E8-30268. Certain Hot-Rolled Carbon Steel Flat Products From India: Notice of Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests from petitioners,^[1] the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping order on certain hot-rolled carbon steel flat products from India (“Indian Hot-Rolled”). This review covers one manufacturer and exporter of the subject merchandise: Essar Steel Limited (“Essar”). The Department has preliminarily determined that during the period of review (“POR”), Essar made sales of subject merchandise at less than normal value (“NV”). If these preliminary results are adopted in the final results of this administrative review, we will instruct U.S. Customs and Border Protection (“CBP”) to assess antidumping duties on all appropriate entries of subject merchandise during the POR.

EFFECTIVE DATE:

December 19, 2008.

FOR FURTHER INFORMATION CONTACT:

Joy Zhang or James Terpstra, AD/CVD Operations Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On December 3, 2001, the Department published in the Federal Register the antidumping duty order on Indian Hot-Rolled. See Notice of Amended Final Antidumping Duty Determination of Sales at Less Than Fair Value and Antidumping Duty Order: Certain Hot-Rolled Carbon Steel Flat Products from India, 66 FR 60194 (December 3, 2001) (“Amended Final Determination”). On December 3, 2007, the Department published in the Federal Register a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on Indian Hot-Rolled. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 72 FR 69889 (December 3, 2007). On December 31, 2007, petitioners requested an administrative review in the antidumping duty order on Indian Hot-Rolled, which were produced or exported by Ispat Industries Limited (“Ispat”), JSW Steel Limited (“JSW”), Tata Steel Limited (“Tata”), and Essar. On January 28, 2008, the Department published a notice of initiation of antidumping duty administrative review of Indian Hot-Rolled for the period December 1, 2006, through November 30, 2007. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 73 FR 4829 (January 28, 2008) (“Initiation Notice”). On February 25, 2008, the Department issued a memorandum informing the interested parties of the Department's intention to limit the number of companies it would examine in this review pursuant to section 777A(c)(2) of the Tariff Act of 1930, as amended (the “Act”).^[2] On February 26-27, 2008, Ispat, Tata, and JSW each informed the Department that they did not have shipments of the subject merchandise to the United States during the POR. On August 20, 2008, the Department published a notice extending the deadline for the preliminary results from September 1, 2008, to October 31, 2008. In this notice the Department also published its intent to rescind this administrative review in part with respect to Ispat, JSW and Tata. See Certain Hot-Rolled Carbon Steel Flat Products from India: Notice of Intent to Rescind Antidumping Duty Administrative Review in Part and Notice of Extension of Time Limits for Preliminary Results of Antidumping Administrative Review, 73 FR 49169 (August 20, 2008) (“Notice of Intent to Rescind and Prelim Extension”).

On April 11, 2008, the Department issued an antidumping questionnaire to Essar. The Department received responses to the original questionnaire from Essar. The Department subsequently issued supplemental questionnaires to Essar and received responses to the same.

On September 2, 2008, the Department sent a letter to all interested parties inviting comment on Draft Customs Instructions related to the Department's intent to rescind the administrative review with respect to Ispat, JSW and Tata. See Memorandum to File, Re: “Draft Customs Instructions - Certain Hot-Rolled Carbon Steel Flat Products from India,” dated September 2, 2008. The Department did not receive comments from any interested party. On November 3, 2008, the Department published a notice of rescission of this administrative review in part with respect to Ispat, JSW and Tata. See Certain Hot-Rolled Carbon Steel Flat Products from India: Notice of Rescission, In Part, of Antidumping Duty Administrative Review, 73 FR 65291 (November 3, 2008).

On October 28, 2008, the Department again extended the time period for issuing the preliminary results of the administrative review from October 31, 2008, to December 12, 2008. See Certain Hot-Rolled Carbon Steel Flat Products from India: Notice of Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 73 FR 63945 (October 28, 2008).

Period of Review

The POR covered by this review is December 1, 2006, through November 30, 2007.

Scope of the Order

The merchandise subject to this order is certain hot-rolled carbon steel flat products of a rectangular shape, of a width of 0.5 inch or greater, neither clad, plated, nor coated with metal and whether or not painted, varnished, or coated with plastics or other non-metallic substances, in coils (whether or not in successively superimposed layers), regardless of thickness, and in straight lengths, of a thickness of less than 4.75 mm and of a width measuring at least 10 times the thickness. Universal mill plate (i.e., flat-rolled products rolled on four faces or in a closed box pass, of a width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness of not less than 4 mm, not in coils and without patterns in relief) of a thickness not less than 4.0 mm is not included within the scope of this order.

Specifically included in the scope of this order are vacuum-degassed, fully stabilized (commonly referred to as interstitial-free (“IF”)) steels, high-strength low-alloy (“HSLA”) steels, and the substrate for motor lamination steels. IF steels are recognized as low-carbon steels with micro-alloying levels of elements such as titanium or niobium (also commonly referred to as columbium), or both, added to stabilize carbon and nitrogen elements. HSLA steels are recognized as steels with micro-alloying levels of elements such as chromium, copper, niobium, vanadium, and molybdenum. The substrate for motor lamination steels contains micro-alloying levels of elements such as silicon and aluminum.

Steel products included in the scope of this order, regardless of definitions in the Harmonized Tariff Schedule of the United States (“HTSUS”), are products in which: i) iron predominates, by weight, over each of the other contained elements; ii) the carbon content is 2 percent or less, by weight; and iii) none of the elements listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or

2.25 percent of silicon, or

1.00 percent of copper, or

0.50 percent of aluminum, or

1.25 percent of chromium, or

0.30 percent of cobalt, or

0.40 percent of lead, or

1.25 percent of nickel, or

0.30 percent of tungsten, or

0.10 percent of molybdenum, or

0.10 percent of niobium, or

0.15 percent of vanadium, or

0.15 percent of zirconium.

All products that meet the physical and chemical description provided above are within the scope of this order unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this order:

• Alloy hot-rolled carbon steel products in which at least one of the chemical elements exceeds those listed above (including, e.g., American Society for Testing and Materials (“ASTM”) specifications A543, A387, A514, A517, A506)).
• Society of Automotive Engineers (“SAE”)/American Iron & Steel Institute (“AISI”) grades of series 2300 and higher.
• Ball bearings steels, as defined in the HTSUS.
• Tool steels, as defined in the HTSUS.
• Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• United States Steel (“USS”) Abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• Non-rectangular shapes, not in coils, which are the result of having been processed by cutting or stamping and which have assumed the character of articles or products classified outside chapter 72 of the HTSUS.

The merchandise subject to this order is currently classifiable in the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel covered by this order, including: vacuum-degassed fully stabilized; high-strength low-alloy; and the substrate for motor lamination steel may also enter under the following tariff numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise subject to this order is dispositive.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all Indian Hot-Rolled produced by the respondent, covered by the scope of the order, and sold in the home market during the POR to be foreign like product for the purpose of determining appropriate product comparisons to Indian Hot-Rolled sold in the United States.

Where there were no sales in the ordinary course of trade of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics listed in Appendix V of the Department's antidumping questionnaire. In making the product comparisons, we matched foreign like products based on the Appendix V physical characteristics reported by each respondent. Where sales were made in the home market on a different weight basis from the U.S. market (theoretical versus actual weight), we converted all quantities to the same weight basis, using the conversion factors supplied by the respondents, before making our fair-value comparisons.

Fair Value Comparisons

To determine whether sales of Indian Hot-Rolled by the respondents to the United States were made at less than NV, we compared the export price (“EP”) to the NV, as described in the “Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to individual U.S. transactions, where there were sales made in the ordinary course of trade, as discussed in the “Cost of Production (“COP”)” section below. See the December 12, 2008, Preliminary Sales Calculation Memorandum for Essar (Calculation Memorandum for Essar); the public version of which is on file in the Central Records Unit (CRU), Room 1117 of the main Department building.

Export Price

Section 772(a) of the Act defines EP as “the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c) of this section.” During the POR, Essar produced and sold subject merchandise to the first unaffiliated purchaser in the United States prior to importation. Therefore, we have applied the EP methodology.

We based EP on the packed price to unaffiliated purchasers in the United States. We made deductions, as appropriate, for billing adjustments. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act. Accordingly, we made deductions for foreign inland freight, foreign inland insurance, foreign brokerage and handling, international freight, U.S. brokerage and handling, and U.S. customs duties. In addition, in accordance with section 772(c)(1)(C) of the Act, when appropriate, we increased EP, by an amount equal to the countervailing duty rate attributed to export subsidies in the most recently completed administrative review of the countervailing duty order applicable to the POR for Essar.

Normal Value

Based on a comparison of the aggregate quantity of home market and U.S. sales, we determined that the quantity of the foreign like product sold by each respondent in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a) of the Act. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities and in the ordinary course of trade.

Where appropriate, in accordance with section 773(a)(6)(B) of the Act, we deducted from the starting price inland freight (offset, where applicable, by freight revenue), inland insurance, and packing. Pursuant to 19 CFR 351.401(c), we deducted rebates and discounts. We also increased NV by U.S. packing costs in accordance with section 773(a)(6)(A) of the Act. For comparisons to EP, pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(b), we made circumstance-of-sale adjustments for credit expenses, bank charges and commissions. In accordance with section 773(a)(1)(B)(i) of the Act, we based NV on sales at the same level of trade as the EP. See the “Level of Trade” section below.

For purposes of calculating NV, section 771(16) of the Act defines “foreign like product” as merchandise which is either (1) identical or (2) similar to the merchandise sold in the United States. When there are no identical products sold in the home market, the products which are most similar to the product sold in the United States are identified. For the non-identical or most similar products which are identified based on the Department's product matching criteria, an adjustment is made to the home market sales price to account for the actual physical differences between the products sold in the United States and the home market. See section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, we determined NV based on sales in the comparison market at the same level of trade (“LOT”) as the EP sales, to the extent practicable. When there were no sales at the same LOT, we compared U.S. sales to comparison market sales at a different LOT.

Pursuant to 19 CFR 351.412, to determine whether EP sales and NV sales were at different LOTs, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the customers. If the comparison market sales are at a different LOT and the differences affect price comparability, as manifested in a pattern of consistent price differences between sales at different LOTs in the country in which NV is determined, we will make an LOT adjustment under section 773(a)(7)(A) of the Act.

Essar reported different channels of distribution in the home market; however, based on our analysis of the selling functions performed for each channel, we found one level of trade for Essar. In the U.S. market, Essar reported one channel of distribution and one LOT for EP sales. We evaluated the core selling function categories in the U.S. and home market LOTs and found that each of the core selling functions (i.e., sales promotion, order processing, and warranty and technical support) were performed in both the U.S. and home markets. Although there are differences in the type of sales and marketing services provided for each market, we did not find this to be a material selling function distinction significant enough to warrant a separate LOT. Therefore, after analyzing the selling functions performed in each market, we find that the distinctions in selling functions are not material and thus, that the home market and U.S. LOTs are the same. Accordingly, there is no basis for making a LOT under section 773(a)(7)(A) of the Act and 19 CFR 351.412(e). For a detailed description of our LOT methodology and a summary of company-specific LOT findings for these preliminary results, see Calculation Memorandum for Essar.

Cost of Production (“COP”)

A. Calculation of COP

In the most recently completed administrative review in which Essar participated, the Department determined that Essar sold foreign like product at prices below the cost of producing the merchandise and excluded such sales from the calculation of NV. See Certain Hot-Rolled Carbon Steel Flat Products From India: Preliminary Results of Antidumping Duty Administrative Review, 72 FR 74267 (December 3, 2007) unchanged in the final results, Certain Hot-Rolled Carbon Steel Flat Products From India: Notice of Final Results of Antidumping Duty Administrative Review, 73 FR 31961 (June 5, 2008). As a result, the Department determined that there are reasonable grounds to believe or suspect that during the instant POR, Essar sold foreign like product at prices below the cost of producing the merchandise. See section 773(b)(2)(A)(ii) of the Act. Therefore, the Department initiated a sales-below-cost inquiry with respect to Essar.

We calculated a company-specific COP for Essar based on the sum of Essar's cost of materials and fabrication for the foreign like product, plus amounts for home-market selling expenses, selling, general and administrative expenses (“SG&A”), and packing costs in accordance with section 773(b)(3) of the Act. We adjusted Essar's reported costs to reflect the actual cost of iron ore pellets obtained from its Hygrade Pellets division, but have denied the claimed offset to the reported costs for profits allegedly earned by its Steelco Gujarat division on services provided during the cost reporting period.

B. Test of Home-Market Prices

In determining whether to disregard home market sales made at prices below the COP, as required under sections 773(b)(1)(A) and (B) of the Act, we compared the weighted-average COP to home market sales of the foreign like product and 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 home market prices (not including Value Added Tax), less any applicable movement charges, discounts, and rebates.

C. Results of COP Test

Pursuant to section 773(b)(1) of the Act, we may disregard below-COP sales in the determination of NV if these sales have been made within an extended period of time in substantial quantities and were not at prices which permit recovery of all costs within a reasonable period of time. Where 20 percent or more of a respondent's sales of a given product during the POR were at prices less than the COP for at least six months of the POR, we determined that sales of that model were made in “substantial quantities” within an extended period of time, in accordance with sections 773(b)(2)(B) and (C) of the Act. Where prices of a respondent's sales of a given product were below the per-unit COP at the time of sale and below the weighted-average per-unit costs for the POR, we determined that sales were not at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. In such cases, we disregarded the below-cost sales in accordance with section 773(b)(1) of the Act.

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product 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.”

We tested and identified below-cost home market sales for Essar. We disregarded individual below-cost sales of a given product and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act. See Calculation Memorandum for Essar.

Arm's-Length Sales

Essar reported that it made sales of the foreign like product in the home market to affiliated parties. The Department calculates NV based on a sale to an affiliated party only if it is satisfied that the price to the affiliated party is comparable to the price at which sales are made to parties not affiliated with the producer or exporter, i.e., sales at arm's length. See 19 CFR 351.403(c).

To test whether these sales were made at arm's length, we compared the starting prices of sales to affiliated and unaffiliated customers net of all movement charges, direct selling expenses, discounts and packing. In accordance with the Department's current practice, if the prices charged to an affiliated party were, on average, between 98 and 102 percent of the prices charged to unaffiliated parties for merchandise identical or most similar to that sold to the affiliated party, we considered the sales to be at arm's-length prices. See Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review: Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy, 71 FR 45017, 45020 (August 8, 2006), and unchanged in the final results; see also Notice of Final Results of the Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy, 72 FR 7011 (February 14, 2007); and 19 CFR 351.403(c). Conversely, where we found sales to the affiliated party that did not pass the arm's-length test, all sales to that affiliated party have been excluded from the NV calculation. See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186, 69187 (November 15, 2002).

Currency Conversion

For purposes of these preliminary results, we made currency conversions in accordance with section 773A(a) of the Act, based on the official exchange rates published by the Federal Reserve Bank.

Preliminary Results of the Review

As a result of this review, we preliminarily find that the following weighted-average dumping margin exists:

Producer/Manufacturer	Weighted-Average Margin
Essar	2.10 %%

The Department will disclose calculations performed within five days of the date of publication of this notice to the parties of this proceeding in accordance with 19 CFR 351.224(b). Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. See 19 CFR 351.309(c)(ii). Rebuttal briefs are limited to issues raised in such briefs or comments and may be filed no later than five days after the time limit for filing the case briefs or comments. See 19 CFR 351.309(d). Parties submitting arguments in this proceeding are requested to submit with the argument: 1) a statement of the issue, 2) a brief summary of the argument, and 3) a table of authorities. See 19 CFR 351.309(c)(2) and (d)(2). Case and rebuttal briefs and comments must be served on interested parties in accordance with 19 CFR 351.303(f). Further, parties submitting written comments are requested to provide the Department with an additional copy of the public version of any such comments on a diskette.

An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). A hearing, if requested, ordinarily will be held two days after the due date of the rebuttal briefs. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in the written comments, or at a hearing, if requested, within 120 days of publication of these preliminary results.

Assessment Rate

Pursuant to 19 CFR 351.212(b), the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP 15 days after the publication of the final results of this review. For assessment purposes, where possible, we calculated importer-specific assessment rates for certain hot-rolled carbon steel flat products from India via ad valorem duty assessment rates based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any assessment rate calculated in the final results of this review is above de minimis. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of these reviews and for future deposits of estimated duties, where applicable.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (“Assessment Policy Notice”). This clarification will apply to entries of subject merchandise during the POR produced by companies included in these final results of review for which the reviewed companies did not know that the merchandise they sold to the intermediary (e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediary involved in the transaction. See Assessment Policy Notice for a full discussion of this clarification.

Cash Deposit Requirements

To calculate the cash deposit rate for the producer and/or exporter included in this administrative review, we divided the total dumping margins for each company by the total net value for that company's sales during the review period.

The following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of hot-rolled carbon steel from India entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rates for the companies listed above will be the rates established in the final results of this review, except if the rate is less than 0.5 percent and, therefore, de minimis, the cash deposit 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 final results in which that manufacturer or exporter participated; (3) if the exporter is not a firm covered in these reviews, a prior 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 final results for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous review or the LTFV conducted by the Department, the cash deposit rate will be 38.72 percent, the all-others rate established in the LTFV. See Amended Final Determination. These cash deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice 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.

These preliminary results of review are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: December 10, 2008.

Stephen J. Claeys,

Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations.

Footnotes

1.  The petitioners are the United States Steel Corporation Steel and Nucor Corporation (collectively “petitioners”).

2.  See Memorandum to File, Re: “2006-2007 Antidumping Duty Administrative Review of Certain Hot-Rolled Carbon Steel Flat Products from India,” Subject: “Customs and Border Protection Data for Selection of Respondents for Individual Review,” from Cindy Robinson, Senior Financial Analyst, through James Terpstra, Program Manager, and Melissa Skinner, Office Director, Office 3, AD/CVD Operations, dated February 25, 2008 (“Hot-Rolled Memo”).