66 FR 2879, January 12, 2001 A-485-803 Admin Review 98-99 Public Document AD/CVD3:FBaker MEMORANDUM TO: Troy Cribb Assistant Secretary For Import Administration FROM: Joseph Spetrini Deputy Assistant Secretary Enforcement Group III SUBJECT: Issues and Decision Memo for the Administrative Review of Cut-to-Length Carbon Steel Plate from Romania - August 1, 1998 through July 31, 1999; Final Results Summary We have analyzed the comments and rebuttals of interested parties in the 1998-99 administrative review of the antidumping duty order covering cut- to-length carbon steel plate from Romania. As a result of our analysis, we have made changes, including corrections of certain inadvertent programming and clerical errors, in the margin calculations. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum for these final results of review. Below is the complete list of issues in this administrative review for which we received comments and rebuttals by parties: 1. Rescinding the Review 2. Barter Transactions 3. Factor Valuation 4. Overhead 5. Use of Inflator 6. Application of Inflator to Labor Costs 7. Circumstance-of-Sale Adjustments 8. Facts Available 9. Ministerial Errors Background On September 7, 2000 the Department of Commerce (the Department) published the preliminary results of administrative review of the antidumping duty order on cut-to-length carbon steel plate from Romania. See Certain Cut-to-Length Carbon Steel Plate from Romania; Preliminary Results of Antidumping Duty Administrative Review and Final Partial Recision of Review, 65 FR 54208 (September 7, 2000) (Preliminary Results). The period of review (POR) is August 1, 1998 through July 31, 1999. There are two respondents in this review, Metalexportimport, S.A. (MEI) (exporter of the subject merchandise) and S.C. Sidex, S.A. (Sidex) (manufacturer of the subject merchandise). We invited parties to comment on our preliminary results of review. On October 10, 2000 MEI and Sidex, and petitioners (Bethlehem Steel Corporation and U.S. Steel Group, a unit of USX Corporation), filed case briefs. These parties filed rebuttal briefs on October 17, 2000. Discussion of the Issues Comment 1. Rescinding the Review Petitioners argue the Department should rescind the review because the record contains no evidence that there were any entries for consumption during the POR. They argue that under the antidumping statute antidumping duties are levied only against entries for consumption. See 19 USC § 1673b(d)(2). Thus, in the absence of such entries, there is nothing against which to assess antidumping duties, and the review is, therefore, moot. In order for a consumption entry to have occurred, petitioners argue, all the forms and formalities necessary to enter the merchandise into the commerce of the United States must have been completed. They base this argument on 19 CFR § 141.0a(f)(2000) which states, "'Entered for consumption' means that an entry summary for consumption {form 7501} has been filed with Customs in proper form, with estimated duties attached." Petitioners argue that the two Customs forms that respondents have submitted for the record, CF 3461 (titled "Entry/Immediate Delivery") and CF 7501 (the entry summary form), do not establish that there was a consumption entry. With respect to the CF 3461, petitioners state that it shows only that there was an "entry," not a consumption entry. Furthermore, under Customs regulations, an entry summary and estimated duties may be filed up to ten business days after the CF 3461. With respect to the CF 7501, petitioners argue that respondents have failed to show that it was filed during the POR. Indeed, the CF 7501 on the record shows that the "entry summary date" is blank. Unless the entry summary date is a date that occurs during the POR, petitioners argue, the entry is outside the POR because under Customs regulations it is the entry summary date, and not the date of entry of the subject merchandise that indicates when an entry has entered for consumption. Thus, petitioners argue, the Department cannot conclude that any merchandise was entered for consumption during the POR. Furthermore, petitioners argue that the U.S. import statistics respondents submitted also fail to establish that a consumption entry occurred. That import data are based on Customs Service IM 146, and is titled, "Imports for Consumption." Petitioners argue that import statistics are known to be incorrect on occasion. Additionally, petitioners state, respondents have not shown that the phrase "Imports for Consumption" as used in these data has the same meaning as "Entered for Consumption." Respondents argue that there was an entry for consumption during the POR. They base this argument on their understanding that Customs regulations provide for two methods of making a consumption entry. The first method involves two steps. Step one is for the importer to file a CF 3461 to make an entry for consumption. See 19 CFR § 142.3(a)(1). Step two is for the importer to complete the entry for consumption by filing with Customs the declared value, classification, and rate of duty applicable to the merchandise. This step the importer does within ten working days of the first step by filing a CF 7501. See 19 USC § 1484(a)(1)(B); see also 19 CFR §§ 141.0a(b) and 142.12(b). The second method of making a consumption entry is for the importer to file a CF 7501 within five days of the date on which the vessel carrying the merchandise arrives in the United States. Under this method, the CF 7501 serves as both the entry for consumption and the entry summary. See 19 CFR § 142.12(a). Respondents state that in this review they used the first method to make their consumption entry, and that the CF 3461 they placed on the record confirms that there was a consumption entry during the POR. See respondent's March 21, 2000 submission at exhibit 2. They cite to two fields on the CF 3461. The first is field #3, which shows that the "entry type code/name" is "consumption." The second is field #28 which shows that the "delivery authorized" date is July 29, 1999, and thus within the POR. Respondents argue that July 29, 1999 is the entry date because 19 CFR § 141.68(a)(1) states the following: (a) When entry documentation is filed without entry summary. When the entry documentation is filed in proper form without an entry summary, the "time of entry" shall be: (1) The time the appropriate Customs officer authorizes the release of the merchandise or any part of the merchandise covered by the entry documentation... Respondents also argue that, contrary to petitioners' argument, the IM 146 data on the record do establish that there was a consumption entry during the POR. They cite the U.S. International Trade Commission's descriptions of the data fields for the IM 146 reports. "Imports for Consumption" are defined as merchandise that has physically cleared Customs, either entering consumption channels immediately or entering after withdrawal from bonded warehouse. Respondents argue further that the definition of entry cited by petitioners found at 19 CFR § 141.0a(f) refers to the first method of making a consumption entry, and addresses when the entry for consumption is completed, not when it is made. They state that the petitioners' statement that an "entry is entered for consumption only once all of the forms and formalities necessary to entry the merchandise into the commerce of the United States have been completed" is true with respect to completion of the process, but that the completion date does not reflect the date of the entry for consumption (i.e., when it is made). Further, respondents state that the entry summary date is irrelevant in establishing when the shipment entered for consumption. While the CF 7501 is required to complete the entry process, an entry for consumption is made when the CF 3461 consumption entry is filed and dated at the time the merchandise is released by Customs. Respondents argue that the Court of International Trade (CIT) has held the same position. In Torrington Co. v. United States the CIT held that "[t]he Customs laws of the U.S. ... define entry as the process of filing documentation with Customs to determine whether the subject merchandise would be released from Customs' custody and, if so, what duties are made" (emphasis added). See Torrington Co. v. United States, 818 F. Supp. 1563, 1563 (CIT 1993). The CIT made no mention of the entry summary date. Department's Position: We agree with respondents that the review should not be rescinded. First, we agree with respondents that the Customs forms they placed on the record do establish that there was an entry for consumption during the POR. The CF 3461 that respondents placed on the record indicates that the entry release date for this shipment was July 29, 1999. See respondent's March 21, 2000 submission at exhibit 2. Therefore, based on 19 CFR § 141.68(a)(1) (cited above), we determine that July 29, 1999 is the date on which this shipment entered for consumption. Because July 29, 1999 is a date within the POR, we find that there was an entry for consumption during the POR. Therefore, contrary to petitioner's argument, it does not matter that the "entry summary date" on the CF 7501 is blank or that the CF 7501 may not have been filed until after the end of the POR because the entry was made on July 29, 1999 at the time of filing of the CF 3461. Second, we find no compelling reason to discount the IM 146 data respondents placed on the record. While petitioners are correct that import statistics have been known to be incorrect on occasion, petitioners have presented no evidence that such is the case here. Furthermore, we find no reason to question that the term "Imports for Consumption" refers to entries for consumption. Therefore, for both of these reasons, we find that there was a consumption entry during the POR, and that Customs will have an entry against which to assess any antidumping duty liabilities. Thus, we have not rescinded this administrative review. Comment 2. Barter Transactions Petitioners argue that the Department erred in using the respondents' barter transactions in calculating normal value (NV). The barter transactions are transactions for which Sidex exchanged a fixed amount of steel for a fixed amount of an input from a foreign market-economy supplier, and for which the two parties fixed a dollar amount for the goods. The Department used this agreed dollar amount as the value of the inputs in the preliminary results. Petitioners argue that using the agreed price was incorrect for three reasons. First, they argue that it was inconsistent with the Department's regulations. Section 351.408(c)(1) (2000) of the Department's regulations states, "The Secretary normally will use publicly available information to value factors. However, where a factor is purchased from a market economy supplier and paid for in a market economy currency, the Secretary normally will use the price paid to the market economy supplier" (emphasis added). Because respondents did not pay for the barter transactions in U.S. currency, petitioners argue, using them was inconsistent with the regulations. Furthermore, because the transactions were not paid for in currency at all, it is not even clear that the transactions fit the definition of a "purchase" as required by the regulation. Second, petitioners argue that the Department should exclude the barter transactions because it is impossible to quantify specifically the dollar value of the items exchanged. This is so because no dollars were ever exchanged. Thus, petitioners argue, it would make no difference to respondents whether the "negotiated price" was three cents per ton of steel and one cent per ton of raw material, or three million dollars per ton of steel and one million dollars per ton of raw material. In either case respondents would exchange one ton of steel for three tons of raw material. The "prices" respondents reported to the Department are, therefore, illusionary. Third, petitioners argue that the documentation respondents put on the record to substantiate their description of the barter transactions does not match the transaction data reported by Sidex. Specifically, the sales contract at exhibit D-2 of its February 18, 2000 submission contains a different sales quantity than that contained in a listing of barter transactions in exhibit 2 of its April 11, 2000 submission. Given this major discrepancy, petitioners argue, the true details of the barter transactions reported by Sidex are called into question. Respondents argue that the Department acted properly in using the barter transactions in the calculation of NV. They state that nowhere in the antidumping laws or in the Department's regulations are there any restrictions on the use of barter transactions for purposes of constructing NV. Moreover, they cite two cases in which the Department addressed the use of barter transactions. The first is Notice of Final Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms from Indonesia, 63 FR 72268, 72280 (December 31, 1998) (Mushrooms from Indonesia). In Mushrooms from Indonesia, although the Department rejected the use of the barter transactions on grounds unrelated to the fact that they were barter transactions, it disagreed with petitioners contention that the barter transactions were "not actual sales or purchases." The second case is Certain Carbon Steel Products from Brazil: Preliminary Affirmative Countervailing Duty Determinations, 49 FR 5157, 5161 (February 10, 1984) (Carbon Steel From Brazil). In Carbon Steel from Brazil, the Department used barter transactions because the companies involved acted in accordance with normal commercial considerations. Respondents also cite the May 19, 1997 Final Rule as another instance in which the Department had the opportunity to reject barter transactions, but did not. See Final Rule, 62 FR 27296, 27366 (May 19, 1997). There a commentator argued that if the Department uses the prices paid by NME producers, it should ensure that those prices are free of any distorting effects attributable to, inter alia, barter transactions. The Department did not adopt the suggestions put forward by that party, and instead reiterated the increased accuracy of using market economy prices. With respect to petitioners' argument that the negotiated prices are illusionary, respondents argue that the barter prices negotiated between Sidex and its suppliers are as real as prices actually paid in currency because they are registered for accounting and tax purposes. Furthermore, respondents argue that the Department's prior treatment of barter transactions shows that what the Department is concerned with is whether the barter transactions are arms-length transactions and constitute normal commercial practice. Here, all of the respondents' barter partners are unaffiliated, and there is nothing on the record to suggest that the transactions are not arms-length. Department's Position: We agree with petitioners that we should not use the barter transactions in our calculations in this case. First, we agree with petitioners that there is a contradiction between the sales quantity indicated in the sales contract Sidex provided in its February 18, 2000 submission (exhibit D-2) and the sales quantity given in the listing in exhibit 2 of its April 11, 2000 submission. (This issue was not addressed by respondents in their rebuttal brief.) Because of this discrepancy we cannot be certain that Sidex has provided the Department with a complete explanation of its barter transaction process. More importantly, we have determined that using barter transactions in this NME antidumping proceeding violates the Department's policy of not using exports from NMEs to value inputs. This policy is a logical outgrowth of our general policy of not using prices and costs in NME cases. See Preliminary Results, 65 FR at 54210. We apply this policy, for instance, when using U.N. Commodity Trade Statistics (UNCTS) to value inputs. When so doing we remove from the calculations all exports from NME countries. See e.g., Tapered Roller Bearings and Parts Thereof, Finished or Unfinished, from Romania; Final Results of Antidumping Duty Administrative Review, 62 FR 37194, 37195 (July 11, 1997); see also September 7, 2000 analysis memorandum at 3. Similarly, where, as in the case of the barter transactions at issue here, an export from an NME is an integral part of the barter transaction (even a transaction with a market- economy currency and with a market-economy supplier), we determine that we cannot use the barter transaction under our NME methodology because part of the transaction is based on a product whose costs were not determined by market forces. Therefore, in these final results of review we have removed the barter transactions from the calculations. Comment 3. Factor Valuation Respondents argue that some of the Indonesian surrogate values the Department used in the preliminary results were aberrational, and therefore should not be used in the final results. They argue that using aberrational data violates a previous Departmental statement that "aberrational surrogate input values should be disregarded." See Final Rule, 62 FR at 27366. Moreover, in other cases the Department has rejected input values that, when compared to the value of those inputs from other countries, were aberrational. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cased Pencils from the People's Republic of China, 59 FR 55625, 55630 (November 8, 1994) (Pencils from China). See also Notice of Final Determination of Sales at Less Than Fair Value: Certain Partial Extension Steel Drawer Slides with Rollers from the People's Republic of China, 60 FR 54472, 54475-54476 (October 24, 1995). Respondents point to five examples of aberrational data. First, in the preliminary results the Department used a surrogate price of $54.42/MT to value limestone and total lime. In contrast, the U.S. and Indian values for total lime were $6.00/MT and $17.50/MT, respectively. Similarly, European Union (EU) import and export data reflect a price of less than $14.50/MT. Respondents argue that for the final results the Department should rely on data from either the United States, India, or the EU. Second, in the preliminary results the Department used a surrogate value of $172.78/MT for iron scrap. In contrast, U.S. and EU data for scrap show prices of $119/MT and $105/MT, respectively. Similarly, American Metal Market data suggest a price well less than $100/MT. Respondents argue that in the final results the Department should use U.S. data or other data to value iron scrap. Third, in the preliminary results the Department used a value of $60.24/MT to value iron pellets. In contrast, U.S. and Indian import data show values of $36/MT and $40/MT, respectively. Similarly, EU export data show a value of $38.86/MT. Furthermore, Sidex purchased iron ore pellets from Russia for a price between $30 and $35/MT. Therefore, for purposes of the final results, respondents argue, the Department should use either U.S., EU, or Indian data to value pellets. Fourth, in the preliminary results the Department used a surrogate value of $793.95/MT for ferrosilicon. Respondents state that this high value is inconsistent with world prices. Respondents argue the Department should use Egyptian data for the final results, since these data show a price of $396.90/MT to value ferrosilicon. Fifth, in the preliminary results the Department used a surrogate value of $6,600/MT for woody plant branches. Respondents state that in the final results the Department should use either U.S. import data or other sources to value woody plant branches. Petitioners argue that the Indonesian import values are not aberrational. Petitioners argue that under the Department's regulations, the Department "normally will value all factors {of production} in a single surrogate country." See 19 CFR § 351.408(c)(2) (2000). Therefore, the petitioners argue, to follow the approach advocated by respondents, the Department would have to violate its own clear policy preference. The petitioners state that there is no reason to do so here. First, the basic premise that the UNCTS data are "aberrational" is flawed. These data are from an objective and widely-used international source and are entitled to a presumption of accuracy. Furthermore, these data reflect the actual experience of a market-economy country at a comparable level of development to Romania. Petitioners argue that it is poor policy, and inconsistent with the congressionally-mandated surrogate value method, for the Department to reject actual data from the surrogate country originating from objective and trusted sources simply because the data are not identical to or consistent with the data for other countries. Second, several of the jurisdictions from which respondents offer data (e.g., the United States and the EU) are not remotely at a level of economic development comparable to Romania. The Department is required by statute, however, to utilize "prices or costs of factors of production in one or more market economy countries that are - (A) at a level of economic development comparable to the nonmarket economy country." See 19 USC § 1677b(c)(4) (1995). By imposing this requirement, petitioners argue, Congress understood that conditions in economies at varying levels of economic development could create significant differences in costs and prices for factors of production. Cost and risk of financing, currency risk, economies of scale from larger orders, better-established trade channels, and many other considerations may all contribute to differences in the price paid for a factor of production. Third, even assuming that some data may be "aberrational," it is impossible to determine which figure is "aberrational" when choosing between only two data points. Thus, petitioners argue, the Department should reject respondents' contention that Egyptian prices for ferrosilicon "are more consistent with world prices" because respondents have offered no support, besides the Egyptian prices, as to the "world price" for ferrosilicon. Fourth, petitioners argue that respondents' figures obscure the variations in prices for the same product. For example, the data that respondents previously submitted for the record indicates that prices for limestone from various sources varied significantly, including $298.91/MT for U.S. imports from Mexico, $1,603.77/MT for U.S. imports from France, $8.08/MT for EU imports from Croatia, $332.17/MT for EU imports from Egypt, and $73.25/MT for Indian imports from the United States. The petitioners argue that similarly wide prices ranges are on the record in the data submitted by respondents for valuation of iron scrap and iron pellets. Given this range of prices, the petitioners state, there is no basis for determining whether a given price is "too high," "too low," or otherwise "aberrant." Department's Position: We agree with the petitioners that the Indonesian import data are not aberrational. The record of this review contains factor value data from various sources. These sources include Eurostat, Monthly Statistics of the Foreign Trade of India, Egypt's Central Agency for Public Mobilization and Statistics, Indonesia Foreign Trade Statistics, UNCTS, and U.S. IM-146 data. As petitioners have pointed out, these sources demonstrate a wider range of values for limestone, iron scrap, and iron pellets than that presented by respondents in their case brief. Furthermore, comparison of U.N. ferrosilicon import data to only one other country (in this case Egypt) does not give us a basis to determine that the U.N. data are aberrational. Nor can we make a determination that data are aberrational in the complete absence from the record of any purportedly "non-aberrational" data as respondents want us to do in the case of woody plant branches. While the value utilized in the preliminary results for woody plant branches may appear high, there is no evidence on the record that it is aberrational for Indonesia. Moreover, as petitioners have also pointed out, many of the comparisons respondents adduced are with countries at a much higher level of economic development than either Romania or Indonesia (e.g., United States and EU). While the Department has in the past considered such countries in making this type of determination (e.g. Pencils from China, 59 FR at 55630), it does attach greater weight to countries of the same level of economic development as the surrogate country. Doing so is consistent with the statutory mandate that input factors are to be valued using prices or costs from market- economy countries that are at a level of economic development comparable to the nonmarket economy country. See section 773(c)(4) of the Act. Because we find the respondent's argument insufficient to demonstrate that the Indonesian import data are aberrational, we will not abandon our standard NME method of valuing all factors in a single surrogate country (see 19 CFR § 351.408(c)(2) (1999)) and of using a surrogate country of the same level of economic development as the non-market economy country (see section 773(c)(4) of the Act). Therefore, in these final results we have continued to value all factors using Indonesian surrogate values. Comment 4. Overhead Respondents argue that the Department erred in its calculation of the overhead ratio (calculated from the financial statement of the Indonesian steel company P.T. Krakatau (Krakatau)) by including two line items in the total overhead expense that are either not overhead expenses or that double-counted expenses. The first is "professional services and worn-out inventory." Respondents argue that these expenses do not appear to be related to production, and therefore the Department should exclude them in the final results. The second is "spare parts and auxiliary materials." Respondents argue that auxiliary material is not a proper item for overhead, but is instead a type of raw material. Under the Indonesian system, respondents argue, materials such as polyethylene bags and sulfuric acid (which Sidex reported) would be classified as auxiliary materials. Therefore, respondents argue, unless there is evidence that the "auxiliary materials" on Krakatau's financial statement are not of the sort that Sidex already reported, the Department should exclude "spare parts and auxiliary materials" from the calculation in the final results. Petitioners argue that the Department properly included the line items at issue in the calculation of the overhead ratio. With respect to "professional services and exclusion for worn-out inventory," petitioners argue that Krakatau is in the better position to know how these costs should be classified, and that respondents have not provided any support for their assertion that these items "do not appear to be related to production." Moreover, with respect to the first element of the line item (i.e. "professional services"), petitioners argue that it is certainly possible for manufacturers to engage "professional services" which are related to production. With respect to the second element of the line item (i.e., "exclusion for worn-out inventory"), petitioners argue that expenses associated with inventory clearly relate to production, and the write-down of worn out inventory is properly included in overhead. With respect to "spare parts and auxiliary materials," petitioners argue that respondents have provided evidence neither for their assertion that auxiliary materials are more properly described as a type of raw material, nor for the implicit claim that Krakatau's accountants and auditors do not know how properly to classify items on Krakatau's financial statements. Petitioners argue that the respondents' only support for their presumption of Krakatau's ignorance about its own business is a vague, unexplained, and unsupported reference to "the Indonesian system." Furthermore, petitioners argue that respondent's proposed solution is disproportionate to the supposed error because the respondents are asking the Department to reject the entire "spare parts and auxiliary materials" item, although their arguments relate only to the "auxiliary materials" item. Department's Position: We agree with petitioners. In the absence of additional information on the record about the Indonesian accounting system, we find respondents' claims about that system to be unsubstantiated. Moreover, respondents have cited no record evidence that Krakatau misclassified any of its expenses. Therefore in these final results we have made no changes to our calculation of overhead. Comment 5. Use of Inflators Respondents argue that the Department erred in its method of inflating the 1998 Indonesian import data to 1999 values because it used the consumer price index (CPI) of Indonesia. They argue that the use of this inflator is improper for several reasons. First, Indonesian import data are reported in U.S. dollars, not Indonesian rupiah. Therefore, any rise in the CPI in Indonesia is a reflection of inflation in Indonesia and the devaluation of the rupiah. These factors do not impact dollar-denominated imports. Second, Krakatau (the Indonesian steel company whose financial statement the Department used to calculate surrogate selling, general, and administrative expenses (SG&A) for Sidex) had a significant foreign- exchange loss due, in part, to devaluation of the rupiah vis-á-vis the dollar. This, in turn, caused a higher surrogate SG&A. Therefore, respondents argue, applying an inflator to imports punishes the respondents twice because it applies to the raw material costs the effect of inflation that is already reflected in SG&A. Furthermore, respondents point out that the Department faced this same issue in Notice of Final Determination of Sales at Less Than Fair Value: Creatine Monohydrate from the People's Republic of China; 64 FR 71104, 71109 (December 20, 1999) (Monohydrate from China). In Monohydrate from China, the Department determined that it acted improperly in the preliminary determination in adjusting the Indonesian import data using the Indonesia wholesale price index (WPI). Therefore, in the final determination it adjusted the Indonesia import data using the U.S. WPI because the Indonesian import data were reported in U.S. dollars. Moreover, respondents argue that if the Department determines to apply an inflator, it would be improper to base it on the entire calendar year 1999 because the U.S. sale was in July 1999. Therefore, the inflator should adjust only for the inflation that occurred between January 1999 and July 1999. Petitioners agree with respondents that the inflator should be based on the inflation rate in the currency in which the values are denominated, but disagree that the inflator should be based on the U.S. WPI, as advocated by respondents. Doing so, petitioners state, assumes that the UNCTS reflect costs denominated in U.S. dollars when incurred. Petitioners assert that many, if not most, of these values were actually denominated in local currencies, and simply converted to U.S. dollar amounts at prevailing exchange rates for reporting purposes by the United Nations or the contributing country. That the Indonesian UNCTS values are reported in U.S. dollars is irrelevant because all UNCTS data for all countries are reported in U.S. dollars. Petitioners argue that the Department should convert the UNCTS import data back into the local currency, apply the inflator appropriate to that currency, and then convert the data back into U.S. dollars. Department's Position: We agree with both parties that our use of an inflator was inappropriate, but have determined that our error consisted not of using the wrong inflator, but in using an inflator at all for data from 1998. Our policy is to not inflate data where the data is from a period that overlaps the POR. 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 decision memorandum at comment 15. In another antidumping proceeding covering the period December 1, 1993 through May 31, 1994, we stated "Our practice is not to inflate values when the time period of the value - in this case 1993 - overlaps with any part of the POI - in this case December 1993." See Notice of Final Determination of Sales at Less Than Fair Value: Ferrovanadium and Nitrided Vanadium From the Russian Federation, 60 FR 27957, 27963 (May 26, 1995). Here, the Indonesian import data are from 1998, and our POR begins with August 1998. Monohydrate from China (cited by respondents) is inapposite because in that proceeding the data was from two-and-a-half years prior to the start of the POR, rather than overlapping the POR. See Monohydrate from China, 64 at 71110. Therefore, in these final results of review we have removed the inflator in calculating surrogate values for data from 1998. Comment 6. Application of Inflator to Labor Costs Respondents argue that the Department erred by applying to the labor costs an inflator based on Indonesian inflation. (The labor rate the Department used in the preliminary results was a regression-based Romanian rate of $1.10/hour published on its web cite at www.enforcement.trade.gov/wages/98wages/gdp00web.htm.) The respondents argue that this was an error because the Indonesian inflation rate has nothing to do with the Romanian wage rate. The respondents also argue that the $1.10/hour rate (without adjustment) has been used in all recent Romanian antidumping cases. See e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Small Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Romania, 65 FR 39125 (June 23, 2000). Petitioners argue the Department properly inflated the labor costs. They argue that since the Romanian wage rates that the Department used are based upon 1998 values, and the sale took place in mid-1999, it was appropriate and necessary for the Department to inflate this figure. Furthermore, the petitioners argue that it would be inappropriate to base the inflator on the Romanian inflation rate since Romania, as an NME, "does not operate on market principles of cost or pricing structures." See section 771(18)(A) of the Act (19 USC § 1677(18)(A)(1995)). Thus, the petitioners state, since the Department is specifically instructed by statute to value factors of production in NME countries using prices or costs in a surrogate country, the Department correctly used the Indonesian inflation rate as the surrogate inflator for the Romanian wage rate. Department's Position: As stated in the Department's position to the previous comment, our policy is not to apply an inflator when the data are from a period that covers part of the POR. Here, the Romanian labor rate is from 1998, and our POR begins in August 1998. Therefore, in these final results we have removed the inflator from the calculation of labor costs. Comment 7. Circumstance-of-Sale Adjustments Comment 7a: Petitioners argue that the Department erred in its calculation of net U.S. price by not deducting from gross U.S. price a fee that MEI (the Romanian exporter) deducts from the revenue it transmits to Sidex (the Romanian manufacturer) following payment by the U.S. customer. The payment from the U.S. customer and the fee retained by MEI are both in U.S. dollars. Petitioners argue that this fee should be deducted from gross U.S. price so that the net U.S. price is the actual amount received by Sidex for its U.S. sales. Respondents argue that the Department should not deduct the fee from the calculation of net U.S. price. First, respondents argue that the antidumping rate ultimately assigned as a result of this review belongs to MEI, and not Sidex. Therefore, it is irrelevant how much money Sidex receives from MEI. Second, respondents argue that in literally scores of NME cases the Department consistently ignores commissions or other transactions between companies. Department's Position: We agree with respondents that the fee retained by MEI should not be deducted from gross U.S. price. The relevant price for our antidumping calculations is the price from the Romanian exporter to the first unaffiliated U.S. customer. The value of the remittance from the exporter to the producer is irrelevant to our calculations. Therefore, no adjustment is appropriate. Comment 7b: Petitioners argue that the Department erred in its calculation of net U.S. price by failing to deduct from the gross U.S. price a bank charge which was paid to a market economy bank in a market economy currency. Respondents argue that a Western bank operating in Romania (such as the one at issue here) is not considered a "market economy" bank. Furthermore, they argue that it is not the Department's policy to make circumstance-of- sale adjustments in NME cases, and should not do so here. Department's Position: We agree with respondent that the bank charge should not be deducted from U.S. price. The bank charge at issue is a selling expense because it is an expense incurred incidental to delivering the merchandise to the customer. We have accounted for selling expenses in the calculation of SG&A included in NV. See appendix VIII(a) of the September 7, 2000 preliminary results analysis memorandum. To make an additional adjustment for the bank charge would be to double-count selling expenses. Furthermore, as respondents have pointed out, in other NME cases it has been our practice not to make adjustments for circumstance-of-sale expenses. See e.g., Tapered Roller Bearings and Parts Thereof from the People's Republic of China; Preliminary Results of Antidumping Administrative Review and Intent to Revoke Antidumping Duty Order in Part, 61 FR 40610, 40613 (August 5, 1996). Therefore, in these final results, as in the preliminary results, we have not made a deduction for the bank charge. Comment 8. Facts Available Petitioners argue that the Department should use facts available for two inputs allegedly used in the production of the subject merchandise, but which respondents did not report on their factors listing. The two factors at issue are factors mentioned on the U.S. sales contract as inputs in the subject merchandise. Because respondents withheld information on these inputs, petitioners argue, the Department should apply a facts available value for them in calculating the respondents' NV. Respondents argue that petitioners' comments on this issue are not timely as respondents filed their section D response over nine months earlier, and in the ensuing time petitioners never once raised the issue. Furthermore, the purpose of the case brief was to raise issue surrounding the Department's preliminary results, and this issue does not arise from the Department's preliminary results. More importantly, respondents argue that the two inputs at issue are contained in the scrap iron input which they did report. Department's Position: Respondents are correct that petitioners never raised this issue prior to submitting their case brief, but there is no requirement that comments need be submitted prior to the case brief. The case brief may contain all arguments the submitter believes relevant to the final results. See 19 CFR § 351.309 (c)(2). Nevertheless, our research indicates that, as respondents have argued, the two inputs may be contained in steel scrap (steel being an alloy of iron). We have included in the final results analysis memorandum (dated January 5, 2001) pages from our source which provided this information. Therefore, we have accepted respondent's explanation that these elements are contained in the scrap iron input, and have not applied facts available for these factors in these final results. Comment 9. Ministerial Errors Comment 9a: Petitioners argue that the Department erred by failing to include in respondent's input costs the commissions paid on purchases from market-economy suppliers. Department's Position: We agree, and have corrected this error in these final results of review. Comment 9b: Petitioners argue that the Department made clerical errors in its calculation of the values for methane gas and electricity. First, it argues that the Department erred in its calculation of both of these inputs by understating the values by a factor of one thousand. Second, with respect to methane gas, it argues that the Department failed to perform each of the constituent elements of the calculation necessary to determine the total value of the methane gas. Third, with respect to electricity, it argues that the Department incorrectly used the exchange rate of the date of the U.S. sale, rather than the exchange rate of the year (1994) of the surrogate value. It states that the Department should use the 1994 exchange rate, and then apply an inflator to adjust for inflation that occurred between 1994 and 1999. Respondents argue that although the Department's calculations may have contained errors, the petitioners' proposed calculation method is also flawed because it includes the use of inflators. They argue that the use of an inflator based on the Indonesian CPI for dollar-denominated factors is improper. Furthermore, they argue that in a May 19, 2000 submission they submitted 1997 data for electricity and 1998 data for methane gas, and that in the final results the Department should use these data rather than the 1994 data it used in the preliminary results. Department's Position: We agree with respondents that the calculations should be based on the 1997 and 1998 data for electricity and methane gas, respectively, because the data are more recent than the 1994 data used in the preliminary results and are already on the record. We have done so in these final results. Our calculations are shown in the final results analysis memorandum dated January 5, 2001. Comment 9c: Petitioners argue that the Department erred by failing to include the cost of freight charges when valuing iron ore fines using market-economy purchases from Brazil. Department's Position: We agree, and have corrected this error in these final results of review. Comment 9d: Petitioners argue that the Department erred in its calculation of labor by not including all of the labor hours that respondents reported in the exhibits of its section D response. Respondents argues that it correctly reported its labor hours on its factors listing. Department's Position: We agree with petitioners. By comparing the labor hours Sidex reported in exhibit D-14 of Sidex's December 10, 1999 section D response with the labor hours reported in its factors listing in Sidex's April 11, 2000 submission (exhibit 2), we determine that the factors listing we used in the preliminary results calculations did not include all of the labor hours. In these final results we have included all of the labor hours reported in the section D response in exhibit 14. Recommendation: Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final results of review and the final weighted-average dumping margins for all reviewed firms in the Federal Register. AGREE ______ DISAGREE ___ _________________________ Troy Cribb Assistant Secretary for Import Administration _________________________ (date)