[Federal Register Volume 65, Number 7 (Tuesday, January 11, 2000)]
[Notices]
[Pages 1597-1601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-634]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-533-808]
Certain Stainless Steel Wire Rod From India; Preliminary Results
and Partial Rescission of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results and partial rescission of
antidumping duty administrative review.
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SUMMARY: In response to a request by Viraj Group, Ltd. (``Viraj''),
respondent, the Department of Commerce (``the Department'') is
conducting an administrative review of the antidumping duty order on
stainless steel wire rod (``SSWR'') from India. The period of review
(``POR'') is December 1, 1997, through November 30, 1998.
We have preliminarily determined that respondent Viraj has made
sales below normal value (``NV''). If these preliminary results are
adopted in our final results of this administrative review, we will
instruct the U.S. Customs service to assess antidumping duties on all
appropriate entries. We invite interested parties to comment on these
preliminary results. Parties who submit arguments in this segment of
the proceeding are requested to submit with the argument: (1) A
statement of the issue, and (2) a brief summary of the argument.
EFFECTIVE DATE: January 11, 2000.
FOR FURTHER INFORMATION CONTACT: Stephen Bailey or Rick Johnson, AD/CVD
Enforcement Group III, Office 9, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0413 (Bailey) or (202) 482-3818 (Johnson).
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (``the Act'') by
the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all references to the Department's regulations are
to the provisions codified at 19 CFR Part 351 (1998).
Background
On October 20, 1993, the Department published in the Federal
Register the antidumping duty order on certain stainless steel wire rod
from India (58 FR 54110). On December 8, 1998, the Department published
in the Federal Register a notice of opportunity to request an
administrative review of this antidumping duty order (63 FR 67646).
On December 29, 1998, Mukand, Ltd. (``Mukand''), Panchmahal Steel,
Ltd. (``Panchmahal'') and Viraj requested an administrative review of
the antidumping duty order on certain stainless steel wire rods from
India. In accordance with 19 CFR 351.221(b), we published a notice of
initiation of the review of Panchmahal and Viraj on January 25, 1999
(64 FR 3682), and published a notice of initiation of the review of
Mukand on February 22, 1999 (64 FR 8542). The review of Mukand was
initiated at a later date due to an inadvertent omission in the January
25, 1999 Federal Register notice. Pursuant to 19 CFR 351.213(d)(1), on
February 23, 1999, Mukand and Panchmahal timely withdrew their requests
for review.
Respondent Viraj submitted its Section A questionnaire response on
March 24, 1999, and its Sections B & C questionnaire responses on April
19, 1999.
On May 11, 1999, petitioners submitted a sales-below-cost
allegation. This allegation was supplemented on July 2, 1999. Based on
the request by petitioners, on July 23, 1999, the Department initiated
a sales-below-cost investigation of stainless steel wire rod by Viraj.
On August 30, 1999, respondent Viraj submitted its response to the
Section D questionnaire. The Department, however, considered this
response to be insufficient and requested Viraj to re-submit its
Section D questionnaire response, which it did on October 14, 1999.
On August 31, 1999, due to the reasons set forth in the Extension
of Time Limit for the Preliminary Results of Antidumping Administrative
Review: Certain Stainless Steel Wire Rod from
[[Page 1598]]
India, the Department extended the due date for the preliminary
results. In accordance with section 751(a)(3)(A) of the Act, the
Department extended the due date for the notice of preliminary results
the maximum 120 days allowable, from the original due date of September
2, 1999, to January 3, 2000.
On November 4, 1999, Viraj asked to withdraw its request for this
review. Pursuant to 19 CFR 351.213(d)(1), if a respondent withdraws its
request for an administrative review within 90 days of the date of
publication of the initiation of the review, the Department will
rescind the review. The Department may extend the time limit if it
decides that it is reasonable to do so. In this case, Viraj's request
for rescission has not been granted because the request was filed after
the 90 day deadline had passed (the administrative review was initiated
on January 25, 1999), and we do not find that it is otherwise
reasonable to do so (see Partial Rescission of Review, below, for
details).
From December 6-11, 1999, the Department conducted a sales and cost
verification of Viraj at its production facilities in Tarapur, India.
The results of this verification are contained in the sales and cost
verification reports for Viraj, public versions of which are on file in
the Department's Central Records Unit, Room B-099 of the Main Commerce
Building.
Scope of the Review
Imports covered by this review are shipments of SSWR from India.
SSWR are products which are hot-rolled or hot-rolled annealed and/or
pickled rounds, squares, octagons, hexagons or other shapes, in coils.
SSWR are made of alloy steels containing, by weight, 1.2 percent or
less of carbon and 10.5 percent or more of chromium, with or without
other elements. These products are only manufactured by hot-rolling and
are normally sold in coiled form, and are of solid cross-section. The
majority of SSWR sold in the United States are round in cross-section
shape, annealed and pickled. The most common size is 5.5 millimeters in
diameter.
The SSWR subject to this review are currently classifiable under
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030,
7221.00.0040, 7221.00.045, 7221.00.0060, 7221.00.0075, and 7221.00.0080
of the Harmonized Tariff Schedule of the United States (``HTSUS'').
Although the HTSUS subheading is provided for convenience and customs
purposes, the written description of the merchandise under review is
dispositive.
Partial Rescission of Review
Pursuant to 19 CFR 351.213(d)(1) of the Department's regulations, a
party that requests an administrative review may withdraw such request
within 90 days of the date of publication of the notice of initiation
of the administrative review. As noted above in the ``Background''
section, because Mukand and Punchmahal have timely withdrawn their
requests for review, the Department is rescinding the review with
respect to these two companies. This rescission of administrative
review and notice are in accordance with section 751(a)(1) of the Act
and 19 CFR 351.213(d)(1). By contrast, Viraj did not withdraw its
request for an administrative review in a timely manner. Although under
section 351.213(d)(1) the Department may extend the deadline for
withdrawing a request for review, in this case Viraj did not ask for
recission of the review until after the Department had expended
substantial resources in conducting the review. In adopting section
351.213(d)(1) the Department explained that we would take into
consideration how much time and effort had been devoted to a review in
deciding whether to permit an untimely withdrawal of request for
review. Antidumping Duties; Countervailing Duties; Final Rule, 62 FR
27296, 27317 (1997). In this particular case, the Department has
solicited and received multiple questionnaire responses and
supplemental responses from respondent, and, as discussed above, has
initiated a sales-below-cost investigation. Therefore, we have
continued with this review with respect to Viraj.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondent, covered by the description in the
``Scope of the Review'' section, above, and sold in the comparison
market during the POR, to be foreign like products for purposes of
determining appropriate product comparisons to U.S. sales. Because
there were no contemporaneous sales of identical or similar foreign
like product in the comparison market to compare to U.S. sales, we
compared U.S. sales to constructed value (``CV'').
Date of Sale
While the Department normally will use the date of invoice as the
date of sale, we have determined in this case that the purchase order
date better reflects the date on which Viraj established the material
terms of sale. In this case, Viraj stated in its April 19, 1999
questionnaire response that the material terms of sale are set at order
date. This claim was confirmed at verification. See Memorandum to the
File: Certain Stainless Steel Wire Rod from India--Antidumping
Administrative Review 12/01/97 through 11/30/98--Verification of Viraj
Impoexpo's (``VIL'') and Viraj Alloys (``VAL'') Sales (``Sales
Verification Report''), at page 5 (January 3, 2000). Although by using
the order date as date of sale the U.S. sales fall outside of the POR,
the Department has the discretion to consider U.S. sales which fall
outside of the POR in its analysis. In accordance with the Department's
practice, we reviewed sales of merchandise shipped to the United States
during the POR.
Affiliation
Viraj is composed of three different companies, two of which are
involved in the production and sale of subject merchandise. Viraj
Forgings Ltd., which produces steel forgings, is not involved in the
production or sale of SSWR. Viraj Alloys, Ltd. (``VAL'') produces steel
billets which are transferred to Tata SSL, Ltd. (``Tata''), an
unaffiliated Indian steel company, which is subcontracted to roll the
billets as a tolling operation. VAL then sells the rolled billets to
Viraj Impoexpo, Ltd. (``VIL''), which anneals and pickles a certain
percentage of the rolled billets into SSWR and subsequently exports the
subject merchandise.
Normal Value Comparisons
To determine whether sales of subject merchandise to the United
States were made at less than normal value, we compared the Export
Price (``EP'') to the NV, as described in the ``Export Price'' and
``Normal Value'' sections of this notice.
Export Price
For calculation of the price to the United States, we used EP, in
accordance with section 772(a) of the Act, because the subject
merchandise was first sold by Viraj to an unaffiliated purchaser in the
United States prior to importation and CEP treatment was not otherwise
indicated. The Department calculated EP for Viraj based on packed,
delivered prices to customers in the United States. We made deductions
from the starting price for movement expenses (foreign inland freight,
ocean freight, insurance, and brokerage and handling) in accordance
with section 772(c)(2) of the Act. Additionally, we added to the U.S.
price an amount for duty drawback pursuant to section
[[Page 1599]]
772(c)(1)(B) of the Act. For a further discussion of duty drawback, see
Sales Verification Report, at pages 11-12, January 3, 2000. As
discussed above in the ``Date of Sale'' section, we used order date as
the date of sale.
Normal Value
After testing (1) home market viability and (2) whether comparison
market sales were at below-cost prices, we calculated NV as noted in
the ``Price-to-CV Comparisons'' section of this notice.
1. Comparison Market Viability
Viraj had no sales of the subject merchandise in the home market
during the POR. Moreover, the only market outside the United States to
which Viraj sold the foreign like product during the POR was Turkey. In
order to determine whether there is a sufficient volume of sales in
Turkey to serve as a viable basis for calculating NV, we compared
Viraj's volume of third country sales of the foreign like product to
the volume of U.S. sales of the subject merchandise, in accordance with
section 773(a)(1)(B)(ii) of the Act. Because Viraj's aggregate volume
of third country sales to Turkey was greater than five percent of its
aggregate volume of U.S. sales for the subject merchandise, we based
our NV analysis on the prices at which the foreign like product was
first sold for consumption in Turkey.
2. Cost of Production Analysis
On May 11, 1999, petitioners filed an allegation that Viraj made
third country sales at prices that were below the cost of production
(``COP''), and supplemented this allegation on July 2, 1999. Our
analysis of the allegation indicated that there were reasonable grounds
to believe or suspect that Viraj had sold SSWR in the third country
market at prices less than the COP. Accordingly, on July 23, 1999,
pursuant to section 773(b) of the Act, we initiated a COP investigation
to determine whether sales were made at prices less than the COP.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of Viraj's cost of materials and fabrication for the
foreign like product, including the cost of the tolling operation
performed by Tata, plus an amount for third country selling, general
and administrative expenses (``SG&A''), including interest expenses,
and packing costs, with the following exceptions.
1. Billet-Major Input
In its original section D questionnaire response, dated August 30,
1999, VIL reported that it purchases the billets used in the production
of SSWR from VAL (after Tata further processes the billets). Because
the billets are produced by VAL, an affiliate of VIL, and because the
billets are a major input in the production of SSWR sold by VIL, the
major input rule should be applied to value the billets that VIL
obtained from VAL (see Notice of Final Results and Partial Recission of
Antidumping Duty Administrative Review: Certain Pasta From Italy, 64 FR
6615, 6621 (February 10, 1999)). The major input rule of section
773(f)(3) of the Act provides that the Department may value inputs
obtained from affiliated parties at the highest of the transfer price,
market price, or the affiliated supplier's costs. See, 19 CFR Section
351.407(b). In this instance, the Department found at verification that
the transfer price is identical to the market price and above VAL's
cost of production. See Memorandum to the File: Certain Stainless Steel
Wire Rod from India-Antidumping Administrative Review 12/01/97 through
11/30/98--Verification of Viraj Impoexpo's (``VIL'') and Viraj Alloys
(``VAL'') Cost of Production (``Cost Verification Report'') at page 8
(January 3, 2000). Therefore, we are valuing input billets at the
transfer price, as reported in verification exhibit 15 of the Cost
Verification Report.
2. Fixed Overhead Costs
At verification, the Department determined that Viraj did not
include the account items ``Material Handling Charges'' (i.e., freight
expenses) and ``Repairs to Plant & Machinery'' in its calculation of
fixed overhead costs. See Cost Verification Report at page 11. Because
these expenses relate to the production of subject merchandise, we have
determined that they should be included as fixed overhead costs.
Accordingly, we have recalculated the ratio of fixed overhead costs to
the cost of goods sold and adjusted the total cost of manufacture. See
Memorandum to the File: Analysis Memorandum for the Preliminary Results
of Review for Viraj (``Analysis Memorandum'') at page 5.
3. Variable Overhead Costs
At verification, the Department found a minor error by Viraj in its
calculation of the variable overhead costs for light diesel oil. Based
on this finding, we have revised Viraj's reported variable overhead
cost. See Analysis Memorandum at page 5.
4. General and Administrative (``G&A'') Expenses
At verification, the Department found that Viraj improperly
included selling expenses in its calculation of G&A expenses.
Therefore, for purposes of these preliminary results, we have
recalculated the G&A factor. See Analysis Memorandum at page 4.
5. Interest Expenses
At verification, the Department found that in addition to reporting
bank charges as a direct selling expense in its Section B & C response,
Viraj reported banking charges in its calculation of net interest
expense. Therefore, for purposes of these preliminary results, we have
excluded banking charges from the calculation of net interest expense.
Additionally, at verification we found that Viraj deducted from net
interest expense an amount for interest usance charges. Because these
charges were not reported by Viraj in its U.S. or home market sales
file as a direct selling expense, we preliminarily find that these
interest usance charges should be included in Viraj's net interest
expense. See Analysis Memorandum at page 5.
6. Packing
At verification, the Department found that Viraj calculated its POR
packing cost based on the sample cost of packing materials during the
POR, and requested that Viraj recalculate packing expenses based on the
weighted-average POR cost of packing materials. For purposes of these
preliminary results, we have used the recalculated packing expense as
explained in the Sales Verification Report at page 10.
B. Test of Third Country Market Sales Prices
We compared the weighted-average COP figures to third country
market sales of the foreign like product as required under section
773(b) of the Act, in order to determine whether these sales were made
at prices below COP. In determining whether to disregard third country
market sales made at prices less than the COP, we examined whether: (1)
Within an extended period of time, such sales were made in substantial
quantities, and (2) such sales were made at prices which permitted the
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the third country market prices,
less any applicable movement charges.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C), where more than 20 percent of
respondent's sales of a given product
[[Page 1600]]
were at prices less than the COP, we disregard any below-cost sales of
that product because we determined that the below-cost sales were made
in ``substantial quantities.'' As a result of our COP test, we
preliminarily determine to disregard certain below-cost sales during
the POR. However, as mentioned above, because there were no
contemporaneous comparison market matches, we have not used Viraj's
third country sales as the basis for normal value.
Calculation of Constructed Value
In accordance with section 773(a)(4) of the Act, we used CV as the
basis for NV because there were no contemporaneous sales of the foreign
like product in the comparison market. We calculated CV in accordance
with section 773(e)(1) of the Act based on the sum of respondent's cost
of materials, fabrication, SG&A, including interest expenses, and
profit. We calculated the COP included in the calculation of CV as
noted above, in the ``Calculation of COP'' section of the notice. In
accordance with section 773(e)(2)(A) of the Act and 19 CFR
351.405(b)(1), we based SG&A and profit on the amounts incurred and
realized by the respondent in connection with the production and sale
of the foreign like product, in the ordinary course of trade, for
consumption in the foreign country.
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 level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. For EP, the U.S. LOT is the level of the starting-price
sale, which is usually from exporter to importer. As discussed above,
all of Viraj's sales to the U.S. were EP sales.
To determine whether NV sales are at a different LOT than EP, we
examine 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 the present review, Viraj did not request a level of trade (LOT)
adjustment. To ensure that no such adjustment was necessary, in
accordance with the principles discussed above, we examined information
regarding the distribution systems in both the U.S. and third country
market, including the selling functions, classes of customers, and
selling expenses.
In both the third country comparison market and the United States,
Viraj reported one LOT and one distribution system with one class of
customer (distributors). Viraj stated that it manufactures the
merchandise after receipt of a final confirmed order and sells directly
to its customers in the comparison market and in the United States on a
CIF basis. Viraj reported that it uses a forwarding agent for sales to
the United States but that in all other aspects it performs identical
selling functions in both the third country comparison market and the
United States. These selling functions include soliciting inquiries
from customers, negotiating with customers, and procurement of export
orders. Further, Viraj reported that it did not provide other sales-
related services on any of its sales, such as inventory maintenance,
technical advice, warranty services, or advertising. Therefore, we
preliminarily conclude that Viraj performs identical selling functions
in the comparison market and the United States and that a LOT
adjustment is not warranted.
Price-to-CV Comparisons
For price-to-CV comparisons, we made a circumstance-of-sale
adjustment by deducting third country market direct selling expenses
(i.e., imputed credit and banking charges) and adding U.S. direct
selling expenses (i.e., imputed credit and banking charges). For
computing credit expenses, it is the Department's normal practice to
use an interest rate applicable to loans in the same currency as that
in which the sales are denominated (see, e.g., Analysis for the
preliminary determination in the investigation of stainless steel plate
in coils from Korea--Pohang Iron & Steel Company, 63 FR 59535 (November
4, 1998). We note that while all sales to the United States are
denominated in U.S. dollars, the short-term interest rate used by Viraj
was derived from loans denominated in rupees. Therefore, we have not
accepted Viraj's reported credit expense for its U.S. sales and have
instead calculated an imputed credit expense for these sales using the
U.S. weighted-average effective rate on commercial and industrial loans
over one month and under one year made by all commercial banks. The
Federal Reserve calculates this rate quarterly. Loan rates were
collected from the four quarters corresponding to the POR and then
weight-averaged by the amount of loans made in each quarter. All
calculations are shown at Appendix I of the Analysis Memorandum.
Additionally, at verification, we found that for its U.S. sales,
Viraj did not include banking charges in the field ``Other Direct
Selling Expenses'' as stated in its supplemental response, dated June
25, 1999, at page 3. See Sales Verification Report at page 10.
Therefore, for purposes of these preliminary results, we have used the
information obtained at verification to determine banking charges for
the sales in issue. See Analysis Memorandum, at page 5.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following weighted-average dumping margin exists for Viraj for the
period December 1, 1997, through November 30, 1998:
------------------------------------------------------------------------
Margin
Manufacturer/Exporter (percent)
------------------------------------------------------------------------
Viraj..................................................... 2.76
------------------------------------------------------------------------
The Department will disclose calculations performed in connection
with this preliminary determination 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
two days after the scheduled date for submission of rebuttal briefs.
Issues raised in the hearing will be limited to those raised in the
case briefs. Case briefs from interested parties may be submitted not
later than 30 days after the date of publication of this notice in the
Federal Register; rebuttal briefs may be submitted not later than five
days thereafter. The Department will publish the final results of this
administrative review, including its analysis of issues raised in any
written comments or at a hearing, not later than 120 days after the
date of publication of this notice.
Upon issuance of the final results of this review, the Department
shall determine, and the U.S. Customs Service shall assess, antidumping
duties on all appropriate entries. If these preliminary results are
adopted in our final results, we will instruct the Customs Service to
assess antidumping duties on the merchandise subject to
[[Page 1601]]
review. Upon completion of this review, the Department will issue
appraisement instructions directly to the Customs Service. In
accordance with 19 CFR 351.212(b), if applicable, we will calculate an
importer-specific ad valorem duty assessment rate based on the ratio of
the total amount of antidumping duties calculated for the examined
sales to the total customs value of the sales used to calculate those
duties. This rate will be assessed uniformly on all entries of that
particular importer made during the POR.
Furthermore, the following 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 these administrative reviews, as provided by section
751(a)(1) of the Act: (1) For Viraj, a deposit equal to the above
margin will be required; (2) if the exporter is not a firm covered in
this review, a prior review, or the original 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 (3)
the cash deposit rate for all other manufacturers or exporters will
continue to be 48.80 percent, the ``All Others'' rate made effective by
the original investigation.
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) 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.
This determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: January 3, 2000.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-634 Filed 1-10-00; 8:45 am]
BILLING CODE 3510-DS-P
