67 FR 41397, June 18, 2002 A-570-869 Investigation Public Document G1O3: LJ MEMORANDUM TO: Richard W. Moreland Deputy Assistant Secretary for Import Administration FROM: Laurie Parkhill Director, Office 3 Office of AD/CVD Enforcement SUBJECT: Issues and Decision Memorandum for the Antidumping Duty Amended Final Investigation of Structural Steel Beams From The People's Republic of China - October 1, 2000, through March 31, 2001 Summary We have analyzed the comments and rebuttals of the interested parties regarding alleged ministerial errors in the antidumping duty investigation of structural steel beams from the People's Republic of China. As a result of our analysis, we have made changes to the final margin calculations. We recommend that you approve the positions we have developed in the "Discussion of the Issues" section of this memorandum. Below is the complete list of alleged ministerial errors and issues in this amended final investigation for which we received comments and rebuttals by interested parties: A. Valuation of Brokerage and Handling and Steam Coal B. Yield Factors Issue C. Valuation of By-Products D. Valuation of Coke Powder E. Calculation of Financial Ratios F. By-Product Offset Background On May 20, 2002, we published in the Federal Register our final determination that structural steel beams from the People's Republic of China (PRC) are being, or are likely to be, sold in the United States at less than fair value (LTFV), as provided in section 735(a) of the Act. See Final Determination of Sales at Less Than Fair Value: Structural Steel Beams from the People's Republic of China, 67 FR 35479 (May 20, 2002), and accompanying Issues and Decision Memorandum (Final Determination). Following publication of the Final Determination, the Department of Commerce (the Department) discovered two ministerial errors in the language it used in the Federal Register notice. These errors are listed in the "Changes in the Final Determination" section of the Federal Register notice for this amended final determination. On May 28, 2002, the Committee for Fair Beam Imports and its individual members (the petitioners) filed timely comments on the Final Determination. Some of the petitioners' comments were allegations of ministerial errors and others were issues being raised for the first time. On June 3, 2002, the respondent, Maanshan, filed timely rebuttal comments. Discussion of the Issues A. Valuation of Brokerage and Handling and Steam Coal Comment 1: The petitioners allege that the Department used an incorrect amount for valuing brokerage and handling associated with U.S. sales. They also allege that the Department neglected to add home-market freight to the value for the material input steam coal. Maanshan does not comment on these allegations. Department's Position : We agree with the petitioners that we made the two ministerial errors described above. We have corrected the brokerage and handling amount and have added a freight amount to the value of steam coal. Because the supplier and the transportation distance for steam coal were not indicated clearly at Exhibit 9 of Maanshan's section D response (1), we used the same freight amount that we calculated for transporting coking coal to the factory. B. Yield Factors Comment 2: The petitioners argue that the Department's final margin calculation assumes that the reported input-usage amounts of materials reported by Maanshan are always expressed in total amounts per metric ton of finished H beams. However, the petitioners claim, according to Maanshan's factors-of production response, in some cases Maanshan did not apply to the input-usage amounts all yield factors for all immediately- following production steps. The petitioners argue that the Department should correct this error by applying missing subsequent yield factors, where appropriate, so that all yield factors are carried through the calculations to the final stage of production. Maanshan responds that its factors-of-production response illustrates that it accounted for all inputs and yield factors at each stage of production and the Department verified these calculations carefully. Regardless, Maanshan argues, the petitioners' allegations do not constitute ministerial errors in accordance with 19 CFR 351.224(f). Department's Position: The Department's regulations at 19 CFR 351.224(f) define a ministerial error as one involving "addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication or the like, and any other similar type of unintentional error which the Secretary considers ministerial." The alleged error the petitioners describe involves Maanshan's submission to the Department and the methodology Maanshan uses to calculate material input usage. Because our use of Maanshan's data with respect to material input usage was intentional, it is not a ministerial error in accordance with 19 CFR 351.224. Therefore, we have not considered this comment for this amended final determination. C. Valuation of By-Products Comment 3: The petitioners allege that the Department committed several errors in its calculations with regard to adding freight costs to various waste products and by-products. First, in the iron-making production stage, the petitioners assert, the Department valued the coal by-products offset incorrectly by using a coal value which is inclusive of freight costs. Second, the petitioners allege, in various production stages the Department valued the waste and by-products iron dust, iron scrap, and steel scrap incorrectly by adding to their values an amount for freight. Maanshan responds that recycled coal and by-products re-enter the production process as material inputs which are valued inclusive of freight costs. Therefore, Maanshan asserts, the Department's valuation of waste and by-products is accurate and not a ministerial error. Department's Position: We agree with the petitioners that we should not have added a freight amount to waste and by-products. In accordance with the Court of Appeals for the Federal Circuit's decision in Sigma Corp. v. United States, 117 F. 3d 1401 (Fed. Cir. 1997), we added to Indian import surrogate values a surrogate freight cost using the shorter of the reported distance from the domestic supplier to the factory or the distance from the nearest seaport to the factory. For Indian domestic values, we calculated a surrogate freight cost using the distance from the PRC domestic supplier to the factory. That is, we are only concerned with the freight amount for the transportation of raw material inputs to Maanshan's production facility. Since waste and by- products are generated at Maanshan's production facility, there is no transportation cost associated with these items and, thus, our inclusion of such costs was unintentional. Therefore, we have excluded the freight amounts from the surrogate values that we applied to waste and by-products for this final determination. D. Valuation of Coke Power Comment 4: The petitioners allege that the Department has valued coal inputs and coal offsets using values for different types of coal. Specifically, the petitioners claim, in the iron-making production stage, the Department used a value for coking coal to value the by-products from steam-coal inputs. Maanshan responds that the by-product to which the petitioners refer is not from coal, which is depleted in the iron-making stages, but from coke. Department's Position: We disagree with the petitioners that we valued the by-product from steam coal with a coking-coal value. The by-product to which the petitioners refer is coke powder. According to Exhibit 4 of Maanshan's factors-of-production response, there does not appear to be any coal by-products generated during the iron-smelting production stage. The coke powder appears to be a by-product from the coking stage of production. Furthermore, according to Maanshan's response, in the coking stage of production, both coking coal and steam coal are used to produce coke. Therefore, we find it is reasonable to continue to use the value for coking coal to value the coke powder by-product and have not made any changes to this value for this amended final determination. E. Calculation of Financial Ratios Comment 5: The petitioners allege that the Department made several ministerial errors when calculating factory overhead and selling, general, and administrative (SG&A) expense financial ratios for The Tata Iron and Steel Co. Ltd. (TATA). First, the petitioners claim, the Department used the wrong number for "Stores and Spares consumed" listed under raw materials in TATA's financial statements. They also claim that including "Stores and Spares consumed" in the raw-materials column is an error because it has been the Department's practice to consider this item as a function of factory overhead expenses. Second, the petitioners claim that the Department committed ministerial errors when it treated certain expenses differently from the matter in which the Department treated them in its preliminary determination. That is, they elaborate, the Department included "Freight & Handling" expenses incorrectly in the SG&A ratio and included "Purchases of Finished, Semi-Finished Steel and Other Products" incorrectly in the calculation of raw-materials costs. According to the petitioners, it was clear from the Department's preliminary determination that it intended to exclude these expenses from all calculations. The petitioners comment that the Department did not give any explanation in its Final Determination as to why it treated the expenses differently. Maanshan agrees that the amount for "Freight & Handling" expenses should be excluded from the calculation of the SG&A ratio. It asserts that the petitioners' claim concerning "Purchases of Finished, Semi-Finished Steel and Other Products" is a methodology consciously chosen by the Department and not a ministerial error as claimed by the petitioners. Department's Position: We agree with the petitioners. First, we recorded the wrong amount for "Stores and Spares consumed." Therefore, we have recalculated the overhead and SG&A expenses using the correct amount for "Stores and Spares consumed" based on TATA's 2001 financial statements. We also agree that we overlooked the issue of moving the amount of "Stores and Spares consumed" from raw materials to overhead expenses. Since this item is typically included as a miscellaneous part of factory overhead in market-economy cases and we believe it is reasonable to include it as factory overhead in non-market-economy cases as well, we intended to include this item as part of factory overhead in this case. Second, we included "Freight & Handling" expenses in the SG&A ratio inadvertently and included "Purchases of Finished, Semi-Finished Steel and Other Products" incorrectly when using TATA's updated financial statements. We intended to exclude these expenses as we did in the preliminary determination and, therefore, we have excluded them from our calculations of the financial ratios for this amended final determination. F. By-Product Offset Comment 6: The petitioners argue that the Department erred by accepting Maanshan's reported offset adjustment for a certain by-product. Maanshan responds that the Department's allowance of the offset was not inadvertent and is not inconsistent with the Department's policy. Maanshan claims that it has demonstrated and the Department has verified that the by-product at issue is reused in the production of steel. Furthermore, Maanshan argues, it is clear that the petitioners' allegation does not concern a ministerial error by the Department. Department's Position: We do not agree that this is a ministerial error as defined by 19 CFR 351.224(f). The petitioners' objection to how data was reported in Maanshan's submission with respect to a certain by-product is a methodological matter. Our acceptance of Maanshan's reported data was intentional and, therefore, we have not considered this comment for this amended final determination. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the amended final determination and the amended final weighted-average dumping margin of 15.23 percent for Maanshan in the Federal Register. Agree ________ Disagree ________ ______________________ Richard W. Moreland Deputy Assistant Secretary for Import Administration ______________________ (Date) __________________________________________________________________ footnote: 1. Exhibit 9 is the vendor list we used to determine the distance between the supplier and Maanshan's production facility for material inputs.