[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Notices]
[Pages 16703-16707]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8487]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-811]
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from
Germany: Preliminary Results of Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: The Department of Commerce (``the Department'') is conducting
an administrative review of the antidumping duty order on certain hot-
rolled lead and bismuth carbon steel products from Germany in response
to a request by the respondent, Saarstahl AG (``Saarstahl''). This
review covers the period March 1, 1997, through February 28, 1998.
We have preliminarily determined that sales have not been made
below normal value (``NV''). Interested parties are invited to comment
on these preliminary results. If these preliminary results are adopted
in our final results of administrative review, we will instruct the
Customs Service not to assess antidumping duties on entries subject to
this review.
EFFECTIVE DATE: April 6, 1999.
FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Rebecca
Trainor, Office 5, AD/CVD Enforcement Group II, Import Administration,
Room B099, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington D.C.
20230; telephone (202) 482-4136, or 482-4007, respectively.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the regulations at 19 CFR Part 351 (1998).
SUPPLEMENTAL INFORMATION:
Background
On March 22, 1993, the Department published in the Federal Register
the antidumping duty order on certain hot-rolled lead and bismuth
carbon steel products from Germany (58 FR 15324).
On March 11, 1998, we published in the Federal Register (62 FR
11868) a notice of opportunity to request an administrative review of
the antidumping duty order on certain hot-rolled lead and bismuth
carbon steel products from Germany covering the period March 1, 1997,
through February 28, 1998.
In accordance with 19 CFR 351.213(b)(1), Saarstahl requested that
we conduct an administrative review of its sales. We published a notice
of initiation of this antidumping duty administrative review on April
24, 1998 (63 FR 20378).
On April 28, 1998, petitioners requested that the Department
determine whether antidumping duties have been absorbed by Saarstahl.
On January 29, 1999, the Department requested proof that unaffiliated
purchasers will ultimately pay the antidumping duties to be assessed on
entries during the review period.
The Department is conducting this administrative review in
accordance with section 751 of the Act.
Scope of the Review
The products covered by this review are hot-rolled bars and rods of
nonalloy or other alloy steel, whether or not descaled, containing by
weight 0.03 percent or more of lead or 0.05 percent or more of bismuth,
in coils or cut lengths, and in numerous shapes and sizes. Excluded
from the scope of this review are other alloy steels (as defined by the
Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72,
note 1 (f)), except steels classified as other alloy steels by reason
of containing by weight 0.4 percent or more of lead, or 0.1 percent or
more of bismuth, tellurium, or selenium. Also excluded are semi-
finished steels and flat-rolled products. Most of the products covered
in this review are provided for under subheadings 7213.20.00.00 and
7214.30.00.00 of the HTSUS. Small quantities of these products may also
enter the United States under the following HTSUS subheadings:
7213.31.30.00; 7213.31.60.00; 7213.39.00.30; 7213.39.00.60;
7213.39.00.90; 7213.91.30.00; 7213.91.45.00; 7213.91.60.00; 7213.99.00;
7214.40.00.10, 7214.40.00.30, 7214.40.00.50; 7214.50.00.10;
7214.50.00.30, 7214.50.00.50; 7214.60.00.10; 7214.60.00.30;
7214.60.00.50; 7214.91.00; 7214.99.00; 7228.30.80.00; and
7228.30.80.50. HTSUS subheadings are provided for convenience and
Customs purposes. The written description of the scope of this
proceeding is dispositive.
Duty Absorption
On April 28, 1998, the petitioners requested that the Department
determine whether antidumping duties had been absorbed during the POR.
Section 751(a)(4) of the Act provides for the Department, if requested,
to determine during an administrative review initiated two or four
years after the publication of the order, whether antidumping duties
have been absorbed by a foreign producer or exporter, if the subject
merchandise is sold in the United States through an affiliated
importer. In this case, Saarstahl sold to the United States through an
importer that is affiliated within the meaning of section 751(a)(4) of
the Act.
Section 351.213(j)(2) of the Department's regulations provides that
for transition orders (i.e., orders in effect on January 1, 1995), the
Department will conduct duty absorption reviews, if requested, for
administrative reviews initiated in 1996 or 1998. Because the order
underlying this review was issued prior to January 1, 1995, and this
review was initiated in 1998, we will make a duty absorption
determination in this segment of the proceeding. As we have
preliminarily found that there is no dumping margin for Saarstahl with
respect to its U.S. sales, we have also preliminarily found that there
is no duty absorption.
Fair Value Comparisons
To determine whether sales of the subject merchandise by Saarstahl
to the United States were made at less than NV, we compared export
price (``EP'') to the NV, as described in the ``Export Price'' and
``Normal Value'' sections of this notice.
[[Page 16704]]
Pursuant to section 777A(d)(2) of the Act, we compared the EPs of
individual U.S. transactions to the monthly weighted-average NV of the
foreign like product where there were sales made at prices above the
cost of production (COP), as discussed in the ``Cost of Production
Analysis'' section, below and were otherwise in the ordinary course of
trade.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by Saarstahl covered by the description in the
``Scope of the Review'' section, above, to be foreign like products for
purposes of determining appropriate product comparisons to U.S. sales.
We compared U.S. sales to sales made in the home market within the
contemporaneous window period, which extends from three months prior to
the U.S. sale until two months after the sale. Where there were no
sales of identical merchandise in the home market made in the ordinary
course of trade to compare to U.S. sales, we compared U.S. sales to the
most similar foreign like product made in the ordinary course of trade.
In making the product comparisons, we matched foreign like products
based on the physical characteristics reported by the respondents in
the following order: chemical composition, shape, cut (i.e., coil or
cut-to-length), size, and grade (see Model Match Methodology Memorandum
from the Team to Irene Darzenta Tzafolias, dated March 22, 1999
(``Model Match Methodology Memorandum'')).
Consistent with our practice (see, e.g., Final Results of
Antidumping Duty Administrative Review: Cold-Rolled Carbon Steel Flat
Products from the Netherlands, 61 FR 48465, (September 13, 1996)), we
compared prime quality models sold in the United States to identical
prime quality models sold in the home market. Where no home market
sales of identical prime quality models made in the ordinary course of
trade existed, we compared the U.S. sales of prime quality models to
the most similar prime quality foreign like product made in the
ordinary course of trade, based on the product characteristics listed
above. There were no U.S. sales of second quality models during the
POR.
The petitioners contend that the Department should also include
casting type (i.e., bloom or billet casting) as a product matching
characteristic. When selecting model match criteria, we normally choose
physical characteristics of the merchandise that are identifiable and/
or quantifiable (see, e.g., Notice of Preliminary Determination of
Sales at Less Than Fair Value and Postponement of Final Determination:
Melamine Institutional Dinnerware Products From Indonesia, 61 FR 43333,
43334, August 22, 1996). As discussed in the Model Match Methodology
Memorandum, we did not use this production method characteristic in the
model match hierarchy because, other than the petitioners' general
contention that bloom-cast products are of better quality than billet-
cast products, there is no information on the record indicating that
merchandise produced by different casting methods results in any
discrete, quantifiable differences in the physical characteristics of
the merchandise. In addition, while the petitioners have demonstrated a
difference in costs between the two production methods, no party has
demonstrated that there are differences in cost attributable to
differences in physical characteristics of the merchandise.
Because Saarstahl reported product costs and control numbers to
distinguish between casting type, we have revised the weight-averaged
costs of the products reported based solely on the matching criteria
identified above.
Export Price
We based United States price on EP, as defined in section 772(a) of
the Act, because the merchandise was sold directly by the exporter to
unaffiliated U.S. purchasers prior to the date of importation and
constructed export price was not otherwise indicated by the facts of
record. When sales are made prior to importation through an affiliated
or unaffiliated U.S. sales agent to an unaffiliated customer in the
United States, our practice is to examine several criteria in order to
determine whether the sales are EP sales. Those criteria are: (1)
Whether the merchandise was shipped directly from the manufacturer to
the unaffiliated U.S. customer; (2) whether this was the customary
commercial channel between the parties involved; and (3) whether the
function of the U.S. selling agent was limited to that of a ``processor
of sales-related documentation'' and a ``communications link'' with the
unaffiliated U.S. buyer. Where all three criteria are met, indicating
that the activities of the U.S. selling agent are ancillary to the
sale, the Department has determined the sales to be EP sales (see,
e.g., Notice of Final Results of Sales at Less Than Fair Value:
Stainless Steel Wire Rod from Italy, 63 FR 40422, 40424-25, July
29,1998). In the instant review, the above-referenced criteria have
been met. As discussed in Saarstahl's questionnaire responses,
Saarsteel, Inc., Saarstahl's affiliate in the United States, acts only
as a communications link and a processor of sales-related
documentation. It has no role in selling the merchandise and it does
not inventory the subject merchandise. Accordingly, we have treated all
U.S. sales as EP sales.
We calculated EP based on packed, delivered prices to customers in
the United States. We made deductions, where applicable, for foreign
inland freight and brokerage and handling expenses in Germany, ocean
freight, marine insurance, U.S. Customs duties, brokerage and handling
charges, merchandise processing fees, and U.S. inland freight charges,
in accordance with section 772(c) of the Act.
Normal Value
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
the Department compared Saarstahl's volume of home market sales of the
foreign like product to its volume of U.S. sales of the subject
merchandise, in accordance with sections 773(a)(1)(C) of the Act.
Because Saarstahl's aggregate volume of home market sales of the
foreign like product was greater than five percent of its aggregate
volume of U.S. sales of the subject merchandise, we determined that the
home market provides a viable basis for calculating NV, in accordance
with Section 773(a)(1)(C) of the Act and 19 CFR 351.404(b).
Saarstahl's home market sales listing included merchandise of steel
grades that Saarstahl stated are outside the scope of this review.
Based on Saarstahl's representations of the merchandise in its December
28, 1998, and January 29, 1999, submissions, we excluded these sales
from our analysis.
Many of Saarstahl's home market sales were made to affiliated
parties. It is the Department's practice, in situations where home
market sales are made to affiliated parties, to determine whether sales
to affiliated parties might be appropriate to use as the basis of NV by
comparing prices of those sales to prices of sales to unaffiliated
parties, on a model-by-model basis. See Final Results of Antidumping
Duty Administrative Reviews, Partial Termination of Administrative
Reviews, and Revocation in Part of Antidumping Duty Orders;
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, et al., 60 FR 10899, 10900, February 28, 1995; and
19 CFR 351.403(c). Because Saarstahl made home market sales to
affiliated end-users during the POR, we tested these sales to ensure
that, on
[[Page 16705]]
average, the affiliated-party sales were made at arm's length. To
conduct this test, we compared the weighted-average unit prices of
sales to affiliated and unaffiliated customers net of all movement
charges, direct selling expenses, billing adjustments, and packing. As
a result of our arm's-length test, we disregarded sales to the
affiliated customers in the home market where the prices charged to an
affiliated customer were on average less than 99.5 percent of the
prices charged to unaffiliated customers. See Final Results of
Antidumping Duty Administrative Review; Certain Welded Carbon Steel
Pipes and Tubes from Thailand, 62 FR 53808, 53817, October 16, 1997.
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we based NV on sales at the same level of trade
(``LOT'') as the EP sale.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same LOT as the EP transaction. The NV LOT is that of the starting-
price sales in the comparison market or, when NV is based on CV, that
of the sales from which we derive selling, general and administrative
(``SG&A'') expenses and profit. For EP, the LOT is also the level of
the starting-price sale, which is usually from exporter to importer. To
determine whether NV sales are at a different level of trade than EP,
we examined stages in the marketing process and selling functions along
the chain of distribution between the producer and the unaffiliated
customer. If the comparison-market sales are at a different LOT and the
difference affects price comparability, as manifested in a pattern of
consistent price differences between the sales on which NV is based and
comparison-market sales at the LOT of the export transaction, we make
an LOT adjustment under section 773(a)(7)(A) of the Act.
In this proceeding, Saarstahl reported three channels of
distribution in the home market: (1) sales produced to order and
shipped directly to the customer, (2) sales manufactured to order and
maintained in a warehouse for ``just in time'' delivery, and (3) sales
of secondary merchandise sold to resellers. In analyzing the data
submitted, we found that the three home market channels differ
significantly with respect to selling activities. Inventory maintenance
is only offered to customers in the second channel. Freight and
delivery services and technical advice are only offered to customers in
the first and second channels. Further, we found that these channels
constitute different stages in the marketing process. Based on this
analysis, we find that the three home market channels of distribution
comprise three LOTs.
In the United States, Saarstahl reported one channel of
distribution, which involves sales produced to order and shipped
directly to customers. The selling activities and functions associated
with these sales are equivalent to those offered in the first home
market channel discussed above. Accordingly, we have compared the U.S.
sales to sales made at the same LOT in the home market.
Cost of Production Analysis
Pursuant to section 773(b) of the Act, for this POR, we initiated
an investigation of sales at less than the cost of production
(``COP''). As discussed in the Memorandum to Joe Spetrini, Deputy
Assistant Secretary for AD/CVD Enforcement III from Edward Yang, Office
Director, dated July 8, 1998, we initiated the COP investigation
because, in the preliminary determination of the less-than-fair-value
(``LTFV'') investigation, we disregarded some of Saarstahl's home
market sales found to be below the COP (see Preliminary Determination
of Sales at Less Than Fair Value: Certain Hot-Rolled Lead and Bismuth
Carbon Steel Products From Germany, 57 FR 44551, September 28, 1992).
Saarstahl subsequently failed both the sales and COP verifications and
the Department relied on the best information available as the basis
for the final determination (see Final Determination of Sales at Less
Than Fair Value: Certain Hot-Rolled Lead and Bismuth Carbon Steel
Products From Germany, 58 FR 6205, January 27, 1993). Therefore, in
accordance with section 773(b)(2)(A)(ii) of the Act, we had reasonable
grounds to believe or suspect that sales made at less than the COP may
have occurred during this review period. Before making any NV
comparisons, we conducted the COP analysis described below.
A. Calculation of COP
We calculated the COP based on the sum of Saarstahl's cost of
materials and fabrication employed in producing the foreign like
product, plus amounts for home market general and administrative (G&A)
expenses and interest expenses. We made no adjustments to the data
provided by Saarstahl in its questionnaire responses.
B. Test of Home Market Prices
After calculating COP, we tested whether home market sales of hot-
rolled lead and bismuth carbon steel were made at prices below the COP
within an extended period of time in substantial quantities, and
whether such prices permitted recovery of all costs within a reasonable
period of time. We compared the model-specific COP to the reported home
market prices less any applicable movement charges, billing
adjustments, direct and indirect selling expenses, and packing.
For indirect selling expenses incurred in Germany, Saarstahl
reported the actual expenses incurred during the POR by its affiliate
Vertriebsgesellschaft Saarstahl m.b.H. (``VGS''), which handles all of
Saarstahl's sales and distribution activities. Since the COP response
is based on Saarstahl's expenses during its fiscal year, corresponding
to the calendar year, we recalculated the indirect selling expenses to
reflect the fiscal year, based on the ratio of VGS' expenses to sales
revenue reported in its 1997 financial statement, which covers the 1997
calendar year. These expenses included commission payments to
unaffiliated parties. To avoid double-counting, we did not deduct these
commissions from the net home market price we compared to COP.
C. Results of COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of the respondent's sales of a specific model were at prices
less than the COP, we did not disregard any below-cost sales of that
product because we determined that the below-cost sales were not made
in ``substantial quantities.'' Where 20 percent or more of the
respondent's sales of a specific model during the POR were at prices
less than the COP, we disregarded the below-cost sales because we
determined that the below-cost sales were made within an extended
period of time in ``substantial quantities'' in accordance with
sections 773(b)(2)(B) and (C) of the Act, and because, based on our
comparisons of prices to weighted-average COPs for the POR, we
determined that the below-cost sales of the product were at prices
which would not permit recovery of all costs within a reasonable period
of time, as defined in section 773(b)(2)(D) of the Act. Based on this
test, we disregarded certain below-cost home market sales made by
Saarstahl.
Price-to-Price Comparisons
Pursuant to section 777A(d)(2) of the Act, we compared the EPs of
individual
[[Page 16706]]
transactions to the monthly weighted-average price of sales of the
foreign like product where there were sales at prices above COP, as
discussed above. We based NV on packed, delivered prices to
unaffiliated purchasers in the home market, and to affiliated
purchasers in the home market to the extent that prices were at arm's-
length. We made adjustments to home market price, where applicable, in
accordance with section 773(a)(6) of the Act, for billing adjustments,
inland freight, and warehousing expenses. We also made circumstance-of-
sale adjustments for differences in credit expenses, interest revenue,
bank fees (based on information in Saarstahl's February 26, 1999,
response), warranties, and commissions paid to unaffiliated parties
pursuant to section 773(a)(6)(C)(iii) of the Act.
Saarstahl paid commissions to unaffiliated parties on certain sales
in the home market, but did not pay any commissions to unaffiliated
parties on U.S. sales. Under 19 CFR 351.410 (e), where there is a
commission paid in one market and none in the other market, we offset
the commission with indirect selling expenses incurred in the other
market to the extent of the lesser of the commission or the indirect
selling expenses. Accordingly, where appropriate, we offset the
weighted-average home market commission by deducting it from the
weighted-average home market price and then adding the sale-specific
U.S. indirect selling expenses. For U.S. indirect selling expenses, we
used the recalculated indirect selling expenses incurred in Germany, as
described in the ``Cost of Production Analysis'' section above. In
addition, we calculated the selling expenses incurred by Saarstahl's
U.S. affiliate, Saarsteel, Inc., based on the ratio of Saarsteel's
selling expenses to sales revenue reported in its 1997 financial
statement. We also included the reported inventory carrying expense
amount on U.S. sales in the total amount of U.S. indirect selling
expenses available to offset the weighted-average home market
commissions.
In order to adjust for differences in packing between the two
markets, we increased home market price by the amount of U.S. packing
costs and reduced it by the amount of home market packing costs. We
made adjustments, where appropriate, for physical differences in
merchandise, in accordance with section 773(a)(6)(C)(ii) of the Act.
For home market sales where the payment date was not reported as of
the date of submission of the latest home market sales listing, we
recalculated imputed credit expenses using the date of the latest sales
listing submission as the payment date.
Preliminary Results of the Review
As a result of our comparison of EP and NV, we preliminarily
determine that the following weighted-average dumping margin exists:
------------------------------------------------------------------------
Margin
Manufacturer/Exporter Period (percent)
------------------------------------------------------------------------
Saarstahl AG (Saarstahl)................ 3/1/97-2/28/98 0.00
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Any interested party may
request a hearing within 30 days of publication. Any hearing, if
requested, will be held 80 days after the date of publication or the
first business day thereafter.
Issues raised in the hearing will be limited to those raised in the
respective case briefs and rebuttal briefs. Case briefs from interested
parties and rebuttal briefs, limited to the issues raised in the
respective case briefs, may be submitted not later than 70 days and 77
days, respectively, from the date of publication of these preliminary
results. See 19 CFR 351.309(c) and (d). Parties who submit case briefs
or rebuttal briefs in this proceeding are requested to submit with each
argument (1) a statement of the issue and (2) a brief summary of the
argument. Parties are also encouraged to provide a summary of the
arguments not to exceed five pages and a table of statutes,
regulations, and cases cited.
The Department will subsequently issue the final results of this
administrative review, including the results of its analysis of issues
raised in any such written briefs or at the hearing, if held, not later
than 120 days after the date of publication of this notice.
Interested parties who wish to request a hearing or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, Room B-099, within 30 days of the
date of publication of this notice. Requests should contain: (1) the
party's name, address and telephone number; (2) the number of
participants; and (3) a list of issues to be discussed. See 19 CFR
351.310(c).
Assessment Rates
The Department shall determine and the Customs Service shall assess
antidumping duties on all appropriate entries. The Department will
issue appropriate appraisement instructions directly to the Customs
Service upon completion of this review. The final results of this
review shall be the basis for the assessment of antidumping duties on
entries of merchandise covered by this review and for future deposits
of estimated duties. We will instruct the Customs Service to assess
antidumping duties on all appropriate entries covered by this review if
any importer-specific assessment rate calculated in the final results
of this review is above de minimis. For assessment purposes, we intend
to calculate importer-specific assessment rates for the subject
merchandise by aggregating the dumping margins calculated for all U.S.
sales examined and dividing this amount by the total entered value of
the sales examined.
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f) to file a certificate regarding
the reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. Failure to comply with this
requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
Cash Deposit Requirements
The following cash deposit requirements will be effective for all
shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of the
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed
company will be that established in the final results of this review,
except if the rate is less than 0.50 percent, and therefore, de minimis
within the meaning of 19 CFR 351.106(d)(1), in which case the cash
deposit rate will be zero; (2) for previously reviewed or investigated
companies not listed above, the cash deposit rate will continue to be
the company-specific rate published for the most recent period; (3) if
the exporter is not a firm covered in this
[[Page 16707]]
review, a prior review, or the original LTFV investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent period for the manufacturer of the merchandise; and (4)
the cash deposit rate for all other manufactures or exporters will
continue to be 85.05 percent, the ``All Others'' rate made effective by
the LTFV investigation. These requirements, when imposed, shall remain
in effect until publication of the final results of the next
administrative review.
This administrative review and notice are published in accordance
with section 751(a)(1) of the Act and 19 CFR 351.221.
Dated: March 31, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-8487 Filed 4-5-99; 8:45 am]
BILLING CODE 3510-DS-P