A-570-855
                                                    Investigation
                                                    Public Document

MEMORANDUM

April 6, 2000

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

FROM:  Richard W. Moreland
       Deputy Assistant Secretary, Group I
       Import Administration


SUBJECT: Issues and Decision Memorandum for the Final Determination
         in the Antidumping Duty Investigation of Certain Non-Frozen
         Apple Juice Concentrate from the People's Republic of China


___________________________________________________________________

SUMMARY

We have analyzed the comments in the case and rebuttal briefs
submitted by interested parties in the antidumping duty investigation
of certain non-frozen apple juice concentrate ("NFAJC") from the
People's Republic of China ("PRC"). As a result of our analysis, we
have made changes, including corrections of certain inadvertent
programming and clerical errors, in the margin calculations. We
recommend that you approve the positions we have developed in the
Discussion of the Issues section of this memorandum. Below is the
complete list of the issues in this investigation for which we
received comments from the parties:

Comment 1: Choice of primary surrogate country
Comment 2: Valuation of apples
Comment 3: Valuation of ocean freight
Comment 4: Valuation of steam coal
Comment 5: Valuation of rail freight
Comment 6: Valuation of aseptic bags
Comment 7: Valuation of apple essence
Comment 8: Valuation of SG&A, factory overhead, and profit
Comment 9: Alleged wrongful initiation of investigation
Comment 10: Critical circumstances
Comment 11: Expansion of scope
Comment 12: Customs instructions
Comment 13: Zhonglu deposit rate

BACKGROUND

On November 23, 1999, the Department of Commerce ("the Department")
published the preliminary determination in this investigation.(1) We
published an amended preliminary determination and postponement of
the final determination on December 27, 1999.(2) The merchandise
covered by this investigation is all NFAJC with a Brix scale of 40 or
greater, whether or not containing added sugar or other sweetening
matter, and whether or not fortified with vitamins or minerals.
Excluded from the scope of this investigation are: frozen
concentrated apple juice; non-frozen concentrated apple juice that
has been fermented; and non-frozen concentrated apple juice to which
spirits have been added.

The period of investigation ("POI") is October 1, 1998, through
March 31, 1999. We invited parties to comment on our preliminary
determination. At the request of certain interested parties, we held
a public hearing on March 17, 2000.

DISCUSSION OF ISSUES

Comment 1: Choice of primary surrogate country

The petitioners contend that the Department should continue to use
India as the primary surrogate country for the PRC, as it did in the
preliminary determination. The petitioners state that India is the
only country that meets both statutory criteria for being used as a
surrogate, i.e., India is both a significant producer of comparable
merchandise and at a level of economic development similar to that of
the PRC. Because India meets both criteria, the petitioners say, the
Department is required by statute to use India as the surrogate
country.

Regarding the significant producer criterion, the petitioners first
note that India is the world's tenth largest apple producer,
according to United Nations' data. They argue that a reasonable
conclusion would be that India, therefore, also is one of the largest
apple juice concentrate ("AJC") producers. Second, while the
petitioners acknowledge that there is little or no country-wide data
on Indian production of AJC, they claim that the record shows
significant AJC production by several Indian companies. Third, the
petitioners maintain that India's combined production of AJC and
single strength apple juice ("SSAJ"), which they describe as a
product comparable to AJC because it is produced using the same
inputs, is significant. The petitioners, who have submitted Indian
production data only for licensed producers, believe that the total
production figure would be much higher if the production of the many
non-licensed SSAJ producers were included.

Another reason for using India, the petitioners maintain, is that
the Department has sufficient information on publicly available
Indian factor values, i.e., there is no need to use factor values
from other countries. Finally, the petitioners argue that using
India, which is frequently chosen as a surrogate country for the PRC,
would enhance the Department's goal of predictability.

While the respondents agree that India is at a level of economic
development comparable to that of the PRC, they claim that there is
no public information on the record showing that India is a
significant producer of comparable merchandise. The respondents note
that most of the petitioners' arguments relating to India's status as
a significant producer of comparable merchandise are based on a
private market study commissioned by the petitioners. The respondents
urge the Department not to rely on such private data in its
investigation.

Specifically, the respondents maintain that the record of this
investigation confirms the existence of only one Indian AJC producer,
the Himachal Pradesh Horticultural Produce Marketing and Processing
Corporation, Ltd., ("HPMC"). They assert that the petitioners'
statements regarding other alleged Indian AJC producers and total
Indian production of AJC and SSAJ are based on the petitioners' own
market study and are not supported by information on the record.

Instead of India, the respondents argue that the Department should
use Turkey as the surrogate country because Turkey is the country
closest to the PRC in terms of GNP per capita that is also a
significant producer of AJC. Alternatively, the respondents argue
that, even if the Department chooses India as the primary surrogate
country, it should use a Turkish surrogate value for at least the
apple input. The respondents contend that the Department has the
authority to use data from other countries which are identified as
significant producers of comparable merchandise and which are at a
level of economic development comparable to that of the NME, or even
data from other countries, as alternate sources for surrogate values.
They point to the Department's practice in Notice of Final
Determination of Sales at Less Than Fair Value: Freshwater Crawfish
Tailmeat from the People's Republic of China, 62 FR 41347 (August 1,
1997) ("Crawfish") where Spain was used as the surrogate country for
the main input, unprocessed crawfish, while India was used as the
source for other surrogate values.

The petitioners counter that Turkey cannot be used as the primary
surrogate country because, with a GNP per capita more than four times
higher than the PRC's, Turkey is not economically comparable to the
PRC. Moreover, the petitioners contend that it is not possible to
determine whether Turkey is a significant producer of the subject
merchandise because the respondents have not put information on the
record showing total NFAJC production in Turkey.

Department's Position:

We agree with the petitioners that India should be used as the
surrogate country in this investigation. India is comparable to the
PRC in terms of economic development, whereas Turkey is not.
Moreover, as outlined below, we also find that India is a significant
producer of comparable merchandise.

In reaching our conclusion, we have first considered what would
constitute "comparable merchandise." We believe that, for purposes of
this investigation, AJC and SSAJ are comparable. Both are made from
the same basic input (juice apples) and the only difference is the
extent to which the juice is concentrated. Furthermore, we share the
petitioners conclusion that countries with significant apple
production are also likely to have significant AJC/SSAJ production.

According to the petitioners' market study, total AJC production in
India reached over 1,500 metric tons ("MT") in 1998/99 and total SSAJ
production was at approximately the same level. As the tenth largest
apple growing country in the world, India is a significant producer
of apples. Also, the petitioners' market study describes numerous
producers of AJC/SSAJ in India. While we acknowledge that there is no
official country-wide data regarding AJC/SSAJ production in India,
the respondents have not provided information that leads us to reject
this market study. Finally, there is record evidence of at least one
significant producer of comparable merchandise in India, HPMC. This
company's 1998/99 annual report shows that it processed over 10,500
MT of apples in 1998/99, part of which was used to produce AJC. We
find that this is sufficient evidence to support a conclusion that
India is a significant producer of comparable merchandise.

We disagree with the respondents that it is necessary to go outside
India to find an appropriate surrogate value for the apple input. The
respondents' reliance on Crawfish is misguided because the factual
situation in that case was different from the instant investigation.
In Crawfish, we used India as the surrogate country to value all
factors of production except fresh crawfish, which is the primary
input in the production of fresh crawfish tailmeat. While we found
India to be a significant producer of comparable merchandise
(processed seafood), we could not use an Indian value for the
crawfish input because India did not have a crawfish industry. Other
forms of seafood processed in India were not deemed to be
sufficiently comparable to serve as a surrogate for the crawfish
input. We, therefore, had to go outside India to find a surrogate
value for crawfish. The only known, significant market-economy
producers of comparable merchandise were Spain and the United States.
We chose Spain because it is closer to the PRC in terms of GNP per
capita than the United States.

The facts in this investigation are different. In Crawfish there was
no production of the crawfish input in the primary surrogate country,
India. In the instant investigation, record evidence shows that India
is the world's tenth largest producer of the primary input in NFAJC
(i.e., apples) and that India is also a significant producer of goods
comparable to the subject merchandise.

Comment 2: Valuation of apples

The petitioners argue that the Department should value the apple
input at widely traded prices in India. The best way to do this,
according to the petitioners, is to value apples at an average price
derived from published prices for grade C apples traded at India's
largest agricultural commodities market, the Azadpur wholesale market
in New Delhi ("Azadpur"). The petitioners argue that the Department
should base the surrogate value on data presented in their February
28, 2000, submission, in which they provided prices paid for
different varieties of grade C apples (which the petitioners describe
as juice apples) at Azadpur from October through December 1998, the
peak of the harvest season. From the average minimum price paid for
grade C apples during this time period, the petitioners deducted
commissions and administrative fees collected at Azadpur as well as
an average cost for transporting apples by truck from the most
distant apple-growing region, Jammu and Kashmir, to New Delhi. The
petitioners request that the Department use the resulting price, 4.30
rupees per kilogram ("Rs/kg"), to value the apple input.

In the alternative, the petitioners contend that the Department
should value juice apples at the published price paid to apple
growers under the government-operated Market Intervention Price
Support Scheme ("MIS") in Himachal Pradesh, the only state where the
MIS program exists. The petitioners state that the MIS price paid to
growers for juice apples was 3.75 Rs/kg in 1998/99. According to the
petitioners, the MIS price is related to recent trends in market
prices.

Finally, the petitioners reject the 2.25 Rs/kg apple price used by
the Department in the preliminary determination. The petitioners
describe this price as a "disposal price" or "distress value" which
is set by the government and used to value inventories of juice
apples. The petitioners maintain that this price is merely an
accounting convention used by state and central government
authorities in India to distribute losses incurred under the MIS
program and is not a widely used transaction price. However, should
the Department choose to use the 2.25 Rs/kg price, the petitioners
contend that the most appropriate methodology would be to calculate a
weighted average of this value and the 4.30 Rs/kg Azadpur price.

The respondents argue that the Department should not use any Indian
price as the surrogate value, claiming that the MIS program is a
subsidy program which affects prices in the entire Indian apple
market, thus making Indian prices non-representative of market
economy apple prices. The respondents contend that it has been
Department practice to avoid surrogate data that is "tainted" by
government subsidies (see, Notice of Final Determination of Sales at
Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel
Products from the Russian Federation, 64 FR 38626 (July 19, 1999)
("Russian Steel"), Notice of Final Determination of Sales at Less
Than Fair Value: Manganese Metal From the People's Republic of China,
60 FR 56045 (November 6, 1995) ("Manganese Metal"), and Sulfanilic
Acid From the People's Republic of China; Final Results of
Antidumping Duty Administrative Review, 63 FR 63834 (November 17,
1998) ("Sulfanilic Acid").

Instead of an Indian price, the respondents request that the
Department value apples at a weighted average of wholesale market
prices paid for juice apples at three agricultural commodity
exchanges in Turkey. (The respondents' arguments for using Turkey as
the surrogate country are summarized in Comment 1 above.) The
respondents argue that their Turkish price data are more complete
than the petitioners' Azadpur prices and that the weight-averaged
Turkish price accurately reflects true market prices for juice
apples. The respondents further contend that the Turkish price is an
appropriate surrogate value because the record shows that one major
Turkish AJC producer is located in proximity to two of the three
commodity exchanges from which the respondents have collected prices,
thus making it feasible to transport apples from these exchanges to
the AJC producer. In contrast, the Indian AJC producers are located
far away from Azadpur and it is, therefore, unreasonable to assume,
as the respondents claim that the petitioners do, that Indian AJC
producers buy juice apples at Azadpur.

Should the Department decide not to use a Turkish surrogate for the
apple input, the respondents argue that the best Indian alternative
is the price of 2.25 Rs/kg used in the preliminary determination. The
respondents dismiss the petitioners' characterization of this prices
as a "disposal price," arguing that there is no information on the
record to support this assertion. Rather, the respondents contend
that 2.25 Rs/kg is a real price actually paid for juice apples in
India. They note that according to the petitioners' own market
research, the 2.25 Rs/kg value is based on average market prices for
juice apples in India. They also point to the introduction to HPMC's
1998/99 financial statements, which reports the cost of processing
apples as 2.25 Rs/kg. The respondents conclude that 2.25 Rs/kg is the
price actually paid by the only documented AJC producer in India,
HPMC.

The respondents reject the Indian apple prices put forward by the
petitioners. With respect to the 4.30 Rs/kg value derived from sales
prices paid at Azadpur, the respondents argue that this price is
inappropriate because the petitioners have not shown that any Indian
AJC or SSAJ producer actually buys apples at Azadpur. Indeed, it
would be uneconomical to do so, the respondents say, due to the long
distance from HPMC and other, alleged, AJC producers to New Delhi.

The respondents also question the petitioners' assertion that grade
C apples sold at Azadpur are juice apples used by AJC manufacturers.
The respondents point to the lack of evidence that Indian AJC
producers buy apples at Azadpur and, also, to their own market
research which shows that the grade C apples sold at Azadpur are
packed in wooden boxes lined with paper and straw. The respondents
describe such packing as atypical for juice apples, claiming that no
Chinese respondent purchases juice apples packed in this manner.

The respondents further argue that the petitioners' Azadpur price
data are incomplete because they cover only part of the POI and do
not include quantities sold. They also criticize the specifics of the
petitioners' calculation of the 4.30 Rs/kg value, arguing that there
is no basis on the record for the amount of truck freight that the
petitioners have deducted to arrive at this price. Should the
Department accept the petitioners' calculation methodology, the
respondents argue that the correct truck freight rates would be the
ones the petitioners put on the record in their February 28, 2000,
submission. In addition, the commission and administrative fee
collected at Azadpur as well as the cost of packing materials must
also be deducted, the respondents say.

Finally, the respondents object to the petitioners' argument that
the Department, as an alternative to the 4.30 Rs/kg Azadpur price,
could use the 3.75 Rs/kg MIS price as the surrogate value. The
respondents state that the MIS price is the amount paid to the apple
grower and is, therefore, irrelevant. Instead, the respondents argue
that Department should use the apple price paid by the AJC producer,
i.e., 2.25 Rs/kg.

In their rebuttal brief, the petitioners maintain that the existence
of the MIS program does not disqualify India as the source of the
surrogate value for apples because MIS is a state-by-state program
that only applies to 5-10 percent of total Indian apple production.
The petitioners reject the respondents' characterization of MIS as a
subsidy program and contend that it is a price support program aiming
at stabilizing juice apple prices in India, thereby providing
stability to India's apple growers.

The petitioners also rebut the respondents' assertion that no Indian
AJC producer buys apples at Azadpur. The petitioners state that there
are numerous licensed and non-licensed apple juice producers near New
Delhi for whom the only source of juice apples is Azadpur.

Department's Position:

The Department has continued to apply the 2.25 Rs/kg price as the
surrogate value for juice apples because we believe that this price
most closely reflects the market price for juice apples in India. The
introduction to HPMC's financial statements shows that the company's
cost for processing apples used in AJC production was 2.25 Rs/kg in
1998/99. (This information is supported by other producer-specific
data which are being kept business proprietary at the request of the
petitioners.) Second, according to the petitioners' market research
report, HPMC's "cost of apples in 1998 diverted to processing is
taken at Rs. 2.25 per kg, the minimum disposal rate under MIS..."
(see petitioners' February 28, 2000, submission, at Exhibit 1, p.
11). The same report also states that

[t]he MIS policy has a provision whereby a minimum price has been
defined for destroying apples that are unsuitable for table purposes.
This rate has been fixed at Rs. 2.25 per kg. based on average prices
seen for juice quality apples in the market. This rate forms the
basis of the input price of apples delivered to HPMC's plants and
accounted for in their Annual Reports which have been audited by the
Auditor General, Government of India (id. at p. 17).

Thus, it is clear that regardless of whether 2.25 Rs/kg is called a
"disposal" or "distress" value, it is a market-derived price actually
paid by HPMC for juice apples during the POI. According to data
submitted by the petitioners, HPMC is the largest AJC producer in
India, accounting for over 60 percent of the country's total
estimated AJC production. The price actually paid by an AJC producer
like HPMC is significant for our determination of the appropriate
surrogate value. Furthermore, the record of this investigation
contains no evidence of any other price actually being paid for juice
apples by Indian AJC producers.

We do not share the respondents' belief that the petitioners are
arguing that Indian AJC producers located in the country's major
apple-growing states of Jammu & Kashmir and Himachal Pradesh buy
juice apples at Azadpur. Instead, we believe that the petitioners
have tried to approximate the price at which grade C apples would be
sold in the growing areas by subtracting freight and other costs from
the price paid at Azadpur. Nevertheless, we do not believe that it is
appropriate to calculate the surrogate value based on grade C apples
traded at Azadpur because there is no evidence that these apples are
juice apples. On the contrary, the way these apples are packed
supports the respondents' conclusion that these are not juice apples
used in the production of AJC. Information on the record indicates
that juice apples are literally "the bottom of the barrel," i.e.,
blemished and damaged fruit which is packed in sacks, carts, or, in
some cases, loaded directly onto trucks without any packaging.
Indeed, the Indian market research report submitted with the petition
states that "apples meant for processing are normally packed in gunny
bags (jute bags) and transported by lorry from the collection
centres/grading centres to HPMC factory." See June 7, 1999 petition
at Exhibit 12K. On this basis, we determine that the grade C apples
traded at Azadpur should not be used as the basis for the surrogate
value.

Concerning the petitioners' suggestion that we use the MIS price of
3.75 Rs/kg as the surrogate value, we do not believe that this is an
appropriate surrogate value for the apple input because it is the
augmented price received by the apples growers, not the price we are
concerned with (i.e., the price paid by AJC producers). As noted
above, the only documented price paid by Indian AJC producers is 2.25
Rs/kg.

Regarding the respondents' argument that the Department should use
Turkey as the surrogate country, we find that India satisfies both
statutory criteria for being used as a surrogate country (see Comment
1 above).

Moreover, we do not agree that the MIS program should lead us to
reject India as a surrogate or to reject all Indian apple prices.
First, there is no evidence on the record to support the respondents'
claim that the MIS affects apple prices throughout India. Second,
regarding the respondents' claim that it is against the Department's
practice to use a subsidized price as the surrogate value, we note
that in none of the cases cited by the respondents has a price
support scheme similar to MIS been at issue. In Russian Steel, Poland
and Turkey both met the statutory criteria for being used as
surrogate countries. We rejected Poland as the surrogate country,
however, because the Polish company to be used to calculate certain
surrogate values was government-owned during part of the POI.
Moreover, the Polish company's financial statements did not cover a
full year of operations as a private company and information on the
record indicated that the privatization had not been completed. In
Manganese Metal, the subsidies at issue were provided to the final
product, not to an input product. Nevertheless, in Manganese Metal,
the Department noted that there was no evidence that the prices of
inputs used in the production of comparable merchandise were
subsidized. The issue in Sulfanilic Acid was the appropriate
surrogate value for aniline, an input product in sulfanilic acid. The
Department used the price for India-produced aniline, which was
artificially inflated due to protective tariffs on imports, and the
price for aniline imported into India. Such imports were relieved of
import duties if the final product was exported in accordance with a
program that the Department previously had found countervailable. The
Department found, however, that while this may have been a subsidy to
sulfanilic acid, it was not a subsidy to the imported aniline.

As noted in both Sulfanilic Acid and the preliminary determination
of this investigation, the Department is primarily concerned with
subsidies that enable producers to lower their prices to a point
where the prices no longer reflect a fair market value. This is not
the case with the MIS program, which may provide a subsidy to Indian
producers of apples but which, if anything, raises the prices of
juice apples to Indian AJC producers as a result of the floor price
established by the program. Second, as the petitioners have pointed
out, the MIS program applies only to a small portion of India's total
apple crop. Third, the 2.25 Rs/kg price that the Department is using
is not the MIS price the growers receive, but a market-derived price
actually paid an Indian producer of AJC. Despite a certain level of
government involvement in the Indian economy, it is the Department's
longstanding practice to treat most Indian prices and costs as market-
determined under the antidumping law.

Comment 3: Valuation of ocean freight

The respondents argue that the Department should use the market-
economy ocean freight they reported. According to the respondents,
the Department verified that those freight transactions reported as
market economy transactions were paid for in a market-economy
currency and involved shipment using market-economy ocean carriers.
The respondents contend that the involvement of a Chinese freight
forwarder does not prevent the Department from using these reported
ocean freight costs. Citing section 351.408(c)(1) of the Department's
regulations, the respondents allege that the Department's established
policy is to use a respondent's actual cost if the 1) factor is
purchased from a market-economy supplier and (2) paid for in a market-
economy currency.

Referencing the Federal Maritime Commission's definition of a
freight forwarder, the respondents claim that the involvement of a
PRC freight forwarder is of no consequence because the freight
forwarder does not sell the service, but is merely involved in
coordinating and facilitating the transaction. According to the
respondents, when the Department has rejected a respondent's ocean
freight costs it has been under circumstances different than the
circumstances in this case. See, e.g., Manganese Metal From the
People's Republic of China; Final

Results of Second Antidumping Administrative Review, 64 FR 49447
(September 13, 1999) ("1999 Manganese Metal") (evidence on the record
did not support the respondent's claim that the ocean freight was
supplied by a market-economy carrier). The respondents contend that
here, in contrast, the verifications demonstrated that the ocean
freight services for which they reported market-economy prices were
both paid in a market economy currency and provided by a market-
economy carrier.

The respondents further argue that the Department's position with
respect to the role of the freight forwarder in 1999 Manganese Metal
demonstrates that the presence of a PRC intermediary does not
invalidate a market-economy freight transaction. According to the
respondents, if the mere presence of a PRC intermediary rendered a
transaction a non-market economy transaction, the Department would
not have addressed the issue of whether the shipping agent had acted
as an agent or a reseller. The respondents conclude from 1999
Manganese Metal that the Department can only disregard a market-
economy ocean freight transaction if the PRC agent is acting as a
reseller rather than an agent. In this case, the respondents claim
that the PRC freight forwarders do not engage in reselling ocean
freight.

The respondents also cite Heavy Forged Hand Tools, Finished or
Unfinished, With or Without

Handles, From the People's Republic of China; Final Results of
Antidumping Duty Administrative Reviews, 63 FR 16758 (April 6, 1998)
("Hand Tools"), in support of their claim that a market-economy
freight transaction may include a PRC intermediary. In Hand Tools,
the Department stated that the actual ocean freight expenses may be
used "only when the service is provided by a market economy vendor
and paid for in a market economy currency." The respondents again
conclude that because the Department gave no indication that the
presence of a PRC intermediary affected its analysis, a market-
economy freight transaction may include a PRC agent. Finally, the
respondents cite Brake Rotors From the People's Republic of China:
Preliminary Results of Third New Shipper Review and Preliminary
Results and Partial

Rescission of Second Antidumping Duty Administrative Review, 64 FR
73007 (December 29, 1999) and Notice of Final Determination of Sales
at Less Than Fair Value: Ferrovanadium and Nitrided Vanadium From the
Russian Federation, 60 FR 27957 (May 26, 1995), where the Department
rejected the use of actual ocean freight costs on the basis that the
ocean freight carrier was not a market economy carrier, despite the
use of market economy currency and market economy status of the
freight forwarder.

The respondents argue that the Department should accept their
reported market-economy ocean freight expenses. However, should the
Department reject these expenses and resort to surrogate value
information, the respondents contend that the Department should use
the ocean freight rates provided in their February 25, 2000,
submission. The respondents argue that the Federal Maritime
Commission data provided in their February 25, 2000, submission is
contemporaneous with the POI and is product specific and route
specific U.S. government-collected data for a collective of shippers
carrying NFAJC from the PRC port most often used by the respondents
to the United States. In contrast, the respondents contend that the
data used in the preliminary determination was July 1996 data
reported by a single shipper for shipments of all products from
multiple destinations in the PRC to various destinations in the
United States. The respondents argue that it would be inappropriate
for the Department to continue to use the surrogate values used in
the preliminary determination.

Department's Position:

We disagree with the respondents that the ocean freight expenses
they were charged by a PRC freight forwarder constitute market
economy transactions. While we agree that it is Department practice
to accept a respondent's actual cost where the factor is purchased
from a market economy supplier and paid for in a market economy
currency, in this instance, we lack the evidence necessary to
demonstrate that these are market economy transactions between the
respondents and the market economy shipping line used by the freight
forwarders. The respondents have provided only invoices between two
PRC entities (i.e., the PRC freight forwarder's invoice to the
respondent) and there is no evidence linking the amount the
respondent claims to have paid for these services to the amount
charged by the market economy supplier. While we do not dispute the
respondents' claims that the ocean freight was both paid for in a
market economy currency and provided by a market economy shipping
company, in the absence of documentation on the record of the amount
actually charged by the market economy shipper (i.e., an invoice
between the market economy supplier and either the PRC freight
forwarder or the respondents), the record contains only the values
associated with transactions between two PRC entities.

Furthermore, we object to the respondents' apparent conclusion that
the absence of a blanket statement rejecting all market-economy
prices charged to PRC intermediaries constitutes our acceptance of
all such prices. Instead such decisions must be made on the basis of
the facts on the record in each case. The Department has stated its
rejection of market economy claims in past cases for other reasons in
the cases cited by the respondents. They do not, therefore, know that
the Department would have accepted these market economy claims
despite the involvement of a PRC freight forwarder, had they not
already been rejected on different grounds. Once it has stated its
reason for a decision, the Department does not typically speculate as
to what it might have done had the circumstances been different.

While we are rejecting the respondents' reported ocean freight
expenses (i.e., the amount billed by the PRC freight forwarder), we
agree that the Federal Maritime Commission ("FMC") data the
respondents provided in their February 25, 2000 submission is a more
appropriate surrogate than the July 1996 data used in the preliminary
determination. The FMC data is contemporaneous with the POI and is
product-specific and route-specific data for a collective of shippers
transporting NFAJC to the United States. Therefore, we have used the
FMC data in our final determination.

Comment 4: Valuation of steam coal

The respondents argue that the Department should value steam coal by
using the average price of Indian-produced "Steam Coal for Industry"
for 1996, as reported in the International Energy Agency's (IEA)
publication Energy, Prices and Taxes (EP&T), rather than the weighted-
average unit import value of steam coal derived from the Monthly
Statistics of the Foreign Trade of India (Monthly Statistics) for the
period from April 1997 through March 1998. (The Monthly Statistics
were used to value steam coal in the preliminary determination.) The
respondents contend that it is inappropriate to value an input using
import prices when publicly-available information concerning domestic
prices is on the record. Moreover, the respondents contend that the
Department has a clear preference for using domestic, rather than
import, prices. In support of this argument, the respondents point to
the Department's use of the EP&T value for steam coal in the Final
Determination of Sales at Less than Fair Value: Creatine Monohydrate
from the People's Republic of China, 64 FR 71104 (December 20, 1999)
("Creatine"). The respondents therefore conclude that the
petitioners' concerns about the contemporaneity of the data should be
rejected. According to the respondents, the domestic EP&T prices can
be adjusted for inflation to the POI using the Wholesale Price Index
(WPI) for India.


The petitioners contend that the Department should continue to value
steam coal on the basis of Monthly Statistics, as it did in the
preliminary determination. The petitioners argue that the Monthly
Statistics data is more current and, therefore, more reflective of
the current market value for steam coal than the EP&T value proposed
by the respondents. The petitioners further argue that there is no
requirement that the Department use domestic price data rather than
import price data, as the respondents suggest, where import data
covers the specific product in question, as it does in this instance.
Citing Mining India, the petitioners claim that recent dynamics in
the Indian coal industry prevent the Department from simply inflating
the EP&T value, as the respondents suggest. Finally, the petitioners
argue that the quality of Chinese steam coal is higher than the
quality of Indian steam coal reflected in the EP&T data and,
therefore, the imported higher quality coal would be more comparable
to the coal used the by PRC respondents.

Department's Position:

We have continued to use the Monthly Statistics data to value steam
coal. In examining potential surrogate values, we select, where
possible and appropriate, publicly available values which are: (1)
average non-export values; (2) representative of a range of prices
either within the POI or most contemporaneous with the POI; (3)
product-specific; and (4) tax and duty-exclusive.

The respondents' reference to the Creatine case is misplaced.
Whether to use domestic prices or import prices to value steam coal
was not an issue in Creatine, and the valuation of steam coal using
the EP&T data was a reflection of the information that was on the
record at that time of that investigation. In this case, we find that
because the 1997/98 Monthly Statistics information is more
contemporaneous with the POI, it is a more appropriate surrogate than
the 1996 EP&T data. There is no evidence on the record to suggest
that the Monthly Statistics data is aberrational or unreliable.
Furthermore, the courts have stated that the Department is not
required to use domestic prices solely because they are available,
but instead it should use the "best available information." See,
e.g., Nation Ford Chemical Co. v. United States, 166 F.3d 1373, 1377
(Fed. Cir. 1999).

Comment 5: Valuation of rail freight

The respondents contend that the Department should use the rail
freight rates from the Northern Railway in India, as submitted in
their February 25, 2000 supplemental surrogate value submission.
While the respondents acknowledge that these rail freight rates post-
date the POI, they state that these rates are more contemporaneous
than the 1995 rates used by the Department in the preliminary
determination and should be used in the final determination.

Department's Position:

We have used the Northern Railway rates for the final determination
because they are more contemporaneous with the POI than other
available data.

Comment 6: Valuation of aseptic bags

The petitioners allege that the Department's use of the Indian
Monthly Statistics HTS category for "sacks and bags of polyethylene,"
as a surrogate value for aseptic bags in the preliminary
determination understates the actual value of the aseptic bags used
by the PRC producers. According to the petitioners, the plastic bags
covered by this HTS category are ordinary plastic bags, not the
highly specialized aseptic bags used to line drums containing apple
juice. Citing section 351.408(c)(1) of the Department's regulations,
the petitioners claim that where a respondent purchased aseptic bags
from a market economy supplier and paid in a market economy currency,
the Department should use the actual prices paid by these companies.
Where a respondent did not purchase aseptic bags from a market
economy supplier, the petitioners argue that the Department should
use an average of the prices respondents paid for the purchase of
aseptic bags from market economy countries. The petitioners contend
that the respondents have advocated using this approach to valuing
factors earlier in the case.

The respondents acknowledge that they have advocated using an
average of other respondents' market economy input costs for a
respondent who might be missing certain factor values. However, the
respondents contend that, if the Department agrees with the
petitioners' request to use a "blended" value based on respondents'
market economy purchases of aseptic bags, the Department should apply
this same methodology to all factors for which there were market
economy purchases.

Department's Position:

For each respondent that purchased aseptic bags from a market
economy supplier in a market economy currency, we have used that
respondent's actual cost for these bags. See Lasko Metal Products,
Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994). For the
remaining respondents, we have used a simple average of those prices,
for the reasons given below.

Both an examination at verification of the aseptic bags themselves
and the market economy invoices provided by the respondents
reflecting purchases of these bags from market economy suppliers
confirm that these are not ordinary polyethylene plastic bags or drum
liners. Therefore, we conclude that the surrogate value for aseptic
bags based on the Indian import statistics does not accurately
reflect the costs of aseptic bags. Accordingly, absent reliable
surrogate values and consistent with our practice, for those
producers which did not purchase aseptic bags from a market economy
supplier, we have applied an average of the prices other respondents
paid to purchase aseptic bags from a market economy supplier. See,
e.g., Notice of Final Determination of Sales at Less Than Fair Value:
Bicycles from the People's Republic of China, 61 FR 19026, 19030
(April 30, 1996) ("Bicycles") .

We disagree with the respondents' argument that we should apply this
"blending" methodology to all factors for which there were market
economy inputs. To do as the respondents suggest would be a
significant departure from the Department's NME methodology. See
Bicycles, where the Department states that where ".... data was not
available in a surrogate country, we used the average actual market-
economy prices from market-economy suppliers to the PRC. However, we
used this data strictly as a second alternative to .... data from
India or Indonesia" (i.e., the selected surrogate countries). As is
our practice, we valued PRC-sourced inputs using publicly available
information from India, our preferred surrogate country, where such
information was available. Only with respect to aseptic bags, for
which we did not have reliable surrogate information, did we rely on
the average of the prices other respondents paid to purchase the
input from a market economy supplier.

Comment 7: Valuation of apple essence

The petitioners argue that the Department should continue to use the
price quote for sales of apple essence in the United States used in
the preliminary determination for the final determination. The
petitioners contend that the apple essence value based on Indian
import statistics that the Department placed on the record on March
3, 2000, is aberrational because it differs so enormously from the
U.S. price quote. The petitioners state that while apple essence, if
imported, could be classified under the HTS category reported by the
Department, that conclusion is not supported by the unit values
calculated from the import data.

Department's Position:

We agree with the petitioners that the value for apple essence
placed on the record by the Department on March 3, 2000, should not
be used in the final determination. As stated in the Preamble to the
Antidumping Duty Regulations (Preamble) at 62 FR 27366 (May 19,
1997), "aberrational" surrogate values should be disregarded. See,
e.g., Notice of Final Determination of Sales at Less Than Fair Value:
Certain Cased Pencils From the People's Republic of China, 59 FR
55625, 55630 (November 8, 1994). Although apple essence would be
included in the reported HTS category of "odiferous substances," the
unit value of imports for that category differs so greatly from the
U.S. price quote, that we have concluded that the unit value is
aberrational or is calculated based on other imports under this
relatively broad category. Accordingly, because we lack reliable
surrogate value information from India and consistent with our
practice, we are continuing to use the more specific price quote for
apple essence in the United States to value apple essence.

Comment 8: Valuation of SG&A, factory overhead, and profit

The respondents argue that rather than using the Reserve Bank of
India (RBI) data, as we did in the preliminary determination, the
Department should use the 1998-99 financial statements of HPMC to
value factory overhead, selling, general and administrative (SG&A)
expenses, and profit. The respondents contend that the RBI data is
based on the experience of an assorted group of manufacturing
industries during 1992-93, many years prior to the POI. The
respondents claim that, unlike the RBI data, the financial statements
of HPMC (which were made public subsequent to the preliminary
determination), provide data that is contemporaneous with the POI and
is based on the financial information of a producer of the specific
product under investigation. The respondents argue that it is the
Department's preference to use data from actual producers of subject
merchandise in the surrogate country rather than the more general RBI
data. See e.g., Final Determination of Sales at Less than Fair Value,
Certain Cut-to-Length Carbon Steel Plate from the People's Republic
of China, 61 FR 61964, 61969-70 (November 20, 1997) and 19 CFR
351.408(c)(4) (The Department will normally use "information gathered
from producers of identical or comparable merchandise in the
surrogate country").

Concerning the calculation of profit, HPMC's financial statements
show a negative profit rate for 1998-99. The respondents claim that
the Department normally treats a negative profit as zero in the
calculation of normal value. See, e.g., Freshwater Crawfish Tailmeat
from the People's Republic of China: Notice of Final Results of New
Shipper Review, 64 FR 27961, 27956 (May 24, 1999) ("Crawfish New
Shipper Review"). The respondents contend that if the Department is
precluded from using zero as a profit where there is only one
surrogate producer's financial statement on the record, the
Department should calculate profit by averaging the zero profit of
HPMC with the profit rate used in the preliminary determination
(i.e., the RBI profit rate).

The petitioners retort that the Department frequently uses RBI data
to calculate amounts for overhead, SG&A and profit, especially when
other data would be distortive. See, e.g., Sebacic Acid From the
People's Republic of China: Final Results of Antidumping Duty
Administrative Review, 64 FR 69503, 69505 (December 13, 1999)
("Sebacic Acid") and 1999 Manganese Metal, 64 FR at 49457. The
petitioners argue that HMPC's financial statements are not
representative of juice manufacturers because HPMC is primarily a
service company and not a manufacturer. According to the petitioners,
only 19 percent of HPMC's revenue is attributed to sales of processed
fruits. In contrast, state the petitioners, the RBI data used in the
preliminary determination consists of data specific to companies that
engage in processing and manufacturing.

Concerning the respondents' suggestion that the Department use a
zero profit rate, the petitioners claim that the statute indicates
that a positive amount for profit must be included in the calculation
of constructed value (see, Silicomanganese From Brazil; Final Results
of Antidumping Duty Administrative Review, 62 FR 37869, 37877 (July
15, 1997) ("Silicomanganese From Brazil"). The petitioners further
contend that the respondents' reliance on Crawfish New Shipper Review
in support of its claim that the Department may use a single zero
rate for the surrogate profit percentage is misleading. According to
the petitioners, in Crawfish New Shipper Review the Department
calculated the profit ratio based on a simple average of several
Indian companies and where one of the companies showed a loss, the
Department averaged its profits in as zero. However, the petitioners
point out that the average surrogate profit amount calculated was a
positive amount. Additionally, the petitioners contend that averaging
the RBI rate with HPMC's rate, an option proposed by the respondents,
would be inappropriate because the RBI rate already represents an
average profit rate for Indian manufacturers, including HPMC.


Department's Position:

While we agree with the respondents that the Department has used
data from actual producers of subject merchandise in the surrogate
country, we have done so only when such information is not
distortive. However, we find several flaws that preclude us from
using HPMC's financial statements to calculate such ratios for the
final determination. Most notably, we are concerned that AJC
production consists of a relatively small portion of HMPC's total
revenues, and that the total revenues of HPMC are primarily derived
from service-oriented rather than manufacturing operations. In
contrast, the RBI data used at the preliminary determination is
derived from manufacturing industries, including those involved in
the production of food products.

Accordingly, we find that the RBI data is the best information
available on the record to value SG&A, overhead, and profit. The use
of RBI data is also consistent with our practice in past cases. See
Sebacic Acid, 64 FR at 68505, and 1999 Manganese Metal, 64 FR 49457.

Comment 9: Alleged wrongful initiation of investigation

The respondents argue that the Department, for several reasons,
lacked a sufficient basis on which to initiate and, therefore, the
initiation should be rescinded and the investigation terminated.

First, the respondents allege that the Department inappropriately
relied on proprietary information from a market study included in the
petition to value apple prices. The respondents contend that section
351.408(c)(1) of the Department's regulations require it to use
"publicly available information" to value factors, claiming that the
Department acknowledged this in its Preliminary Determination, 64 FR
at 65679. Furthermore, respondents state that Department's policy is
to require "evidence supporting each element of the calculation in
the petition." See Bicycles. In light of these two requirements, the
respondents claim that the petition failed to provide adequate
evidence since nearly all of the Normal Value information in the
petition was proprietary. Moreover, the respondents note that, both
preceding and subsequent to the initiation, they were unable to share
the petition's proprietary information with their market researchers,
thereby limiting their ability to rebut such information.

Second, the respondents argue that their ability to comment on the
standing of the petitioners to represent the domestic industry was
severely prejudiced given that the petitioners waited until one day
prior to initiation to file certain relevant information. According
to the respondents, this late submission, along with the Department's
refusal to extend the comment period, effectively precluded them from
consulting with knowledgeable outside parties concerning potential
challenges.

Third, the respondents allege that the petitioners' U.S. price
calculation was critically flawed because it was based on a sale from
an unaffiliated U.S. distributor of Chinese NFAJC to a U.S. buyer,
rather than on the price of a Chinese seller or affiliated U.S. party
to an unaffiliated U.S. purchaser, as required by sections 772(a) and
772(b) of the Act.


In response to the first point, the petitioners counter that the use
of public information, particularly at the initiation stage, is a
preference not a requirement. In support of this argument,
petitioners cite section 351.408(c)(1) of the Department's
regulations stating the Department will, "normally use publicly
available information to value factors...." (emphasis added) The
petitioners did not respond to the second point. With regard the
third point, the petitioners state that the respondents misunderstood
the U.S. price methodology employed in the petition. According to the
petitioners, while they began with a price for Chinese NFAJC from a
U.S. distributor to a U.S. customer, they worked back to the price at
which the distributor purchased the NFAJC from a Chinese seller. The
petitioners claim that, given the close working relationship between
Chinese trading companies and their U.S. distributors, this was the
only available method to obtain the export price.

Department's Position:

Section 732(b)(1) of the Act requires the Department to examine the
accuracy and adequacy of the information provided in the petition to
determine whether it alleges the elements necessary for the
imposition of duty. In conducting this analysis, this section
requires that the petition allegations be based on information
reasonably available to the petitioner. See also, 19 CFR 351.203
(implementing section 732(c) of the Act with respect to determining
the sufficiency of the petition). Consistent with its practice, the
Department conducted such an examination in this case, and after
making certain adjustments to the data provided in the petition,
determined that there was a sufficient basis on which to initiate an
investigation. See Initiation of Antidumping Duty Investigation:
Certain Non-Frozen Apple Juice Concentrate from the People's Republic
of China, 64 FR 36330 (July 6, 1999) ("Initiation Notice").
Furthermore, after the initiation of an investigation, the Department
typically does not revisit such decisions.

Notwithstanding the above, we agree with the respondents that the
Department normally relies on publicly available information to value
factors of production. However, as the petitioners point out, this is
a preference rather than a requirement. Furthermore, because
petitions need only be based on "information reasonably available to
the petitioner," the Department sometimes initiates based on
proprietary data from research reports before actual data can be
solicited from the respondents. As our own research for factor value
information has shown, there is relatively little public information
on juice apple prices in India. In the instant case, given the dearth
of publicly available information regarding juice apple prices,
deviating from the Department's normal practice was warranted.

Additionally, as it is required to do, the Department examined the
data provided supporting the claim that the petitioners had adequate
support from the domestic industry to met the standing requirements
for a successful petition. Based on this analysis, the Department
found that the petitioners had sufficient support from the domestic
industry. See June 28, 1999 Initiation Checklist at 4-6. In addition,
section 732(c)(4)(E) of the Act states that after initiation the
Department does not revisit decisions regarding industry support.

Lastly, we agree with the petitioners that the U.S. price used in
the margin calculation at initiation was not a price between two U.S.
companies, but rather a derived export price from a Chinese seller to
an unaffiliated U.S. purchaser. The petitioners constructed an export
price by subtracting the U.S. distributor's markup, ocean freight,
and insurance from the initial U.S. distributor's price to arrive at
the export price, as stated in the Initiation Notice, 64 FR at 36331.
The Department has accepted such derivations of export price based on
U.S. retail prices in previous cases. See, e.g., Bicycles 61 FR at
19034 and Notice of Initiation of Antidumping Duty Investigation:
Ferrovanadium and Nitrided Vanadium From the Russian Federation, 59
FR 32952 (June 27, 1994). Furthermore, the Department also
recalculated export price for the petition based on average import
prices, rather than the price quote, and calculated the margin rate
used for initiation. See June 28, 1999 Initiation Checklist at 8.

Comment 10: Critical circumstances

The respondents contend that the Department erred in not revising
its preliminary critical circumstances determination when it
implemented this determination in its preliminary determination of
sales at less than fair value ("LTFV"). The respondents contend that
the expedited preliminary finding of critical circumstances based, in
part, on the dumping margin calculated at initiation, should have
been revised to reflect the company-specific dumping margins
calculated for the LTFV preliminary determination. The respondents
argue that this failure to revise the preliminary critical
circumstances determinations violates the mandate of the Federal
Circuit: "{i}t is the duty of ITA to determine dumping margins 'as
accurately as possible'" NTN Bearing Corp. v. United States, 74 F.3d
1204, 1208 (Fed.Cir. 1995).

The respondents further argue that the Department improperly
deviated from its practice of assuming negative critical
circumstances for those companies which are not selected as full
respondents ("non-selected respondents"). In Notice of Final
Determination of Sales at Less Than Fair Value: Certain Preserved
Mushrooms from the People's Republic of China, 63 FR 72255, 72263
(December 31, 1998), the Department made a negative critical
circumstances finding for such companies because the Department did
not ask for critical circumstances data from these firms. In the
instant case, the Department instead considered whether there were
massive imports for the non-selected respondents by subtracting the
company-specific shipment data of the selected respondents from total
shipment data. The respondents contend that this methodology
inappropriately blends the shipment data of non-selected respondents
with shipments of entities subject to the PRC-wide rate. The
respondents argue that this approach involves an inappropriate
adverse inference which is not in accordance with law. See Olympic
Adhesives, Inc. v. United States, 899 F.2d 1565, 1572-75 (Fed. Cir.
1990), and Queen's Flowers de Colombia v. United States, 947 F. Supp.
503, 507 (CIT 1996).

Finally, the respondents contend that the Department's decision to
adjust the base and comparison periods based on a self-serving
announcement in October 1998 by parties associated with the
petitioners is arbitrary and can lead to unfair results in seasonal
industries such as the NFAJC industry. The respondents argue that the
petitioners' announcement had the effect of unfairly locking-in a
base period covering the low shipment volume summer months.
Accordingly, the respondents contend that the Department should
conduct its critical circumstances analysis using base and comparison
periods before and after the filing of the petition.

Department's Position:

We disagree with the respondents that the Department is required to
revise a preliminary finding of critical circumstances based on the
dumping margins calculated in a subsequent LTFV preliminary
determination. In accordance with section 733(e) of the Act, at the
time of our preliminary critical circumstances determination, we used
the best information on the record to determine whether importers
knew or should have known that dumping and injury existed, i.e., the
rate calculated by the Department for purposes of initiation.
Whenever the Department makes a decision, it must weigh all the
evidence before it at the time of that decision. Had Congress
intended that the Department wait for all the information it intended
to consider when making its preliminary LTFV determination, it would
not have provided for preliminary critical circumstances
determinations prior to preliminary LTFV determinations. Moreover,
the petition data the Department used in making its preliminary
critical circumstances determination were not simply allegations, but
data examined and clarified prior to initiation. The fact that more
detailed and precise information became available subsequent to
initiation does not change the evidentiary value of the petition data
examined by the Department for purposes of initiation.

Nevertheless, as is our standard practice for final determinations
and, in conformance with section 735(a)(3) of the Act, we have
reconsidered whether the margins calculated for each selected,
voluntary, and non-selected respondent meet the Department's standard
for imputing knowledge of dumping (i.e., 15 percent for CEP sales and
25 percent for export price sales). See, e.g., Notice of Final
Determination of Sales at Less Than Fair Value: Ferrosilicon From
Brazil, 59 FR 732 (January 6, 1994). Furthermore, in light of
revisions to shipment data at verification, we have analyzed the
revised data for those companies to which we have imputed knowledge
of dumping in order to determine whether their shipments were
massive. Based on this analysis, we have determined that critical
circumstances exist for Lakeside and Nannan. Furthermore, for SAAME
and other entities subject to the PRC-wide antidumping margin, we
find that critical circumstances exist based on adverse facts
available. See "Use of Facts Available" and "Critical Circumstances"
sections of the Federal Register notice. We find that critical
circumstances do not exist for North Andre, Haisheng, Zhonglu,
Oriental, and the four non-selected respondents. See April 6, 2000
Memorandum to File on Critical Circumstances.

We disagree with the respondents that it is inappropriate to use the
shipment data on the record to determine whether massive imports
exist for non-selected respondents. In the Notice of Final
Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products From Japan, 64 FR 24329, 24388
(May 6, 1999), the Department used this methodology, replacing its
previous methodology of deciding whether critical circumstances
existed for non-selected respondents based on whether critical
circumstances existed for a majority of the selected respondents. See
Notice of Final Determination of Sales at Less than Fair Value:
Certain Steel Concrete Reinforcing Bars from Turkey, 62 FR 9737, 9741
(March 4, 1997). In fact, contrary to the assertion of the
respondents, these non-selected respondents, which have been granted
separate rates, are in a position analogous to that of firms subject
to the all others rate in a market economy investigation, i.e., they
were not selected for a full investigation by the Department.
Furthermore, the fact that we have deemed the PRC-wide entity to be
non-cooperative does not impugn the validity of the aggregate
shipment data we have received from Customs. While we do not have
company-specific data for each non-selected respondent, we made a
critical circumstances determination based on information on the
record. This involved a neutral, not an adverse, assumption since it
is based on actual group data for the group of companies for which
company-specific data is not available. Be this as it may, the
question of whether shipments should be considered massive for the
non-selected respondents is moot, because the we have determined that
the final margins are insufficient for the Department to impute
knowledge of dumping. See April 6, 2000 Memorandum to File on
Critical Circumstances.

Finally, we disagree with the respondents that it was improper to
compare base and comparison periods based on the date on which
exporters had knowledge of an impending case. While we agree that
shifting the comparison in a seasonal industry could, in certain
cases, lead to anomalous results, the Department specifically
analyzed the import data over a significant period of time in an
attempt to determine whether seasonal patterns existed. Based on this
analysis, we determined that there was no consistent seasonal pattern
other than the fact that July and August are low shipment months.
Based on this finding, we excluded these months from our massive
imports analysis. See November 3, 1999, Critical Circumstances
Memorandum to Richard Moreland at Attachment 2 on file in B-099.
Because there is no new information on the record indicating that the
base and comparison periods used in making our preliminary critical
circumstances determination are inappropriate, our analysis from that
determination stands.

Comment 11: Expansion of scope

The respondents allege that the Department's preliminary decision to
revise the scope to include fortified NFAJC, which was specifically
excluded from the scope in the petition, was improper and contrary to
established policy. The respondents contend that the Department has
consistently rejected requests to expand the scope to cover products
specifically excluded. See, e.g., Final Determination of Sales at
Less Than Fair Value; Certain Internal-Combustion, Industrial
Forklift Trucks from Japan, 53 FR 12552 (April 15, 1988) ("Forklifts
from Japan"); Final Determination of Sales at Less Than Fair Value;
Personal Word Processors from Japan; 56 FR 31101 (July 9, 1991); and
Final Determination of Sales at Less Than Fair Value; Certain Cold-
Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062 (July
9, 1993). Furthermore, the respondents state that the facts in this
case do not merit departure from this policy. The respondents claim
that the two letters that the petitioners submitted in support of
their claim that circumvention may occur unless the scope is expanded
do not amount to sufficient evidence of possible circumvention,
contrary to the Department's statements in its preliminary
determination.

The respondents claim that in Forklifts from Japan, 53 FR at 12556-
57, the Department rejected an attempt to expand the scope by the
petitioners because they had not presented any evidence that the
products in question were "being separately imported in order to
avoid the imposition of antidumping duties." The respondents argue
that not only have the petitioners failed to present credible
evidence of current circumvention, but the petitioners have even
boldly admitted that there have been no imports of fortified NFAJC
from the PRC in the recent past and that the product is not even
produced by the domestic industry. Furthermore, the respondents
allege that the Department erroneously relied on NTN Bearing Corp. of
America v. United States, 747 F. Supp. 726 (CIT 1990) (NTN Bearing
Corp.) and Mitsubishi Elec. Corp. v. United States, 700 F. Supp. 538
(CIT 1988) in its preliminary determination. In both of those cases,
the respondents claim that the product in question was specifically
included in the scope of the petition and the investigation.

The petitioners state that the Department found in its preliminary
determination that the evidence they provided supporting the
requested amendment to the scope was sufficient, and that the
respondents are merely attempting to "second-guess" the Department.

Department's Position:

One purpose of the Department's investigation process is to
determine the appropriate scope of any subsequent antidumping duty
order. In doing so, the Department considers factors such as whether
the covered products are the same class or kind and whether the scope
includes all the products for which the domestic industry is seeking
relief and for which the ITC is determining injury or threat of
injury. Neither party has suggested nor is there any information on
the record indicating that fortified NFAJC is a separate class or
kind of product. Furthermore, the petitioners have stated that there
is no production of fortified NFAJC in the United States, which the
respondents have not disputed. Therefore, the Department's decision
to allow an amendment to the scope will have no impact on the ITC's
injury determination.

Lastly, we disagree with the respondents that the Department does
not have the authority to allow changes to the scope after
initiation. The courts have held that the Department possesses the
discretion to define the scope of an order in a manner that differs
from the petition. Mitsubishi Electric Corp. v. United States, 898
F.2d 1577, 1582-83 (Fed. Cir. 1990) ("{t}he responsibility to
determine the proper scope of the investigation and of the
antidumping order ... is that of the Administration, not of the
complainant before the agency"); see also NTN Bearing Corp. 74
F.Supp. at 731 (if the petition is in any way defective, the
Department possesses "inherent authority to redefine and clarify the
parameters of its investigation," and may do so to "decrease the
incentive foreign producers might have to 'finesse' their way around
our trade laws"). The fact that the actions taken by the Department
in those two particular cases was not identical in nature to that in
this case does not detract from the validity of the general legal
principles enunciated in the holding. In fact, the Court in NTN
Bearing Corp. expressly rejected the assertion that the Department
was obligated to accept the scope set forth in the petition. 747 F.
Supp. at 731.

Comment 12: Customs instructions

The respondents request that the Department issue instructions to
Customs to correct the deposit rates of all respondents except
Lakeside retroactively to the date of the initial suspension of
liquidation. The Department has admitted that it made ministerial
errors (albeit "non-significant") within the meaning of 19 CFR
351.224, in its preliminary determination for these companies. The
respondents assert that if the Department fails to issue such
instructions, it is in effect denying these respondents the cap on
liability intended by Article 10.3 of the WTO Agreement on
Implementation of Article VI, as implemented by section 733(d)(1)(B)
of the Act ("Provisional Measures Deposit Cap").

The respondents argue that the effect of not amending the
preliminary determination margins for errors deemed to be non-
significant is that final duties will be collected at the incorrect
rate under automatic liquidation procedures unless an administrative
review is requested. Unless the Department retroactively corrects the
deposit rate, the respondents argue that the Department's regulation
specifying that only "significant" clerical errors be corrected will
be inconsistent with importers' rights to the Provisional Measures
Deposit Cap.

Department's Position:

Section 351.224 of the Department's regulations clearly specifies
that the Department is only required to correct for "significant"
ministerial errors in a preliminary determination. This section
defines "significant" errors as errors that together or alone would
amount to a change of five absolute percentage points or 25 percent
of the calculated margin, whichever is greater. The Department
analyzed the ministerial error allegations of parties and found that
this threshold was met only for Lakeside. Accordingly, the Department
subsequently amended Lakeside's deposit rate. See Amended Preliminary
Determination.

There is no provision in the Act or the Department's regulations
supporting the respondents' suggested retroactive change to the
deposit requirements during the provisional measures period resulting
from non-significant ministerial errors. Furthermore, if the
respondents request a review for the first review period, the entries
in question will be liquidated at the actual dumping rate for those
entries, rather than based on the deposit amounts. We have,
therefore, not adopted the respondents' suggestion.

Comment 13: Zhonglu deposit rate

Zhonglu requests that the Department clarify in the Customs
instructions for the final determination that Zhonglu's rate applies
to subject merchandise produced and exported by all the companies
which make up the Zhonglu group of companies.

Department's Position:

We agree with Zhonglu that Zhonglu's duty deposit rate applies to
subject merchandise produced and exported by the Zhonglu group of
companies (i.e., Shangdong Zhonglu Co. Ltd., Rushan Shangjin-Zhonglu
Foodstuff Co. Ltd., Shandong Luling Fruit Juice Co., and Rushan
Dongjin Foodstuffs), because their responses and their calculated
margin were based on their combined sales data. We will issue our
final determination instructions to Customs with respect to Zhonglu
accordingly.

RECOMMENDATION

Based on our analysis of the comments received, we recommend
adopting all of the above positions and adjusting all related margin
calculations accordingly. If these recommendations are accepted, we
will publish the final determination in the Federal Register.



AGREE ____

DISAGREE ____

______________________

Joseph A. Spetrini
Acting Assistant Secretary
  for Import Administration

______________________
(Date)


___________________________________________________________________
footnotes:


1. Notice of Preliminary Determination of Sales at Less Than Fair
Value: Certain Non-Frozen Apple Juice Concentrate from the People's
Republic of China, 64 FR 65675 (November 23, 1999) ("Preliminary
Determination").

2. Non-Frozen Apple Juice Concentrate From the People's Republic of
China: Notice of Amended Preliminary Determination, Postponement of
Final Determination and Extension of Provisional Measures, 64 FR
72316 (December 27, 1999).