67 FR 34899, May 16, 2002
                                                            A-533-824
                                                POI: 4/1/00 - 3/31/01
                                                      Public Document
                                                     G2/O4: TPF/ZP/HS
May 6, 2002 

MEMORANDUM TO: Joseph A. Spetrini
               Acting Assistant Secretary
                 for Import Administration

FROM:          Bernard T. Carreau
               Deputy Assistant Secretary 
                 for Import Administration, Group II


SUBJECT: Issues and Decision Memorandum for the Final Determination in
         the Antidumping Duty Investigation of Polyethylene Terephthalate
         Film, Sheet, and Strip (PET film) from India


Summary

We have analyzed the comments and rebuttal comments of interested parties
in the investigation of PET film from India for the period April 1, 2000,
through March 31, 2001. As a result of our analysis, we have made changes
for the final calculations. We recommend that you approve the positions we
have developed in the Discussion of the Issues section of this memorandum
for this final determination.


Background

On December 21, 2001, the Department of Commerce (Department) published
the preliminary determination of the antidumping (AD) duty investigation
of PET film from India. See: Polyethylene Terephthalate Film, Sheet, and
Strip from India; Notice of Preliminary Determination of Sales at Less
Than Fair Value and Postponement of Final Determination, 66 FR 65893
(December 21, 2001) (Preliminary Determination). The period of
investigation (POI) is April 1, 2000, through March 31, 2001. We gave
interested parties an opportunity to comment on our preliminary
determination. On April 10, 2002, the respondents, Ester Industries
Limited (Ester) and Polyplex Corporation Limited (Polyplex) (collectively
respondents) submitted case briefs, and on April 11, 2002, the petitioners
(1) submitted their case briefs. On August 9, 2001, all parties submitted
rebuttal briefs. The Department received requests for a public hearing
from both petitioners and respondents. A pubic hearing was held on April
17, 2002.

List of Issues

Below is the complete list of issues in this investigation for which we
received comments and rebuttal comments from parties:

Common Issues

1. Adjustment to U.S. Price for Countervailing Duties 
2. Antidumping Duty Order with No Cash Deposit, Bond or Security 
3. Adjustment to Cost of Production (COP) for Duty Entitlement Passbook
   Scheme (DEPB) Benefits 
4. Negative Dumping Margins 
5. Model Matching Similar Films 

Company-Specific

Ester Industries Limited

6. Failure to Provide Product-Specific Costs
7. General and Administrative Expense and Interest Expense
8. Interest Rates Used to Calculate Imputed Credit Expenses for
   Constructed Export Price (CEP) Transactions
9. Interest Rates used to Calculate Imputed Credit Expenses for 
   Export Price (EP) Transactions 
10. Unreconciled Quantities Classified As Slitting Loss
11. Verification Corrections

Polyplex Corporation Limited

12. Whether to Apply Adverse Facts Available (AFA) for Polyplex's 
    Sales to US1/US2
13. Application of the Special Rule
14. Whether to Apply AFA for CEP Expenses and Sales
15. Failure to Provide Product Specific Costs
16. Credit Expenses and Inventory Carrying Costs for CEP Sales
17. Verification Corrections


Discussion of the Issues

Common Issues


Comment 1: Adjustment to U.S. Price for Countervailing Duties

Petitioners state that in the preliminary determination of this
investigation, the Department inappropriately increased U.S. price by the
amount of the export subsidy found in the concurrent countervailing duty
(CVD) investigation. Petitioners contend that this adjustment is not
authorized under section 772(c)(1) of the Tariff Act of 1930, as amended
(the Act). Section 772(c)(1) provides that export price (EP) and
constructed export price (CEP) shall be increased by:

   (A) when not included in such price, the costs of all containers 
   and coverings and all other costs, charges, and expenses incident 
   to placing the subject merchandise in condition packed ready for 
   shipment to the United States,

   (B) the amount of any import duties imposed by the country of 
   exportation which have been rebated, or which have not been 
   collected, by reason of the exportation of the subject merchandise
   to the United States, and 

   (C) the amount of any countervailing duty imposed on the subject
   merchandise under subtitle A to offset an export subsidy

Petitioners argue that section 772(c)(1) only authorizes the Department
to increase U.S. price by the amount of the countervailing duty "actually
'imposed' (i.e., assessed) on the subject merchandise." Petitioners' Case
Brief at page 3. Further, petitioners contend that the Department has
"consistently stated that an adjustment to U.S. price 'can only be made to
offset countervailing duties imposed, i.e., assessed at the time of
liquidation (and not to offset a cash deposit for estimated countervailing
duties)." (2) Citing Honey from Argentina; Notice of Final Determination
of Sales at Less Than Fair Value, 66 FR 50611 (October 4, 2001) (Honey
from Argentina), petitioners state that the Department affirmed the
longstanding practice, articulated in Chapter 7 of the Antidumping Manual,
by reversing its preliminary determination decision to increase U.S. price
by the amount of the export subsidy and concluding that it was more
appropriate to reduce the AD cash deposit by the amount of an export
subsidy in order to prevent double counting. 

Petitioners state that the Court of International Trade (CIT) upheld this
interpretation of Section 772(c)(1) in Serampore Industries v. United
States, 675 F. Supp. 1354, 1360 (CIT 1987): "Commerce's interpretation of
the word 'imposed' to mean 'actually imposed' or 'assessed' is supported
by the legislative history and is sufficiently reasonable. Commerce thus
properly refused to adjust USP {U.S. price} for the deposits of estimated
duties." Thus, according to petitioners, until the Department assesses
countervailing duties on subject merchandise, section 772(c)(1) is
irrelevant, and the Department should calculate U.S. price without
reference to export subsidies. 

Ester does not dispute that the statute requires the Department to make
an adjustment for export subsidies found in companion CVD cases. However,
Ester claims that by adjusting the U.S. price to account for export
subsidies, the Department has ignored its substantial previous practice
and, contrary to the statute, the WTO Antidumping Agreement and court
precedent, done so without providing an explanation for this change in
practice.

Ester states that according to the Department's own Antidumping Manual,
the practice of adjusting U.S. price by the export subsidy applies to
administrative reviews but not investigations. Additionally, Ester cites
to Honey from Argentina where the Department agreed to adjust the
estimated weighted-average dumping margin for Customs bonding purposes by
taking into account export subsidies, rather than adjusting U.S. price by
the export subsidy.

Furthermore, Ester states that according to Article 12.2.1. of the WTO
Antidumping Agreement, a "detailed explanation for the preliminary
determination on dumping or injury is required." Similarly, Ester claims
that the statute requires that in all determinations the Department
"notify the petitioner and other interested parties...of the facts and
conclusions of law upon which the determination is based." Ester also
cites to a CIT decision (Cultivos Miramonte S.A. and Flores Mocari S.A. v.
United States, 980 F. Supp 1268, 1274 (CIT 1997) where, according to
Ester, the Court stated that an administrative agency must explain its
actions when it departs significantly from its own precedent.

In conclusion, Ester states the Department should revert to the previous
methodology and instruct Customs to adjust the AD duty for any export
subsidies found in the concurrent CVD investigation. In the alternative,
Ester suggests, that if the Department continues to believe that the
methodology used to adjust for export subsidies in the preliminary
determination is the appropriate methodology to use in the final
determination, the Department should issue a memorandum prior to the final
determination explaining the reasoning behind this change in practice and
provide the parties with an opportunity to brief this issue again prior to
issuing the final determination. 

Polyplex did not comment on this issue.

Department's Position:


We agree with petitioners that it is our practice, in AD investigations,
to initially calculate a dumping margin and then to offset that figure by
any export subsidy cash deposit rate calculated in the concurrent CVD
investigation in the cash deposit instructions sent to Customs. Section
772(c)(1)(C) of the Act directs the Department to increase EP or CEP by
the amount of the countervailing duty "imposed" on the subject merchandise
"to offset an export subsidy." The basic economic theory underlying this
provision is that in parallel AD and CVD investigations, if the Department
finds that a respondent received the benefits of an export subsidy
program, it is presumed the subsidy contributed to lower-priced sales of
subject merchandise in the United States market by the amount of any such
export subsidy. Thus, the subsidy and dumping are presumed to be related,
and the imposition of duties against both would in effect be "double-
application"- or imposing two duties against the same situation. Section
772(c)(1)(C) of the Act therefore requires that the Department factor the
affirmative subsidy determination into the AD calculations to prevent this
"double-application" of duties. 

As noted by petitioners, the Department has interpreted the term
"imposed" to mean "assessment" in past investigations, and the CIT has
affirmed this interpretation. See Honey from Argentina, 66 FR 50612,
50613; See also, Serampore Industries v. United States, 675 F. Supp. 1354,
1360 (CIT 1987). The Department also has recognized, however, that cash
deposit rates are estimates of the AD duties which may ultimately be
assessed, and are applied in investigations to provide the United States
with security that it will collect AD duties upon completion of a review,
should it find that dumping has occurred in the period covered by the
review. Cash deposit rates become final assessment rates only when
administrative reviews are not requested (see 19 CFR 351.212(c)), are
subject to modification, and, as noted above, serve a different purpose
than assessment rates. However, they are calculated on the basis of all of
the information on the record and, in most respects, are calculated in the
same manner as assessment rates determined in reviews. Therefore, the
Department has recognized that although Congress is silent as to the
application of subsidy offsets during an investigation in the statute, the
same underlying theory of "double-application" which applies to the
imposition of duties also applies to the Department's calculation of a
cash deposit rate. Thus, the Department's longstanding practice in an
investigation is to offset the AD cash deposit rate by the export subsidy
cash deposit rate.

Unlike administrative reviews, the Department calculates this offset in
investigations not in the margin calculation program, but in the cash
deposit instructions issued to the Customs Service. See Honey from
Argentina, 66 FR 50612. The Department's practice is a result of the
practical administrative difficulties in applying the results of an
ongoing CVD investigation to calculations in an ongoing AD investigation.
A dumping margin calculation normally will be completed before the actual
export subsidies have been calculated. Thus, the Department withholds its
application of the subsidy offset until it issues its cash deposit
instructions. Such problems typically do not arise in administrative
reviews.

Because it is our practice to adjust for the export subsidy offset in the
AD cash deposit instructions, we have not made the adjustment used in our
preliminary determination but have followed our normal practice in the
final determination.

Comment 2: Antidumping Duty Order with No Cash Deposit 

Petitioners contend that the Department can place a respondent under an
AD duty order even if the cash deposit requirements are zero or de
minimis. Petitioners state that the Department "mistakenly believed that
it cannot adjust the weighted-average dumping margin for Customs bonding
or cash deposit purposes...if that adjustment would result in a bond or
cash deposit below de minimis levels." Petitioners' Brief at page 5.
Petitioners provide five reasons to support their argument.

First, petitioners argue that the Act and the Department's regulations do
not exclude respondents who pay either zero or de minimis security
deposits from an AD duty order, whereas these provisions do exclude
respondents that receive zero or de minimis dumping margins. (3)
Therefore, the level of the security deposit does not determine and, under
the statute and the regulations, is not relevant to the issue of whether
to exclude a respondent from an AD duty order. 

Second, petitioners maintain that the Department's regulations recognize
that a respondent may be subject to an order with a cash deposit rate of
zero. Specifically, petitioners point to an 

example provided in section 351.526(c)(2) of the Department's regulations
wherein a subsidy of 10 percent ad valorem is found to exist during the
CVD POI but that subsidy is reduced to a de minimis level by a program-
wide change that took place after the POI but before the preliminary
determination. In this case, the example notes that the Department would
issue an affirmative determination but would establish a cash deposit rate
of zero. See Certain Textile Mill Products and Apparel from Peru; Final
Affirmative Countervailing Duty Determinations and Countervailing Duty
Orders and Rescission of Initiation of Investigations With Respect to Hand-
Made Alpaca Apparel and Hand-Made Carpets and Tapestries (Apparel from
Peru), 50 FR 9871 (March 12, 1985) (where the Department placed a
respondent under a CVD order without a cash deposit). 

Third, petitioners state that the WTO Agreements do not suggest that a
respondent cannot be subject to AD and CVD administrative reviews simply
because the respondent 's less-than-fair-value sales may be the result of
export subsidies. Petitioners note that while Article VI:5 of the General
Agreement on Tariff and Trade (GATT) provides that merchandise shall not
be subject to AD and countervailing duties for the same instance of
dumping or export subsidization, it does not prohibit annual reviews of
unfair trade practices under both the AD and CVD rules. 

Fourth, petitioners allege that by reducing the cash deposit by the
amount of the export subsidy, the objective of preventing the double
counting of duties in concurrent AD and CVD investigations is achieved.

Finally, petitioners argue that a respondent should not be allowed to use
export subsidies as a shield from future AD reviews. Petitioners speculate
that if subsidies were eliminated over time there is "good reason to
believe that these producers will not 'pass on' the loss of these
subsidies to their customers through higher prices" given that PET film is
generally a commodity product whose sale is often made or not made based
on price. Petitioners reiterate that if Polyplex is excluded from the
order because of the Customs adjustment, petitioners would have no remedy
against future dumping. 

Ester and Polyplex did not comment on this issue.


Department's Position:


As noted above, the calculation of cash deposit rates in an AD
investigation closely mirrors the calculation of assessment rates
calculated in concurrent AD and CVD reviews. As estimates of the final
duties assessed on entries after the POI, cash deposit instructions direct
Customs to collect a specific ad valorem amount equal to the estimated
margin of dumping of subject merchandise by the respondent. If the
Department finds in an AD investigation, based upon the provisions of
section 772(c)(1)(C) of the Act, that merchandise was dumped, in whole or
in part, as a result of export subsidies that also lead to the imposition
of countervailing duties, then once a CVD cash deposit rate has been
determined, the dumping margin is offset by the amount of the export
subsidies included in the CVD cash deposit rate. 


Petitioners argue that when the Department calculates this offset, if the
end result is a de minimis or zero cash deposit rate, the Department
should issue a final affirmative AD determination and continue suspension
of liquidation of subject merchandise, but set the cash deposit rate at
zero. We disagree with this interpretation of the law. 

The calculations underlying cash deposit rates resulting from an
investigation are essentially equivalent to calculations in administrative
reviews leading to the assessment of AD duties for the period of review,
where both AD duties and countervailing duties are applicable to that
period of review. As discussed in Comment 1 above, the implication arising
out of section 772(c)(1)(C) of the Act is that no dumping exists if the
countervailing duties that are determined to be applicable for export
subsidies are equal to or greater than the calculated dumping margin. The
Department believes that this is true regardless of whether such a result
appears in an administrative review or in an investigation. (4) Therefore,
we believe that issuing an affirmative dumping determination, and thereby
requiring Customs to suspend liquidation of a respondent's imports, while
at the same time stating that the amount of dumping is de minimis or zero,
is inconsistent with the logic and intent of the law. If the Department's
calculations in an investigation result in a zero cash deposit rate, then
in reality, there exists no dumping upon which an affirmative
determination could be based as to that particular respondent. Thus, under
this interpretation of the Act, the circumstances here are no different,
in effect, than the situation in which we determine that a respondent's
dumping margin is zero or de minimis even without the export subsidy
offset.

Petitioners are correct in noting that the Department has acknowledged in
19 CFR 351.526(c)(2) that when a foreign government enacts a change to a
government subsidy program which reduces the amount of an investigated
subsidy to a de minimis level during a CVD investigation, the Department
may issue an affirmative determination, but establish a cash deposit rate
of zero. That practice addresses a situation in which a countervailable
subsidy was eliminated either during or after a POI. It would not be
applicable if the subsidy were eliminated prior to the POI, such that no
subsidy remained during the period actually examined. The situation
described in the regulation contrasts sharply with that in this AD
investigation, in which, as a result of adjusting for the export subsidy
found in the concurrent CVD investigation, we find, in effect, that no
dumping has occurred in the POI for a particular respondent.

Thus, the Department has determined that subject merchandise sold by
Polyplex has not been sold at less than fair value during the POI and is
issuing a negative final determination as to Polyplex. Should the
International Trade Commission (ITC) subsequently issue an affirmative
injury determination, Polyplex will be excluded from the AD order
thereafter. 

Comment 3: Adjustment to Cost of Production (COP) for Duty Entitlement
Passbook Scheme (DEPB) Benefits

Petitioners argue that in the preliminary determination the Department
erred by reducing Ester's and Polyplex's material costs by the amount of
the benefits received under the DEPB. According to petitioners, because
section 773(b) of the Act requires the Department to determine the cost of
producing a "foreign like product" and the DEPB program does not grant
benefits on sales of a foreign like product, these benefits should not be
used to reduce the materials cost included in the cost of production.
Moreover, given that the DEPB credits are calculated as a percentage of
the value of exported merchandise, petitioners argue that allowing
respondents to reduce costs by DEPB credits inappropriately alters the
results of the sales-below-cost test. Specifically, respondents provide an
example in which two companies have identical costs before accounting for
DEPB credits but, because one company exports significantly more than the
other company, reducing costs by DEPB credits results in a completely
different outcome with respect to the sales-below-cost test. According to
petitioners, such a result is inconsistent with the purpose of the sales-
below-cost test and thus, in the final determination, the Department
should not reduce respondents' material costs by the amount of the DEPB
benefits. 

Respondents rebut by stating that the DEPB credits at issue are directly
related to the cost of the raw materials used to produce the subject
merchandise and are treated as an offset to raw material costs in their
normal books and records. Further, respondents claim that petitioners
misinterpreted section 773(b) of the Act. Respondents argue that section
771(16)(A) of the Act defines "foreign like product" as merchandise that
is "identical in physical characteristics with, and produced in the same
country by the same person as, that merchandise {subject merchandise}."
Respondents note that they produce identical products for the U.S. and
Indian markets and that the reduction of material costs by DEPB credits is
used to calculate the COP and the constructed value (CV) of exported
goods. Further, respondents contend that the Department has granted an
adjustment to the COP where a sufficient link exists between the DEPB
benefits and materials costs. In the instant case, respondents claim that
such a link was verified by the Department. See Stainless Steel Bar From
India; Final Results of Antidumping Duty Administrative Review and New
Shipper Review and Partial Rescission of Administrative Review (SSB from
India), 65 FR 48965 (August 10, 2000) and accompanying Decision Memorandum
at Comment 3.

Department's Position: 

It is our practice to analyze the utilization of benefits received under
the DEPB program in order to determine whether an adjustment to material
costs is warranted. See SSB from India and accompanying Decision
Memorandum at Comment 3. 

At verification, both Ester and Polyplex demonstrated that they used a
portion of the DEPB credits that they received on PET film sales to cover
duties on imported materials used in PET film production. Unlike the DEPB
credits received but not used, the DEPB credits used during the POI are
directly related to Ester's and Polyplex's purchases of imported raw
materials used to produce PET film and result in lower material costs for
the respondents. Thus the record contains evidence of a sufficient link
between the DEPB credits used and the respondents' material costs.
Accordingly, for the final determination, we reduced both respondents' raw
material costs by the amount of DEPB benefits actually used for
importation of raw materials during the POI.


Comment 4: Negative Dumping Margins

Respondents argue that the Department's practice of setting negative
weighted-average margins to zero is inconsistent with Article 2 of the WTO
Anti-dumping Agreement. Respondents contend that the Department's
definition of a dumping margin, pursuant to section 771(35)(a) of the Act,
as "the amount by which normal value exceeds the export price or
constructed export price of the subject merchandise," appears to have led
the Department to set margins that do not exceed either EP or CEP to zero.
However, according to respondents, Black's Law Dictionary defines "amount"
as "the whole effect, substance, quantity, import result or significance."
Thus, respondents argue that an amount can be negative and therefore the
statute does not require the practice of zeroing. See Ester's Brief at
page 14 and Polyplex's Brief at page 12. 

Finally, respondents also argue that the Department should adhere to the
finding of the WTO Panel Report European Communities - Antidumping Duties
On Imports of Cotton-Type Bed Linen From India (Bed Linen from India),
WT/DS141/AB/R adopted March 12, 2001, and offset any positive margins with
negative margins in the same entry. See Ester's Brief at pages 14-16 and
Polyplex's Brief at pages 12-14. 


Petitioners state that the Department has rejected the argument for
zeroing margins in the past and under U.S. law it is under no obligation
to recognize an Appellate Body's interpretation of the WTO Agreement in a
dispute between the European Union and India. Thus, petitioners believe
that the Department should continue with its standard practice. (5) 

Department's Position:


We disagree with the respondents and have not changed our calculation of
the weighted-average dumping margin for the final results. Non-dumped
sales are included in the weighted-average margin calculation as just that
- sales with no dumping margin. The value of such sales is included in the
denominator of the weighted-average margin calculation along with the
value of dumped sales. We do not, however, allow non-dumped sales to
cancel out dumping determined to be present on other sales.

This methodology is required by U.S. law. Section 771(35)(A) of the Act
defines "dumping margin" as the amount by which the normal value (NV)
exceeds EP or CEP of the subject merchandise. Section 771(35)(B) defines
"weighted-average dumping margin" as "the percentage determined by
dividing the aggregate dumping margins determined for a specific exporter
or producer by the aggregate export prices and constructed export prices
of such exporter or producer." These sections, taken together, direct the
Department to aggregate all individual dumping margins, each of which is
determined by the amount by which NV exceeds EP or CEP, and to divide this
amount by the value of all sales. The directive to determine the
"aggregate dumping margins" in section 771(35)(B) makes clear that the
single "dumping margin" referred to in section 771(35)(A) applies to
calculating individual transaction margins, and does not itself apply on
an aggregate basis. There is no statutory provision directing that the
amount by which EP or CEP exceeds NV on non-dumped sales cancel out the
dumping margins found on other sales.

With respect to the respondents' WTO-specific arguments, we consider that
U.S. law is consistent with our WTO obligations. Moreover, the Bed Linen
from India Panel and Appellate Body decisions concerned a dispute between
the European Union and India. We have no WTO obligation to act based on
these decisions. See Certain Preserved Mushrooms from India; Final Results
of Administrative Review (Mushrooms from India), 66 FR 42507 (August 13,
2001) and accompanying Decision Memorandum at Comment 16.

Comment 5: Model Matching Similar Films

Petitioners state that in the preliminary determination, the Department's
model matching program incorrectly considered film thickness to be more
important than film grade (film type) in identifying appropriate matches.
Specifically, petitioners note that in the log of the margin calculation
program for Polyplex (lines 1781 - 1977) and Ester (lines 1742 - 1851; see
also the output for Ester at lines 10 and 11 of page 12) the coding used
by the Department to select similar matches for United States sales
incorrectly matched a grade of film sold in the United States to a
different grade sold in India when a more similar grade of film was sold
in India. Petitioners claim that both respondents recognize that the
industry distinguishes different types of film primarily by grade, rather
than thickness, and therefore, the Department should consider grade to be
more important than thickness in identifying appropriate matches. 

Respondents rebut petitioners argument noting that the variable
definitions in the programming language and the output of the respective
programs show that the Department has correctly considered first film type
(grade) and then film thickness in attempting to identify products similar
to those sold in the United States market. 

Department's Position:


We agree with petitioners that grade is more important than thickness in
identifying appropriate matches. However, with respect to Polyplex, the
margin calculation output from the preliminary determination shows that
the grade of film sold in the United States which petitioners referenced
in their brief is matched to an identical grade of film sold in the
comparison market. Therefore, the example provided by petitioners does not
demonstrate that the Department incorrectly considered thickness more
important than grade in identifying products similar to those sold in the
U.S. market. Nonetheless, we have reviewed the model match program and
found, for certain grades sold in the United States, that modifications to
give greater weight to grade than thickness are appropriate. We have made
these modifications for Polyplex for the final determination in this case.
See Calculation Memorandum of the Final Determination of the Investigation
of Polyplex Corporation Limited, dated May 6, 2002 at page 5.


With respect to Ester, the computer program has correctly considered the
type of the film first and the thickness second in selecting the models
sold in the home market that are similar to those sold in the United
States. However, we noted during verification that the grade of film
referred to in the petitioners' brief was assigned an incorrect similar
match based on incorrect information supplied by Ester. This discrepancy
was tested and the correction was substantiated by the Department at
verification. See Verification of the Sales Response of Ester Industries
Ltd., and Ester International (USA) Limited, in the Antidumping Duty
Investigation of Polyethylene Terephthalate Film, Sheet and Strip from
India (Ester Sales Verification Report) dated April 1, 2002 at pages 6-7.
Therefore, based on our verification findings, for purposes of the final
determination we have adjusted the similar match for two grades of film.

Company-Specific Issues 

Ester Industries Limited

Comment 6: Failure to Provide Product-Specific Costs

Petitioners argue that Ester disregarded the Department's request for
product-specific costs and reported its overhead costs based solely on
film thickness, ignoring differences in product grades (types). As a
result, petitioners conclude, the Department should apply AFA for the
final determination. Petitioners propose using as AFA the highest cost of
production that Ester reported for a single thickness of PET film as the
cost of all models of film.

Ester rejects petitioners' allegations noting that it provided product
specific costs where each control number has an individual total cost of
manufacture, in its August 31, 2001, section D questionnaire response.
Also, Ester notes that in its supplemental section D questionnaire dated
November 15, 2001, it explained that its cost system is capable of
capturing differences in the cost of producing different control numbers
and thus it reported control number-specific costs. In that response,
Ester also noted that productivity is dependent on film thickness and
therefore it based its reported variable and fixed overhead costs on film
thickness. Finally, Ester notes that it has provided all the cost
information requested by the Department and this information was
successfully verified. Consequently, Ester believes that its costs should
be used for the final determination. 

Department's Position: 

We disagree with petitioners. Ester reported grade (type)-specific
product costs by accounting for differences in the raw materials' cost for
different grades of film. As for petitioners' argument that Ester reported
its overhead costs based only on film thickness, we find Ester's
allocation of overhead costs to be reasonable. Ester allocated overhead
costs based on conversion factors calculated as a function of productivity
by film thickness. As we noted in our verification report, in its normal
accounting system Ester keeps track of PET film production quantities by
thickness only. The company believes that thickness is the only variable
accounting for differences in conversion costs across different grades.
This belief is supported by the fact that Ester's productivity
consistently correlated with thickness for all product grades.
Accordingly, we find that applying facts available (FA) is not warranted
in this case.


Comment 7: General and Administrative Expense and Interest Expense


Ester calculated its reported general and administrative (G&A) and
interest expenses based on the G&A and interest expenses allocated to its
PET film division. In the preliminary determination, the Department
recalculated Ester's G&A and interest expense rates by dividing company-
wide G&A and interest expenses by the company's total cost of goods sold
(COGS). Ester maintains that the Department erred in recalculating the G&A
and interest rates in this fashion. Specifically, Ester notes that because
its PET chips division supplies its PET film division with chips, and the
cost of this inter-company transfer is not reflected in its company-wide
COGS, the calculation methodology used by the Department in the
preliminary determination significantly overstated Ester's G&A and
interest expenses. To illustrate the impact of not reflecting produced
chips in the COGS, Ester notes that if it had sold all of the chips it
produced and then purchased the chips on the market for the same price
(without internal transfers of chips, and with no impact on profits), it
would have increased its COGS, thus decreasing its G&A and interest
expense rates. 

Ester acknowledges that the methodology used by the Department in its
preliminary determination is used in many, if not most cases. However,
Ester notes that the Department's regulations allow it to consider other
appropriate allocations that take into account "other quantitative and
qualitative factors associated with the manufacture and sale of the
subject merchandise and the foreign like product." See 19 CFR 351.407(c).
Moreover, Ester notes that the statute requires the Department to
calculate an amount for G&A and interest expense based on the actual
amounts incurred in connection with the production and sale of the foreign
like product (see section 773 (e)(2)(A) of the Act ). According to Ester,
this requires some form of allocation of these expenses among its
divisions, which it did. 

Furthermore, Ester contends that because its allocation of G&A and
interest expense is consistent with the methodology it used in the normal
course of business, the Department should use Ester's reported G&A and
interest expense in the final determination. Ester notes that the law
requires the Department to calculate costs based on the records of the
producer, if such records are kept in accordance with the generally
accepted accounting principles of the exporting country and reasonably
reflect the costs (see section 773 (f)(1)(A) of the Act). Further, Ester
notes that the Department has stated in past cases that its practice is to
calculate general expenses based on the company's normal books and
records. See Notice of Final Determination of Sales at Less Than Fair
Value: Stainless Steel Bar From the United Kingdom, 67 FR 3146 (January
23, 2002) and accompanying Decision Memorandum at Comment 5. 

Nevertheless, should the Department find that the methodology used by
Ester is inappropriate, Ester urges the Department to increase the COGS
used to calculate the G&A and interest rates by the value of the chips
transferred internally from the chips division and included in the COGS of
the film division. Ester argues that by not doing so, the aggregate COGS,
calculated as a sum of the COGS of all Ester's divisions, is grossly
understated. 

Petitioners support the Department's methodology. According to
petitioners, Ester diluted the ratios by allocating costs to the chips
division but failing to transfer those costs to the film division when it
consumed the chips. In petitioners' view, the calculation method used by
the Department is proper and should continue to be used in the final
determination.

Department's Position: 


The Act does not prescribe a specific method for calculating a company's
G&A and interest expense rates. Accordingly, the Department has, over
time, developed a consistent and predictable practice for calculating and
allocating these expenses. With respect to the G&A rate, our practice is
to calculate the rate based on the company-wide G&A costs incurred by the
producer allocated over the producer's company-wide cost of sales. The
interest rate is calculated using a similar methodology (except that
interest expenses are determined based on the highest level of financial
consolidation). Pursuant to this practice, we therefore do not calculate
the rates on a divisional or product-specific basis. See Notice of Final
Determination of Sales at Less Than Fair Value-Stainless Steel Round Wire
from Canada, 64 FR 17324, 17325 (April 9, 1999); Hot-Rolled Flat-Rolled
Carbon-Quality Steel Products From Japan; Notice of Final Determination of
Sales at Less Than Fair Value, 64 FR 24329, 24354 (May 6, 1999). This
practice is identified in section D of the Department's AD questionnaire,
which states that the G&A and interest expense rates should be calculated
as the ratio of total company-wide G&A expenses divided by company-wide
COGS and full-year net interest expense reported in the financial
statements divided by the COGS, respectively. See section D questionnaire
at page D-13. This methodology recognizes the general nature of these
expenses and the fact that they relate to the activities of the company as
a whole, rather than to a particular production process. See Rautaruukki
Oy v. United States, 19 CIT 438 (1995). 

The Department's methodology also avoids any distortions that may result
if, for business reasons, greater amounts of company-wide general expenses
are allocated disproportionally between divisions. If the costs Ester
reported as G&A and interest expenses only relate to the products of the
PET film division, they may be more accurately included in our
calculations as part of the cost of manufacturing that merchandise.
However, Ester did not report these costs as part of its company-wide cost
of manufacturing in its audited financial statements. Therefore, we
continue to find that they are general in nature and relate to the
operations of the company as a whole. 


Furthermore, we disagree with Ester's argument that we should increase
the total cost of sales by the amount of inter-company transfers. Doing so
would double-count certain input costs of the PET film sold and thereby
overstate the cost of PET film sold. With regard to the example that Ester
provided to illustrate the impact of not reflecting the cost of produced
chips in the COGS, we note that if the company were to sell and buy back
the chips used in PET film production, it would inevitably incur
additional general expenses related to the selling and purchasing of the
chips. These expenses may offset the effect that the increase in the COGS
has on the rate. The key point, however, is that Ester did not sell PET
chips to other companies and did not purchase PET chips from other
companies during the POI. As such, the speculative example provided by
Ester is meaningless in determining its actual cost of producing PET film
during the POI. Accordingly, for the final determination, we have
continued to compute Ester's G&A and interest expense rates on a company-
wide basis in accordance with the Department's normal practice.

Comment 8: Interest Rates Used to Calculate Imputed Credit Expenses for
Constructed Export Price (CEP) Transactions

Petitioners claim that Ester's U.S. affiliate, Ester International (USA)
Limited (EIUL), factors (discounts) its receivables on CEP sales of the
subject merchandise. As a result, petitioners claim that instead of
calculating credit expenses using an "abstract" short-term dollar
denominated rate (i.e., the Federal Reserve rate used in the preliminary
determination), the Department should calculate credit expenses using the
actual full rate that EIUL paid to its factoring agent. 

Ester argues that it only factors some of its account receivables.
Moreover, according to Ester, the Department reviewed Ester's calculation
of imputed credit expenses during its verification of EIUL and found no
discrepancies. Therefore, for the final determination, Ester urges the
Department to continue to use the interest rate it provided. 

Department's Position: 

We agree with petitioners, in part. Our review of the record indicates
that EIUL incurred interest expenses on factored receivables. In Exhibit 9
of its November 20, 2001, supplemental questionnaire response, Ester
provided a copy of an agreement between EIUL and its factoring agent. The
agreement states that a pre-specified rate of interest and an additional
fee will be charged on money advanced to EIUL. Ester admits that such
advances were obtained for at least some of its CEP sales. Because we
consider the factoring of receivables to constitute short-term borrowings,
we have used the interest rate charged by the factoring agent to calculate
the imputed credit expense for EIUL's CEP sales. However, contrary to
petitioners' suggestion, we did not use the full rate charged by the
factoring agent (i.e., the sum of the interest and an additional fee) as
the interest rate used in our calculations. Rather, because we consider
the additional fee to be associated with only factored sales, we deducted
the fee from the gross unit price of specific sales only where the record
indicates that the sale was factored.

Comment 9: Interest Rates used to Calculate Imputed Credit Expenses for
Export Price (EP) Transactions 

Petitioners note that for EP transactions, banks advanced money to Ester
upon submission of an invoice and other transportation documents and
charged the company interest from the date of the advance until the date
of receipt of payment by the bank. Given this fact pattern, petitioners
claim that Ester erred by not using the interest rate on the advances
provided by Indian banks when calculating its imputed credit expenses for
EP transactions. Instead, Ester based its imputed credit expenses for EP
sales on a U.S. published commercial lending rate from the Federal Reserve
Bank. As a result, petitioners state that the Department should
recalculate the imputed credit expense for EP transactions using the
interest rate incurred by Ester during the POI rather than the Federal
Reserve Bank's U.S. published commercial lending rate.

Ester objects to the methodology proposed by petitioners because the
interest expense it incurred on EP sales during the POI was associated
with rupee-denominated loans, as verified by the Department. Ester argues
that the use of the interest rate on these loans would be contrary to the
Department's policy of tying short-term interest rates to the currency
denomination of the sale for which credit expenses are being calculated.
Ester cites to the Department's Policy Bulletin 98.2, where the Department
states that it will base the interest rate for purposes of calculating
imputed credit expenses on the respondent's weighted-average short-term
borrowing experience in the currency of the sales transaction. In cases
where a respondent has no short-term borrowing in the currency of the
sales transaction, the Department will use publicly available information
to establish a short-term interest rate applicable to the currency of the
sales transaction.

Department's Position: 

We disagree with petitioners. The record in this case establishes that
the advance payments received during the POI by Ester on its EP sales are
rupee-denominated loans. See Ester Sales Verification Report at page 15
and Exhibit 19. The Department's standard practice with respect to
calculating imputed credit expenses is outlined in Policy Bulletin 98.2,
as follows:

   For the purposes of calculating imputed credit expenses, we will use
   a short-term interest rate tied to the currency in which the sales 
   are denominated. We will base this interest rate on the respondent's
   weighted-average short-term borrowing experience in the currency of 
   the transaction.

   In cases where a respondent has no short-term borrowing 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. ....For dollar transactions, we will generally use the
   average short-term lending rates calculated by the Federal Reserve to
   impute credit expenses.

Ester's EP transactions during the POI were denominated in U.S. dollars.
During the POI, Ester's wholly owned U.S. sales affiliate, EIUL incurred
interest expenses on factored receivables in the currency of the EP
transactions. Consequently, for the final determination, we have used
EIUL's interest rate to calculate credit expenses on Ester's EP sales. See
Comment 8 above for details regarding EIUL's short-term borrowings during
the POI. 

Comment 10: Unreconciled Quantities Classified As Slitting Loss

Petitioners note that during the verification of EIUL, the Department
found a discrepancy while reconciling the reported sales quantity to
EIUL's inventory movement report. Because petitioners are concerned that
Ester has understated its slitting expense (one of the direct selling
expenses reported for U.S. sales) by failing to fully account for the
losses that take place when film is reslit in the United States, as FA,
petitioners urge the Department to adjust the reported slitting expense to
account for the quantity discrepancy found at verification. 

Ester concedes that, at verification, the Department noted a discrepancy
in its quantity reconciliation. However, Ester points out that this
discrepancy represents an extremely small percentage of the total quantity
of Ester's U.S. sales during the POI.

Department's Position: 

We agree with Ester. At verification, we reconciled the quantity and
value of EIUL's U.S. sales to the company's financial statements. See
Ester Sales Verification Report at page 22. However, we found a minor
discrepancy in reconciling the reported sales quantity to Ester's
inventory records. Because the inventory reconciliation was performed in
order to test the total sales quantities reported to the Department and
the minor discrepancy found did not call into question the reported total
sales quantity, we did not attempt to determine the reason for the
discrepancy. Therefore, we find no basis for attributing the inventory
discrepancy to slitting losses. Consequently, for the final determination,
we have not adjusted the reported slitting loss for the minor discrepancy
found in the inventory reconciliation.

Comment 11: Verification Corrections 

Ester requests that for the final determination, the Department take into
account the minor corrections it submitted at verification. Petitioners
did not comment on the minor corrections submitted by Ester. See Ester
Sales Verification Report at pages 2-3. 

Department's Position: 

We agree with Ester. For purposes of the final determination, we have
made the corrections verified by the Department.

Polyplex Corporation Limited

Comment 12: Whether to Apply Adverse Facts Available (AFA) for Polyplex's
Sales to US1/US2 

Petitioners contend that the Department should base the dumping margin
for Polyplex's sales to its U.S. customer US1/US2 on AFA because Polyplex
impeded the instant investigation by providing false and misleading
statements regarding US1/US2's relationship with Spectrum, Polyplex's U.S.
sales affiliate, and misled the Department as to the nature of its direct
and indirect sales to US1/US2. (6) Specifically, petitioners note that in
its response to sections A and C of the Department's AD questionnaire,
Polyplex reported that US1/US2 was unaffiliated with Spectrum but it was
later discovered that Spectrum and US1/US2 are affiliated by virtue of the
fact that both entities are controlled by the same person (see section
771(33) of the Act). See Preliminary Determination at page 65,894.
Moreover, petitioners point out that in its supplemental questionnaire
responses, Polyplex described a limited relationship between Spectrum and
US1/US2 wherein "{t}here are no long term arrangements between US1/US2 and
Spectrum of any kind" and "{t}here are no employees that work for both
Spectrum and {US1/US2}." However, at verification, the Department found
that US1/US2 processes Spectrum's payroll at no charge and provides
Spectrum's employees with health insurance. In addition, petitioners note
that, based on the Department's verification findings, it appears that
certain personnel are employed by both Spectrum and US1/US2. Moreover,
according to petitioners, Polyplex originally indicated that the party who
exercised control over both Spectrum and US1/US2 had a limited role in
Spectrum's operations but later admitted that this party oversees
Spectrum's operations. Finally, petitioners note that at verification, the
Department found certain previously undisclosed financial dealings between
the controlling party in question and Spectrum. 

Additionally, petitioners maintain that Polyplex has repeatedly made
contradictory and misleading statements regarding a certain physical
characteristic of the PET film that it sold directly and indirectly to
US1/US2. This physical characteristic is an important factor to consider
in identifying the appropriate model comparisons. Therefore, petitioners
claim that Polyplex's actions have impeded the Department's investigation
and cast tremendous doubt as to the validity of its U.S. sales database. 

Further, petitioners maintain that the Department would have had an
opportunity to fully examine US1/US'2s further manufactured sales had
Polyplex provided further manufacturing information in response to the
Department's AD questionnaire. However, according to petitioners, Polyplex
concealed its relationship with US1/US2 and thus the Department should use
AFA to determine the margin on these sales rather than apply the special
rule under section 772(e) of the Act. See Comment 13 below for additional
discussion of use of the special rule. 

To support its argument for AFA, petitioners cite to Certain Welded
Stainless Steel Pipe from Taiwan; Final Results of Administrative Review
(Steel Pipe from Taiwan), 62 FR 37,543 (July 14, 1997), where the
Department applied adverse inferences to value sales made to an unreported
affiliated party in the United States. In Steel Pipe from Taiwan,
petitioners maintained that the respondent "withheld vital information
from the Department, disclosing piecemeal its affiliations only under
duress. ...{R}ather than volunteering key information concerning its
relationship with U.S. customers, {respondent} has instead divulged this
information only following petitioners' allegations that {respondent} was
related to, or affiliated with, these parties." Id at 37,552. Petitioners
liken the situation found in Steel Pipe from Taiwan to that found in the
instant case because in the former case the respondent's selling arm had
unusually close ties to its purportedly unaffiliated customer, as does
Spectrum and US1/US2. 

Further, petitioners argue that the use of adverse inferences is
warranted because Polyplex failed to act to the best of its ability in
reporting information regarding its sales to US1/US2. Petitioners point to
three factors considered in the past by the Department which they claim
warrant applying AFA. First, the Statement of Administrative Action, H.
Doc. No. 103-316, at 870 (1994) (SAA), states, "in employing adverse
inferences, one factor {the Department} will consider is the extent to
which a party may benefit from its own lack of cooperation." Petitioners
contend that Polyplex only altered its representations regarding a certain
physical characteristic of the merchandise sold to US1/US2 when it
realized it was more advantageous to seek the application of the special
rule for further manufactured sales than it was to have these sales
compared to merchandise in the home market." See Petitioners' Brief at
page 20. 

Second, petitioners indicate that the experience of a respondent in an AD
proceedings should be considered when deciding whether to use adverse
inferences. See Dynamic Random Access Semiconductors from Korea; Final
Results of Antidumping Duty Administrative Review and Determination Not To
Revoke the Order in Part, 64 FR 69,694 (December 14, 1999) (DRAMS from
Korea). Petitioners infer that Polyplex is an experienced respondent based
on its past participation in an AD proceeding involving the European
Community, its support for a petition on PET film imports into India from
Indonesia and Korea, and the nature of Polyplex's responses in this
investigation.

Finally, in DRAMS from Korea, petitioners claim the Department also
considered "whether the respondent was in control of the data which
Commerce was unable to verify or rely upon." Petitioners assert that
without question Polyplex was aware, from the outset of the investigation,
of the nature of the merchandise sold to US1/US2; that Spectrum and
US1/US2 shared an office complex; that there was a person who exercised
control over US1/US2 and Spectrum, and that this person was the officer-of-
record of Spectrum. 

Polyplex contends that petitioners' sole argument for FA, the argument
that Polyplex impeded the investigation by providing false and misleading
statements regarding its relationship with US1/US2, is not supported by
the facts of this case. Polyplex claims that it provided detailed
information regarding its relationship with US1/US2 in its response to
section A of the Department's questionnaire and in its responses to the
Department's supplemental questionnaires. According to Polyplex, the
information that it provided allowed the Department to decide in its
preliminary determination that US1/US2 is an affiliated party. Polyplex
contends that the preliminary determination is the customary time for
making such decisions. 

Nevertheless, Polyplex concedes that it did provide certain incorrect
information regarding Spectrum's operations and Spectrum's relationship
with US1/US2. However, Polyplex points out that while a company's
ignorance of its own operations is no excuse for mistakes, a company's
ignorance of certain details regarding the operations of a less than
wholly owned affiliate located in another country is a different matter.
Moreover, Polyplex notes that the CIT has held that "where a claim of
inadvertence is at issue, the simple fact of a respondent's failure to
report information within its control does not warrant an adverse
inference." See Nippon Steel Corporation v. United States, 146 F. Supp. 2d
835, 840 (CIT 2001). Finally, Polyplex notes that its errors only relate
to the issue of whether US1/US2 is an affiliated party, an issue which it
no longer contests. Thus Polyplex maintains that these errors do not
provide it with a more favorable result. 

Furthermore, Polyplex argues that its actions did not impede the
investigation with respect to the issue of how to calculate margins for
US1/US2's further manufactured sales. Polyplex notes that less than one
month after responding to section A of the Department's questionnaire and
nearly three months before the Department's preliminary determination, it
raised the issue of how to treat US1/US2's further manufactured sales,
arguing that the special rule, section 772(e) of the Act, should be
applied to these sales. Thus, Polyplex believes that the record does not
establish that its actions delayed the investigation with respect to the
further manufacturing issue. 

Polyplex distinguishes the facts of the instant investigation from those
in Steel Pipe from Taiwan by noting that there is no evidence on the
record of this investigation to suggest that Polyplex resorted to the
actions attributed to the respondent in Steel Pipe from Taiwan (the
Taiwanese respondent dissolved an affiliated U.S. reseller and attempted
to create another U.S. reseller without equity ties to avoid a finding of
affiliation). In addition, Polyplex distinguishes the facts in the instant
investigation from those in Ferro Union, Inc. v. United States (Ferro
Union I), 44 F. Supp. 2d 1310 (CIT 1999) and Ferro Union, Inc. v. United
States (Ferro Union II), 74 F. Supp. 2d 1289 (CIT 1999), where a
respondent did not identify any affiliated home market resellers, yet the
Department discovered three affiliated entities at verification and
subsequent to verification by means of two post-verification
questionnaires. In contrast to the Ferro Union case in which the
Department did not have time to request downstream sales, Polyplex notes
that in the instant investigation, the Department was aware of the further
manufactured sales in advance of the preliminary determination and had
time to gather and verify all of the necessary information and determine
whether to apply the special rule or require a response to section E of
the questionnaire. 

Additionally, Polyplex contends that FA is not warranted in this case
because it has provided all of the information necessary to calculate a
margin on US1/US2's sales using the special rule. Polyplex notes that
pursuant to section 782(e) of the Act, the Department may not disregard
this information because 1) the information has been submitted in a timely
fashion, 2) the information has been verified, 3) the information is not
so incomplete that it cannot serve as a reliable basis for the final
determination, 4) Polyplex has done its best to supply the information,
and 5) the information can be used without undue difficulties. 


Also, Polyplex disagrees with petitioners' characterization of the record
regarding its reporting of a certain physical characteristic of its direct
and indirect sales to US1/US2. Polyplex contends that the Department's
verification findings regarding the nature of its sales to US1/US2 "are
fully consistent with what Polyplex has been saying all along." See
Polyplex's Brief at 15. Thus, Polyplex contends that the record is clear
and the merchandise that it sold to US1/US2 has not been misrepresented. 

Lastly, with respect to the petitioners' claim that Polyplex is an
experienced respondent, Polyplex states that it was not a respondent in
the European Community's investigation and that its experience as one of
several Indian petitioners in the Indian PET film AD investigation hardly
prepared it to be a respondent in the instant investigation. Moreover,
Polyplex asserts that even if it had fully participated in the European or
Indian AD investigations, such participation would not have prepared it
for the instant investigation given the procedural and methodological
differences between the AD investigations in those regions/countries and
the United States. 

Department's Position:

We agree with Polyplex. Section 776(a) of the Act provides that "if (1)
necessary information is not available on the record, or (2) an interested
party or any other person: (A) withholds information that has been
requested by the administering authority or the Commission under this
title; (B) fails to provide such information by the deadlines for the
submission of the information or in the form and manner requested, subject
to subsections (c)(1) and (e) of section 782; (C) significantly impedes a
proceeding under this title; or (D) provides such information but the
information cannot be verified as provided in section 782(i), the
administering authority and the Commission shall, subject to section
782(d), use the facts otherwise available in reaching the applicable
determination under this title." While petitioners do not specifically
identify which portion of section 776(a) they are relying upon, their
argument centers on the claim that Polyplex concealed critical information
regarding its and Spectrum's relationship with US1/US2 and thereby impeded
the investigation. 

In the preliminary determination, the Department found that Polyplex and
Spectrum are affiliated with US1/US2. In reaching this determination, the
Department gave a great deal of weight to the facts surrounding a
particular individual's relationships with US1/US2 and another company
whose identity is proprietary information. See the Memorandum from Holly
A. Kuga to Bernard T. Carreau: Whether Polyplex Corporation Limited is
Affiliated, Under the Tariff Act of 1930, as Amended, With Its U.S.
Customer, Company A, and Its Home Market Customer, Company B (Affiliation
Memorandum) dated December 13, 2001. The most important aspect of this
individual's relationships with these two companies was disclosed by
Polyplex in its response to section A of the Department's questionnaire.
Moreover, Polyplex responded in a timely manner to subsequent supplemental
questionnaires issued by the Department to obtain additional facts
regarding the affiliation issue. Although Polyplex did not identify
US1/US2 as an affiliated customer in its questionnaire response (Polyplex
initially argued that it is not affiliated with US1/US2) and it
incorrectly described certain aspects of the relationship between Spectrum
and US1/US2, these actions did not significantly impede this proceeding,
as evidenced by the fact that the Department identified affiliation to be
an issue upon review of Polyplex's initial questionnaire response and was
able to determine that US1/US2 is an affiliated party at the preliminary
determination. Additionally, the information that we obtained at
verification, which was not provided in Polyplex's description of
Spectrum's and US1/US2's relationship, and the inaccuracies in that
description did not impede this proceeding as the more crucial information
with respect to affiliation had already been reported in Polyplex's
response to section A of the Department's questionnaire and subsequent
supplemental questionnaires. Finally, although Polyplex maintained it was
not affiliated with US1/US2, it noted in its response to the Department's
first supplemental questionnaire that if the Department should find it
affiliated with US1/US2 "the value added in the United States in the
further processing of PET film is substantial and the special rule for
determining normal value {sic} included at section 772 of the Tariff Act
of 1930 would apply in this case." See Polyplex's supplemental response
dated September 24, 2001 at page 15. Hence, although Polyplex did not
raise the issue of further manufactured sales as early as it should have
(Polyplex incorrectly stated in its questionnaire response that the issue
of further manufacturing was not applicable), we find that it did identify
this issue soon enough to avoid significantly impeding this investigation. 

Furthermore, we find no basis for resorting to FA with respect to
Polyplex's reporting of a certain physical characteristic of the PET film
that it sold to US1/US2. Although Polyplex's narrative description of this
characteristic was at times confusing, the information regarding this
characteristic was clarified prior to verification and thoroughly examined
at verification. See the Sales and Cost Verification Report for Polyplex
Corporation Ltd (Polyplex Verification Report) dated April 1, 2002, at
pages 8 - 11. 

Thus, for the foregoing reasons, we have not based the dumping margin for
Polyplex's sales to US1/US2 on FA. Because we have determined that the use
of FA is not appropriate in this case, an adverse inference analysis
pursuant to section 776(b) is not warranted.

Comment 13: Application of the Special Rule

In the preliminary determination, the Department determined that
Polyplex's U.S. customer, US1/US2, which further manufactured Polyplex's
PET film, is affiliated with Polyplex. (7) Polyplex urges the Department
to determine the dumping duty on US1/US2's sales of further manufactured
PET film by applying the special rule for merchandise with value added
because during the POI 1) the value added by US1/US2 substantially exceeds
the value of the PET film input, 2) US1/US2 made a substantial number of
products containing PET film, 3) US1/US2 purchased PET film from many
producers and cannot identify the producer of the film used in the further
manufactured product, 4) US1/US2 further manufactured PET film at many
different plants in the United States, and 5) US1/US2 sold further
manufactured PET film in a significant number of transactions (i.e., sales
resulted in a great number of invoices and line items). Polyplex notes
that the special rule, as discussed in section 772(e) of the Act, provides
that where the subject merchandise is imported by a person affiliated with
the exporter or producer and the value added in the United States by the
affiliated person is likely to exceed substantially the value of the
subject merchandise, the administering authority shall determine the CEP
for such merchandise using 1) the price of identical subject merchandise
sold by the exporter or producer to an unaffiliated person 2) the price of
other subject merchandise sold by the exporter or producer to an
unaffiliated person, or if there is not a sufficient quantity of sales to
provide a reasonable basis for comparison under 1 or 2, or the
administering authority determines that neither of the prices described is
appropriate, then the CEP may be determined on any other reasonable basis. 

Polyplex proposes two special rule methodologies. First, Polyplex
suggests that the Department base the margin for further manufactured
sales on the price of other subject merchandise sold to unaffiliated U.S.
customers, i.e., all other sales excluding sales to US1/US2. Polyplex
contends that this methodology was used by the Department in many other
special rule decisions in the past. Alternatively, Polyplex suggests that
Department rely on the "transfer prices" from Polyplex and Spectrum
(Polyplex's U.S. sales affiliate) to US1/US2. Polyplex contends that these
verified prices demonstrate that during the POI, sales to US1/US2 were at
arm's length prices. Therefore, while the Department would not normally
rely on prices to an affiliate, Polyplex maintains that the unique
circumstances of this investigation indicate that the use of transfer
price would be another reasonable special rule methodology. 

Petitioners argue against applying the special rule because 1) the
special rule would be applied to a significant percentage of U.S. sales
and 2) the sales to which the special rule would be applied involve
merchandise which is priced differently from that sold to unaffiliated
customers. Petitioners note that the Department has stated in past cases
that "the greater proportion of further manufactured sales to non-further
manufactured sales, the greater possibility of inaccurate results." See
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; Final Results of Antidumping
Duty Administrative Reviews (TRBs from Japan); 63 FR 2,558, 2,560 (January
15, 1998). Moreover, petitioners note that the intent of the special rule
is to not "elevate the goal of burden reduction over the goal of
accuracy." See TRBs from Japan at page 2,562. Given the above and the
Department's "overriding mandate" to calculate accurate dumping margins,
petitioners contend that applying the special rule would greatly distort
the margin calculations in this case. 

Rather than apply the special rule, petitioners urge the Department to
apply AFA because Polyplex made it impossible for the Department to
conduct a thorough investigation of US1/US2's further-manufactured sales
by repeatedly failing to disclose its relationship with US1/US2 and
misreporting U.S. sales data. As a result of Polyplex's actions throughout
the investigation, petitioners maintain that the Department "apparently
concluded" that there was insufficient time to complete an investigation
of further manufacturing costs in this investigation (i.e., the issuance
of a Section E questionnaire). Therefore, according to the petitioners,
the Department should apply as AFA either the highest margin alleged in
the petition or the highest calculated margin for any U.S. sale to all
sales to US1/US2, so as not to "reward Polyplex for delaying this
investigation and for misreporting its sales." See Petitioners' Brief at
page 22. 

Short of applying AFA to all US1/US2 sales, petitioners conclude that
using a special rule methodology whereby US1/US2's sales are valued based
on the transfer prices from Spectrum to US1/US2 would be the second most
accurate means of determining a dumping margin for the further
manufactured sales. Petitioners do not believe that the transfer prices
from Polyplex to US1/US2 should be used as the special rule in this case
because those prices do not reflect any U.S. related party selling
expenses, and the description of the merchandise is therefore unreliable.

Department's Position:

At the preliminary determination, we determined that the record did not
contain sufficient information for the Department to determine whether it
is more appropriate to use the special rule or the standard methodology in
calculating margins for the sales in question. Moreover, we noted that the
record did not contain the information necessary to apply the standard
methodology. In the preliminary determination notice, we stated that we
intended to collect the information necessary to decide how to treat the
sales in question for the final determination. Subsequent to issuing our
preliminary determination notice, we collected additional information
regarding US1/US2's sales of further manufactured products. 

This information indicates that the value added in the United States
substantially exceeds the value of the subject merchandise. In addition,
the information collected subsequent to issuing the preliminary
determination indicates that any potential accuracy gained by applying the
standard methodology is likely outweighed by the burden of its
application. Specifically, the significant number of models of further
manufactured products produced and sold by US1/US2 during the POI and the
inability of US1/US2 to identify the source of the PET film used in a
particular further manufactured product greatly complicates the analysis
required to apply the standard methodology. Furthermore, the fact that
US1/US2 is unable to identify the source of the PET film used in a
particular further manufactured product, and both Spectrum and Polyplex
sold PET film to US1/US2, further complicates the analysis by requiring
the Department to develop assumptions about the adjustments that need to
be made in order to calculate net U.S. price.


Given the forgoing, and the fact that there is a sufficient quantity of
non-further processed subject merchandise sales to unaffiliated parties in
the United States to provide a reasonable basis for comparison under the
special rule, we have determined that it is appropriate to apply the
special rule in this case. The special rule provision of section 772(e) of
the Act notes that the Department may determine the CEP for further
manufactured sales using one of the following prices: "(1) The price of
identical subject merchandise sold by the exporter or producer to an
unaffiliated person, (2) The price of other subject merchandise sold by
the exporter or producer to an unaffiliated person." Additionally, this
section of the Act notes that "{i}f there is not a sufficient quantity of
sales to provide a reasonable basis for comparison under paragraph (1) or
(2), or the administering authority determines that neither of the prices
described in such paragraphs is appropriate, then the CEP may be
determined on any other reasonable basis." 

With respect to the specified alternative methods the Department may use
after invoking the special rule, the SAA notes:

   The alternative methods for establishing export price are: (1) 
   the price of identical subject merchandise sold by the exporter
   or producer to an unaffiliated person; or (2) the price of other
   subject merchandise sold by the exporter or producer to an 
   unaffiliated person. There is no hierarchy between these 
   alternative methods of establishing the export price. If there
   is not a sufficient quantity of sales under either of these 
   alternatives to provide a reasonable basis for comparison, or 
   if the Department determines that neither of these alternatives
   is appropriate, it may use any other reasonable method to 
   determine constructed export price, provided that it provides
   to interested parties a description of the method chosen and 
   an explanation of the basis for its selection. Such a method 
   may be based upon the price paid to the exporter or producer by
   the affiliated person for the subject merchandise, if the 
   Department determines that such a price is appropriate. 

See SAA at 826.

In this proceeding, we have determined that it is appropriate to base the
dumping margins for Polyplex's further manufactured sales on the weighted-
average dumping margins calculated on sales of other subject merchandise
sold to unaffiliated U.S. customers. Although the sales to which the
special rule is being applied involve merchandise sold to an affiliate
that is priced differently from that sold to unaffiliated customers in the
United States, this does not necessarily lead to the conclusion reached by
petitioners that use of the special rule results in an inaccurate dumping
margin. A price difference between the grade of PET film to which the
special rule is being applied and other grades of PET film was also
observed in the home market. Thus, even if price differences do exist for
different grades in the U.S. market, this would not by itself indicate
that the margins on sales of other subject merchandise sold in the United
States is an inappropriate proxy for the margins on Polyplex's sales to
US1/US2. Further, given the assumptions that would need to be made to
apply the standard methodology, it is not clear what impact the different
pricing for merchandise sold to US1/US2 would have on the margins
calculated using the standard methodology. Thus, it is not possible to
conclude that use of the special rule results in an inaccurate dumping
margin in this investigation.

Because we have determined that the use of the margins on sales of other
subject merchandise is an appropriate proxy for the margins on sales of
subject merchandise to US1/US2, we have not considered using any other
basis for these margins, including the use of FA. For further information
regarding our decision not to use FA with respect to the sales to US1/US2,
see Comment 12 above.

Comment 14: Whether to Apply AFA for CEP Expenses and Sales

Petitioners argue that because many of Spectrum's selling expenses were
incurred on services provided by US1/US2 and/or the person who exercised
control over Spectrum and US1/US2, and are not arm's-length transactions,
the Department lacks reliable information from which to calculate the CEP
adjustments required under section 772(d) of the Act. Specifically,
petitioners note that: 

   1. Spectrum leases all of its office space from US1/US2.

   2. US1/US2 provides warehouse space to Spectrum under a lease agreement.

   3. The person who exercised control over Spectrum and US1/US2 provided
      all of Spectrum's outstanding notes payable during the POI. 

   4. US1/US2 maintains and processes Spectrum's payroll at no charge and
      provides health care insurance to Spectrum's employees.

   5. Spectrum employees review documentation related to US1/US2's
purchases
      from foreign vendors at no charge. 

   6. US1/US2 "apparently draws" on Spectrum's inventories at a shared
      facility. Petitioners suggest that this affects inventory carrying 
      costs and that US1/US2's inventories of PET film should be included
      in this calculation.
 
   7. US1/US2 pays for the services of Spectrum's officers.

Petitioners conclude that the Department lacks the necessary information
to calculate CEP deductions because Polyplex concealed its relationship
with US1/US2 and significantly impeded this investigation. Because
Polyplex failed to act to the best of its ability in this investigation,
petitioners urge the Department to apply AFA by assigning the margin
alleged in the petition to all CEP sales. 


Polyplex counters that disregarding an entire CEP sales database because
some services are provided by an affiliated party would be unprecedented.
Polyplex contends that the Department has a well-established practice of
testing whether services and products provided by affiliated parties are
provided at arm's-length prices and replacing those prices with surrogates
when they are not arm's-length prices. Moreover, Polyplex argues that the
surrogate information that may need to be used to value the services that
Spectrum obtained from affiliated parties is insignificant in comparison
to the amount of data that was reported to, and verified by, the
Department. Polyplex distinguishes the facts of this case from those of
other cases where gaps in the record were so "pervasive and persistent"
that the Department disregarded all of the data submitted. See Steel
Authority of India v. United States, 149 F. Supp. 2d 921, 928 (CIT 2001). 

Furthermore, Polyplex believes that 1) the fee for providing payroll and
health insurance processing services for Spectrum's three employees must
be minimal, 2) small closely-held companies often do not pay their
officers and directors salaries when they receive both dividends on
profits and interest income on loans, 3) the job of a corporate secretary
is not particularly time consuming or onerous and 4) the Department
verified the rental payments that Spectrum made on its warehouses and
found only an extremely minor discrepancy. Finally, Polyplex reiterates
that the use of FA is not warranted in this investigation because although
it did not report certain facts regarding Spectrum's relationship with
US1/US2 as it was unaware of those facts, and it did provide significant
information regarding the ownership structure of Spectrum and US1/US2 in
its first questionnaire response.

Department's Position:

We disagree with petitioners. There is no basis for using total FA to
determine the margins on all of Polyplex's CEP sales because Polyplex
reported the information necessary to determine the CEP adjustments under
section 772(d) of the Act for its sales to unaffiliated customers and this
information is substantially complete, useable, and has been verified (8).
Furthermore, as noted in Comment 12 above, we do not agree with
petitioners' position that Polyplex significantly impeded this
investigation by concealing its relationship with US1/US2. Therefore, we
have not determined the margins on CEP sales using total FA. 


Nevertheless, there is evidence on the record that certain services
provided by US1/US2 to Spectrum, during the POI, were not purchased by
Spectrum at arm's-length prices. While this finding indicates that
Spectrum under-reported its CEP deductions, it is not so significant as to
call into question the integrity of the entire CEP database. Consequently,
for the final determination, we adjusted the cost of the certain services
that were not provided at arm's-length prices. However, we did not impute
a cost to the services provided by Spectrum's corporate officers or take
US1/US2's inventory into account in calculating inventory carrying costs,
as suggested by petitioners, because the record does not indicate that
US1/US2 draws upon Spectrum's inventory and there is no indication that
the corporate officers were paid a salary by Spectrum or US1/US2 for the
services that they provided to Spectrum. Moreover, as noted by Polyplex,
evidence on the record indicates that with respect to one corporate
officer, the services provided to Spectrum were not significant. 



Comment 15: Failure to Provide Product Specific Costs

Petitioners argue that the Department should apply AFA to Polyplex for
failing to report product-specific costs. Petitioners reach this
conclusion based on three primary factors: 1) Polyplex had the burden of
proving that film grade is irrelevant to film cost; 2) Polyplex admitted
that costs vary by film grade; and, 3) other PET film producers have
reported that COP varies based on film grade. 

With respect to number one, petitioners preface their argument by stating
that the Department "should presume that Polyplex's costs vary based on
film grade - a primary physical characteristic of PET film that the
Department included in control numbers in this investigation." See
Petitioners' Brief at pages 24-25. In Certain Polyester Staple Fiber from
Taiwan; Notice of Final Determination of Sales at Less Than Fair Value
(PSF from Taiwan), 65 FR 16,877 (March 30, 2000) and accompanying Decision
Memorandum at Comment 31, the respondent (Nan Ya) argued that coating
polyester staple fiber with silicon does not result in significant cost
differences and that, in any event, Nan Ya's accounting records do not
contain the information requested. Petitioners state that the Department
rejected Nan Ya's argument and applied AFA:

   Nan Ya failed to provide product-specific costs for silicon-coated
   products. Silicon coating is a matching characteristic identified in
   sections B and C of the Department's questionnaire. Thus, it should be
   taken into account in determining product-specific costs. In the
   Department's view, the requirement of product-specific sales and cost 
   data is one of the most basic and significant requirements in performing
   the antidumping analysis and margin calculation. … The specific physical
   characteristics which make up a control number are those physical
   characteristics determined to be the most significant in differentiating
   between products. Id. (emphasis added by petitioners).

Petitioners also cite to Hot-Rolled Flat-Rolled Carbon-Quality Steel
Products from the Russian Federation; Notice of Final Determination of
Sales at Less Than Fair Value, 64 FR 38626, 38635 (July 19, 1999), where
the Department did not accept the respondent's general cost categories
that it submitted in lieu of CONNUM-specific costs. Petitioners assert
that Polyplex similarly created broad categories, i.e., "super CONNUMs". 

With respect to point number two above, petitioners argue that Polyplex's
claim that costs do not vary by grade is not supported by their own data
and statements. Petitioners state Polyplex's reported variable and fixed
overhead costs do not correlate with the assumption that, if thickness is
the only significant variable accounting for cost differences, thicker
films have lower costs. Petitioners cite to the Polyplex's Verification
Report at page 40 where the Department asked Polyplex to account for such
instances. Petitioners argue that Polyplex's explanation and Polyplex's
data demonstrates that thickness is not the only significant cost
variable, but that costs also "depend largely on film grade." Petitioners'
Brief at page 28.

Lastly, with respect to point number three above, petitioners state that
respondents in the prior investigation of PET film from Korea reported
product specific costs based on grade and thickness. 

In concluding, petitioners contend that Polyplex had an obligation, under
section 782(c) of the Act, to explain its inability to provide product-
specific costs and to suggest other forms in which to submit the required
cost information. Thus, petitioners state that Polyplex has failed to act
to the best of its ability to comply with the Department's request for
model-specific COP; therefore, petitioners argue that the Department
should use adverse inferences as "facts otherwise available in the
preliminary {sic, final} determination," pursuant to section 776(b) of the
Act. Petitioners recommend applying the highest COP for one of Polyplex's
"super" control numbers (CONNUMS) to all models of subject merchandise.
For purposes of reporting variable and fixed overhead, Polyplex aggregated
all grades by thickness into "super CONNUMS" and apportioned those costs
by equivalent units of super CONNUM production. 

Polyplex rebuts petitioners' argument stating that a close review of the
record and data in this investigation shows that Polyplex did not ignore
film type and did provide model or CONNUM specific cost. Polyplex cites to
the Department's Verification Report, where the Department described in
detail Polyplex's product range, production process, differences in raw
materials for select grades, and the degree to which Polyplex maintains
specific production records. See Polyplex Verification Report at pages 28 -
29. Also, Polyplex states that its approach to report cost by super
CONNUMs was reasonable given that it produced only select products and did
not maintain a cost accounting system in its normal course of business. 

Further, Polyplex draws exception to the petitioners' example of SKC, a
Korean respondent in the AD order on PET film from Korea, as an example of
the ability of a respondent to provide product-specific costs. Polyplex
contends that SKC is poor precedent in that SKC produces higher value-
added film types which are not comparable to that of Polyplex, and that
the CIT has upheld SKC's reporting methodology which was also challenged
by the then petitioning companies who have since merged as the current
petitioners. Polyplex states that the experience of STC, another Korean
respondent before the Department, with select products, is more comparable
to itself. Lastly, Polyplex argues that the petitioners ignored the
remainder of the Department's findings from the Polyplex Verification
Report with respect to the discussion of conversion factors, which
explains why the costs of that product in question do not correlate with
what would be expected of thicker films. Moreover, the Department noted no
discrepancies in its report with respect to conversion factors. 

Department's Position:


We disagree with petitioners. First, the majority of cost information
pertaining to Polyplex is proprietary and thus our discussion is limited.
However, we note that Polyplex reported grade-specific product costs by
accounting for the cost differences in raw materials, i.e., the cost of
additional chemicals, used in production of different grade products. As
for petitioners' argument that Polyplex reported its overhead costs based
only on film thickness, we find Polyplex's allocation of overhead costs
reasonable. Polyplex allocated overhead costs based on conversion factors
calculated as a function of actual productivity by film thickness. As the
record shows, and as we noted in our verification report at considerable
length, Polyplex does not maintain a cost accounting system in the normal
course of business that would allow it to allocate overhead on a grade
specific basis. Given that it produces only select products, the company
believes that thickness is the variable accounting for differences in
conversion costs across different grades, aside from chemical costs which
were are allocated by actual grade usage. As for the lack of correlation
between thicknesses and overhead costs noted above, the Department
substantiated Polyplex's explanation with respect to the production
experience, products produced, quantities produced, and frequency of
production at verification. Accordingly, we find that the application of
FA is not warranted in this case. 


Comment 16: Credit Expenses and Inventory Carrying Costs for CEP Sales

At verification, the Department found that the interest rate used to
calculate imputed credit expenses and inventory carrying costs for
Spectrum's CEP sales substantially understated Spectrum's actual credit
costs and was based solely on transactions with an affiliated party. Based
on these findings, petitioners urge the Department to calculate Spectrum's
imputed credit expenses and inventory carrying costs using AFA.
Petitioners note that section 776 of the Act directs the Department to use
FA with adverse inferences where a respondent fails to provide requested
information by established deadlines or significantly impedes a proceeding
by not acting to the best of its ability. Petitioners point out that the
affiliated party loans should have been disclosed by Polyplex when the
Department asked Polyplex in a supplemental questionnaire to disclose any
dealings between Spectrum and the party in question. Therefore, as AFA,
petitioners urge the Department to apply the verified interest rate.

Polyplex contends that the Department should not use the verified
interest rate to calculate imputed credit expenses and inventory carrying
costs for the following reasons. First, the verified interest rate is
based on loans Spectrum obtained from an affiliated party and the terms of
these loans are clearly not arm's-length. Polyplex notes that the
Department's practice is to disregard interest rates between affiliated
parties unless the rates are determined to be arm's-length, market rates
(see Policy Bulletin 98.2, "{t}he Department prefers to measure interest
expenses using borrowings made from unrelated parties"; see also
Industrial Phosphoric Acid from Belgium; Final Results of Antidumping Duty
Administrative Review (IPA from Belgium), 63 FR 36,754 (October 14, 1998)
at Comment 2, (where the Department determined that the U.S. credit
expense paid to the respondent's affiliates was not incurred at arm's
length, the Department calculated U.S. credit expense using the prevailing
U.S. dollar prime rate in effect during the period of review). According
to Polyplex, there is no evidence on the record to suggest that the
interest rate determined at verification is an arm's-length rate. Rather,
Polyplex maintains that this rate substantially exceeds the commercial
business rates in effect during the POI. Moreover, Polyplex maintains that
the rate obtained at verification cannot be justified by Spectrum's credit
rating because Spectrum was profitable during the POI. Second, Polyplex
contends that the interest rate determined at verification was the result
of a mistake made by the parties in calculating the amount of interest to
be paid and not an agreement between the parties. Polyplex claims that
both Spectrum and its affiliated party believed the interest rate
associated with the loans between them to be different from the rate
determined at verification. Polyplex argues that where the respondent has
made a mistake, there is no reason to penalize it with FA particularly
when the mistake is easily corrected by using the Federal Reserve rate to
calculate imputed credit expenses and inventory carrying costs. 

Department's Position:

At verification, the Department obtained conflicting information
regarding the interest rate paid by Spectrum on borrowings from an
affiliated party. The interest rate that the Department calculated using
Spectrum's records is different from the rate charged by the affiliated
party because Spectrum and the party differ as to the balance of the loan
and the amounts of certain interest payments. These discrepancies were not
resolved at verification. Because the record does not clearly establish
which of the interest rates was paid by Spectrum during the POI, and the
Department has a well-established practice of disregarding interest rates
charged on loans from affiliated lenders that are not arm's length rates,
we have calculated Spectrum's credit expenses and inventory carrying costs
using the Federal Reserve rate. For this investigation, the application of
the Federal Reserve rate is consistent with the Department's policy of
calculating an imputed credit expense using the interest rate of the
currency of the sale. As we stated in Import Administration Policy
Bulletin 98.2, "for the purposes of calculating imputed credit expenses,
we will use a short-term interest rate tied to the currency in which the
sales are denominated. We will base this interest rate on the respondent's
weighted-average short-term borrowing experience in the currency of the
transaction." However, since the respondent did not borrow from any
unaffiliated parties during the POI, we have no information on the record
to substantiate whether the interest rate paid by Spectrum to its
affiliated lender is at arm's length. Therefore, we have calculated
imputed U.S. credit expense using the prevailing average short-term
interest rate, as published by the Federal Reserve, in effect during the
POI. See Federal Reserve Statistical Release E.2; Survey of Terms of
Business Lending, dated May 1-5, 2000, August 7-11, 2000, November 6-10,
2000, and February 5-9, 2001, available at
www.federalreserve.gov/releases/E2.


Comment 17: Verification Corrections

Petitioners request that for the final determination, the Department
correct the errors in Polyplex's data that were found at verification.
Polyplex requests that the Department correct all of the minor errors
identified at verification except the discrepancy involving the interest
rate paid by Spectrum during the POI. For the reasons outlined in Comment
16 above, Polyplex contends that the interest rate determined at
verification should not be used to calculate Spectrum's imputed credit
expense or inventory carrying costs.

Department's Position: 

We agree with both parties, in part. With the exception of the interest
rate correction, in our final determination we have made the minor
corrections identified at verification. Our position regarding Spectrum's
interest rate is discussed in Comment 16 above.


Recommendation

Based on our analysis of the comments received, we recommend adopting the
positions described above. If these recommendations are accepted, we will
publish the final determination and the final weighted-average dumping
margins in the Federal Register.




Agree__________ Disagree__________ Let's Discuss___________



_________________________________

Joseph A. Spetrini 
Acting Assistant Secretary
  for Import Administration


__________________________________
(Date)




_________________________________________________________________________
footnotes:

1. The petitioners in this investigation are: DuPont Teijin Films,
Mitsubishi Polyester Film of America, and Toray Plastics (America), Inc.
(collectively the petitioners). 

2. See Section 735(c)(1)(B) of the Act and 19 CFR § 351.204(e).

3. We note that a CVD investigation of a period covered by an AD
administrative review under an existing order normally would not alter any
AD duty assessment for that period, as no countervailing duties would be
applied to entries subject to the AD review. However, for cash deposit
purposes, an adjustment to the dumping margin for any export subsidies
found in the CVD investigation would be in order. 

4. See Automotive Replacement GlassWindshield from the People's Republic
of China; Final Results of Antidumping Investigation, 67 FR 6482 (February
12, 2002), and accompanying Decision Memorandum at Comment 34. 

5. Polyplex sold subject merchandise to US1/US2 both directly and through
its U.S. sales affiliate, Spectrum. 

6. For the record, Polyplex does not contest the Department's preliminary
determination of affiliation with US1/US2. See Polyplex Rebuttal Brief at
page 12. 

7. As noted in Comment 13 above, we have used the special rule to
determine the margin on CEP sales involving US1/US2.