02-5472. Stainless Steel Bar from India; Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results and partial rescission of 2000-2001 administrative review.

SUMMARY:

In response to requests from interested parties, the Department of Commerce is conducting an administrative review of the antidumping duty order on stainless steel bar from India with respect to Viraj Group, Limited (“Viraj”). This review covers sales of stainless steel bar to the United States during the period February 1, 2000, through January 31, 2001.

We preliminarily find that, during the period of review, Viraj has not made sales below normal value. If these preliminary results are adopted in our final results of this administrative review, we will instruct the Customs Service not to assess antidumping duties. Interested parties are invited to comment on these preliminary results. Parties who submit arguments are also requested to submit (1) a statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE:

March 7, 2002.

FOR FURTHER INFORMATION CONTACT:

Melanie Brown or Cole Kyle, Office 1, AD/CVD Enforcement, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone [phone] or [phone] respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute

Unless otherwise indicated, all citations to the statute are references to the provisions of the Tariff Act of 1930, as amended effective January 1, 1995 (“The Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department of Commerce's (“the Department”) regulations are to 19 CFR part 351 (April 2001).

Background

On February 21, 1995, the Department published in the Federal Register (60 FR 9661) the antidumping duty order on stainless steel bar from India. The Department notified interested parties of the opportunity to request an administrative review of this order on February 14, 2001 (66 FR 10269). In February 2001, the Department received requests for review from five Indian producers of the subject merchandise: Shaw Alloys Corp., Ltd (“Shaw”); Ferro Alloys Corp. Ltd. (“FACOR”); Isibars Limited (“Isibars”); Viraj Group, Ltd. (“Viraj”); and Panchmahal Steel Limited (“Panchmahal”). Concurrent with their request for review, Isibars and Viraj also requested revocation from the antidumping duty order. In accordance with 19 CFR 351.221(b)(1), we published a notice of initiation of this antidumping duty administrative review on March 22, 2001 (66 FR 16037) with respect to Shaw, FACOR, Isibars, Viraj, and Panchmahal. The period of review (“POR”) is February 1, 2000, through January 31, 2001.

On March 30, 2001, Shaw Alloys withdrew its request for review. Panchmahal and FACOR withdrew their requests for review on June 1 and June 13, 2001, respectively. The above withdrawal requests were timely and no other interested party had requested a review of these companies. Therefore, in accordance with 19 CFR 351.213(d)(1), we are rescinding the reviews of Shaw, FACOR, and Panchmahal.

On December 20, 2001, Isibars withdrew its request for review. Although this withdrawal was received by the Department after the regulatory deadline of June 20, 2001, section 351.213(d)(1) of the regulations permits the Department to extend the deadline if “it is reasonable to do so.” Therefore, in accordance with section 351.213(d)(1) of the Department's regulations, the Department extended the deadline to withdraw requests for review and rescinded the administrative review with respect to Isibars (See the January 3, 2002 memorandum to Richard Moreland entitled, “Rescission of Administrative Review of Isibars, Ltd.” which is on file in the Department's Central Records Unit (“CRU”) in the main Department building). Therefore, for purposes of this administrative review, the only company reviewed is Viraj.

On July 19, 2001, the petitioners alleged that Viraj had made sales below the cost of production. Because the petitioners' allegation provided a reasonable basis to believe or suspect that sales in the home market by Viraj had been made at prices below the cost of production, the Department initiated a sales below cost investigation of Viraj on September 7, 2001. (See Cost of Production Analysis below).

Request for Revocation

According to section 351.222(b)(2)(i) of the Department's regulations, the Secretary may revoke an antidumping duty order in part if one or more of the exporters or producers covered by the order have sold the merchandise at not less than normal value for a period of at least three consecutive years. Section 351.222(b)(4)(d)(1) allows that the company requesting revocation need not have been reviewed during the intervening year (i.e., “any year between the first and final year of the consecutive period on which revocation or termination is conditioned” (351.222(b)(4)(d)(2)).

Viraj was reviewed in the 1998-1999 administrative review and received a 2.50 percent margin (See, Stainless Steel Bar From India; Final Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 2000). Viraj was not reviewed in the 1999-2000 administrative review (the “intervening year”). Viraj's request for revocation is based on an assumption that it will be found to be not dumping in the pending litigation of the 1998-1999 administrative review, not on the basis of an actual finding of no dumping. Because Viraj was found to be dumping in the 1998-1999 administrative review at 2.50 percent, Viraj has not had three consecutive years of no dumping. Accordingly, we find that Viraj does not meet the standard for revocation. In addition, the Department notes that Viraj failed to certify commercial quantities pursuant to 19 CRF 351.222(e)(1)(ii) of the Department's regulations.

Scope of Review

Imports covered by this review are shipments of stainless steel bar (“SSB”). SSB means articles of stainless steel in straight lengths that have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-finished, or ground, having a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles, hexagons, octagons, or other convex polygons. SSB includes cold-finished SSBs that are turned or ground in straight lengths, whether produced from hot-rolled bar or from straightened and cut rod or wire, and reinforcing bars that have indentations, ribs, grooves, or other deformations produced during the rolling process.

Except as specified above, the term does not include stainless steel semi-finished products, cut length flat-rolled products (i.e., cut length rolled products which if less than 4.75 mm in thickness have a width measuring at least 10 times the thickness, or if 4.75 mm or more in thickness having a width which exceeds 150 mm and measures at least twice the thickness), wire (i.e., cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products), and angles, shapes and sections.

The SSB subject to these reviews is currently classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this review is dispositive.

Collapsing

The regulations state that we will treat two or more affiliated producers as a single entity where those producers have production facilities for similar or identical products that would not require substantial retooling of either facility in order to restructure manufacturing priorities, and we conclude that there is a significant potential for the manipulation of price or production. In identifying a significant potential for the manipulation of price or production, the factors we may consider include the following: (i) The level of common ownership; (ii) the extent to which managerial employees or board members of one firm sit on the board of directors of an affiliated firm; (iii) whether operations are intertwined, such as through the sharing of sales information, involvement in production and pricing decisions, the sharing of facilities or employees, or significant transactions between the affiliated producers. See 19 CFR 351.401(f).

The Viraj Group Ltd. has responded to the Department's questionnaire on behalf of the affiliated companies, Viraj Forgings, Ltd. (“VFL”); Viraj Alloys, Ltd. (“VAL”); Viraj Impoexpo, Ltd. (“VIL”); and Viraj USA, Inc. (“Viraj USA”). Based on the information currently on the record, we agree with Viraj that these companies are affiliated and should be collapsed for purposes of these preliminary results.

The information on the record indicates that there is common ownership among the companies in the Viraj Group Ltd. and that certain individuals serve on the board of directors of each of the four companies. The operations of the companies are intertwined through close supplier relationships, as VAL supplies VIL with the input hot-rolled bar VIL processes into bright bar and sells to the United States. VAL, VIL, and VFL each use production facilities for similar or identical merchandise. VAL produces hot-rolled round bars and billets for sale in the home market. VIL also produces stainless steel billets, flanges, forgings and wires. VFL produces stainless steel forged flanges from billets procured from VAL. There is no evidence on the record to indicate that substantial retooling would be required for VAL, VIL, or VFL to restructure their manufacturing priorities.

Because the Viraj companies are under common control and ownership, the three producing companies use similar production facilities to produce similar products, and the operations of the companies are intertwined, we preliminarily find the Viraj companies are affiliated for the purposes of this administrative review and that VAL, VIL, and VFL, should be collapsed and considered one entity pursuant to section 771(33) of the Act and section 351.401(f) of the Department's regulations. We will consider this issue further for the final results.

Fair Value Comparisons

To determine whether sales of stainless steel bar from India to the United States were made at less than normal value, we compared export price (“EP”) or constructed export price (“CEP”) to the normal value (“NV”), as described in the “Export Price/Constructed Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated EPs and CEPs for comparison to weighted-average NVs.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced and sold by the respondents in the home market during the POR that fit the description in the “Scope of Investigation” section of this notice to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We compared U.S. sales to sales made in the home market, where appropriate. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade. In making the product comparisons, we matched foreign like products based on the physical characteristics reported by the respondent.

Export Price/Constructed Export Price

We calculated EP in accordance with Section 772(a) of the Act for those sales where the merchandise was sold to the first unaffiliated purchaser in the United States prior to importation by the exporter or producer outside the United States. We based EP on packed, CIF prices to unaffiliated purchasers in the United States. We made deductions from the starting price for movement expenses including, inland freight, international freight, marine insurance, and brokerage, in accordance with section 772(c)(2)(A) of the Act.

In accordance with Section 772(b) of the Act, we calculated CEP for those sales to the first unaffiliated purchaser that took place after importation into the United States. We based CEP on packed, CIF duty-paid prices to unaffiliated purchasers in the United States.

We made deductions from the starting price for movement expenses, including inland freight, international freight, marine insurance, brokerage and handling, and U.S. customs duties, in accordance with section 772(c)(2)(A) of the Act, where appropriate. We increased the EP and CEP, where appropriate, by the amount of duty drawback in accordance with section 772(c)(1)(B) of the Act.

Normal Value

1. Home Market Viability

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., whether the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared Viraj's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with 19 CFR 404(b)(2) of the Department's regulation. Because Viraj's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales for the subject merchandise, we determined that the home market was viable.

2. Cost of Production Analysis

Based on our analysis of an allegation made by petitioners on July 19, 2001, we found that there were reasonable grounds to believe or suspect that the respondent's sales of the subject merchandise in their respective comparison markets were made at prices below their cost of production (“COP”). Accordingly, pursuant to section 773(b) of the Act, we initiated an investigation to determine whether Viraj made home market sales during the POR at prices below the COP, within the meaning of section 773(b) of the Act (See Memorandum from Team to Susan Kubach, Director, AD/CVD Enforcement Office 1, Allegation of Sales Below the Cost of Production for Viraj Impoexpo Ltd., dated September 7, 2001). We conducted the COP analysis described below.

3. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of the Viraj's cost of materials and fabrication for the foreign like product, plus amounts for general and administrative expenses (G&A), and interest expenses, where appropriate. We relied on the COP information provided by Viraj in its questionnaire responses.

4. Test of Home Market Prices

On a product-specific basis, we compared the weighted-average COPs to home market sales of the foreign like product during the POR, as required under section 773(b) of the Act, in order to determine whether sales had been made at prices below the COP. The prices were exclusive of commissions and indirect selling expenses. In determining whether to disregard home market sales made at prices below the COP, we examined whether such sales were made (1) within an extended period of time in substantial quantities, and (2) at prices which did not permit the recovery of costs within a reasonable period of time.

5. Results of the COP Test

Pursuant to section 773(b)(1) of the Act, where less than 20 percent of a respondent's sales of a given product are made at prices below the COP, we do not disregard any below-cost sales of that product because we determine that in such instances the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product are at prices less than the COP, we disregard those sales of that product, because we determine that in such instances the below-cost sales represent “substantial quantities” within an extended period of time in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determine whether such sales are made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act. We found that Viraj did not make more than 20 percent of its sales of any product at prices less than the COP. Therefore, all of Viraj's home market sales have been included in the calculation of NV, in accordance with section 773(b)(1).

Level of Trade

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (“LOT”) as the EP or CEP. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. Id.; see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997). In order to determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”),^[1] including selling functions,^[2] class of customer (“customer category”), and the level of selling expenses for each type of sale.

Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying levels of trade for EP and comparison market sales, (i.e., NV based on either home market or third country prices^[3] ) we consider the starting prices before any adjustments. For CEP sales, we consider only the selling expenses reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 2001).

When the Department is unable to match U.S. sales to sales of the foreign like product in the comparison market at the same LOT as the EP or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if a NV LOT is more remote from the factory than the CEP LOT and we are unable to make a level of trade adjustment, the Department shall grant a CEP offset, as provided in section 773(a))(7)(B) of the Act. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

Viraj reported that it sells to manufacturers and distributors in the home market and to distributors and resellers in the United States. Viraj reported two levels of trade (based on customer category) and a single channel of distribution in the home market. We examined the information reported by Viraj and found that home market sales to both customer categories were identical with respect to sales process, freight services, warehouse/inventory maintenance, and warranty service. Accordingly, we preliminarily find that Viraj had only one level of trade for its home market sales.

Viraj reported a single, different, level of trade and a single channel of distribution for its EP and CEP sales. The EP/CEP level of trade differs from the home market only with respect to freight and delivery. Thus, it was unnecessary to make any level-of-trade adjustment. See section 773(a)(7)(A) of the Act.

6. Calculation of Normal Value Based on Home Market Prices

We calculated NV based on ex-factory prices to unaffiliated customers. We made adjustments for differences in costs attributable to differences in the physical characteristics of the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. In addition, we made adjustments under section 773(a)(6)(C)(iii) of the Act for differences in circumstances of sale for imputed credit expenses. We also made adjustments, in accordance with 19 CRF 351.410(e), for indirect selling expenses incurred in the home market or United States where commissions were granted on sales in one market but not in the other (the commission offset).

Preliminary Results of Review

We preliminarily find the following weighted-average dumping margin:

Manufacturer/Exporter	POR	Weighted Average ­Margin
Viraj Group, Ltd.	2/1/00-1/31/01	0.10 (de minimis)

Any interested party may request a hearing within 30 days of publication of this notice. A hearing, if requested, will be held 37 days after the publication of this notice, or the first business day thereafter. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results.

Upon completion of this administrative review, the Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. The Department will issue appraisement instructions directly to the Customs Service.

The following deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of stainless steel bar from India 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 rate for the reviewed company will be the rate established in the final results of this review; (2) if the exporter is not a firm covered in this review, but was covered in a previous review or the original LTFV investigation, 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, a previous review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers and/or exporters of this merchandise, shall be 12.45 percent, the “all others” rate established in the LTFV investigation. (See 59 FR 66915, December 28, 1994).

These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) 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. In addition, this notice also serves as a reminder to parties subject to administrative protective orders (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305, 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 administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

February 28, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  The marketing process in the United States and home market begins with the producer and extends to the sale to the final user or customer. The chain of distribution between the two may have many or few links, and the respondents" sales occur somewhere along this chain. In performing this evaluation, we considered Viraj"s narrative response to properly determine where in the chain of distribution the sale occurs.

2.  Selling functions associated with a particular chain of distribution help us to evaluate the level(s) of trade in a particular market. For purposes of these preliminary results, we have organized the common selling functions into four major categories: sales process and marketing support, freight and delivery, inventory and warehousing, and quality assurance/warranty services.

3.  Where NV is based on CV, we determine the NV LOT based on the LOT of the sales from which we derive selling expenses, G&A and profit for CV, where possible.