66 FR 8383, January 31, 2001 A-570-836 AR 3/1/99-8/30/99 Public Document DAS III/9/RB MEMORANDUM TO: Bernard T. Carreau, fulfilling the duties of Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary Enforcement Group III SUBJECT: Issues and Decision Memorandum for the final result; New Shipper Administrative Review of Glycine From the Peoples's Republic of China: March 1, 1999 through August 30, 1999. SUMMARY: We have analyzed the comments and rebuttal comments of interested parties in this new shipper administrative review of the antidumping duty order covering glycine from the People's Republic of China. As a result of our analyses, we have made changes, including corrections of certain inadvertent programming and clerical errors, in the margin calculation. We recommend that you approve the positions we have developed in the "Discussion of the Issues" section of this Issues and Decision Memorandum. Below is the complete list of the issues in this administrative review for which we received comments and rebuttal comments by parties: Changes Since the Preliminary Results: Methyl Alcohol Chloroacetic acid ("MCA") Hexamine Discussion of the Issues: 1. Factors of Production a. Choloracetic Acid b. Hexamine c. The Valuation of Water d. Electricity e. Coal f. SG&A, Overhead, and Profit 2. Other Issues a. Eligibility for a New Shipper Review b. No Sales and Entries during the POR c. Ministerial Errors BACKGROUND: On September 7, 2000, the Department of Commerce ("Department") published the preliminary results of new shipper administrative review of the antidumping duty order on glycine from the People's Republic of China. See Notice of Preliminary Results of New Shipper Antidumping Administrative Review: Glycine from the People's Republic of China, 65 FR 54211 (September 7, 2000)("Preliminary Results"). The merchandise covered by this order is glycine as described in the "Scope of the Review" section of the Federal Register notice. The period of review ("POR") is March 1, 1999 through August 30, 1999. We invited parties to comment on our preliminary results. Nantong Dongchang Chemical Industry Corporation ("Nantong" or "respondent"), and Hampshire Chemical Corporation ("Hampshire") and Chattem Chemicals, Inc. ("Chattem") (collectively, the "petitioners") submitted comments on October 10, 2000 and rebuttal comments on October 17, 2000. On November 21, 2000, the Department requested additional information and/or comments from interested parties regarding the comparability of phenylglycine and glycine. Both petitioners and respondent provided comments and rebuttal comments. See Letters from Wilmer, Cutlter & Pickering (December 7 & 14, 2000); Letters from Garvey, Schubert & Barer (December 7 & 14, 2000). CHANGES SINCE THE PRELIMINARY RESULTS: 1. Methyl Alcohol In the preliminary results, the Department inadvertently applied an incorrect cell to the methyl alcohol formula in its calculation worksheet. For the final results, we have corrected our worksheet by applying the correct cell to the methyl alcohol formula in our calculation worksheet. 2. MCA In the preliminary results, the Department inadvertently calculated a simple average for MCA's surrogate value. For the final results, we have corrected our worksheet by calculating a weighted average for MCA. Additionally, for the final results, we have used the full range of MCA import prices from Chemical Weekly (i.e., the POR) to value MCA. 3. Hexamine In the preliminary results, the Department calculated the surrogate price of Hexamine using an average of prices in the Mumbai and Chennai markets in India. However, for the final results, we have used the surrogate value information on Hexamine for the POR from the "General Market Information" of Chemical Weekly. See Comment 2. DISCUSSION OF THE ISSUES: 1. Factors of Production Comment 1: Chloroacetic Acid Nantong notes that the Department did not use its actual import price to value chloroacetic acid ("MCA") in its preliminary results because the Department stated in its preliminary decision memo that "the material did not enter the inventory until after the POR, and . . . Nantong had not posted the purchase in any of its accounting records." However, respondent states that the Department values factors of production by using prices that are contemporaneous with the POR, regardless of when the merchandise was produced. Thus, respondent contends that the Department should use its submitted MCA price because it is contemporaneous with the POR and best reflects the price of MCA during the POR. Additionally, respondent argues that if the Department decides not to use the actual import price, the Department should use the import prices from Chemical Weekly because these prices are not aberrational and closely represent the price of MCA in China if that price were set by market forces, as determined by the Court of International Trade ("CIT") in a prior proceeding. See Nation Ford Chem. Co. v. United States, 985 F. Supp. 133, 135 (CIT), aff'd, Nation Ford Chem. Co. v. United States, 166 F.3d 1373 (Fed. Cir. 1999)("Nation Ford"). Further, respondent contends that the Department should not use the price supplied by petitioners in their September 27, 2000 submission from an Indian glycine producer (i.e., Ashok Brothers). Nantong argues that the price supplied by petitioners is not an actual price quote, but is just a price quote given to the law firm, for one raw material input of chloroacetic acid from a glycine producer, and the price is neither verifiable nor public information. Further, respondent contends that the Department should deny petitioners' suggestion that it use export prices because the Department's preference is to use prices contemporaneous with the POR. Petitioners argue that the chloroacetic acid price that the Department used in its preliminary results, which was based on Indian import prices of MCA from selective issues of Chemical Weekly, was not correct because the import price published in Chemical Weekly is exclusive of the 35 percent customs duty applied to all Indian MCA imports. Petitioners contend that the Department should instead use the price quote supplied by a producer of glycine in India. Also, petitioners argue that Nantong did not correctly report its per-ton usage of MCA. Respondent rebuts petitioners' suggested use of the price quote supplied by an Indian glycine producer because the Department's preference, according to respondent, is not to use export values. Further, respondent notes that petitioners' allegation that import prices do not reflect the 35 percent Indian Customs duty and thus are not market prices is incorrect, because the Indian government has an advance license scheme, which allows Indian glycine producers to import raw materials, such as chloroacetic acid, duty free to produce glycine, citing to Nation Ford. Furthermore, Nantong states that the Department has stated in a past case that its preference in valuing factors of production was to use import prices instead of domestic prices, because they are duty-exclusive, citing Final Results of Antidumping Administrative Review; Heavy Forged Hand Tools from the People's Republic of China, Decision Memo, Comment 6 (July 13, 2000). Finally, Nantong notes that its factors of production for chloroacetic acid had been verified and the Department found no discrepancies in the usage amounts. See Verification Report at page 16. Petitioners rebut Nantong's argument that the Department should use Nantong's actual import prices for MCA in the final results for two reasons. First, petitioners argue that Nantong did not receive the MCA shipment during the POR. Second, petitioners contend that Nantong has presented different versions of how Yotech acquired its MCA. Petitioners maintain that the Department should use MCA price quotes it supplied on July 26, 2000 because the quotes are within or just outside the POR, are net of taxes, and are consistent with world and export prices. Petitioners contend that Ashok is an Indian producer of glycine and MCA, and that Ashok sold MCA during the POR at a price consistent with three other price quotes submitted by petitioners in their factor value submission. Further, petitioners state that respondent misrepresents the Department's practice with regard to the use of export prices. Petitioners specifically contend that the Department's practice is simply to use the best information available. Furthermore, petitioners contend that respondent's reliance on Nation Ford is misplaced. Petitioners assert that, in Nation Ford, the court upheld the Department's use of an Indian import price of aniline rather than an Indian domestic price because evidence on the record in that case demonstrated that the domestic price was distorted by a high (85%) tariff. In contrast, in this case, according to petitioners, there is no record evidence that Indian domestic prices of MCA are distorted. Moreover, petitioners note that respondent's reliance on Nation Ford (which pertained to the Department's review of Sulfanilic Acid from China) is not correct because the Department used a domestic price in a recent review of that product and that price met certain criteria established by the Department. See Issues and Decision Memo for the 1997-1998 Final Results of Administrative Review; Sulfanilic Acid from the People's Republic of China ("Sulfanilic Acid"), 65 FR 13366, Comment 4 (March 13, 2000). Because the price quotes for MCA are exclusive of taxes, petitioners assert that, consistent with Sulfanilic Acid, the Department should use the price quotes on the record. Finally, petitioners contend that if the Department uses the import prices from Chemical Weekly to value MCA, it should use the full range of import prices because they are more complete and cover the entire POR. Department's Position: We disagree, in part, with both petitioners and respondent. After considering the comments and information provided by the parties, we have determined that it is proper to value MCA using the full range of publicly available import prices found in Chemical Weekly. First, we disagree with respondent that the Department should be using Nantong's import price to value MCA. As the Department stated in its preliminary factor valuation memorandum, "we found evidence that indicated that the material did not enter Nantong's inventory until after the POR, and that the material had never been posted to the ledgers either as a payable or as an entry to the Raw Material inventory." See Verification of the Response of Nantong Dongchang Chemical Industry Corp. with Regard to the Sales and Factors of Production of Glycine ("Verification Report") dated August 21, 2000 at page 17. Therefore, as the input was not recognized in Nantong's accounting records during the POR, either as inventory or as a purchase, we will not consider the cost of this particular input using Nantong's "price" from Yotech. Furthermore, even if the MCA had entered the inventory or had been reflected in the company's books during the POR, Nantong purchased the MCA from Yotech, and since Nantong did not acquire the MCA directly from a foreign supplier, the Department is not required under its regulations to consider the price Nantong paid for the MCA. See 19 CFR 351.408(c)(1). We also disagree with petitioners that we should use the price quotes provided by petitioners in their July 26, 2000 submission. First, we note that some of the price quotes that petitioners submitted are outside of the POR. As petitioners themselves have noted, it is established Department preference to use surrogate values which are contemporaneous to the POR. Second, it is also the Department's established preference not to use export prices where other data is available which more reliably reflects the price of that input in the surrogate country. As we stated in Manganese Metal from the People's Republic of China, Final Results and Partial Recission of Antidumping Duty Administrative Review, 63 FR 12442 (March 13, 1998), "we use, where possible, publicly available factor prices that are broad market averages (not export-related) contemporaneous with the POR, specific to the input in question, and exclusive of taxes." See also Manganese Metal from the People's Republic of China, Final Results of Second Antidumping Duty Administrative Review, 64 FR 49447 (September 13, 1999), where the Department stated that it will use publicly available average non-export values as surrogate values where possible and appropriate. Further, the Department disagrees with petitioners that the prices used in the preliminary results from Chemical Weekly were too low because they are allegedly exclusive of customs duties. In Nation Ford, the Court determined, "even if the record had shown that Indian importers paid duties or mark-ups, Commerce would not have had to add them to the surrogate value . . . if it decided that the result was not representative of what the price . . . would have been in a theoretical market-economy PRC." Nation Ford Chem. Co. v. United States, 985 F. Supp. 133, 135 (CIT). Furthermore, there is no record evidence justifying a duty adjustment to the Chemical Weekly published prices of MCA. Additionally, for the final results, the Department agrees with petitioners that it is proper to use the full range of MCA import prices from Chemical Weekly (provided by petitioners in their September 27, 2000 surrogate value submission) to value MCA. Finally, the Department disagrees with petitioners' allegation that Nantong did not correctly report its per-ton usage of MCA. As we stated in our verification report, "we found no discrepancies in the usage amount reported to the Department." See Verification Report at page 17. Comment 2: Hexamine Nantong argues that for the final results the Department should use an average of all the hexamine prices in India. Respondent notes that in the preliminary results, the Department only used an average of prices in the Mumbai and Chennai markets in India. Respondent contends that the Department should not use petitioners' suggested prices from the General Market Information in the Indian Chemical Weekly because those prices increase the hexamine price almost 60 percent from the preliminary results price, which brings into question whether some of the petitioners prices are aberrational. Petitioners argue that the Department should use the average of the domestic prices of hexamine during the POR published in the "General Market Information" section of Chemical Weekly, (i.e., 49. 6087 Rs/Kg.) rather than the Indian domestic prices in Mumbai and Chennai. Petitioners contend that using prices from the "General Market Information" section are appropriate because they reflect prices throughout India and do not include local and excise taxes, and include specific local markets such as Chennai and Delhi. Department's Position: We agree with petitioners that the Department should be using an average of all the hexamine prices in India. In the preliminary results, the Department used only the average prices reported in Chemical Weekly for the Chennai and Mumbai regional markets because at the time of the preliminary results, general market information on hexamine was not available. Therefore, for the final results, we have used the surrogate value information on hexamine for the POR from the "General Market Information" of Chemical Weekly provided by petitioners on September 27, 2000. See Surrogate Value Memorandum dated November 25, 2000. With regard to respondent's assertion that using an average of all prices may be aberrational, we note that a mere comparison of the surrogate value used in the preliminary results with that we are using in the final results is, by itself, insufficient to warrant a claim that the latter figure is aberrational. That is, the comparison could also indicate that the figure used in the preliminary results was "aberrational". Given the lack of evidence cited by respondent in support of its claim, we find no reasonable basis to agree with respondent on this issue. Comment 3: The Valuation of Water Nantong argues that the Department should not value water separately in the final results as it did in the preliminary results. Respondent points out that in other Chinese proceedings the Department has determined water to be a factory overhead cost and has not included water as a direct cost. Nantong notes that the Department currently applies two groups of precedents when valuing water, either as a direct material cost or as factory overhead. In the first instance, respondent states that the Department valued water as a direct material cost because the Department was able to exclude the cost of water from the fixed overhead expenses in the financial statements. See e.g., Final Determination of Sales at Less Than Fair Value: Synthetic Indigo from the People's Republic of China, 65 FR 25706, (April 27, 2000)("Indigo"); Preliminary Results of Antidumping Administrative Review: Persulfates from the People's Republic of China, 65 FR 18963, 18966 (April 27, 2000). Further, respondent points to cases in which, conversely, the Department valued water as a component of factory overhead because the Department did not know (because the data did not indicate) whether the cost of water was included in the surrogate value for fixed overhead. See e.g., Final Results of Antidumping Duty Administrative Review; Sebacic Acid from the People's Republic of China, 65 FR 49537 ("Sebacic Acid") (August 14, 2000); 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). Also, respondent asserts that the Department will not value water separately if it knows that the cost of water is included in the surrogate value for fixed overhead, citing Sebacic Acid. Thus, Nantong states that if the Department has evidence that water is not included in fixed overhead, it should be valued separately. However, if the Department determines that water is included and identifiable, but is "excluded" or extracted from fixed overhead as it was in Indigo, then the Department must follow its practice and not value water separately. Further, Nantong contends that if the Department continues to value water separately, then it should not value the water Nantong pumps from its wells and the canal as a cost because Nantong does not incur a cost. Respondent argues that it does not pay for water from the wells or canal, but only incurs a cost for the electricity it uses to pump the water from the wells and canal, and that the electricity has been reported. Furthermore, respondent noted at verification that it does not keep track of the water pumped from the well or canal because it is not a cost. Moreover, Nantong states that in prior cases, the Department did not value water from the factory's wells because "[a]t verification we found that the two factories we chose to verify did not incur costs for water used in the production process for the subject merchandise." See Final Determination of Sales at Less Than Fair Value; Sulfanilic Acid from the People's Republic of China, 57 FR 29705, 29707 (July 6, 1992). Also, respondent notes that the Department treated water as a fixed overhead in an administrative review, stating "Yude and Zhenxing have their own wells from which they pump water for use in the production process; the water is then recirculated." See Final Results of Antidumping Duty Administrative Review; Sulfanilic Acid from the People's Republic of China, 61 FR 53711, 53716 (October 15, 1996). Lastly, respondent contends that well and canal water are not costs in either China or the United States and should not be valued as such, and it has the right to sell water pumped from its wells and has reported water purchased from the well of an adjacent factory. Petitioners argue that the Department properly valued water separately as a material input in the preliminary results, and for the final results should continue to value water separately, using the same surrogate value as in the preliminary results. Petitioners state that the Department has valued water separately in situations in which water expenses are not included in factory overhead surrogate value. Petitioners point out that Daurala Organics' factory overhead ratio from its financial statements excludes water consumption. Therefore, petitioners contend that because water is not included in Daurala Organics' factory overhead ratio, and consistent with the Department's practice, water should be treated as a direct input and valued separately. Petitioners continue that the Department values water separately where water expenses are not included in the factory overhead surrogate value, and values water separately from overhead expenses if water is required for part of the production process that is identified as a direct material input, which applies in this case. Petitioners assert that the financial statements on the record (i.e., Daurala Organics and Atul) do not include water expenses in overhead. Further, petitioners contend that respondent's supporting citations on this issue are misleading. First, petitioners note that respondent cites to the preliminary results in Helical Springs rather than the final results. In the final results, petitioners note that the Department clearly explains its reasoning for valuing water separately from factory overhead. See Final Results of Antidumping Duty Administrative Review; Certain Helical Spring Lock Washers from the People's Republic of China, 62 FR 61794, 61800 (November 19, 1997). Second, petitioners note that for Sulfanilic Acid, again respondent only took selective information in making its argument, but failed to mention in that case that the Department did not segregate the water cost from other factory overhead expenses because there was no line item that could identify the cost. See Sulfanilic Acid. Petitioners argue that the Department will separate water out from factory overhead if it is a line item in the surrogate financial statements, and if other facts in the case indicate that water should be treated as a direct input, as is the case in this proceeding. Additionally, petitioners argue that if the Department continues to value water separately in the final results, it must include the value of Nantong's full water usage, regardless of the source. Again, petitioners state that the respondent did not fully articulate the Department's position in the investigation of Sulfanilic Acid because in the final determination, the Department was silent on whether water was included in the ratio for factory overhead. Also, petitioners claim that, in the 1996 review of Sulfanilic Acid, the Department did not value water separately because it was included in factory overhead, consistent with the Department's policy. Finally, petitioners argue that in a recent administrative review, the Department addressed the valuation of water obtained from an on-site well, and specifically determined that the water should be valued as a separate input. See Final Results of Antidumping Duty Administrative Review; Porcelain-On-Steel Cooking Ware from the People's Republic of China, 62 FR 32757, 32759 (June 19, 1997). Department's Position: We disagree with respondent and have continued to include water as a material input in the calculation of the production cost of glycine. Following the Department's criteria in Saccharin, we value water if it is required for a particular segment of the production process. 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)("Saccharin"). Based upon respondent's description of the production process during our plant tour at verification, we consider respondent's use of water in the first stage of production as a requirement for that particular segment, because during the first stage of production, chloroacetic acid is dissolved in water. See Verification Report at page 15. Additionally, we consider respondent's use of water in the filtering process as a requirement for that particular stage, because washing of the subject merchandise takes place at both the technical and refining stage of glycine production. See Verification Report at page 15. Because the water for Nantong's production factory is a required input for different segments of the Nantong's production process, the Department's practice is to value water separately like other direct material inputs required in the production process. Moreover, in determining whether an input should be valued separately or considered valued in overhead, the Department stated in Bicycles that the input in question should be valued separately if it is "essential for producing the finished product . . ." and if the input appears "to be [a] significant input into the manufacturing process rather than miscellaneous or occasionally used materials, i.e., cleaning supplies which might normally be included in consumables." See Notice of Final Determination of Sales at Less Than Fair Value: Bicycles from the Peoples Republic of China, 61 FR 19026 (April 30, 1996)(Bicycles). Based upon the plant tour during verification, water is a significant input into the manufacturing process. Unlike the instant case, in Synthetic Indigo and Sebacic Acid, the Department included the water value in the factory overhead because there was no record evidence that water was a significant input into the manufacturing process of either product. Further, in neither case did any interested party make an argument that water was a significant input, but only that water was a direct material or that it was included in the factory overhead surrogate value. However, in Saccharin, the Department valued water separately because it was a requirement for a particular segment of the production process, and it was more typical of items that are accounted for as direct material inputs, rather than as overhead items. See Saccharin, 59 FR 58818, Comment 7. Here, as in Saccharin, the water was also a required input in segment's of the production process. Simply because respondent does not out source and/or pay for all of its water does not mean that the water does not have value, nor does it alter the fact that it is a specific, required input in the production process. Therefore, we have valued it as a separate input. Comment 4: Electricity Nantong argues that if the Department continues to include the water from wells in its calculation, it should not include the electricity to pump the water because it would be double-counting. Respondent notes that the only electricity cost with respect to water is pumping the water from the well and delivering it to the factory. However, respondent states that in the preliminary results the Department used a surrogate value for water, which included the cost of delivering the water to the factory. Thus, Nantong contends that any additional electricity cost would be double- counting. Additionally, Nantong asserts that if the Department determines to value the water in the wells and the canal, it should not value the electricity lost in the lines. At verification, Nantong explained that certain electricity is lost in the lines, but was included in its factor of production. See Verification Report, at page 18, dated August 21, 2000. Respondent notes that Section 773(c)(1) of the Act states that the Department "shall determine the normal value of the subject merchandise on the basis of the value of the factors of production utilized in producing the merchandise and to which shall be added an amount for general expenses and profit plus the cost of containers, coverings and other expenses." Therefore, Nantong maintains that the Department should not value the electricity that is lost in the lines because it is not a factor consumed in the production of glycine. Petitioners assert that the Department should continue to include the electricity used to pump well water in its calculation of Nantong's electricity usage in the final results because this electricity is part of the measure of all electricity used by Nantong to produce glycine. Thus, it is properly included in Nantong's electricity usage. Additionally, petitioners argue that the Department should continue to include the line loss charge in its calculation in the final results. Petitioners state that the Department calculated Nantong's electricity usage from invoices from the provider, and the provider charged Nantong for the full amount of electricity delivered. Petitioners assert that line loss is a characteristic of electricity transmission. Moreover, petitioners note that the Department has determined that such losses are costs that must be reported, citing, Final Results of Antidumping Duty Administrative Review, Cyanuric Acid and its Cholrinated Derivatives from Japan, 55 FR 1690, 1693 (January 18, 1990). Department's Position: We disagree with respondents. The electricity the Department included as a factor of production in the preliminary results was not only for pumping the water from the wells but also the electricity usage that Nantong used to produce glycine during the POR. Additionally, the Department verified the electricity usage rates based on the allocation of production of each workshop. See Verification Report at page 19. Moreover, at verification, respondent's allocation did not reflect the electricity used to pump water from the wells versus electricity used in the production process, and we found no information at verification that would allow the Department to make such an adjustment. Additionally, respondent's argument that the Department should exclude charges related to line loss does not change the fact that line loss charges are actual costs that are incurred in the production of subject merchandise. Comment 5: Electricity Prices Petitioners argue that the Department used the correct price of electricity, which was derived from the Energy Prices and Taxes ("EP&T"), in the preliminary results and should continue to use that price in the final results. Petitioners state the EP&T price is more appropriate than the respondent-provided prices from the TERI Energy Data Directory and Yearbook ("TERI") because the EP&T price reflects electricity rates paid by industrial users in India. Also, the EP&T price reflects rates paid by the industry, while the TERI rates reflect the unit cost of power supplied by India's State Electricity Boards. In this regard, petitioners contend that the Department has indicated a preference for rates specific to the industrial sector over an average rates paid by all users, citing, e.g., Notice of Final Determination of Sales at Less Than Fair Value; Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). Nantong argues that the data used by the Department to value electricity in its preliminary results are inclusive of additional expenditures, subsidies or other price manipulations. Consequently, respondent asserts that the Department relied upon values which were aberrational and should not be used in the final results, because they are twice as high as respondent's supplied data. Thus, respondent contends that the Department should use the surrogate values that it submitted on September 27, 2000. Department's Position: We agree with petitioners. We have determined that we will continue to use the surrogate value for electricity used in the preliminary results rather than respondent's recently submitted surrogate value for electricity because the EP&T price reflects electricity rates paid by industrial users in India. The Department has stated in a prior proceeding that its preference is to use an industrial user electricity rate than a consumer electricity rate. See e.g., Notice of Final Determination of Sales at Less Than Fair Value; Pure Magnesium and Alloy Magnesium from the Russian Republic, 60 FR 16440 (March 30, 1995). Further, respondent has not provided any record evidence supporting its assertion that the surrogate values the Department used in its preliminary results were inclusive of additional expenditures, subsidies or other price manipulations. Accordingly, we have no record evidence to determine whether respondent's statement is factually correct, and thus, we have no reasonable basis to agree with respondent on this issue. Comment 6: Coal Petitioners state that the Department used the correct price of coal, derived from the Indian Import Statistics ("IIS"), in the preliminary results, and should continue to use that price in the final results. Petitioners argue that the prices respondent provided from the EP&T with support from the 1999/2000 TERI Energy Data Directory and Yearbook ("TERI") are not relevant because these tables do not demonstrate that the IIS data are aberrational, as respondent has argued. Additionally, petitioners contend that, unlike the IIS data, the TERI data is not specific to steam coal. Further, petitioners assert that the TERI tables do not reflect prices to Indian end-users of steam coal but instead are "pithead" prices, were supplied by only two Indian coal companies, and do not reflect the whole Indian coal industry. Finally, petitioners note that continuing to use the IIS would be consistent with past precedent where the Department found IIS data to be a better match than EP&T data, citing Final Determination of Sales at Less Than Fair Value; Certain Non-Frozen Apple Juice Concentrate, Decision Memorandum (April 6, 2000). Nantong contends that for the final results, the Department should use the surrogate values that it submitted on September 27, 2000 regarding steam coal. Respondent notes that this data was recently used to value coal in the Sulfanilic Acid final results. See Memorandum, Surrogate Values Used for the Preliminary Results of the 1997-1998 Administrative Review of Sulfanilic Acid from the People's Republic of China, (August 31, 1999) at pages 4-5. In that review, respondent asserts that the Department properly determined that the reported average domestic market price for steam coal was the most appropriate surrogate for valuing steam coal costs. Department's Position: We agree with petitioners. At verification, the Department discovered that the only type of coal that the Nantong production facilities used was steam coal. See Verification Report at page 18. Thus, the coal prices that we used in our preliminary results were steam coal prices. See Surrogate Value Memorandum dated August 28, 2000. Additionally, respondent has not presented any evidence that the steam coal prices that the Department used in its preliminary results are aberrational. Further, in the recently completed 1998-1999 administrative review of Sebacic Acid, the Department used IIS data for steam coal. See Final Results Factors Valuation Memorandum dated August 8, 2000. Finally, the IIS data for steam coal used in the preliminary results is more current (i.e., April 1997 through March 1998) than the respondent-provided data (i.e., 1996) and better reflects the market conditions for steam coal since it is closer to the POR. Therefore, we continue to use the weighted- average unit import price for steam coal derived from IIS for the period April 1997 through March 1998 for the final results, because respondent has not provided any evidence that the EP&T coal prices are superior to the IIS data. Comment 7: SG&A, Overhead, and Profit Nantong argues that the Department's use of Daurala Organics Ltd.'s ("Daurala Organics") data as the source for surrogate values for SG&A, overhead, and profit is improper because Daurala Organics is a producer of phenylglycine, a product that is not comparable to glycine. Respondent notes that section 773(c)(2) of the Act states that, if the Department is unable to find subject merchandise in the surrogate country, the Department must determine the normal value using merchandise that is "comparable to the subject merchandise." Further, respondent comments that the Department's regulations state that "for manufacturing overhead, general expenses, and profit, the Secretary normally will use non- proprietary information gathered from producers of identical or comparable merchandise in the surrogate country, " citing 19 CFR 351.408(c)(4). Respondent also notes that recently, the Court of International Trade ("CIT") found the Department's interpretation of "comparable" merchandise unreasonable because the Department did not examine whether the products were comparable in value or use, citing Union Camp Corp. v. United States, 8 F. Supp. 2d 842, 848-49 (CIT 1998). Nantong contends that the Department appears to have used the SG&A, overhead, and profit of phenylglycine merely because of the similarity of the name to glycine. Respondent asserts that glycine and phenylglycine have different uses and values. Respondent continues that phenylglycine is a different product than glycine: specifically glycine is edible, phenylglycine is not edible, and indeed, one of the reactants in the production of phenylglycine, HCN, is a toxic substance. Thus, Nantong argues that the Department's use of Daurala Organics as a surrogate for glycine is groundless and without scientific basis. Therefore, respondent contends that it is not appropriate to compare the aforementioned costs in the production of phenylglycine with glycine, and that the Department should use factory overhead, SG&A, and profit from the Reserve Bank of India ("RBI") for the chemical industry, as it has done in other administrative reviews, e.g., Sulfanilic Acid and Sebacic Acid. Petitioners argue that for the final results, the Department should continue to use the factory overhead, SG&A and profit ratios derived from Daurala Organics' financial statements. Petitioners contend that the Daurala financial statements are superior to the RBI data presented by respondents because the RBI data is stale data (i.e., 1992-1993) and because the data is not specific to the Indian glycine industry (i.e., Processing and Manufacture: Metals, Chemicals and Products Thereof). Additionally, petitioners state that respondent's assertion that phenylglycine is an entirely different product from glycine is not correct. Petitioners assert that glycine and phenylglycine are "cousins," and note that MCA is a major input in both. Petitioners claim that the production processes for both are similar. Further, petitioners point out that they have supplied financial statements for two periods (i.e., 1998- 1999, 1999-2000) and the Department should use both because the POR encompasses both years, as it has in another administrative review. See Final Results of Antidumping Duty Administrative Review; Persulfates from the Peoples's Republic of China, 64 FR 69494, 69497 (December 13, 1999). Petitioners note that the Department should use both of Daurala's financial statements because Daurala's 1998-1999 financial statement differ from the 1999-2000 due to the increase of raw material prices during 1999-2000 reporting period. Thus, petitioners claim that Daurala's financial ratios derived solely from its 1999-2000 financial statements are not representative of factory overhead, SG&A and profit. Addressing petitioners' assertion regarding the contemporaneity of the data, respondent states that the Department recently used the RBI data in its final determination of Sebacic Acid. Next, Nantong argues that petitioners' allegation that phenylglycine and glycine are similar in nature is misleading. First, respondent notes that the Merck Index indicates that phenylglycine is a different product than glycine. See The Merck Index at pages 765 and 1256, included in respondent's submission dated September 27, 2000. Also, Nantong states that The Merck Index notes that glycine is used in food production as a "non-essential amino acid for human development," while phenylglycine is used in the synthesis of indigo, which is a dye. Furthermore, respondent contends that with regard to petitioners' assertion that the Daraula ratios are "artificially low," these ratios total an additional 55 percent, compared to an additional 45 percent for the RBI data. Thus, respondent states that the question for the Department should be which set of ratios best represents the ratios in China if the production costs were set by market forces. In this regard, Nantong argues that the Department should use the Reserve Bank of India data because the ratios are for the Indian chemical industry as a whole, without any aberrational data, and not for one non-comparable product with a similar name. Petitioners state that the Department should not consider respondent's argument because the deadline for submitting factual information and factor value information had passed when they submitted their arguments in their case briefs. Also, petitioners assert that the Department should remove from the record all information submitted by respondent in its case brief. Petitioners argue that the Department must follow the statute and use best available information in choosing the surrogate value information, citing section 773(c) of the Act. Petitioners state that their surrogate value information is more relevant and reliable than respondent's information because respondent's information is from 1992/1993, and covers a broad range of industries in India (e.g., manufacturing metals), including chemicals, which are not comparable to the glycine industry. Further, petitioners contend that respondent's claim that phenylglycine is a different product from glycine based on information in the Merck Index is incorrect. Petitioners note that the Merck Index shows that glycine and phenylglycine contain the same elements, and have similar solubility properties. Furthermore, petitioners assert that respondent provided no support for its claim that the production of glycine does not include the use of a toxic material input. Further, petitioners argue that respondent's attempt to compare a single aspect regarding the uses (i.e., glycine is edible and phenylglycine is not) is misplaced. Therefore, petitioners argue that respondent has not provided evidence to demonstrate that phenylglycine and glycine are different products. As noted in our background section, we requested additional information and/or comments from interested parties regarding the comparability of phenylglycine and glycine. We have summarized the interested parties comments as follows. Petitioners state that glycine and phenylglycine are both amino acids, and assert that phenylglycine is simply a glycine molecule with a benzene ring attached in place of a hydrogen molecule. Additionally, petitioners argue that the similarity between the two chemicals is reflected in the production processes in which the same inputs are used and applied in a similar manner, resulting in production stages in which the relative costs are similar. Petitioners note that different primary ingredients may be used to make the same end product. Specifically, petitioners note that while Nantong uses MCA and ammonia to produce glycine, Daurala uses either MCA and aniline, or benzaldehye, cyanide and ammonium carbonate to produce phenylglycine. Petitioners characterize these primary ingredients as bulk chemicals that are relatively inexpensive, toxic and hazardous, and require special handling and equipment. Petitioners continue that the production processes and equipment that Nantong and Daurala use to produce glycine and phenylglycine are similar at all stages of production. Further, petitioners assert that both Nantong and Daurala use a batch production process to produce the respective products. Petitioners describe the stages of production for both products as follows: first, the primary ingredients are mixed in a vat; second, ammonia is added (Nantong adds ammonia, while Daurala adds ammonium carbonate and cyanide); third, the reactions are stabilized; fourth, filtering occurs, determining the yield (which, petitioners maintain, requires substantial cost and energy to operate centrifuges, distillers, and chillers); fifth, the intermediate product undergoes a drying process (in which both Nantong and Daurala use similar equipment); sixth, the material is purified (using similar equipment and processes, as in step four); finally, the material is dried, sized, and packed. Petitioners next argue that the pharmaceutical grade glycine produced by Nantong and Daurala's phenylglycine have similar uses; specifically, both are used by the pharmaceutical industry as part of medicines or in the production of medicines. Respondent argues that glycine and phenylglycine are "completely different" products: while phenylglycine is used in the production of chemical dyes, glycine is used in the preparation of food and drugs. Respondent further notes that glycine is edible, whereas phenylglycine is a toxic chemical, unfit for consumption. Additionally, respondent notes that glycine is a white crystal and crystalline powder, with a melting point of 4240 degrees centigrade, while phenylglycine is a white or light yellow crystalline or powder with a melting point of 126-128 degrees centigrade. Respondent states that it produces glycine in two production stages: the first stage results in the production of technical/feed grade glycine; the second stage results in the production of food/pharmaceutical grade glycine. Respondent outlines the production steps in the first stage as follows: first, chloroacetic acid is added to water; second, liquid ammonia is added to hexamethylene-tetramine/urotropin; third, methyl alcohol is added to the mixture; fourth, the resulting material is filtered; fifth, the material is dried; finally, the material is sized and bagged. The production of food/pharmaceutical grade glycine continues as follows: first, glycine is dissolved into distilled water; second, the material is decolorized (through the addition of a liquid phase activated carbon into the solution); third, the material is filtered through a centrifuge process; lastly, the material is dried, sized, and packed. Respondent discusses the production process for phenylglycine as consisting of the following steps: first, formaldehyde, hydrocyanic acid, and aniline are mixed, and alcohol is added as a solvent; second, the solution is heated; third, the material is filtered; finally, the material is annealed with dilutant alcohol to achieve pure phenylglycine. Respondent asserts that there is no material input in the production of glycine that is toxic, unlike phenylglycine. Respondent argues that phenylglycine is primarily used in the production of chemical dyes and initiator systems for photographic and computer films. Respondent asserts that petitioners' claims regarding similarities in the production processes and equipment used in the production process are unsubstantiated by fact. In this regard, respondent notes that petitioners' reasoning is based on an affidavit of an employee of the petitioner, and his statement that the production processes of Nantong and Daurala are "strikingly similar" because they are both engaged in the production of "fine chemicals." Respondent notes that while petitioners address the relative production processes, petitioners do not address issues involving either : (1) the comparability and costs associated with the different raw materials used in producing these compounds; (2) the comparability and costs associated with the different adjunct chemical used in producing these compounds; or (3) the comparability and cost associated with the process steps involving concentration, crystallization, isolation, or filtering of the subject compounds. Respondent also argues that petitioners do not offer any evidence that Nantong and Daurala's production processes, which respondents contend involve dissimilar chemical compounds, are at comparable terms with regard to: (1) production steps; (2) relative difficulty; (3) time expended; (4) the cost associated with the production steps; and (5) yields. Further, respondent notes that Leo Grondine, Vice President of Operations for Hampford Research, Inc. stated that phenylglycine and glycine are wholly incomparable products. See Garvey, Schuber & Barer letter of December 14, 2000, attachment 1. Also, respondent notes Mr. Groundine stated that phenylglycine is a relative expensive product costing approximately $50 per pound. Therefore, respondent argues that phenylglycine and glycine are different products, and it is not proper to consider phenylglycine comparable to glycine. Thus, respondent concludes that the Department should use the RBI surrogate values for factory overhead, SG&A, and profit for this review. Petitioners argue that Nantong's comments are simply incorrect. Petitioners contend that Nantong's comments do not address the comparability between the pharmaceutical grade glycine that is subject to this review and the pharmaceutical grade phenylglycine produced by Daurala. Petitioners state that Nantong's assertion regarding inputs are incorrect, because both glycine and phenylglycine can be made using either an acid or an aldehyde as a primary input. Additionally, petitioners assert that Nantong's statements about the differences between the two production processes are incorrect because Nantong compares an industrial process for producing pharmaceutical grade glycine with laboratory procedures for producing an industrial grade phenylglycine. Further, petitioners argue that Nantong's description of glycine's production process glosses over key parts of the production process, such as the symmetry between each of the steps employed in producing both glycine and phenylglycine. Furthermore, petitioners contend that Nantong erroneously compares the uses of a pharmaceutical grade glycine with an industrial grade phenylglycine. Lastly, petitioners maintain that Nantong's assertion that the production of glycine only involves non-toxic inputs is false, because both glycine and phenylglycine involve inputs (e.g., MCA) that are toxic and corrosive. Department's Position: In the preliminary results, the Department calculated surrogate values for factory overhead, SG&A and profit ratios derived from Daurala Organics' financial statements. We used this information because neither we nor any of the interested parties were able to find available information from a producer of glycine in India. However, for the final results both petitioners and respondent provided additional data on financial ratios. 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., Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate from the People's Republic of China, ("Creatine")64 FR 71104, 71108 (December 20, 1999); Notice of Final Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from the Peoples' Republic of China ("PVA"), 61 FR 14057, 14061 (March 29, 1996) and section 351.408(c)(4) of the Department's regulations. In this proceeding, there is no information on the record regarding the glycine industry in India. Alternatively, we have the following Indian industry information on the record: 1998/1999 and 1999/2000 financial statements from an Indian producer of phenylglycine (Daurala Organics); and 1992/1993 Indian governmental industry data for "Metal, Chemicals and Products Thereof." After reviewing publicly available information submitted for the record and available to the Department in this administrative review, we have determined that Daurala's financial data provides the best basis for valuing overhead, SG&A, and profit. Based on our analysis of the information submitted by petitioners and respondent on December 7 and 14, 2000, we found that glycine and phenylglycine have similarities with regard to material inputs and production processes. For example, both processes appear to use similar equipment (e.g., drying equipment, centrifuge, filter, evaporators, etc.) in manufacturing the glycine and phenylglycine. See Letter from Wilmer, Cutlter & Pickering dated December 7, 2000. Additionally, both products have similar production processes (mixing, crystallization, filtering, drying, etc.), and add and subtract chemical compounds at the same step in the production process. Additionally, in producing the glycine and phenylglycine, the steps involved in the production processes appear to be similar: step 1 involves initial inputs; step 2 involves adding and mixing additional chemicals; step 3 involves stabilizing the compound; step 4 involves crystallizing and filtering out impurities; and step 5 involves drying the compound. See Letter from Wilmer, Cutlter & Pickering dated December 7, 2000. Given the similarities in the production processes, we have concluded that Daurala's financial ratios better reflects the overhead, SG&A and profit levels that would be incurred by the producers of glycine. Thus, we have determined that phenylglycine constitutes comparable merchandise for purposes of surrogate selection. Furthermore, the Department notes that it is our practice to use financial data that are more narrowly limited to a producer of comparable merchandise than data based on a wider range of products when the former data are available. See Creatine. Therefore, for the final results, we have continued to use the surrogate values for factory overhead and SG&A from our preliminary results. While we considered the end-uses of the glycine and phenylglycine in making our determination, and acknowledge that both products have different end-uses (pharmaceutical products versus dyes, as respondent has enumerated in both their comments and additional requested information), we believe that in this case, the similarity of the production processes of both products outweighs any difference in the final use of the products. Additionally, the Department considered respondent's concerns regarding the comparability and costs of glycine versus phenylglycine. While respondent stated that petitioners did not offer any evidence that glycine and phenylglycine are produced with comparable chemical compounds, neither has respondent submitted any record evidence showing that the raw material costs used to produce glycine differ from the raw material costs used to produce phenylglycine. Additionally, respondent has not provided any evidence showing that the costs of any of the stages of production differ between producing glycine versus phenylglycine. Thus, we have no record evidence to determine whether the raw material costs are different in producing glycine and phenyglycine. Further, respondent has stated that phenyglycine is an expensive product costing approximately $50 per pound. Again, respondent has not provided any record evidence supporting its assertion on the cost of phenylglycine, and has provided no record evidence regarding the U.S. dollar cost per pound of glycine. Therefore, we have no record evidence to determine whether respondent's statement is factually correct. Finally, with respect to petitioners' claim that respondent submitted untimely information and/or argument, we disagree. The information that petitioners are referring to consists of RBI data that was properly on the record (submitted with respondent's surrogate value information on September 27, 2000), and thus was timely. As such, we have not rejected any information on the record as untimely. Comment 8: Eligibility for a New Shipper Review Petitioners argue that neither Nantong nor Yotech Chemical Industrial Co. ("Yotech") is eligible for a new shipper review under the Department's regulations because neither meets the requirements to be considered a new shipper. Petitioners contend that to be eligible for a new shipper review, the new shipper must not be affiliated with any exporter or producer that exported the subject merchandise to the United States during the POI, citing the Department's regulations 19 CFR 351.214(a) and (b)(iii). Petitioners assert that both Nantong and Nantong Dongchang Yotech Chemical Industrial Co. ("Dongchang Yotech") are affiliated with Yotech, and Yotech produced glycine for export to the United States during the POI. Further, petitioners assert that even if Yotech did not actually ship glycine to the United States during the POI, it did make an offer for sale of glycine in the United States during the POI and, thus, is ineligible for a new shipper review. Petitioners argue that the Department should find that Yotech exported subject merchandise to the United States during the period of investigation ("POI")(i.e., February 1, 1994 through July 31, 1994), based on petitioners' claim that during the POI, Yotech was actively soliciting sales in the United States. Petitioners note, in this regard, that Yotech's web site states that it has ten years of experience in exporting to the United States. Additionally, petitioners assert that there is no evidence on the record supporting Yotech's assertion that it did not export during the POI, and that the burden of proof lies with the party in possession of the necessary information, citing Tianjin Mach. Import & Export Corp. v. United States, ("Tianjin") 806 F. Supp. 1008, 1015 CIT (1992). Further, petitioners state that Yotech's claim that it did not export to the U.S. during the POI because it did not posses an export license is not proof that Yotech did not make U.S. export sales during the POI, because Yotech could have made sales to the U.S. through a trading company, in which case Yotech would have had knowledge that the glycine was bound for the United States. Petitioners argue that Nantong and Yotech are affiliated through their joint venture Dongchang Yotech and through relationships relating to the production, sale and pricing of glycine. Petitioners state that Nantong and Yotech formed Dongchang Yotech to produce glycine. Petitioners contend that under the joint venture agreement, Yotech provides Dongchang Yotech technical expertise in manufacturing glycine, quality control, quality inspection, product sales and price quotes, R&D, and staff training. Petitioners state that the Tariff Act states that two entities are affiliated where there are "two or more persons directly or indirectly controlling, controlled by or under common control with, any person," citing section 771(33)(E) of the Act. Additionally, petitioners contend that the Department has defined "control" as being in a position legally or operationally to exercise restraint or direction over the other entity; evidence of the existence of control is not necessary. See Notice of Final Determination of Sales at Less Than Fair Value; Stainless Steel Sheet and Strip in Coils from Mexico, 64 FR 30790, 30797 (June 8, 1999). Further, petitioners argue that the Department's regulations state that the Department will not find two companies affiliated unless the control relationship "has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product," citing 19 CFR 351.102(b). Petitioners state that during the 1998 administrative review of this product, Dongchang Yotech supplied the glycine that Yotech sold, and Yotech sold glycine on behalf of Dongchang Yotech. Additionally, petitioners note that, in that administrative review, Yotech identified Dongchang as its subsidiary. Thus, petitioners argue that these actions provide evidence that Yotech has the legal ability and the practical capability to exercise control over Dongchang Yotech in production, pricing, and cost of glycine. Moreover, petitioners argue that Nantong is the majority owner of Dongchang Yotech and manages its production and provides certain services (e.g., accounting). Petitioners contend that Nantong controls Dongchang Yotech through production, pricing, and cost of glycine. Petitioners also assert that Nantong's assertions that Yotech only provides the name of the customers and does not participate further in the sale process is contradicted by the terms of the joint venture agreement. See Verification Report at page 4. Furthermore, petitioners argue that the record shows that Nantong and Yotech are a single entity, and that throughout the 1998 administrative review, the Nantong and Yotech names were used interchangeably. Petitioners contend that Nantong believes it can use Yotech's trademark for glycine produced by Dongchang Yotech and itself. Further, petitioners claim that neither Nantong, nor Yotech, have explained why they have the same fax number on their respective Web sites. Petitioners also claim that Yotech and Dongchang Yotech are affiliated because Yotech owns 25 percent of the stock of Dongchang Yotech, and the statute states that two companies are affiliated if one company directly owns five or more percent of the outstanding voting stock or shares of the other company, citing section 1677(33)(E) of the Act. Also, petitioners argue that Nantong and Yotech have a cooperative relationship to sell glycine. Petitioners note that Yotech has admitted to be the sole owner of the other glycine producers involved in the relationship (i.e., Suzhou Yotech and Nantong Yotech Fine Chemical). Finally, petitioners contend that the Department should request a shareholder list from Nantong and Yotech to determine whether statements about stock ownership (i.e., Nantong is now owned by the people) need to be clarified or amended. Thus, petitioners assert that Nantong and Yotech are affiliated. Respondent argues that both Nantong and Yotech meet the criteria for a new shipper review. First, respondent contends that Nantong did not exist until late 1994, after the POI. Second, respondent asserts that Nantong did not produce glycine until 1995. Third, respondent argues that Nantong did not have an export license until 1999, thus it could not have exported glycine during the POI. Fourth, respondent asserts that Yotech never had an export license, thus could not have exported glycine during the POI. Therefore, respondent argues that under the Department's regulations both Nantong and Yotech meet the statutory criteria for requesting a new shipper review. Further, respondent argues that Yotech did not export glycine to the United States during the POI. First, respondent contends that Yotech could not have sold glycine to the United States during the POI because Yotech did not have an export license to make export sales. Second, respondent asserts that it could have only sold glycine during the POI through a Chinese exporting company, in Chinese currency. Thus, Yotech sales would have been in Chinese currency. In this regard, respondent argues that the Department has never considered sales between two companies in an NME, such as China, to be market-based transactions. Third, respondent asserts that there is no record evidence that Yotech sold glycine to the United States during the POI. Fourth, respondent states that petitioners' reliance on the knowledge test is misplaced because the knowledge test does not base export price on transactions in China between Chinese companies. Specifically, respondent notes that the Department stated that the "'Knowledge Test' is restricted with regard to NME cases, because we do not base export price on internal transactions between two companies located in the NME country," citing Indigo, 65 FR at 25706. Lastly, respondent notes that during verification, the Department did not find any evidence which indicated that Yotech exported to the U.S. during the POI. Furthermore, respondent rebuts petitioners' allegation by stating that it agrees that Nantong and Yotech are affiliated through the joint venture, but assert that Yotech does not control Nantong. Additionally, respondent contends that Nantong sets the price and exports the glycine to the United States because it is the company with the export license, and controls all exporting because they have the right to export. See Verification Report at pages 22 and 24. Respondent argues that the issue before the Department is not, as petitioners argue, Yotech's ability to control Dongchang Yotech; instead, the Department must consider Yotech's ability to control Nantong. Respondent notes that it has more control over Dongchang Yotech than Yotech because it owns a majority of the stock of Dongchang Yotech and because Dongchang Yotech is dependent on the technical glycine produced by Nantong. Further, respondent asserts that the Department does not need to request a shareholding list from Nantong, as petitioners have requested, because during the POR, Nantong was owned by all the people. See Verification Report at page 4. Thus, pursuant to Chinese law, Yotech could not own a part of Nantong. Lastly, respondent notes that the verification team found no discrepancies with regard to ownership of Nantong. Department's Position: We disagree with petitioners, and have determined that Nantong is eligible for a new shipper review under our regulations. First, there is no record evidence that either Nantong or Dongchang Yotech, or any of the earlier company predecessors, had exported subject merchandise to the United States during the POI. Second, the Department found at verification that Nantong did not exist as a company until November 1994. See Verification Exhibit 1 and Verification report at page 3. Additionally, our verification report states that ". . . Rudong Dongchang (i.e., the predecessor to Nantong) began production and sales of glycine in February 1995." See Verification Report at page 3. Further, our verification report notes that "we examined Rudong Dongchang's sub-ledgers which indicated that glycine was neither produced nor sold prior to February 1995. See Verification Report at page 3. Therefore, Nantong could not have exported or sold subject merchandise to the United States during the POI. Moreover, the Department's regulations state that "the Secretary normally will consider offers for sale only in the absence of sales and only if the Secretary concludes that acceptance of the offer can be reasonably expected." See Section 351.403(b) of the Department's Regulations. Petitioners have not provided any record evidence that Yotech's offer(s) of sale of glycine during the POI were actually accepted, or that acceptance of the offer could have been reasonably expected. In fact, in light of evidence on the record showing that Yotech did not possess an export license, we believe that record evidence supports a conclusion that Yotech could not have made an offer which could have reasonably been expected to have been accepted. Further, we disagree with petitioners that Yotech exported glycine to the U.S. during the POI. First, there is no evidence on the record that Yotech exported glycine to the United States during the POI. During verification, we saw evidence that Nantong had an export license but Yotech did not. See Verification Report, pages 6, 7, 24 and 25. Second, section 772(a) of the Act permits the Department to use the price from a producer to a middleman if the producer knew the merchandise was intended for sale to the United States under terms of sale fixed on or before the date of importation by the producer or exporter of the subject merchandise outside of the United States or to an unaffiliated purchaser for exportation to the United States. However, the Department has restricted this practice with regard to NME cases, since we do not base export price on internal transactions between two companies located in the NME country. Thus, applying these principles to the facts of this case, while Yotech might have had knowledge of the ultimate destination of the merchandise and is in the distribution chain, the transaction between a trading company and Yotech would have been an internal transaction between two companies located in an NME country, and, therefore inappropriate for review. See Final Results Antidumping Duty Administrative Review; Fresh Garlic from the Peoples's Republic of China, 62 FR 23758 (May 1, 1997). Further, the facts in this case are distinguishable from Tianjin. Tianjin involved an instance in which respondent had not provided the Department with sufficient record information to warrant verification. See Tianjin, 806 F. Supp. at 1015. Unlike Tianjin, in this case, respondent has created a body of record evidence, and the Department has verified its claim. Specifically, Yotech demonstrated that it did not export glycine to United States during the POI, and the Department verified this claim. See Verification Report, pages 24 and 25. Moreover, at verification, a company official stated "that at no time during the POI could Yotech have exported directly to the United States." See Verification Report, page 24. Thus, we find that petitioners reference to Tianjin not to be on point because in Tianjin, the respondent did not create an adequate record supporting its claim which the Department could verify. Lastly, we have determined that it is not necessary to reach the question of affiliation between Nantong and Yotech. Petitioners have argued that because Yotech shipped merchandise during the POI, and because Nantong and Yotech are affiliated (through ownership of a joint venture, Donchang Yotech), Nantong is not eligible for a new shipper review. However, as discussed above in comment 8 and below in comment 10, we find that Yotech did not have sales or exports of subject merchandise during the POI. As such, even if Nantong were affiliated with Yotech, this affiliation would not preclude a new shipper review. For this reason, we have declined to consider the question of affiliation between these two entities. Comment 9: No Sales and Entries during the POR Petitioners argue that Nantong is not eligible for a new shipper review because it did not have any sales or entries during the POR. Additionally, petitioners contend that Nantong did not provide records of any U.S. entry dates to the Department. Thus, petitioners argue that there is no factual information to claim that Nantong had sales or entries during the POR. Respondent notes that it sold glycine to the United States during the new shipper review period. Also, respondent contends that the glycine entered the United States during the normal period of administrative review (i.e., March 1999 through February 2000), and that the Department may rescind a new shipper review only if there has not been an entry and sale to an unaffiliated party, citing 19 CFR 351.214(f)(2). Respondent contends that Nantong has clearly met this criteria because the glycine entered the United States before the end of the normal period of administrative review. Department's Position: We disagree with petitioners. The Department's regulations provide that a new shipper can request a review of shipments during the POR, or if the merchandise has not yet been shipped or entered, the date of sale may be used. See 19 CFR 351.214(b). The Department verified that Nantong had sale(s) of the subject merchandise during the new shipper period and found that the sale(s) occurred during the new shipper POR. See Verification Exhibit 8, page 8 Invoice. Comment 10: Ministerial Errors Nantong contends that the Department erred in its calculation of the cost of methyl alcohol. Respondent states that the Department applied an incorrect cell to the formula in the worksheet, which increased the overall cost. Department's Position: We agree with respondent and have corrected our cost of methyl alcohol. See Surrogate Value Memorandum dated January 25, 2001. RECOMMENDATION: Based on our analysis of the comments received, we recommend adopting all of the above positions. If accepted, we will publish the final results of the administrative review and the final weighted-average dumping margin for the investigated firm in the Federal Register. __________ __________ Agree Disagree ________________________________ Bernard T. Carreau, fulfilling the duties of Assistant Secretary for Import Administration ________________________________ Date