65 FR 15123, March 21, 2000 A-489-808 POI: 1998-99 IA/Group III: CRR/SCA Public Document MEMORANDUM TO: Robert S. LaRussa Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary for Import Administration AD/CVD Enforcement Group III SUBJECT: Issues and Decision Memorandum for the Antidumping Investigation of Cold-Rolled Flat-Rolled Carbon Quality Steel Products from Turkey; Notice of Final Determination ff Sales at Less Than Fair Value (A-489- 808) Summary We have analyzed the comments and rebuttals of interested parties in the 1998-1999 antidumping duty investigation of cold-rolled flat- rolled carbon quality steel products (cold-rolled steel) from Turkey (A-489-808). As a result of our analysis, we have made changes, including corrections of certain inadvertent programming and ministerial 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. Below is the complete list of the issues in this investigation for which we received comments and rebuttals by parties: 1. Facts Available 1. Adverse Facts Available 2. Major Input 2. Date of Sale 3. COP/CV 1. Exchange Rate Gains and Losses 2. Translation Gains and Losses 3. Major Input - Trace to Individual Coils 4. Missing Coils 5. Auditor's Adjustments 6. Sales of Scrap 4. Adjustments to Export Price 1. Movement Expenses 2. Duty Drawback 5. Adjustments to Normal Value 1. Returns 2. Interest Revenue 3. Technical Services 6. Model Match 7. Ministerial Errors Background We published in the Federal Register the preliminary determination in this investigation on January 7, 2000. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Cold-Rolled Flat- Rolled Carbon-Quality Steel Products from Turkey, 65 FR 1127 (January 7, 2000) (Preliminary Determination). The period of investigation (POI) is April 1, 1998, through March 31, 1999. The investigation covers cold-rolled steel sales made by two manufacturers/exporters; Borçelik Çelik Sanayii ve Ticaret A.S. (Borcelik) and Ereli Demir ve Çelik Fabrikalari T.A.. (Erdemir). We invited parties to comment on our preliminary determination. We received case briefs from Erdemir, Borcelik and petitioners(1) (for issues only concerning Borcelik), on February 11, 2000. We received rebuttal briefs from the same parties on February 18, 2000. At the request of certain interested parties, we held a public hearing on February 22, 2000. Scope of Investigation FOR PURPOSES OF THIS INVESTIGATION, THE PRODUCTS COVERED ARE CERTAIN COLD-ROLLED (COLD-REDUCED) FLAT-ROLLED CARBON-QUALITY STEEL PRODUCTS, NEITHER CLAD, PLATED, NOR COATED WITH METAL, BUT WHETHER OR NOT ANNEALED, PAINTED, VARNISHED, OR COATED WITH PLASTICS OR OTHER NON- METALLIC SUBSTANCES, BOTH IN COILS, 0.5 INCH WIDE OR WIDER, (WHETHER OR NOT IN SUCCESSIVELY SUPERIMPOSED LAYERS AND/OR OTHERWISE COILED, SUCH AS SPIRALLY OSCILLATED COILS), AND ALSO IN STRAIGHT LENGTHS, WHICH, IF LESS THAN 4.75 MM IN THICKNESS HAVING A WIDTH THAT IS 0.5 INCH OR GREATER AND THAT MEASURES AT LEAST 10 TIMES THE THICKNESS; OR, IF OF A THICKNESS OF 4.75 MM OR MORE, HAVING A WIDTH EXCEEDING 150 MM AND MEASURING AT LEAST TWICE THE THICKNESS. THE PRODUCTS DESCRIBED ABOVE MAY BE RECTANGULAR, SQUARE, CIRCULAR OR OTHER SHAPE AND INCLUDE PRODUCTS OF EITHER RECTANGULAR OR NON-RECTANGULAR CROSS- SECTION WHERE SUCH CROSS-SECTION IS ACHIEVED SUBSEQUENT TO THE ROLLING PROCESS (I.E., PRODUCTS WHICH HAVE BEEN "WORKED AFTER ROLLING") – FOR EXAMPLE, PRODUCTS WHICH HAVE BEEN BEVELED OR ROUNDED AT THE EDGES. SPECIFICALLY INCLUDED IN THIS SCOPE ARE VACUUM DEGASSED, FULLY STABILIZED (COMMONLY REFERRED TO AS INTERSTITIAL-FREE ("IF")) STEELS, HIGH STRENGTH LOW ALLOY ("HSLA") STEELS, AND MOTOR LAMINATION STEELS. IF STEELS ARE RECOGNIZED AS LOW CARBON STEELS WITH MICRO-ALLOYING LEVELS OF ELEMENTS SUCH AS TITANIUM AND/OR NIOBIUM ADDED TO STABILIZE CARBON AND NITROGEN ELEMENTS. HSLA STEELS ARE RECOGNIZED AS STEELS WITH MICRO-ALLOYING LEVELS OF ELEMENTS SUCH AS CHROMIUM, COPPER, NIOBIUM, TITANIUM, VANADIUM, AND MOLYBDENUM. MOTOR LAMINATION STEELS CONTAIN MICRO-ALLOYING LEVELS OF ELEMENTS SUCH AS SILICON AND ALUMINUM. STEEL PRODUCTS INCLUDED IN THE SCOPE OF THIS INVESTIGATION, REGARDLESS OF DEFINITIONS IN THE HARMONIZED TARIFF SCHEDULES OF THE UNITED STATES ("HTSUS"), ARE PRODUCTS IN WHICH: (1) IRON PREDOMINATES, BY WEIGHT, OVER EACH OF THE OTHER CONTAINED ELEMENTS; (2) THE CARBON CONTENT IS 2 PERCENT OR LESS, BY WEIGHT, AND; (3) NONE OF THE ELEMENTS LISTED BELOW EXCEEDS THE QUANTITY, BY WEIGHT, RESPECTIVELY INDICATED: 1.80 PERCENT OF MANGANESE, OR 2.25 PERCENT OF SILICON, OR 1.00 PERCENT OF COPPER, OR 0.50 PERCENT OF ALUMINUM, OR 1.25 PERCENT OF CHROMIUM, OR 0.30 PERCENT OF COBALT, OR 0.40 PERCENT OF LEAD, OR 1.25 PERCENT OF NICKEL, OR 0.30 PERCENT OF TUNGSTEN, OR 0.10 PERCENT OF MOLYBDENUM, OR 0.10 PERCENT OF NIOBIUM (ALSO CALLED COLUMBIUM), OR 0.15 PERCENT OF VANADIUM, OR 0.15 PERCENT OF ZIRCONIUM. ALL PRODUCTS THAT MEET THE WRITTEN PHYSICAL DESCRIPTION, AND IN WHICH THE CHEMISTRY QUANTITIES DO NOT EXCEED ANY ONE OF THE NOTED ELEMENT LEVELS LISTED ABOVE, ARE WITHIN THE SCOPE OF THIS INVESTIGATION UNLESS SPECIFICALLY EXCLUDED. THE FOLLOWING PRODUCTS, BY WAY OF EXAMPLE, ARE OUTSIDE AND/OR SPECIFICALLY EXCLUDED FROM THE SCOPE OF THIS INVESTIGATION: - SAE GRADES (FORMERLY ALSO CALLED AISI GRADES) ABOVE 2300; - BALL BEARING STEELS, AS DEFINED IN THE HTSUS; - TOOL STEELS, AS DEFINED IN THE HTSUS; - SILICO-MANGANESE STEEL, AS DEFINED IN THE HTSUS; - SILICON-ELECTRICAL STEELS, AS DEFINED IN THE HTSUS, THAT ARE GRAIN-ORIENTED; - SILICON-ELECTRICAL STEELS, AS DEFINED IN THE HTSUS, THAT ARE NOT GRAIN-ORIENTED AND THAT HAVE A SILICON LEVEL EXCEEDING 2.25 PERCENT; - ALL PRODUCTS (PROPRIETARY OR OTHERWISE) BASED ON AN ALLOY ASTM SPECIFICATION (SAMPLE SPECIFICATIONS: ASTM A506, A507); - NON-RECTANGULAR SHAPES, NOT IN COILS, WHICH ARE THE RESULT OF HAVING BEEN PROCESSED BY CUTTING OR STAMPING AND WHICH HAVE ASSUMED THE CHARACTER OF ARTICLES OR PRODUCTS CLASSIFIED OUTSIDE CHAPTER 72 OF THE HTSUS. - SILICON-ELECTRICAL STEELS, AS DEFINED IN THE HTSUS, THAT ARE NOT GRAIN-ORIENTED AND THAT HAVE A SILICON LEVEL LESS THAN 2.25 PERCENT, AND A) FULLY-PROCESSED, WITH A CORE LOSS OF LESS THAN 0.14 WATTS/POUND PER MIL (0.001 INCH), OR B) SEMI-PROCESSED, WITH CORE LOSS OF LESS THAN 0.085 WATTS/POUND PER MIL (0.001 INCH); - CERTAIN SHADOW MASK STEEL, WHICH IS ALUMINUM KILLED COLD-ROLLED STEEL COIL THAT IS OPEN COIL ANNEALED, HAS AN ULTRA-FLAT, ISOTROPIC SURFACE, AND WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS: 0.001 TO 0.010 INCH, WIDTH: 15 TO 32 INCHES, CHEMICAL COMPOSITION: CARBON CONTENT LESS THAN 0.002 PERCENT, BY WEIGHT. - CERTAIN FLAPPER VALVE STEEL, WHICH IS HARDENED AND TEMPERED, SURFACE POLISHED, AND WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS: LESS THAN OR EQUAL TO 1.0 MM; WIDTH: LESS THAN OR EQUAL TO 152.4 MM; CHEMICAL COMPOSITION: CARBON CONTENT GREATER THAN OR EQUAL TO 0.90 PERCENT AND LESS THAN OR EQUAL TO 1.05 PERCENT, BY WEIGHT; SILICON CONTENT GREATER THAN OR EQUAL TO 0.15 PERCENT AND LESS THAN OR EQUAL TO 0.35 PERCENT BY WEIGHT; MAGNESIUM CONTENT GREATER THAN OR EQUAL TO 0.30 PERCENT AND LESS THAN OR EQUAL TO 0.50 PERCENT, BY WEIGHT; PHOSPHORUS CONTENT OF LESS THAN OR EQUAL TO 0.03 PERCENT, BY WEIGHT; AND SULPHUR CONTENT LESS THAN OR EQUAL TO 0.006 PERCENT, BY WEIGHT; MECHANICAL PROPERTIES: TENSILE STRENGTH GREATER THAN OR EQUAL TO 162 KGF/SQUARE MM; HARDNESS GREATER THAN OR EQUAL TO 475 VICKERS HARDNESS NUMBER; PHYSICAL PROPERTIES: FLATNESS LESS THAN 0.2 PERCENT OF NOMINAL STRIP WIDTH; MICROSTRUCTURE: COMPLETELY FREE FROM DECARBURIZATION. CARBIDES ARE SPHEROIDAL AND FINE WITHIN 1 PERCENT TO 4 PERCENT (AREA PERCENTAGE) AND ARE UNDISSOLVED IN THE UNIFORM TEMPERED MARTENSITE; NON-METALLIC INCLUSION: SULFIDE INCLUSION WITH AREA PERCENTAGE LESS THAN OR EQUAL TO 0.04 PERCENT, AND OXIDE INCLUSION WITH AREA PERCENTAGE LESS THAN OR EQUAL TO 0.05 PERCENT; COMPRESSIVE STRESS: 10 TO 40 KGF/SQUARE MM; SURFACE ROUGHNESS SPECIFICATIONS: IF THICKNESS IS LESS THAN OR EQUAL TO 0.209 MM, WILL HAVE ROUGHNESS (RZ) LESS THAN OR EQUAL TO 0.5 MICROMETER; IF THICKNESS IS GREATER THAN 0.209 MM BUT LESS THAN OR EQUAL TO 0.310 MM, WILL HAVE ROUGHNESS (RZ) OF LESS THAN OR EQUAL TO 0.6 MICROMETER; IF THICKNESS IS GREATER THAN 0.310 MM BUT LESS THAN OR EQUAL TO 0.440 MM , WILL HAVE ROUGHNESS (RZ) LESS THAN OR EQUAL TO 0.7 MICROMETER; IF THICKNESS IS GREATER THAN 0.440 MM BUT LESS THAN OR EQUAL TO 0.560 MM, WILL HAVE ROUGHNESS (RZ) LESS THAN OR EQUAL TO 0.8 MICROMETER; IF THICKNESS IS GREATER THAN 0.560 MM, WILL HAVE ROUGHNESS (RZ) LESS THAN OR EQUAL TO 1.0 MICROMETER. - CERTAIN ULTRA THIN GAUGE STEEL STRIP, WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS LESS THAN OR EQUAL TO 0.100 MM (+/- 7 PERCENT), WIDTH: 100 TO 600 MM; CHEMICAL COMPOSITION: CARBON CONTENT LESS THAN OR EQUAL TO 0.07 PERCENT BY WEIGHT; MANGANESE CONTENT GREATER THAN OR EQUAL TO 0.2 BUT LESS THAN OR EQUAL TO 0.5 PERCENT BY WEIGHT; PHOSPHORUS CONTENT LESS THAN OR EQUAL TO 0.05 PERCENT BY WEIGHT; SULPHUR CONTENT LESS THAN OR EQUAL TO 0.05 PERCENT BY WEIGHT; ALUMINUM CONTENT LESS THAN OR EQUAL TO 0.07 PERCENT BY WEIGHT; WITH THE BALANCE IRON; MECHANICAL PROPERTIES: HARDNESS EQUALS FULL HARD (HV 180 MINIMUM); TOTAL ELONGATION LESS THAN 3 PERCENT; AND TENSILE STRENGTH OF 600 TO 850 N/SQUARE MM. PHYSICAL PROPERTIES: SURFACE FINISH LESS THAN OR EQUAL TO 0.3 MICRON; CAMBER (IN 2.0 M) LESS THAN 3.0 MM; FLATNESS (IN 2.0 M) LESS THAN OR EQUAL TO 0.5 MM; EDGE BURR LESS THAN 0.01 MM GREATER THAN THICKNESS; AND COIL SET (IN 1.0 M) LESS THAN 75.0 MM. - CERTAIN SILICON STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS: 0.024 INCH +/- 0.0015 INCH; WIDTH: 33 INCHES TO 45.5 INCHES; CHEMICAL COMPOSITION: MINIMUM SILICON CONTENT OF 0.65 PERCENT, BY WEIGHT, MAXIMUM CARBON CONTENT OF 0.004 PERCENT, BY WEIGHT, MAXIMUM MANGANESE CONTENT OF 0.4 PERCENT, BY WEIGHT; MAXIMUM PHOSPHORUS CONTENT OF 0.09 PERCENT, BY WEIGHT, MAXIMUM SULPHUR CONTENT OF 0.009 PERCENT, BY WEIGHT; MAXIMUM ALUMINUM CONTENT OF 0.4 PERCENT, BY WEIGHT. MECHANICAL PROPERTIES: HARDNESS OF B 60-75 (AIM 65); PHYSICAL PROPERTIES: SMOOTH FINISH (30 - 60 MICROINCHES), GAMMA CROWN (IN 5 INCHES) OF 0.0005 INCHES, WITH MEASUREMENT BEGINNING ONE- QUARTER INCH FROM SLIT EDGE; FLATNESS OF 20 I-UNIT MAXIMUM; COATING OF C3A - 0.08A MAXIMUM (A2 COATING ACCEPTABLE); CAMBER (IN ANY 10 FEET) OF ONE-SIXTEENTH INCH; COIL SIZE INSIDE DIAMETER OF 20 INCHES. MAGNETIC PROPERTIES: CORE LOSS (1.5T/60 HZ) NAAS OF 3.8 WATTS/POUND MAXIMUM. PERMEABILITY (1.5T/60 HZ) NAAS OF 1700 GAUSS/OERSTED TYPICAL 1500 MINIMUM. - CERTAIN APERTURE MASK STEEL, WHICH HAS AN ULTRA-FLAT SURFACE FLATNESS AND WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS: 0.025 MM TO 0.245 MM; WIDTH: 381 MM - 1000 MM; CHEMICAL COMPOSITION: CARBON CONTENT OF LESS THAN 0.01 PERCENT, BY WEIGHT, NITROGEN CONTENT GREATER THAN OR EQUAL TO 0.004 AND LESS THAN OR EQUAL TO 0.007 PERCENT, BY WEIGHT, AND ALUMINUM CONTENT OF LESS THAN 0.007 PERCENT, BY WEIGHT. - CERTAIN ANNEALED AND TEMPER-ROLLED COLD-ROLLED CONTINUOUSLY CAST STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: CHEMICAL COMPOSITION: CARBON CONTENT OF MINIMUM 0.02 AND MAXIMUM 0.06 PERCENT, BY WEIGHT; MANGANESE CONTENT OF MINIMUM 0.20 AND MAXIMUM 0.40 PERCENT, BY WEIGHT; MAXIMUM PHOSPHORUS CONTENT OF 0.02 PERCENT, BY WEIGHT; MAXIMUM SULPHUR CONTENT OF 0.023 (AIMING 0.018 MAXIMUM) PERCENT, BY WEIGHT; MAXIMUM SILICON CONTENT OF 0.03 PERCENT, BY WEIGHT; MINIMUM ALUMINUM CONTENT OF 0.03 PERCENT, BY WEIGHT AND MAXIMUM 0.08 (AIMING 0.05) PERCENT, BY WEIGHT; MAXIMUM ARSENIC CONTENT OF 0.02 PERCENT, BY WEIGHT; MAXIMUM COPPER CONTENT OF 0.08 PERCENT, BY WEIGHT; NITROGEN CONTENT OF MINIMUM 0.003 PERCENT, BY WEIGHT AND MAXIMUM 0.008 (AIMING 0.005) PERCENT, BY WEIGHT. NON- METALLIC INCLUSIONS: EXAMINATION WITH THE S.E.M. SHALL NOT REVEAL INDIVIDUAL OXIDES GREATER THAN 1 MICRON (0.000039 INCH) AND INCLUSION GROUPS OR CLUSTERS SHALL NOT EXCEED 5 MICRONS (0.000197 INCH) IN LENGTH. SURFACE TREATMENT AS FOLLOWS: THE SURFACE FINISH SHALL BE FREE OF DEFECTS (DIGS, SCRATCHES, PITS, GOUGES, SLIVERS, ETC.) AND SUITABLE FOR NICKEL PLATING. SURFACE FINISH SHALL BE EXTRA BRIGHT WITH ROUGHNESS, OF 0 RA MICROINCHES (0 MICROMETERS) TO 7 RA MICROINCHES (0.2 MICROMETERS) WITH AN AIM OF 5 MICROINCHES (0.1 MICROMETERS). - CERTAIN ANNEALED AND TEMPER-ROLLED COLD-ROLLED CONTINUOUSLY CAST STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: CHEMICAL COMPOSITION: CARBON CONTENT OF LESS THAN 0.08 PERCENT, BY WEIGHT; SILICON CONTENT OF LESS THAN 0.04 PERCENT, BY WEIGHT; MANGANESE CONTENT OF LESS THAN 0.40 PERCENT, BY WEIGHT; PHOSPHOROUS CONTENT OF LESS THAN 0.03 PERCENT BY WEIGHT; SULFUR CONTENT OF LESS THAN 0.03 PERCENT, BY WEIGHT; ALUMINUM CONTENT OF 0.010 TO 0.025 PERCENT, BY WEIGHT; NITROGEN CONTENT OF LESS THAN 0.0025 PERCENT, BY WEIGHT; ADDITIONAL PROPERTIES: HARDNESS OF HV 85-110; MATTE SURFACE; WIDTH TOLERANCE OF -0.0/+7 MM; ANNEALED; TENSILE STRENGTH GREATER THAN 275N/SQUARE MM; ELONGATION GREATER THAN 36 PERCENT; THICKNESS TOLERANCE (GUARANTEED INSIDE OF 15 MM FROM MILL EDGES) OF +/-5 PERCENT (AIM OF +/- 4 PERCENT). - CERTAIN ANNEALED AND TEMPER-ROLLED COLD-ROLLED CONTINUOUSLY CAST STEEL, IN COILS, WITH A BASE WEIGHT OF 55 POUNDS, WHICH INCLUDES A CERTIFICATE OF ANALYSIS PER CABLE SYSTEMS INTERNATIONAL (CSI) SPECIFICATION 96012 AND MEETS THE FOLLOWING CHARACTERISTICS: CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.13 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.60 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.02 PERCENT BY WEIGHT; MAXIMUM SULFUR CONTENT OF 0.05 PERCENT, BY WEIGHT; ADDITIONAL PROPERTIES: THEORETICAL THICKNESS OF 0.0061 INCH,+/- 10 PERCENT OF THEORETICAL THICKNESS; WIDTH OF 31 INCHES; TENSILE STRENGTH OF 45,000 TO 55,000 PSI; AND ELONGATION OF A MINIMUM OF 15 PERCENT IN 2 INCHES. - CERTAIN FULL HARD TIN MILL BLACK PLATE, CONTINUOUSLY CAST, WHICH MEETS THE FOLLOWING CHARACTERISTICS: CHEMICAL COMPOSITION: CARBON CONTENT OF MINIMUM 0.02 PERCENT, BY WEIGHT AND MAXIMUM 0.06 PERCENT, BY WEIGHT; MANGANESE CONTENT OF MINIMUM 0.20 AND MAXIMUM 0.40 PERCENT, BY WEIGHT; MAXIMUM PHOSPHORUS CONTENT OF 0.02 PERCENT, BY WEIGHT; MAXIMUM SULPHUR CONTENT OF 0.023 (AIMING 0.018 MAXIMUM) PERCENT, BY WEIGHT; MAXIMUM SILICON CONTENT OF 0.03 PERCENT, BY WEIGHT; ALUMINUM CONTENT OF MINIMUM 0.03 AND MAXIMUM 0.08 (AIMING 0.05) PERCENT, BY WEIGHT; MAXIMUM ARSENIC CONTENT OF 0.02 PERCENT, BY WEIGHT; MAXIMUM COPPER CONTENT OF 0.08 PERCENT, BY WEIGHT; NITROGEN CONTENT OF MINIMUM 0.003 AND MAXIMUM 0.008 (AIMING 0.005) PERCENT, BY WEIGHT. NON-METALLIC INCLUSIONS: EXAMINATION WITH THE S.E.M. SHALL NOT REVEAL INDIVIDUAL OXIDES GREATER THAN 1 MICRON (0.000039 INCH) AND INCLUSION GROUPS OR CLUSTERS SHALL NOT EXCEED 5 MICRONS (0.000197 INCH) IN LENGTH. THE SURFACE FINISH SHALL BE FREE OF DEFECTS (DIGS, SCRATCHES, PITS, GOUGES, SLIVERS, ETC.) AND SUITABLE FOR NICKEL PLATING. SURFACE FINISH SHALL BE STONE FINISH WITH ROUGHNESS OF 8 RA MICROINCHES (0.2 MICROMETERS) TO 24 RA MICROINCHES (0.6 MICROMETERS) WITH AN AIM OF 16 RA MICROINCHES (0.4 MICROMETERS). - CERTAIN ULTRA-BRIGHT TIN MILL BLACK PLATE MEETING ASTM 7A SPECIFICATIONS FOR SURFACE FINISH AND RA OF SEVEN MICRO-INCHES OR LOWER. - CONCAST COLD-ROLLED DRAWING QUALITY SHEET STEEL, ASTM A-620-97, TYPE B, OR SINGLE REDUCED BLACK PLATE, ASTM A-625-92, TYPE D, T-1, ASTM A-625-76 AND ASTM A-366-96, T1-T2-T3 COMMERCIAL BRIGHT/LUSTER 7A BOTH SIDES, RMS 12 MAXIMUM. THICKNESS RANGE OF 0.0088 TO 0.038 INCHES, WIDTH OF 23.0 INCHES TO 36.875 INCHES. - CERTAIN SINGLE REDUCED BLACK PLATE, MEETING ASTM A-625-98 SPECIFICATIONS, 53 POUND BASE WEIGHT (0.0058 INCH THICK) WITH A TEMPER CLASSIFICATION OF T-2 (49-57 HARDNESS USING THE ROCKWELL 30 T SCALE). - CERTAIN SINGLE REDUCED BLACK PLATE, MEETING ASTM A-625-76 SPECIFICATIONS, 55 POUND BASE WEIGHT, MR TYPE MATTE FINISH, TH BASIC TOLERANCE AS PER A263 TRIMMED. - CERTAIN SINGLE REDUCED BLACK PLATE, MEETING ASTM A-625-98 SPECIFICATIONS, 65 POUND BASE WEIGHT (0.0072 INCH THICK) WITH A TEMPER CLASSIFICATION OF T-3 (53-61 HARDNESS USING THE ROCKWELL 30 T SCALE). - CERTAIN COLD-ROLLED BLACK PLATE BARE STEEL STRIP, MEETING ASTM A- 625 SPECIFICATIONS, WHICH MEET THE FOLLOWING CHARACTERISTICS: THICKNESS: 0.0058 INCH +/- 0.0003 INCH; CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.13 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.60 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.02 PERCENT, BY WEIGHT; MAXIMUM SULFUR CONTENT OF 0.05 PERCENT, BY WEIGHT; MECHANICAL PROPERTIES: HARDNESS: T2/HR 30T 50-60 AIMING; ELONGATION OF GREATER OR EQUAL TO FIFTEEN PERCENT; AND TENSILE STRENGTH AIMING FOR 51,000 PSI +/- 4,000 PSI. - CERTAIN COLD-ROLLED BLACK PLATE BARE STEEL STRIP, IN COILS, MEETING ASTM A-623, TABLE II, TYPE MR SPECIFICATIONS, WHICH MEET THE FOLLOWING CHARACTERISTICS: THICKNESS: 0.0060 INCH +/- 0.0005 INCH; WIDTH OF UP TO AND INCLUDING 10 INCHES +1/4 TO 3/8 INCH/-0; CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.13 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.60 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.04 PERCENT, BY WEIGHT; MAXIMUM SULFUR CONTENT OF 0.05 PERCENT, BY WEIGHT; MECHANICAL PROPERTIES: ELONGATION OF 15 PERCENT IN 2 INCHES, MINIMUM; AND TENSILE STRENGTH OF 55,000 PSI MAXIMUM. - CERTAIN "BLUED STEEL" COIL (ALSO KNOW AS "STEAMED BLUE STEEL" OR "BLUE OXIDE") WITH A THICKNESS AND SIZE OF 0.30 MM X 0.42 MM AND WIDTH OF 609 MM TO 1219 MM, IN COIL FORM. - CERTAIN COLD-ROLLED STEEL SHEET, WHETHER COATED OR NOT COATED WITH PORCELAIN ENAMELING PRIOR TO IMPORTATION, WHICH MEETS THE FOLLOWING CHARACTERISTICS: NOMINAL THICKNESS: LESS THAN OR EQUAL TO 0.019 INCH; WIDTH OF 35 INCHES TO 60 INCHES; CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.004 PERCENT, BY WEIGHT; MINIMUM OXYGEN CONTENT OF 0.010 PERCENT, BY WEIGHT; AND MINIMUM BORON CONTENT OF 0.012 PERCENT, BY WEIGHT. - CERTAIN COLD-ROLLED STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.07 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.67 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.14 PERCENT, BY WEIGHT; MAXIMUM SILICON CONTENT OF 0.03 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: WIDTH: > 66 INCHES; THICKNESS RANGE OF 0.800 TO 2.000 MM; YIELD POINT (MPA)OF 265 TO 365; MINIMUM TENSILE STRENGTH (MPA) OF 440; AND MINIMUM ELONGATION OF 26 PERCENT. - CERTAIN BAND SAW STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: THICKNESS LESS THAN OR EQUAL TO 1.31 MM; WIDTH LESS THAN OR EQUAL TO 80 MM; CHEMICAL COMPOSITION: CARBON CONTENT OF 1.2 TO 1.3 PERCENT BY WEIGHT; SILICON CONTENT OF 0.15 TO 0.35 PERCENT BY WEIGHT; MANGANESE CONTENT OF 0.20 TO 0.35 PERCENT BY WEIGHT; PHOSPHORUS CONTENT LESS THAN OR EQUAL TO 0.03 PERCENT BY WEIGHT; SULPHUR CONTENT LESS THAN OR EQUAL TO 0.007 PERCENT BY WEIGHT; CHROMIUM CONTENT OF 0.30 TO 0.5 PERCENT BY WEIGHT; AND NICKEL CONTENT LESS THAN OR EQUAL TO 0.25 PERCENT BY WEIGHT. OTHER PROPERTIES: CARBIDE: FULLY SPHEROIDIZED HAVING GREATER THAN 80 PERCENT OF CARBIDES, WHICH ARE LESS THAN OR EQUAL TO 0.003 MM AND UNIFORMLY DISPERSED; SURFACE FINISH: BRIGHT FINISH FREE FROM PITS, SCRATCHES, RUST, CRACKS, OR SEAMS; SMOOTH EDGES; EDGE CAMBER (IN EACH 300 MM OF LENGTH)OF LESS THAN OR EQUAL TO 7 MM ARC HEIGHT; AND CROSS BOW (PER INCH OF WIDTH) OF 0.015 MM MAX. - CERTAIN TRANSFORMATION-INDUCED PLASTICITY (TRIP) STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: VARIETY 1: CHEMICAL COMPOSITION: CARBON CONTENT OF 0.09 TO 0.13 PERCENT, BY WEIGHT; SILICON CONTENT OF 1.0 TO 2.1 PERCENT, BY WEIGHT; MANGANESE CONTENT OF 0.90 TO 1.7 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS RANGE OF 1.000 TO 2.300 MM (INCLUSIVE); YIELD POINT (MPA) OF 320 TO 480; MINIMUM TENSILE STRENGTH (MPA) OF 590; MINIMUM ELONGATION OF 24 PERCENT IF 1.000 TO 1.199 MM THICKNESS RANGE; MINIMUM ELONGATION OF 25 PERCENT IF 1.200 TO 1.599 MM THICKNESS RANGE; MINIMUM ELONGATION OF 26 PERCENT IF 1.600 TO 1.999 MM THICKNESS RANGE; AND MINIMUM ELONGATION OF 27 PERCENT IF 2.000 TO 2.300 MM THICKNESS RANGE; VARIETY 2: CHEMICAL COMPOSITION: CARBON CONTENT OF 0.12 TO 0.16 PERCENT, BY WEIGHT; SILICON CONTENT OF 1.5 TO 2.1 PERCENT, BY WEIGHT; MANGANESE CONTENT OF 1.1 TO 1.9 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS RANGE OF 1.000 TO 2.300 MM (INCLUSIVE); YIELD POINT (MPA) OF 340 TO 520; MINIMUM TENSILE STRENGTH (MPA) OF 690; MINIMUM ELONGATION OF 21 PERCENT IF 1.000 TO 1.199 MM THICKNESS RANGE; MINIMUM ELONGATION OF 22 PERCENT IF 1.200 TO 1.599 MM THICKNESS RANGE; MINIMUM ELONGATION OF 23 PERCENT IF 1.600 TO 1.999 MM THICKNESS RANGE; AND MINIMUM ELONGATION OF 24 PERCENT IF 2.000 TO 2.300 MM THICKNESS RANGE; VARIETY 3: CHEMICAL COMPOSITION: CARBON CONTENT OF 0.13 TO 0.21 PERCENT, BY WEIGHT; SILICON CONTENT OF 1.3 TO 2.0 PERCENT, BY WEIGHT; MANGANESE CONTENT OF 1.5 TO 2.0 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS RANGE OF 1.200 TO 2.300 MM (INCLUSIVE); YIELD POINT (MPA) OF 370 TO 570; MINIMUM TENSILE STRENGTH (MPA) OF 780; MINIMUM ELONGATION OF 18 PERCENT IF 1.200 TO 1.599 MM THICKNESS RANGE; MINIMUM ELONGATION OF 19 PERCENT IF 1.600 TO 1.999 MM THICKNESS RANGE; AND MINIMUM ELONGATION OF 20 PERCENT IF 2.000 TO 2.300 MM THICKNESS RANGE. - CERTAIN CORROSION-RESISTANT COLD-ROLLED STEEL, WHICH MEETS THE FOLLOWING CHARACTERISTICS: VARIETY 1: CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.40 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.10 PERCENT, BY WEIGHT; COPPER CONTENT OF 0.15 TO 0.35 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS RANGE OF 0.600 TO 0.800 MM; YIELD POINT (MPA) OF 185 TO 285; MINIMUM TENSILE STRENGTH (MPA) OF 340; AND MINIMUM ELONGATION OF 31 PERCENT (ASTM STANDARD 31 PERCENT = JIS STANDARD 35 PERCENT); VARIETY 2: CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.05 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.40 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.08 PERCENT, BY WEIGHT; COPPER CONTENT OF 0.15 TO 0.35 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS RANGE OF 0.800 TO 1.000 MM; YIELD POINT (MPA) OF 145 TO 245; MINIMUM TENSILE STRENGTH (MPA) OF 295; AND MINIMUM ELONGATION OF 31 PERCENT (ASTM STANDARD 31 PERCENT = JIS STANDARD 35%); VARIETY 3: CHEMICAL COMPOSITION: MAXIMUM CARBON CONTENT OF 0.01 PERCENT, BY WEIGHT; MAXIMUM SILICON CONTENT OF 0.05 PERCENT, BY WEIGHT; MAXIMUM MANGANESE CONTENT OF 0.40 PERCENT, BY WEIGHT; MAXIMUM PHOSPHOROUS CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM SULFUR CONTENT OF 0.023 PERCENT, BY WEIGHT; COPPER CONTENT OF 0.15 TO 0.35 PERCENT, BY WEIGHT; MAXIMUM NICKEL CONTENT OF 0.35 PERCENT, BY WEIGHT; MAXIMUM ALUMINUM CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM NIOBIUM CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM TITANIUM CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM VANADIUM CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM BORON CONTENT OF 0.10 PERCENT, BY WEIGHT; MAXIMUM MOLYBDENUM CONTENT OF 0.30 PERCENT, BY WEIGHT; PHYSICAL AND MECHANICAL PROPERTIES: THICKNESS OF 0.7 MM; AND ELONGATION OF GREATER THAN OR EQUAL TO 35 PERCENT. - CERTAIN PORCELAIN ENAMELING SHEET, DRAWING QUALITY, IN COILS, 0.014 INCH IN THICKNESS, +0.002,-0.000, MEETING ASTM A-424-96 TYPE 1 SPECIFICATIONS, AND SUITABLE FOR TWO COATS. THE MERCHANDISE SUBJECT TO THIS INVESTIGATION IS TYPICALLY CLASSIFIED IN THE HTSUS AT SUBHEADINGS: 7209.15.0000, 7209.16.0030, 7209.16.0060, 7209.16.0090, 7209.17.0030, 7209.17.0060, 7209.17.0090, 7209.18.1530, 7209.18.1560, 7209.18.2550, 7209.18.6000. 7209.25.0000, 7209.26.0000, 7209.27.0000, 7209.28.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.23.1500, 7211.23.2000, 7211.23.3000, 7211.23.4500, 7211.23.6030, 7211.23.6060, 7211.23.6085, 7211.29.2030, 7211.29.2090, 7211.29.4500, 7211.29.6030, 7211.29.6080, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7225.19.0000, 7225.50.6000, 7225.50.7000, 7225.50.8010, 7225.50.8085, 7225.99.0090, 7226.19.1000, 7226.19.9000, 7226.92.5000, 7226.92.7050, 7226.92.8050, AND 7226.99.0000. ALTHOUGH THE HTSUS SUBHEADINGS ARE PROVIDED FOR CONVENIENCE AND U.S. CUSTOMS SERVICE ("U.S. CUSTOMS") PURPOSES, THE WRITTEN DESCRIPTION OF THE MERCHANDISE UNDER INVESTIGATION IS DISPOSITIVE. -------------- The Department received comments from a number of parties including importers, respondents, consumers, and the petitioners, aimed at clarifying the scope of these investigations. See Memorandum to Joseph A. Spetrini (Scope Memorandum), January 18, 2000, for a list of all persons submitting comments and a discussion of all scope comments including those exclusion requests under consideration at the time of the preliminary determination in these investigations. Discussion of the Issues 1. Facts Available A. Erdemir Section 776(a)(2) of the Act provides that "if an interested party or any other person--(A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title." In this case Erdemir failed, in its original and supplemental responses, to provide product-specific costs that account for cost differences associated with the physical characteristics as defined by the Department. Erdemir assigned essentially the same costs to all products within a cold-rolled family group. Erdemir's methodology does not provide the product-specific cost of production (COP) information necessary to perform a cost test, nor does it provide the information necessary to calculate a difference-in-merchandise (DIFMER) adjustment to account for differences in costs associated with the physical characteristics when comparing sales of similar merchandise. In addition, without accurate product-specific cost and DIFMER data, we cannot appropriately match U.S. and home market sales for price-to-price comparisons; nor can we determine accurate constructed values for use as normal value. We issued Erdemir multiple supplemental questionnaires requesting that it correct these errors, but it failed to do so. Accordingly, Erdemir's failure to provide the requested data renders its response unusable for this final determination. Therefore, in light of Erdemir's failure to provide requested information necessary to calculate a dumping margin in this case, in accordance with section 776(a) of the Act, we are forced to resort to facts available for this final determination. The statute requires that certain conditions be met before the Department may resort to facts available. Where the Department determines that a response to a request for information does not comply with the request, section 782(d) of the Act provides that the Department will inform the party submitting the response and will, to the extent practicable, provide that party the opportunity to remedy or explain the deficiency. If the party fails to remedy the deficiency within the applicable time limits, the Department may, subject to section 782(e), disregard all or part of the original and subsequent responses, as appropriate. We notified Erdemir of the deficiencies in its responses in supplemental questionnaires dated September 16, 1999, and October 19, 1999. Section 782(e) provides that the Department "shall not decline to consider information that is submitted by an interested party and is necessary to the determination but does not meet all the applicable requirements established by (the Department)" if the information is timely, can be verified, and is not so incomplete that it cannot be used, and if the interested party acted to the best of its ability in providing the information. Where all of these conditions are met, and if the Department can use the information without undue difficulties, the statute requires it to do so. In addition, section 776(b) of the Act provides that, if the Department finds that an interested party "has failed to cooperate by not acting to the best of its ability to comply with a request for information," the Department may use information that is adverse to the interests of the party as the facts otherwise available. Adverse inferences are appropriate "to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully." See Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA), H.R. Doc. No. 103-316 at 870 (1994). This provision is intended to induce parties to cooperate in antidumping proceedings. Furthermore, "an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference." Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27340 (May 19, 1997) (Department's Regulations). Section 776(b) of the Act notes in addition that in selecting from among the facts available the Department may, subject to the corroboration requirements of section 776(c), rely upon information drawn from the petition, a final determination in the investigation, or any previous administrative review conducted under section 751. Under section 776(b), in selecting from among the facts available the Department may also rely on any other information on the record. Although Erdemir's submissions were timely, they did not contain the information (i.e., product-specific costs or DIFMER data) necessary to perform a dumping analysis. Consequently, we cannot use the information supplied pursuant to section 782(e) of the Act. Under section 782(c) of the Act, a respondent has a responsibility not only to notify the Department if it is unable to provide requested information, but also to provide a "full explanation and suggested alternative forms" of the data necessary to perform a valid analysis. The questionnaire further instructs parties to contact the Department if they have questions or difficulties. Upon receipt of the antidumping questionnaire Erdemir failed to notify the Department that it would be unable to respond with its normal accounting system. It was not until the submission of the section D response that Erdemir notified the Department of its difficulties. In the Department's supplemental questionnaire, we requested that Erdemir use whatever available data it had at its disposal to modify the costs from its existing cost accounting system. Moreover, for physical characteristics that Erdemir believed have little or no cost difference, the Department requested that Erdemir provide an analysis demonstrating that assertion. In response to our requests for product- specific cost data Erdemir only repeated the statement that its accounting records did not permit it to report product-specific costs. Cooperation in an antidumping investigation requires more than a statement that a respondent cannot provide certain information from its previously prepared accounting records; the burden to establish that it has acted to the best of its ability rests upon the respondent. As noted above, to meet that burden a respondent must explain what steps it has taken to comply with the information request, and propose alternative forms of the necessary information. See also Allied-Signal Aerospace v. United States, 996 F.2d 1185, 1192 (Fed. Cir. 1993). Erdemir failed to do either. Moreover, we find Erdemir's claim that it is unable to provide this information inconsistent with Erdemir's other statements and information on the record of this case. For example, Erdemir has budgets, manufacturing standards, and engineering standards for specific products listed in the company's product brochure.(2) Erdemir must develop production plans involving the identification of certain products as produced from certain raw materials on certain production lines using specific engineering standards. Further, to maintain ISO certification, Erdemir must maintain contemporaneous records of production and processes to insure the quality of the products it produces. While a company's financial accounting records may not contain the information requested on separate product costs, the company is expected to develop a reasonable allocation methodology to allocate cost differences to specific products using the company's normal cost accounting records as a starting point and drawing from readily available manufacturing data as is done in almost every case. See Certain Cut-to-Length Carbon Steel Plate from Mexico: Final Results of Antidumping Duty Administrative Review, 64 FR, 76, 79, January 4, 1999. In the instant case, the Department repeatedly requested that Erdemir look beyond its financial and cost accounting records and select from a variety of available data using, for example, engineering standards, budgeting systems, or other production records for allocating costs to products on a control number specific basis.(3) The statute directs the Department to account for costs associated with differences in merchandise. Therefore, the Department requests product-specific cost data and routinely receives such information from respondents, as we did from the other respondent in this case, Borcelik. See also, Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 63 FR, 13170,13201, March 18, 1998 and Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon-Quality Steel Plate Products from Indonesia, 64 FR, 73164, 73174, December 29, 1999. As knowledgeable producers of the subject merchandise the respondent companies have information which allows them to calculate a reasonable estimate of the costs to make a given product. Even if a company does not identify product-specific costs in its normal financial and cost accounting records, it should be able to make some reasonable allocation of its costs among distinct products through the use of other product and production information. Given the absence of data that would allow the Department to perform a meaningful cost test, DIFMER adjustment, the U.S. and home market sales matching analysis, or constructed value calculation the Department must resort to facts otherwise available. Moreover, in light of the variety of allocation factors available to Erdemir for use in allocating costs by product, we have determined, in accordance with section 776(b) that Erdemir did not cooperate to the best of its ability. As adverse facts available, we have assigned Erdemir a margin of 32.91 percent, the highest margin alleged in the petition, as stated in the notice of initiation (see Initiation of Antidumping Duty Investigation: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from Turkey, 64 FR 34194 (June 25, 1999) (Notice of Initiation)). Section 776(c) of the Act provides that when the Department relies on secondary information in using the facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. The SAA clarifies that "corroborate" means that the Department will satisfy itself that the secondary information to be used has probative value (see SAA at 870). The SAA also states that independent sources used to corroborate may include, for example, published price lists, official import statistics and customs data, as well as information obtained from interested parties during the particular investigation (see id.). In accordance with section 776(c) of the Act, we sought to corroborate the data contained in the petition. We reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis of the petition, to the extent appropriate information was available for this purpose (e.g., import statistics and foreign market research reports). See Notice of Initiation, 64 FR at 34202. To further corroborate the information in the petition, for the final determination, we reexamined the highest margin in the petition in light of information obtained during the investigation to the extent practicable, and determined it has probative value. For further discussion, see Memorandum to the file "Facts Available Rate and Corroboration of Secondary Information" dated December 8, 1999. B. Borcelik Borcelik failed, in its original and supplemental response, to provide COP data for major inputs purchased from an affiliated party. Therefore, in accordance with section 776(a) of the Act, we have decided to use facts available in computing the affiliate's COP for purposes of the major input rule. As facts available we used the cost of major inputs from the petition. As indicated above, to the extent practicable, the Department will corroborate secondary information to ensure that it has probative value. As noted above, we reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis of the petition, to the extent appropriate information was available for this purpose. Further, we determined that the information in the petition has probative value, although we were unable specifically to examine the cost of the major inputs in the petition, for no additional cost information existed on the record. Comment 1: Adverse Facts Available Erdemir claims that the Department erred in using adverse facts available in its preliminary determination. Erdemir asserts that it did act to the best of its ability in complying with the Department's requests for information. Erdemir claims that the law requires a factual inquiry into whether a respondent was "unwilling" to reply or "unable" to reply to the Department's questionnaire in full. Specifically, Erdemir asserts that while it was unable to measure or reasonably estimate cost differentials as to quality and dimension between different members of the same family of steel products, it did provide the Department with a comprehensive response that is usable as provided. Alternatively, Erdemir suggests any deficiencies in its reported data could be remedied with the addition of indexed variables for three cost fields taken from Erdemir's affiliate, Borcelik. Erdemir maintains that the Act, the SAA, and the Department's regulations all conclude that the Department may only apply adverse facts available if it is able to demonstrate that the party has not acted to the best of its ability to comply with a request for information. Erdemir also maintains that the determination of whether a respondent has acted to the best of its ability is case- and fact- specific as the Department declared in its preamble to the current regulations. Erdemir contends that the courts have given intense scrutiny in ruling on whether the Department's determination as to the application of adverse facts available is warranted based on the factual nature of the case. See e.g, Borden v. United States, 4 F. Supp. 2d 1221, CIT, 1998, (Borden) and Mannesmannrohren-Werke AG v. United States, 1999 CIT, LEXIS 121, Slip Op. 99-118 (October 29, 1999) (Mannesmannrohren). Specifically, in each of the these cases Erdemir suggests that the courts ruled that in addition to explaining why the absence of such information is of significance to the completion of the investigation, the Department must also articulate its reasons for deciding that a company did not act to the best of its ability. Erdemir asserts that the issue of a company acting to the best of its ability starts with whether the respondent was unwilling to cooperate or unable to cooperate; only if the former is determined are adverse facts available warranted. Erdemir argues that all submissions were made in a timely manner with all the information requested contained therein. Specifically, Erdemir cites to three of its submissions. First, Erdemir cites its August 5, 1999 submission in which it stated that "Erdemir's accounting and production control computer systems do not interact, and so the extractions necessary for the response cut across lines that have historically been strictly separated" and that "[t]hese problems are heightened by the requirement for monthly cost reporting." Second, Erdemir cites its November 3, 1999 second supplemental questionnaire response in which Erdemir noted that it: does not have any means by which to measure, estimate or calculate the cost differential between two coils that differ in width, thickness, or quality . . . for products within a product family, Erdemir simply does not have information in its system to pick up a costing differential . . . [it has] conducted numerous internal meetings among its cost accounting staff, its production control staff and other knowledgeable personnel, and, after a great many hours of analysis and discussion, the company is constrained to inform the Department that it is not aware of, and cannot find, any reasonable, verifiable methodology for differentiating between the cost per ton of two coils that differ only in thickness or only in width. Third, Erdemir cites its December 1, 1999 submission responding to petitioners' claims that Erdemir had failed to respond to the best of its ability. In this submission Erdemir restated the same positions as above and also noted that: the characteristics for which Erdemir is unable to report a cost differential are three, quality, thickness and width . . . the quality characteristic, for Erdemir, is the difference between commercial quality, drawing quality, and deep drawing quality . . . these differences are physical in a sense that they begin from slight differences in the molten steel, and then they entail different treatment in scarfing (slab conditioning), hot rolling, cold rolling, annealing, and testing. However, Erdemir asserted that " it is not sensible to create an estimate of the cost differential for drawing or deep drawing quality as distinct from ordinary commercial quality." Even if there is a meaningful cost differential estimate for drawing versus commercial quality, respondent does not believe it is possible to make such a differential in an accurate and verifiable manner based on any sort of engineering or other estimates. Thus, from the foregoing, Erdemir argues that it is clear that it participated actively in the investigation. Erdemir asserts that the company undertook a review of its cost accounting system but found it was unable to provide data (cost differentiations) for quality, thickness, and width because any superimposed system would not only have to capture cost differentials reasonably, but would also have to distribute those differentials across all the products of the company, since any other distribution would be distortive. Also, Erdemir maintains that quality differences are the result of differences in processing (annealing, scarfing, hot and cold rolling) as well as differences in materials (ferro alloys), and that it would have been necessary to track those differentials across all mill products in order to avoid miscalculations of the cost adjustments. Erdemir submits that judging from its monthly cost reports kept in the ordinary course of business, it is obvious that Erdemir does not maintain this information in the normal course of business. Erdemir claims that it was not able to account precisely for, or to estimate reasonably, the cost differentials associated with thickness, width, and quality. Further, Erdemir disagrees with the Department's and petitioners' suggestions that it has the information necessary to estimate cost differentials for quality and dimension. Erdemir asserts there was no means to bridge its family groups to any financial records. Similarly Erdemir asserts there is nothing in its records which would allow the company to extract these cost differentials, or which the company could use to derive cost differentials by quality or dimension. Erdemir argues that it does distinguish between the costs of different products, but that it does not distinguish the costs between these products at the level of detail required by the Department with respect to quality, width, and thickness. Erdemir asserts that while other companies may be able to calculate product- specific costs, due to the level of complexity in this case, Erdemir was unable to do so. Erdemir contends that the Department's reference to Borcelik's product-specific cost reporting is inapposite because Borcelik is not an integrated steel mill and, therefore, does not have the same level of complexity as Erdemir. Thus, Erdemir maintains, it was unable to report costs in the manner specified by the Department in regards to three model match criteria, quality, thickness, and width. Erdemir claims that it demonstrated that it was trying to be completely responsive and open and that it did not report the three criteria mentioned above because it was unable rather than unwilling. Further, Erdemir argues that the statute establishes that the Department should use its submitted data for purposes of the final determination irrespective of the deficiencies. Erdemir contends that in accordance with section 782(e) of the Act its data: (1) were submitted within the deadlines established; (2) are verifiable; (3) included all fields except for quality, thickness, and width; (4) show that it acted to the best of its ability in answering the Department's questionnaires; and (5) can be used without undue difficulties. In addition, Erdemir asserts that, based on established case law, the Department should use its submitted data for the final results. Erdemir argues that it should receive the same treatment as the respondent received in another case in which the Department permitted the respondent to report the same costs for different products within the same CONNUM because the respondent's cost accounting system purportedly did not enable the respondent to report such costs differently. See Notice of Final Results of Antidumping Duty Administrative Reveiw: Certain Pasta from Turkey, 64 FR 69493, 69494, December 13, 1999 (Pasta). Hence, Erdemir maintains that the Department should use its databases as submitted. Erdemir argues that even if the Department does not agree to use its information for the three categories in question, it has the authority to fill in the missing data with information submitted by its affiliate in the case, Borcelik. Erdemir maintains that the cost data submitted are the weighted-average cost of production for each product family. Since Borcelik has reported costs which are differentiated by quality and dimension, Erdemir argues that the Department is able to index those differentials and apply the index cost differentials to Erdemir. Finally, Erdemir asserts that section 782(c) of the Act, requiring respondents to contact the Department if they are unable to respond to information requested within 14 days of receiving the Department's questionnaire, is not applicable in the present case. See 19 CFR 353.301(c)(2)(iv). Erdemir maintains that a plain reading of section 782(c) simply gives a respondent the option of notifying the Department of this type of difficulty and that given the extremely short time frame for a section 782(c) request, the provision is not applicable in a situation where a respondent is unable to identify a problem until significantly later than 14 days. Petitioners argue that the Department should continue to apply adverse facts available because Erdemir has not placed information on the record that can be used to calculate a margin, nor has it acted to the best of its ability in responding to the Department's request for information. Petitioners contend that despite numerous requests from the Department, Erdemir failed to report product-specific costs. For instance, petitioners assert that the Department's original questionnaire required Erdemir to report product-specific costs for each foreign like product based on actual costs. Even though the Department provided Erdemir with numerous extensions, petitioners contend that, without notifying the Department in advance, Erdemir reported its costs by product family. Further, petitioners argue that in the Department's first supplemental questionnaire(4) it suggested that Erdemir utilize company records, such as budgeted costs and standards, to develop a suitable cost methodology. Petitioners note that Erdemir responded that its cost accounting records did not allow it to develop costs on a product-specific basis and again provided costs only by product families. Also, petitioners maintain that the Department clearly relayed the need for product-specific cost information a second time by explaining to Erdemir that "it is imperative that you submit new DIFMER, COP, and CV databases that include a unique cost for each CONNUM" and went as far as suggesting that Erdemir utilize its engineering studies to allocate its costs on a CONNUM-specific basis. See the Department's second supplemental questionnaire, October 19, 1999. Petitioners note that again, Erdemir stated that its accounting system did not provide product-specific costs. Petitioners contend that without product-specific costs, Erdemir's submitted information is not sufficient to calculate a margin and that Erdemir has not acted to the best of its ability by not utilizing cost information at its disposal, i.e., engineering standards, direct labor hours, machine hours, budgeting systems, production line reports, production time, or other production records, to develop a reasonable reporting methodology. Petitioners argue that the Department correctly decided not to conduct verification. Petitioners note that following the Preliminary Determination Erdemir once again provided information as to why it could not provide product-specific information. Specifically, petitioners maintain that while Erdemir explained that it was unable to use its budgets because budgeted costs were on precisely the same family basis as actual costs, with respect to manufacturing or engineering standards, Erdemir stated only that this information could not be "dovetailed with the cost accounting system." Petitioners argue that Erdemir failed to explain why either of these standards, which are maintained for specific products, could not be utilized to develop a reasonable allocation methodology to determine product-specific costs. Petitioners argue that Erdemir's cost information cannot be used to calculate a meaningful margin. Citing Cut-To-Length Carbon-Quality Steel Plate Products from Indonesia, 64 FR 73164, 73175 (December 29, 1999) (Plate from Indonesia) and Cut-To-Length Carbon-Quality Steel Plate Products from India, 64 FR 73126, 73127 (December 29, 1999) (Plate from India), petitioners contend that where a respondent has failed to provide product-specific costs, the Department is unable to meet its statutory obligation to determine whether home market prices are a proper basis for normal value, or to determine constructed value or the difference in merchandise adjustment. Petitioners maintain that in the instant case, Erdemir has devised a cost methodology in which products within a family with variations in physical characteristics and processing costs have the same reported costs. Petitioners assert that within the cold-rolled coil family, there are a variety of CONNUMs with variations in physical characteristics that are not reflected in Erdemir's reported total cost of manufacturing (TOTCOM) and variable cost of manufacturing (VCOM). Therefore, these data are plainly inaccurate. Further, petitioners argue that by Erdemir's own account it acknowledged that the production of drawing quality and commercial quality "entail different treatment in scarfing (slab conditioning), hot rolling, cold rolling, annealing, and testing." See Erdemir's December 1, 1999 letter to the Department at 2. Thus, petitioners assert that Erdemir's contention that drawing quality and commercial quality products have the same allocable cost is fundamentally flawed. Petitioners state that Erdemir's reliance on the Pasta case is misplaced, for unlike the instant case, there was no evidence whatsoever in the Pasta case that the cost of producing products within the same family varied significantly. Petitioners also contend that Erdemir is wrong to suggest that Borcelik's cost data should be used, because Borcelik's production process is significantly different than that of Erdemir's, in that Borcelik is not an integrated steel making operation. Therefore, petitioners argue that Erdemir's cost experience bears no resemblance to Borcelik. In sum, petitioners maintain that because Erdemir failed to submit reliable cost data, the Department had no choice but to reject all of Erdemir's reported data and apply total adverse facts available. Further, petitioners assert that Erdemir failed to act to the best of its ability. First, petitioners assert that Erdemir's claim that it was unable to provide more detailed information regarding costs is an insufficient explanation since no respondent maintains its cost records in the same format as the Department's model match criteria. Second, as explained above, petitioners argue that Erdemir has not explained why its manufacturing and engineering standards, which are maintained on a product-specific basis, could not have been utilized to allocate costs. Petitioners maintain that the fact that these standards did not dovetail with the cost accounting system is irrelevant for they could have been used to allocate costs from the accounting system to specific products. Third, petitioners contend that Erdemir's claim that it could not report the required costs because an allocation methodology would result in an estimate that would not reconcile to the financial statements misses the point completely since by definition if Erdemir's normal costs were allocated proportionally to the specific products within a given family the resulting product-specific costs would also reconcile to the financial statements. Petitioners argue that it is incumbent upon the respondent to look beyond its accounting records and select from a variety of methodologies, as mentioned above, to allocate costs to products on a product-specific basis. Thus, petitioners conclude that the facts demonstrate that Erdemir did not act to the best of its ability to provide the required cost information. Petitioners assert that the application of adverse facts available does not require a finding of "intent" to support an affirmative determination (see section 776(b) of the Act); rather, as stated in the Department's Regulations, "an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference." Petitioners contend that even if the statute were interpreted to require intent, this element is present in the instant case for Erdemir has failed to provide cost data that it possesses. Erdemir's legal conclusions regarding its obligations were incorrect for it was obligated to attempt to submit the requested data rather than rely on its interpretation of what was lawfully required. For example, petitioners contend that in Borden the Court held that (i) the Department must base its determination that the respondent failed to act to the best of its ability on a reasoned analysis of the facts of the record and (ii) that adverse facts available are not warranted if a respondent merely was unable to cooperate as opposed to unwilling to cooperate. In the present case petitioners argue that both requirements have been fulfilled. First, petitioners assert that the Department preliminarily determined that Erdemir failed to use the information available to it. Second, petitioners maintain that, as noted above, Erdemir was not "unable" to provide the requested information, it simply did not utilize the information in its possession because of its other assertion that the resulting costs would not verify. In fact, petitioners note that upon reviewing the redetermination on remand, the Borden court found that the record adequately supported the Department's conclusion that the respondent did not act to the best of its ability. Specifically, petitioners note that in upholding the Department, the Court stated that: Congress has given Commerce the difficult task in requiring it to determine if a party is cooperating to the best of its ability in supplying Commerce with requested information . . . Commerce must necessarily draw some inferences from a pattern of behavior. Petitioners contend that here, as in Borden, Erdemir has repeatedly and persistently refused to provide the required information. Further, petitioners maintain that the Department has satisfied the requirements set forth in Mannesmannrohren for it clearly articulated in its Preliminary Determination why it concluded that Erdemir failed to act to the best of its ability. Finally, petitioners assert that Erdemir's argument that section 782(c) of the Act does not apply in the instant case is not persuasive for even if Erdemir was not able to give notice that it was unable to report information requested within the 14 day period set forth in 19 CFR 351.301(c)(2)(iv), it surely should have been able to notify the Department of its difficulties between the nearly two months from receipt of the Department's questionnaire and submission of its response. Petitioners contend that the Court held in the Borden remand that a respondent's failure to notify the Department of problems with providing the requested data as quickly as possible is a basis for concluding that the respondent did not act to the best of its ability. Therefore, for the reasons stated above, petitioners argue that for these final results the Department must continue to reject Erdemir's response and apply as adverse facts available the highest margin alleged in the petition. Department's Position: As discussed above, section 776(a)(2) of the Act provides that: if an interested party or any other person--(A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the administering authority shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title. In addition, section 776(b) of the Act provides that, if the Department finds that an interested party "has failed to cooperate by not acting to the best of its ability to comply with a request for information," the Department may use information that is adverse to the interests of the party as the facts otherwise available. Adverse inferences are appropriate "to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully." See SAA at 870. This provision is intended to induce parties to cooperate in antidumping proceedings. The record evidence in this case amply demonstrates that Erdemir withheld crucial information necessary to calculate an accurate dumping margin and, thus, failed to cooperate to the best of its ability under section 776(b) of the Act. We have, therefore, determined that the application of total adverse facts available is warranted. See the facts available section above. See also Memorandum from Peter Scholl to Neal Halper regarding Erdemir, dated March 13, 2000 (Erdemir Memorandum), for a detailed evaluation of Erdemir's submissions and the Department's findings. In this case Erdemir failed in its original and supplemental responses to provide product-specific costs (i.e., by control number) which account for the cost differences associated with the physical characteristics of the products under investigation. In the Department's view, the requirement of product specific sales and cost data is one of the most basic and significant requirements in performing the dumping analysis and margin calculation. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea: Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170,13201 (March 18, 1998) (Carbon Steel Flat Products from Korea); see also Plate from Indonesia at 73174. The specific physical characteristics identified at the beginning of each case, which make up a control number, are those physical characteristics determined to be the most significant in differentiating between products. These are the physical characteristics that define a unique product for sales comparison purposes. The level of detail within each physical characteristic reflects the importance the Department places on comparing the most similar products in a price-to-price comparison. Erdemir assigned the same costs to all products within a cold-rolled family group, which only account for cost differences due to annealing, one out of the fourteen characteristics identified.(5) Absent product-specific COP information, the Department lacks the necessary information to calculate a DIFMER adjustment to account for differences in physical characteristics when comparing sales of similar merchandise. In addition, without this information, we cannot perform a sales-below-cost test, we cannot determine matches between U.S. and home market sales for price-to-price comparisons, nor can we determine accurate constructed values for use as normal value, as required. In numerous cases a respondent's normal cost accounting system does not differentiate among products nor provide product-specific costs to the level of detail required by the Department. Our consistent practice, however, is to have respondents start with the costs established in their normal cost accounting system and then further allocate the costs to specific products based upon a reasonable method available to them. See section 773(f)(1)(A) of the Act and the SAA. See also Carbon Steel Flat Products from Korea, 63 FR at 13201; and Plate from Indonesia, 64 FR at 73174. If there is little or no cost difference associated with a particular physical characteristic, then the respondent may provide an analysis as to why there is virtually no cost difference relating to the characteristic in question. If there is a significant difference then respondents are required to develop a reasonable method to quantify such a difference. In this case we issued Erdemir multiple supplemental questionnaires requesting that it perform such an analysis, but it failed to do so. Erdemir continued to report product family costs which only differentiated products based on one characteristic identified. Erdemir failed to provide an analysis of the cost differences resulting from the remaining characteristics. We did not verify Erdemir's submissions because they contained no usable data for the final determination. Therefore, in light of Erdemir's failure to provide requested information necessary to calculate dumping margins in this case, we are forced to resort to facts available for this final determination in accordance with sections 776(a) and 782(c)(2), (d), and (e) of the Act. We disagree with Erdemir that it cooperated to the best of its ability under section 776(b) of the Act. The facts in this case demonstrate that Erdemir did not cooperate to the best of its ability within the meaning of section 776(b) of the Act. We do not agree with Erdemir's contention that it was unable to supply the requested product specific costs or that the information was not available to it. The Department routinely requests product-specific cost data and typically receives such information from respondents, as we did from the other respondent in this case, Borcelik, and in other cases, as noted above. The Department repeatedly instructed Erdemir to rely not only on its existing financial and cost accounting records, but on any other information which would allow it to calculate a reasonable allocation of its costs. Erdemir could have and should have looked beyond its cost and financial accounting systems to determine a reasonable method to allocate product family costs as kept in the normal course of business to product-specific costs requested by the Department using readily available manufacturing records. We find that Erdemir's claim that it is unable to provide this information is inconsistent with Erdemir's other statements and information on the record of this case. Erdemir has budgets, manufacturing standards, and engineering standards for specific products listed in the company's product brochure. To produce the product, Erdemir must develop production plans involving the identification of certain products as produced from certain raw materials using specific engineering standards. Further, to maintain ISO certification, Erdemir must maintain contemporaneous records of production and processes to insure the quality of the products it produces. Erdemir acknowledges production process differences with regard to quality and dimensions which give rise to cost differences,(6) but then concludes that it cannot quantify these cost differences. We disagree with Erdemir's conclusion given the numerous other types of data maintained by the company, and in light of the Department's expertise on costs in general and the manufacturing process for these types of products. Erdemir failed to explain why manufacturing or engineering standards maintained for specific products could not be used to develop a reasonable allocation methodology. While Erdemir's financial and cost accounting records may not contain the information requested on separate product costs, the company could have developed a reasonable allocation methodology to allocate costs to products on a control-number- specific basis using the company's normal cost accounting records as a starting point to calculate control-number-specific costs. The Department repeatedly requested that Erdemir look beyond its financial and cost accounting records and select from a variety of available data using, for example, engineering standards, direct labor hours, machine hours, budgeting systems, production line reports, production time, or other production records for allocating costs to products on a control-number-specific basis.(7) Erdemir failed to do this and failed to explain why it could not develop any methodology for allocating costs. Under section 782(c) of the Act, a respondent has a responsibility not only to notify the Department if it is unable to provide requested information, but also to provide a "full explanation and suggested alternative forms." Erdemir made no attempt to contact the Department in order to seek assistance regarding its difficulties. Moreover, it never suggested any alternative forms of data usable for an antidumping duty analysis. Instead, in response to our requests for product-specific cost data, Erdemir simply submitted responses to our supplemental questions on the topic which only repeated the statement that its accounting records did not permit it to report product-specific costs. Cooperation in an antidumping investigation requires more than a simple statement that a respondent cannot provide certain information from its previously prepared accounting records; the burden to establish that it has acted to the best of its ability rests upon the respondent. As noted above, to meet that burden a respondent must explain what steps it has taken to comply with the information request, and propose alternative methodologies for getting the necessary information. See also Allied-Signal Aerospace v. United States, 996 F.2d 1185, 1192 (Fed. Cir. 1993). Erdemir has failed to do either in that it stated only that after internal meetings were held it decided it could not comply with the request. Erdemir did not propose any alternative methodology to the Department. Moreover, we agree with petitioners that the application of adverse facts available does not require a finding of "intent" to support an affirmative determination (see, section 776(b) of the Act); rather, as stated in the Department's Regulations "an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference." As the Court found in the Borden remand "Commerce must necessarily draw some inferences from a pattern of behavior." The requirement of control-number-specific costs is a standard consistently applied in all cases. It would be unfair to allow one company to not adhere to that standard while continuing to require others to do so. We note that often a company may contact us to make a request to limit the number of ranges identified for a particular characteristic (e.g., for thickness, the Department may have identified five thickness ranges, whereas a respondent may request permission to report costs based on three different thickness ranges due to the relative insignificance between the two additional thickness ranges) which we frequently grant. However, in this case Erdemir made no effort to contact us and no effort even to partially comply with our requirements for the dimensional and quality characteristics. We also disagree with Erdemir's assertion that its data meet the tests for usability outlined in section 782(e) of the Act. Although we agree that Erdemir submitted responses in a timely fashion, as discussed above the information Erdemir submitted was so incomplete that it could not serve as a reliable basis for reaching a final determination. The lack of product-specific costs rendered the responses unusable for calculating a dumping margin. Furthermore, because the information was so incomplete, we find that it cannot be used without undue difficulty. With respect to verification, as a practical matter, we find there is no need to verify the accuracy of information that is unusable in determining whether sales at less than fair value occurred. Further, Erdemir's reliance on Pasta is misplaced. We note that the issue raised by Erdemir was not addressed in the referenced Federal Register notice. In Pasta, the respondent asserted that costs were not significantly different and therefore reporting costs under one control number would be reasonable. Although the Department did not address this issue in Pasta, that case is clearly distinguishable from this case in that the respondent in that case reported the same costs for different products within the same control number because, although physical differences existed, the respondent provided information to show that the cost differences associated with these physical differences were not significant. The products in this case have different ferroalloy content and dimensions which create significantly different raw material costs and different production processes and processing times which result in significant cost differences. For example, thinner cold-rolled steel products require more rolling costs than thicker cold-rolled steel products. Erdemir has stated that the production of drawing quality and commercial quality steel "entail different treatment in scarfing (slab conditioning), hot rolling, cold rolling, annealing and testing." See Erdemir's December 1, 1999 letter to the Department at 2. See the Erdemir Memorandum for proprietary information regarding these cost differences. We also disagree with Erdemir's suggestion that it is appropriate to use the cost data from the other respondent because it would not be adverse to Erdemir. We agree with the petitioners that this case is more analogous to Plate from India and Plate from Indonesia, where the Department determined that the respondents had failed to provide product- specific costs which rendered the responses unusable for the final determination. In Plate from Indonesia the respondent did not report control-number-specific, monthly costs which were critical for making fair value comparisons in a hyperinflationary economy, and did not explain in detail why it was not able to provide the sales and cost information the Department routinely requests and receives from respondents in other antidumping cases. Further, the respondent in that case offered no alternative methodologies for meeting the Department's request for information given its inability to provide such information in the manner requested by the Department. Rather, the respondent continued to report one standard production cost for each month of the POI which did not differentiate between control numbers. As discussed above, Erdemir is similarly situated. The level of complexity of operations indicated by Erdemir as a reason for not providing the requested data does not excuse Erdemir from devising some reasonable method to report product specific costs. Erdemir's comments that using information outside of the accounting system while possible would be unwieldy and imprecise are unpersuasive. As discussed above, the statute requires the Department to collect product-specific costs to perform an accurate dumping analysis. While the Department is sensitive to the burden placed upon respondents in responding to questionnaires and is ready to assist respondents regarding alternative methodologies, it cannot excuse a respondent from providing information necessary to perform an accurate dumping analysis. Comment 2: Major Input Borcelik argues that the Department should not resort to adverse facts available for the valuation of the hot-rolled coil obtained from its affiliate Erdemir. Borcelik maintains that it made repeated efforts to acquire these data from Erdemir, but Borcelik's requests were refused. The respondent notes that Erdemir is a minority shareholder in Borcelik, while Borcelik neither holds stock in Erdemir nor appoints any members to Erdemir's board. Thus, Borcelik asserts it has no power to compel Erdemir to comply with the request for information. Borcelik further contends that it has established that arm's length prices were paid for the coil that the company purchased from Erdemir through the comparison of hot-rolled coil invoices received from Erdemir to generally available Erdemir price lists. Additionally, the respondent states that it provided copies of invoices sent to two companies unaffiliated with Erdemir and these prices also agree with Erdemir's price lists. Therefore, Borcelik concludes that transfer price should be used as facts available for the cost of production of the hot-rolled coil. Borcelik cites Certain Cut-to-Length Carbon Steel Plate from Brazil: Final Results of Antidumping Duty Administrative Review, 63 FR 12744 (March 16, 1998) (Brazilian Plate) in support of its claim that transfer price is the appropriate choice for facts available in the final determination. Similarly, Borcelik claims that in Brazilian Plate the respondent's affiliated supplier refused to comply with the request for cost of production data for a major input. According to Borcelik, in its final analysis of Brazilian Plate the Department determined that the respondent had acted to the best of its ability in attempting to obtain the data and concluded that the transfer price, which was generally higher than market price, could be used as facts available. Finally, Borcelik contests the Department's preliminary decision that an adverse facts available determination is appropriate in this case. Borcelik points to section 776 of the Act, stating that an adverse determination is separate from a facts available finding and is based upon a party's failure to cooperate to the best of its ability. Borcelik argues that the Department has failed to provide substantial evidence demonstrating that Borcelik refused to cooperate rather than that Borcelik was unable to cooperate. While the respondent allows that a facts available finding is appropriate in this case, Borcelik maintains that it has fully cooperated with the Department's requests to the best of its ability, and therefore a separate finding of adverse inferences is inappropriate. Petitioners argue that total adverse facts available are warranted due to Borcelik's failure to provide the COP data on the major input obtained from an affiliate, thus inhibiting the Department's performance of statutorily mandated analysis. Petitioners stress that the COP cannot be accurately calculated if the cost data on the major input is withheld. Furthermore, petitioners believe that this deficiency calls into question the entirety of Borcelik's submitted data. Petitioners also challenge that the arm's length argument posed by Borcelik is irrelevant if the major input is transferred at less than COP. Because section 773(f)(3) of the Act requires the Department to compare transfer price, market price and COP, petitioners state that if it is found to be higher, COP must be used even if transactions are occurring at market prices (i.e., arm's length prices). Petitioners also draw a distinction between the situation presented in the current case and the case cited by respondents. Petitioners state that in Brazilian Plate the affiliated major input supplier was not itself subject to a below cost investigation, whereas, in the current case, both Borcelik and its affiliated supplier are respondents in the below cost investigation. Also, petitioners state that in Brazilian Plate market price was above transfer price "in most instances" while Borcelik only proves that the transfer price paid by Borcelik agreed with Erdemir's price list. Finally, petitioners refute Borcelik's contention that adverse facts available were used to compute the affiliated supplier's COP in the preliminary determination. As in the decision in Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel products from Brazil: Final Determination of Sales at Less Than Fair Value, 65 FR 5554,5581 (February 4, 2000) (Brazilian Cold-Rolled), petitioners state that the Department used the cost of the major input as disclosed in the petition "[a]s a gap filling facts available". Since no adverse inference was applied in the instant case Borcelik's good-faith argument is irrelevant to the Department's facts available determination. Petitioners emphasize that the COP for hot-rolled coil from the petition is the appropriate facts available selection because it is the only information of record related to the COP of the major input. Department's Position: The Department's well established practice, based upon sections 773(f)(2) and (3) of the Act, is to use the highest of transfer price, market price, or cost of production for major input where there is a reason to believe or suspect the input is sold below cost. In this case Borcelik's failure to provide the COP data for the major input does not warrant use of adverse facts available. Under section 776(b) of the Act, the Department may apply adverse inferences when an interested party is found to have "...failed to cooperate by not acting to the best of its ability..." In this case we find that Borcelik cooperated to the best of its ability 1) by attempting to obtain the COP information from its affiliate, Erdemir, and 2) because the data were not within Borcelik's control. Thus, we determined that Borcelik cooperated to the best of its ability in this respect and an adverse inference is not warranted. However, in order to comply with section 773(f)(3) of the Act, a COP for the hot-rolled coils must be obtained in order to complete the major input analysis. Section 776(a) of the Act allows the Department to use the facts otherwise available when necessary information is not on the record. Borcelik has not contested the use of facts available. Instead, it argues that transfer price is the appropriate selection for facts available since it states that the hot-rolled coil purchases from Erdemir were at arm's length. However, as seen in Stainless Steel Plate in Coils from South Africa; Final Determination of Sales at Less Than Fair Value, 64 FR 15459, 15475 (March 31, 1999) proving that purchases of an input from an affiliate "...were at arm's length prices does not satisfy the requirement that the transfer price (or market price under section 773(f)(2)) be above the affiliated supplier's actual COP." Section 773(f)(3) of the Act requires that the Department use available information on cost. We agree with petitioners that use of the major input's COP from the petition was not an application of adverse facts otherwise available, but instead a "gap filling facts available." See Brazilian Cold-Rolled. Accordingly, we have used the cost of hot-rolled coil from the petition as a surrogate for the COP required in the analysis. 2. Date of Sale Comment 1: Use of Invoice Date versus Contract Date Petitioners submit that the Department should use Borcelik's contract date as the date of sale rather than the invoice date. Borcelik, petitioners note, has stated that its home market sales protocols permit a deviation in quantity of plus or minus a given percentage. Petitioners further note that Borcelik issues a written invoice to the customer when material is ready for shipment and that, due to the quantity tolerance, the quantity shipped almost always differs from that ordered. Borcelik, petitioners observe, also states that the invoice is the only written document reflecting the final price, quantity, and size breakdown of individual sales, and that quantity differences are due solely to the tolerance specified in the sales protocol.(8) Because Borcelik's customer is aware of the tolerance at the time the protocol is concluded, petitioners contend that any differences between the quantity ordered and the quantity shipped which fall within the tolerance do not qualify as changes to the substantive terms of sale. Petitioners argue that Borcelik has failed to demonstrate how the sales protocol which it provided in its August 30, 1999 response as an example of an agreement change between contract and invoice date is representative of all home market sales. Petitioners continue that it surely is not representative of U.S. sales, as Borcelik apparently was unable to provide an example of change in material terms between the sales protocol and the invoice date. Petitioners assert that the difference between the quantity shipped and the quantity ordered in the sample sales protocol did not exceed the tolerance specified in the protocol. Thus, petitioners argue, this does not constitute any variation from the terms of the initial agreement. Petitioners maintain that Borcelik's assertions in its questionnaire response demonstrate that the agreement between the parties is finalized long before invoice date. For example, Borcelik explains that the sales protocols establish certain material terms of sale for each customer on a quarterly basis, and that these terms must be set within a given time frame prior to delivery. Petitioners argue that Borcelik has failed to support its assertions that changes to the terms of sale established in the sales protocols are representative of home market sales. Borcelik, petitioners note, explains in its response that changes in total quantity and value of a sale will occur only "occasionally." Further, Borcelik has indicated that there is "little in the way of a documentary trail between the sales protocol and the invoice." Petitioners assert that, given this statement, Borcelik's claims that changes occurred in many of the sales contracts associated with invoices during the POI are unverifiable. In its response Borcelik argues that the invoice date is the appropriate date of sale since its internal records do not recognize a sale until the issuance of the invoice. Petitioners claim that this argument makes the erroneous supposition that Borcelik's accounting practices should dictate the manner in which the Department conducts its investigation. Petitioners also assert that Borcelik has refused to report the date of the sales protocol associated with each invoice. Petitioners contend that, as articulated in Certain Welded Stainless Steel Pipe from Taiwan; Preliminary Results of Administrative Antidumping Review and Intent to Revoke in Part 64 FR 71,728 (December 22,1999) (Stainless Steel Pipe from Taiwan), the Department requires evidence of material changes in contract terms between the contract date and the invoice date in order to use the latter as date of sale. Petitioners claim that Borcelik's description of the sales process demonstrates that substantive terms of sale were set long before the issuance of an invoice. Differences between the quantity shipped and the quantity specified in the contract do not, petitioners assert, constitute a change in material terms of sale for purposes of determining date of sale. Petitioners note that such pre- approved variances are standard industry practice. Petitioners assert that the date of sale should be the date on which the material terms are established. Relying on Circular Welded Non- Alloy Steel Pipe from Korea, 63 FR 32836 (June 16, 1998) (Standard Steel Pipe from Korea), petitioners submit that the mere possibility that material terms can change up to the issuance of the invoice is not dispositive in making invoice or shipment date the appropriate date of sale. Further, petitioners allege that Borcelik refused to cooperate with the Department during verification, rendering the company's claims unverifiable. Petitioners conclude that the use of facts available would be appropriate under such circumstances. Borcelik responds that the Department has established a presumption that the date of sale will be based on the invoice date. The rationale for the Department's preference, argues Borcelik, is articulated in its regulations at 62 FR 27296 (May 19, 1997) as well as in the recent Stainless Steel Plate in Coils from Korea 64 FR 15444 (March 31, 1999), wherein the Department explained that "[i]n adopting this provision, we explained that the purpose was, whenever possible, to establish a uniform event which could be used as the date of sale." Borcelik also cites numerous antidumping proceedings (e.g., Certain Cut-to-Length Carbon Quality Steel Plate Products from Japan, 64 FR 73,215 (December 29, 1999) and Hot-Rolled Carbon Quality Steel Products from Japan, 64 FR 24,329 (May 6, 1999)) where the Department has used the invoice date as the date of sale where one party alleged that the use of the purchase order or contact date was more appropriate. Further, Borcelik contends that petitioners' reliance upon Standard Pipe from Korea is misplaced. In that case, the Department found that the material terms of sales to the United States were set on the contract date and any subsequent changes were "usually immaterial in nature or, if material, rarely occur." Borcelik argues that, contrary to petitioners' assertions, the material terms of home market sales change often between the date of contract and the date of invoice. Borcelik alleges that petitioners' claims that contract date is the appropriate date of sale are based on the faulty premise that all of Borcelik's home market sales are based on quarterly sales protocols. However, Borcelik explains, its home market sales are either 1) negotiated on a case-by-case basis or 2) made pursuant to quarterly agreements. Borcelik argues that it had no choice but to report the invoice date as the date of sale for the first category of sales, as no other document is generated in connection with such sales. Borcelik contends that the Department observed during verification that not all home market sales were made pursuant to sales protocols and explains that the first home market sales trace reviewed was one to a service center for which no protocol was generated. Borcelik argues that although sales to service centers accounted for a small percentage of total home market sales, such sales account for a large number of individual invoices issued. The invoice date, continues Borcelik, is the appropriate date of sale for those concluded by a quarterly protocols because the invoice is the only document that shows the final agreement between Borcelik and its customers with respect to quantity, price, and payment terms. Borcelik asserts that there is evidence on the record demonstrating that "material" changes can and do often occur after the conclusion of the sales protocol. Borcelik's supplemental responses, for example, indicate that sales protocols provide only a general framework and that quantity and value actually shipped can vary significantly from the quantity and value specified in the protocols. Borcelik claims that the Department has verified that changes to the material terms of sale other than quantity often occur after the protocol is concluded. Borcelik argues that the Department also verified that changes to the quantity terms of a protocol can and do exceed the specified tolerances. The Department has confirmed in its verification report, argues Borcelik, that changes to protocols are representative of home market sales. Borcelik further asserts that changes to the material terms of sale are not limited to price and quantity, as explained in its September 14, 1999 supplemental response ("...actual payment terms may change during the term of the sale protocol based upon a request from a customer..."). In addition Borcelik notes that it provided a sample invoice reflecting a change in payment terms in Exhibit B-5 of its supplemental response. Finally, argues Borcelik, the invoice date is the appropriate date of sale for home market transactions because the invoice is the only document that reflects the final value of the sale in Turkish Lira. Borcelik continues that the amount of the sale in Turkish Lira is not known until the invoice date due to the devaluation of the lira against the dollar between the date of the protocol and the date of the invoice. Borcelik also argues that the material terms of sale of its U.S. transactions change between the date of the contract and that date of the invoice, and that the invoice date is accordingly the appropriate date of sale. Borcelik disputes petitioners' assertions that it was unable provide an example of a change in material terms between the protocol and the invoice date. Borcelik claims that, in making this allegation, petitioners overlooked evidence on the record, such as its October 14, 1999 and November 5, 1999 supplemental responses, which explain the frequency with which quantity changes (including those exceeding the specified tolerance) occur. In addition, Borcelik explains that it provided for the record a specific example of a sale where the difference between the quantity ordered and the quantity shipped exceed the established tolerance. Further, argues Borcelik, the Department reviewed during verification and described in its verification report changes to the material terms of sale for a particular U.S. transaction. Finally, Borcelik disagrees with petitioners' characterizations of the respondent as uncooperative at verification in providing information on date of sale. Borcelik argues that there is not one word in the verification report that suggests Borcelik was uncooperative. Borcelik argues that, on the contrary, the report reflects that Borcelik fully cooperated with the verification team during its visit. Department's Position: Under our current practice, as codified in the Department's regulations, in identifying the date of sale we normally use date of invoice unless record evidence demonstrates "that a different date better reflects the date on which the exporter or producer establishes the material terms of sale." See Department's Regulations at 19 CFR 351.401(i). As articulated in Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea, 63 FR 13170, 13194 (March 18, 1998), "[o]ur current practice, in a nutshell, is to use the date of invoice as the date of sale unless there is a compelling reason to do otherwise." See also Canned Pineapple Fruit from Thailand; Notice of Final Results and Partial Recission of Antidumping Duty Review, 63 FR 43,661 (May 9, 1997) (invoice date will be used as date of sale "absent satisfactory evidence that the material terms of sale were finally established on a different date"). See also Thai Pineapple v. United States, Slip Op. 00-17 (CIT, February 10, 2000 at 5-6). Furthermore, as the Department has noted, "price and quantity are often subject to continued negotiation between the buyer and the seller until a sale is invoiced. ... [a]s a practical matter, customers frequently change their minds and sellers are responsive to those changes." See Department's Regulations at 62 FR 27348. The Department has further recognized that the buyer and seller themselves will often disagree as to when, precisely, the terms of sale were set: "this theoretical date usually has little, if any, relevance. From their perspective, the relevant issue is that the terms be fixed when the seller demands payment (i.e., when the sale is invoiced)." Id. at 27349. In the home market, Borcelik concludes quarterly sales contracts (or "protocols") establishing a general framework under which Borcelik and its customers agree to conduct business.(9) Sales protocols, Borcelik explains, set forth the price, quantity, payment terms, delivery terms, and legal conditions of sales for the applicable three-month period. See Borcelik's July 13, 1999 response at page A- 22. Customers are permitted to make changes to the quantity and dimensions specified in the protocols, subject to Borcelik's approval, provided changes are requested 30 days prior to the delivery date. Id. When merchandise is ready for shipment, Borcelik issues a written invoice to the customer. All sales to U.S. customers, however, are negotiated on a sale-by-sale basis. Following an informal agreement on the terms of sale and the issuance of a purchase order by the customer, Borcelik prepares a sales contract that reflects agreement on price, quantity, and size. Id. at A-23. Borcelik explains that, subject to its approval, U.S. customers occasionally will make changes to the quantity and dimensions specified in the sales contract. Once coils are ready to be shipped, Borusan Dagitim (Borcelik's export facilitator) issues an invoice to the customer. Id at A-26. We agree with petitioners that, as articulated in Stainless Steel Pipe from Taiwan, the Department requires evidence of material changes in contract terms between the contract date and the invoice date in order to use the latter as date of sale. In the instant proceeding, however, Borcelik has provided evidence for the record that the material terms of sale can and do change between the conclusion of the contract and the issuance of the invoice. With respect to U.S. sales, while we also agree with petitioners that any differences between the quantity ordered and the quantity shipped which fall within the contractual tolerances do not constitute changes in the material terms of sale, Borcelik has submitted a specific example of a change in quantity which exceeded the tolerance specified in the sales contract. See Exhibit C-3 of Borcelik's October 14, 1999 supplemental response. In addition, during verification we examined a U.S. sales transaction for which there had been an amendment to individual coil tolerances between the issuance of the contract and the invoice. See Sales Verification Report at page 24; see also Sales Verification Exhibit 6. There is also evidence on the record of this investigation that the material terms of sale in the home market are subject to change up until the time the invoice is issued for those sales negotiated pursuant to quarterly contracts. For example, Borcelik submitted a copy of a request by a customer to modify the terms of payment made after the conclusion of the sales contract. See Exhibit B-5 of Borcelik's October 14, 1999 supplemental response. In addition, we reviewed during our sales verification an example Borcelik provided in its October 14, 1999 supplemental response of a significant quantity change between the contract date and the invoice date. See Sales Verification Report at page 5; see also Borcelik's September 13, 1999 response at page 4. As for sales negotiated on a individual basis in the home market, the invoice is the only document which memorializes the essential terms of sale (see Sales Verification Report at page 23); thus, the invoice date should serve as the appropriate date of sale under such circumstances. Given this evidence, the Department has no basis to conclude that essential terms of sale were set and not subject to change at the initial protocol or contract date. Furthermore, we disagree with petitioners that Borcelik was uncooperative during the sales verification. Had Borcelik not provided the Department with the requested information or had the Department determined that the information provided was not sufficient, this fact would have been duly noted in the verification report. Based on Borcelik's representations, and as a result of our examination of its selling records kept in the ordinary course of business, we are satisfied that the invoice date should be used as date of sale, as it most accurately represents the date on which the material terms of sale are established. Further, there is no evidence on the record that the material terms of sale were finally established on a date other than invoice date. 3. COP/CV Comment 1: Exchange Rate Gains and Losses Borcelik argues that inclusion of kur farki, foreign exchange gain variation, and vade farki, inflation adjustments on charges for raw materials which are financed, in the cost of production is inconsistent with the Department's replacement cost methodology and results in a double-counting of expenses. Borcelik notes that when the Department uses replacement cost methodology it is increasing the raw material values to the cost in the month of production rather than using the average historical cost on the books. Borcelik states that this approach accounts for the inflation which has occurred between the date of acquisition of the materials and the date of production, while kur farki and vade farki account for the devaluation of the Turkish lira between the date of acquisition (historical cost) and the date of payment. Thus, it argues that adding these expenses to the already increased replacement cost in effect reports the cost of coil in a future period, not in the current production period. Borcelik further states that through the replacement cost methodology, the Department is attempting to remove the effect of inflation on the cost calculation, and thus inclusion of kur farki and vade farki, which account for inflation, distorts the calculation. Respondent states the Department should not follow the precedent set in Plate from Indonesia at 64 FR 73173, where the Department included the exchange gains and losses incurred on accounts payable. Including both raw materials at replacement cost and exchange gains and losses on raw materials results in a double- counting of the impact of inflation due to the replacement cost methodology. Borcelik also denies that either vade farki or kur farki include any element of interest expense - they are simply mechanisms for adjusting prices for the effects of inflation and the consequent devaluation of the currency over time. In the case of kur farki, Borcelik states that regardless of when or how much Turkish lira is paid, the supplier still receives the invoiced amount. Due to inflation it may take more Turkish lira to exchange to the dollar invoice price; however, the respondent states, any finance expense is included in the dollar price stated on the invoice and included in the replacement cost reported in the cost files by Borcelik. Vade farki simply ensures through an additional payment to the supplier that the current currency value on the date of payment is the equivalent of the current currency value on the date of acquisition. Also citing to Plate from Indonesia, petitioners counter that it is the Department's practice to include in COP foreign exchange losses incurred on accounts payable. Petitioners allow that while the Department's replacement cost methodology adjusts for inflation, it fails to adjust for exchange losses attributable to delay or timing of payment. This exchange loss is a separate cost above the replacement cost of the material and petitioners emphasize that it accounts for the depreciation of the Turkish lira between the time a raw material is purchased and the time the payment is made. Petitioners believe that this loss is not accounted for without the complete inclusion of kur farki in the reported costs. Petitioners contend that the vade farki paid to suppliers represents interest expense and should be fully included in COP. Because vade farki is a set percentage agreed upon by the contracting parties based on credit terms and because Borcelik does not record a separate financing expense in relation to the deferral of payments, petitioners conclude that the price paid for the benefit of deferring payment is a financing expense, not an inflation loss. Petitioners state that whether the vade farki is tied to prevailing borrowing rates or to inflation rates is of no importance. Petitioners stress that interest rates generally reflect the inflation in the currency loaned and that in high inflation economies, lenders generally charge high interest rates to compensate for the erosion in the value of the currency by the time of repayment. Accordingly, petitioners believe that the entire amount of vade farki incurred for the deferral of payments should be included in the computation of the financial expense rate. Department's Position: We agree with Borcelik that including the entire amount of kur farki and vade farki would be inappropriate when using the replacement cost methodology. The replacement cost methodology used by the Department attempts to mitigate the distortions of inflation by recording material costs at the current value in the month of production rather than at the historic value on the date of acquisition. Likewise, the kur farki and vade farki recorded on Borcelik's books account for the devaluation of the currency from the date of acquisition to the date of payment. The replacement cost method for valuing raw material inputs already accounts for the effects of inflation. Thus, to the extent that the kur farki and vade farki arose due to the effects of inflation from the time of receipt to the time of payment for these raw materials, to include them would result in a replacement cost not reflective of the currency levels for the month of production. In the case of vade farki, there is also an element of interest expenses in the payments as it represents an extension of credit. In a comparison of a vade farki rate tested during verification to the increase in the general inflation index for the concurrent time period, the Department noted that the vade farki rate exceeded the concurrent rise in inflation, thus indicating that the vade farki compensates the supplier for both the change in inflation and the extension of credit. We have included a portion of 1998 vade farki in the financing expense rate for the final calculation. Regarding kur farki, Borcelik is assuming that changes in the exchange rate between the Turkish lira and the U.S. dollar are the result of inflation alone. Its argument does not recognize the fact that currencies have a value which fluctuates according to other factors such as the rules of supply and demand. Both are accounted for in the recognition of foreign exchange gains and losses. The Department notes, however, that information on the record shows that the change in the exchange rate between the U.S. dollar and Turkish lira during the year closely mirror the inflation rate experienced in Turkey during the same period. Thus, we consider it reasonable not to adjust the reported costs for the kur farki as the fluctuation in the value of the U.S. dollar and Turkish lira outside of the effect of inflation is minimal. Comment 2: Translation Gains and Losses Petitioners argue that the translation exchange gains and losses reported on Borusan's consolidated financial statements should be included in the respondent's financial expense ratio. They contend that the Department requires that exchange gains and losses generated by foreign currency debt be included in net interest expense. In support of their assertion, petitioners cite Certain Welded Carbon Steel Pipe and Tube from Turkey: Final Results of Antidumping Duty Administrative Review, 62 FR 51629, 51632 (October 2, 1997) where the Department included Borusan's foreign exchange losses on dollar- denominated debt in the COP calculation. Respondent counters that the petitioners have "mischaracterized" the translation expenses on its financial statements as gains and losses on foreign-denominated debt. Borcelik states that the translation expenses are generated from the restatement of all balance sheet and income statements accounts into US dollars, not solely debt translations. Respondent points out that imported raw material purchases and debt are principally denominated in US dollars, thus, these accounts do not require restatement. Borcelik concludes that translation gains and losses have not been shown to be monetary in nature; therefore, it would be inconsistent with prior practice to include them as a component of the financial expense rate. Department's Position: We agree with petitioners and have included the translation gains and losses in COP. As part of its response to our September 16, 1999 supplemental questionnaire, Borcelik failed to provide the information requested. Had Borcelik provided the breakdown of the nature of the translation gains and losses, it would have been appropriate to extract those gains and losses solely related to foreign-denominated debt. In the absence of such a schedule, we are forced to resort to the use of the entire translation expense in the final calculation. Comment 3: Major Input - Trace to Individual Coils Petitioners argue that adverse inferences should result from Borcelik's failure to provide information on hot-rolled coil inputs by control number. Petitioners state that Borcelik's claim that it is unable to trace hot-rolled coil inputs purchased to control numbers is not credible. They point out that coils are labeled by coil number and individually tracked through production by the production control computer system. Petitioners argue that this indicates that Borcelik simply chose not to make coil-specific calculations. Thus, petitioners state that Borcelik's refusal to arrange the input chart by control number should result in adverse inferences. Respondents argue the difficulties of preparing such a schedule given the wide usage of a variety of raw material coils in a variety of control numbers. Aside from the computer programming problems, Borcelik also contends that the affiliated input comparison should be made to all purchases of the same product, regardless of end-use. Further, Borcelik states that the method ultimately used by Borcelik to report affiliated inputs was responsive to the Department's questionnaire. Department's Position: We disagree with petitioners regarding Borcelik's compliance with the Department's request for an affiliated input schedule. In the August 30, 1999 section D response Borcelik stated that the requested chart of information was not "feasible" due to the volume of control numbers and the versatile nature of the raw material (any one input coil could be used in the production of a multitude of control numbers and any one control number could begin production with any number of different sizes of input coils.) Thus, as Borcelik states there is "no one-to-one match." See the August 30, 1999 section D response at page D-13. As a result of the difficulties and based on our discussions with Borcelik, we revised the format of the affiliated input schedule in a supplemental questionnaire and Borcelik fully complied with our new request by submitting a revised schedule that provided the necessary information to the Department and addressed Borcelik's concerns. At verification we determined that Borcelik's concern over the originally requested schedule was valid. We noted that the schedule would have been possible; however, it would have required Borcelik to retrace every unit produced to raw material records in order to match control numbers to hot-rolled coil purchases and the result would have been too voluminous to make an adjustment by the Department feasible. Comment 4: Missing Coils Petitioners argue that the Department should use adverse facts available to value the COP for certain coils whose coil histories were lost during production and were excluded from the cost database. Petitioners assert that information provided at verification regarding the lost data disproves Borcelik's claim that the costs could not be compiled for these coils. Borcelik responds that the lack of costs for certain coils is a result of a linkage problem between the finished coils and their coil history reports. The problem originated with the installation of new equipment in the slitting line. Thus, the reports for these specific coils were not retrievable after the coils advanced through the slitting line. Borcelik states that the information provided at verification regarding the coils was obtained from the labels that are physically affixed to the coils. However, Borcelik argues that the information extracted from the label does not provide the precise raw material code used to produce the coil, the processing steps the coil encountered and the yield losses experienced at each processing step. Thus, Borcelik concludes that it could not have computed the costs for these coils under the same methodology it used for all other production. Finally, Borcelik argues that assigning the coils a cost based on the cost of the other coils produced within the same control numbers would not have a material effect on COP due to the Department's replacement cost methodology and the small number of coils missing costs. Borcelik also points out that considering the volume of production, the number of coils missing costs is immaterial. Department's Position: In our final calculation we calculated the highest control number cost in the reported files as a surrogate value for the coils with missing costs and computed the highest potential impact to control numbers affected. However, we note that none of the missing coils' control numbers were sold in the U.S. market. Additionally, none of the missing coils' control numbers were used to match to a U.S. sale. Therefore, we have not included the facts available adjustment in the final calculation. Comment 5: Auditor's Adjustments Petitioners request that we amend the adjustment factor for other fixed overhead ("OFOH") adjustment factor for certain auditor adjustments which were erroneously duplicated in the reported costs. Borcelik provided no comment on the issue. Department's Position: We have amended the OFOH adjustment factor to eliminate all duplications in the final calculation. Comment 6: Sales of Scrap Petitioners urge the Department to exclude the offset for scrap sales from the general and administrative (G&A) expense rate stating that scrap revenues were already accounted for in the COP field labeled as "SCRAP." Borcelik asserts that no duplication of offsets in regard to scrap has occurred. Borcelik explained that the scrap generated during production is valued at the average market price for that type of scrap and this calculated amount is directly offset against raw material costs. Due to the methodology employed, a variance is created when the scrap is actually sold. Borcelik states that it is only this small variance which is seen in other income. Department's Position: We agree with respondents. Based on the testing performed at verification, scrap generated during production is credited to the raw material costs based on the average market price that Borcelik has received for that type of scrap in the past. This approach would necessarily create a variance when the scrap is actually sold at the current market price. We have not excluded the scrap offset from other income in the final calculation. 4. Adjustments to Export Price Comment 1: Movement Expenses Petitioners contend that the Department should reject Borcelik's freight expense claim. Petitioners explain that the calculated per- unit domestic inland freight charges by dividing total freight expenses by the total quantity of merchandise(10) which assumes that the same per-unit freight charge applies to all products on an invoice, regardless of whether or not freight expenses actually vary among types or sizes of merchandise. Borcelik asserts that it calculation of per-unit freight expenses is reasonable. Borcelik suggests that petitioners allegations are baseless, as freight charges are billed on a per-kilogram basis regardless of the type or size products. Borcelik further explains that charges vary only according to the distance merchandise is transported, and emphasizes that all material associated with a particular invoice will be exported from the same port. Department's Position: We disagree with petitioners. In order to calculate its reported per-unit domestic inland freight expenses for U.S. sales,(11) Borcelik divided the total freight charges appearing on the invoice from its freight carrier by the total quantity of merchandise shipped pursuant to the invoice. See Borcelik's August 30, 1999 response at page C-35 and Exhibit C-3. Regarding petitioners' assertions that respondent's methodology fails to consider whether charges varied among types or sizes of merchandise, we note that Borcelik has described in its October 14, 1999 supplemental response that freight charges are based on the quantity of merchandise shipped (i.e., not on the type or sizes of merchandise). Given that freight charges are based on weight, the fact that different types and sizes of merchandise may be shipped together is not relevant to the calculation of freight expense. And while freight charges often vary according to distance, it is important to note that in this case, each item shipped pursuant to a single invoice is transported exactly the same distance. See Borcelik's July 13, 1999 response at Exhibit 25. Furthermore, there is no evidence on the record calling into question the accuracy of the reported freight charges, as the Department reviewed Borcelik's calculation of freight expenses during verification. See Sales Verification Report at page 14 and Sales Verification Exhibit 8. We have accordingly made no changes for this final determination with respect to Borcelik's reported freight expenses. Comment 2: Duty Drawback Petitioners urge the Department to deny Borcelik's claimed adjustment to United States price for duty drawback. The formula used to calculate the amount of imported raw materials physically incorporated into finished products, petitioners maintain, is an inexact one which provides meaningless results. Petitioners assert that, because Borcelik notes in its response that "each production process requires a different amount of raw material to produce one unit of finished product," the percent of imported raw material incorporated in the various processes cannot be identical. Any calculation methodology which yields identical results for all products, petitioners argue, is distortive. Borcelik, petitioners explain, has indicated in its response that it is not required to pay taxes and duties on imported hot-rolled coil provided the coil is incorporated into merchandise which is exported during a specified period. Petitioners claim, however, that Borcelik's formula for determining the percentage of imported raw material in its merchandise demonstrates that it does not know how much imported material is incorporated into each product. Petitioners note that, as articulated in Rajinder Pipes Ltd. v. United States 70 F. Supp. 2d. 1350, 1358 (CIT 1999) (Rajinder), the Department, in determining whether a duty drawback adjustment is warranted, considers "whether the import duty and rebate are directly linked to, and depending upon, one another." Borcelik, petitioners argue, has not met the standard for duty drawback adjustments because it has not established a link between the import duty and the drawback benefit received. Accordingly, petitioners argue, the Department should deny Borcelik's claimed duty drawback adjustment. As for petitioners' assertions that the formula used to determine the amount of imported raw materials incorporated into the finished product (known as the "yield factor") is inexact, Borcelik responds that, pursuant to Turkey's duty drawback program, the yield factor is calculated on a company-specific and product-specific basis. For example, Borcelik explains, a separate set of yield factors is developed for galvanized pipe and standard pipe to take account of the different inputs into each. Borcelik argues that, as the Department verified, the yield factor was calculated from figures taken from capacity reports that are prepared by industry analysts at the local chamber of commerce and reviewed by the Turkish Government for accuracy. Furthermore, asserts Borcelik, the formula used to compute its drawback yield factor is at the same level of specificity as that accepted by the Department in other Turkish antidumping proceedings. See Certain Standard Welded Carbon Steel Pipe and Tube Products from Turkey, 63 FR 35190, (June 29, 1998). Borcelik also refutes petitioners' second claim that respondent has not satisfied the first prong of the duty drawback test(12) by failing to establish a link between the import duty and the drawback benefit received. Borcelik asserts that it has clearly satisfied both prongs of this test by establishing that i) imported hot-rolled coil is subject to duty at the rates specified in its drawback calculations; ii) coil not imported under the duty drawback program would have been subject to the specified duty rates; and iii) it exported a sufficient quantity to the United States and other destinations of finished product to incorporate all of the raw material imported under the drawback program. Borcelik asserts that the facts of this case are markedly different from those in Rajinder, where the court held that the Department's decision to deny a duty drawback adjustment was lawful because the documents the Rajinder submitted did not show that the steel imported duty free was directly linked to and dependent on exportation. Borcelik argues that it has provided documentation showing what the normal duty rate is on hot-rolled coil and that it has provided evidence of the direct link between the raw material imported duty free and the exportation of the subject merchandise to the United States. Borcelik emphasizes that included as part of Exhibit C-7 of its questionnaire response were an Import Closing List, an Export Closing List, and a table showing the total amount of raw materials imported and the total amount of finished product. This table, asserts Borcelik, establishes through use of the yield factor that a sufficient quantity of finished coil was exported to have incorporated all of the raw material imported duty free. Borcelik submits that, given the evidence on the record of this investigation and the Department's acceptance of the very same methodology in other proceedings, the Department should continue to allow its claimed adjustment for duty drawback. Department's Position: Section 772(c)(1)(B) of the Act requires that the starting price for EP or CEP shall be increased by the amount of any import duties "...imposed by the country of exportation which have been rebated, or which have not been collected, by reason of the exportation of the subject merchandise to the United States." In determining whether or not duty drawback should be added to the starting price, the Department looks for a reasonable link between the duties imposed and those rebated. Under our two-pronged test, as noted above, we require that the company meet the following conditions in order to qualify for a duty drawback adjustment. The first requirement is that the import duty and rebate be directly linked to and dependent on one another. If a duty drawback program exempts the duty on imported raw materials based on proof that such or similar raw materials are incorporated into a finished product which is subsequently exported, the Department has interpreted the first prong of the test to require a demonstration of whether import duties actually were not collected because the subject merchandise was exported. See Rajinder at 1350, 1355. The second requirement is that the company must demonstrate that there were sufficient imports of the imported material to account for the duty drawback received for the export of the manufactured product. For example, the imported inputs must be in quantities that can be tied to the production and exportation of the finished product, thus establishing a direct link between the amount of the import duty paid and the amount rebated (see, e.g. Final Determination of Sales at Less Than Fair Value; Brass Sheet and Strip from Japan, 53 FR 23298 (June 21, 1988), Final Results of Antidumping Duty Administrative Review; Steel Wire Rope from Korea, 61 FR 55965 (October 30, 1996)). Information on the record of this investigation demonstrates that respondent has met the requirements of the first prong of our test (i.e., that duties which normally would have been levied were not collected by reason of exportation of the subject merchandise). First, Borcelik has established what the normal duty rates are on imports of hot-rolled coil. In Exhibit 10 of its October 14, 1999 supplemental response Borcelik provided a schedule showing the applicable duty assessed on imports of hot-rolled coil. During verification we further examined the import duty schedules and were able to confirm the normal duties for hot-rolled coil imports. See Sales Verification Report at page 21. Borcelik has also provided for the record copies of an Import Closing List, which lists each of the shipments of hot-rolled coil imported duty-free made pursuant to a specific duty drawback "project."(13) As explained in our Sales Verification Report, the information provided in Import Closing Lists is scrutinized by the Turkish Secretariat General of Exporters Unions upon the completion of a project. The Turkish Undersecretariat of Foreign Trade's "Communique on Internal Processing Regime" (see Exhibit 6 and Appendix 7 of Borcelik's August 30, 1999 response) specifies that the Import Closing List must be submitted when exporters apply for the closing of a specific duty drawback project. Borcelik also provided a document reviewed by the Department at verification listing the export invoices used to "close" a project. The Export Closing List (which is submitted along with the Import Closing List upon the completion project) itemizes exports to the United States and other destinations of finished cold-rolled coil as well as the total quantity of merchandise exported under the applicable project. Finally, the "Table of Raw Material Consumption" which Borcelik has provided (see final page of the August 30, 1999 response at Exhibit C-7) demonstrates the manner in which the total quantity of exported cold-rolled coil from the Export Closing List relates to the total quantity of hot-rolled coil imported pursuant to the drawback project. In total, these documents establish that i) import duties were not collected by reason of exportation of subject merchandise and ii) there were sufficient imports of the imported hot- rolled coil to account for the drawback benefit received for the export of finished cold-rolled coil. Petitioners further allege that Borcelik's calculation of the yield factor is inaccurate. However, as Borcelik explains in its response, company-specific yield factors are calculated for each type of product (e.g., pipe, cold-rolled steel) pursuant to Turkey's duty drawback regulations. We ensured the accuracy of Borcelik's product- specific yield factor calculation during verification. See Sales Verification Report at page 22. The figures used to calculate Borcelik's yield factor for cold-rolled steel were taken from a "Capacity Report," which is prepared for each member company of the local chamber of commerce and submitted to the Secretariat General of Exporters Unions upon the completion of a drawback project. Id. Having verified the accuracy of Borcelik's yield factor, and given that Borcelik has established for the record the validity of its claimed duty drawback adjustment, we have accepted Borcelik's reported duty drawback adjustment. 5. Adjustments to Normal Value Comment 1: Returns Petitioners explain that Borcelik calculated a customer-specific return rate by dividing the total quantity of returns by the total quantity of sales because of its claimed inability to tie the quantity and value of the returned goods to a particular item on an invoice. Petitioners argue that this method does not provide an accurate per-unit return rate, as it supposed that every instance in which merchandise was returned yielded identical return values. In its third supplemental questionnaire, petitioners note, the Department asked Borcelik to provide additional support for its contention that it is unable to link returns with individual invoices. Borcelik responded that "[i]n some cases...customers may return all of the coils associated with a line item on an invoice. In other cases, a customer may return only a portion of the merchandise...During the POI Borcelik did not record the quantity and value of returned goods associated with a particular invoice." Borcelik's claims that it maintains only a sales return account that tracks returns on a customer-specific (but not invoice-specific) basis, argue petitioners, provides no support for Borcelik's assertions regarding its inability to track returns on an invoice-by- invoice basis. Rather, contend petitioners, this statement merely reasserts Borcelik's argument. Petitioners argue that the Department should deny Borcelik's claimed adjustments because Borcelik's failure to record invoice-specific data makes its claims unverifiable. Borcelik responds that the sales verification report confirms that the Department was able to verify all aspects of Borcelik's returned goods calculation, and that the verifiers did not find any fault with the methodology employed. Borcelik argues that, because it cannot track returned merchandise on an invoice-by-invoice basis, it calculated a customer-specific return rate, then multiplied this factor by the quantity of each sale in order to report a total sales quantity net of returns. This method of calculating a net quantity, argues Borcelik, is reasonable under the circumstances of the case. Borcelik urges the Department to continue its acceptance of the quantity adjustment for the final determination. Department's Position: During verification we addressed the manner in which Borcelik records returned merchandise. See, e.g., page 12 of our Sales Verification Report ("[Borcelik's] computer system does not, however, have the ability to link a return with any given line item on an invoice.") Furthermore, we verified that Borcelik's calculation of the customer-specific return factor was accurate and agree that it's a reasonable methodology. Id. We have accordingly made no changes for our final determination with respect to Borcelik's reported return percentage factors. Comment 2: Interest Revenue Petitioners argue that the manner in which Borcelik calculated its customer-specific interest revenue factor (i.e., by dividing total interest charges by net sales) is inaccurate. Petitioners assert, however, that net sales are irrelevant to these charges for any customer who made at least one timely payment during the POI. Petitioners also question Borcelik's assertions that it is unable to tie interest charges to specific invoices. Petitioners argue that the charges themselves are calculated in a manner which ties them to individual invoices, since a customer can only accrue late fees by missing payment deadlines for specific sales. Furthermore, petitioners maintain, Borcelik has failed to provide a credible explanation regarding why it sometimes decides not to collect late payments from certain customers. Petitioners assert that the Department should use facts available to determine the amount of home market interest revenue which Borcelik claims to have foregone. Borcelik responds that its calculation of customer-specific interest charges is accurate and that there is no support for petitioners' assertions that interest revenue has been incorrectly reported or allocated to its home market sales. Borcelik explains that its records do not allow it to tie late-payment interest revenue to specific invoices and that these charges are not calculated on an invoice-by-invoice basis but on the customer's total outstanding balance. Borcelik further explains that, when a customer remits a late payment, its computer system records an amount equal to the total amount of revenue collected but does not attempt to allocate these amounts to individual invoices. Borcelik continues that the Department thoroughly reviewed its calculation of interest revenue during verification, and that it was able to tie both the total interest expense reported in Borcelik's financial statement and the interest revenue received from certain customers to the total revenue reported in its home market sales file. Borcelik asserts that it provided a complete explanation of its late-payment policy in its original and supplemental responses, the accuracy of which was confirmed in the Department's verification report. Department's Position: We agree with Borcelik and have made no changes for this final determination in our treatment of Borcelik's reported home market interest revenue. In its August 30, 1999 questionnaire response Borcelik explained that it computed an interest revenue factor for each customer by dividing total interest charges invoiced by total net sales. Borcelik then applied the resulting factor to the gross unit price (net of any billing adjustments) to derive the amount reported under the "INTREVH" field in its home market sales file. Borcelik further explained that, in some cases, it did not invoice customers for late payments even though they paid late. In our September 16, 1999 supplemental questionnaire we asked Borcelik to indicate under what circumstances it did not collect interest revenue even though a customer paid late. Borcelik responded in its October 14, 1999 supplemental response that its domestic sales manager makes the final decision as to whether to charge interest for a particular customer, and that such decisions are made on a case-by-case basis based on a number of factors.(14) Thus, contrary to petitioners' allegations, we are satisfied that Borcelik has provided a clear and credible explanation regarding its late-payment policy. Petitioners urge the Department to apply facts available to determine the amount of revenue the company claims to have forgone. However, during our sales verification, in addition to tracing the total interest paid by several home market customers, we also ensured that the total interest revenue collected from all customers was accurate by tying this figure to the account in which Borcelik records interest revenue. In doing so, we verified that Borcelik had reported all interest revenue it had received. See Sales Verification Exhibit 14, which includes a worksheet itemizing total interest charges collected and a copy of Borcelik's trial balance supporting the total charges appearing on the worksheet; see also Sales Verification Report at page 18. Implied in petitioners' argument regarding the use of facts available is that Borcelik has somehow failed to properly report all interest revenue collected from home market customers. However, as noted above, our exercise during verification served the purpose of ensuring that all such charges had been reported. Furthermore, Borcelik's claim that it is unable to track interest payments on an invoice-by-invoice basis is substantiated by information on the record of this investigation. For example, our Sales Verification Report discusses the manner in which Borcelik records customer remittances. In the report we note that Borcelik "applies payments against invoices on a 'first-in first-out' basis and thus is unable to link any given payment to an individual invoice." See Sales Verification Report at page 10. We were able to establish the validity of this claim during our review of two of Borcelik's reported home market billing adjustments (BILADJ2H, which accounts for payments from customers for exchange rate differences and BILADJ3H, which reflects those instances where Borcelik over- invoiced a customer). In addition, Borcelik explained in its August 30, 1999 response that customers pay on a periodic basis and further that it maintains an overall outstanding balance of a customer's account. Section 351.401(g) of the Department's regulations states that allocated expenses are acceptable when transaction-specific reporting is not feasible, provided the Department is satisfied that the allocation method used does not cause inaccuracies or distortions. Given Borcelik's representations, and our examination of this adjustment during verification, we are satisfied that Borcelik has calculated interest revenue accurately and on the most specific basis permissible. Comment 3: Technical Services Petitioners suggest that the Department deny an adjustment for home market technical service expenses because Borcelik failed to provide a satisfactory explanation regarding the nature of the services provided. Borcelik responds that it never requested such an adjustment and notes that the Department did not make one for the preliminary determination. Department's Position: As a preliminary matter, while petitioners propose that the Department deny an adjustment for technical service expenses, there is no such expense reported in Borcelik's home market sales files. Further, Borcelik's August 30, 1999 response at page B-46 explains that, while the company does provide technical services, "these expenses have been included in the calculation of indirect selling expenses." Presumably, then, petitioners are requesting that the Department remove from Borcelik's home market indirect selling expenses the portion attributable to technical service expenses. Petitioners allege that they are unable to assess the validity of Borcelik's claims regarding technical services because Borcelik failed to describe the nature of services provided. However, we requested in a September 16, 1999 supplemental questionnaire that Borcelik explain fully the technical services it provides for home market customers. Borcelik responded in its October 14, 1999 submission that: [t]he technical services offered by Borcelik to home market customers include providing advice and assistance to new customers in the use of the cold-rolled products produced and sold by Borcelik. In addition, Borcelik's technicians work with existing customers to oversee the introduction of new products. Borcelik's technicians also make periodic visits to existing customers to ensure that the companies are pleased with the material they have received...Borcelik did not maintain a schedule of the specific technical services provided during the POI or the expenses incurred in providing such services. However, the total amount of technical service expenses incurred during 1998, including the technician's salaries, have been included in the indirect selling expenses reported in Borcelik's Section B response. Moreover, we conducted a thorough review of Borcelik's reported indirect expenses during our sales verification and found them to be accurate. We were able to successfully trace each of the components of indirect selling expenses (which include costs incurred for providing indirect technical services) to Borcelik's financial statements. See Verification Report at page 21. As we are satisfied that Borcelik has described adequately the nature of technical services provided, and given our review of this expense during verification, we have not removed from home market indirect selling expenses the portion attributable to technical services. 6. Model Match Comment 1: Model-Match Characteristics Borcelik proposes the use of two additional physical characteristics (in addition to the fourteen contained in the Department's questionnaire) for purposes of selecting the products sold in the foreign market to be compared to U.S. sales: i) the surface quality of the finished product and ii) whether or not a finished product has undergone electrolytic cleaning. Borcelik asserts that the administrative record in this case clearly demonstrates that these physical characteristics constitute a significant factor in the cost, price, and end-use of the steel it produces, thus supporting the inclusion of these additional model-matching criteria. Citing Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990) and Lasko Metal Prods. Inc. v. United States, 43 F.3d 1442, 1446 (Fed. Cir. 1994), Borcelik first emphasizes that the Department is statutorily mandated to calculate dumping margins as accurately as possible. In addition, asserts Borcelik, sections 773(a)(B)(i) and 771 (16)(A) of the Act requires the Department to match products with "identical...physical characteristics" for purposes of price-to-price comparisons where possible. Borcelik continues that, in implementing section 771(16)(A), the Department selects matching criteria based on "meaningful characteristics." Borcelik argues that the Department will consider physical characteristics which generate both price and cost differences in order to determine which characteristics are "meaningful." Borcelik cites as an example Certain Pasta from Italy; Final Determination of Sales at Less Than Fair Value 61 FR 30326 (June 14, 1996), wherein the Department concluded that because differences in wheat quality were reflected in wheat costs and pasta prices, this characteristic was "commercially significant and an appropriate criterion for product matching." Borcelik explains that it is not an integrated producer, as are most of the other respondents in this investigation; rather, it is a re- roller of hot-rolled steel which it must purchase from domestic and international suppliers. Borcelik further explains that the surface quality of hot-rolled coil (and, consequently, of the finished cold- rolled product) varies significantly depending on the source of the input. For example, hot-rolled coils purchased from certain countries have fewer defects than those obtained from other countries. Borcelik submits that the Department's model-match should recognize surface quality as an important physical characteristic for several reasons. First, argues Borcelik, differences in quality reflect significant differences in the finished product. The end uses of finished products vary dramatically, ranging from high quality cold- rolled steel suitable for automobile and appliance manufacturers to coils suitable for pipe and profile manufacturing to cold-rolled steel for use in non-exposed automotive parts and manufacturing. Second, Borcelik maintains that the cost differences to produce different surface qualities are substantial. Borcelik notes that the surface quality of the finished product affects the acquisition cost of the hot-rolled coil inputs, since coils used to produce cold- rolled steel for use in more demanding applications are considerably more expensive than those for use in applications where surface quality is not as important. Borcelik also asserts that the surface quality affects its costs in the cold-rolling mill, as demonstrated by the different productivity ratios for each quality group. These cost differences, Borcelik argues, are captured in different finished goods inventory values by surface quality. Third, Borcelik maintains that surface quality is an important physical characteristic which should be incorporated into the Department's model match because the price differences of otherwise identical coils of different surface qualities are substantial. Borcelik points to invoices provided in its questionnaire response and in cost verification Exhibit 10 demonstrating that the unit price of two products whose primary difference is surface quality varies significantly. Borcelik asserts that the customer to whom the invoice was issued is willing to pay a higher price for products with better surface quality because such merchandise will be used in exposed parts. Finally, Borcelik argues that surface quality is an important physical characteristic because distinctions among qualities are tracked in its internal costing and sales records. Borcelik explains that, as discussed in its questionnaire response, the surface quality of material is tracked throughout the production process and in the company's inventory and sales records. In addition, Borcelik notes that differences among surface qualities are recognized in its internal product coding system. Borcelik further argues that, in addition to surface quality, electrolytic cleaning is a meaningful physical characteristic which should be incorporated into the Department's model-match program. Borcelik explains that it uses an electrolytic cleaning process in which cold-rolled coils are dipped in alkaline and electrolytic baths to remove accumulations of oil film. Borcelik contends that whether or not a product is electrolytically cleaned affects the price of the finished product, as there are additional costs associated with this process. Therefore, Borcelik argues, the Department should consider this characteristic when matching U.S. sales to products sold in the foreign market. In conclusion, Borcelik suggests that the Department amend its model- match program to use the product codes (and associated costs) reported under the field "CONNUM2" (which incorporates surface quality distinctions and electrolytic cleaning in addition to the Department's 14 matching characteristics) rather than "CONNUM1" (which reflects only those physical characteristics specified in the original questionnaire). Petitioners offer several reasons why the Department should reject Borcelik's arguments and continue to employ the model-match methodology used for the preliminary results. First, petitioners assert, the statute does not require the Department to include every physical characteristic in its model match. Petitioners argue that the Department has been accorded broad discretion by the courts in selecting what constitutes "such or similar" merchandise. Further, argue petitioners, the courts have extended this discretion to determining which products should be considered identical. Petitioners maintain that the Department is therefore not required to develop a matching methodology which incorporates each and every characteristic. Petitioners cite Certain Cold-Rolled Carbon Steel Flat Products from Germany 60 FR 65264 (December 19, 1995), wherein the Department stated that "[it] need not account for every conceivable characteristic of a product in its hierarchy." Second, petitioners assert that the Department should reject Borcelik's proposed modifications to the model match because the Department's practice is not to alter the matching criteria established at the outset of an investigation. Petitioners argue that this practice prevents the possibility that margins calculated for different companies in this and other proceedings with the same scope are based on different matching criteria. Third, petitioners argue that because Borcelik selectively reported electrolytic cleaning and surface quality characteristics, the use of such criteria in the model match would create the potential for manipulation. Were the Department to permit respondents to select additional matching criteria, petitioners allege, respondent would be able to chose those characteristics which produce a more favorable outcome. The fact that Borcelik's product coding system tracks distinctions among these characteristics do not, petitioners argue, remove the potential for manipulation. Further, petitioners suggest that Borcelik could alter characteristics covered by its internal product codes to suit its needs. Petitioners note that the Department has addressed this very point in Stainless Steel Wire Rod from Korea; Preliminary Determination of Sales at Less than Fair Value 63 FR 10825 (March 5, 1998). In that determination, emphasize petitioners, the Department stated that "...allowing companies to deviate from the criteria may permit manipulation of model matches..." In addition, petitioners urge the Department to reject Borcelik's arguments because neither surface quality nor electrolytic cleaning have been considered for matching purposes in prior cold-rolled steel cases and are not now being used in the other companion cold-rolled investigations. The Department, petitioners argue, have already considered Borcelik's proposed modifications to the model-match criteria at the beginning of this investigation but did not include them in its questionnaire. Finally, petitioners allege that Borcelik has failed to provide evidence to establish that electrolytic cleaning and surface quality are "meaningful characteristics." With regard to electrolytic cleaning, petitioners assert that there is no information on the record demonstrating to what extent this characteristic affects cost of production or the final price to the customer. As for surface quality, petitioners assert that cost verification Exhibit 12 to which Borcelik refers does not quantify the significance of cost differences across quality groups, but merely indicates that coils in a particular quality group are more expensive than those in another. Petitioners also argue that the comparisons of invoices Borcelik provided showing different prices for products with different surface qualities are meaningless, particularly since the products have varying widths and thicknesses. In addition, petitioners assert that the invoices provided by Borcelik were issued in different months and that price fluctuations could therefore account for any price differences. Department's Position: We disagree with respondent. In the development of the Department's model match in an investigation, the Department focuses its selection of model match characteristics on unique measurable physical characteristics that the product can possess. In steel products such as the subject cold-rolled sheet, the model match variables differentiate products based on either physical, chemical, or mechanical characteristics. Physical characteristics would include thicknesses, widths, whether the product was painted, whether the product was in sheet or coil form, etc. Chemical characteristics would include the carbon level, etc. Mechanical characteristics would include the strength of the product. See the Department's July 9, 1999 questionnaire at Appendix V. Merchandise with differences in the types of characteristics noted exhibit clear physical differences (and, in turn, will invariably reflect price differences). Borcelik, however, has provided no evidence for the record demonstrating that finished cold-rolled coils produced with hot-rolled coil inputs of varying surface qualities in fact possess clear physical, chemical, or mechanical differences. Instead, the respondent merely asserts that "the end-uses into which coils produced by Borcelik are sold varies dramatically, ranging from high-quality cold-rolled steel suitable for use by automobile and appliance manufacturers for exposed surfaces, cold-rolled coils suitable for pipe and profile manufacturing and cold-rolled steel suitable for non-exposed automotive parts applications and manufacturing." See Borcelik's case brief at page 25. Borcelik's simple assertions regarding the different end-uses of finished products are not sufficient to establish the existence of physical differences between cold-rolled steel produced from varying hot- rolled coil "surface qualities." Moreover, the Department's model- match program already recognizes distinctions among different qualities of cold-rolled steel (e.g., commercial, structural, deep drawing, bake hardenable, motor lamination) that largely determine a product's end-use applications and dictate the surface quality requirement of the product. For example, commercial quality would be used in applications requiring minimal or limited fabrication and deformation. Structural quality products generally would possess higher carbon and strength characteristics than those found in commercial quality, and deep drawing quality would possess lower carbon levels and would be intended for severe drawing or forming applications such as exposed or unexposed applications. Borcelik also argues that surface quality should be considered in the Department's model match because it affects the acquisition cost of the hot-rolled coil inputs as well as the price of finished products. However, differences in price or cost, standing alone, are not sufficient to warrant inclusion in the Department's model-match of characteristics which a respondent claims to be the cause of such differences. The Department, as noted above, selects identical and similar merchandise based on physical characteristics (which, in turn, affect the price of a finished product). Borcelik should have provided evidence, beyond cost or price variations, of clear physical differences between merchandise of different surface qualities, but has not done so. The Department may consider price and cost variations when matching identical and similar merchandise only when there is evidence demonstrating that these differences were clearly the result of differences in physical characteristics. Borcelik notes that, in Extruded Rubber Thread from Malaysia; Final Results of Antidumping Duty Administrative Review, 62 FR 62,547 (November 24, 1997), the Department found that color was an appropriate criterion for matching because it materially affected cost. However, in that case, cost differences were the result of the existence of clearly different physical characteristics (i.e., thread color). In the instant proceeding, as indicated above, Borcelik has failed to demonstrate any clear physical differences among finished products with differing surface qualities. Borcelik further argues for the inclusion of electrolytic cleaning as a model-match characteristic. The respondent asserts that, since there are additional costs associated with the cleaning process, whether or not the product is subject to electrolytic cleaning affects the price of the finished product. Borcelik, however, has provided no evidence for the record of any clear physical differences between finished products which were subject to electrolytic cleaning and those which were not. Furthermore, the statute does not require the Department to follow Borcelik's suggested methodology. The Court has explicitly recognized the Department's broad discretion to determine what constitutes similar merchandise for the purpose of determining NV. For example, in Timken Co. v. United States, 630 F. Supp. 1327, 1338 (CIT 1986), the Court emphasized that it is the purview of the Department and not of interested parties to determine what methodology should be used. In NTN Bearing Corp. of America, American NTN Bearing Mfg. Corp, and NTN Corp. v. United States, 18 CIT 555 (CIT 1994), the Court held that the Department was not required to adopt a particular matching methodology advanced by the respondent, noting again the latitude accorded the Department in the selection of a methodology to implement section 771(16) of the Act. The selection of appropriate matching criteria to define identical merchandise under section 771(16)(A) of the Act is based on "meaningful" characteristics. Petitioners are correct that the Department does not attempt to account for every conceivable characteristic when selecting matching criteria. The criteria selection process allows the Department to "draw reasonable distinctions between products for matching purposes, without attempting to account for every possible difference inherent in the merchandise." See Notice of Final Determination of Sales at Less Than Fair Value; Steel Wire Rod from Canada 63 FR 9182 (February 24, 1998). In this case, the 14 matching criteria specified in the Department's questionnaire (hardening and tempering, painting, carbon level, quality, yield strength, thickness, thickness tolerance, width, edge finish, form, temper rolling, leveling, annealing, and surface finish) sufficiently take into account all of the commercially meaningful physical characteristics for model matching. The two additional criteria proposed by Borcelik are not necessary in this case to adequately define identical and similar products. For the reasons stated above, we find that the 14 matching criteria included in our questionnaire are sufficient to identify the physical characteristics of the cold-rolled steel included in this investigation and for use in identifying either identical or similar products for matching purposes. 7. Ministerial Errors Comment 1: Assignment of Physical Characteristics in the Model-Match Petitioners argue that the Department' model-match program for Borcelik does not assign a weighting factor to products for which thickness tolerance (CTOLERU) is reported as "F." Thus, petitioners suggest that the Department modify its model-match program to properly assign a value to those instances where thickness tolerance is "F." Department's Position: We agree with petitioners, and have amended our model-match program as described in our final results analysis memorandum, dated March 13, 2000. Recommendation Based on our analysis of the comments received, we recommend adopting all of the positions set forth above and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final determination and the final weighted-average dumping margins for all firms in the Federal Register. AGREE____ DISAGREE____ Robert S. LaRussa Assistant Secretary for Import Administration Date footnotes: ___________________________________________________________________ 1. Petitioners in this case are Bethlehem Steel Corporation, Gulf States Steel, Inc., Ispat Inland Inc., LTV Steel Company Inc., National Steel Company, Steel Dynamics, Inc., U.S. Steel Group, a unit of USX Corporation, Weirton Steel Corporation, United Steelworkers of America, and Independent Steelworkers Union (collectively, petitioners). 2. Section D response, September 3, 1999, pages 98-99. 3. Supplemental Questionnaires dated September 16, 1999 and October 19, 1999. 4. See the Department's Section B-D Supplemental Questionnaire, September 16, 1999 at page 10. 5. Erdemir reported six different family costs for cold-rolled products. The main difference between the family groups is a distinction between production lines. The Department does not recognize cost distinctions between production lines or factories since we calculate a weighted-average production cost for the entity as a whole. Therefore the six different family costs would be collapsed into three cost groups (i.e., full hard, cold rolled and sheet). Full hard represents non-annealed products whereas cold rolled and sheet are presumably annealed. We note that the term sheet is not a matching characteristic, but may refer to cut-to-length, which is a matching characteristic. 6. See December 1,1999 submission page 2. 7. See supplemental questionnaires dated September 16, 1999 and October 19, 1999. 8. Petitioners also contend that this statement conflicts with other assertions in Borcelik's response. For example, petitioners note that Borcelik explains in its supplemental questionnaire response that in those cases where the quantity changed between the original contract date and the invoice date, the change exceeded the quantity tolerance in more than a given percentage of U.S. sales contracts. 9. A small number of sales are negotiated on a sale-by-sale basis. See Sales Verification Report at page 23. 10. Petitioners do not discuss specifically to which freight expense they are referring. However, we are assuming that their reference is to domestic inland freight for U.S. sales, as their brief cites a page of Borcelik's response which discusses this particular expense. See Case Brief of Schagrin Associates at 9. 11. Borcelik calculated freight for home market sales in the same manner. 12. Under the two-pronged test, respondents must provide evidence establishing that i) import duties and rebates are directly linked to and dependent upon one another and ii) there were sufficient imports of raw materials to account for the drawback received on exports of the manufactured products. 13. As explained in Borcelik's August 30, 1999 response, an exporter files a request for a "project" with the Turkish Undersecretariat of Foreign Trade. The project states how much an exporter intends to export. 14. Borcelik provides a specific, proprietary example on page 19 of its October 14, 1999 supplemental response.