[Federal Register Volume 64, Number 68 (Friday, April 9, 1999)]
[Notices]
[Pages 17319-17323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8924]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-533-814]
Stainless Steel Round Wire From India; Final Determination of
Sales at Less Than Fair Value
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final determination of antidumping duty
investigation.
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EFFECTIVE DATE: April 9, 1999.
FOR FURTHER INFORMATION CONTACT: Diane Krawczun or Richard Rimlinger,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW,
Washington, DC 20230; telephone: (202) 482-0198 or (202) 482-4477,
respectively.
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to Department of Commerce (Department)
regulations refer to the regulations codified at 19 CFR Part 351 (April
1998).
Final Determination
We determine that stainless steel round wire from India is being
sold, or is likely to be sold, in the United States at less than fair
value (LTFV), as provided in section 735 of the Act. The estimated
margins are shown in the Continuation of Suspension of Liquidation
section of this notice.
Case History
The Department issued the preliminary determination in this
investigation on November 12, 1998. See Notice of Preliminary
Determinations of Sales at Less Than Fair Value and Postponement of
Final Determinations--Stainless Steel Round Wire From Canada, India,
Japan, Spain, and Taiwan; Preliminary Determination of Sales at Not
Less Than Fair Value and Postponement of Final Determination--Stainless
Steel Round Wire From Korea, 63 FR 60402 (November 18, 1998)
(preliminary determination). Since the preliminary determination, the
following events have occurred.
In December 1998 and January 1999, we conducted on-site
verifications of the questionnaire responses submitted by Raajratna
Metal Industries Limited (Raajratna). We received case briefs from the
petitioners 1 and the respondent on February 19, 1999, and
we received rebuttal briefs from the same parties on February 26, 1999.
We held a public hearing on March 11, 1999.
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\1\ ACS Industries, Inc., Al Tech Specialty Steel Corp.,
Branford Wire & Manufacturing Company, Carpenter Technology Corp.,
Handy & Harman Specialty Wire Group, Industrial Alloys, Inc., Loos &
Company, Inc., Sandvik Steel Company, Sumiden Wire Products Corp.,
and Techalloy Company, Inc.
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Scope of Investigation
The scope of this investigation covers stainless steel round wire
(SSRW). SSRW is any cold-formed (i.e., cold-drawn, cold-rolled)
stainless steel product of a cylindrical contour, sold in coils or
spools, and not over 0.703 inch (18 mm) in maximum solid cross-
sectional dimension. SSRW is made of iron-based alloys containing, by
weight, 1.2 percent or less of carbon and 10.5 percent or more of
chromium, with or without other elements. Metallic coatings, such as
nickel and copper coatings, may be applied.
The merchandise subject to this investigation is classifiable under
subheadings 7223.00.1015, 7223.00.1030, 7223.00.1045, 7223.00.1060, and
7223.00.1075 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheadings are provided for convenience
and customs purposes, the written description of the merchandise under
investigation is dispositive.
Period of Investigation
The period of the investigation (POI) is January 1, 1997, through
December 31, 1997. This period corresponds to the respondent's four
most recent fiscal quarters prior to the month of the filing of the
petition (i.e., March 1998).
Fair Value Comparisons
To determine whether sales of stainless steel round wire from India
were made at less than fair value, we compared the export price (EP) to
the normal value (NV). Our calculations followed the methodologies
described in the preliminary determination except as noted below. See
also our analysis memorandum dated April 2, 1999, which has been placed
in the file.
Export Price and Constructed Export Price
For the price to the United States, we used EP as defined in
section 772 of the Act. We calculated EP based on the same methodology
used in the preliminary determination, except that we calculated an
amount for U.S.
[[Page 17320]]
indirect selling expenses for Raajratna's EP sales as an offset to its
home-market commissions in accordance with Sec. 351.410(e) of the
Department's regulations (see our response to Comment 3, below).
Normal Value
We used NV as defined in section 773 of the Act. We calculated NV
based on the same methodology used in the preliminary determination. We
based NV on CV where there was no above-cost HM sale for comparison. In
accordance with section 773(e)(1) of the Act, we calculated CV based on
the sum of Raajratna's cost of materials, fabrication, general
expenses, profit and U.S. packing costs. In general expenses, we
included HM indirect selling expenses and an amount we calculated to
cover expenses Raajratna incurred in its Mumbai sales office on certain
sales which Raajratna had reported.
Section 776(a)(1) of the Act provides that, if necessary
information is not available on the record, the Department shall,
subject to section 782(d) of the Act, use facts otherwise available in
reaching the applicable determination.
Raajratna indicated in its response that it was unable to segregate
and report its U.S. indirect selling expenses. In addition, Raajratna
did not report its home-market (HM) indirect selling expenses. As facts
available, we calculated an indirect selling expense factor as an
offset for Raajratna's HM commissions which we deducted from NV. We
used the same factor to deduct HM indirect selling expenses from HM
price in our determination of whether HM sales were made below the cost
of production (COP) and to add HM indirect selling expenses to
constructed value (CV).
Also, Raajratna did not report all of its general and
administrative (G&A) expenses with respect to its Mumbai (Bombay) sales
office which assisted Raajratna in obtaining raw materials for the
manufacture of subject merchandise and in the completion of certain
sales. We calculated an amount based on Raajratna's response to cover
these expenses.
Cost of Production
In accordance with section 773(b)(3) of the Act, we calculated the
weighted-average COP, by model, based on the sum of Raajratna's cost of
materials, fabrication, general expenses, and packing costs. We relied
on the COPs submitted by Raajratna except in the following instances
where the submitted costs were not quantified or valued appropriately:
(1) we calculated an amount for Raajratna's HM indirect selling
expenses which we deducted from HM price for COP comparisons and added
to CV for NV comparisons; (2) we used a revised financial expense ratio
using cost of sales in the denominator; (3) we included in Raajratna's
G&A expense portions of expenses incurred in Raajratna's Mumbai office;
(4) we used a model-specific yield-loss rate to calculate direct
materials costs; and (5) we added HM packing expenses to COP.
Currency Conversions
As in the preliminary determination, we made currency conversions
in accordance with section 773A of the Act. The Department's preferred
source for daily exchange rates is the Federal Reserve Bank.
Verification
As provided in section 782(i)(1) of the Act, we verified the
information submitted by the respondent for use in our final
determination. We used standard verification procedures, including
examination of relevant accounting and production records, as well as
original source documents provided by the respondent.
Interested Party Comments
Comment 1. Export Incentive System--Adjustment to EP
Raajratna argues that the Department should add to EP amounts
received as export incentives under the Indian Government's Duty
Entitlement Passbook (DEPB) System. Raajratna argues that the DEPB
benefits received from the Indian Government are directly related to
exports and are part of Raajratna's net returns on its U.S. sales.
Raajratna argues further that, alternatively, the Department should
treat the DEPB benefits as a circumstance-of-sale (COS) adjustment to
NV because the DEPB program is linked directly to Raajratna's U.S.
sales. Raajratna cites Fuel Ethanol From Brazil, 51 FR 5572 (1986), and
Acetylsalicylic Acid From Turkey, 52 FR 24492 (1987) to support its
position.
The petitioners respond that Raajratna is not entitled to an
adjustment for reported DEPB benefits because it failed to meet the
Department's two-prong test for a duty-drawback adjustment.
Specifically, the petitioners note that Raajratna was unable to provide
at verification information which would link the claimed refund amount
to actual imports of raw materials. The petitioners also argue that the
prior determinations Raajratna cited are irrelevant and inapplicable
because both cases precede the Department's two-prong test for making
duty-drawback adjustments to NV. The petitioners state that, in Fuel
Ethanol From Brazil, the Department determined that premiums received
under an export credit program directly related to the export sales
were COS adjustments but that, because Raajratna's reported DEPB
adjustments do not qualify as COS adjustments, Fuel Ethanol From Brazil
is inapplicable for this final determination. The petitioners argue
further that Raajratna's reliance upon Acetylsalicylic Acid From Turkey
is also misplaced because the payment at issue was not a government
benefit but the result of an arm's-length contract.
Department's Position: Section 772(c)(1)(B) of the Act requires the
Department to make an upward adjustment to NV for import duties rebated
by reason of exportation to the United States. We interpret this
requirement to apply only when the respondent meets our two-prong test
i.e., that (1) the import duty and rebate are directly linked to, and
dependent upon, one another; and (2) there were sufficient imports of
the imported material to account for the duty drawback received for the
export of the manufactured product (see e.g., Final Results of
Antidumping Duty Administrative Review: Oil Country Tubular Goods from
Korea, 64 FR 13169, 13172 (March 17, 1999)). We found during the sales
verification that, although Raajratna demonstrated actual receipt of
refund amounts under the DEPB system, it could not supply information
establishing how the Government of India calculates the amount refunded
to Raajratna. (See Sales Verification Report.) We also found that
Raajratna's consumption of imported wire rod dropped significantly
during the POI. Id. In addition, we found during the cost verification
that the incentive credits received under the DEPB system are not based
on the actual amount of the duty paid. (See Verification of Cost of
Production and Constructed Value Data for Raajratna Metal Industries,
Ltd., dated February 9, 1999.) Therefore, because Raajratna established
neither a direct link between the import duty paid by suppliers and
passed on to Raajratna, nor sufficient imports of wire rod to account
for the duty it received, we are unable to adjust EP for duty drawback
under section 772(c)(1)(B) of the Act.
The prior determinations cited by Raajratna are unsupportive
because both cases precede the establishment of the two-prong test. See
Huffy Corp. v. U.S., 632 F. Supp. 50 (CIT 1986). In addition, contrary
to Raajratna's assertion, benefits received under the DEPB
[[Page 17321]]
system do not qualify for a COS adjustment because benefits received
constitute revenue to Raajratna. COS adjustments reflect selling
expenses incurred by a respondent; however, we found at verification
that the DEPB refunds were not tied to any selling expenses nor were
they based on actual customs duties Raajratna paid to purchase raw
materials for the manufacture of subject merchandise. Cost Verification
Report at 2, 11; Sales Verification Report at 8. Indeed, Raajratna's
DEPB benefits were based on the FOB sales prices of Raajratna's
finished goods for export and exceeded substantially the amount of
customs duties Raajratna paid to import raw materials directly. Thus,
we have denied Raajratna a COS adjustment. (See section
773(a)(6)(C)(iii) of the Act and section 351.410(b) of the Department's
regulations.) Raajratna's reliance upon Fuel Ethanol From Brazil is
unsupportive here because, in this case, we find that Raajratna's DEPB
benefits do not qualify for a COS adjustment since they were unrelated
to differences in selling expenses. Thus, we have denied Raajratna an
adjustment to EP for refund amounts under the DEPB system.
Comment 2: Export Incentive System--CV Adjustment
Raajratna argues that, if the Department does not increase U.S.
prices to reflect the DEPB incentive, it should reduce Raajratna's CV
by the export incentive earned on Raajratna's U.S. sales. Raajratna
argues that an adjustment to CV is appropriate because the purpose of
the export incentive is to reduce the cost of materials to the extent
of the import duties incurred. Raajratna also argues that reducing CV
by this incentive is consistent with Department precedent, citing
Stainless Steel Bar From India, 62 FR 10540 (March 7, 1997) (SS Bar
From India I), Stainless Steel Bar From India, 63 FR 13622 (March 20,
1998) (SS Bar From India II), Solid Urea From the Former German
Democratic Republic, 62 FR 61271 (1997) (Solid Urea From Germany),
Camargo Correa Metais v. United States, Slip Op. 98-152 (CIT 1998)
(Camargo Correa Metais), and AK Steel Corp. v. United States, Slip Op.
97-152 (CIT 1997) (AK Steel Corp.).
The petitioners argue that the Department should not use the DEPB
incentive as an offset to Raajratna's CV. The petitioners argue that no
statutory provision exists which allows for such an offset. The
petitioners contend that the DEPB incentive is not granted in order to
offset any additional costs Raajratna incurred in purchasing raw
materials. The petitioners argue that, since the Department's
regulations and Antidumping Manual define CV as the costs of producing
the subject merchandise exported to the United States as if it were
sold in the home market, CV represents non-export sales made in the
home market. Raajratna rebuts petitioners' characterization of CV,
citing Ad Hoc Committee of Florida Producers of Gray Portland Cement v.
United States, Slip Op. 98-131 at 23 (CIT 1998).
The petitioners argue further that, because Raajratna's claimed
DEPB incentives were unrelated to (and exceeded) the actual amount of
import duties paid, the Department should not use the incentive amounts
to reduce Raajratna's COP or CV. Also, because Raajratna classifies the
DEPB incentive as a revenue on its income statement, the petitioners
argue that offsetting Raajratna's CV by the DEPB benefits constitutes a
deviation from Raajratna's normal accounting practice and violates
section 773(f)(1)(A) of the Act, the Statement of Administrative Action
(H. Doc. 316, 103d Cong., 2d Sess. 821, 834-835 (SAA)), and Department
practice.
The petitioners reject the cases cited by Raajratna as
unsupportive, arguing that the respondent in Camargo Correa Metais
received a government credit for use against future tax liability in
the home market, which the Court of International Trade (CIT)
determined to constitute a refund of the tax. The petitioners
distinguish this case in that the import duties Raajratna paid were not
refunded upon exportation because the DEPB incentives it received were
not based upon import duties paid on raw materials. The petitioners
also argue that AK Steel Corp. and Solid Urea From Germany are
unsupportive because they demonstrate the Department's long-standing
practice to base COP upon a producer's actual costs and to refuse to
restate such costs to exclude government payments which are linked to
specific costs.
Finally, the petitioners argue that, if the Department determines
that the DEPB incentives should offset Raajratna's reported raw
materials costs, the Department should cap the DEPB amount by the level
of import duties and apply it only to Raajratna's CV and not to its
COP. The petitioners note that Raajratna requests only that its CV
material costs be adjusted for DEPB benefits. The petitioners argue
further that an offset to COP for the DEPB benefits is improper because
no correlation exists between the import duties paid and the DEPB
benefits received upon exportation.
Department's Position: We found at verification that the DEPB
refunds were unrelated to the customs duties Raajratna paid to purchase
raw materials for the manufacture of subject merchandise. Cost
Verification Report at 2, 11; Sales Verification Report at 8. Indeed,
Raajratna's DEPB benefits were based on the FOB sales prices of
Raajratna's finished goods for export and exceeded substantially the
amount of customs duties Raajratna paid to import raw materials
directly. Therefore, because we find no link between the revenue
Raajratna received and its cost of purchasing raw materials, we are
unable to decrease Raajratna's COM to reflect the DEPB benefits
received.
Although Raajratna cited prior decisions and precedent in support
of its position, the facts of this case indicate that an offset for raw
materials costs is not warranted here. First, AK Steel Corp. did not
address the issue of a downward adjustment to production costs to
reflect government benefits, as Raajratna maintains. In Solid Urea from
Germany, the Department agreed with the respondents that, where
government payments were linked to specific costs and recorded in the
respondent's financial statements, the respondent's COP should reflect
government benefits received. Solid Urea from Germany at 61273. Here,
Raajratna could not link its DEPB payments to specific costs and
records the payments as revenue; thus to capture the DEPB benefits in
Raajratna's COP calculation would be inconsistent with Solid Urea from
Germany. In Camargo Correa Metais, the Department and the CIT found
that a government tax credit, which constituted a refund, should be
deducted from the respondent's CV calculation. Id. at 3. Here, however,
we found that import duties Raajratna paid were not refunded upon
exportation because the DEPB incentives were not directly based upon
import duties Raajratna had paid on raw materials. Further, SS Bar from
India I did not address an adjustment to CV for government benefits
received. Finally, Raajratna cites to SS Bar from India II, in which
the Department did not discuss the reasons justifying an adjustment to
the respondent's CV costs for government credits received. Id. However,
in the original less-than-fair-value investigation for that case, the
Department explained that the facts of the case warranted an adjustment
to CV for government credits received because the revenues were
``directly related'' to its purchases of domestic raw materials used to
produce subject merchandise
[[Page 17322]]
and represented an appropriate offset to the respondent's raw materials
costs. Notice of Final Determination of Sales at Less Than Fair Value:
Stainless Steel Bar from India, 59 FR 66915, 66920 (December 28, 1994).
Because in this case we found no link between Raajratna's DEPB credits
received and its raw materials costs, we find no justification for an
offset to CV for those credits. Thus, where NV is based on CV, we have
made no adjustment to Raajratna's raw materials costs for DEPB credits
it received.
Comment 3: COP and CV Calculation
The petitioners argue that the Department should revise Raajratna's
reported G&A expense ratio to include expenses incurred in its Mumbai
office. The petitioners note that Raajratna included in its G&A expense
ratio only the salary of the Mumbai-office employee performing liaison
functions but not the expenses incurred in performing those functions.
The petitioners argue that there are other legitimate G&A costs
incurred by the Mumbai office for Raajratna's operation as a whole and
that these should be included in COP and CV in accordance with the
Department's long-standing practice.
Department's Position: We agree with the petitioners that we should
include Raajratna's Mumbai-office expenses in the COP and CV
calculation. We verified that the Mumbai office is a trading office
which purchases raw materials consumed in the manufacturing process of
the subject merchandise and occasionally facilitates HM sales. To
calculate its general expenses, Raajratna included only the salary of
the employee assigned to the Mumbai office. Raajratna excluded from the
calculation of its G&A rate office expenses associated with maintaining
that employee at the Mumbai office. Consistent with our normal
methodology, we have allocated a portion of the total expenses of the
Mumbai office to the merchandise under investigation. (See Fresh
Atlantic Salmon, 63 FR at 31433.)
Comment 4: HM Indirect Selling Expenses
The petitioners argue that Raajratna did not report HM indirect
selling expenses in its calculation of COP and that the Department
should deduct these expenses from net HM prices before making the
comparison to COP.
Department's Position: We agree that we should deduct HM indirect
selling expenses from net price in our COP calculation. We calculated a
HM indirect selling expense amount for Raajratna by calculating an
indirect selling expense factor and applying it to Raajratna's HM
sales. We deducted this amount from net price for COP. (See Final
Determination Analysis Memorandum: Stainless Steel Round Wire From
India, dated April 2, 1999.) We also added HM indirect selling expenses
to our CV calculations.
Comment 5: Packing Expenses
The petitioners argue that the Department should add packing
expenses to the calculation of Raajratna's COP or deduct packing
expenses from the ``net price COP'' calculation.
Department's Position: We agree that we must deduct packing costs
from net price for COP, which we compare to the cost of manufacturing,
in order to achieve an apples-to-apples comparison. Therefore, we have
deducted packing expenses from net price for COP for the final
determination. This is consistent with the methodology we employed for
all other SSRW investigations (see, e.g., Preliminary Determination
Analysis Memorandum--SSRW from Canada, Central Wire, dated November 12,
1998).
Comment 6: Commission Offset
The petitioners argue that the Department should use facts
available for Raajratna's commission offset because Raajratna reported
HM commissions but not U.S. commissions or U.S. indirect selling
expenses. The petitioners argue that the Department should either omit
the deduction for HM commissions from its calculation of HM prices or
set the U.S. offset to the value of the HM commission.
Department's Position: We agree that Raajratna reported no U.S.
commissions or U.S. indirect selling expenses. However, rather than
omit the deduction for HM commissions or set the U.S. offset to the
value of the HM commission, we have calculated an indirect selling
expense amount by allocating all indirect selling expenses incurred by
Raajratna over all sales in both markets. We then offset HM commissions
by this amount for the final determination in accordance with section
351.410(e) of the Department's regulations. (See Final Determination
Analysis Memorandum: Stainless Steel Round Wire From India, dated April
2, 1999.)
Comment 7: Financial Expense Ratio
Raajratna noted that the Department should revise its financial
expense ratio based on the Department's verification findings.
Department's Position: We agree with Raajratna that we should
revise the financial expense ratio according to our findings at
verification and have made this adjustment for the final determination
based on a company-wide cost-of-sales amount.
Continuation of Suspension of Liquidation
In accordance with section 735(c)(1)(B) of the Act, we are
directing the Customs Service to continue to suspend liquidation of all
entries of stainless steel round wire from India that are entered, or
withdrawn from warehouse, for consumption on or after November 18,
1998, the date of publication of the preliminary determination in the
Federal Register. The Customs Service shall require a cash deposit or
the posting of a bond equal to the weighted-average amount by which the
normal value exceeds the EP, as indicated in the chart below. These
instructions suspending liquidation will remain in effect until further
notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
(percent)
------------------------------------------------------------------------
Raajratna.................................................. 18.64
All Others................................................. 18.64
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ITC Notification
In accordance with section 735(d) of the Act, we have notified the
International Trade Commission (ITC) of our determination. As our final
determination is affirmative, the ITC will, within 45 days, determine
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry. If the ITC determines that material
injury or threat of material injury does not exist, the proceeding will
be terminated and all securities posted will be refunded or canceled.
If the ITC determines that such injury does exist, the Department will
issue an antidumping duty order directing the Customs Service to assess
antidumping duties on all imports of the subject merchandise entered,
or withdrawn from warehouse, for consumption on or after the effective
date of the suspension of liquidation.
We are issuing and publishing this determination in accordance with
sections 735(d) and 777(i)(1) of the Act.
[[Page 17323]]
Dated: April 2, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-8924 Filed 4-8-99; 8:45 am]
BILLING CODE 3510-DS-P
