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Q * * * your objections to the adjustment from
consignment to turnkey then, in terms of the real world
markup, really just come down to what the material
markup is, right?
A Oh yes. That actually--yes. I have no
qualms, the clear issue is how large the markup should
be.
Q So you and I can agree that you can adjust
from consignment to turnkey transactions, and you can
do so with certainty.
A You can adjust from consignment to turnkey
transactions, the--when you say whether you can do it
with certainty is somewhat problematic since I clearly
believe that sort of the 5 percent net should be done
here and you believe that the 17.7 percent of gross
should be used and that is a lot of money.
Q And the certainty point is that there is a
range of different markups in the marketplace, isn't
there?
A Yes.
Moreover, we do not believe that excluding the turnkey equivalent
transactions from the analysis would change the result here.
Respondent's failure to provide an alternative CUP analysis
supports our impression that the undisputed actual transactions
establish arm's-length consistency for petitioner's pricing.
Respondent also challenges the use of 17.7 percent as a
material markup, arguing that markups on other transactions were
less than 17.7 percent. Respondent's contention is that the
excessive markup allows Compaq Asia to earn too much money.
Instead, respondent advocates the use of a 5-percent material
markup, despite not being able to point to one single arm's-
length transaction that took place at such a minimal markup.
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