02-11188. Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

May 9, 2002.

FOR FURTHER INFORMATION CONTACT:

Paige Rivas at [phone] or Mark Manning at [phone], AD/CVD Enforcement Office IV, Group II, Import Administration, Room 1870, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

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 2001).

Preliminary Determination

We preliminarily determine that certain cold-rolled carbon steel flat products (cold-rolled steel) from India are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 733 of the Act. The estimated margins of sales at LTFV are shown in the Suspension of Liquidation section of this notice.

Case History

This investigation was initiated on October 18, 2001. ^[1] See Notice of Initiation of Antidumping Duty Investigations: Certain Cold-Rolled Carbon Steel Flat Products From Argentina, Australia, Belgium, Brazil, France, Germany, India, Japan, Korea, the Netherlands, New Zealand, the People's Republic of China, the Russian Federation, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 54198 (October 26, 2001) (Initiation Notice). Since the initiation of the investigation, the following events have occurred.

On October 31, 2001, we solicited comments from interested parties regarding the criteria to be used for model-matching purposes, and we received comments on our proposed matching criteria on November 8, 2001. On November 8, 2001, we received model match comments from petitioners and respondents. On November 26, 3001, we informed respondents of our revised model match criteria.

On November 13, 2001, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that an industry in the United States is materially injured or threatened with material injury by reason of imports from Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan, Korea, the Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela of cold-rolled steel products. See Certain Cold-Rolled Steel Products From Argentina, Australia, Belgium, Brazil, China, France, Germany, India, Japan, Korea, Netherlands, New Zealand, Russia, South Africa, Spain, Sweden, Taiwan, Thailand, Turkey, and Venezuela, 66 FR 57985 (November 19, 2001).

Based on our analysis of an allegation contained in the petition, we found at the initiation of this investigation that there were reasonable grounds to believe or suspect that the respondent's sales of the subject merchandise in its comparison market were made at prices below its cost of production (COP). Accordingly, pursuant to section 773(b) of the Act, we initiated a country-wide sales-below-cost investigation. See Initiation Notice.

On November 20, 2001, the Department issued a complete antidumping questionnaire to Ispat Industries, Ltd. (Ispat). ^[2] See Memorandum to Holly A. Kuga, Selection of Respondents for the Antidumping Investigation of Certain Cold-Rolled Carbon Steel Flat Products from India (Respondent Selection Memo) (November 20, 2001).

On February 7, 2002, the petitioners requested a postponement of the preliminary determination in this investigation. On February 22, 2002, the Department published a Federal Register notice postponing the deadline for the preliminary determination until April 26, 2002. See Postponement of Preliminary Determinations of Antidumping Duty Investigations: Certain Cold-Rolled Carbon Steel Flat Products from Argentina (A-357-816), Australia (A-602-804), Belgium (A-423-811), Brazil (A-351-834), the People's Republic of China (A-570-872), France (A-427-822), Germany (A-428-834), India (A-533-826), Japan (A-588-859), Korea (A-580-848), the Netherlands (A-421-810), New Zealand (A-614-803), Russia (A-821-815), South Africa (A-791-814), Spain (A-469-812), Sweden (A-401-807), Taiwan (A-583-839), Thailand (A-549-819), Turkey (A-489-810) and Venezuela (A-307-822), 67 FR 36 (February 22, 2002).

Selection of Respondents

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Where it is not practicable to examine all known producers/exporters of subject merchandise, section 777A(c)(2) of the Act permits the Department to investigate either (1) a sample of exporters, producers, or types of products that is statistically valid based on the information available at the time of selection, or (2) exporters and producers accounting for the largest volume of the subject merchandise that can reasonably be examined. Using company-specific export data for the period of investigation (POI), which we obtained from a variety of sources under the Harmonized Tariff Schedules of the United States (HTSUS) number that corresponds to the subject merchandise, we found that nine producers/exporters may have exported cold-rolled steel to the United States during the POI. According to data on the record, Ispat represented over half of the imports during the POI. Due to limited resources, we determined that we could only investigate this one largest producer/exporter. See Respondent Selection Memo. Therefore, we designated Ispat as the mandatory respondent and sent it the antidumping questionnaire.

Critical Circumstances

In a letter dated December 7, 2001, the petitioners alleged that there is a reasonable basis to believe or suspect that critical circumstances exist with respect to imports of cold-rolled steel from India. On April 10, 2002, the Department preliminarily determined that critical circumstances exist with respect to imports of cold-rolled steel from India. See Memorandum From Bernard Carreau to Faryar Shirzad Re: Preliminary Affirmative Determinations of Critical Circumstances; see also Notice of Preliminary Determination of Critical Circumstances: Certain Cold-Rolled Carbon Steel Flat Products From Australia, the People's Republic of China, India, the Republic of Korea, the Netherlands, and the Russian Federation, 67 FR 19157 (April 18, 2002) (Critical Circumstances Notice).

Period of Investigation

The POI is July 1, 2000, through June 30, 2001. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition (i.e., September 2001).

Scope of Investigation

For purposes of this investigation, the products covered are certain cold-rolled (cold-reduced) flat-rolled carbon-quality steel products. For a full description of the scope of this investigation, please see the Scope Appendix attached to the Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, published concurrently with this preliminary determination.

Facts Available (FA)

1. Application of FA

Section 776(a)(2) of the Act provides that, if an interested party (A) withholds information requested by the Department, (B) fails to provide such information by the deadline, or in the form or manner requested, (C) significantly impedes a proceeding, or (D) provides information that cannot be verified, the Department shall use, subject to sections 782(d) and (e) of the Act, facts otherwise available in reaching the applicable determination.

Pursuant to section 782(e) of the Act, the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

On November 20, 2001, the Department issued an antidumping questionnaire to Ispat. Section A was due on December 10, 2001, and Sections B-D were due on December 26, 2001. On November 28, 2001, and December 11, 2001, Ispat notified the Department that it did not intend to respond to the Department's questionnaire. Ispat asserted that its sales to the United States were insignificant and asked the Department to exclude it from the investigation. In letters dated December 6, 2001, and January 10, 2002, Ispat was informed that the Department continued to consider Ispat a mandatory respondent in this investigation. As stated in the Respondent Selection Memo, the Department found that Ispat was the largest exporter of subject merchandise during the POI and, therefore, designated Ispat as a mandatory respondent. See Respondent Selection Memo. In addition, the Department informed Ispat that it would attempt to accommodate any difficulties that Ispat had in answering the questionnaire, and would consider any suggestions Ispat provided as to alternative methods for submitting the requested information. The Department also advised Ispat that failure to submit the requested information by the date specified might result in use of the FA under section 776 of the Act and section 351.308 of the Department's regulations.

Although we requested that Ispat suggest alternative methods for submitting the requested information, it did not submit a response to that request. Furthermore, Ispat did not respond to the sections A, B, C, and D by the respective due dates, nor did the company request that the Department grant any extension of the deadlines to respond. Rather, Ispat did not respond to the Department's requests for information at all.

As described above, Ispat failed to provide a response to the Department's questionnaire despite the Department's willingness to consider alternative methods for submitting the information. Because Ispat failed to provide any of the necessary information requested by the Department, pursuant to section 776(a)(2)(B) of the Act, we have applied the FA to calculate the dumping margin.

2. Selection of Adverse FA (AFA)

In selecting from among the facts otherwise available, section 776(b) of the Act authorizes the Department to use an adverse inference if the Department finds that an interested party failed to cooperate by not acting to the best of its ability to comply with the request for information. See, e.g., Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997). Ispat was notified in the Department's questionnaire and in additional letters that failure to submit the requested information by the date specified might result in use of the FA. Moreover, Ispat failed to offer any alternative methods for submitting the requested information. As a general matter, it is reasonable for the Department to assume that Ispat possessed the records necessary for this investigation and that by not supplying the information the Department requested, Ispat failed to cooperate to the best of its ability. As Ispat failed to cooperate to the best of its ability, we are applying an adverse inference pursuant to section 776(b) of the Act. As AFA, we have used 153.65 percent, the rate derived from the petition. See Initiation Notice.

3. Corroboration of Information

Section 776(b) of the Act authorizes the Department to use as AFA information derived from the petition, the final determination from the LTFV investigation, a previous administrative review, or any other information placed on the record.

Section 776(c) of the Act requires the Department to corroborate, to the extent practicable, secondary information used as FA. Secondary information is defined as “{i}nformation derived from the petition that gave rise to the investigation or review, the final determination concerning the subject merchandise, or any previous review under section 751 concerning the subject merchandise.” See Statement of Administrative Action (SAA) accompanying the URAA, H.R. Doc. No. 103-316 at 870 (1994) and 19 CFR 351.308(d).

The SAA clarifies that “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value (see SAA at 870). The SAA also states that independent sources used to corroborate such evidence may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation (see SAA at 870).

In order to determine the probative value of the margins in the petition for use as AFA for purposes of this determination, we examined evidence supporting the calculations in the petition. We reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis of the petition, to the extent appropriate information was available for this purpose (see India Initiation Checklist on file in the Central Records Unit (Initiation Checklist), Room B-099, of the Main Commerce Department building, for a discussion of the margin calculation in the petition). In addition, in order to determine the probative value of the margin in the petition for use as AFA for purposes of this determination, we examined evidence supporting the calculation in the petition. In accordance with section 776(c) of the Act, to the extent practicable, we examined the key elements of the export price (EP) and CV calculations on which the margin in the petition was based.

The Department was provided with no useful information by the respondents or other interested parties and is aware of no other independent sources of information that would enable us to further corroborate the margin calculations in the petition. It is worth noting that the implementing regulation for section 776 of the Act states, “(t)he fact that corroboration may not be practicable in a given circumstance will not prevent the Secretary from applying an adverse inference as appropriate and using secondary information in question.” See 19 CFR 351.308(c). Additionally, the SAA at 870 specifically states that where “corroboration may not be practicable in a given circumstance,” the Department need not prove that the facts available are the best alternative information.” Therefore, based on our efforts, described above, to corroborate information contained in the petition, and in accordance with 776(c) of the Act, we consider the margins in the petitions to be corroborated to the extent practicable for purposes of this preliminary determination.

Export Price

With respect to the margin in the petition, EP was based on an offer for sale of two types of Indian cold-rolled steel in the United States. The petitioners calculated a net EP by deducting port charges, freight charges, shipping charges, customs duties, and trading company mark-up. Our review of the EP calculations indicated that the information in the petition has probative value, as the information included in the margin calculations in the petition is from actual source documents and is concurrent, for the most part, with the POI.

Normal Value

The petitioners calculated normal value (NV) from price information obtained from foreign market research for grades and sizes of cold-rolled steel comparable to the products exported to the United States which serve as the basis for EP. The petitioners made no adjustment to NV. The grade and size of this merchandise was comparable to the merchandise offered for sale that was used as the basis of EP. In addition, the home market price quote was contemporaneous with the U.S. offer for sale obtained by the petitioners.

With respect to NV, the petitioners also provided information demonstrating reasonable grounds to believe or suspect that sales of cold-rolled steel in the home market were made at prices below COP within the meaning of section 773(b) of the Act. COP consists of the cost of manufacturing (COM), selling, general, and administrative (SG&A) expenses, and packing. To calculate the foreign producers' COP, the petitioners used publicly available data obtained from Ispat's March 31, 2001, financial statements for the cost of the raw material input, hot-rolled coil, and SG&A expenses. The petitioners' used their own information, adjusted for known differences between costs in the United States and India, for the cost of transforming the hot-rolled coil into subject merchandise. Because Ispat does not separately report depreciation attributable to the company's cold-rolling operations in its financial statements, the petitioners excluded Ispat's depreciation relative to cold-rolling from the calculation of COP.

Because the Indian price of cold-rolled carbon steel flat products is below the COP, the petitioners also based NV on CV, pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act. The petitioners calculated CV using the same COM and SG&A expenses used to compute home market COP, and included an amount for profit. Because Ispat reported a net loss for the year, the petitioners based the amount for profit on the 2001 financial statements of a company in the same general industry, Tata Iron and Steel Company, Ltd. (TISCO). For initiation purposes, we conservatively recalculated CV by including Ispat's zero profit. This allowed the Department to obtain SG&A expenses, financial expenses, and profit from the same source financial statements. However, we also stated that if we need to rely on the use of facts otherwise available in the future, we would then pursue alternative methods for computing the profit rate. See Initiation Checklist at 7.

For purposes of this preliminary determination, pursuant to section 773(e)(2)(B)(iii) of the Act, we calculated CV by including a positive amount for profit. Because the only information on the record concerning the profit of a company other than Ispat in the same general industry is from the petition, we included the same amount for profit as done by the petitioners. The estimate dumping rate using TISCO's profit is 153.65 percent, which is also the petition rate.

With respect to the CV data, we were able to corroborate the reasonableness of these data by examining the financial statements used to calculate COP and the petitioners' own information about the cost of transforming the hot-rolled coil into subject merchandise. With respect to the petitioners' own information regarding the cost of transforming the hot-rolled coil into subject merchandise, we corroborated the information by tracing the surrogate factors and values to the affidavit provided by the U.S. surrogate. Where applicable, we corroborated the petitioners' own information adjusted for known differences with publicly available data. With regard to the CV contained in the petition, the Department was provided no useful information by the respondent or other interested parties and is aware of no other independent sources of information that would enable us to further corroborate the margin calculations in the petition.

Accordingly, in selecting AFA with respect to Ispat, the Department applied the petition rate of 153.65 percent.

All Others

Section 735(c)(5)(B) of the Act provides that, where the estimated weighted-average dumping margins established for all exporters and producers individually investigated are zero or de minimis, or are determined entirely under section 776 of the Act, the Department may use any reasonable method to establish the estimated “all others” rate for exporters and producers not individually investigated. This provision contemplates that we weight-average margins other than zero, de minimis, and FA margins to establish the “all others” rate. Where the data do not permit weight-averaging such rates, the SAA, at 873, provides that we may use other reasonable methods. Because the petition contained only an estimated price-to-CV dumping margin, there are no additional estimated margins available with which to create the “all others” rate. In this case, we have determined that the only reasonable method is to use the single margin alleged in the petition, which was also the source of our facts available margin for Ispat. Therefore, we applied the petition margin of 153.65 percent as the “all others” rate. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From Indonesia, 66 FR 22163 (May 3, 2001).

Final Critical Circumstances Determination

We will make a final determination concerning critical circumstances for India when we make our final determination regarding sales at LTFV in this investigation, which will be no later than 75 days after the publication of this notice in the Federal Register.

Suspension of Liquidation

Because of our preliminary affirmative critical circumstances finding in this case, and in accordance with section 733(e) of the Act, we are directing U.S. Customs to suspend liquidation of all entries of cold-rolled steel from India that are entered, or withdrawn from warehouse, for consumption on or after the date which is 90 days prior to the date of publication of this notice in the Federal Register. We are also instructing U.S. Customs to require a cash deposit or the posting of a bond equal to the dumping margin, as indicated in the chart below.

These instructions suspending liquidation will remain in effect until further notice.

Manufacturer/exporter	Margin (percent)
Ispat Industries, Ltd. (Ispat)	153.65
All Others	153.65

Disclosure

The Department will disclose calculations performed within five days of the date of publication of this notice to the parties of the proceedings in this investigation in accordance with 19 CFR 351.224(b).

ITC Notification

In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final antidumping determination is affirmative, the ITC will determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry. The deadline for that ITC determination would be the later of 120 days after the date of this preliminary determination or 45 days after the date of our final determination.

Public Comment

For the investigation of cold-rolled steel from India, case briefs must be submitted no later than 50 days after the publication of this notice in the Federal Register. Rebuttal briefs must be filed within five calender days after the deadline for submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Public versions of all comments and rebuttals should be provided to the Department and made available on diskette. Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by any interested party. If a request for a hearing is made in an investigation, the hearing will tentatively be held two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request within 30 days of the publication of this notice. Requests should specify the number of participants and provide a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. If this investigation proceeds normally, we will make our final determination in the investigation of cold-rolled steel from India no later than 75 days after the date of this preliminary determination.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Dated: April 26, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners in this investigation are Bethlehem Steel Corporation, LTV Steel Company Inc., National Steel Corporation, Nucor Corporation, Steel Dynamics, Inc., United States Steel Corporation, WCI Steel, Inc., and Weirton Steel Corporation (collectively, the petitioners).

2.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this section is not applicable to respondents in non-market economy (NME) cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation. Section E requests information on further manufacturing.