[Federal Register Volume 63, Number 12 (Tuesday, January 20, 1998)]
[Notices]
[Pages 2952-2959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-1277]
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DEPARTMENT OF COMMERCE
[A-405-802]
Certain Cut-to-Length Carbon Steel Plate From Finland; Final
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of Antidumping Duty Administrative
Review.
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SUMMARY: On July 15, 1997, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on certain cut-to-length carbon steel plate from
Finland (62 F.R. 37866). The review covers one manufacturer/exporter,
Rautaruukki Oy (Rautaruukki), for the period August 1, 1995 through
July 31, 1996.
EFFECTIVE DATE: January 20, 1998.
FOR FURTHER INFORMATION CONTACT: Heather Osborne or Linda Ludwig,
Enforcement Group III, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, D.C. 20230; telephone (202) 482-
3019 or (202) 482-3833, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 15, 1997, the Department of Commerce (the Department)
published in the Federal Register (62 FR 37866) the preliminary results
of its administrative review of the antidumping duty order on certain
cut-to-length carbon steel plate from Finland (58 FR 44165, August 19,
1993). The Department has now completed this administrative review in
accordance with section 751 of the Tariff Act of 1930, as amended (the
Act).
Under section 751(a)(3)(A) of the Act, the Department may extend
the deadline for completion of an administrative review if it
determines that it is not practical to complete the review within the
statutory time limit of 365 days. On November 3, 1997, the Department
extended the time limits for the final results in this case. See
Extension of Time Limit for Antidumping Duty Administrative Review, 62
FR 60683 (November 12, 1997).
Applicable Statute and Regulations
Unless otherwise stated, all citations to the Tariff Act of 1930,
as amended (the Tariff Act) are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the
Tariff Act by the Uruguay Round Agreements Act (URAA). In addition,
unless otherwise indicated, all references to the Department's
regulation are to 19 CFR part 353 (April 7, 1997).
Scope of the Review
The products covered by this administrative review constitute one
``class or kind'' of merchandise: certain cut-to-length carbon steel
plate. These products include hot-rolled carbon steel universal mill
plates (i.e., flat-rolled products rolled on four faces or in a closed
box pass, of a width exceeding 150 millimeters but not exceeding 1,250
millimeters and of a thickness of not less than 4 millimeters, not in
coils and without patterns in relief), of rectangular shape, neither
clad, plated nor coated with metal, whether or not painted, varnished,
or coated with plastics or other nonmetallic substances; and certain
hot-rolled carbon steel flat-rolled products in straight lengths, of
rectangular shape, hot rolled, neither clad, plated, nor coated with
metal, whether or not painted, varnished, or coated with plastics or
other nonmetallic substances, 4.75 millimeters or more in thickness and
of a width which exceeds 150 millimeters and measures at least twice
the thickness, as currently classifiable in the Harmonized Tariff
Schedule (HTS) under item numbers 7208.40.3030, 7208.40.3060,
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000,
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030,
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, and
7212.50.0000. Included are flat-rolled products of nonrectangular
cross-section where such cross-section is achieved subsequent to the
rolling process (i.e., products which have been ``worked after
rolling'') for example, products which have been beveled or rounded at
the edges. Excluded is grade X-70 plate. These HTS item numbers are
provided for convenience and Customs purposes. The written description
remains dispostive.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received briefs and rebuttal comments from
Bethlehem Steel Corporation, U.S. Steel Group, a Unit of USX
Corporation, Inland Steel Industries, Inc., LTV Steel Company, Inc.,
National Steel Corporation, AK Steel Corporation, Gulf States Steel
Inc. of Alabama, Sharon Steel Corporation, and WCI Steel Inc.,
petitioners, and from Rautaruukki Oy (Rautaruukki), a producer/exporter
of the subject merchandise. At the request of petitioners and
respondent, we held a hearing on October 31, 1997.
Comment 1: Petitioners argue that Rautaruukki's interest revenues
should be accounted for and that the Department should adjust
Rautaruukki's home market sales prices to account for unreported late
payment charges. Petitioners contend that Rautaruukki's stated policy
of charging interest to all of its customers for late payments
conflicts with Rautaruukki's assertion that in practice, its customers
rarely pay interest. Petitioners note that Rautaruukki enters all
interest revenues into one general account and argue that charges for
late payments constitute interests revenue.
Petitioners assert that the Department confirmed at verification
that Rautaruukki's financial records account for total interest revenue
received in 1996, but that no information was provided for 1995.
Petitioners argue that neither of the transactions cited by respondent
support Rautaruukki's claim that it did not accrue and receive interest
revenue. Petitioners state that the Department should employ facts
available in calculating Rautaruukki's interest revenue due to
respondent's failure to provide information on interest revenue earned
in 1995 and its failure to identify the sales for which late payment
charges were assessed. Petitioners state that, as facts available, the
Department should calculate an interest revenue adjustment for all
sales for which, pursuant to their terms of payment, payment was
recorded as late.
[[Page 2953]]
Respondent claims that it has reported interest revenue, and no
further adjustment is required. Respondent states the Department
verified that interest revenue was properly reported. Respondent
contends that it has provided information on the total interest revenue
which it received during calender year 1995 and 1996.
Department Position: We partially agree with both petitioners and
respondent. At verification, the Department specifically identified one
sale solely for verification of interest revenue. As noted in the
verification report, the Department verified that for this sale, no
interest revenue was received. See Sales Verification Report at 24. We
also examined other sales for which the customer had initially been
billed for late charges (interest revenue) that were ultimately not
paid by the customer. These sales were also properly reported.
Rautaruukki reported a negative amount for interest revenue in 1995,
and a positive amount for 1996. See Respondent's Rebuttal Brief of
September 15, 1997, at 11. Rautaruukki did not, however, allocate
interest revenue to 1996 sales in its sales database.
Section 776(a)(2) of the Act provides that if an interested party
or any other persons--(A) withholds information that has been requested
by the administering authority; (B) fails to provide such information
by the deadlines for the submission of the information or in the form
and manner requested, subject to subsections (c)(1) and (e) of section
782; (C) significantly impedes a proceeding under this title; or (D)
provides such information but the information cannot be verified as
provided in section 782(i), the administering authority shall, subject
to section 782(d), use the facts otherwise available in reaching the
applicable determination under this title.
Because Rautaruukki did not report any interest revenue in its
sales database, although the interest revenue was received, the
Department must, pursuant to section 776, use facts otherwise available
in these final results. We are allocating as facts available the amount
of interest revenue reported for 1996 to all 1996 sales on a per-ton
basis.
Comment 2: Petitioners argue that Rautaruukki's submitted gross
unit prices should be adjusted, because the Department found a very
large discrepancy with respect to the reported gross unit price of a
pre-selected home market sale. Petitioners claim Rautaruukki deducted
the full amount of the credit from the selected sale rather than
applying this credit to all sales listed on the invoice. Petitioners
contend that since the error was uncovered pursuant to a small
sampling, this suggests that similar errors may well exist elsewhere in
the dataset. Petitioners argue that based upon variation in prices
within a given product control number, the understatement discovered by
the Department at verification could also exist in other product
control numbers and, in fact, pervade the dataset. Petitioners contend
that the Department should make an adjustment to the entire dataset to
account for the errors uncovered with the sample sales. Specifically,
petitioners suggest that gross unit prices be increased by the
percentage that the samples sales were under-reported.
Respondent argues that it has submitted correct home market gross
unit price data and that no adjustment is warranted. Respondent claims
that the discrepancy in question was the result of offsetting a credit
to a customer against a single line item or transaction which was one
of several transactions on a single invoice. Respondent argues that
this allocation error works both ways. Although the gross unit price of
the sale in question was artificially depressed, the gross unit prices
of the remaining transactions on the invoice were artificially
increased. Overall, according to Rautaruukki, the errors offset each
other. Respondent also contends that, as noted during the sales
verification, this was a special project credit involving an end-user
(shipyard) in Finland, and that such special or one-time projects are
rare. Moreover, respondent notes that the Department's verification of
other home market sales did not disclose a similar problem.
Department Position: We agree with respondent. At verification, we
found that, for one sale a credit to a customer was offset against a
single line item, rather than crediting this amount to all the items to
which it applied. We agree with respondent that the consequences of
this allocation error serve to artificially depress the gross unit
price of the sale in question, while artificially increasing the gross
unit prices of the remaining transactions on the invoice. We noted that
the one sale in question was found to be below cost, and is therefore
already being excluded from our calculation of normal value. We found
no evidence at verification of any other discrepancies in the reporting
of gross unit prices. No further adjustment of reported gross unit
prices is warranted for these final results.
Comment 3: Petitioners state that Rautaruukki should be denied any
home market credit expense adjustment because the Department determined
at verification that the Finnish short-term interest rate that
Rautaruukki used to calculate the reported home market credit expense
could not be verified. Petitioners argue that the Department must use
facts available in establishing the interest rate applicable to the
calculation of the home market credit expense, and deny Rautaruukki any
home market credit expense adjustment for the final results.
Respondent argues that it submitted information on its home market
interest rate and the Department verified Rautaruukki's total interest
expenses. Respondent claims that due to time constraints during the
sales verification, the Department chose to postpone the verification
of Rautaruukki's home market interest rate until the cost verification.
Rautaruukki states that during the cost verification the Department
reviewed Rautaruukki's interest expense worksheet and verified
Rautaruukki's total interest cost. Additionally, Rautaruukki claims
that it provided the Department with detailed information regarding
borrowings during the POR. Hence, in respondent's view, Rautaruukki's
home market interest rate was reported to the Department and is readily
verifiable.
Department Position: We agree with petitioners that we were unable
to verify Rautaruukki's home market interest rate. The verification
report states that, [w]e were unable to verify Rautaruukki's U.S. or HM
interest rates during sales verification. See Sales Verification Report
at 23. Respondent's claim that the Department chose to postpone the
verification of Rautaruukki's home market interest rate until the cost
verification is false. We were prepared to conduct this portion of the
verification during the sales verification; however, as noted in the
verification report, respondent simply referred us to prior submissions
listing short-term borrowings. No original loan agreements or proof of
payment relative to these loans were provided to the sales verification
team. While the cost verification team examined information relating to
respondent's overall interest expense, it was unable to verify the
interest rate claimed by Rautaruukki in its home market credit
calculation. As a result of the failure on the part of respondent to
support a claimed adjustment, and thus our inability to verify that
claim, we must use partial facts available pursuant to Section 776(a)
of the Act. Thus, as facts available we are denying an adjustment for
home market credit expenses for these final results.
[[Page 2954]]
Comment 4: Petitioners claim that the Department should use facts
available to calculate Rautaruukki's U.S. credit expense because
Rautaruukki used Finnish interest rates rather than interest rates
related to U.S. borrowing in its calculation of credit, and that the
Finnish rate submitted by Rautaruukki could not be verified.
Petitioners contend that the Department should use an interest rate of
nine percent, the short-term interest rate in effect during the POR
which the U.S. Customs Service charged on underpayment of antidumping
duties.
Respondent claims that it had no U.S. borrowings during the POR.
Rautaruukki states that in view of the Department's verification of
Rautaruukki's total interest expense and in light of the fact that
Rautaruukki had no U.S. borrowings, the Department should use the
Finnish short-term borrowing rate submitted by Rautaruukki for the
calculation of its U.S. credit expenses.
Department Position: We partially agree with petitioners. It is
Department practice to use a U.S. interest rate in the calculation of
U.S. credit expenses. If a respondent does not have such borrowing, the
questionnaire instructs the party to use a U.S. published commercial
bank prime short-term lending rate. Rautaruukki did not do so.
Moreover, as noted in Comment 3 above, the Department was unable to
verify respondent's home market interest rate. Therefore, pursuant to
Section 776 of the Act, the Department must use facts available to
calculate Rautaruukki's U.S. credit expense.
In Certain Cut-to-Length Carbon Steel Plate from Sweden; Final
Results of Antidumping Duty Administrative Review, 61 FR 15772, 15780
(April 9, 1996) and Certain Corrosion-Resistant Carbon Steel Flat
Products from Australia; Final Results of Antidumping Duty
Administrative Reviews, 61 FR 14049, 14054 (March 29, 1996) the
Department selected the average short-term lending rates calculated by
the Federal Reserve as surrogate U.S. interest rates. These rates
represent a reasonable surrogate for respondents' U.S. dollar borrowing
rates because they are calculated based on a variety of actual dollar
loans to actual U.S. customers. We have employed this methodology as
facts available in calculating Rautaruukki's U.S. credit expense using
the average short-term dollar lending rate effective during the POR.
See Analysis Memorandum, dated December 15, 1997.
Comment 5: Petitioners argue that the Department should adjust
Rautaruukki's movement expenses related to international freight
charges. Petitioners note that Rautaruukki's movement expenses are
based on affiliated party transactions with JIT-Trans. In this
situation, petitioners note that the Department tests whether movement
expenses based on affiliated party transactions reflect arm's-length
transactions by comparing those expenses to movement expenses
pertaining to non-affiliated party transactions. Petitioners reject
Rautaruukki's claim that JIT-Trans's transfer prices reflect an arm's-
length price merely because JIT-Trans is profitable overall. In
petitioners' view, this claim is contradicted by a direct comparison of
JIT-Trans' charge to Rautaruukki with its charge to an unaffiliated
party. Petitioners claim that for the final results, the Department
should revise this expense upwards by the percentage that the price to
the unaffiliated party exceeded that charged to respondent.
Respondent alleges no additional adjustment is required by the
Department to its reported movement expenses other than the adjustment
already made for affiliated party mark-up charges. Respondent claims
that at verification, Rautaruukki provided the Department with
documentation to compare movement expenses from arm's length
transactions between Rautaruukki and JIT-Trans and movement expenses
from transactions between JIT-Trans and non-affiliated party Outokumpu
Oy, a Finnish producer of stainless steel products. Rautaruukki cites
the explanation for the higher prices charged Outokumpu in the sales
verification report: ``[t]he rate charged the unaffiliated party is
somewhat higher * * * because in the winter it is more expensive to go
farther north (due to the ice) and also because it is more expensive to
make an additional stop.'' Respondent contends that the Department
concluded that transactions between Rautaruukki and JIT-Trans are at
arm's length and argues that no additional adjustment by the Department
is required for movement expenses.
Department Position: We partially agree with petitioners.
Respondent did not demonstrate that transactions between Rautaruukki
and JIT-Trans are at arm's length. In fact the prices charged to an
unaffiliated party are greater than those charged to respondent.
Respondent asserted at verification that ``[t]he rate charged the
unaffiliated party is somewhat higher * * * because in the winter it is
more expensive to go farther north (due to the ice) and also because it
is more expensive to make an additional stop.'' Given the geographic
location of Rautaruukki and Outokumpu Oy, we find respondent's
explanation that some price differential is attributable to the
additional expense of going farther north in the winter to be
reasonable. However the charges to the affiliated party are higher in
summer as well as in winter. (See Sales Verification Exhibit 26). For
these final results, therefore, we are increasing Rautaruukki's
reported U.S. movement expenses for all shipments by the absolute value
of the amount of the difference in price charged the unaffiliated party
and Rautaruukki for the summer. See Analysis Memorandum dated December
15, 1997.
Comment 6: Respondent claims that the Department erred in its
selection of a weight conversion factor. Respondent states that the
Department chose to apply as facts available the lowest conversion
factor submitted by Rautaruukki, or 0.9059, because the Department was
unable to verify respondent's reported weight conversion factors.
Rautaruukki alleges that this conversion factor is aberrational and the
Department's use of this factor distorts the verified information
submitted by Rautaruukki. Rautaruuki claims that only one product
control number in its database had a conversion factor of 0.9059, and
that this product control number contains only one observation, a sale
of painted plate. Respondent argues that this sale is not an identical
or similar match to its U.S. sales under the Department's mode match
criteria. Respondent notes that under the Department's model match
hierarchy, painted versus not painted is the first factor to be
considered. The respondent explained that none of its U.S. sales are of
painted plate and argues that in selecting a conversion factor of
0.9059, based solely on painted plate, the Department selected an
aberrant non-representative factor. Respondent argues that its
submitted data are the most accurate weight conversion factors.
Respondent contends that its calculation of theoretical weight was
explained in its submissions and at verification. In the event the
Department continues to apply a facts available conversion factor,
Rautaruukki urges the Department to apply an average of its reported
factors, or 0.9870. Respondent argues that unlike the factor used in
the preliminary results, at least this factor would be representative
of Rautaruukki's submitted data.
Petitioners claim that the facts available weight conversion factor
selected by the Department is appropriate. Petitioners disagree that
the
[[Page 2955]]
conversion factor used by the Department is aberrational. Further,
petitioners argue that because Rautaruukki failed to provide sufficient
support for any of its conversion factors at verification, the
Department may make an adverse inference to ensure that the respondent
does not benefit from its failure to provide the necessary information.
See Certain Internal Combustion Industrial Forklift Trucks from Japan,
62 FR 5592, 5594-95 (Feb. 6, 1997). Petitioners note that the
Department may use as facts available data that are reported by the
respondent or any other data it deems appropriate. See Uruguay Round
Agreements Act, Statement of Administrative Action, A.R. Doc. No. 103-
316, 103d cong., 2d sess. at 869-870. Petitioners claim there is no
requirement that the facts available selected by the Department reflect
the actual data or be the most recent information. See e.g., Rhone
Poulenc, Inc., v. United States, 899 F.2d 1185, 1190 (Fed. Cir. 1990);
Mitsubishi Belting Limited and MBL (USA) Corp. v. United States, Slip
Op. No. 97-28, (CIT March 12, 1997) at 5. As the Department could not
verify the conversion factors used by Rautaruukki, in petitioners'
view, there is no reason to believe that an average of these unverified
factors would be more accurate than the factor used by the Department.
Petitioners add that using an average factor would essentially reward
Rautaruukki for its failure to provide verifiable conversion factors.
Petitioners conclude that the use of an average factor would not
satisfy the Department's need to make an adverse inference in this
instance and urge the Department to continue to use the factor employed
in the preliminary results for the final results.
Department's Position: We agree with petitioners. By not providing
verifiable weight conversion factors, when respondent could have done
so, we have determined that respondent failed to cooperate by not
acting to the best of its ability to comply with a request for
information. See Certain Cut-to-Length Carbon Steel Plate From South
Africa, 62 FR 61731 (November 19, 1997). The Department first learned
that Rautaruukki had not reported sale-specific weight conversion
factors at sales verification. Rather, we were told, weight conversion
factors were calculated for each product control number. The
verification outline clearly states: Provide worksheets showing any
conversions from actual to theoretical weight. Rautaruukki did not
prepare any such worksheets in advance of verification. When asked at
verification to support the weight conversion calculation for a
specific product control number, Rautaruukki was unable to do so in the
time available at the verification. Consequently, pursuant to section
776(b) of the Act, an adverse inference is warranted in selecting facts
available. Thus as facts available, we are continuing to use the weight
conversion factor employed in the preliminary results of review. See
Certain Cut-to-Length Carbon Steel Plate from Finland, 62 FR at 37,876.
Comment 7: Respondent alleges that the Department erred by failing
to consider subject merchandise which is manufactured to shipbuilding
specification ``A'' as identical merchandise. Respondent claims that
its customers sometimes demand that identical merchandise, such as
shipbuilding plate grade ``A,'' be certified by the national
classification society of the country in which the product will be
used. Respondent states that the Department has treated all of the
grade ``A'' shipbuilding plate, other than the grade used in the United
States, as most similar to this grade, and that the Department assigned
a unique weight to the U.S. specification and a different but uniform
weight to all other grade ``A'' shipbuilding plate. Respondent claims
that the Department is treating identical merchandise differently based
on the identity of the classification society. Respondent contends that
it demonstrated repeatedly during this administrative review that all
grade ``A'' shipbuilding plate subject merchandise manufactured to the
``A'' specification of shipbuilding plate is the same product,
regardless of the classification society which provides the
certification. Respondent claims that irrespective of national
classification society, all grade ``A'' shipbuilding steel has
identical chemistry, delivery condition, elongation, yield strength and
tensile strength. Respondent claims that it provided mill certificates,
which show not only that the chemical and physical properties are the
same for all shipbuilding grade ``A'' steel, but also demonstrate that
steel from the same cast or heat was used to meet orders for grade
``A'' shipbuilding plate sold to different classification society
certifications. Respondent states that it described the procedures that
it underwent in order to qualify as a supplier of shipbuilding steels,
and notes that in order to be qualified, the various national
certification societies used common test pieces and test results.
Respondent argues that this interchangeability of test pieces supports
its claim that this material is identical and that the various
societies apply the same standard for this material.
Petitioners did not comment on this issue.
Department Position: We disagree with respondent. Respondent's
argument is based on an examination of the plate that was produced. As
we have explained to respondent in this proceeding, the plate
specification variable refers to the physical characteristics of the
specification. See Analysis Memorandum for the preliminary results of
the third administrative review of Certain Cut-to-Length Carbon Steel
Plate From Finland (July 7, 1997). Thus, while it is possible to
produce plate so that the same plate meets multiple national standards,
this in no way demonstrates that the standards themselves are
identical. As noted in the final results of the second review, prices
can vary based on the specifications to which the product is sold, even
though the product is physically identical. See Certain Cut-to-Length
Carbon Steel Plate from Finland; Final Results of Antidumping Duty
Administrative Review. 62 FR 18468 (April 15, 1997). See also analysis
memo. We continue to find that there are certain differences between
the various national specifications for grade A shipbuilding plate and
are not changing the weights assigned to these products for these final
results. We do note, however, that as there was no plate sold in the
home market that was made to the same specification as the shipbuilding
steel sold in the United States, maintaining the weights assigned to
various products will not affect the home market models that are
matched to U.S. sales.
Comment 8: Respondent argues that the Department erred by comparing
normal cut-to-length carbon steel plate sold to the U.S. market with
beveled plate sold in the home market. Respondent claims that beveled
plate is a structural steel product which requires separate and
additional manufacturing and handling on a different product line.
Respondent notes that it has created a special field to identify
beveled plate as well as other prefabricated plate products, which may
have the same physical characteristics as basic cut-to-length plate,
but are manufactured by different processes and have different end
uses. Respondent also notes that it has provided information about the
different and additional costs associated with the production of
beveled plate. Respondent contends that the Department has verified
that beveled plate requires additional processing and the different
nature of the product is reflected in
[[Page 2956]]
Rautaruukki's price list which established an (extra) for beveled
plate.
Petitioners allege respondent has failed to demonstrate that
beveled plate is not comparable to the plate sold in the U.S. market.
Petitioners contend that the Department expressly rejected the
arguments raised by respondent in both the first and second
administrative reviews. See Certain Cut-to-Length Carbon Steel Plate
from Finland, 61 FR 2792, 2795 (January 29, 1996) and Certain Cut-to-
Length Carbon Steel Plate from Finland 62 FR 18468, 18471 (April 15,
1997). Petitioners argue that the Department correctly determined in
those prior reviews that Rautaruukki failed to establish beveling as a
product-matching criterion, and that the Department found that beveled
plate does not possess physical characteristics which make it unique
from non-beveled plate with regard to applications and uses.
Petitioners claim that the Department noted that Rautaruukki had the
opportunity to suggest beveling as a characteristic for use in product
matching, but failed to do so. See Certain Cut-to-Length Carbon Steel
Plate from Finland, 61 FR at 2795. Petitioners argue that nothing has
changed with respect to this issue in this review. In petitioners'
view, respondent has not established on the record that beveling is a
product matching criterion considered by the Department. Petitioners
claim that respondent is simply seeking to create its own matching
hierarchy. Petitioners state that the support cited by Rautaruukki is
the same information that Rautaruukki submitted in the second
administrative review information which failed to convince the
Department that beveled plate should not be compared to the products
sold in the U.S. market.
Petitioners claim that the Department has correctly determined, and
as Rautaruukki has conceded, beveled plate products do not possess any
physical characteristics that set them apart from non-beveled plate
products. Accordingly, petitioners argue that Rautaruukki's contentions
regarding the treatment of beveled plate are without merit and should
be rejected by the Department.
Department Position: We agree with the petitioners. The Department
correctly determined in those prior reviews that Rautaruukki failed to
establish beveling as a product-matching criterion, and that the
Department found that beveled plate does not possess physical
characteristics which make it unique from non-beveled plate with regard
to applications and uses. See Certain Cut-to-Length Carbon Steel Plate
from Finland, 61 FR 2792, 2795 and Certain Cut-to-Length Carbon Steel
Plate from Finland, 62 FR 18468, 18471. The documentation submitted by
Rautaruukki in the course of this review does not establish the
relevance of beveling as a product matching criterion. We have not
changed our treatment of beveled products for these final results.
Comment 9: Respondent contends that the Department failed to
convert harbor expenses from Finnish markka to U.S. dollars in its
calculation of margin expenses. The respondent suggests that we make an
adjustment similar to the adjustment made for international freight
charges for affiliated party charges.
Additionally, respondent claims that the Department did not convert
direct selling expenses and credit expenses for U.S. sales from Finnish
markka to U.S. dollars in the margin calculation program. Rautaruukki
reported direct selling and credit expenses in Finnish markka, but the
margin calculation program applies these figures in U.S. dollars,
resulting in a skewed total for direct expenses for U.S. sales.
Petitioners did not comment on this issue.
Department's Position: We have converted harbor expenses, U.S.
direct selling expenses, and U.S. credit expenses from Finnish markka
to U.S. dollars. We note that the affiliated party charges were in U.S.
dollars so no currency conversion was required for these expenses.
Comment 10: Rautaruukki claims that the Department erred in
applying the theoretical weight conversion factor to its verified COP
and CV amounts. Rautaruukki argues that the Department should have
applied the weight conversion factor only to the sales quantities to
insure that all sales were reported on the same (i.e., theoretical
weight) basis and not to reported costs which reflect actual costs
incurred for delivered or shipped quantities of subject merchandise.
Rautaruukki notes that its U.S. sales were all reported on a
theoretical weight basis, while some of its home market sales were
reported on a theoretical weight basis and some were reported on an
actual weight basis. Consequently, for the sales made on a theoretical
weight basis, Rautaruukki contends that the costs associated with these
sales were reported on a theoretical weight basis, not on an actual
weight basis. Therefore, Rautaruukki argues that if the Department
decides to apply the conversion factor to costs, it should be applied
only to those products sold on an actual weight basis. Rautarrukki
suggests that the Department would need to recalculate costs for only
two of the three products which were matched in the model match program
because one product's costs was reported only on a theoretical weight
basis. To recalculate the costs for the other two matched products,
Rautaruukki recommends that the Department calculate the relative
distribution or allocation of costs associated with each weight basis
using the percentage of sales made on each basis. Then, the Department
could adjust the costs associated with sales made on an actual weight
basis by applying the conversion factor and add this figure to the
costs reported on a theoretical weight to arrive at a figure for the
cost for all sales on a theoretical weight basis.
Petitioners state that Rautaruukki's claim that cost data are
calculated on both theoretical and actual weight basis constitutes new
information that the Department has not verified. Petitioners cite the
Department's cost verification report which states that to calculate
the weighted-average cost for all extras, Rautaruukki used shipped
quantities to determine the per ton cost amounts. Because Rautaruukki's
case brief dated September 8, 1997, indicates that Rautaruukki
calculated the average cost per ton using a combination of costs based
on both theoretical weights and actual weights, petitioners argue that
Rautaruukki's cost reporting methodology is flawed and the reported
amounts are inaccurate and unreliable. Therefore, petitioners cite
Final Results of Antidumping Duty Administrative Review: Certain Cut-
to-Length Carbon Steel Plate from Sweden, 62 FR 18396, 18398-99 (April
15, 1997), and recommend that the Department reject Rautaruukki's
reported per ton costs and apply total facts available.
Department Position: We agree with petitioners that Rautaruukki's
cost calculation methodology is flawed in that it relied on production
quantities based on both theoretical and actual weights. We disagree
with petitioners, however, that Rautaruukki's cost reporting
methodology warrants use of total facts available. Under its submission
methodology, Rautaruukki first computed a weighted-average cost of
manufacturing for the subject merchandise based on two broad product
categories, plate and cut-to-length coil. At verification, we confirmed
that each of these weighted-average cost categories was calculated by
dividing actual costs by total production quantity on an actual weight
basis (See Production Reports per February 27, 1997, Submission at
Exhibit 3, calculation 3). Rautaruukki then computed an average cost
for
[[Page 2957]]
extras by multiplying product-specific extra amounts by product-
specific sales quantities (some of which were on an actual weight
basis, others on a theoretical weight basis) and dividing by the same
sales quantities. Because, in the normal course of business,
Rautaruukki maintains product-specific sales reports but not product-
specific production reports, it used shipped quantities of each product
to compute the average cost for extras. Rautaruukki deducted this
average cost for extras from the weighted-average cost of manufacturing
for each broad product category in order to compute the average base
cost for the category. To compute product-specific manufacturing costs,
Rautaruukki added to the average base cost the same product-specific
extra amounts used to derive the base cost.
By using actual production weights to compute the average costs for
each of the broad product categories, and by relying on a mix of
theoretical and actual production weights in determining the average
cost of extras, Rautaruukki's submitted costs represent a mix of weight
bases that do not accurately reflect the per-unit costs incurred to
produce the subject merchandise. To correct this flaw, we increased
Rautaruukki's reported COP and CV amounts by the theoretical-to-actual
weight conversion factor. See Comment 6.
Comment 11: Petitioners argue that the Department should reject
Rautaruukki's COP and CV data and use facts available because they
contend that Rautaruukki's product-specific cost data are not based on
actual costs incurred during the POR, are not supported by source
documentation, cannot be reconciled to Rautaruukki's audited financial
statements, and are not supported by tests performed by the Department.
Petitioners cite Final Results of Antidumping Duty Administrative
Review: Certain Cut-to-Length Carbon Steel Plate from Finland, 62 FR
18468, 18472-18473 (April 15, 1997), in which the Department rejected
Rautaruukki's cost data in the second administrative review, to support
its argument. Petitioners state that the problems identified in the
second administrative review persist and that there is insufficient
record evidence for the third administrative review to support the
Department's reversal of its previous decision.
Petitioners argue that the submitted costs be rejected because the
Department verified that product-specific costs are not based on the
POR. Petitioners note that all documentation provided by Rautaruukki to
substantiate its reported product-specific costs was from outside the
POR. Therefore, petitioners maintain that the Department has no
reliable basis or record evidence to determine whether the submitted
data reflect actual costs for the POR. Petitioners further contend that
the Department cannot rely on documentation provided during this review
which relates to previous review periods to support Rautaruukki's
historical production costs since the Department previously rejected
this information.
Rautaruukki argues that the Department's decision regarding costs
submitted in this third administrative review must be based on the
facts of the current proceeding and not on alleged deficiencies or
factual errors in previous administrative proceedings. Rautaruukki
asserts that record evidence in the current review clearly states that
the Department verified Rautaruukki's submitted product-specific
information, reviewed its internal system which tracks quality and
dimensional costs by product grade, and reconciled these costs with
Rautaruukki's profit-and-loss accounts. Rautaruukki contends that the
costs recorded in the quality cost tables dated July 31, 1995, were the
costs in effect throughout the POR, and therefore, are a proper basis
for calculating product-specific costs. Rautaruukki also states that
the Department verified its dimensional extras costs and reconciled
these figures with Rautaruukki's financial reports. Lastly, Rautaruukki
argues that the Department tested and verified costs for specific
products and reconciled these costs with Rautaruukki's financial
statements. Therefore, Rautaruukki maintains that its product-specific
cost data was verified by the Department to be accurate and reliable.
Department Position: We disagree with petitioners' contention that
we must reject totally Rautaruukki's submitted COP and CV data for this
review. First, as discussed in Comment 10 above, Rautaruukki relied on
actual costs incurred and actual tonnages produced during the POR to
calculate weighted-average costs for its broad categories of plates and
cut-to-length products. In order to derive the total base cost for each
category, Rautaruukki deducted from the weighted-average cost, an
amount for the average cost of extras. The company then added back
costs for product-specific extras. Contrary to petitioners' assertions,
there is nothing inherently unreliable or theoretically unsound about
Rautaruukki's underlying cost allocation methodology. Rather, much like
other manufacturers that rely on standard costs as a means to
distribute actual costs among specific products, Rautaruukki relies on
a system of base and standard extra costs to allocate its actual
production costs among the company's plate and cut-to-length products.
We found this methodology reasonable.
Second, Rautaruukki's product-specific costs are supported by
source documentation. In its February 27, 1997, Section D supplemental
response, Rautaruukki provided documentation of the detailed
calculations used to derive its quality and dimensional extras costs.
Rautaruukki notes that these calculations are based on engineering
standards and the company's production experience. Petitioners chose
not to challenge the validity or accuracy of Rautaruukki's
calculations. Instead, the petitioners argue that because Rautaruukki
did not update these standards during the POR, the cost of extras as
reported by the company are unreliable. For this review, however, we
have no reason to believe that Rautaruukki's extra cost calculations,
which were based on data used by the company during the POR, do not
reasonably represent the cost differences incurred to produce
individual products. It is unnecessary for Rautaruukki to update its
standard extra costs every year so long as these amounts continue to
accurately reflect costs incurred by the company during the year.
Third, the reported costs can be reconciled to Rautaruukki's
audited financial statements. During the cost verification, we
reconciled Rautaruukki's reported product-specific costs to its audited
financial statements noting only a slight difference. See Comment 14
below for further discussion.
Fourth, Rautaruukki's product-specific costs are supported by tests
performed by the Department during verification. We tested
Rautaruukki's calculations of weighted-average costs, base costs, and
extra costs (see cost verification report at pages 7 through 14).
During our verification, we determined that the standard costs for
extras used by Rautaruukki in the normal course of business during the
POR were based on actual production and cost data, engineering
standards, and company experience. As discussed above in this comment,
we do not believe that it is necessary for Rautaruukki to update every
year the tables containing these standard extra costs, where such
standard costs continue to reflect the company's production cost
experience with reasonable accuracy. In addition, in contrast to
petitioners' argument, we
[[Page 2958]]
found it reasonable that Rautaruukki reported identical cost of
manufacturing amounts for a small number of CONNUMs even though these
products had slightly different physical characteristics. We verified
the fact that these products had the same cost for various reasons. For
example, in some instances, differences in the costs of specific extras
offset one another, making the costs of the two products the same in
total. In other instances, products with differing plate specifications
underwent the same processing and, as a result, incurred the same costs
under Rautaruukki's accounting system. Thus, it was not unreasonable
for certain of Rautaruukki's products to have identical costs.
Last, to support their argument that the cost data submitted in
this review should be rejected, the petitioners cite Final Results of
Antidumping Duty Administrative Review: Certain Cut-to-Length Carbon
Steel Plate from Finland, 62 FR 18468, 18472-18473 (April 15, 1997), in
which the Department rejected Rautaruukki's cost data in the second
administrative review. We note that any decision in a specific review
must be made on the facts of the record for that review. In this
review, as explained above, we were able to verify Rautaruukki's cost
extras and found their reporting methodology to be reasonable. As the
Department has stated, we review each period independently and may
determine that a change in analysis is appropriate. * * * Thus, the
Department is not bound in a current administrative review to strictly
adhere to the methodology or practice used in a previous review. See
Certain Dried Heavy Salted Codfish from Canada, 54 FR 13211, 13213
(March 31, 1989).
Comment 12: Petitioners state that Rautaruukki's variable cost of
manufacturing data reported for its home market and U.S. sales differs
substantially from the amounts derived from the COP and CV datasets.
Petitioners argue that the Department's calculation of variable costs
as used for the preliminary determination, which were computed by
subtracting the fixed overhead amount reported in the COP dataset from
the total cost of manufacturing amount reported in the COP dataset,
fails to accurately calculate product-specific costs. Petitioners
reason that this methdology is unacceptable because Rautaruukki
reported the same fixed overhead amount for every product produced,
thereby disregarding fixed-cost differences between products.
As the Department cannot derive accurate product-specific variable
costs from Rautaruukki's COP dataset, petitioners recommend that the
Department use an adverse facts available percentage of 24.95 percent,
the margin from the last administrative review, for calculating the
difference in merchandise (difmer) adjustment. As alternative adverse
facts available, petitioners suggest that the Department use
Rautaruukki's lowest reported home market variable cost and its highest
reported U.S. variable cost to calculate the difmer adjustment for all
non-identical comparisons. Petitioners assert that use of adverse facts
available is appropriate since Rautaruukki failed to submit revised
data in response to several requests made by the Department that
Rautaruukki ensure that its home market and U.S. sales files reflect
the same variable cost of manufacturing amounts as reported in its COP
and CV datasets. petitioners cite Final Results of Antidumping Duty
Administrative Review: Porcelain-on-Steel Cookware from Mexico, 61 FR
54616, 54618 (October 21, 1996); Preliminary Determination of Sales at
Less than Fair Value: Class 150 Stainless Steel Threaded Pipe Fittings
from Taiwan, 59 FR 10784, 10785 (March 8, 1994); and Final
Determination of Sales at Less than Fair Value: Class 150 Stainless
Steel Threaded Pipe Fittings from Taiwan, 59 FR 28432 (July 28, 1994)
to support the use of adverse facts available.
Petitioners further contend that if the Department does not use
adverse facts available, the Department should at least apply neutral
facts available for the difmer adjustment. As neutral facts available,
petitioners suggest that the Department apply an amount equal to the
twenty percent cap as the difmer adjustment. Petitioners cite Notice of
Final Results and Partial Termination of Antidumping Duty
Administrative Reviews: Tapered Rolled Bearings, Four Inches or Less in
Diameter, and Components Thereof, from Japan, 59 FR 56035, 56048, which
was upheld in NTN Bearing Corp. of America v. United States, 924 F.
Supp. 200 (Ct. Int'l Trade 1996), to show that the Department's
practice has been to apply an amount equal to the twenty percent cap in
those instances where a respondent fails to provide variable cost data
in the requisite form for the difmer test.
Rautaruukki disagrees with the petitioners' claim that the
Department erred in calculating Rautaruukki's variable costs by
subtracting fixed overhead costs from the total cost of manufacture
reported in the COP and CV datasets. Rautaruukki maintains that the
Department's calculation is acceptable because the Department verified
that the cost data are in accordance with its practice and generally
accepted accounting principles.
Department Position: We agree with petitioners that Rautaruukki
incorrectly reported its fixed manufacturing costs by reporting only
amounts related to producing base products (i.e., all products were
assigned the same amount of fixed manufacturing costs). As a result,
the methodology used by the Department for the preliminary
determination (determining product-specific variable cost of
manufacturing by subtracting the reported product-specific fixed cost
of manufacturing from the product-specific total cost of manufacturing)
failed to account for fixed-cost differences arising from processing
route differences. This flaw in methodology, however, has no impact on
the similar product matches for Rautaruukki in this review. The only
difference between home market sales and the U.S. sales to which they
are matched is the specification of the steel. All other model match
criteria, including width and thickness, and identical. With respect to
specification, all U.S. sales and the home market sales that are
matched to those U.S. sales are shipbuilding grade A material. As
respondent has argued throughout this proceeding (See Comment 7), all
shipbuilding grade A material is manufactured the same regardless of
the national classification standard to which it is ultimately
certified. Petitioners have not disputed these claims. Thus, with
respect to these sales, there are essentially no differences in the
total cost of manufacturing for the matched products, and no
differences in the processing routes or machines used in production.
Accordingly, we consider the methodology used by the Department for the
preliminary results reasonable and non-distortive for purposes of this
review. We are continuing to use this methodology for these final
results.
Comment 13: Petitioners claim that Rautaruukki improperly reduced
its costs associated with the production of subject merchandise by
including revenue from sales of slab in the amount it reported for
scrap and sales of by-products. Petitioners note that slabs are semi-
finished, non-subject merchandise and that the income from sales of
slab should not be deducted from costs. Petitioners recommend that the
Department exclude Rautaruukki's reported scrap amount from the
calculation of total costs because the
[[Page 2959]]
Department has no way of knowing what percentage of Rautaruukki's scrap
amount is from sales of slab.
Rautaruukki responds that it did not report slab as a by-product
and offset its COP and CV data by revenues from the sale of slabs.
Rautaruukki notes that the Department verified that by-products
reported include burnt lime, coke, coal tar, sulfur, benzene, nut coke,
and utilities. Rautaruukki maintains that slab is not included as a by-
product offset in its submitted costs.
Department Position: We agree with Rautaruukki. Although
Rautaruukki officials stated that in their management accounting
monthly reports, they included sales of slabs with by-product turnovers
(See Sales Verification Report at 5), we found no evidence to show that
Rautaruukki had improperly offset reported production costs with
revenue from the sale of slab. As discussed in our cost verification
report at page 7, by-product revenues offset to the cost of subject
merchandise included burnt lime, coke, coal tar, sulfur, benzene, nut
coke, and utilities. Because we have no evidence that Rautaruukki
included sales of slab in the by-product offset, we made no adjustment.
Comment 14: Petitioners argue that if the Department accepts
Rautaruukki's product-specific cost data, the Department should make an
adjustment to account for the difference between Rautaruukki's May 5,
1997 COP dataset, which was submitted after verification, and its
audited financial statements. Petitioners note that the reconciliation
reviewed by the Department was based on data submitted prior to
verification and that the May 5, 1997 dataset no longer reconciles to
Rautaruukki's financial statements. As Rautaruukki did not explain
whether the discrepancy between its revised COP dataset and its
financial statements relates to subject or non-subject merchandise,
petitioners recommend that the Department adjust the submitted data by
the amount of the discrepancy.
Rautaruukki replies that the slight discrepancy between its costs
submitted on May 5, 1997, and its audited financial statements
represents omitted costs of products sold to third countries that were
outside the scope of this administrative review. Rautaruukki further
contends that the Department verified the accuracy and validity of its
cost reconciliation and its production costs for plate. Therefore,
Rautaruukki concludes that an adjustment to its reported costs is
unwarranted.
Department Position: We agree with practitioners. The
reconciliation reviewed by the Department did not include the
correction of errors identified at the beginning of verification (See
Cost Verification Report at 3, 6, and 7). Based on our revised
reconciliation, it appears that the COP and CV data submitted by
Rautaruukki in its May 5, 1997, response did not capture all costs as
recorded under the company's financial accounting system. As we have no
evidence to support Rautaruukki's contention that the difference
relates to third country sales that were outside the scope of this
administrative review, we adjusted Rautaruukki's submitted costs for
this small difference. See Analysis Memorandum dated December 15, 1997.
Final Results of Review
As a result of our review, we have determined that no margin exists
for Rautaruukki Oy for the period of August 1, 1995 through July 31,
1996. The Department will issue appraisement instructions directly to
the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of plate from Finland entered, or withdrawn from warehouse,
for consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) The cash deposit rates for the
reviewed company 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 review, or
the original less than fair value (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)
if neither the exporter nor the manufacturer is a firm covered in this
review, the cash deposit rate will be 40.36 percent. This is the all
others rate from the amended final determination in the LTFV
investigation. See Amended Final Determination Pursuant To CIT
Decision: Certain Cut-To-Length Carbon Steel Plate from Finland, 62 FR
55782 (October 28, 1997). These deposit requirements when imposed,
shall remain in effect until publication of the final results of the
next administrative review.
This notice serves as a final reminder to importers of their
responsibility under Section 351.402(f) of the Department's regulations
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 notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with Sections 351.305 of the Department's
regulations. Timely notification of return/destruction of APO materials
or conversion to judicial protective order is hereby requested. Failure
to comply with the regulations and the terms of an APO is a
sanctionable violation.
This administrative review and this notice are in accordance with
section 751 (a)(1) of the Act (19 U.S.C. 1675(a)(1)) and Sec. 351.213
and 351.221 of the Department's regulations.
Dated: January 12, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-1277 Filed 1-16-98; 8:45 am]
BILLING CODE 3510-DS-M
