[Federal Register Volume 64, Number 50 (Tuesday, March 16, 1999)]
[Notices]
[Pages 12951-12959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-6290]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-824]
Certain Corrosion-Resistant Carbon Steel Flat Products From
Japan: Final Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration, U.S.
Department of Commerce.
ACTION: Notice of final results of the antidumping duty administrative
review of certain corrosion-resistant carbon steel flat products from
Japan.
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SUMMARY: On September 8, 1998, the Department of Commerce (``the
Department'') published the preliminary results of its administrative
review of the antidumping duty order on certain corrosion-resistant
carbon steel flat products from Japan. This review covers one
manufacturer/exporter of the subject merchandise to the United States
and the period August 1, 1996 through July 31, 1997. We gave interested
parties an opportunity to comment on our preliminary results. As a
result of these comments, we have changed the results from those
presented in the preliminary results of review.
EFFECTIVE DATE: March 16, 1999.
FOR FURTHER INFORMATION CONTACT: Contact Doreen Chen or Rick Johnson,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th and Constitution Avenue, NW, Washington,DC
20230; telephone: (202) 482-0408 or (202) 482-3818 respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are to the provisions effective January
1, 1995, the effective date of the amendments made to the Act by the
Uruguay Round Agreements Act (``URAA''). In addition, unless otherwise
indicated, all citations to the Department's regulations are to 19 CFR
part 351 (62 FR 27379, May 19, 1997).
[[Page 12952]]
Background
On September 8, 1998, the Department published in the Federal
Register (63 FR 47465) the preliminary results of its administrative
review of the antidumping duty order on certain corrosion-resistant
carbon steel flat products from Japan (``Preliminary Results''). We
gave interested parties an opportunity to comment on our preliminary
results. We received written comments from respondent Nippon Steel
Corporation (NSC), and from petitioners (Bethlehem Steel Corporation
and U.S. Steel Group (a unit of USX Corporation)) on October 8, and
October 15, 1998, respectively. We have now completed this
administrative review in accordance with section 751(a) of the Act.
Scope of Review
The product covered by this administrative review constitutes one
``class or kind'' of merchandise, certain corrosion-resistant steel.
Certain corrosion-resistant steel includes flat-rolled carbon steel
products, of rectangular shape, either clad, plated, or coated with
corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-,
nickel- or iron-based alloys, whether or not corrugated or painted,
varnished or coated with plastics or other nonmetallic substances in
addition to the metallic coating, in coils (whether or not in
successively superimposed layers) and of a width of 0.5 inch or
greater, or in straight lengths which, if of a thickness less than 4.75
millimeters, are of a width of 0.5 inch or greater and which measures
at least 10 times the thickness or if of a thickness of 4.75
millimeters or more are of a width which exceeds 150 millimeters and
measures at least twice the thickness, as currently classifiable in the
Harmonizing Tariff Schedule of the United States (HTSUS) under item
numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030,
7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060,
7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000,
7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000,
7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000,
7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000,
7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this review are
corrosion-resistant flat-rolled products of non-rectangular 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 from this review are flat-rolled steel products either plated
or coated with tin, lead, chromium, chromium oxides, both tin and lead
(``terne plate''), or both chromium and chromium oxides (``tin-free
steel''), whether or not painted, varnished or coated with plastics or
other nonmetallic substances in addition to the metallic coating. Also
excluded from this review are clad products in straight lengths of
0.1875 inch or more in composite thickness and of a width which exceeds
150 millimeters and measures at least twice the thickness. Also
excluded from this review are certain clad stainless flat-rolled
products, which are three-layered corrosion-resistant carbon steel
flat-rolled products less than 4.75 millimeters in composite thickness
that consist of a carbon steel flat-rolled product clad on both sides
with stainless steel in a 20%-60%-20% ratio. Also excluded from this
review are certain corrosion-resistant carbon steel flat products
meeting the following specifications: widths ranging from 10
millimeters (0.394 inches) through 100 millimeters (3.94 inches);
thicknesses, including coatings, ranging from 0.11 millimeters (0.004
inches) through 0.60 millimeters (0.024 inches); and a coating that is
from 0.003 millimeters (0.00012 inches) through 0.005 millimeters
(0.000196 inches) in thickness and that is comprised of three evenly
applied layers, the first layer consisting of 99% zinc, 0.5% cobalt,
and 0.5% molybdenum, followed by a layer consisting of chromate, and
finally a layer consisting of silicate. These HTSUS item numbers are
provided for convenience and Customs purposes. The Department's written
description of the products covered by the scope of the instant order
remains dispositive.
Fair Value Comparisons
To determine whether sales of subject merchandise from Japan to the
United States were made at less than fair value, we compared the Export
Price (EP) to the Normal Value (NV), as described in the ``Export
Price'' and ``Normal Value'' sections of the preliminary results of
review notice.
Interested Party Comments:
Comment 1: Petitioners argue that the Department should reject home
market sales to a certain customer because the sales to this customer
result in unfair and improper margin comparisons between EP and NV.
Petitioners contend that, for a majority of respondent's home market
(HM) sales that are matched to its U.S. sales, either the customer is
the same for both markets or the U.S. and HM customers are related.
Petitioners assert that for all such sales, the U.S. customer was also
the importer of record. Thus, petitioners note that the customer would
have been responsible for the dumping duties. Additionally, petitioners
note that the Japanese parent company of the U.S. customer was involved
in the price negotiations with NSC. Under these circumstances,
petitioners argue, the potential for manipulation of the dumping margin
was especially great.
Petitioners assert that a margin based on such comparisons violates
the statutory requirement that the comparisons be ``fair,'' and on this
basis alone, the Department should reject the HM sales to the
particular customer because they result in ``unfair and improper''
comparisons. Petitioners argue that it is a fundamental principle of
the antidumping law that ``in determining whether subject merchandise
is being, or is likely to be, sold at less than fair value, a fair
comparison shall be made between the export price or constructed export
price and normal value.'' Petitioners argue that a ``fair comparison''
cannot exist where most of the U.S. sales are compared with sales to
the same customer in the home market. Petitioners argue that such
comparisons are inherently unreliable because the seller and buyer can
simply agree to increase prices on merchandise destined for the U.S.
and, at the same time, decrease prices on merchandise purchased in the
home market. Petitioners assert that the antidumping statute and the
Department's regulations and practice go to great lengths to ensure
that the prices in the home market and the prices in the U.S. market
are reliable and representative of sales in each market. To support
this contention, petitioners refer to section 773(a)(1)(B) of the Act
(19 U.S.C. 1677b(a)(1)(B)) (requiring that normal value be based on
sales made in the ordinary course of trade); section 773(a)(2) of the
Act (19 U.S.C. 1677b(a)(2)) (providing that sales intended to establish
a fictitious market shall not be used in determining normal value);
section 773(f)(2) and (3) of the Act (19 U.S.C. 1677b(f)(2) and (3)
(ensuring that the cost of a major input not be valued at the transfer
price if such price is below market value or less than cost); section
772(d) of the Act (19 U.S.C. 1677a(d)) (requiring certain adjustments
to U.S. price where the
[[Page 12953]]
merchandise is sold through an affiliated U.S. supplier); and 19 CFR.
Sec. 351.403 (c) (providing that sales to affiliated parties that are
not at arm's length prices not be used in determining normal value).
Petitioners further assert that it is not necessary for the
Department to find evidence of price manipulation in order to conclude
that the comparisons in the margin calculation are unfair and improper.
Petitioners assert that a finding of a ``potential for price
manipulation'' is sufficient to warrant a finding of an ``unfair and
improper'' margin comparison, citing Koening & Bauer-Albert AG, et al.
v. United States, No. 96-10-02298, Slip Op. 98-83 (CIT 1998) at 5-6 and
Koyo Seiko Co. v. United States, 936 F. Supp. 1040, 1048 (CIT 1996).
Thus, petitioners claim that under the present facts, the Department
need not conduct any further investigation to determine whether price
manipulation has occurred. Moreover, petitioners assert that in this
case the Department has the authority to reject such comparisons. In
support of this assertion, petitioners cite Mistubishi Electric Corp.
v. United States, 700 F. Supp. 538, 555 (CIT 1988), aff'd 898 F.2d 1977
(Fed. Cir. 1990); see also Koening & Bauer-Albert AG v. United States,
No. 96-10-02298, Slip Op. 98-83 (CIT 1998) at 6; and Queen's Flowers de
Columbia v. United States, 981 F. Supp. 617, 622 (CIT 1997).
Respondent claims that petitioners' allegations concerning its
sales to the customer at issue are untimely and unsubstantiated and
should therefore be dismissed. First, respondent argues that
petitioners first raised these claims in their case brief, and thus
failed to raise these allegations until long after the deadline for
submission of factual information in this review. Respondent cites 19
CFR Sec. 351.302(d) and contends that the Department has refused to
allow petitioners to dispute the validity of a NV calculation at such a
late stage in the proceedings. Respondent claims that in previous
cases, the Department rejected as untimely a fictitious market
allegation which was first raised at the time of filing of case briefs
following the preliminary results of the review, citing Carbon Steel
Wire Rope From Mexico: Final Results of Antidumping Duty Administrative
Review, 63 FR 46753, 46754-55 (September 2, 1998); and Dynamic Random
Access Memory Semiconductors of One Megabyte or Above from the Republic
of Korea: Final Results of Antidumping Duty Administrative Review, 62
FR 39809 (July 24,1997). Respondent argues that the prior Department
decisions rejecting fictitious market claims based on untimeliness
apply equally to petitioners' claims regarding ordinary course of trade
and fair value comparisons. Respondent argues that all three of
petitioners' claims relating to the customer at issue arise from
section 773 of the Act (calculating normal value). Respondent further
cites the preamble to the Department's regulations, arguing that a
timely and adequately substantiated allegation is necessary, since an
investigation of these types of claims requires information that is
quantitatively and/or qualitatively different from the information
normally gathered by the Department as part of its standard AD
analysis. See Antidumping Duties; Countervailing Duties: Final Rule, 62
FR 27296, 27357 (May 19, 1997) (``Final Rule''). Consequently,
respondent argues that a proper analysis of the allegations would
require the gathering of information that is not currently in the
administrative record for this review.
Second, respondent contends that the factual record does not
support petitioners' assertions regarding a potential for price
manipulation. Respondent argues that the challenged sales are
comparable in terms of price to other sales. Respondent contends that
the percentage difference between NSC's average home market net sales
price to the customer at issue and NSC's average net price to other
customers in the home market purchasing similar merchandise is minimal.
Moreover, respondent argues that the allegation that NSC and the
customer artificially lowered NSC's home market prices does not comport
with commercial reality. In so arguing, respondent claims that NSC's
U.S. sales to the customer at issue were very small in volume in
relation to NSC's sales to the same customer in the home market.
(Citing Tubeless Steel Disc Wheels from Brazil, 56 FR 14083, 14085
(April 5, 1991) (``[T]here is no commercial incentive for the
respondent to suppress the prices of its comparatively higher volume
home market sales to eliminate hypothetical margins in the much smaller
U.S. market.))'' Thus, respondent argues that it would be impractical
to manipulate the substantially larger set of sales in the home market
in order to raise the price of the relatively small set of U.S. sales.
Respondent contends that the Department has acknowledged that ``the
purpose of the antidumping duty statute is to offset the effect of
discriminatory pricing between the U.S. and home markets. * * * Thus,
while there is no statutory requirement that a firm must act to
eliminate price discrimination, if it decides to do so, how it does so
is within its own discretion. * * * A firm may also choose to increase
its U.S. prices and lower its home market prices at the same time.''
See Certain Hot-Rolled Lead and Bismuth Carbon Steel Products form the
United Kingdom; Final Results of Antidumping Duty Administrative
Review, 60 FR 44009 (Aug 24, 1995). Respondent argues that the fact
that NSC's U.S. and home market selling prices do not involve
significant dumping margins is the intended result of the antidumping
laws.
Respondent further objects to petitioners' interpretation of the
term ``fair'' in the statute. Respondent claims that petitioners'
interpretation of a ``fair'' comparison is inapposite, arguing that
under section 773 of the Act, ``fair comparison'' is a term of art that
refers solely to the technical calculations that produce the essential
terms--EP or constructed export price (CEP) and NV--of such a
comparison. Respondent argues that ``fair'' signifies that calculations
were made according to the relevant statutory criteria set forth in
sections 772 and 773. Thus, respondent contends that a challenge as to
whether a comparison is ``fair'' must allege that the Department has
not followed the methodological approach set forth under the Act.
Respondent argues that petitioners make no allegation that the
Department has failed to follow the requirements set forth in sections
772 and 773. Respondent argues that petitioners instead referenced the
Department's limited discretion under section 781, a section related to
scope issues that respondent argues is not relevant to the calculation
of NV. As stated above, respondent asserts that if petitioners seek to
challenge the Department's fair comparison methodology, they must do so
by citing a failure to carry out the calculations mandated by sections
772 and 773. Respondent submits that because petitioners have not done
so, their challenge must fail.
Department's Position: We disagree with petitioners that the sales
in question should be rejected as ``unfair comparisons'' under section
773 of the Act. Petitioners are correct that section 773(a) of the Act
requires that a fair comparison shall be made between EP or CEP and NV.
Petitioners are also correct that the Department has a certain amount
of discretion to act ``with the purpose in mind of preventing the
intentional evasion or circumvention of the antidumping duty law.''
Dastech Int'l, Inc. v. ITC, 963 F. Supp. 1220, 1229 (CIT 1997);
Mitsubishi Elec. Corp. v. United States, 12 CIT 1025, 1046, 700 F.
Supp. 538, 555 (1988).
[[Page 12954]]
However, the mere fact that the customer in question purchased NSC
product in both the U.S. and home markets does not provide sufficient
grounds to establish that the calculation based upon these sales is
inappropriate. That the customer in question purchased the identical
product in both markets is not, in itself, unusual, nor suggestive of
an intentional evasion or circumvention of the antidumping duty law.
Furthermore, as acknowledged by the Department in previous cases, it is
permissible for a respondent to reduce or eliminate dumping either by
raising its U.S. prices or by lowering its home market prices of
merchandise subject to the order. Furfuryl Alcohol from the Republic of
South Africa: Final Results of Antidumping Duty Administrative Review,
62 FR 61084, 61085 (November 14, 1997). (For further discussion
involving proprietary information, see Memorandum to the File: Analysis
of Nippon Steel Corporation (``NSC'') in the Final Results of Corrosion
Resistant Steel Flat Products from Japan (January 6, 1998)(``Analysis
Memo''). Therefore, we did not reject the sales in question on the
basis that they would lead to ``unfair comparisons.''
We disagree with respondent's argument that petitioners'
allegations are untimely. In order to address this claim, it is not
necessary for the Department to seek new factual information and
petitioners have not submitted new factual information in their
allegation.
Comment 2: Petitioners claim that the sales made to the customer at
issue should be rejected because they constitute sales that are outside
the ordinary course of trade. Petitioners argue that both the statute
and the Department's practice authorize the Department to disregard
sales (1) that are below cost; (2) that are not made at arm's length;
and (3) that are not ordinary when compared to sales generally made in
the market, particularly where the use of such sales in the margin
calculation would lead to irrational or unrepresentative results.
Petitioners argue that the Department could disregard sales for these
reasons even where those sales constitute a majority of respondent's
home market sales. Further, as discussed in Comment 1, petitioners note
that the U.S. sales are compared to sales to the same customer in the
home market. Petitioners assert that the potential for price
manipulation is enormous, given the economic incentive to minimize the
dumping margin. (For further discussion involving proprietary
information, see the Analysis Memo).
Petitioners assert that these circumstances are so extraordinary
that NSC's home market sales to the customer at issue should be
rejected as outside the ordinary course of trade. Additionally,
petitioners charge that the inclusion of these sales in the home market
would lead to ``irrational'' and ``unrepresentative'' results because
of this great potential for manipulation of prices.
Petitioners submit that under the statute, the Department may
reject various categories of home market sales because they are found
to be outside the ordinary course of trade. Petitioners contend that
although the Statement of Administrative Action (``SAA'') sets forth a
variety of examples of sales that are outside the ordinary course of
trade, the Department has the express authority to ``consider other
types of sales or transactions to be outside the ordinary course of
trade when such sales or transactions have characteristics that are not
ordinary as compared to sales or transactions generally made in the
same market.'' See SAA, reprinted in 1994 U.S.C.C.A.N., 4040, 4171
(``SAA'').
Respondent refutes NSC's claim that the challenged sales were
outside the ordinary course of trade. Respondent points out that the
burden of proving that sales are outside the ordinary course of trade
lies with the party making the assertion, citing Final Rule, at 27299.
Respondent argues that petitioners make no allegation that NSC has
engaged in any of the enumerated list of practices that are
presumptively deemed to constitute conditions and practices outside the
ordinary course of trade as prescribed in section 771 (15) of the Act,
nor have petitioners alleged that the sales at issue are characterized
by factors similar to those that have been found to constitute sales
outside of the ordinary course of trade in other cases. See, e.g.,
CEMEX, S.A. v. United States, 133 F.3d at 901-2 (Fed. Cir. 1998);
Sulfur Dyes, Including Sulfur Vat Dyes, From the United Kingdom: Final
Results of the Antidumping Administrative Review, 58 FR 3253, 3256
(January 8, 1993); Manganese Metal from the People's Republic of China:
Final Results of the Antidumping Administrative Review, 60 F.R. 56045,
56046 (November 6, 1995); Color Television Receivers, Except for Video
Monitors from Taiwan: Final Results of the Antidumping Duty
Administrative Review (``Color Television Receivers''), 55 FR 47093,
47100 (Nov. 9, 1990) (challenging the Department's comparison of sales
to the United States and a third country, where, in some cases, the
matching sales had the same customer order number, contract date, and
sales price.) Respondent argues that petitioners have an obligation to
point to specific evidence that the challenged sales are not normal
when compared to NSC's other sales of corrosion-resistant steel during
a reasonable period of time prior to the exportation of the subject
merchandise. Respondent also argues that a mere potential for price
manipulation is not enough to justify excluding home market sales.
Respondent argues that the court in Zenith Electronics determined that
there can be no basis for excluding home market sales without evidence
of actual price manipulation. See Zenith Electronics v. United States,
865 F. Supp. 890 (CIT 1994). Respondent argues that petitioners rely on
a series of vague assertions that do not meet the legal standard
enunciated in the statute, regulations, and case law in support of
their contention that the challenged sales were outside the ordinary
course of trade.
Respondent asserts that the Department has, in fact, previously
ruled that comparisons between sales to the same customer in two
markets may be valid. See Color Television Receivers, 55 FR 47093,
47100 ( November 9, 1990) (holding that ``nothing in the antidumping
law or in the Department's regulations directs or authorizes the
Department to ignore a valid third-country purchaser who is related to
the U.S. purchaser'').
Respondent contends that the ``ordinary course of trade'' provision
applies only to sales used in the calculation of NV under section 773.
Thus, respondent argues that petitioners' claim that the sales are
extraordinary because they comprise a great percentage of its U.S.
sales, is inappropriate under section 773. Additionally, respondent
cites Chang Tieh Ind. Co. v. United States, 840 F. Supp. 141, 145 (CIT
1993), for the proposition that it is unusual, if not improper, to
refer to the entire corpus of a party's U.S. sales as
``unrepresentative,'' as they must be representative of that seller's
behavior.
Department's Position: We agree with respondent. The statute and
SAA are clear that a determination of whether sales (other than those
specifically addressed in section 771(15)) of the Act are in the
ordinary course of trade must be based on an analysis comparing the
sales in question with sales of merchandise of the same class or kind
generally made in the home market. An ordinary course of trade
determination requires evaluation of sales in each review on ``an
individual basis taking in to account all of the relevant facts of each
case.'' See Nachi-Fujikishi Corp. v.
[[Page 12955]]
United States, 798 F. Supp. 716, 719 (CIT 1992). This means that the
Department must review all circumstances particular to the sales in
question. See Gray Portland Cement and Clinker from Mexico: Final
Results of the Antidumping Administrative Review, 62 FR 17148, 17153
(April 9, 1997).
The particular facts of this case do not support a finding that the
sales to the customer at issue were extraordinary transactions in
relation to other sales transactions. There is no record evidence
demonstrating any significant distinctions between the sales at issue
and other home market sales. In particular, there is no evidence of a
discernible pattern of lower sales prices to this customer as compared
to NSC's other customers who purchased similar merchandise. Moreover,
we agree with respondent that the small number of sales to the customer
at issue in the U.S. in comparison to the number of sales to the same
customer in the home market lessens any commercial incentive for the
respondent to suppress the prices of its comparatively higher volume
home market sales in order to eliminate hypothetical margins in the
much smaller U.S. market. See Tubeless Steel Disc Wheels from Brazil,
56 FR 14083, 14085 (April 5, 1991) (``Disc Wheels''). In addition, the
mere facts that the customer is the same for both the U.S. and home
market sales and that the parent company of the customer was involved
in the sales negotiations do not warrant a finding of extraordinary
sales transactions. For the above reasons, we have determined that the
home market sales in question were made in the ordinary course of
trade.
With respect to respondent's argument regarding the timeliness of
petitioners' allegations, as stated above, because no new factual
information has been submitted, nor is new factual information
necessary for the analysis of this claim, we find that this allegation
is not untimely.
Comment 3: Petitioners allege that NSC's home market sales to the
customer at issue should be rejected on the basis that such sales
constitute a fictitious market under section 773(a)(2) of the Act.
Petitioners note that as a general rule, the Department's practice in
analyzing whether there is evidence of a fictitious market is to
``require evidence that {a} decrease in price of home market sales of
the foreign like product was accompanied by an increase in the price of
sales of ``different forms of the foreign like product'.'' Furfuryl
Alcohol from the Republic of South Africa: Final Results of the
Antidumping Duty Administrative Review, 62 FR 61084, 61085 (November
14, 1997). Petitioners assert that the Department has acknowledged,
however, that the ``price movements within a foreign like product are
{but} one example of a fictitious market,'' and that ``we may determine
in the future that a fact pattern other than price movements within a
foreign like product constitutes a fictitious market.'' Id. Petitioners
note that in Zenith Electronics Co. v. United States, the CIT ordered a
remand for the Department to investigate allegations of a fictitious
market. See Zenith, 770 F. Supp. at 659, appeal after remand, 812 F.
Supp. 228 (1993), vacated in part on other grounds, 865 F. Supp. 890
(CIT 1994). According to petitioners, the plaintiffs, in Zenith,
claimed that the basis for the remand was a ``small proportion'' of
sales where the purchaser in the U.S. market was affiliated with the
purchaser in the comparison market. Petitioners argue that Zenith
compels the Department to investigate a potential fictitious market
where sales of the same merchandise within a close time frame are made
to related purchasers in both the U.S. and home markets. (For further
discussion involving proprietary information, see the Analysis Memo.)
Petitioners claim that the court's finding of a potential fictitious
market under such circumstances overruled the Department's previous
holding in Color Television Receivers that ``nothing in the antidumping
law or in the Department's regulations directs or authorizes the
Department to ignore valid third-country sales for purposes of
calculating FMV simply because those sales are made to a third-country
purchaser who is related to the U.S. purchaser.'' Color Television
Receivers, 55 FR 47093, 47100 (November 9, 1990). Petitioners also,
however, distinguish Zenith from this case, claiming that no further
investigation is warranted since the present record sufficiently
supports a finding of a fictitious market. On this basis, petitioners
claim that their allegation is timely.
Respondent argues that petitioners' fictitious market allegation
should be rejected because NSC's home market sales to the customer at
issue are ``bona fide arm's length transactions'' that reflect the
``actual market price.'' Respondent asserts that a fictitious market
analysis is ``extraordinary'' and will be undertaken by the Department
only upon receipt of a timely and adequately substantiated allegation,
citing Carbon Steel Wire Rope from Mexico: Final Results of the
Antidumping Duty Administrative Review, 63 FR 46753, 46755 (Sept. 2,
1998); Preamble to Final Rule, 62 FR at 27357.
Respondent argues that only sales which are not bona fide arm's
length transactions are subject to the fictitious market provision, and
that such sales must be ``pretended,'' citing PQ Corp. v. United
States, 652 F. Supp. 724 (CIT 1987); Furfuryl Alcohol, 62 FR at 61085.
Respondent asserts that in order to prove that NSC's home market sales
to the customer at issue are ``pretended'' sales with ``artificial''
prices that ``do not reflect actual market price,'' petitioners would
have to show that NSC ``artificially suppressed'' its home market
prices to the customer at issue. Respondent contends that the
Department has rejected fictitious market allegations where the
petitioner has failed to submit information indicating that
respondent's lower home market prices ``were other than actual market
price,'' citing Porcelain-on-Steel Cooking Ware from Mexico: Final
Results of the Antidumping Administrative Review, 58 FR 32096 (June 8,
1993). Respondent argues that petitioners failed to provide such data.
Respondent argues that NSC's sales to the customer in question are
``bona fide arm's length transactions'' at prices that reflect ``actual
market price.'' As discussed earlier, respondent claims that the
average net sales price to the customer at issue is comparable to NSC's
average net sales to other customers purchasing similar merchandise,
differing by a minimal percentage.
Respondent further argues that petitioners' fictitious market
allegation should be rejected because NSC had no commercial incentive
to suppress prices, which respondent believes is evidenced by the fact
that the home market sales volume to the customer at issue is
significantly larger than U.S. sales volume to the same customer. Disc
Wheels, 56 FR at 14085.
Respondent argues that even if NSC were to lower its prices in the
home market, this does not constitute a fictitious market. Respondent
asserts that the Department's general practice requires that a
fictitious market allegation must be supported by evidence of
``different movements in the prices at which different forms of the
subject merchandise have been sold in the home market.'' Furfuryl
Alcohol, 62 FR at 61085; Disc Wheels, 56 FR at 14095. Respondent argues
that petitioners have not identified any ``different forms,'' nor have
they alleged any ``different movements'' in the prices of any such
forms. Respondent notes that in Furfuryl Alcohol, the Department found
that a claim ``centering around a
[[Page 12956]]
single supplier selling at low prices in the home market does not
justify an expansion'' of the Department's ``normal practice of
determining the existence of a fictitious market based on a comparison
of prices of different forms of the foreign like product.'' Furfuryl
Alcohol, 62 FR at 61085. Additionally, respondent notes that in
Furfuryl Alcohol, the Department acknowledged a respondent's right to
``reduce or eliminate dumping by either raising its U.S. prices or by
lowering its home market prices of merchandise subject to the order.''
Id.
Respondent also argues that a ``mere potential'' for price
manipulation does not satisfy the legal standard for establishing a
fictitious market. Rather, respondent contends that a finding of
``actual'' price manipulation must be shown in order for sales to be
excluded. Respondent asserts that the court in Zenith acknowledged this
requirement when it ordered the Department to determine whether
manipulation ``had taken place,'' citing Zenith, 770 F. Supp. at 659.
Respondent further notes that petitioners' assertion about the
challenged sales is based on the order date as the date of sale.
Respondent argues that the Department must use the shipment date as the
date of sale since it is the date when the material terms of sale were
established. (See Comment 4 below for further details.) Respondent
claims that the percentage of matched sales to the same customer in
both markets is lower if the date of shipment is used as the date of
sale.
Department's Position: An allegation involving fictitious markets
requires investigation and analysis by the Department of factors that
are not always considered during the ordinary course of a review.
Petitioners failed to raise their fictitious market allegation until
the filing of their case brief following the preliminary results of
review. Therefore, petitioners' allegation was untimely filed and not
adequate to warrant determining that NSC's home market sales constitute
a fictitious market. As stated in prior determinations by the
Department, a fictitious market analysis is extraordinary. In the
Preamble to the Department's Final Regulations implementing the URAA,
the Department explained that it typically does not engage in a
fictitious market analysis under section 773(a)(2) of the Act, or a
variety of other analyses called for by section 773, ``unless it
receives a timely and adequately substantiated allegation from a
party.'' Antidumping Duties: Countervailing Duties; Final Rule, 62 FR
27296, 27357 (May 19, 1997) (Final Rule) (citing Disc Wheels, 56 FR at
14083 (April 15, 1991)); and Porcelain-on-Steel; Cooking Ware from
Mexico: Final Results of the Antidumping Duty Administrative Review, 58
FR 32095 (June 8, 1993). The various provisions of section 773,
including section 773(a)(2) of the Act, ``call for analyses based on
information that is quantitatively and/or qualitatively different from
the information normally gathered by the Department as part of its
standard antidumping analysis.'' See Final Rule, 62 FR at 27357. If a
timely and adequately substantiated allegation is submitted in a future
review, we will examine this issue in that review.
Comment 4: Respondent argues that the Department's preliminary
decision to use date of order confirmation as date of sale is not in
accordance with law and inconsistent with the Department's regulations
on date of sale. Respondent argues that the Department should instead
use shipment date as the date of sale. Respondent first argues that the
intent of the date-of-sale regulation is to select the date that most
accurately reflects the date on which the material terms of sale are
established. Respondent argues that for that purpose, the regulation
instructs the Department to use the invoice date unless there is
evidence on the record indicating that another date more accurately
reflects the date on which the material terms of sale are established,
citing 19 CFR 351.401(i). Respondent notes that the Department has
previously held that the reason for using a date other than the invoice
date as the date of sale must be ``compelling,'' citing Certain Cold
Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea:
Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170,
13194 (March 18, 1998).
Second, respondent argues that the Department's regulations state a
preference for establishing a date of sale on the basis of data
maintained by the respondent in the ordinary course of business. See 19
CFR 351.401(i). Respondent argues that these regulations establish a
rebuttable presumption that the invoice date is the appropriate date of
sale, because it: (1) most accurately reflects the date on which the
material terms are set; and (2) is the date that is generally
maintained in the ordinary course of business.
Respondent notes that in previous cases, the Department held that
the date of invoice could not be used because the date of invoice was
later than the shipment date. See Small Diameter Circular Seamless
Carbon and Alloy Steel Standard, Line and Pressure Pipe from Germany:
Final Results of Antidumping Duty Administrative Review, 63 FR 13217,
13226 (March 18, 1998). Respondent contends that under no circumstances
may a date after the date of shipment be used as the date of sale,
regardless of when the material terms are set. Therefore, respondent
argues that where the invoice date most accurately reflects the date on
which the material terms of sale are established, but may not be used
because it falls after the date of shipment, the Department must select
a proxy for the invoice date. In this situation, respondent argues, the
proxy date should be the shipment date, because it is the closest
permissible ``date of sale'' to the invoice date.
Respondent further argues that the Department's use of the order
confirmation date of NSC's sales of subject merchandise as the date of
sale is not in accordance with the Department's regulations. Respondent
asserts that the order confirmation date is an inappropriate date of
sale because the order confirmation date does not accurately reflect
the date on which the material terms of sale are ``finally
established.'' Respondent contends that the order confirmation date
occurs prior to the date of shipment of the subject merchandise, and
that the material terms of sale can (and routinely do) change up to,
and even after, the date of shipment.
Respondent contends that the use of the shipment date as date of
sale fully accords with the Department's date-of-sale rules. Respondent
argues that the invoice date is the date that most accurately reflects
the date on which the material terms of sale are established. However,
respondent asserts that NSC's invoice date always occurs on, or after,
the shipment date. Therefore, the Department may not rely on invoice
date since the Department's rules do not permit the use of any date
after the shipment date as the ``date of sale.'' Respondent argues that
because the shipment date is the closest permissible ``date of sale''
to the invoice date, the shipment date is the best proxy for the
invoice date and, as such, is the date that reflects most accurately
the date on which the material terms of sale are established.
Petitioners argue that the Department properly selected the order
confirmation as the date of sale. Petitioners argue that if the record
shows that the material terms of sale are usually established on a date
other than the invoice date, the Department will select such other date
as the date of sale. Petitioners assert that the Department prefers to
use the invoice date as the date of sale because in many cases, ``price
and quantity are
[[Page 12957]]
often subject to continued negotiation between the buyer and seller
until a sale is invoiced.'' See Final Rule, at 27348. However,
petitioners contend that the Department will not use the invoice date
where the evidence shows that ``for a particular respondent, the
material terms of sales usually are established on some date other than
the invoice date,'' citing Canned Pineapple Fruit from Thailand, 63 FR
43661, 43668 (August 14, 1998), quoting Final Rule, at 27349.
Petitioners assert that if the invoice date does not ``reasonably
approximate the date on which the material terms of sale were made in
either of the markets under consideration,'' the Department has
determined that ``its blanket use as the date of sale in an antidumping
analysis is untenable.'' Circular Welded Non-Alloy Steel Pipe from the
Republic of Korea, 63 FR 32833, 32835 (June 16, 1998).
Petitioners argue that the record fully supports the Department's
finding that the order confirmation date, and not the invoice date or
the shipment date, is the date that best reflects the date on which the
material terms of sale are set. Petitioners point out that, as
indicated by NSC's questionnaire response and also confirmed by the
verification results, the order confirmation establishes all essential
aspects of the sale, including the product specifications, price and
quantity. Petitioners note that NSC produces merchandise to order.
Petitioners assert that the Department confirmed at verification that
in instances where the parties decide to modify the terms following the
initial order confirmation, NSC either receives a revised order and
issues a revised order confirmation, or it internally modifies the
previously issued order confirmation. Petitioners argue that where
these minor variations existed between the quantity ordered and the
quantity shipped, such variances were immaterial and clearly
attributable to NSC's practice of manufacturing the subject merchandise
to order, as opposed to simply selling from inventory. Petitioners note
that the sales traces conducted at verification showed that NSC made
several shipments in order to supply the customer with the quantity
specified in the order confirmation, and the sales traces demonstrated
that the total quantity shipped in the multiple shipments conformed to
the total quantity in the order confirmation. Petitioners conclude that
these sales traces, in which several shipments satisfied the terms of a
single order, constitute clear and concrete proof that it was the order
confirmation date, and not the shipment date (or the invoice date),
that best reflects when the ``material terms of sales usually are
established.'' Petitioners contend that given NSC's practice of
multiple shipping dates where the terms were consistent with the order
confirmation, the use of the shipment date as the date of sale would be
arbitrary and distort the calculations. Petitioners argue that it would
result in two shipments, both of which were intended to satisfy the
terms of a single order made on one day, having different dates of
sale. Petitioners assert that the Department confirmed at verification
that the terms of the revised order confirmation then supersede the
terms initially established. Petitioners contend that it is the order
confirmation, as originally agreed to or as modified--and not the
invoice or the shipment--that establishes the material terms of the
sale.
Petitioners argue that NSC's claim that the invoice/shipping date
is the proper date of sales is based entirely on claims that the use of
the order confirmation date is improper. Petitioners assert that NSC's
claims that the order confirmation is not the correct date of sale are
meritless. Petitioners claim that respondent's claim that the material
terms of sales ``can--and routinely do--change up to and even after the
date of shipment'' is not an accurate characterization of the record.
Petitioners allege that the record clearly shows that to the extent NSC
and its customer made a significant revision to any material term of
sales, there is an established mechanism for accomplishing the
revision; specifically, petitioners assert that NSC issues a new or
revised order confirmation. Petitioners claim that the ``routine
changes'' to the order confirmation referenced by respondents involve
slight variances between the quantity ordered and the quantity shipped
and are distinctly not material changes as evidenced by these sales
traces. Petitioners contend that the Department has repeatedly refused
to base date of sale determinations on these types of insignificant
changes, citing Circular Welded Non-Alloy Steel Pipe from Korea: Final
Results of the Antidumping Administrative Review, 63 FR 32833, 32836
(June 16, 1998).
Furthermore, petitioners assert that respondent's claim of a lag
time between the date of the order confirmation to the date of shipment
does not mandate that the date of shipment be used instead of the order
confirmation date as the date of sale. Petitioners argue that the
Department's requirement in the questionnaire that the invoice date not
be used for the date of sale if there is an ``exceptionally long period
of time between the date of the invoice and the date of the shipment''
refers to the discussion in the Preamble to the Department's
regulations relating to manipulation of the invoice date and pertains
solely to the length of time between the invoice date and shipping
date. See Final Rule, at 27349. Petitioners argue that since the issue
raised by NSC concerns the lag time between the order confirmation and
the date of shipment, the requirement in the questionnaire and
discussion in the Preamble are not relevant.
Petitioners charge that respondent mischaracterizes the record by
its statement that the Department verified that the material terms of
sales were not set until shipment, and the quantity shipped ``varied
significantly'' from the quantity ordered. Petitioners note that the
Department did not reach these findings. Further, petitioners assert
that respondent's argument that it was untimely for the Department to
reject NSC's reported date of sale for the first time in the
preliminary results is misplaced. Petitioners argue that there was
simply no opportunity for the Department, prior to verification, to
examine the order confirmations for specific sales and compare terms in
those orders to what was shipped and reported in the response.
Petitioners argue that the Preamble explicitly recognizes that date of
sale issues cannot always be resolved at an early stage in the
proceedings. Final Rule, at 27349-50.
Department Position: As in the preliminary results, we have
continued to use order confirmation date as the date of sale. The
Department normally uses invoice date as the date of sale ``absent
satisfactory evidence that the material terms of sale were finally
established on a different date.'' See Canned Pineapple Fruit from
Thailand: Notice of Final Results and Partial Rescission of Antidumping
Duty Administrative Review, 63 FR 43661, 43668, citing Antidumping
Duties; Countervailing Duties, 62 FR 27296, 27348 (May 19, 1997).
Accordingly, ``[i]f the Department is presented with satisfactory
evidence that the material terms of sale are finally established on [a]
date other than the date of invoice, the Department will use that
alternative date as the date of sale.'' Id. Verification results
indicate that the material terms of sale were established on the date
of order confirmation. Additionally, among the sales traces examined,
we found no material changes to the order confirmation terms. As noted
by petitioners, the sales verification results
[[Page 12958]]
showed that the total quantity shipped in the multiple shipments
conformed to the quantity in the order confirmation. NSC also reported
that if there were revisions in the sales terms, the revised order
would be issued. Thus, the order confirmation date, and not the
shipment date or the invoice date, best reflects when the material
terms of sale usually are established. Accordingly, consistent with our
current practice, we have determined that order confirmation date is
the appropriate date of sale for NSC's sales, as it most accurately
represents the date on which the essential terms of sale are
established.
Comment 5: Petitioners argue that the Department should reject
NSC's claimed adjustments for post-sale rebates where the rebate
amounts were not fixed at the time of sale. Petitioners contend that it
is the Department's long standing practice to require a respondent to
show that the terms of a rebate were fixed at or before the time of the
sale in order to be entitled to a rebate adjustment, citing, e.g.,
Department's Antidumping Questionnaire at I-11; Certain Corrosion-
Resistant Carbon Steel Flat Products from Canada: Final Results of
Antidumping Administrative Review, 63 FR 12725, 12741 (March 16,
1998)(``Canadian Steel''). Petitioners contend that the purpose of this
rule is to protect against manipulation of prices with the intent of
minimizing or masking dumping, citing Antifriction Bearings and Parts
thereof from France: Final Results of Antidumping Administrative
Review, 60 FR 10900, 10930 (Feb. 28, 1995). Petitioners note that NSC
reported rebates where the rebate amount was not fixed until after
shipment. Petitioners argue that although the post-sale revisions to
rebates might be part of NSC's normal business practices, this does not
mitigate against the potential for manipulation. Petitioners argue that
following shipment, the respondent has the ability to analyze the
merchandise that it sold to United States, and then decide to alter the
amount of the rebate based on which sales match to the U.S. shipments.
Petitioners argue that where post-sale adjustments to the rebate are
part of the respondent's normal business practice, the potential for
manipulation is even greater because the very mechanism for
manipulation is already in place.
Petitioners stress that it is not necessary for the Department to
determine whether manipulation did or did not occur. Petitioners argue
that the mere potential for manipulation is sufficient to warrant
rejection of rebates, citing Koening & Bauer, No. 10 96-10-02298, Slip
Op. 98-93 (CIT 1998) at 6 (stating that ``Commerce's decision to reject
price amendments that present the potential for price manipulation was
a permissible interpretation of the statute''). Petitioners argue that
the fact that the Department did not find in this case any evidence of
manipulation at verification is not determinative. Petitioners contend
that if a respondent were permitted to adjust rebates after the sale,
it would be virtually impossible to verify that manipulation would not
occur, particularly if rebates are also granted on non-subject
merchandise sold to the same customer.
Petitioners argue that the potential for manipulation in this case
was great. Petitioners assert that NSC was in a position to eliminate
or reduce rebates on non-subject merchandise sold to the same home
market customers in return for higher rebates on home market subject
merchandise. Petitioners stress that in this case, the Department's
normal safeguards with respect to rebates-i.e., that the terms be
``fixed at or before the time of sale''-be strictly enforced.
Petitioners rebut NSC's claim that if the Department decides to
reject NSC's post sale price adjustments, it should only reject rebates
where there is a difference between the amount of the ``initial
rebate'' and the rebate that was ultimately paid. Petitioners argue
that all sales where the rebate amount was not firmly established by
the date of sale were subject to manipulation, whether the rebate
amount changed or not. Petitioners find it unacceptable to substitute
the amount of the initial rebate for the amount reported by NSC as the
actual rebate paid. Petitioners point out that respondent acknowledged
that such amounts did not represent the complete agreement between NSC
and its customer. Petitioners conclude that the Department should
disallow all home market rebates where the terms were not fixed at or
before the time of the sale.
Respondent argues that the Department's decision to accept NSC's
rebates, and the post-sale adjustments to those rebates, was consistent
with Department practice where, as here, the Department has verified
that the rebates were made in the normal course of business on a
transaction-specific basis. Respondent argues that the Department's
finding in the preliminary results that NSC had not engaged in the
manipulation of dumping margins through the use of rebates is
consistent with the Department's ``prior knowledge'' requirement.
Respondent contends that in determining whether rebates have been
improperly used by the respondent to manipulate the dumping margins,
the Department considers whether ``the buyer {is} aware of the
conditions to be fulfilled and the approximate amount of the rebates at
the time of sale.'' Canadian Steel, 61 FR 13815, 13823 (March 28,
1996). Respondent argues that the record demonstrates, and the
Department confirmed at verification, that NSC's customer had knowledge
of the conditions of its ``rebate program'' at or before the time of
sale, thus fulfilling the requirement that the buyer has ``prior
knowledge'' of the conditions and the approximate amount of the
rebates. Respondent asserts that in cases where the rebate agreement
for the period was in the process of its negotiation at the time of
sale, NSC granted the end user the rebate amount in the rebate
agreement for the prior period with the understanding that this rebate
would be adjusted to reflect the final outcome of the negotiations.
Respondent argues that its customers were aware that the rebate amount
based on the existing agreement would be adjusted depending on the
final outcome of the final rebate negotiations for the new agreement.
Department's Position: We allowed the rebates in accordance with 19
CFR 351.401(c) and (g). The regulations collectively refer to rebates
under the umbrella term ``price adjustment.'' See definition of ``Price
Adjustment'' in 19 CFR 351.102(b). A ``price adjustment'' as defined by
the regulations represents ``change[s] in the price charged for subject
merchandise or the foreign like product . . . that are reflected in the
purchaser's net outlay.'' Id. Where a change in the price meets this
definition of a ``price adjustment,'' and is ``reasonably
attributable'' to the subject merchandise or foreign like product,
Sec. 351.401(c) the Department's regulations state that the Department
will use a price net of the price adjustment in calculating export
price, constructed export price and normal value.
The Department allows post-sale price adjustments if they reflect
the respondent's normal business practice and were made on a
transaction-specific (or properly allocated) basis. See Antifriction
Bearings from France, et al. Final Results of Antidumping
Administrative Review, 60 FR 10900, 10930 (February 28, 1995); and
Canadian Steel, 61 FR at 13815. The price adjustments in this review
reflect NSC's normal business practice. Moreover, we verified the price
adjustments given in the course of the sales traces, and traced them to
the sales journal and supporting documentation. Information on the
record of this review
[[Page 12959]]
indicates that these adjustments were made and reported on a
transaction-specific basis. Therefore, we allowed the rebates since
they meet the requirements for ``price adjustments'' under 19 CFR
351.401 (c) and (g).
Comment 6: Petitioners note the following errors in the model match
program: (1) incorrect modification of values in the DIFFCODE field;
(2) incorrect characteristic value in the ROLLU/H field; (3) incomplete
assignment of values for the additional product characteristics
reported by respondent for CWEIGHTU/H; (4) improper inclusion of home
market credit expense in the calculation of net cost of production; (5)
incorrect concatenation of the home market control numbers for certain
resales; (6) multiple matches to U.S. product characteristics based
upon the home sales source; and (7) failure to retain invoice field.
Petitioners noted the following errors in the margin program: (1)
incorrect recalculation of credit expense; (2) incorrect conversion of
U.S. packing expense; (3) failure to account for indirect expenses in
offset for home market commission.
Respondent notes the following clerical errors: (1) incorrect
inclusion of the inventory carrying cost date in the MOVECOP field; (2)
incorrect linking of cost records to sales records for certain control
numbers; and (3) incorrect assignment of certain variable costs to home
market control numbers selected as matches. Respondent also notes a
further correction to petitioners' proposed correction to the
recalculation of credit expenses.
Department's Position: We agree with both petitioners and
respondent and have modified the calculations for the final results of
review accordingly.
Final Results of Review
As a result of our review, we determine that the following
weighted-average dumping margin exists for the period June 30, 1996,
through July 1, 1997:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Nippon Steel Corporation................................ 12.51
------------------------------------------------------------------------
The Department will determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. We will
calculate importer-specific duty assessment rates on a unit value per
metric ton basis. To calculate the per metric ton unit value for
assessment, we summed the dumping margins on U.S. sales, and then
divided this sum by the total metric tons of all U.S. sales examined.
The Department will issue appraisement instructions directly to the
Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of these final results for all shipments of the
subject merchandise entered, or withdrawn from warehouse, for
consumption on or after the publication date provided by section
751(a)(1) of the Act: (1) the cash deposit rate for the reviewed
company will be the rate listed above; (2) if the exporter is not a
firm covered in this review, 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 period
for the manufacturer of the merchandise; and (3) the cash deposit rate
for all other manufacturers or exporters will continue to be the ``all
others'' rate of 36.41 percent, the all others rate established in the
LTFV 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 final 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 the antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1), that continues to govern
business proprietary information in this segment of the proceeding.
Timely written notification of the 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 determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: March 8, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-6290 Filed 3-15-99; 8:45 am]
BILLING CODE 3510-DS-P
