66 FR 3540, January 16, 2001 A-580-815 A-580-816 AR 8/1/98-7/31/99 Public Document DAS III/9/MFP/MH January 5, 2001 MEMORANDUM TO: Troy H. Cribb Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary for Import Administration SUBJECT: Issues and Decision Memorandum for the Administrative Reviews of Cold Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: August 1, 1998 through July 31, 1999. SUMMARY: We have analyzed the comments and rebuttal comments of interested parties in the sixth administrative reviews of the antidumping duty orders covering cold- rolled and corrosion-resistant carbon steel flat products from Korea. As a result of our analyses, 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 Issues and Decision Memorandum. Below is the complete list of the issues in these administrative reviews for which we received comments and rebuttal comments by parties: GENERAL COMMENTS 1. The Net Financial Expenses of POSCO's, Dongbu's and Union's U.S. Selling Affiliates Should Be Included As Part of POSCO's, Dongbu's and Union's U.S. Indirect Selling Expenses 2. Home Market "Credit Adjustment" COMPANY-SPECIFIC COMMENTS Dongbu Steel Co., Ltd. ("Dongbu") 3. Calculation and Allocation of U.S. Indirect Selling Expenses 4. Total Entered Value and the Assessment Rate 5. Weighting Factors for Quality in the Model Match Pohang Iron and Steel Co., Ltd. ("POSCO*"), Pohang Coated Steel Co., Ltd. ("POCOS"), and Pohang Steel Industries Co., Ltd. ("PSI") (collectively, "POSCO") 6. Home Market Imputed Credit Expenses 7. Treatment of PSI Rebates 8. Ministerial Errors 9. Eligibility for Revocation 10. Treatment of Sales with Warranty Expenses 11. Cost Variances Union Steel Manufacturing Co., Ltd. ("Union") 12. Value Added Tax ("VAT") 13. Obsolete Sales in the Home Market 14. Home Market weights v. U.S. Weights BACKGROUND: On September 7, 2000, the Department of Commerce ("Department") published the preliminary results of administrative reviews of the antidumping duty orders on cold-rolled and corrosion-resistant steel flat products from Korea. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, 65 FR 54197 (September 7, 2000) (preliminary admin. reviews) ("Preliminary Results"). The merchandise covered by these orders are cold-rolled and corrosion-resistant carbon steel flat products as described in the "Scope of the Reviews" section of the Federal Register notice. The period of review ("POR") is August 1, 1998 through July 31, 1999. We invited parties to comment on our Preliminary Results. DISCUSSION OF THE ISSUES: GENERAL COMMENTS Comment 1. The Net Financial Expenses of POSCO's, Dongbu's and Union's U.S. Selling Affiliates Should Be Included As Part of POSCO's, Dongbu's and Union's U.S. Indirect Selling Expenses POSCO, Dongbu, and Union Petitioners argue that the Department should include all of POSAM's interest expenses, appropriately offset for interest income, in calculating POSCO's U.S. indirect selling expenses. Citing Tapered Roller Bearings and Parts Thereof, Finished and Unfinished from Japan, 65 FR 11767 (March 6, 2000) (final admin. reviews) ("TRBs from Japan"). Petitioners argue that the Department considers all financial expenses incurred by an affiliated U.S. subsidiary with respect to sales of subject merchandise to be indirect selling expenses ("ISE") under section 772(d)(1) of the Act. Petitioners further argue that it would be inconsistent to attribute any portion of POSAM's financial expenses to sales of non-subject merchandise because the Department has a longstanding policy of treating financial expenses as fungible. Petitioners acknowledge that there have been isolated instances that are inconsistent with this policy. However, Petitioners contend, those prior decisions were incorrect and the Department's new approach, as iterated in TRBs from Japan, has been upheld by the CIT, citing NTN Bearing Corp. America v. United States, No. 00-64, slip op. at 53-59 (Ct. Int'l Trade, June 5, 2000). Petitioners also contend that it is inappropriate to attribute a portion of financial expenses to non-subject merchandise. Petitioners, citing Section 5, Comment 2 of TRBs from Japan, state that the Department does allow the attribution of various non-financial ISEs to non-subject merchandise. However, Petitioners contend, the Department did not apply that treatment to financial expenses, citing to Section 5, Comment 3 of TRBs from Japan. Petitioners assert that this makes sense because it is impossible to show that certain financial expenses are incurred with respect to a subset of a company's sales due to the fungibility of money. Thus, in keeping with this principle, Petitioners argue, the Department should add the entire pool of financial expenses to the existing pool of U.S. ISEs and recalculate POSCO's U.S. ISE factor. Finally, Petitioners argue that the Department should not make an adjustment to account for possible double-counting of imputed credit expenses. Petitioners contend that the Department has recognized that interest expenses and imputed credit expenses are fundamentally different, citing the Department of Justice's response to the CIT, POSCO v. United States, Consol. Court No. 98-04-00906 at 9 (May 17, 2000). Petitioners further reason that these expenses do not overlap because one is a real cost recorded in a company's accounting records while the other is an imputed opportunity cost. Thus, Petitioners conclude, when the Department deducts both expenses from U.S. price, there is no double-counting. Petitioners further state that the offset to account for double-counting required in Pohang Iron and Steel Co., Ltd., et al. v. United States, No. 00- 77, Consol. Court No. 98-04-00906, slip op. at 12 (Ct. Int'l Trade, July 6, 2000) ("Pohang"), was made over the Department's objection and did not address the fungibility principle. POSCO argues that the Department properly excluded all interest expenses, at the Preliminary Results, in accordance with its long-standing practice and its prior determinations of the instant order. POSCO contends that the Department's long-standing practice is to exclude financial interest expenses when they relate to non-subject merchandise or are already accounted for by imputed credit expenses. Moreover, POSCO states, the Department has repeatedly rejected Petitioners' argument, citing Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, 64 FR 48767, 48771 (September 8, 1999) (prelim. admin. reviews). POSCO takes issue with Petitioners' interpretation of TRBs from Japan. POSCO asserts that there is no new policy established in that case nor does TRBs from Japan establish any new precedent. Dongbu argues that in previous reviews, the Department reduced the affiliate's interest expenses in its calculation of ISEs, specifically excluding interest expenses associated with non-subject merchandise and reducing the remaining amount of interest expenses for an amount attributable to financing accounts receivable and inventory, i.e. imputed costs. These reductions were made so that only expenses associated with subject merchandise were captured and so that the Department did not double-count interest expenses that were already accounted for as imputed costs. Dongbu argues that in TRBs from Japan, the policy change announced in that determination was narrowly tailored to the Department's treatment of expenses related to the financing of cash deposits for antidumping duties, it was not a major policy change regarding the Department's treatment of financial expenses generally. Dongbu argues that in the final results for the fourth administrative review, the Department addressed the issue of excluding interest expenses incurred by U.S. affiliates that are related to non-subject merchandise when calculating U.S. indirect selling expenses. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, 64 FR 12927, 12932 (March 16, 1999) (final admin. reviews) ("4th AR Final Results"). In that determination the Department excluded interest expenses associated with non-subject merchandise. Dongbu states that the Department should continue to exclude the affiliate's interest expenses associated with non-subject merchandise when calculating Dongbu's ISEs as Petitioners have offered nothing to support a change in the Department's practice. Dongbu argues that Petitioners, in support of their argument that there is no double-counting associated with the deduction of both Dongbu's U.S. financial expenses and Dongbu's imputed credit expenses, stated that the Department has recognized that imputed credit expenses and interest expenses are fundamentally different and that they account for different type of costs and different types of transaction. Petitioners, Dongbu argues, however fail to recognize that the Department has a judicially-recognized policy of reducing the amount of a U.S. affiliate's financial expenses which are included in the respondent's ISEs by imputed credit expenses incurred by the U.S. affiliate to avoid double- counting. Dongbu states that the Department should reject Petitioners' arguments. Union argues that the Department has a longstanding policy of reducing all, or a portion, of a U.S. sales affiliate's interest expenses in its calculation of U.S. ISEs, specifically excluding interest expenses associated with non-subject merchandise and reducing the remaining amount of interest expenses by the amount of imputed credit expenses calculated for U.S. sales of subject merchandise. Union argues that these reductions are made so that only interest expenses associated with subject merchandise are captured and so that the Department does not double-count interest expenses that are already accounted for as imputed credit expenses. See Pohang, 2000 WL 963357, at *3; New Minivans from Japan, 57 FR 21937, 21956-57 (May 26, 1992) (final determination). Department's Position: We agree with Petitioners that including financial expenses incurred by the respondent's U.S. affiliates in the pool of U.S. ISEs is appropriate. However, we have not adopted their suggestions entirely; nor do we entirely agree with their reading of TRBs from Japan. Given the sometimes proprietary nature of ISE calculations, it appears that the parties may have misinterpreted past public discussions of this topic. As a preliminary matter, ISEs are expenses which neither result from, nor bear a direct relationship to, a particular sale. Cf. section 772(d)(1)(B) with section 772(d)(1)(D). See also, Torrington v. United States, 82 F.3d 1039, 1050 (Fed. Cir. 1996); Torrington v. United States, 68 F.3d 1347, 1353 (Fed. Cir. 1995). Because they are not directly related to a particular sale, ISEs "do not vary with the quantity sold." Zenith Electronics v. United States, 77 F.3d 426, 431 (Fed. Cir. 1996). Because such expenses cannot be tied to a particular sale, in general ISEs are allocated to all sales in a particular market. In some cases the Department has made an exception for non-financial ISEs, such as salaries, where a respondent could demonstrate that, although the ISE was not tied to a particular sale, it was generated by selling activities for either subject or non-subject merchandise. In such cases, the ISE was allocated solely to subject or non-subject sales, as appropriate. See generally, Comment 3, infra. However, the Department does not extend such an exception to financial ISEs, such as interest expenses, because, regardless of which unit incurred them, they relate to the general financing of the entire corporate entity. For these reasons, as Petitioners correctly note, it is our practice to include interest expenses incurred by the U.S. affiliate in the total pool of U.S. ISEs under section 772(d)(1)(D) of the Act. Although POSCO correctly states that we did not include an amount for U.S. interest expenses in previous reviews of these orders, we did so because, after taking into account potential double-counting, there were no or virtually no expenses remaining. Had there been an appreciable amount of U.S. interest expenses remaining, we would have included these expenses in the pool of U.S. ISEs. Although not explicitly discussed in TRBs from Japan, due to the proprietary nature of the ISE calculations, it is logical to conclude that such expenses were included in the ISE expense pool in that case, because NTN claimed an offset for a portion of these expenses attributable to financing its cash deposit rates. See, e.g., Section 5 Comment 3 in TRBs from Japan. We concur with Petitioners' reasoning and our past statements that the fungibility of money is a basic principle applicable to our treatment of financial ISEs. Id. Moreover, this is not in conflict with Section 5 Comment 2 of TRBs from Japan because the discussion in Comment 2 is limited to non- financial selling expenses. Therefore, we agree with Petitioners that no portion of U.S. interest expenses should be segregated and attributed to non- subject merchandise sales. We agree with Respondents that a certain measure of double-counting will occur if we deduct both U.S. interest expenses, imputed U.S. credit costs and U.S. inventory carrying costs from the starting price. Although Petitioners argue that interest expenses are real expenses while the latter are imputed expenses, their conclusion that double-counting is not possible is incorrect because the two types of expenses are directly related. Had Respondents' customers paid at the time of shipment, the improved cash flow would reduce the need to borrow. Notwithstanding the fact that, in the instant case, we do not have U.S. inventory carrying costs, it is our policy to calculate an amount of both imputed credit and inventory carrying costs attributable to subject merchandise and subtract this amount, up to the amount of net interest expenses, and add any remainder to the pool of ISEs. Therefore, for these Final Results, we have recalculated each company's ISE factor. See, e.g., each company's respective Final Analysis Memo (January 5, 2001). Dongbu and Union Comment 2: Home Market "Credit Adjustment" Petitioners state that the credit adjustment to normal value is intended to capture the opportunity cost associated with delayed payment. The adjustment may only be calculated if the credit period, i.e. the gap between the shipment date and the payment date associated with a given sale, is known. Petitioners argue that Respondents do not know the payment date associated with any of their home market sales. In addition, Petitioners argue that the adjustment cannot be considered a direct selling adjustment to normal value as defined by the statute, see section 772(d)(1)(B) of the Act, and that Respondents have insisted that they have no idea when payment was received for any of their home market sales, either individually or collectively. Petitioners argue that the Department should reclassify Dongbu's and Union's claimed "credit" adjustment as ISEs because the adjustment put forward by Dongbu and Union is neither a credit, nor a direct selling expense adjustment to normal value. Dongbu and Union argue that Petitioners cite to no case precedent for their argument, and they conveniently ignore both a long line of the Department's cases and the fact that their repeated claims regarding Dongbu's customer- specific credit expense methodology has been dis-allowed by the Department. See Steel Wire Rope from the Republic of Korea, 60 FR 63499, 63503-04 (December 11, 1995) (final admin. review); Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel Plate From Korea, 58 FR 37176, 37184 (July 9, 1993) (final determinations) ("Certain Steel Flat Products and Carbon Steel Plate from Korea Final"). Dongbu argues that Petitioners and the Department are aware that Dongbu's credit expenses are calculated based on actual sales amounts of subject merchandise to each customer and actual payments on these accounts receivable through promissory notes issued by each customer. Dongbu argues that although Petitioners have consistently argued against the methodology Dongbu uses for calculating its home market customer-specific credit periods, the Department has been equally consistent in dismissing Petitioners' claims. See 4th AR Final Results, 64 FR at 12929-30 (Comment 1). Dongbu states that Petitioners argue that the statute and the Department's regulations define credit expenses as direct selling expenses and the Department has accepted the average accounts receivable turnover rate methodology as a valid means of calculating the imputed credit expenses applicable to every home market sale. Dongbu argues that since the only way that home market ISEs become an adjustment to normal value is in the context of a CEP or commission offset, Petitioners are in effect arguing that the Department should make no adjustment to normal value to credit expenses because, as Petitioners and the Department know, Dongbu does not receive either a CEP or commission offset. Dongbu states that the Department should again dismiss Petitioners' unsupported arguments and continue to carry out its long- standing practice of accepting Dongbu's credit expenses calculated using the average accounts receivable turnover rate methodology. According to the Department's regulations at 19 C.F.R. 351.401(g), the Department may consider allocated expenses if it is shown by the respondent that the allocation is calculated on as specific a basis as is feasible and it is explained why the allocation methodology used does not cause inaccuracies and distortions. The Department has rejected Petitioners' claims that Union's credit expense methodology is distortive and has accepted Union's calculation of customer-specific credit expense periods and the credit expenses calculated using these customer specific credit period. See 4th AR Final Results, 64 FR at 12929-30 (Comment 1). Union argues that although Petitioners are claiming that Union's home market credit expenses should be treated as ISEs, the statute and Department's regulations define credit expenses as direct selling expenses. Union argues that since the only way that home market ISEs become an adjustment to normal value is in the context of a CEP offset, Petitioners are in effect arguing that the Department should make no adjustment to normal value for credit expenses because, as Petitioners and the Department know, Union does not receive either a CEP or commission offset. Union argues that the Department should again dismiss Petitioners' unsupported and legally flawed arguments and continue to follow its long-standing practice of accepting Union's credit expenses calculated using the average accounts receivable turnover rate methodology. Department's Position: We agree with Respondents. The Department continues to find appropriate Dongbu's and Union's methodology for calculating their home market customer- specific credit periods as there is no evidence on the record that Dongbu and Union are able to tie individual sales to exact payments dates. See 19 C.F.R.§ 351.401(g). Based on the calculation of the credit period, the Department has accepted Dongbu's and Union's calculation of credit expenses which is based on actual sales amounts of subject merchandise to each customer and actual payments on these accounts receivable through promissory notes issued by each customer. See Certain Steel Flat Products and Carbon Steel Plate from Korea Final, 58 FR at 37184; 4th AR Final Results, 64 FR at 12929-30. Because Dongbu's and Union credit period can be calculated, credit expenses applicable to each home market transaction calculated using these customer-specific credit periods, can be tied to separate sales. Such credit expenses are therefore directly tied to sales and are direct expenses. Because we have accepted Dongbu's and Union's credit period, a credit adjustment to normal value can also be calculated. COMPANY-SPECIFIC COMMENTS DONGBU Comment 3: Calculation and Allocation of U.S. Indirect Selling Expenses Dongbu argues that the Department, in the fifth review, accepted Dongbu's breakdown of ISEs into three categories (flat-rolled specific, other product specific, and common) and then allocated the U.S. ISEs tied to flat-rolled sales over annual U.S. total sales of flat-rolled products. However, Dongbu argues, the Department broke this practice in the preliminary results and disregarded Dongbu's methodology for allocating U.S. ISEs and instead allocated all U.S. ISEs incurred during fiscal year 1998 over total sales. This methodology overstates the ISEs associated with the sale of flat-rolled products because many of these expenses, in particular freight, are associated with the sales of other non-subject products, and also results in double- counting of bank charges. In addition, Dongbu states that the Department adjusted the calculation of U.S. ISEs without any notice or comment regarding its change in position, and without providing Dongbu with an opportunity to remedy any deficiencies. See 19 U.S.C. §167m(d); Ta Chen Stainless Steel Pipe, Ltd. v. United States, 1999 WL 1001194, at *12 (Ct. Int'l Trade, October 28, 1999). Dongbu argues that the Department should allocate only the portion of Dongbu's U.S. ISEs that are tied to flat-rolled sales when calculating the ISE ratio and in addition allocate "common" expenses to both subject and non- subject merchandise on the basis of direct expenses. Dongbu argues that Exhibit C-25 of its July 12, 2000 supplemental response provided a detailed breakdown of its U.S. affiliate's, Dongbu USA, ISEs: expenses related to the flat-rolled division; expenses related to other non- flat-rolled divisions; and "common" expenses that are not related to any specific division, i.e. related to the operation of the entire company. Dongbu states that Dongbu USA is involved in a number of activities, only one of which involves the sale of flat-rolled products and that the level of activity related to sales of flat rolled products is low in comparison to the activity related to sales of other products; thus the expenses associated with the sale of flat-rolled products are disproportionate to the sales value. Dongbu has therefore separated the expenses associated with flat-rolled sales from the expenses associated with sales of other products. Dongbu states that in order to address the Department's concerns regarding the definition of "common" expenses, Dongbu provided a complete list of expenses which included a detailed breakdown of the "common" expenses incurred by Dongbu USA during the POR. Dongbu allocated the "common" expenses among the different departments within Dongbu USA on the basis of direct expenses. These expenses were then added to the expenses associated with the flat-rolled division, and allocated over flat-rolled sales to arrive at the submitted ISE ratio for Dongbu USA. Dongbu argues that this method of allocation is an accepted allocation methodology in accountings systems to allocate, for example, overhead costs. In addition, Dongbu argues that the alternative sales value is inappropriate as flat-rolled products have the highest sales value but involve the least amount of work at Dongbu USA. Dongbu states that it has consistently reported bank charges separately on its U.S. database and therefore there is no basis on which to include bank charges in the calculation of the ISE ratio. Dongbu points out that the ISE worksheet submitted as Exhibit C-25 properly deducted the bank charges thus, the Department should accept that deduction and avoid double-counting bank charges in these Final Results. Petitioners claim that the Department was correct in rejecting Dongbu's methodology for determining ISEs. Petitioners argue that Dongbu failed to demonstrate that it properly attributed certain expenses to non-flat rolled products and that its allocation of common expenses was appropriate, i.e. not distortive. Petitioners argue that Dongbu fails to demonstrate how it determined the portions of its ISEs that it claimed it could link to either flat-rolled product or to other products, and additionally, how it was able to "link" these portions to either flat-rolled products or to other products; Dongbu also fails to demonstrate how any of the expenses in this list tie to the general ledger. In addition, Petitioners state that Dongbu claimed to provide copies of the general ledger, which identified products with certain expenses, to demonstrate that the expenses reported under other products in Exhibit C-25 were indeed related to non-subject products. This was illustrated using freight expenses as they are the largest category of expenses. However, Petitioners argue that information pertaining to freight expenses is irrelevant to the assignment of ISEs to particular products, as freight is a direct expense and thus cannot be used to demonstrate which expenses can be segregated and assigned to specific products and therefore failed to show how the ISEs in its list ties to the general ledger. Petitioners argue that the ISEs could relate to any product and cannot be tied to specific products and without a tie to the specific product categories and to the ledger the Department has no basis for applying the ISE to any product. Petitioners state that the Department's practice with respect to this issue is well-established. See Certain Cut-to-Length Carbon-Quality Steel Plate Products from France, 64 FR 73143, 73149 (December 29, 1999) (final determination); Emulsion Styrene-Butadiene Rubber From Mexico, 64 FR 14872 (March 29, 1999) (final determination). As a result, Petitioners argue that the Department should allocate Dongbu USA's ISEs over all sales as it did in the Preliminary Results. Department's position: We agree with Respondent. In the two cases cited by Petitioners, the respondent was unable to demonstrate at verification that the non-financial ISEs which the respondent had allocated to a particular product were generated by selling activities of that product. In contrast, the record in this case contains no evidence that the reporting methodology used by Respondent was distortive or otherwise inappropriate. Therefore, we have accepted Dongbu's methodology with respect to its assignation of ISEs to flat-rolled sales and non-flat rolled sales divisions. However, with respect to the ISEs which Dongbu states were common to both flat- rolled and other products, Dongbu provided two possible allocation bases and reasoned that either allocation base could be accepted. Upon examination of the record, the Department cannot accept Dongbu's allocation for such common expenses based on either direct selling expenses or the number of invoices. Neither allocation base is related to the rate at which ISEs are incurred. Normally, we only accept an allocation based on sales value or sales volume. In this case, we have information on sales value only and, therefore, for these Final Results we are allocating "common" ISEs based on sales value and recalculating Dongbu's ISE factor (in addition to the changes noted in Comment 1, supra). See Final Analysis Memo. Comment 4: Total Entered Value and the Assessment Rate Petitioners state that Dongbu did not report the per-unit entered value in their response and instead reported "the total entered value," resulting in the computer program language calculating an inflated total entered value amount, and consequently, an understated duty assessment rate. In order to remedy this situation, Petitioners urge that the Department alter the SAS program that would allow reporting for each sale the average unit entered value and a correctly calculated duty assessment rate. Dongbu did not address this issue in its case brief or rebuttal brief. Department's Position: We agree with Petitioners that Dongbu reported total entered value, rather than the per-unit entered value. Thus, the SAS program inflated the total entered value amount and understated the duty assessment rate. Therefore, for these Final Results, we have adjusted the margin program to achieve the correct assessment rate. See Final Analysis Memo. Comment 5: Weighting Factors For Quality in the Model Match Petitioners argue that in order to perform the U.S. home market model match, for each matching characteristic (e.g., hardening and tempering, painted, carbon level, quality, etc.) the Department assigns a weight to each of the available selections pertaining to that characteristic. However, for the quality characteristics ("CRQUALH" and "CRQUALU"), the weights the Department assigned to the home market models do not match with those assigned to the U.S. models. Petitioners state that in the Department's Preliminary Results, the Department referenced the March 6, 2000 final results memorandum from the previous administrative review with regard to its product matching methodology, in which the SAS computer program used the same factors for both home market and U.S. models. Dongbu did not address this issue in its case brief or rebuttal brief. Department's Position: We agree with Petitioners that we assigned different weights for the home market sales as compared to the U.S. sales for the quality characteristics "CRQUALH" and "CRQUALU" and regard this difference in assigning weights as a clerical error. Therefore for these Final Results, we have adjusted our model matching program to reflect the inconsistency in coding between the U.S. and home markets with respect to the "CRQUALH" AND "CRQUALU" variables. See Final Analysis Memo. POSCO Comment 6: Home Market Credit Expenses Petitioners argue that POSCO's home market credit adjustment is distortive and unreliable. Moreover, Petitioners argue that, given POSCO's inaccurate and misleading statements, and given POSCO's failure to act to the best of its ability in reporting this expense, the Department should use an adverse inference in choosing facts otherwise available. Petitioners contend that the Department's treatment of POSCO's credit expenses for the Preliminary Results falls short of being adverse. Instead, Petitioners contend, the Department should deny POSCO's claimed home market credit expense in its entirety for these Final Results. Finally, Petitioners contend that the Department should correct a proprietary methodological error in POSCO's credit calculations. Alternatively, Petitioners argue, as in Comment 2, supra, that if the Department accepts POSCO's reasoning that it cannot tie payments to sales, then the Department should treat credit expenses as ISEs. POSCO argues that the Department's analysis of its credit expense methodology is erroneous. POSCO contends that the Department's analysis is limited to the verification of only two sample transactions and for only one of nine reporting entities in the POSCO group, whereas their home market dataset contains over 750,000 transactions. That the Department was able to identify a payment date for a sample transaction is coincidental and plausible, POSCO argues, because it indicated to the Department that only "nearly all," but not one hundred percent of their customers paid on an open account system. POSCO further argues that they are in compliance with the Department's questionnaire at page B-29 because their accounting records do not readily identify payment dates. POSCO states that most of their customers pay by promissory note and that, in the sample transaction, the customer paid for multiple transactions with multiple promissory notes. POSCO argues that one cannot link a particular transaction to a particular note. POSCO contends that the Department has verified POSCO's credit expense methodology in prior reviews and has not found it to be deficient. Moreover, the Department has accepted POSCO's reporting methodology in prior reviews and for other companies in other proceedings. Finally, POSCO argues that they did not make a methodological error and no adjustment is necessary. Department's Position: We agree with Petitioners that POSCO could determine actual payment dates, that POSCO failed to report their imputed credit expenses in the home market in an appropriate manner, and that POSCO impeded our review by providing misleading statements. At essence here is the level of specificity for which a respondent can calculate payment dates. POSCO maintains that their best efforts lead only to a customer-specific level of specificity. In other words, according to POSCO, the best they could do was to tell the Department, for each customer, the average amount of time that customer took to pay. We are unconvinced by POSCO's arguments that their accounting records do not readily identify more specific payment dates. The record is clear that POSCO had the ability to calculate transaction-specific payment dates, but failed to do so. See Sales Verification Report at Exhibit 24 (August 9, 2000) and the Facts Available section in the Preliminary Results. Moreover, POSCO's distinction between contract-specific or multiple contract- specific payment dates and transaction-specific payment dates is hollow because the Department applies the payment date for an invoice to all line items included in that invoice and treats this as a transaction-specific calculation. That all items on an invoice, a contract, or in this case a group of contracts, have the same payment date does not give POSCO license to abandon transaction- specific reporting entirely. We disagree with POSCO that our acceptance of their methodology in prior reviews and the use of this methodology by companies in reviews of other orders requires an acceptance in the instant review. Although we have accepted a customer-specific average payment calculation in cases where a true "open account" system is in place, here, the record indicates that we do not have such a system. Under a true "open account" system, the customer's payments do not coincide with prior periodic balances, invoices, or groups of invoices. Rather, a customer makes a payment towards its balance to reduce the level of arrears and to establish confidence about the customer's ability to pay for future shipments. Moreover, this alternative credit expense methodology is a surrogate. It is a basic tenant of the dumping calculations that in reporting a price adjustment, the respondent bears the burden of proof to demonstrate that transaction-specific amounts cannot be calculated (See, e.g., section 351.401(g) of the regulations). In this case, we found that the contract, indeed the monthly balance, was paid on a won for won basis. Therefore, we conclude that POSCO had the ability to report this field on a more specific basis and was, therefore, not in compliance with our questionnaire. Finally, contrary to POSCO's assertion that our findings are coincidental, we note that, in the transactions examined, the seller was POSCO*, the largest of the five reporting entities and the customer was POSCO's largest home market customer. See Final Analysis Memo. Therefore, for these Final Results, we continue to find that facts available for this field are warranted. We also agree with Petitioners that use of an adverse inference is warranted because POSCO controlled the data and impeded our review with misleading statements. However, we do not agree with Petitioners' suggestion that we should deny the imputed credit expense entirely. At the Preliminary Results, we made an adjustment to account for the distortion discovered at verification. We believe that this adjustment is sufficient. Finally, we agree that POSCO's credit calculations should be corrected of a methodological error. However, due to the proprietary nature of this correction, see the Final Analysis Memo for a complete discussion of this issue. Comment 7: Treatment of PSI Rebate: POSCO contends that the Department should deduct their reported rebates for PSI from gross unit price. POSCO adopts the same logic in making this argument that they have iterated above in regards to home market imputed selling expenses. Specifically, POSCO takes issue with the Department's conclusion that these rebates could have been reported on a transaction-specific basis, stating that the Sales Verification Report does not identify any support for this conclusion. Rather, POSCO concludes, their accounting records show only the rebate amount and do not contain a "key" to tie these amounts to particular sales. POSCO also points to the Department's conclusions in the prior review period as further support for this conclusion. POSCO goes on to argue that the methodology used in their response is consistent with the Department's practice and regulations, citing Antifriction Bearings (Other than Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, Romania, Sweden, and the United Kingdom, 64 FR 35590, 35602 (July 1, 1999) (final admin. reviews) ("AFBs"), and section 351.401(g) of the Department's regulations. POSCO contends that the regulations allow for this methodology and the Department's practice in AFBs describes its acceptability when the preferred methodology of transaction-specific reporting is not feasible. POSCO also cites several other cases where the Department has accepted a customer-specific reporting methodology. POSCO asserts that, in evaluating feasibility, the Department examines the relevant accounting records. POSCO maintains that their responses and the Sales Verification Report confirm that individual transactions are not identified on the accounting entries. Moreover, the Department accepted POSCO's methodology in the most recently completed review of these orders. POSCO contends that a second test of feasibility involves the number of transactions, which POSCO states exceeds 30,000 and represents a substantial number. POSCO also argues that the Department never instructed POSCO to report rebates on a transaction-specific basis and, therefore, may not now apply adverse facts available. As support for this argument, POSCO cites to the instructions in the initial questionnaire at page B-25, stating: Report the unit value of each rebate given to the customer. Create a separate field for reporting each rebate program. Rebates should be reported with the sales to which they apply. POSCO asserts that they fully complied with this request by reporting a customer-specific rebate amount. Moreover, POSCO asserts that, although the Department asked additional questions regarding rebates in a supplemental questionnaire, the Department never asked POSCO to change their methodology. In addition, POSCO argues, the Department accepted this methodology in the final results of the most recently completed review of these orders. POSCO argues that the Department may only resort to facts available under narrow circumstances which are not present in this case. POSCO states that the Department had an obligation to notify them that there was a problem with its rebate reporting methodology, yet did not do so, citing Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 1574 (Fed. Cir. 1990), et al. POSCO maintains that they supplied a complete set of data, responded to every question and notes that the Sales Verification Report identifies no errors in POSCO's calculations and that the Department accepted the methodology in a prior review. Therefore, POSCO concludes, the Department did not ask subsequent questions nor provide notice before resorting to adverse facts available. Petitioners argue that the Department's decision to use adverse facts available was appropriate given POSCO's misleading and inaccurate statements. Petitioners point to the instructions in Department's questionnaire at page B- 25 directing POSCO to report rebates "with the sales to which they apply." Petitioners also point to page G-5 where POSCO was informed that allocations of price adjustments are allowable only when such adjustments cannot be tied to a specific sale. These instructions, Petitioners reason, clearly ask for a sales- specific reporting methodology. Petitioners point to POSCO's statements at page 55 of its December 3, 1999 response that "PSI has no means to tie a rebate to a specific sale" and at page B-9 of its June 14, 2000, supplemental response that for PSI rebates ". . . PSI cannot link specific sales to specific payments." Petitioners argue that the Department did not ask POSCO to report a more specific methodology because POSCO's record statements already indicated that it could not. Petitioners also note that POSCO did not claim that it was burdensome to link or tie a rebate to a specific sale, such that it was infeasible to do so. Petitioners argue that neither the statute nor the regulations require the Department to repeat its requests for information in case the information the respondent has provided turns out at verification to be inaccurate. Petitioners compare these statements to the Department's findings at verification. Petitioners point to the findings that POSCO did not describe the full range of rebate programs and POSCO"s statement that it knew which sales were eligible for the rebate at the time the rebate was granted and that it could manually trace all rebates to their respective sales. Petitioners concur with the Department's conclusion that POSCO could have reported these rebates on a more specific basis and characterizes POSCO's statements as misleading. Petitioners take issue with POSCO's assertion that the Department accepted and verified this methodology in a prior review and is, therefore, bound by its past decisions. Rather, Petitioners reason, new information on the record in the instant case requires a different conclusion. Petitioners state that section 351.401(g)(2) requires that the respondent bear the burden of demonstrating to the Department's satisfaction that the allocation is calculated on as specific a basis as is possible and to explain why the methodology does not cause distortions or inaccuracies. Petitioners cite to POSCO's August 23, 2000 letter at Exhibits 2 and 3 as evidence that POSCO not only could, but did provide rebate amounts on a transaction-specific basis. Moreover, Petitioners cite to proprietary evidence in this submission that the methodology POSCO used is distortive. Thus, Petitioners conclude the two conditions set forth in section 351.401(g)(2) have not been met. Therefore, for the reasons stated above, Petitioners assert that the Department was correct in employing an adverse inference in resorting to facts available because POSCO impeded the review, failed to provide the information in the form requested, and did not act to the best of its ability. Department's Position: We agree with Petitioners and have continued to disregard POSCO's claimed rebates, except for one customer (see Preliminary Results Analysis Memorandum from Michael Panfeld through James Doyle to the File (August 30, 2000) ("Preliminary Analysis Memo"), and the Sales Verification Report, at 6), for these Final Results. As we stated above with respect to POSCO's home market credit expenses, it is a threshold issue as to whether a respondent may use an alternative methodology as a surrogate for a transaction-specific reporting methodology. In this case, the record shows that POSCO had the ability to report these rebates on a more specific basis. At verification, POSCO stated that they could tie rebates to sales. The exhibits taken at verification demonstrate that rebate amount can be traced to a group of invoices (i.e., these are transaction-specific). Again, as we noted above in regards to credit expenses, the fact that a group of invoices is involved in a rebate rather than just one invoice or a specific line item in an invoice does not indicate that it is a non-transaction-specific rebate. Rather, it merely indicates that all line items in that group have the same rebate percentage. Moreover, due to the nature of the trigger for granting this type of rebate, it is only logical that POSCO knows to which sale or sales a rebate applies. However, because of the proprietary nature of this trigger, see the Final Analysis Memo for a more complete discussion. Therefore, we are not satisfied that POSCO has met its burden that the allocation is reported on as specific a basis as is possible, under section 351.401(g)(2) of our regulations. Although POSCO raises generally valid points about adequate notice before resorting to adverse inferences and the acceptability of an alternative methodology, these arguments are misplaced in the instant case. Normally, the Department allows a party to correct or improve its reporting, so long as time remains for submission of new factual information. However, no such correction is allowed for factual assertions that are shown to be false at verification. The deadline for submission of new factual information falls before verification. See section 351.301(b)(2) of our regulations. If this were not the case, the Department would have to conduct multiple verifications in order to comply with section 782(i) of the Act. The statute and regulations do not require the Department to do so. In the instant case, Respondents alleged that it was unable to provide transaction-specific reporting of certain rebates. As discussed above, this assertion was shown to be false at verification. Thus, the Department is correct in rejecting POSCO's factual submission for this particular rebate and resorting to facts available (see section 351.308 of the Department's regulations). In addition, we found that POSCO did not completely identify the full range of rebate programs. As POSCO necessarily "failed to cooperate to the best of its ability" when it falsely claimed to be unable to comply with our request, an adverse inference under section 776(b) of the Act is also warranted. See also, our Facts Available discussion in the Preliminary Results, 65 FR at 54199. Comment 8: Ministerial Errors Petitioners argue that the Department should correct three ministerial errors. Specifically, Petitioners contend that the Department did not assign weighting factors for two of POSCO's thickness tolerances. Similarly, Petitioners contend that one surface finish did not get an assigned weight. Petitioners suggest that the Department assign weights for these criteria as it has done in a prior review. Finally, Petitioners argue that the Department used an incorrect interest rate to calculate interest expenses for use in constructed value and cost of production ("COP"). Petitioners suggest that the Department use the financial expense rate provided at verification in calculating interest expenses. POSCO argues that the electronic version of the Department's program indicates that the Department correctly assigned weights for surface finish and thickness tolerances. Therefore, no changes to these two fields are necessary for these Final Results. POSCO did not comment on the financial expense rate. Department's Position: With respect to the weighting factors for surface finish and thickness tolerance, we note that, due to an administrative error, the paper version of the log did not reflect the corrections made to these fields. However, the electronic version and the margin calculations did take these weighting factors into account. We will ensure that both the electronic and the paper copies of the final margin program include these weighting factors. With respect to the interest rate, for these Final Results, we have used the correct interest rate as suggested by Petitioners. Comment 9: Eligibility for Revocation POSCO argues that the Department erred in failing to issue a revocation for POSCO in the cold-rolled proceeding. POSCO argues that they have satisfied all requirements for revocation, including three years of de minimis margins and the necessary certifications. Moreover, there is no record evidence that POSCO would be likely to dump in the future. POSCO argues that the Department's finding that they did not sell in "commercial quantities" in the fourth administrative review is wrong both factually and legally. POSCO argues that the "commercial quantities" requirement applies only in cases where the Department did not conduct a review in an intervening year. Moreover, POSCO argues, this requirement contradicts the Department's regulations concerning revocations as set forth in its Amended Regulations Concerning Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51240 (September 22, 1999). POSCO refers to the Department's reasoning in the Preliminary Results as new and not supported by the plain language of the regulations because it takes a reference to "commercial quantities" from section 351.222(d) dealing with intervening middle years in which a review is not conducted and applies it to section 351.222(e)'s requirements for certification. POSCO argues that it is reasonable to interpret this reference in 351.222(e) to those instances where a review is not conducted during an intervening year rather than to section 351.222(b)(2)(i), which does not contain a reference to a "commercial quantities" test. Moreover, POSCO argues, the Department has stated as such, citing to Antidumping Duties; Notice of Proposed Rulemaking and Request for Public Comments, 61 FR 7308, 7320 (February 7, 1996) ("Proposed Rule"). POSCO argues that the Department's new practice of imposing this threshold, as enunciated in the instant case and in Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Canada, 64 FR 2173, 2175 (January 13, 1999) (final admin. reviews) ("Canada Steel") and Pure Magnesium from Canada, 65 FR 55502, 55503 (September 14, 2000) (final admin. review) ("Canada Magnesium"), is unlawful because the certification requirements do not by themselves create an independent substantive requirement for revocation. POSCO cites to Asahi Chemical Industry Co., Ltd. v. United States, 727 F. Supp. 625, 627 (Ct. Int'l Trade, 1989) as support for this contention. Rather, POSCO argues that any such "commercial quantities" standard appears to violate the recent WTO Panel decision in the Dynamic Random Access Memory Semiconductor from Korea case ("DRAMs from Korea"). By imposing a "commercial quantities" threshold in each of the three years subject to a revocation analysis, POSCO argues, the Department is imposing a new requirement inconsistent with the necessity standard of Article 11.1 of the AD agreement. POSCO requests that the Department reconsider its reasoning against this argument as expressed in Canada Steel and Canada Magnesium. Moreover, POSCO argues that the Department should not apply this position to POSCO. POSCO contends that the positions described in these Canadian cases were first enunciated in 1999, long after POSCO's shipments were made during the fourth administrative review period and, as such, it would be grossly unfair for the Department to apply these retroactively. In addition, POSCO argues, both Departmental practice and case law support the conclusion that a new revocation standard should not be applied retroactively, citing Elemental Sulphur from Canada, 64 FR 37737 (July 13, 1999) (final admin. review) and Bowen v. Georgetown University Hospital, 488 U.S. 204 (1988) ("Bowen"). POSCO contends that the Department does not have the express intent of Congress to apply its authority to promulgate retroactive rules for granting revocations as required by Bowen. Moreover, POSCO argues, the Department's cite to Landgraf v. USI Film Products, 511 U.S. 244, 280 (1994) ("Landgraf") in Canada Magnesium is misplaced because while the instant case refers to the retroactivity of a regulation, Landgraf examines the retroactivity of a statute. Finally, under the Landgraf standard, a court must examine whether "the new provision attaches new legal consequences to events completed before its enactment." Here, POSCO argues, denying it revocation attached legal consequences to past acts and impaired POSCO's rights. Finally, POSCO argues that they did, in fact, sell in "commercial quantities" during the fourth review and, notwithstanding the applicability of a "commercial quantities" standard as argued above, the Department does not have the authority to conduct an aggregate quantities analysis. POSCO argues that their sales were verified by the Department without a determination that these were not bona fide commercial transactions. Notwithstanding the Department's statements in the Preliminary Results, there is no indication in the record that the given quantity does not represent a normal "commercial quantity" for a given sale or that the circumstances surrounding this sale were unusual. Thus the record does not support the Department's conclusion that the sales were not in commercial quantities. Moreover, the Department has specifically stated that the term "commercial quantities" refers to the size of individual sales and not sales in the aggregate, citing to Proposed Rule at 7320. POSCO refers to the lack of standards for market share, size of shipments or sales volume after the imposition of an order to qualify for revocation as evidence that this requirement is without regulatory basis. Finally POSCO argues that its behavior in subsequent review periods is not indicative of a likelihood of future dumping and differs from the behavior of respondent Norsk Hydro in Canada Magnesium where there was a consistent pattern of a low shipment volume. For the reasons outlined above, POSCO asserts that the Department should issue a revocation in the cold-rolled proceeding. Petitioners contend that the Department was correct in requiring, as a threshold matter, that the respondent participated in the U.S. market at commercial quantities over a three year period, citing to the Department's reasoning in Canada Steel and Canada Magnesium. Petitioners argue that POSCO would have the Department nullify the certification requirement with regards to commercial quantities. Notwithstanding this, Petitioners contend that POSCO cannot certify to that given the minimal quantity of cold-rolled product it sold during the fourth review in comparison to the investigation and the fifth and sixth reviews. Therefore, Petitioners argue, the Department should continue to deny revocation for these Final Results. Department's Position: We disagree with POSCO's claim that the commercial quantities requirement applies only to non-reviewed, intervening years and that application of the requirement to its sales is an impermissible expansion of the existing regulations. POSCO's arguments ignore the plain language of the regulation and the Department's past rejection of this position. Commercial quantities is a threshold requirement applicable to all respondents seeking revocation, in whole or in part, of an antidumping duty order. Specifically, 19 C.F.R. 351.222(e)(1) requires that any respondent seeking revocation certify that inter alia, in each of the three years at issue they sold the subject merchandise to the United States in commercial quantities. See 19 C.F.R. 351.222(e)(1)(ii). The threshold requirement that there be exports to the United States in commercial quantities, therefore, explicitly applies in each of the three years encompassed in the request for revocation. Moreover, the Department has previously rejected the argument that the commercial quantities threshold requirement is only applicable to intervening years because of the language of the heading of 19 C.F.R. 351.222(d). In previous case decisions, the Department has stated the following regarding the intervening year argument: {W}hile the regulation requiring sales in commercial quantities may have developed from the unreviewed intervening year regulation, its application in all revocation cases based on the absence of dumping is reasonable and mandated by the regulations. The application of this requirement to all such cases is reflected not only in the provision for unreviewed intervening years (see 19 C.F.R. 351.222(d)(1)), but also in the new general requirement that parties seeking revocation certify to sales in commercial quantities in each of the years on which revocation is to be based. See 19 C.F.R. 351.222(e)(1)(ii). This requirement ensures that the Department's revocation determination is based upon a sufficient breadth of information regarding a company's normal commercial practice. . . regardless of whether we conducted a review or the sales took place in an intervening year. See Pure Magnesium from Canada, 64 FR at 12977, 12979 (March 16, 1999) (final admin. review) ("Pure Magnesium from Canada"); Pure Magnesium From Canada, 64 FR 50489, 50491 (September 17, 1999) (final admin. review) ("Pure Magnesium from Canada-2"); and Canada Magnesium, 65 FR at 55504, and accompanying Decision Memorandum at Comment 4: Procedural Requirements for Revocation. In other words, the assessment of commercial quantities is a threshold issue to any request for a revocation review. When a respondent is not meaningfully participating in the U.S. market (i.e., selling at below commercial quantities), the Department is not able to establish the respondent's ability to compete in the U.S. market without the discipline of the antidumping duty order. Thus, without commercial quantities the Department lacks a basis upon which to evaluate whether revocation analysis, with respect to that respondent, is appropriate. We disagree with POSCO that the commercial quantities requirement is new and unfairly applied. As discussed above, commercial quantities is a threshold requirement applicable to all respondents seeking revocation. See 19 C.F.R. 351.222(e)(1) (listing the required certifications for revocation, including sales in commercial quantities in each of the three years at issue). Furthermore, although the Department revised its revocation regulation in 1999, we explicitly stated that the revisions did not affect the threshold commercial quantities requirement. Specifically, the preamble of the Amended Regulation Concerning the Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51238 (September 22, 1999) ("Revocation Final Rule") states: We disagree with those commenters who suggest that the revised regulation continues to place a burden on respondents, rather than the Department, to prove eligibility for revocation. The threshold requirement for revocation continues to be that respondents not sell at less than normal value for at least three consecutive years, and that, during each of those years respondents exported subject merchandise to the United States in commercial quantities. See 19 C.F.R. 351.222(d)(1). Also, as the Department notes in the preamble, the WTO panel reviewing the DRAMs from Korea case whose findings were the impetus for the revisions to the Department's existing regulations, did not disturb the commercial quantities aspect of the Department's revocation practice. See Revocation Final Rule, 64 FR at 51238. POSCO's arguments are based on a mischaracterization of the commercial quantities requirement as something other than a threshold requirement and are thus in error. Because POSCO failed to make sales of cold-rolled steel in the United States in commercial quantities during all three years, we cannot consider whether POSCO has demonstrated an ability to compete in the U.S. market without the discipline of the antidumping duty order. Thus, the Department lacks a basis upon which to evaluate whether revocation of the order with respect to POSCO is appropriate. A revocation analysis (i.e., consideration of whether the continued application of the order is necessary to offset dumping) is not implicated where a respondent, like POSCO, fails to meet the threshold commercial quantities requirement. See Polyvinyl Alcohol From Taiwan, 65 FR 60615 (October 12, 2000) (final admin. review) ("PVAs from Taiwan") . We disagree with POSCO that the Department has applied the commercial quantities requirement in a manner inconsistent with its past practice and regulations. In addition, we disagree with POSCO's assertion that the Department has defined commercial quantities as specifically referring to the size of individual sales (which is not included in the preamble of the Revocation Final Rule, the preamble of our Proposed Rule,(1) or codified in our past practice). On the contrary, absent an extraordinary occurrence which would cause the Department to consider other measures of commercial quantities (e.g., Professional Electric Cutting Tools From Japan, 64 FR 71411, 71416 (December 21, 1999) (final admin. review)), it has been the Department's practice to examine the aggregate volume of total sales to the United States (in absolute terms and in comparison with the POI or other appropriate benchmark period) in determining whether sales have been made in commercial quantities. See Pure Magnesium from Canada, 64 FR at 12979; Pure Magnesium from Canada-2, 64 FR at 50492; Canada Magnesium, 65 FR 55502, and accompanying Decision Memorandum at Comment 6: Benchmarks Used to Determine Commercial Quantities and Comment 9: Whether the Evidence Demonstrates Commercial Quantities; and Certain Corrosion- Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada, 65 FR 9243, 9249 (February 24, 2000) ("Canada Steel-2"). Additionally, the Department previously rejected this argument in Canada Magnesium, stating: {I}n order to determine whether NHCI is selling subject merchandise to the United States in commercial quantities, our analysis in this revocation review properly focuses on aggregate sales to the United States rather than the size of individual shipments. This is because in order to determine whether the absence of margins is meaningful, we must be satisfied that the margins were calculated on a suitable aggregate quantity. A producer or exporter cannot be said to be making sales in commercial quantities where the current overall level of sales are so small just because the handful of shipments made were in the same lot sizes as those during the benchmark period. If this were the standard, the Department could not reasonably conclude that, without the discipline of the order, NHCI can participate in the U.S. market without selling at less than NV. See Canada Magnesium, 65 FR 55502, and accompanying Decision Memorandum at Comment 6: Benchmarks Used to Determine Commercial Quantities. See also, PVAs from Taiwan. We also disagree with POSCO's characterization of the Department's three standards for commercial quantities examination (i.e., market share, sales volume, and shipping volume). Revocation determinations are particularly fact- intensive and industry-/company- specific, and the Department's practice has been to make its revocation determinations on a case-by-case basis. Thus, the Department's commercial quantities analysis could conceivably include the consideration of all or none of the aforementioned factors (i.e., market share, sales volume, and shipping volume). However, our commercial quantities analysis and practice has considered the relative importance of these factors, as applicable, on a case-by-case basis with a particular focus on the comparative sales volume during the PORs in question and the POI. Commercial quantities have not been found where aggregate sales are determined to be of an abnormally small quantity, either in absolute terms or in comparison to an appropriate benchmark period, because there was not a sufficient breadth of information regarding a company's normal commercial practice.(2) Based on the current record, we find that POSCO did not sell merchandise in the United States in commercial quantities during the fourth administrative review (one of the three consecutive reviews cited by POSCO to support their request for revocation). During the POR covered by that review (August 1996 though July 1997), POSCO appeared to have made only one sale in the United States. Moreover, the total tonnage of this sale was small. See Preliminary Analysis Memo, at Appendix II. By contrast, during the period covered by the antidumping investigation, which was only six months long (January 1992 through June 1992), POSCO made several thousand sales whose total quantity is 400 times greater than the quantity for the fourth administrative review period. In other words, POSCO's sales for the entire year covered by the fourth review period were only 0.27% of its sales volume during the six-months covered by the investigation. Similarly, during the current POR, POSCO sold approximately 400 times more subject merchandise in the United States than during the fourth administrative review. Consequently, although POSCO received a de minimis margin during the fourth administrative review, this margin was not based on commercial quantities within the meaning of the revocation regulation. The number of sales and total sales volume is so small, both in absolute terms, and in comparison with the period of investigation and other review periods (see Preliminary Analysis Memo), that it does not provide any meaningful information of POSCO's normal commercial experience. Therefore, we find that POSCO did not meaningfully participate in the marketplace for purposes of qualifying for a revocation analysis and thus, because they have not sold the subject merchandise for three years in commercial quantities within the meaning of 351.222(e), does not qualify for a revocation analysis. Comment 10: Treatment of Sales with Warranty Expenses Petitioners argue that the Department should reclassify POSCO's home market sales with reported warranty expenses as sales of non-prime merchandise and exclude these sales from the home market dataset. Petitioners allege that POSCO's negotiated compensation is evidence that the merchandise is defective. Petitioners further allege that POSCO's statements at page B-26 of its June 14, 2000 supplemental response indicate that POSCO considers this type of merchandise to be non-prime. Petitioners cite to Certain Cold-Rolled Flat- Rolled Carbon-Quality Steel from Brazil, 65 FR 5554, 5570 (February 4, 2000) (final determination) ("Brazilian Steel"), to support their contention that it is appropriate to classify defective merchandise as non-prime merchandise. POSCO argues that Petitioners' reliance on Brazilian Steel is misplaced because it did not represent a fundamental change in policy. Rather, POSCO contends, the Department's determination in Brazilian Steel was specific to a unique factual situation and can be distinguished from the instant case. POSCO states that, in Brazilian Steel, the Department merely applied the results of verification for a sampled set of warranty claims to all warranty claims. Moreover, these sales with warranty claims were reclassified in the company's records as scrap. POSCO further argues that Petitioners' proposal would punish Respondents for complying with the questionnaire by providing adjustments on as specific basis as possible. Finally, POSCO states that warranty claims can be made for minor defects or other reasons not related to defects that would not serve as a basis for reclassifying merchandise as non-prime. Department's Position: We disagree with Petitioners and have not treated POSCO's sales with warranty claims as non-prime merchandise. First, we agree with POSCO that the basis for paying a warranty claim does not necessarily coincide with a non-prime classification. Thus, Petitioners' argument that a warranty claim presupposes a classification as non-prime is incorrect. Moreover, Petitioners do not cite other record evidence supporting their position that these sales are non-prime merchandise. Finally, we agree with POSCO that our treatment of certain sales in Brazilian Steel was unique and not in line with the factual situation present in the instant case because we did not find fault with POSCO's reporting of this expense at verification as we did in Brazilian Steel. Comment 11: Cost Variances POSCO claims that the Department's reliance on the highest adjustment increasing costs amounts to an adverse adjustment. According to POSCO, the Department has repeatedly verified the same methodology used in this review and POSCO was never instructed to modify its methodology. Therefore, POSCO asserts that because the Department has never requested this information, it cannot use an adverse inference as it did in the Preliminary Results. Petitioners did not comment on this issue. Department's Position: We disagree with POSCO. The adjustment we made to POSCO's costs was not adverse. The adjustment reflected the actual process-specific variance recorded in POSCO's normal accounting records. See Cost Verification Report from Theresa L. Caherty to Neal M. Halper, at 2 (August 14, 2000). While it is higher than the other actual process-specific variances on the record, using the higher verses the average variance has little impact on the margin. Additionally, we disagree with POSCO that the Department did not ask for this information or instruct them to change the methodology. The questionnaire, at page D-1, sent to POSCO instructed them to report the product-specific costs as recorded in the company's normal books and records. POSCO normally calculates the variances for each process center and these variances are allocated to the RPGs that go through the process. POSCO never volunteered that they calculated the variances on a more specific level than they were reporting them to the Department. Instead, the Department happened upon this fact during the latest verification. Hence, because the Department did not know that POSCO calculated the variances to this level of product specificity, it could not issue POSCO a deficiency question or instruct them to change the methodology. UNION Comment 12: Value Added Tax Petitioners state that Union calculates the credit period for specific customers by using an average-age-of-receivables, or "receivable-turnover" method. Petitioners argue that the numerator of the ratio should not include the percent value added tax ("VAT") applied to sales in Korea. This VAT is collected by Union and then remitted to the government of South Korea. Petitioners further reiterates that VAT is improperly included only in the numerator and not in the denominator which therefore overstates the credit expense. Petitioners argue that the Department should correct this error by dividing the reported credit adjustment reported for each transaction by one plus the VAT rate. Union argues that the home market credit methodology Union used in this review was verified and accepted by the Department, without comment from Petitioners, in the second administrative review. However, if the Department chooses to modify Union's calculation of its home market credit expense, Union notes that the Department must first distinguish between local sales, for which payment is made in cash on a shipment-by-shipment basis, and other sales where payment is made on an open account basis. For the local sales, no adjustment should be made to the small amount of credit expense reported, while for sales where payment is made on an open account basis, the credit formula would change with respect to the "customer credit period." Union suggests that the simple and accurate method for modifying the per-unit credit expenses for local non-sales in Union's home market sales database is to multiply the reported amounts for CREDITH by the factor 1/1.1 which would negate the inclusion of the ten percent VAT in the numerator of the customer credit period calculation. Union argues that these changes would increase the margin by a few hundredths of one percent. Department's Position: The Department agrees with Petitioners that the VAT should be removed from the numerator of the receivable-turnover ratio so as to not improperly inflate the credit period and overstate the credit expense. The Department's practice is to calculate credit expenses exclusive of VAT because the imputed credit factor is applied to the gross unit price exclusive of VAT. However, we disagree with both Petitioners' and Union's suggested correction because, although it is clear that accounts receivable contains VAT, we are unsure if the notes receivable value also contains VAT. Thus, both methodologies overcorrect the problem. Therefore, the Department has applied its own corrective measure by reducing the accounts receivable amount by an appropriate estimate of VAT based upon the sample credit calculations provided by respondent. See Final Analysis Memo for the relevant calculations. Comment 13: Obsolete Sales in the Home Market Petitioners argue that the Department should remove Union's sales of "obsolete" merchandise from the home market database. Petitioners argue that Union states that "the weighted-average price of prime non-overrun merchandise is lower than individual sales of prime overrun merchandise because the weighted-average price of prime non-overrun merchandise includes sales of obsolete merchandise." Petitioners contend that sales of obsolete merchandise, made at discount prices, should never be matched to prime sales in the United States. These sales are outside the ordinary course of trade and the conditions and practices related to the sale of "obsolete" merchandise are not normal in the market and significantly differ from sales of prime merchandise in the United States. Union states that Petitioners' argument that Union's sales of "obsolete" merchandise should be excluded from Union's home market sales database as "outside the ordinary course of trade" rests ultimately on the fact that these sales were made at discounted prices. Union argues that Petitioners completely ignore the fact that these sales, like all home market sales of prime merchandise included in Union's home market sales database, are subject to the Department's sales-below-cost test and arm's-length test. If they did not fail these tests, they are not "outside the ordinary course of trade," and therefore Petitioners' argument is solely a rejection of the results of the sales-below- cost test. Union argues that if a sale is not excluded based on the 20-percent rule, there is no additional, prescribed set of acceptable or unacceptable reasons for why a sale of prime merchandise made below the COP may remain in, or be excluded from, the home market sales database. Union states that section 777(15) of the Act defines two types of sales that would be disregarded as outside the ordinary course of trade: sales at less than the COP, pursuant to section 773(b)(1); and sales between affiliated parties that are not at arm's length, pursuant to section 773(f)(2). Union argues that if Union's sales of obsolete merchandise do not fail either the sales-below-cost test or the arm's- length test, they should properly be included in Union's home market sales database. Union argues that Petitioners have failed to provide any evidence that Union's obsolete sales warrant a departure from the normal criteria of section 771(15) in order to "avoid basing normal value on sales which are extraordinary for the market in question, particularly when use of such sales would lead to irrational or unrepresentative results." SAA at 834. Union states that the Department should adhere to its Preliminary Results and deny Petitioners' request to exclude Union's "obsolete" sales from its home market sales database. Department's Position: We agree with Union that none of Union's sales should be classified as outside the ordinary course of trade for purposes of the Department's analysis in this review. We find no basis for excluding the obsolete merchandise sales from the analysis simply because they are discounted price sales, and Petitioners have not presented sufficient reasons for determining any of the sales in question as outside the ordinary course of trade. Also, Petitioners' argument is incorrect when it states that the Department implicitly recognized the fact that sales of obsolete merchandise should never be matched to prime sales in the U.S. by requiring Union to report such sales under a new variable "OSOLETH." The Department's question to Union to explain the practical meaning of the term obsolete merchandise and create a separate field for "obsolete" sales, was to understand the meaning of the term "obsolete" as used by Union and to establish the quantity of such sales. As discussed above, these sales were not made outside the ordinary course of trade and, as such, irrespective of the terminology employed, will be included in the dumping analysis. Comment 14: Home Market Weights v. U.S. Weights Union states that the Department, in its model match program, assigned different weights for home market sales as compared to U.S. sales for the variable "CRQUAL." Union argues that since none of the numerical codes for "CRQUAL" in the home market are the same as those in the U.S. market, there can be no identical matches even when there are sales in both markets with the identical codes under "CRQUAL," e.g., Code A. In order to remedy this situation, Union argues that the Department should correct the inconsistency in coding between the United States and home market with respect to the "CRQUAL" variable and, assign weights for the home market sales that are identical to the weights for the U.S. sales and that result in Code A being the next most similar comparison to Code E. Petitioners did not address this issue in their case brief or rebuttal brief. Department's Position: We agree with Respondent that we assigned different weights for the home market sales as compared to U.S. sales for the variable "CRQUAL" and regard this difference in assigning weight as a clerical error. Therefore, for these Final Results, we have adjusted our model match program to reflect the consistency in coding between the U.S. and home markets with respect to the "CRQUAL" variable. See Final Analysis Memo. RECOMMENDATION: Based on our analysis of the comments received, we recommend adopting all of the above changes and positions, and adjusting the model match and margin calculation programs accordingly. If accepted, we will publish the final results of the reviews and the final weighted-average dumping margins for the reviewed firms in the Federal Register. AGREE___________ DISAGREE___________ __________________________ Joseph A. Spetrini Acting Assistant Secretary for Import Administration __________________________ Date ________________________________________________________________________________ footnotes: 1. See Proposed Rule, 61 FR at 7320. 2. See Brass Sheet and Strip from the Netherlands, 65 FR 742, 750 (January 6, 2000) (final admin. review); Silicon Metal from Brazil, 65 FR 7497, 7498 (February 15, 2000) (final admin. review); Pure Magnesium from Canada, 64 FR at 12978; Pure Magnesium from Canada-2, 64 FR at 50492; Canada Steel, 64 FR at 2189; and Canada Steel-2, 65 FR at 9249. See also, PVAs from Taiwan.