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Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6205should be adjusted to account fortrained employees.Shanghai claims that Petitioner hasmisinterpreted the verification report.Rather than stating that the number ofemployees assigned to TRB productionwas unverifiable, Shanghai contendsthat the report noted that it was notverifiable from personnel departmentworksheets, which do not contain suchinformation. Shanghai says that it didreport the number of employeesassigned to TRB production and thatsuch information was verifiable througha variety of means. Shanghai furtherclaims that its reported labor hoursaccounted for trained workers. Shanghaicounters Petitioner’s argument for use ofBIA, stating that it did not refuse toprovide information and it was able toproduce, in a timely manner, anyinformation requested by theDepartment.Department’s PositionWe agree with Shanghai’s contentionthat Petitioner misinterpreted ourverification report. In the report, wenoted that there was nothing to whichwe could trace the numbers from aworksheet prepared for thisadministrative review in order to verifythe number of employees assigned tothe production of subject merchandise.However, based on company records weexamined at verification, we determinedthat Shanghai reported the number ofemployees assigned to the production ofTRBs accurately.We were able to verify the direct-laborhours from Shanghai’s internal recordkeepingfrom work tickets. We found atverification that by reporting directlabor from the work tickets Shanghaidid not account for trained workers. Tocalculate direct labor for the preliminaryresults, we adjusted Shanghai’s reportedlabor hours in order to account fortrained workers by adding the directlaborhours for trained workers to thedirect-labor hours for skilled workers.We have applied this same methodologyfor these final results. Because we wereable to verify Shanghai’s direct laborand there was no evidence indicatingthat indirect labor was misreported, wehave used the indirect labor as reported.Comment 21Petitioner asserts that the Departmentshould apply BIA ocean-freight andmarine-insurance rates to all of Henan’sU.S. sales through Central Equimpexbecause the record includes an invoicewhich shows that Henan made a sale ona CIF basis, although it stated in thesubmission that the terms of sale werenot CIF.Henan claims that Petitioner’sassertion is based on amisunderstanding of the transactionwhich was the subject of the invoice.Further, Henan states that the invoicedoes not relate to Henan’s ESP salesthrough Central Equimpex but relates toone of Henan’s direct purchase-pricesales. Thus, Henan asserts, theDepartment can trace the sales quantityand price directly to Henan’s purchasepricesales listing.Department’s PositionWe agree with respondent in part. Thefact that the sale was a purchase-pricetransaction is not relevant to thededuction of ocean-freight expensesfrom USP but, rather, whether oceanfreightexpenses are included in theprice. The record evidence is that oceanfreightexpenses were included in thesale price. Moreover, because the sale inquestion is a purchase-price transactionand, therefore, is not related to salesmade through Central Equimpex, thereis no justification for applying BIA to allsales made through Central Equimpex.Furthermore, there is no evidence tosupport Petitioner’s assertion thatHenan’s ESP sales listing does notreflect its transactions accurately. Wehave examined documentation relatedto the sale in question and havedetermined that ocean freight andmarine insurance were provided byPRC-based companies. Accordingly, wehave applied the surrogate ocean-freightand insurance rates for this transaction.Comment 22Shanghai argues that the Departmentmust recalculate the estimated oceanfreightcharges on its ESP transactions.Shanghai contends that theDepartment’s estimated ocean-freightcharges improperly included charges forU.S. inland freight and brokerage &handling which the Departmentdeducted elsewhere from ESP.Specifically, Shanghai claims thatcharges for ‘‘destination deliverycharge’’ included in the ocean freightrates the Department used werepresumably for the costs of off-loadingand transporting the merchandise fromthe port of entry to the warehouse in theUnited States. Shanghai states that itreported such costs as U.S. inlandfreight and/or brokerage & handlingcharges and the Department deductedthem from ESP accordingly.Petitioner responds that Shanghaimisunderstood the Department’s oceanfreightmethodology. Petitionercontends that, notwithstanding otherproblems, the Department did notinclude expenses twice in itscalculation of ocean freight. Petitionerargues that an examination of thecomponent parts of the ocean-freightcharge shows that the destinationdeliverycharge clearly covered theoverland portion of the shipment, i.e.,from Long Beach to Cincinnati, becauseall other portions of the charge arerelated to the ocean part of the voyage.Department’s PositionBecause we have changed ourmethodology to calculate ocean freight(see our response to Comment 16), thisissue is moot.Comment 23Shanghai argues that the Departmenterroneously added a surrogate-basedinland-freight charge to its purchases ofsteel imported from market-economycountries, improperly inflating theimported-steel values by doublecountingfreight costs. Thus, Shanghaiargues, the Department should deletethe surrogate-based freight charge fromthe costs of the imported steel.Department’s PositionWe agree with Shanghai that wedouble-counted freight costs when weadded surrogate-based freight charges torespondent’s imported-steel values.Because Shanghai incurred no inlandfreightcharges, these should not havebeen added. Furthermore, because wedetermined that it is more accurate tovalue all of Shanghai’s hot-rolled-steelbar using the imported steel value (seeour response to Comment 7), we have,for these final results, not included thesurrogate-based freight cost in valuingShanghai’s hot-rolled-steel-bar materialinputs.Comment 24Shanghai states that the Departmentshould not base the overhead rate oninformation contained in the SKF reportbecause it is excessive andunrepresentative of Chinese producers.Shanghai and Chin Jun argue that, if theDepartment does use the SKF report tovalue overhead for the final results, itmust recalculate the rate in order tocorrect several errors. In addition,Shanghai claims that the overhead ratethe Department used in the preliminaryresults is based on Petitioner’s analysisof the SKF report, an analysis whichShanghai claims contains several errors.Shanghai and Chin Jun argue the ratethe Department used in the preliminaryresults improperly allocates the fullamount of the depreciation expense tooverhead and, as a result, theDepartment did not consider thatcertain depreciation expenses should beallocated instead to SG&A. Shanghainotes that, for the final results of the