                          Slip Op. 00-77

         UNITED STATES COURT OF INTERNATIONAL TRADE
____________________________________
                                        :
POHANG IRON AND STEEL CO., LTD.,        :
POHANG COATED STEEL CO., LTD., AND      :
POHANG STEEL INDUSTRIES CO., LTD.,      :
                                        :
                 Plaintiffs,            :
                                        :
                 v.                     :
                                        :    Consol. Court No.
THE UNITED STATES,                      :        98-04-00906
                                        :
                 Defendant,             :
                                        :
                 and                    :
                                        :   PUBLIC VERSION
NATIONAL STEEL CORPORATION; U.S. STEEL :
GROUP - A UNIT OF USX CORPORATION;      :
INLAND STEEL INDUSTRIES, INC.;          :
BETHLEHEM STEEL CORPORATION; AND LTV    :
STEEL CO., INC.,                        :
                                        :
                 Defendant-Intervenors. :
                                        :
NATIONAL STEEL CORPORATION, et al.,     :
                                        :
                 Plaintiffs,            :
                                        :
                 v.                     :
                                        :
THE UNITED STATES,                      :
                                        :
                 Defendant,             :
                                        :
                 and                    :
                                        :
POHANG IRON AND STEEL CO., LTD., et al.,:
                                        :
                 Defendant-Intervenors, :
                                        :
                 and                    :
                                        :
UNION STEEL MANUFACTURING CO. LTD.,     :
                                        :
                 Defendant-Intervenor.  :
________________________________________:
CONSOL. COURT NO. 98-04-00906                                PAGE   2



[Antidumping duty remand determination affirmed in part and
remanded in part.]

                                          Dated:   July 6, 2000

     Akin, Gump, Strauss, Hauer & Feld, LLP (Sukhan Kim,
Spencer S. Griffith, J. David Park, and Sydney H. Mintzer) for
the POSCO Group.

     David W. Ogden, Acting Assistant Attorney General,
David M. Cohen, Director, Commercial Litigation Branch, Civil
Division, United States Department of Justice (Michele D.
Lynch), Linda S. Chang, and Bernd G. Janzen, Office of the
Chief Counsel for Import Administration, Department of
Commerce, of counsel, for defendant.

     Dewey Ballantine LLP (Michael H. Stein, Bradford L. Ward,
Jennifer Danner Riccardi and Andrew J. Conrad) for National
Steel Corporation, et al.

     Kaye, Scholer, Fierman, Hays & Handler, LLP (Donald B.
Cameron, Julie C. Mendoza and Paul J. McGarr) for Union Steel
Manufacturing Co., Ltd.

                                OPINION
     RESTANI, Judge: This matter is before the court following

remand.   See Final Results of Redetermination Pursuant to

Court Remand: Pohang Iron and Steel Co., Ltd. v. United

States, Consol. Ct. No. 98-04-00906 (Feb. 22, 2000)

[hereinafter “Remand Results” or “RR”].    The court ordered

the United States Department of Commerce (“Commerce” or “the

Department”) to explain or reconsider (1) its determinations
CONSOL. COURT NO. 98-04-00906                                    PAGE   3


that the Posco Group’s1 U.S. sales were constructed export

price (“CEP”) sales as opposed to export price (“EP”) sales,

(2) U.S. indirect selling expenses for the Posco Group, and

(3) Union Steel Manufacturing Co., Ltd.’s (“Union”) claim of

free U.S. warehousing for one verification observation.

Pohang Iron and Steel Co. v. United States, No. 98-04-00906,

1999 WL 970743, at *19 (Ct. Int’l Trade Oct. 20, 1999)

[hereinafter “Pohang I”].       Familiarity with the court’s prior

opinion herein is presumed.       See id.   The issues will be

addressed in reverse order.

               Jurisdiction and Standard of Review

     The court has jurisdiction pursuant to 28 U.S.C. §

1581(c) (1994).   In reviewing final determinations in

antidumping duty investigations and reviews, the court will

hold unlawful those agency determinations which are

unsupported by substantial evidence on the record, or

otherwise not in accordance with law.        19 U.S.C. §

1516a(b)(1)(B) (1994).




     1 The plaintiffs herein, Pohang Iron and Steel Co., Ltd.
(“POSCO”), Pohang Coated Steel Co., Ltd. (“POCOS”) and Pohang
Steel Industries Co., Ltd. (“PSI”) are collectively referred
to as the “POSCO Group”.
CONSOL. COURT NO. 98-04-00906                                  PAGE   4


                                Discussion

I.   Union Warehousing Expense

     Although Commerce complains mightily that the court has

required an unreasonable amount of verification activity or

evidentiary support for its conclusion that Union had no

warehousing expense for a particular sale, the court

disagrees.   See RR at 17-20 & 46.      The particular aspect of

the verification at issue involved a very small sample.

Pohang I, 1999 WL 970743, at *15.       In such a situation, the

individual observations are important.       It was the verifiers’

obligation to state their conclusions accurately, whether

based on oral statements or documentary evidence.       Further,

they needed to include in the record enough of a trail for the

court to determine if their conclusions were supported.

     In this case, a domestic industry participant discovered

a disconnect in the verification report.       Id. at *16.   It was

up to the parties to resolve this issue by reference to the

record the first time the issue was presented to the court.

The explanation provided at that time was incomplete and

partially incorrect.    Id. at *18.     On remand, review of the

record revealed that a different Union sales contractual

arrangement from the one originally discussed applied to the
CONSOL. COURT NO. 98-04-00906                                PAGE   5


observation at issue, Observation 83.2   RR at 45.   Either the

company’s statement to the verifier or the verifier’s report

of it contained errors or ambiguities.   Id. at 44-45.

      When the supporting documentation reveals contradictions

or commercially nonsensical practices in a respondent’s

explanations, the verifier cannot simply accept them and move

on, as Commerce seems to assert.   See Consolidated Edison Co.

v. NLRB, 305 U.S. 197, 229 (1938) (finding that substantial

evidence means “such relevant evidence as a reasonable mind

might accept as adequate to support a conclusion”).      In any

case the ambiguity has now been resolved by reference to sales

information of record which is discussed in confidential

footnote 2.   As the court found no problems with the rest of

the verification as to warehousing expenses, Commerce’s

determination on this issue is now sustained.

II.   POSCO Group’s U.S. Indirect Selling Expenses

      Because the POSCO Group, adhering to its position that

use of CEP information was not appropriate, specifically

declined on at least two occasions to provide information on



      2
      The contract reviewed by Commerce with respect to
observation 83 apparently was between [   ] and [   ], a Union
customer. RR at 45. The Union sales contract terms were
[   ]. Presumably Union would incur no warehousing expenses
in such a situation.
CONSOL. COURT NO. 98-04-00906                                   PAGE   6


U.S. indirect selling expenses, Commerce used facts available.

Pohang I, 1999 WL 970743, at *14.      The court has already

approved the use of facts available for POSCO, if an

adjustment is necessary in U.S. indirect selling expenses to

account for an interest expense.      See id. at *15.   POSCO

asserts that such an adjustment is neither necessary nor

permissible.   It states that Commerce improperly changed its

methodology after the final results had issued to include the

interest expense, and that Commerce did not simply correct a

ministerial error.    Id. at *14.    The court found Commerce’s

explanation wanting and remanded the issue.      Id. at *15.

     Commerce has now embraced the suggestion from the court

that perhaps its indirect selling expense calculation involved

a partial adverse facts available selection.      Id. at *15, see

also Remand Results, at 14-17.      Indeed, the court has no

problem with that selection because there is no reason to

believe POSCO could not have complied with Commerce’s request,

and POSCO’s decision not to comply was purposeful.

Accordingly, use of adverse facts available was permissible

under 19 U.S.C. § 1677e(b) (1994).      The threshold problem,

however, is that Commerce is permitted to change the indirect

expenses calculation after the final results are issued only

if Commerce originally calculated such expenses incorrectly
CONSOL. COURT NO. 98-04-00906                                     PAGE   7


because of ministerial error.       See 19 U.S.C. § 1675(h) (1994)

(ministerial errors to be corrected within a reasonable time

after final determinations are issued).

     On remand, Commerce clarified that it intended to include

a number of items in indirect expenses even though under

normal circumstances it might exclude those items in order to

avoid double counting of expenses already counted, e.g., as

direct expenses.     RR at 40-42.    Because POSCO did not submit

specific CEP indirect expense information, Commerce alleges

that it cannot be certain that double counting would occur.

Id. at 41-42.     Therefore, this alleged uncertainty with

respect to double counting caused Commerce, in fulfilling the

adverse inference it had drawn, to include the interest

expense at issue in indirect selling expenses.       Id.   Commerce,

however, failed to program its computer accordingly.        Id.     The

type of correction Commerce describes is a ministerial error

correction.     See 19 C.F.R. § 351.224(f) (1999) (noting that

arithmetic function is ministerial error).

     As to a related adjustment, in its remand determination

Commerce failed to clarify expressly, as instructed by the

court, why it rejected POSCO’s own claim of ministerial error

as to bank charges and commissions adjustments to indirect

sales expenses.     RR at 37.   The court nevertheless surmises
CONSOL. COURT NO. 98-04-00906                               PAGE   8


from Commerce’s explanation as to interest that certain

commissions and bank charges also were included in the

original final results calculation because of Commerce’s

belief that there was a lack of POSCO information

demonstrating double counting.    Thus, Commerce concluded no

post-final results ministerial error change in POSCO’s favor

was warranted.3

     It is probably reasonable in a facts available situation,

and clearly so in an adverse facts available setting, to put

the risk of double counting on the delinquent party.     This

would be the normal result of drawing an adverse inference.

POSCO alleges, however, that there was adequate data in the

record to make clear that Commerce’s method double counted.

Commerce cannot use information which is known to be

incorrect.   D & L Supply Co. v. United States, 113 F.3d 1220,

1223 (Fed. Cir. 1997).    Thus, the question now presented to

the court is whether the record demonstrates that Commerce


     3 In Commerce’s supplemental brief, it confirms that the
treatment in methodology as to claimed corrections for both
interest and bank charges and commissions is consistent, as
the court surmised. Commerce’s Supp. Br. at 2 (May 17, 2000).
Because Commerce intended to include bank charges and
commissions there was no ministerial error which could be
corrected post-final results as to commissions and bank
charges, and POSCO’s claim fails. Ministerial Analysis
Memorandum (Apr. 15, 1998), at 3, P.R. Doc. 216, Def.’s Pohang
I Public App., Ex. 18, at 2.
CONSOL. COURT NO. 98-04-00906                                   PAGE   9


incorrectly included POSCO’s interest expenses in the U.S.

indirect selling expenses figure.4

     First, Commerce normally makes a direct selling expense

adjustment based on an imputed credit expense for individual

sales, which it did here.       The imputed credit expense, which

is not a separate actual expense figure, is excluded from the

total interest expense figure used to calculate indirect

selling expenses.     New Minivans from Japan, 57 Fed. Reg.

21,937, 21,956-57 (Dep’t Commerce 1992) (final LTFV det.)

(excluding imputed credit expense on individual sales as part

of indirect selling expenses); see also Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof from

the Federal Republic of Germany, 56 Fed. Reg. 31,692, 31,721

(Dep’t. Commerce 1991) (final results of antidumping duty

admin. rev.) (Commerce “reduced interest expense on the firm’s

books for a portion of [imputed credit] expense . . . to avoid

double-counting.”).     The court sees no reason which would

justify this known double counting here.       No specific

additional information from POSCO is necessary to eliminate

this particular double counting.       Nonetheless, the court


     4    The court does not hold that such specific partial
adverse facts available data must be used, but Commerce chose
this method and must follow all facts available procedures
that flow from its choice.
CONSOL. COURT NO. 98-04-00906                              PAGE   10


accepts Commerce’s explanation that it may make some indirect

selling expense adjustment with respect to interest expenses

because it lacks the information to determine if the imputed

credit deduction covered all sales-related interest expenses.

See RR at 42.   Accordingly, while here the imputed credit

figure must be subtracted from the total interest figure,

interest expenses may generally be included in the indirect

selling expense adjustment where the respondent has not

provided full CEP expense data.

     Second, POSCO asserts that the interest figure largely

relates to non-subject merchandise, that Commerce’s allocation

of interest expenses between subject and non-subject is

incorrect, and that interest expenses should be allocated

based on the relationship that a specific non-subject

merchandise business asset bears to total assets.5   Commerce

is not required to use this method of allocation if it is

already allocating interest expenses on another acceptable

subject - non-subject merchandise basis.

     The problem is that the ratio of subject merchandise

revenue to total revenue may not account for the revenue

generated by the separate business asset because this figure


     5 The specific business asset is [    ].   POSCO’s Comments
on Remand at 11-16.
CONSOL. COURT NO. 98-04-00906                              PAGE   11


may not be included in the POSCO group’s balance sheets.      See

Commerce’s Supp. Br. at 12-13 (May 17, 2000).   Commerce states

it cannot tell which interest expenses are related to the

separate business asset and cannot deduct such interest

expenses from the total to be allocated.   Thus, it implies

that it accepts the possibility that its allocation may be

distortive.

     Had POSCO submitted all the data required by Commerce,

the court might be sympathetic to its arguments that Commerce

does not need any more information because it can allocate on

an asset basis, and that Commerce never requested the data.

Had Commerce received all the information it requested, it

might have been led to ask for this additional data.     It also

seems improper under adverse inference circumstances to

require Commerce to abandon its normal allocation methods

because POSCO’s methods might be better.   AK Steel Corp. v.

United States, 988 F. Supp. 594, 606 (Ct. Int’l Trade 1997)

(“[T]he [c]ourt’s role is not to determine whether the

information chosen was the ‘best’ actually available.” )

(quotation omitted), aff’d 1999 U.S. App. Lexis 15023 (Fed.

Cir. 1999). Further, because of the odd financial structure at

issue and POSCO’s lack of cooperation, the court cannot say

that Commerce is incorrect in focusing on debt financing as
CONSOL. COURT NO. 98-04-00906                               PAGE   12


opposed to taking a broader view of financing.    Accordingly,

Commerce is not required to allocate the interest expense on

the basis of the relationship of the separate business asset

to total assets.

       Third, POSCO objected that the normal practice of

deducting interest income from interest expenses was not

followed.    POSCO did not explain its objections in terms of

specific calculations, clarify whether only short term

interest was at issue or whether interest income was deducted

from imputed credit.    Despite Commerce’s lack of response on

this point, the court finds POSCO’s objection insufficient.6

       Finally, the court finds arguments with respect to

freight expenses and other periods of review irrelevant to

this matter.    Accordingly, for purposes of the indirect

selling expenses adjustment, Commerce shall adjust the

interest expense figure removing previously deducted imputed

credit expenses.

III.        Use of Constructed Export Price for POSCO Group’s

U.S. Sales

       All parties agree that the Federal Circuit’s decision in



       6  Only in its response to Commerce’s supplemental
brief did POSCO make its objection to the remand results on
this issue with any specificity. This was too late.
CONSOL. COURT NO. 98-04-00906                                 PAGE   13


AK Steel Corp. v. United States impacts this case.     203 F.3d

1330 (Fed. Cir. 2000).     It involves the same parties, the same

product, and the same commercial patterns.     In AK Steel, the

Federal Circuit rejected Commerce’s longstanding three-part

test for selecting EP versus CEP treatment for U.S. sales.

Id. at 1339-40.     The court held that the additional words of

19 U.S.C. § 1677a (1994), “outside the United States” and “by

a seller affiliated with the producer” in the respective

definitions of EP and CEP are significant.     Id. at 1337.     It

found that the additional words invalidated the prior

administrative practice; whereas this court, in the absence of

contrary legislative history, had recognized the additional

words to be mere clarification.     Compare AK Steel, 203 F.3d at

1338-39, with AK Steel Corp. v. United States, 34 F. Supp.2d

756, 762 (Ct. Int’l Trade 1998), aff’d in part, rev’d in part

by 203 F.3d 1330.     The Court of Appeals declared the statute

wholly unambiguous and unambiguously eliminated Commerce’s

three-part test to determine whether sales by domestic

affiliates rendered the sales subject to EP or CEP treatment.

AK Steel, 203 F.3d at 1337-40.

     No one has asserted that the U.S. sales at issue were not

made pursuant to contracts signed by the U.S. affiliates and

the U.S. customers in the United States.     Under AK Steel’s
CONSOL. COURT NO. 98-04-00906                                PAGE   14


geographic approach, the sales are subject to CEP treatment.7

That is all that remains of this issue and further remand, as

the domestic parties request, would serve no purpose in this

case.



                                Conclusion

     This matter is remanded to correct the indirect selling

expenses adjustment as stated in this opinion.       Remand is due

within 30 days.    The parties may object within 11 days

thereafter.



                                  ______________________
                                       Jane A. Restani
                                           Judge


Dated: New York, New York

         This 6th day of July, 2000.




     7 The court does not mean to imply that a U.S. affiliate
and a U.S. customer could sign a contract in the Barbados to
avoid CEP treatment. If both contractual parties are U.S.
entities operating in the U.S. under AK Steel, the sale will
be a CEP sale. See AK Steel, 203 F.3d at 1339-40.
