§ 351.405 Calculation of normal value based on constructed value.

(a) Introduction. In certain circumstances, the Secretary may determine normal value by constructing a value based on the cost of manufacturing, selling, general and administrative expenses and profit. The Secretary may use constructed value as the basis for normal value when: neither the home market nor a third country market is viable; sales below the cost of production are disregarded; sales outside the ordinary course of trade or sales for which the prices are otherwise unrepresentative are disregarded; sales used to establish a fictitious market are disregarded; no contemporaneous sales of comparable merchandise are available; or in other circumstances where the Secretary determines that home market or third country prices are inappropriate. (See section 773(e) and (f) of the Act.) This section clarifies the meaning of certain terms and sets forth certain information which the Secretary will normally consider in determining a constructed value. (b) Profit and selling, general, and administrative expenses. In determining the amount to be added to constructed value for profit and for selling, general, and administrative expenses, the following rules will apply: (1) Under section 773(e)(2)(A) of the Act, “foreign country” means the country in which the merchandise is produced or a third country selected by the Secretary under § 351.404(e), as appropriate. (2) Under section 773(e)(2)(B) of the Act, “foreign country” means the country in which the merchandise is produced. (3) Under section 773(e)(2)(B)(iii) of the Act, the Secretary will normally consider the following criteria in selecting sources for selling, general and administrative expenses, as well as profit, in calculating constructed value: (i) The similarity of the potential surrogate companies' business operations and products to the examined producer's or exporter's business operations and products; (ii) The extent to which the financial data of the surrogate company reflects sales in the home market and does not reflect sales to the United States; (iii) The contemporaneity of the surrogate company's data to the period of investigation or review; and (iv) The extent of similarity between the customer base of the surrogate company and the customer base of the examined producer or exporter.