66 FR 46775, September 7, 2001 A-570-001 Administrative Review POR 01/01/99-12/31/99 Public Document IA: PS/HS MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Bernard T. Carreau Deputy Assistant Secretary, Group II Import Administration SUBJECT: Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review of Potassium Permanganate from the People's Republic of China - January 1, 1999 through December 31, 1999 Summary We have analyzed the comments of the interested parties in the 1999 administrative review of the antidumping duty order covering potassium permanganate from the People's Republic of China (PRC). As a result of our analysis of the comments received from interested parties, we recommend making changes in the margin calculations for the respondent, as discussed in the "Margin Calculations" section of this memorandum. We also 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 administrative review for which we received comments from parties: 1. Allegations That the Sale is not Bona Fide and There was Fraud Upon the Department's Proceedings 2. Allegation of Failure to Properly Address the Characteristics of the Sale 3. Allegation of Failure to Take into Account the Importer's Resale Price 4. Allegation of Failure to Properly Weigh Evidence Regarding the Shipper's Policy on LCL Shipments 5. Allegation of Failure to Address Fraud on the Department's Proceedings 6. Allegation of Failure to Properly Weigh Evidence Regarding Knowledge of the Hazardous Nature of the Merchandise 7. Allegation of Failure to Take into Account Evidence Regarding the Parties Responsible for the Merchandise Descriptions on House Bills of Lading (HBLs) 8. Allegation of Failure to Properly Weigh Evidence Regarding the Fraudulent HBL 9. Allegation That the Department Improperly Placed the Burden of Proof on Petitioner 10. Allegation of Failure to Determine Whether the Shipment was Legal 11. Allegation That the Department's Approach in the Preliminary Results Undermines Trade Laws 12. Respondents' Failure to Provide the Required Certification with their Factor Value Submission 13. Use of Third-Party Price Quotes Dated after the Preliminary Results 14. Contemporaneity and Representativeness of Respondents' Price Quotes 15. Surrogate Value for Coal 16. Surrogate Value for Drums Used for Packing 17. Surrogate Value for Electricity 18. Surrogate Value for Manganese Dioxide 19. Surrogate Value for Potassium Hydroxide 20. Surrogate Value for Selling, General and Administrative Expenses (SG&A), Factory Overhead and Profit Ratios 21. Surrogate Value for Water 22. Inputs Used to Treat River Water: Lime, Alum, Salt, Electricity and Labor 23. Surrogate Value for Lime 24. Surrogate Value for Alum 25. Surrogate Value for Salt Background On February 27, 2001, the Department of Commerce (the Department) published in the Federal Register the preliminary results of the administrative review of the antidumping duty order on potassium permanganate from the PRC. See Potassium Permanganate From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review (66 FR 12461) ("Preliminary Results). The period of review (POR) is January 1, 1999 through December 31, 1999. We invited parties to comment on our preliminary results of review. In response to this invitation, the respondents, Guizhou Provincial Chemicals Import & Export Corporation (Guizhou), and its supplier of potassium permanganate, the Zunyi Chemical Factory (Zunyi) (collectively respondents), and petitioner, Carus Chemical Company (Carus), filed case briefs on March 29, 2001 and March 30, 2001, respectively, and rebuttal briefs on April 5, 2001. Margin Calculations Based upon our analysis of the comments received from interested parties, we recommend making the revisions to the calculations used in the preliminary results as discussed below. Discussion of the Issues Comment 1: Allegations That the Sale is not Bona Fide and There was Fraud Upon the Department's Proceedings Petitioner argues that the Department's preliminary determination not to rescind this review is flawed and the review should be rescinded because 1) the sale which is the basis for the review is not a bona fide sale, and 2) the record contains evidence of fraud on the Department's proceedings. Each of these alleged grounds for rescission is discussed in detail below. Petitioner asserts that the one metric ton (MT) sale under review is not bona fide because it was accomplished by way of a fraudulent and illegal shipping scheme. Specifically, petitioner alleges that importers and others in the shipping chain attempted to avoid the commercially unreasonable costs of shipping one MT of the hazardous chemical, potassium permanganate, in the only legitimate manner possible, namely in its own container, by using apparently fraudulent house bills of lading (HBL) to conceal the hazardous nature of the subject merchandise so that it would be consolidated with other cargo to fill an ocean shipping container. In doing so, petitioner contends that the parties circumvented the shipping company's policy against shipping less-than-container-loads (LCLs) (1) of hazardous materials, and violated numerous national and international laws and rules regarding the transportation of hazardous materials. (2) Petitioner cites the following facts on the record to support its position: 1) the transporting vessel's manifest lists the contents of the container which held the potassium permanganate as "tools & toys" with no reference to potassium permanganate or any hazardous chemical; 2) the container shipper, the shipping company, and the U.S. customs broker used to ship the subject sale claimed, when contacted by the petitioner, to not transport LCLs of hazardous materials on the route taken in transporting the subject merchandise; 3) the record contains multiple versions of the HBL associated with the transportation of the subject merchandise - one version, which was obtained by the Department at verification, identifies the merchandise as "potassium permanganate" with no indication that the merchandise was shipped on an LCL basis, while another version, which was furnished to U.S. Customs, identifies the merchandise simply as "chemical" shipped on an LCL basis; (3) 4) numerous Shanghai shippers (the merchandise was shipped to the United States from Shanghai, PRC) or co-loaders (not used to ship the subject sale) contacted by the petitioner indicated that they will not handle a LCL shipment of potassium permanganate on the route taken in transporting the subject merchandise; 5) other PRC shippers contacted by the petitioner will not handle LCL shipments unless the destination freight forwarder will do so; 6) imports of potassium permanganate into the United States are virtually always in amounts of at least a full container; and 7) safety considerations play an important role in the well-established trade practice of shipping potassium permanganate in amounts of at least a container load. (4) Based on the foregoing record, petitioner concludes that fraudulent HBLs were used to deceive the shipper into transporting a LCL of hazardous potassium permanganate despite laws and policies against such shipments, and thus the sale cannot be considered bona fide. Citing the Department's decision in Certain Cut-To-Length Carbon Steel Plate from Romania: Notice of Rescission of Antidumping Duty Administrative Review, 63 FR 47232, 47234 (September 4, 1998) (Steel Plate From Romania), petitioner notes that "where the weight of the evidence indicates that a "transaction has been so artificially structured as to be commercially unreasonable," it is not a bona fide transaction and must be excluded." See Petitioner's March 30, 2001 case brief (petitioner's case brief) at page 11. Petitioner argues that "the use of fraud and deception to avoid established commercial shipping restrictions and hazmat (hazardous materials) laws is powerful evidence that the transaction was 'artificially structured,' 'commercially unreasonable' and hence, not bona fide." See Petitioner's case brief at page 31. Furthermore, petitioner argues that "a transaction which depends on fraud and illegality cannot, by definition, be bona fide." Id. at page 12. Petitioner notes that Black's Law Dictionary defines bona fide as something done "in or with good faith; honestly, openly and sincerely; without deceit or fraud; . . . without simulation or pretense." See Id. at page 12. Thus, petitioner argues that a transaction involving a "smuggling scheme" is inconsistent with a bona fide sale and the instant review must be rescinded. See Id. at page 28. Additionally, petitioner argues that the instant review must be rescinded because the record contains evidence of fraud on the Department's proceedings. Specifically, petitioner alleges that the HBL presented to the Department at verification, which respondents later conceded was not the correct HBL, was apparently presented to the Department in an attempt to cover up the fraudulent and illegal shipping scheme. Petitioner notes that the courts have repeatedly recognized that the Department may disregard U.S. sales in order to prevent fraud upon its proceedings. See, e.g., Chang Tieh Ind. Co. v. United States, 840 F. Supp. 141, 147 (CIT 1993) (Chang Tieh); PQ Corp. v. United States, 652 F. Supp. 724, 729 (CIT 1987). Further, petitioner notes that the Department has disregarded certain U.S. sales when documents presented at verification indicated that information may have been fabricated. See Final Determination of Sales at Less Than Fair Value; Sulfanilic Acid From the Republic of Hungary, 58 FR 8256 (February 12, 1993). Therefore, petitioner maintains that even if the sale is found to be bona fide, the review must be rescinded based on its allegations regarding forged documents and the intentional submission of incorrect information during verification. Furthermore, petitioner contends that respondents failed to provide adequate evidence to refute the allegation of fraud and illegality even though they bore the legal burden to so. See Hoogovens Staal v. United States, 86 F. Supp. 2d 1317, 1326 (CIT 2000). According to petitioner, the evidence provided by respondents consists of 1) an unconvincing statement from the U.S. importer that it does not know why the sale has multiple and conflicting HBLs; 2) unsupported assertions regarding the creation of the multiple HBLs; 3) unsupported assertions regarding "industry practice" governing bills of lading; and 4) claims that the respondents are in compliance with all legal requirements. In addition, petitioner maintains that respondents never explained why materially different HBLs were presented to U.S. Customs and the Department when respondents claimed that a third, different version of the HBL is, in fact, the correct document. Further, petitioner finds respondents' failure to supply factual information refuting the fraud allegation (e.g., statements or affidavits from the container shipper and the shipping company explaining the three different HBLs) particularly troubling given that the record clearly shows that respondents have access to definitive information on this issue. Thus, petitioner concludes that respondents failed to meet their legal burden to provide facts refuting the allegation of fraud and illegality. Respondents assert that the test sale under review is a bona fide transaction. Referring to the definition of bona fide sale in Blacks Law Dictionary, i.e., a "completed sale in which {the} seller makes a sale in good faith", respondents submit that a bona fide sale is a real sale and there is absolutely no evidence in this case that the sale under review is not real. Respondents dismiss petitioner's claim that the sale under review is not bona fide because it involved "commercially unreasonable shipping arrangements" and argue that the Department should not expand the definition of bona fide sale to include characteristics such as commercial reasonableness. Id. at page 5. Respondents maintain that each day foreign exporters make sales that have valid business purposes but may not be sold for profit or in other ways may be atypical of normal business considerations. Further, respondents note that the Court of International Trade (CIT) specifically barred the Department from rejecting an entire U.S. sales response because sales were "unrepresentative" or "commercially unreasonable." Id. at page 4. According to respondents, the CIT has only allowed U.S. sales to be excluded to prevent fraud upon the Department's proceedings. See Chang Tieh. Moreover, respondents claim that if the Department were to exclude from its analysis U.S. sales that are atypical of normal business practices or commercially unreasonable it would be excluding sales not in the ordinary course of business - an approach that is prohibited by the statue and prior court rulings. In addition, respondents contend that there was no fraud on the Department's proceedings. According to respondents, documentation on the record demonstrates that the U.S. importer (the sale terms were FOB, Shanghai) complied with all laws and regulations regarding transportation of the subject merchandise. Specifically, respondents state that the U.S. importer 1) properly reported the shipment of potassium permanganate to the DEA; 2) declared the shipment of potassium permanganate to U.S. Customs and paid the appropriate antidumping duties thereon; 3) properly declared the goods as potassium permanganate in paperwork supplied to its freight forwarder; and 4) instructed the respondents regarding the proper marking, (i.e., Potassium Permanganate, Oxidizer, UN# 1490, hazardous cargo) packing and shipment of the subject merchandise. Moreover, respondents note that the sales invoice, packing list, and certificate of origin all identify the subject merchandise as potassium permanganate. Respondents claim that the numerous documents on the record which indicate that the shipment was of the hazardous chemical potassium permanganate underscores the absurdity of the petitioner's allegation of a fraudulent and illegal shipping scheme. Moreover, respondents point to the inconsistency between petitioner's allegation and the information on the record. Respondents note that if there was such a smuggling scheme, why did the U.S. importer declare the true nature of the subject merchandise to U.S. Customs, pay duties, and make antidumping cash deposits upon importation? Id. at page 13. With respect to the shipper's policy regarding LCLs of hazardous materials, respondents maintain that there likely is flexibility in the rules regarding what will or will not be transported by a shipping line because not all hazardous chemicals need be handled in the same manner. Id. at page 3. Further, respondents concur with the Department's preliminary finding that the evidence petitioner placed on the record regarding the transportation companies' hazardous chemicals policy is deficient because it "does not indicate whether the practice of not handling hazardous chemicals (at all or in LCLs) was in effect at the time of the shipment in question nor does it make clear whether there are exceptions to this policy for certain customers." See Respondents' April 5, 2001 rebuttal brief (respondent's rebuttal brief) at page 3. Additionally, respondents contend that the existence of multiple versions of the HBL is not unusual and does not support a finding of fraud. Although respondents maintain that neither they nor the U.S. importer know why the HBLs on the record differ in their descriptions of the goods shipped, based on an examination of the documents, they surmise that the second HBL, which describes the merchandise as "chemical" was created to amend the first HBL which describes the merchandise as "potassium permanganate". (5) According to respondents, it is likely that the description "chemical", although not the precise chemical name of the goods, more accurately reflects the tariff rate category used by the shipping company for purposes of calculating transportation fees. Respondents claim that it is not uncommon by industry practice to prepare a HBL at the time that the goods are accepted without rating the goods under the applicable shipping tariff. Moreover, respondents note that the second HBL includes freight terms not included on the first HBL. According to respondents, this is another indication that the second HBL was created to amend the first HBL. Nevertheless, respondents point out that neither they nor the U.S. importer were involved in characterizing the subject merchandise on either HBL. Respondents note that a bill of lading is not used to "enter goods in U.S. Customs territory" but is "simply a receipt obtained by the shipper of goods from the carrier for transport to a particular buyer" and that in addition "the HBL is "proof that the recipient is entitled to the goods when received." See respondent's rebuttal brief at page 9. Thus, respondents claim that the U.S. importer acted properly in supplying the Department with the second HBL, which it had provided as evidence of its right to the goods upon delivery. Furthermore, respondents claim that the U.S. importer was not "involved in assigning the cargo to other parties or negotiating the shipping company's or the freight consolidator's commingling of the subject merchandise with other goods." See Id. at page 8. Respondents maintain that the U.S. importer acted properly and within the law. Finally, respondents rebut petitioner's claim of fraud by noting that they and the U.S. importer made all authorities aware of the specific merchandise being shipped. Id. at pages 7 - 8. The Department's Position: We disagree with petitioner. As noted in Silicon Metal from Brazil: Notice of Final Results of Antidumping Duty Administrative Review, 64 FR 6305, 6317 (February 9, 1999) (Silicon Metal), "the Department only disregards U.S. sales in exceptional circumstances where the sale is commercially unreasonable and other facts and circumstances indicate an attempt to manipulate the dumping margin." Petitioner's allegation that the sale is not bona fide primarily rests on its claim that the transaction was artificially structured and commercially unreasonable due to the use of fraud and deception in shipping the subject merchandise from the PRC to the United States. However, evidence on the record shows that respondents were not responsible for shipping the merchandise from the PRC, and does not provide any indication that respondents have attempted to manipulate the dumping margin through the shipping arrangements. The record in the instant review stands in stark contrast to the facts in Steel Plate From Romania, the case relied upon by petitioner. In Steel Plate From Romania, the Department found that respondent's U.S. sale was not bona fide because, among other things, 1) the respondent's U.S. customer incurred extraordinarily high costs to transport the subject merchandise (steel plate) to the United States by air freight (the cost was many times greater than the total value of the sale), 2) respondent's decision to send the shipment by air was based solely on the need to have the subject merchandise enter before the end of the POR, and 3) the same legal counsel guided both respondent and its U.S. customer through the sales process and helped negotiate a sale price solely for the purpose of obtaining a lower antidumping cash deposit rate. In fact, the Department found that there was no evidence that any commercial factors that normally influence price negotiations played any role in setting the price for this sale. Thus, unlike the situation in the instant review, in Steel Plate From Romania the Department found that the respondent was involved in a number of aspects of the sale that indicated it was not a bona fide transaction. In the instant review there is no evidence on the record that shows that commercial factors which normally influence price negotiations did not play a role in setting the sale price. In addition, the case at hand is also distinguishable from the situation in manganese metal from the People's Republic of China. See 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). In Manganese Metal, the Department disregarded certain U.S. sales because it found that the totality of the circumstances surrounding the sales provided substantial evidence that the sales were not bona fide sales for commercial purposes. See Manganese Metal, 60 FR at 56046 (emphasis added). These circumstances include the timing of the sales relative to the filing of the petition, sales prices that were significantly higher than the world market and U.S. price for the commodity under investigation, commercially unusual facts about the parties to the transactions, and factual assertions by parties to the transactions that did not verify. Based on this record, the Department concluded that the entire situation surrounding respondent's U.S. sales lacked credibility. See the Memorandum from David Boyland to the File, Bona Fide Sales - Analysis of Information Regarding Great Wall Industry Import & Export Corporation's (GWIIEC) U.S. sales, dated October 27, 1995. In the instant review respondents made no factual assertions regarding the sale that did not verify, and there is no record evidence regarding the sale price or parties to the transaction that indicate the sale lacks credibility. With respect to petitioner's arguments regarding LCL shipments, we note that there is no evidence suggesting that respondents provided false or inaccurate data, or would have had knowledge of the LCL policy of shipping companies with respect to this transaction since the international shipping was not the responsibility of the respondents. In addition, we disagree with petitioner's argument that differences between the HBL presented to the Department at verification and other copies of the HBL on the record provide clear evidence of fraud on the Department's proceedings. Importantly, the HBL was issued by the container company, bears the stamp of the container company's agent, and was only furnished to the respondents by the U.S. importer, who was responsible for the shipping. Thus, in the absence of clear evidence that respondents altered the container company's HBL, it is not reasonable to conclude that by supplying the Department with a version of the HBL that was not the latest version, as acknowledged by respondents, the respondents committed fraud upon the Department's proceedings. Finally, we note that the record in an administrative review must contain evidence of exceptional circumstances indicating that a U.S. sale is unrepresentative and extremely distortive before the Department will exclude the sale from the review. See FAG U.K. LTD. v. United States, 945 F. Supp. 260, 265 (CIT 1996), wherein the CIT noted that "Commerce can only exclude sales from USP in an administrative review in exceptional circumstances when those sales are unrepresentative and extremely distortive" (emphasis added). The record in the instant administrative review does not contain evidence of any such exceptional circumstances, therefore, we have not disregarded respondents' sale and have not rescinded this review. Comment 2: Allegation of Failure to Properly Address the Characteristics of the Sale Petitioner contends that the Department never properly addressed the unusually small quantity of the sale or the fact that the subject merchandise was shipped to a U.S. port far from its ultimate destination which, according to petitioner, added substantial transportation costs to the total costs borne by the importer. Petitioner contends these facts show that the sale was artificially structured, commercially unreasonable, and thus, not bona fide. See petitioner's case brief at pages 13 - 14. Respondents contend that petitioner raised the question regarding the small quantity of the test sale in order to preclude such sales. According to respondents, "without test sales, it will be difficult, if not impossible, for Chinese exporters ever to contest the antidumping order, giving petitioner protection from competing Chinese imports ad infinitum." See Respondents' rebuttal brief at page 5. The Department's Position: An atypical sales quantity does not necessarily indicate that the sale is not bona fide. As the Department noted in paint brushes from the People's Republic of China, "neither the size of a sale nor the number of sales is sufficient to determine that a sale is not bona fide ... ". See Natural Bristle Paint Brushes and Brush Heads From the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 65 FR 45753 (July 25, 2000) and accompanying Issues and Decision Memorandum at Comment 8. Moreover, both the Department and the CIT have found "test" transactions involving small quantities to be bona fide transactions where other circumstances did not warrant excluding the sale. See, e.g., Silicon Metal, 64 FR at 6317, affirmed in American Silicon Technologies v. United States, 110 F. Supp. 2d 992 (July 17, 2000) (American Silicon). In the absence of other evidence on this record to indicate that the sale was artificially structured to manipulate the dumping margin, the atypical quantity of the test sale does not sufficiently demonstrate that the sale is not bona fide. Furthermore, in this review, there is no evidence that the respondent was involved in shipping the subject merchandise from the PRC port or in the decision to ship the merchandise by any particular route. This situation contrasts with the facts in Steel Plate From Romania, where the respondent's involvement in the unusual decision to ship steel plate by air, which resulted in extraordinarily high freight costs, was a factor that led the Department to find the sale was not bona fide. Such is not the case here. See Steel Plate from Romania, 63 FR 47234. Comment 3: Allegation of Failure to Take Into Account the Importer's Resale Price Petitioner argues that the Department failed to take into account the fact that respondents did not provide the price at which the U.S. importer resold the subject merchandise. Petitioner notes that this is a factor the Department has examined in past cases involving the bona fide sale issue. See Steel Plate From Romania, 63 FR at 47234. The Department's Position: Although, as noted by petitioner, the price at which the U.S. importer resold the subject merchandise has been examined in past cases involving the bona fide sale issue, this information was not requested or examined in this review because there is no indication that the sale price of the transaction under examination (i.e., the price respondents charged their U.S. customer) was not based on commercial terms. Therefore, there is no reason to look at the U.S. importer's resale price. In Steel Plate From Romania, the respondent's clear and direct involvement with the decision to incur the abnormally high freight costs, among other things, led the Department to question the commercial validity of the entire transaction and thus examine all elements of the transaction. In the instant review, there are no indications of respondent activity that lead us to question the validity of the entire transaction. Therefore, we did not examine the U.S. importer's resale price in this review. Comment 4: Allegation of Failure to Properly Weigh Evidence Regarding the Shipping Company's Policy on LCL Shipments Petitioner claims the Department improperly discounted the evidence placed on the record which shows that the shipping company, the container shipper, and the U.S. customs broker used by respondents, as well as many other Shanghai-based shippers, will not transport LCLs of potassium permanganate on the shipping route taken in transporting the subject merchandise. Petitioner notes that the Department dismissed this evidence because the record does not indicate whether the transportation companies' policy against shipping LCLs of potassium permanganate was in effect when the subject merchandise was shipped nor does it indicate whether there were any exceptions to this policy. Moreover, petitioner notes that in dismissing this evidence, the Department pointed to a price quote for a LCL shipment of potassium permanganate placed on the record by respondents. Petitioner submits that the Department erred in dismissing this evidence because: 1) the record merely contains a document that refers to a price quote for shipping a LCL of potassium permanganate, not an actual quote; 2) the alleged quote is not for the route taken in transporting the subject merchandise, and thus, is irrelevant; 3) there is no evidence that the shipping agent who supplied the quote offered its own LCL service for potassium permanganate or verified that such service was provided by other shippers or container shippers; and 4) the fact that the price quote is for a route that was ultimately not taken suggests that the shipping agent may have experienced difficulties in arranging a legal LCL shipment of potassium permanganate on the route actually taken in transporting the subject merchandise. Finally, petitioner maintains that a one-line reference to a price quote for shipping a LCL of potassium permanganate should not overcome the well documented general policy against making such shipments from Shanghai. The Department's Position: Evidence regarding the shipping company's hazardous materials policy has no bearing on the central issue of whether respondents artificially structured the transaction in order to manipulate the dumping margin. Although we questioned the record evidence regarding the shipping company's policy in the preliminary results, for the final results we have focused on evidence regarding respondents' responsibility for shipping the merchandise from the PRC. Because the sales terms for this transaction are FOB PRC port and respondents were not responsible for or involved in shipping the merchandise from the PRC port, the shipping company's policy is not germane and does not serve to answer the question of whether the sale is bona fide. Comment 5: Allegation of Failure to Address Fraud on the Department's Proceedings Petitioner argues that the Department failed to address evidence indicating that fraud has been committed on its proceeding. Specifically, petitioner states that the Department failed to address "{1)}whether one or more of the three {house bills of lading} on the record was, in fact forged, altered, or fraudulently used; {2)} why respondents submitted materially different versions of the HBL to the Customs service and to the Department at verification, while claiming that a third HBL was, in fact, the correct document; {3)} the implications of these facts for the Department's verification process and the overall integrity of the Department's review proceeding; {and 4)} the significance of these facts under Department and court precedent allowing for the exclusion of sales based on evidence of fraud on the Department's proceeding." See Petitioner's case brief at page 16. The Department's Position: As discussed in our position to comment 1 above, there is no evidence that respondents were responsible for creating or issuing the HBL in question or that they altered the HBL presented to the Department at verification. Moreover, record evidence indicates that respondents accurately identified the nature of the merchandise being shipped. The Department obtained documentation from U.S. Customs indicating that respondents correctly identified the hazardous nature of the merchandise in the documents they prepared (e.g., packing list, invoice, etc.). See the attachments to the Department's November 3, 2000, letters to the respondent and the petitioner. Comment 6: Allegation of Failure to Properly Weigh Evidence Regarding Knowledge of the Hazardous Nature of the Merchandise Petitioner claims that the Department improperly discounted evidence of a fraudulent and illegal shipping scheme based upon its finding that the U.S. importer informed the PRC shipping agent of the hazardous nature of the cargo. Petitioner states that this finding has no bearing on the existence of a fraudulent and illegal shipping scheme as the evidence shows that the entity that actually transported the cargo, the shipper, was the entity that was defrauded as it had no idea that it was transporting hazardous cargo. In fact, petitioner contends that, based on the evidence on the record, it appears that the shipping agent may have played a role in altering shipping documents or in persuading the container shipper to mislabel the shipment. Hence, petitioner finds the fact that the shipping agent knew of the hazardous nature of the cargo not at all surprising and fully consistent with the alleged fraudulent scheme. The Department's Position: The record indicates that the PRC shipping agent used in the transaction was acting on behalf of the U.S. customer, not respondents. As noted above, the sales terms for the transaction under review are FOB PRC port, and thus respondents were not responsible for shipping the merchandise from the PRC port. Therefore, information regarding the U.S. customer's shipping agent's role in shipping the subject merchandise and questions as to whether the agent properly shipped the merchandise are not relevant to our determination in these final results. Comment 7: Allegation of Failure to Take Into Account Evidence Regarding the Parties Responsible for the Merchandise Descriptions on HBLs Petitioner asserts that the Department failed to take into account evidence indicating that the parties to the sale were legally and practically responsible for the misleading, fraudulent, and possibly forged merchandise descriptions on the multiple copies of the HBL. Petitioner notes that it submitted evidence that "under both California law (i.e., the law of the state of importation) and established legal practice, the party furnishing the goods to a carrier is deemed as a matter of law to certify the accuracy of the description of the goods." See Petitioner's case brief at page 25. Moreover, petitioner claims that notations on the HBL on the record indicate that the description of the merchandise on a HBL is the responsibility of the party furnishing the goods to the carrier. Petitioner contends that resolving "the question of who was legally and factually responsible for the merchandise descriptions on the" [HBL] "is critical to the determination of whether parties to the transaction were themselves involved in a fraudulent and illegal scheme and/or fraud on the Department." See Petitioner's case brief at page 25. The Department's Position: Although petitioner has focused on the commercial laws that identify the party responsible for the merchandise description on bills of lading, the issue important to the Department's proceedings is whether there is evidence that respondents provided an inaccurate description of the merchandise on documents they generated as part of the transaction. As discussed in the Department's position to Comment 5 above, all record evidence indicates that the respondents correctly identified the subject merchandise. Thus, there is no record evidence that respondents were involved in any scheme to perpetuate fraud on the Department's proceedings. Comment 8: Allegation of Failure to Properly Weigh Evidence Regarding the Fraudulent HBL Finally, petitioner argues that the Department improperly dismissed its allegation of a fraudulent and illegal shipping scheme based upon an unsupported assumption that alterations to the HBL alone, without altering any other documents, is inconsistent with such a scheme. Petitioner claims the Department's position is at odds with the facts and with respondents' ultimate goal of entering a shipment of potassium permanganate into the U.S. customs territory before the end of the instant POR. According to petitioner, the record shows that the altered HBL did, in fact, enable the smuggling scheme to work by deceiving the shipping company into transporting a LCL of potassium permanganate. Petitioner notes that the ocean bill of lading and the ship's manifest show that the shipping company was completely unaware that the shipping container identified as containing tools and toys also contained potassium permanganate. Moreover, petitioner claims that shipping companies depend almost exclusively on the merchandise descriptions of those who consign containers because they do not have the resources or time to examine underlying cargo documents. Thus, petitioner contends that even if other documents properly identified the cargo as hazardous, hazardous cargo can be smuggled by falsely describing the merchandise to the shipping company. Additionally, petitioner maintains that if invoices and other documents associated with the sale were altered to conform with the altered HBL, it would have been more difficult for respondents to enter the subject merchandise through U.S. Customs and it would have made the respondents' smuggling scheme readily apparent to the Department at verification. The Department's Position: The HBLs were not issued by respondents and the record does not show that respondents inaccurately described the subject merchandise in documents they prepared in connection with the sale. Moreover, there is no evidence that respondents altered the container company's HBL. Therefore, whether or not a fraudulent shipping scheme could depend solely on an altered HBL is not relevant to our bona fide sale determination. Comment 9: Allegation That the Department Improperly Placed the Burden of Proof on Petitioner Petitioner contends that despite respondents' superior access to information regarding the shipment of subject merchandise, in the preliminary results the Department placed the entire factual burden with respect to certain issues surrounding the shipment on petitioner. For example, petitioner notes that the Department discounted evidence regarding the shipping companies' policy against shipping LCLs of hazardous materials because petitioner failed to show whether this policy was in effect on the shipment date and failed to show whether there were exceptions to this policy. Petitioner maintains that it should not be penalized for respondents' failure to provide such information when it is clear that respondents could do so. Moreover, petitioner claims that the Department improperly and unfairly placed upon it the burden of demonstrating whether there was any means by which the subject merchandise could have been legitimately shipped on a LCL basis. Petitioner believes this is an unfair and inappropriate burden. According to petitioner, the issue is whether the shipping companies used on the actual route taken would handle the actual shipment under review. Petitioner notes that it placed extensive evidence on the record showing that the companies that transported the subject merchandise do not permit LCLs of hazardous materials on the route taken and that the importer and others engaged in a scheme to circumvent this policy. Finally, petitioner points out that if the evidence shows that the subject merchandise was fraudulently shipped, the fact that it may have been possible, in theory, for the merchandise to have been shipped by other legitimate means is irrelevant. The Department's Position: We disagree with petitioner. Respondents were not responsible for shipping the subject merchandise from the PRC and thus, as a general matter, they would not necessarily have superior access to information regarding the shipment. Therefore, petitioner's emphasis on the argument that respondents have the burden to show how the shipment was made is misplaced. Nevertheless, although petitioners have provided information for the record regarding the shipment of subject merchandise, so have respondents and the U.S. importer. After examining this record evidence, we find no evidence that respondents were responsible for shipping the subject merchandise from the PRC or that they prepared sales documents that failed to properly identify the merchandise as potassium permanganate. Comment 10: Allegation of Failure to Determine Whether the Shipment was Legal Petitioner argues that the Department's refusal, in the preliminary results, to determine whether the subject merchandise was shipped illegally is inappropriate for the following reasons. First, petitioner argues that it is unaware of any basis for refusing to interpret laws in the context of a trade case simply because the laws are administered by another agency. Petitioner notes that the Department did not determine whether the shipment violated any hazardous shipping laws because, as the Department stated, it is not in a position to interpret such laws. Moreover, petitioner rebuts the Department's preliminary determination by noting that if the Department is not in a position to interpret laws administered by others, it would be powerless to analyze and interpret foreign laws and programs involving subsidies. Further, petitioner maintains that simply because the Department is not in the position to enforce certain laws does not mean that it can refuse to analyze and interpret these laws in the context of its own proceeding. Second, petitioner maintains that a complete and proper analysis of the rescission issue requires the Department to determine whether any laws were violated. Specifically, petitioner claims that a finding that the shipment was unlawful indicates that the sale was artificially structured and commercially unusual, two characteristics that the Department has associated with non-bona fide sales. See Steel Plate From Romania, 63 FR 47232, 47234. Furthermore, petitioner states that a finding that the shipment was unlawful is also relevant to the question of whether parties committed fraud on the Department's proceedings in an attempt to cover-up the illegality. Respondents concur with the Department's preliminary determination that the Department is not in a position to interpret the regulations and laws which were allegedly violated (i.e., the Hazardous Materials Transportation Act, Department of Transportation regulations DEA regulations, and Customs Regulations). Respondents note that while the Department has clear authority to prevent fraud upon its own proceedings it is not in a position to interpret other agency laws at issue. If there is any question as to whether these laws were violated the appropriate authorities should be notified. The Department's Position: We disagree with petitioner. In past cases the Department has determined whether a sale is bona fide by examining whether the sale is commercially unreasonable and other facts and circumstances indicate an attempt to manipulate the dumping margin. Thus, the central issue is whether respondents artificially structured the transaction in order to manipulate the dumping margin. In the instant review, petitioner argued that the transaction was artificially structured through a fraudulent shipping scheme that violated hazardous shipping laws and regulations. However, there is no evidence that respondents were responsible for or involved in shipping the merchandise from the PRC port and, therefore, there is no need for the Department to address the allegation of a fraudulent shipping scheme. Nevertheless, as we stated in the preliminary results, the determination of whether any hazardous shipping laws and regulations were violated can only rightfully be made by the agencies charged with enforcing those laws. Comment 11: Allegation That the Department's Approach in the Preliminary Results Undermines Trade Laws Petitioner disagrees with the Department's statement in the preliminary results indicating that it will not exclude a sale involving fraud or illegality unless the fraud or illegality "undermines the Department's ability to achieve a fair comparison and calculate an accurate dumping margin" or prevents "a fair comparison ... between the price of that U.S. sale and normal value." See Petitioner's case brief at page 30. Petitioner maintains that this is not the proper test because fair price comparisons are only one of the factors that must be considered when deciding whether a sale is bona fide. According to petitioner, other factors include transportation and other costs, the importer's resale price, and whether the sale involves any commercially unreasonable facts. Further, petitioner maintains that the overly restrictive approach taken by the Department with respect to the alleged illegalities limits consequences for parties who provide fraudulent information, encourages parties to resort to illegal means to create reviewable transactions, and places domestic parties at an unfair advantage. Petitioner contends that the drafters of the trade laws did not intend for the Department to sit idly by while respondents violate laws in the context of trade cases. Thus, petitioner urges the Department not to allow fraud and illegality to be used to transform a commercially unreasonable sale into a bona fide sale. Respondents contend that, assuming arguendo, there was a fraudulent scheme, the Department is correct in concluding that the appropriate remedy in such a situation "is not necessarily to exclude the sale from review but to report the illegalities to the agency charged with enforcing the laws that have been violated." See Respondents' case brief at page 12. The Department's Position: Petitioner has not accurately stated the Department's position regarding transactions involving fraudulent or illegal activities. We have, in fact, examined the totality of the circumstances surrounding respondents' sale, not just price comparisons, and found insufficient evidence indicating that the sale is not bona fide. In addition, we have carefully considered petitioner's allegation, but determined that because respondents were not responsible for shipping the subject merchandise from the PRC, and there is no evidence indicating they were involved in decisions regarding the shipment from the PRC, the allegation of an illegal shipping scheme is not relevant to this proceeding. Comment 12: Respondents' Failure to Provide the Required Certification With Their Factor Value Submission Petitioner contends that the Department must refuse to consider, and exclude from the record, respondents' March 19, 2001 surrogate value submission because this submission does not include respondents' and counsel's certification of accuracy, which is expressly required by statute and the Department's regulations. This submission contains new factor values for potassium hydroxide, manganese dioxide, lime, alum, selling, general and administrative expenses (SG&A), drums, and electricity. According to petitioner, the failure to present the required certification is more than a technicality because without it, the Department has no assurance that the submitted information is true and complete. Petitioner states that the lack of certification is of critical concern in this case because many of the factor values proposed in the submission are based on third or fourth- hand price quotes from private parties that cannot be corroborated. The Department's Position: We disagree with petitioner. In response to the Department's request for proper certification, respondents' counsel filed a post-submission certification in which counsel attested to the accuracy of the March 19, 2001 submission. See memorandum from the case analyst to the file Post- Submission Filing of Certificates of Accuracy for Respondents' March 19, 2001 Submission of Surrogate Value Information; Potassium Permanganate from the People's Republic of China, A-570-001 (April 16, 2001). In the past, the Department has accepted post-submission certifications. See, e.g., Final Determination of Sales at Less Than Fair Value: Certain Small Business Telephone Systems and Subassemblies Thereof From Taiwan, 54 FR 42543, 42549 (October 17, 1989), Comment 24, wherein the Department stated that "{t}he fact that the petitioner's allegation was not initially accompanied by the requisite certification does not invalidate the allegation. The certification of the relevant submission subsequently provided by petitioner's legal counsel satisfied the Department's regulations." Although respondents in the instant review did not certify the accuracy of the March 19, 2001 submission, the Department considers certification by counsel alone to be adequate in this situation because the information that is certified consisted of publicly available information and information generated by parties other than respondents (i.e., it is not respondents own data). Therefore, we have not rejected respondents' March 19, 2001 surrogate value submission. Comment 13: Use of Third-Party Price Quotes Dated After the Preliminary Results Petitioner claims that, as a matter of policy, the Department should reject all third-party price quotes dated after the preliminary results because such information is inherently unreliable and, in the absence of corroboration, the Department must assume that such quotes are concocted solely to reduce dumping margins. Thus, petitioner argues that for the sake of due process and reliability the Department must reject private party price quotes dated after the preliminary results. Moreover, petitioner urges the Department to reject the price quotes dated after the preliminary results of this review because respondents are proposing many of their price quotes in lieu of public information they previously submitted. Petitioner claims that this information should be rejected because it amounts to entirely new factor data which conflict with data previously submitted by respondents. The Department's Position: We disagree with petitioner. While the Department considers the source and date of price information in evaluating potential surrogate values, it does not automatically reject publicly available price quotes because they are dated after the preliminary results. Rather, in accordance with section 773(c)(1)(B) of the Act, the Department's policy is to weigh all the relevant characteristics of the surrogate value information on a case- by-case basis to determine the best available data for valuing factors of production. See Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From the People's Republic of China, 62 FR 61964, 61987 (November 20, 1997) (Comment 29), wherein the Department noted that "{i}t is important to emphasize, however, that our overarching mandate is to select the 'best' available data (see 19 U.S.C. 1677b(c)(1)), which involves weighing all of the relevant characteristics of the data rather than relying on one or two absolute 'rules' . . . Thus the Department must weigh available information with respect to each input value and make a product-specific and case-specific decision as to what the "best" surrogate value is for each input." Furthermore, the Department's regulations allow interested parties to submit surrogate value information within 20 days after publication of the preliminary results without limiting either the type of publicly available information that may be submitted nor the time period to which such information applies. See 19 CFR 351.301(c)(3)(ii). Moreover, this regulation does not limit surrogate value information submitted after the preliminary results to merely revisions or updates of previously submitted information. Therefore, we have considered the surrogate values submitted by respondents on March 19, 2001 for these final results. Comment 14: Contemporaneity and Representativeness of Respondents' Price Quotes Petitioner maintains the Department should discount the price quotes and invoices included in respondents' March 19, 2001 submission because virtually all of the quotes are from February or March of 2001, which is not contemporaneous with the POR. Specifically, petitioner notes that the surrogate values for potassium hydroxide, manganese dioxide, lime, alum, drums, and electricity are dated approximately a year after the end of the POR. Petitioner contends that there are more accurate, contemporaneous values on the record for each of these factors and points out that the Department has repeatedly emphasized its preference for prices within the POR or closest in time to the POR. See, e.g., Manganese Metal from the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 66 FR 15076, (March 15, 2001) and accompanying Issues and Decision Memorandum at Comments 11, 14 (Department Memorandum: Manganese Metal 1999-2000). Additionally, petitioner contends that the Department should reject the price quotes in respondents' March 19, 2001 submission as the price quotes consist primarily of single quotes from private companies in particular regions of India. Petitioner argues that these values are inconsistent with the Department's express preference for a range of surrogate values that reflect conditions of the surrogate country as a whole, rather than information from particular companies in a limited number of regions of the country. In support of its position, petitioner cites the preamble to the Department's regulations, 62 FR 27296, 27366 (May 19, 1997): "[W]e question the accuracy of {a producer-specific valuation} approach as it applies to input prices." See also, Department Memorandum: Manganese Metal 1999-2000 at Comment 14 wherein the Department stated that where possible, the Department uses a surrogate value that is "(1) an average non-export value; (2) representative of a range of prices within the POR or closest in time to the POR; (3) product specific and (4) tax-exclusive." The Department's Position: We have addressed the contemporaneity and representativeness of respondents March 19, 2001 surrogate values in our positions to the factor- specific comments that follow. Comment 15: Surrogate Value for Coal Respondents contend that the Department should value coal (coal powder and coal lumps) using the Indian domestic price for steam coal from the International Energy Agency (IEA) publication. According to respondents, this price is superior to the Indian import value used in the preliminary results because 1) the Department has previously found IEA's domestic values to be the most appropriate surrogate value for steam coal used by industry in the PRC and, 2) Indian import values for steam coal (i.e., the value used in the preliminary results, as well as that proposed by petitioner) appear to be aberrational when compared to Indian domestic prices. See Sulfanilic Acid From the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 65 FR 13366 (March 13, 2000) and accompanying Issues and Decision Memorandum at Comment 4 (Sulfanilic Acid). Specifically, respondents note that they submitted data from the Teri Energy Data Directory & Yearbook 1999/2000 (TERI) demonstrating that Indian import prices for coal are significantly higher than domestic prices. Respondents note that TERI data on the record shows that import prices for pithead coal in 1996-1997 were more than twice the greatest average domestic price reported by two of India's coal producing companies. Thus, respondents maintain that the Department should value coal using the IEA data they submitted on January 11, 2001. Respondents note that while the Department rejected the IEA data in the preliminary results because they are not contemporaneous with the POR, the data are the most current IEA data available. For the following reasons, petitioner urges the Department to continue to use Indian import statistics to value coal, rather than the IEA data supplied by respondents. First, petitioner notes that the import statistics are closer in time to the date of the U.S. sale or more contemporaneous than the IEA data. Petitioner notes that respondents' IEA data are from 1996, while the Indian import statistics it provided are from April through August 1998. Second, petitioner notes that the Department has relied upon Indian import statistics to value steam coal in a number of recent antidumping cases. See Sebacic Acid From the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 65 FR 49537 (August14, 2000). Third, petitioner states that there is no basis for rejecting prices simply because they are import prices and not domestic prices. Petitioner claims that the Department has rejected any attempt to establish an unconditional preference for domestic prices over import prices. Fourth, petitioner claims that respondents' reliance on Sulfanilic Acid is misplaced. According to petitioner, the Department did not establish a preference for IEA prices in Sulfanilic Acid, rather the Department used IEA domestic coal prices because they were part of the record in that review and the petitioner in that case submitted Indian import prices for steam coal after the applicable deadline. Finally, petitioner contends that the TERI data cited to by respondents do not support respondents' assertion that Indian import prices are aberrational because 1) it is not clear what type of coal is covered by the TERI data and 2) it is not clear whether the data represents costs or prices. The Department's Position: We agree with petitioner. We have continued to value steam coal using Indian import statistics rather than IEA prices. Although both potential surrogate values - IEA and Indian import statistics - are for the type of coal used by respondents (steam coal), we have based the surrogate value on Indian import statistics because, unlike the IEA data from 1996, the import statistics are contemporaneous with the POR. See Department Memorandum: Manganese Metal 1999-2000, at Comment 8 stating that "{t}he Department prefers, where possible, to use surrogate values which are contemporaneous with the POR." Moreover, we do not find respondents' arguments against using Indian import statistics to be persuasive. The situation in Sulfanilic Acid, wherein the Department valued coal using IEA statistics, rather than Indian import values, is distinguishable from the instant situation. In Sulfanilic Acid the Department declined to consider Indian import statistics because this information was submitted after the deadline for submitting surrogate values. Such is not the case in this review. Additionally, for the following reasons the TERI data submitted by respondents do not demonstrate that the Indian import statistics for steam coal used in the preliminary results are aberrational. First, it is not clear that the TERI prices for domestically-produced coal are representative of the average Indian price for steam coal during the POR. The TERI prices are the average prices from 1991 to 1998 reported by two Indian coal producers (see Attachment 4, Table 23 of respondents' January 11, 2001 surrogate value submission). Thus, these prices are not broad market averages for the POR. In addition, the TERI prices are identified as "pithead" prices. Therefore, it is not clear whether the prices included in the TERI data are for steam coal. Moreover, Table 24 of Attachment 4 indicates that the pithead price used in respondents' price comparison is just one component of the total price charged for domestic coal. Second, the most recent average annual import price of coal reported by TERI does not indicate that the import value used by the Department in the preliminary results is an aberrational import value (the TERI import price is 35.95 USD/MT (1997)) while the Department used 32.93 USD/MT; see Attachment 4, Table 25 of respondents' January 11, 2001 surrogate value submission). Thus, the Department will continue to rely on surrogate values for coal based on Indian import statistics rather than IEA data. Comment 16: Surrogate Value for Drums Used for Packing Respondents claim that the Department should not value drums using Indian import statistics for HTS category 7310.10.09 because it is an overly broad basket category of goods and it is not clear that it includes iron drums. In contrast, respondents note that they have provided an Indian company's price quote for drums similar in size to those they use. Respondents claim that the significant difference between their proposed drum value, 978.20 USD/MT, and petitioner's proposed drum value, 2,441.82 USD/MT, is explained by the broad Indian import category which may include items more expensive than iron drums. Petitioner contends that the Department should not rely on respondents' proposed surrogate value for drums because it is based on a price quote which is missing critical information regarding the weight, thickness, composition, and rating of the drums (i.e., whether the drums are rated to carry potassium permanganate). According to petitioner, the Department should continue to value drums using Indian import statistics for HTS category 7310.10.09, Tanks, Casks, Drums Etc, of Capacity of >=50L - Others (i.e., other than tin plated) because 1) contrary to respondents' claim, this category specifically covers iron drums given that it is part of Chapter 73 "Articles of Iron or Steel" of the HTS, and 2) this HTS category is preferable to the single Indian source proposed by respondents because the HTS values are based on numerous arm's-length transactions. However, petitioner requests that the Department use the updated statistics it supplied for HTS category 7310.10.09 because they are contemporaneous with the POR. The Department's Position: We have continued to value drums using Indian import statistics. In selecting surrogate values, the Department prefers to select values that are 1) for products as similar as possible to the input being valued, 2) contemporaneous with, or closest in time to the POR, and 3) representative of a range of prices in effect during the POR. See Manganese Metal, 63 FR at 12442. Based upon these criteria, we find that the Indian import statistics constitute the best available information on the record because they are 1) contemporaneous with the POR, 2) representative of a range of prices during the POR, and 3) sufficiently specific to the input being valued given that imports of metal drums are included under HTS category 7310.10.09. Although the price quote supplied by the respondents is for drums, rather than a group of products including drums, it is dated almost a year after the POR and there is no evidence that it is representative of the range of Indian drum prices during the POR. Thus, we have valued drums using Indian import statistics, as updated by petitioner's March 19, 2001 factor value submission. Comment 17: Surrogate Value for Electricity Petitioner maintains that the Department should value electricity using the average electricity cost used in Synthetic Indigo from the People's Republic of China; Notice of Final Determination of Sales at Less Than Fair Value, 65 FR 25706 (May 3, 2000) (Synthetic Indigo). Petitioner agues that indigo dye, like potassium permanganate, is a chemical, and thus electricity prices of indigo dye producers are more similar to those of potassium permanganate producers than an average price for all industries. In addition, petitioner notes that the average electricity cost in Synthetic Indigo is representative of the range of industry prices because it is based on prices from four distinct entities rather than a quote from a single entity. Moreover, petitioner notes that the Synthetic Indigo prices overlap with the POR, and thus they are preferable to the 1997 electricity prices from the IEA used in the preliminary results. With respect to the electricity prices from Synthetic Indigo, respondents argue that there is no information on the record supporting petitioner's position that the manufacturing processes and electricity costs for potassium permanganate and indigo dye are similar. Moreover, respondents argue that the Synthetic Indigo rate is significantly higher than values they placed on the record and the value used by the Department in its preliminary results. Thus, respondents conclude that the indigo dye values are inclusive of additional expenditures, subsidies or other price manipulations and are therefore aberrational. Respondents claim that, of the data on the record, the TERI data satisfy the Department's requirement to estimate as accurately as possible what electricity prices in the PRC would be if determined by "market forces." Respondents consider the IEA data used by the Department in the preliminary results to be inaccurate because they are "retail" prices and hence do not reflect the actual prices paid by volume purchasers in India. Furthermore, respondents claim that the significant difference between the TERI electricity price (0.058 USD/KWH) and that used in the preliminary results, or that advocated by petitioner (0.075 USD/KWH and 0.11 USD/KWH, respectively) indicates that the latter two prices contain additional costs, subsidies or other price manipulations. For example, respondents question the IEA data because they believe the data indicate that the Indian government subsidizes household users of electricity by charging higher rates to industrial users. Moreover, respondents contend that the TERI electricity rate (0.058 USD/KWH) is supported by the rate they placed on the record from the electricity bill of an Indian manufacturer (0.063 USD/KWH). Lastly, respondents argue that the Department's decision in the preliminary results not to use the TERI data was recently contradicted in manganese metal from China wherein the Department determined that the TERI values met the Department's surrogate value selection criteria because they are: 1) average non-export values; 2) representative of a range of prices within the POR or closest in time to the POR; 3) product-specific; and 4) tax-exclusive. See Department Memorandum: Manganese Metal 1999-2000 at Comment 10. In regards to the use of TERI data, petitioner argues that it should not be used to value electricity because, as the Department noted in the preliminary results, there is insufficient information on the record to confirm the accuracy, objectivity and breadth of coverage of the data. Specifically, petitioner notes that the data do not distinguish between industrial rates and household rates and include two different rates for two Indian states but no information for several other Indian states. Petitioner argues that respondents have not addressed any of the concerns about this data raised by the Department in the preliminary results. Furthermore, petitioner argues that the Department should not rely on the electricity bill submitted by respondents in support of the TERI data. Specifically, petitioner maintains that the bill should be rejected because 1) it was part of a submission that was not certified, 2) it is dated a year after the end of the POR, 3) it is a single, region-specific quote that does not reflect a range of prices in the Indian economy as a whole, 4) it appears to be missing the "Energy Charges" detail and the bottom portion of the "Amount of the Bill", including the "total" line and 5) it was issued to a metal company rather than a chemical company and therefore is an inappropriate basis for determining an electricity surrogate value in this review. Although, based on contemporaneity, petitioner finds the electricity prices from Synthetic Indigo preferable to the IEA price used in the preliminary results, petitioner disagrees with respondents' objections to the IEA data. Specifically, petitioner notes that respondents object to the IEA price because, according to respondents, it is a "retail" price and it includes additional expenditures, subsidies or other price manipulations. Petitioner contends, however, that respondents have mistakenly applied a general definition of retail to the IEA data (i.e., small quantities sold directly to the ultimate consumer) and, in fact, it is unlikely that the IEA would exclude industrial energy prices from its data because its overall energy prices for the country would not be complete without prices from the industrial sector. In addition, contrary to respondents' assertion, petitioner claims there is no information on the record to indicate that IEA prices include additional expenditures, subsidies or other price manipulations. Finally, petitioner notes that the IEA price is supported by the Department's own research which found that the IEA price is the same as the electricity price listed on the government of India's website. Finally, petitioner states that regardless of the source used to value electricity, the Department should inflate the electricity value using the industry specific index published by the Reserve Bank of India because it is narrower and more accurate with respect to fluctuations in electricity prices than the wholesale price index. Petitioner notes that the Department used an electricity specific index in several recent cases. See, e.g., Manganese Metal from the People's Republic of China: Final Results of Antidumping Administrative Review, 65 FR 30067 (May 10, 2000) and accompanying Issues and Decision Memorandum at Comment 5 (Department Memorandum: Manganese Metal 1998-1999); see also Bulk Aspirin from the People's Republic of China: Final Determination of Sales at Less Than Fair Value, 65 FR 33805 (May 17, 2000) and accompanying Issues and Decision Memorandum at Comment 6 (Department Memorandum - Aspirin). The Department's Position: We disagree with both parties, in part, and have continued to value electricity using IEA data as in the preliminary results. Although respondents claim that IEA prices are inappropriate because they are "retail" prices and, hence, do not reflect the actual prices paid by volume purchasers in India, we note that the chart of "retail" IEA prices to which respondents refer contains prices for different categories of users including the categories "Electricity for Industry" and "Electricity for Households". See Surrogate Values Used in the Preliminary Results of Administrative Review of Potassium Permanganate from the People's Republic of China; January 1, 1999 through December 31, 1999, (January 30, 2001) at Attachment 6. Because industrial use is included in this chart, it is not clear that the designation "retail" indicates that these are prices for low volume users or simply the price of sales made directly to consumers of electricity. Therefore, we have not rejected the IEA prices based upon the "retail" designation. Although petitioners propose that we value electricity using the Indian indigo dye producers' costs from Synthetic Indigo, we have not done so because the IEA data represent broad averages of Indian industrial electricity prices. There is no information on the record demonstrating that the respondents' production process is more similar to that of indigo dye producers than other non-chemical producers. Moreover, even if there were, this in and of itself would not mean that the prices from a few Indian indigo dye producers are preferable to the broader IEA averages. In many cases, electricity prices do not vary across production process, i.e., producers of very different products may be subject to the same electricity rate schedule. In addition, we have not valued electricity using the TERI figure submitted by respondents because we have questions regarding the representativeness of this value. First, respondents obtained this 1998/1999 value from a chart in TERI simply entitled "Unit cost of power supply." Thus, it is not clear whether this value reflects industrial rates or residential rates. Moreover, it is not clear whether this value is the price charged to consumers (including industrial consumers) of electricity or the unit cost of producing electricity. Second, the figures in the TERI chart are not in agreement with the "average tariff for industry" electricity figures that the Department obtained from the Government of India's Ministry of Power website (see http://powermin.nic.in/plc74.htm). Finally, although respondents correctly note that the Department used TERI data to value electricity in the 1999 - 2000 administrative review of manganese metal from China, it appears the TERI chart used in that review differs from that provided by respondents. Specifically, although the TERI publication used in the manganese metal review and the instant review is the same (i.e., the Tata Energy Research Institute (TERI) Energy Data Directory & Yearbook 1999/2000 ), the data used in manganese metal " ... included a breakdown of rates specific to the "industrial" users category ... ." See Department Memorandum: Manganese Metal 1999-2000 at Comment 10. Such is not the case with the TERI data submitted by respondents here and the lack of such a breakdown is a central reason why we do not find the TERI data to be the best available information with which to value electricity for this review. Thus, our decision not to use TERI data in the instant review is not contradicted by the 1999 - 2000 administrative review of manganese metal from China because it appears that different TERI data was submitted in these two administrative reviews. We agree with petitioner that the electricity value should be inflated using an industry specific index. Thus, we used the industry specific index published by the Reserve Bank of India to inflate the electricity value as we did in Manganese Metal and Aspirin. Industry specific indices are narrower and more accurate with regard to prices in each respective industry than country-wide indices based upon a multitude of industries, such as a country's wholesale price index. Comment 18: Surrogate Value for Manganese Dioxide Petitioner contends that the Department should value manganese dioxide using 1999 Indian import statistics rather than the Chemical Weekly export prices used in the preliminary results. According to petitioner, the Department generally prefers to value factors using import data rather than export data. See 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, 60 FR 49251, 49252 (September 22, 1995) (wherein the Department noted that it "prefers import data in the selected surrogate country over export data because import prices more closely reflect the market price of that factor in the surrogate country"). Moreover, petitioner claims that "not only are export prices an uncertain proxy for domestic prices but the widespread availability of Indian export subsidies artificially suppresses export prices." See Petitioner's case brief at page 33. Finally, petitioner claims that the Department traditionally values factors using export prices only when reliable import prices are not available, which is not the case here. Respondents request that the Department value manganese dioxide using the domestic, purity-specific price quote from the Indian company, Alisca Minerals, which they provided in their March 19, 2001 submission. According to respondents, the Chemical Weekly prices used to value manganese dioxide in the preliminary results overstate the value of this input because 1) record evidence indicates that the Chemical Weekly prices are 20 to 50 percent greater than actual market prices in India; and 2) the Chemical Weekly prices are for manganese dioxide at a higher concentration level than that used by respondents. Specifically, respondents note that they placed on the record a statement from Bipin Jatakia, Vice President of K. Patel International, an Indian manufacturer and exporter of Dyes and Chemicals indicating that prices in Chemical Weekly are not "true" prices and that they are "higher by 20 to 30% or sometimes 50%". See Respondents' March 19, 2001, Surrogate Value Submission at Attachment 2. Moreover, respondents note that in past proceedings, the Department found that Chemical Weekly prices without references to purity levels, as is the case with the manganese dioxide price, are based on a 100 percent purity level. See Issues and Decision Memorandum accompanying Sebacic Acid From the People's Republic of China: Final Results of Antidumping Duty Administrative Review, 65 FR 49537 (August 14, 2000) (Department Memorandum - Sebacic Acid) at Comment 5. Respondents, however, state that they used manganese dioxide with a 60-65 percent concentration during the POR. Respondents emphasize the importance of purity levels by noting that the record contains a wide range of prices for manganese dioxide of different concentrations (e.g., Indian prices of approximately 74.21 U.S. dollars (USD)/ MT for 65-70% concentration (price quote from Alisca Minerals), and 335.34 USD/MT for 100 percent concentration (the Chemical Weekly price); as well as U.S. import prices of 200 USD/MT and 250-380 USD/MT for 74-76 percent and 84 percent concentration levels, respectively). Additionally, respondents urge the Department to reject the average Indian import price for manganese dioxide submitted by petitioner (1,666.54 USD/MT). Respondents contend that because manganese dioxide prices vary widely based on purity levels, Indian import prices, for which purity levels are not referenced, do not permit the Department to comply with its statutory requirement to determine factor values as accurately as possible. See Nation Ford Chemical Co. v. United States, 985 F. Supp. 133, 135 (CIT 1997). Moreover, respondents note that the Department prefers to value factors using the surrogate country's domestic prices, rather than import prices. See Pure Magnesium from the People's Republic of China, 63 FR 3085, 3087 (January 21, 1998). In contrast, petitioner urges the Department to reject the Alisca Minerals (Alisca) price quote for manganese dioxide supplied by respondents because it is a single, region-specific, uncertified price quote that does not reflect prices in the Indian economy as a whole. Furthermore, petitioner claims that the quote contains unclear maximum percentage limitations, apparently for other elements in the product, that could have a significant but undetermined effect on the price quoted. The Department's Position: We agree with respondents, in part. In past cases, the Department has recognized the importance of using surrogate values that reflect the same purity levels as those used by the respondent. See e.g., Issues and Decision Memorandum accompanying Sebacic Acid From the People's Republic of China: Final Results of Antidumping Duty Administrative Review , 65 FR 49537 (August 14, 2000) at Comment 6. Moreover, in this review, the respondents have placed information on the record demonstrating that the purity levels (grade) of manganese dioxide have a substantial impact on the price of the product. Thus, we have decided to value manganese dioxide using surrogate values that reflect the purity levels of the manganese dioxide used by respondents. The only surrogate values on the record for the specific grade of manganese dioxide used by respondents are two price quotes dated after the POR, one of which is an export price. Although the Department normally prefers non-export, broad market average values that are contemporaneous with the POR, in this case we consider the price quotes to be the best information on the record based on specificity. Furthermore, while petitioners are correct in noting that one of the price quotes lists percentage limitations for certain unidentified elements contained in the manganese dioxide, we do not find this to be a sufficient reason to reject the price quote. The record contains other potential surrogate values for manganese dioxide for which there is no information at all about the mineral's composition (i.e., Indian import and export statistics). Thus, we find price quotes for the specific purity level of manganese dioxide used by respondents to be superior to values for manganese dioxide with unknown purity levels and composition even if the price quotes are for manganese dioxide containing certain other unknown elements. Comment 19: Surrogate Value for Potassium Hydroxide Respondents request that the Department value potassium hydroxide using the price quote from the Indian company, Andhra Sugars Limited (Andhra), which they provided in their March 19, 2001 submission. Respondents contend that the Chemical Weekly price used by the Department in its preliminary results is inappropriate because, as noted in Comment 8 above, record evidence indicates that Chemical Weekly prices are 20 - 50 percent higher than actual Indian market prices. In fact, respondents claim that Chemical Weekly prices are from traders who have an interest in inflating prices, and thus, these prices are equivalent to list prices, not market prices. It is this fact, according to respondents, which explains why Chemical Weekly prices are substantially higher than the publicly available actual market price charged by Andhra. Petitioner argues that the Department should not rely on the Andhra price quote supplied by respondents, but continue to rely on Chemical Weekly prices to value potassium hydroxide. Petitioner observes that Chemical Weekly has been in publication since 1957, and is considered to be an authoritative source of Indian prices for a wide range of chemicals. Furthermore, petitioner points out that the Department has repeatedly relied on prices from Chemical Weekly in previous cases. See, e.g., Sebacic Acid, 64 FR at 69504-06; and the Department Memorandum - Aspirin at Comments 1 and 2. Furthermore, petitioner dismisses respondents' assertion that prices in Chemical Weekly are 20 - 50 percent higher than Indian market prices. Petitioner contends this assertion is based on an unsupported and incredibly broad statement from a single obscure Indian company official whose authority to testify on such matters has not been demonstrated in this review. While petitioner urges the Department to continue to rely on Chemical Weekly prices, it requests that the Department use a different methodology to average the prices taken from Chemical Weekly. According to petitioner, the Department incorrectly employed a simple average of all 1999 prices for the preliminary results which improperly weighted prices because the number of prices or "data points" vary by month. For example, only two "data points" are for November, 1999 and five are for June 1999. Therefore, petitioner argues that because prices in June were lower, the simple average of all prices improperly weights the lower prices and results in a lower average price. Petitioner argues that the Department should first calculate a simple average price for each month, and then calculate a simple average annual price based on the monthly average prices. Respondents claim that there is no evidence on the record supporting petitioner's argument that the Department improperly weighted prices from Chemical Weekly. Respondents maintain that the two-step process advocated by petitioner inappropriately requires the Department to attach significance to the petitioner's speculation regarding the number and seasonal frequency of potassium hydroxide sales in India. According to respondents, the evidence does not suggest that the number and frequency of potassium hydroxide sales on the record of this review are atypical or unusual in any way. The Department's Position: We agree with petitioner. We have continued to value potassium hydroxide using prices from Chemical Weekly because unlike respondents' price quote from Andhra, the prices from Chemical Weekly represent a range of prices that are contemporaneous with the POR. The Department has found the prices in Chemical Weekly to be a reliable source of surrogate values in numerous investigations and reviews. See, e.g., Sebacic Acid and Department Memorandum - Aspirin. In addition, we agree with petitioner that it is distortive to base the value of potassium hydroxide on a simple average of all Chemical Weekly prices on the record. The record contains issues of Chemical Weekly dated during each month of the POR; however, for some months, every Chemical Weekly issued during the month is on the record, while for other months, only several issues of Chemical Weekly are on the record. Thus, calculating a simple average of the Chemical Weekly prices on the record assigns a greater weight to price ranges in certain months even though there is no basis for doing so. Therefore, we have revised the methodology used in the preliminary results by first calculating a simple average price for each month, and then calculating a simple average of the monthly averages. Comment 20: Surrogate Value for Selling, General and Administrative Expenses (SG&A), Factory Overhead and Profit Ratios While petitioner urges the Department to continue to rely on the Reserve Bank of India Bulletin (RBI) data to calculate factory overhead, selling, general, and administrative expenses (SG&A), and profit ratios, it requests that the Department follow its new, more precise methodology whereby it excludes labor from the denominator used to calculate these ratios. See, e.g., Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China: Final Determination of Sales at Less Than Fair Value, 65 FR 19873 (April 13, 2000) (Apple Juice); see also Department Memorandum: Manganese Metal 1998-1999 at Comment 10. Petitioner contends that labor exclusive ratios are more accurate because the labor cost listed in Indian financial statements includes contributions to welfare funds, bonuses, etc., while the Department's wage rates used to calculate nonmarket economy manufacturing costs are strictly wage rates. Thus, according to petitioner, excluding labor from the denominator of the ratios and applying the ratios to surrogate factors which exclude labor yields an "apples to apples" comparison. Furthermore, petitioner notes that potassium permanganate production essentially involves a complicated chemical process where labor does not drive costs. Petitioner states that this is similar to the situation in manganese metal from the People's Republic China, wherein the Department excluded labor from its ratio calculations because production involved a technologically sophisticated chemical process where labor did not appear to drive overhead and SG&A costs. See Department Memorandum: Manganese Metal 1998-1999 at Comment 10. According to respondents, the Department should not exclude labor from the denominator of the formula used to derive factory overhead and SG&A ratios. Respondents claim that doing so requires the Department to estimate how to apportion labor expenditures among direct labor, indirect labor and management costs. Moreover, respondents maintain that the Department should rely on the financial statements of Universal Chemicals & Industries Ltd. (Universal) to derive factory overhead and SG&A ratios because 1) Universal produces the merchandise subject to this review 2) its information is for the period 1999-2000, which is more contemporaneous to the POR (1999) than the 1992-1993 RBI data used in the preliminary results, and 3) the RBI data is overly broad compared to that of Universal because it is based on combined information for the metals and chemicals industry. Respondents note that in the New Shipper Review of Glycine From the People's Republic of China - March 1, 1999 through August 30, 1999; Final Results, 66 FR 8383 (January 31, 2001) (Glycine), the Department rejected RBI data in favor of data from an Indian producer, noting that " 'The Department's practice is, where information is available, to derive the overhead, SG&A, and profit values from producers of merchandise that is identical or comparable to the subject merchandise.' " See, e.g., Glycine and accompanying Issues and Decision Memorandum at Comment 7. In contrast, petitioner contends that the Department should not calculate financial ratios from Universal's financial statement because 1) many of the forms, schedules, and notes cited to in Universal's financial statement are not on the record, 2) Universal's managerial remuneration (an item included in SG&A) is not separately segregated from direct labor in the financial statement, 3) the information on the record indicates that Universal produces cookies in addition to potassium permanganate, without any indication of the relative percentage of each product produced, and 4) Universal's financial statement was included in a submission that was not certified by respondents or their counsel. Petitioner acknowledges that the Department has a preference for using producer-specific data to derive financial ratios, but argues that it has an obligation to use the best information available. According to petitioner, calculating financial ratios using the financial statement of a company that may well produce more cookies than chemicals is not the best information available. The Department's Position: We agree with petitioner, in part. Universal's financial statements indicate that in addition to potassium permanganate it produces "biscuits," or cookies. The financial statements also indicate Universal is involved in textiles and petrochemicals. Thus, it is not clear that Universal's SG&A, factory overhead and profit ratios are an appropriate basis for calculating surrogate values for a small, relatively undiversified chemical company such as the factory in this case, Zunyi. Thus, we will continue to rely on RBI data for the final results of this review. However, we do not agree with petitioner that labor should be excluded from the denominator of the factory overhead and SG&A ratios. While we recognize that labor has been excluded from the calculation in a limited number of recent cases, such as manganese metal from the People's Republic of China, the decision whether or not to exclude labor in deriving the factory overhead and SG&A ratios is a methodological issue specific to the facts of each case. See Department Memorandum: Manganese Metal 1998-1999 at Comment 10. Petitioner contends that the Department should exclude labor from the denominator in this review because potassium permanganate production is similar to manganese metal in that it involves a complicated chemical process. However, there is no evidence on the record in this review which clearly demonstrates that these two production processes are substantially similar. Moreover, petitioner is mistaken in noting that labor costs in Indian financial statements include contributions to welfare funds, bonuses, etc., while the Department's labor rates used in nonmarket economy cases are strictly wage rates. The Department's rates represent "fully-loaded" wages (i.e., inclusive of all bonuses, overtime, etc.). As noted in rebar from Moldova, the sum of materials, labor and energy is an appropriate proxy for the overall scale of operation, and factory overhead and SG&A tend to be more a function of the overall scale of the operation than with materials and energy alone. See Notice of Final Determination of Sales at Less than Fair Value: Steel Concrete Reinforcing Bars from Moldova, 66 FR 33525 (June 22, 2001) and accompanying Issues and Decision Memorandum (Department Memorandum - Moldovan Rebar) at Comment 9. Therefore, we have not removed labor from the denominator of the factory overhead and SG&A calculations. Comment 21: Surrogate Value for Water Petitioner states that the Department should value water in its final results because water is a critical input in the production of potassium permanganate. Specifically, petitioner maintains that water is used by PRC producers of potassium permanganate in a number of stages in the "roasting" process and is a required input for the chemical reaction in the "secondary" phase of the roasting process. Petitioner states that it is the Department's standard practice to value water separately from overhead if "water is required for a particular {production segment} such that it is more typical of items that are accounted for as direct material inputs, rather than as overhead items". See Department Memorandum - Aspirin at Comment 7. Moreover, petitioner notes that in the investigation of bulk aspirin from the People's Republic of China, the Department found that: "the respondents' use of water is required for various segments of the aspirin production process. Because water is a required input, we have continued to value water as a separate factor." Id. Respondents argue that the Department should not value water separately in this review for four reasons. First, in numerous Chinese antidumping investigations and administrative reviews, the Department has not included water as a direct cost because the Department determined water to be a factory overhead item. See, e.g., Department Memorandum - Sebacic Acid at Issue 3; see also Notice of Final Determination of Sales at Less Than Fair Value; Polyvinyl Alcohol from the People's Republic of China, 61 FR 14057, 14063 (March 29, 1996). Second, respondents contend that it is clear from past decisions that the Department will not value water separately if it knows that the cost of water is included in the surrogate value for overhead. See, e.g., Synthetic Indigo at comment 9. Moreover, respondents note that in the Department Memorandum - Sebacic Acid at Issue 3, the Department did not value water separately stating that because "normal accounting practice includes the cost of water in factory overhead expense, the Department presumed that the cost of water was included in the RBI overhead data in order to avoid 'double-counting' water costs." Respondents note that the Department used RBI data to value overhead in the preliminary results of the instant review and therefore, following Sebacic Acid, it should not value water. Third, respondents point out that there is no information on the record as to the quantity of water they used and thus, the Department cannot make an accurate calculation of water costs. Fourth, respondents note that they incurred no direct cost for the river water used; therefore, the Department cannot value a cost that does not exist. The Department's Position: While we agree with petitioner that water is a critical input in the production process of potassium permanganate, the Department found at verification that respondents obtained water directly from the river at no cost. Therefore, it is not appropriate to value water in our calculation of normal value. Comment 22: Inputs Used to Treat River Water: Lime, Alum, Salt, Electricity and Labor Respondents note that although they do not intentionally distill water, in the process of heating river water in boilers to generate steam heat they recover steam-condensed or "distilled" water. Respondents also note that, in this process, they add "trace" chemicals to demineralize/soften the river water in order to protect the boilers from scale. According to respondents, these added chemicals (i.e., lime, alum, salt) should not be separately valued because they are indirect inputs that are included in factory overhead under generally accepted accounting principles. Specifically, respondents contend that these material inputs are part of overhead because 1) the Department historically treats inputs that are infrequently used and small in value relative to the total cost of manufacturing as overhead (see Notice of Final Determination of Sales at Less Than Fair Value; Saccharin from the People's Republic of China, 59 FR 58818 (November 15, 1994), wherein the Department found that trace chemicals used to cool reactors are part of overhead) and 2) the inputs are not physically incorporated into potassium permanganate. In fact, respondents compare these material inputs to machine oil which the Department has found to be part of overhead. See Notice of Final Determinations of Sales at Less Than Fair Value: Brake Drums and Brake Rotors From the People's Republic of China, 62 FR 9160, 9169 (February 28, 1997). Likewise, respondents argue that the electricity and labor employed to run the boilers should be considered part of factory overhead because they are not direct factors incurred to produce potassium permanganate. Moreover, respondents note that they use boilers to produce water for the whole factory and the Department has recognized that overhead items generally relate to more than one product. See Cost of Production and Constructed Value Analysis: A Legal and Policy View, in U.S. Trade Law and Policy 31, 89 (Harvey M. Applebaum, et. al., eds., Practicing Law Institute 1987). Finally, respondents claim that the surrogate overhead percentage used in this review already accounts for the indirect labor and electricity used to run the boilers. Petitioner argues that the Department should continue to value all factors of production used to treat water because water is a critical direct input that is introduced into the production of potassium permanganate at least three times. Petitioner notes that contrary to respondents' claim that they do not intentionally produce distilled water, the Department found at verification that distillation is an intentional and necessary production step. Furthermore, petitioner notes that the water used in the production of potassium permanganate must be distilled and purified to prevent wasteful side reactions. Thus, petitioner dismisses respondents' argument equating or comparing inputs used to treat water to that of lubricating oil. Additionally, they dismiss respondents' claim that water is treated solely to protect the boilers. Finally, petitioner maintains that the quantities of chemicals used to treat water are not "trace" amounts because they account for a significant percentage of the total cost of production. The Department's Position: We agree with petitioner. Treated water is a critical input in the production of potassium permanganate. Untreated river water cannot be used in the production process. The water must be treated to protect boilers and other manufacturing equipment and treatment occurs before the water is used in the production process. Also, lime, alum and salt are not used infrequently or in trace amounts. Although they are not incorporated into the final product, they are significant inputs in the production of subject merchandise that, like electricity, should be accounted for like direct material inputs. Thus, we will value lime, alum and salt for the final results of this review. Comment 23: Surrogate Value for Lime Respondents claim that the Department erred in the preliminary results because it valued lime using Indian import statistics for "slaked lime" which is not the type of lime used to treat river water. Respondents explain that "slaked lime" or calcium hydroxide (CaOH) is different from "lime" or calcium oxide (CaO), which they use to treat water. Respondents note that they provided price quotes for "hydrated lime" (Active CaO), at various concentration levels, from three Indian Companies. Petitioner argues that the Department should not rely on respondents' price quotes for lime because 1) the quotes are dated more than 13 months after the end of the POR; 2) they are fourth hand information provided to respondents through a series of companies; and 3) they are for a type of lime which respondent has not demonstrated that Zunyi used in its production process. In addition, petitioner finds respondents' argument regarding lime problematic because 1) respondents did not provide specifications for the lime used, and 2) respondents provided prices for "hydrated lime" which, by definition is the same as "slaked lime." Moreover, petitioner points out that the use of lime was discovered only at verification and thus, the Department is entitled to employ an adverse inference because respondents failed to report lime as an input in their questionnaire response. Petitioner urges the Department to continue to value lime using Indian import statistics. The Department's Position: We have continued to value lime using Indian import statistics for slaked lime because this data is contemporaneous with the POR (i.e., for the period January through May 1999) and respondents' price quotes are not (i.e., for the period February through March 2001). Moreover, the Indian import statistics represent a larger sample of Indian prices than respondents' price quotes. When possible, the Department prefers to value factors using prices that are broad market averages. See Notice of Final Determination of Sales at Less Than Fair Value: Steel Concrete Reinforcing Bars from Moldova, 66 FR 33525 (June 22, 2001) and accompanying Issues and Decision Memorandum at Comment 2 (noting that in the Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from the PRC, 62 FR 61964, 61981 (November 20, 1997), the Department rejected Indian domestic prices in favor of a larger sample of Indian import prices). Furthermore, we are not persuaded by respondents' argument that "slaked lime" (calcium hydroxide) is an inappropriate surrogate for the type of lime used in the production of potassium permanganate. Respondents submitted a definition of lime from FunkandWagnalls.com which states "When treated with water, lime liberates large amounts of heat and forms calcium hydroxide, sold commercially as a white powder called slake lime or hydrated lime." See Attachment 4 to respondents' March 19, 2001 submission. Therefore, it appears that after arguing that "slaked lime" is not the type of lime used in production, respondents have, in fact, provided price quotes for "slaked lime" that simply identify the substance by the alternative designation, "hydrated lime." Therefore, we will continue to value lime using Indian import statistics for "slaked lime" for the final results of this review. Comment 24: Surrogate Value for Alum Respondents claim that the "other alums" Indian import statistics category used to value alum in the preliminary results is not the correct category for this input because prices for alum vary enormously depending upon the type of alum. Respondents provided price quotes from the Indian company Kamal Chemical Industries (Kamal) for two types of alum, "ferric alum" and "non-ferric alum," as well as information on alum price ranges from the Indian Pharma Guide demonstrating variations in price depending on the type of alum. Based on this information, and the fact that the record does not indicate the type of alum used to treat water, respondents contend that the Department must not value alum in its final results without some basis for identifying the particular type of alum used by Zunyi. Petitioner notes that it was respondents' responsibility to develop the record with regard to alum; however, they failed to report alum as a factor of production (it was discovered at verification) and they provided no specifications for the alum used. Thus, petitioner believes adverse inferences are appropriate. Moreover, petitioner calls respondents' assertion that the Department should not value alum at all, because the record of the review does not include specifications for alum, incredible and without basis. Furthermore, petitioner argues that the Department should not value alum using respondents' price quotes because 1) the quotes are dated more than 13 months after the end of the POR; 2) they are fourth hand information provided to respondents through a series of companies; and 3) they are for a type of alum which has not been demonstrated to be the type of alum used by Zunyi in its production process. Specifically, petitioner notes that respondents have not demonstrated whether Zunyi used "ferric alum" or "non- ferric alum". Petitioner contends that in the absence of information regarding the specific type of alum used, the Department properly valued alum using the basket category for "other alum" because this information is certified, contemporaneous with the POR, and represents a broad range of transactions between buyers and sellers. The Department's Position: Respondent failed to identify the type of alum used in production. Because this information is not on the record, we have not based the surrogate value for alum on the price information respondents provided for specific types of alum. Rather, we have valued alum using the Indian import statistics basket category for "other alum." Comment 25: Surrogate Value for Salt Respondents point out that the Department did not value salt in its preliminary results because, according to the Department, the type of salt used to treat water is not identified on the record. Respondents believe this approach should be followed in the final results. Respondents note that the price for salt will vary enormously depending upon the type of salt used and, therefore, it would be unfair of the Department to value salt without knowing the type. In addition, respondents argue that the HTS category 2521.00.90, provided by the petitioner, is an overly broad basket category of items including table salt, pure sodium chloride and other items, and thus, it should not be used to calculate a surrogate value for salt. Petitioner contends that, in the absence of information regarding the specific type of salt used, the Department should value salt using the 1999 Indian import statistics it placed on the record on March 19, 2001. Petitioner notes that it was respondents' responsibility to develop the record with regard to salt; however, they failed to report salt as a factor of production (it was discovered at verification) and they provided no specifications for the salt used. For this reason, particularly in light of the failure to report other factors used to produce distilled water, petitioner maintains adverse inferences are appropriate. The Department's Position: We agree with petitioner. Salt is an essential input in the process of softening water. However, respondents failed to identify the type of salt used to soften water. Therefore, we have valued this input using a basket category for salt from 1999 Indian import statistics. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of review and the final weighted-average dumping margin for the reviewed firm in the Federal Register. Agree __________ Disagree __________ Faryar Shirzad Assistant Secretary for Import Administration (Date) _________________________________________________________________________ footnotes: 1. Petitioner states that a 40 foot container filled with potassium permanganate packed in drums (the packing method used for the sale under review) holds approximately 18 MTs of potassium permanganate. 2. Petitioner previously submitted for the record references to U.S. Coast Guard, U.S. Drug Enforcement Agency (DEA), and U.S. Customs legal requirements which were purportedly violated. 3. In addition, based on an examination of handwritten and stamped notations on the HBL placed on the record by respondents after verification in their November 16, 2000, submission, petitioner claims that this HBL, which identifies the merchandise as "chemical", is yet a third version of the HBL at issue. 4. For additional details concerning the shipment of subject merchandise, see the memorandum from Thomas F. Futtner to Holly A. Kuga, Bona Fide Sale and Rescission of Review, dated January 30, 2001. 5. Respondents identified the order in which the HBLs were created based on the sequential number in the upper right hand corner of the documents. Id. at pages 9 - 10.