[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16085]
[[Page Unknown]]
[Federal Register: July 1, 1994]
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DEPARTMENT OF COMMERCE
[A-475-811]
Notice of Final Determination of Sales at Less Than Fair Value:
Grain-Oriented Electrical Steel From Italy
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: July 1, 1994.
FOR FURTHER INFORMATION CONTACT: Jennifer L. Katt or Lori Way, Office
of Antidumping Investigations, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0498 and 482-0656, respectively.
Final Determination
The Department of Commerce (the Department) determines that grain-
oriented electrical steel (GOES) from Italy is being, or is likely to
be, sold in the United States at less than fair value, as provided in
section 735 of the Tariff Act of 1930, as amended (the Act). The
estimated margins are shown in the ``Suspension of Liquidation''
section of this notice.
Case History
Since the notice of the preliminary determination and postponement
of the final determination on February 2, 1994 (59 FR 5991, February 9,
1994), the following events have occurred:
We conducted verification of the respondents' (ILVA S.p.A. and
Acciai Speciali Terni, S.r.l. (collectively Terni)) sales and cost
questionnaire responses in Italy and the United States in May 1994.
Terni and the petitioners in this investigation (Allegheny Ludlum
Corp., Armco, Inc., The United Steelworkers of America, Butler Armco
Independent Union and Zanesville Armco Independent Union) submitted
case briefs on June 10, 1994, and rebuttal briefs on June 15, 1994. No
public hearing was requested.
On June 20, 1994, a meeting took place where representatives from
the Italian government expressed their concerns regarding our findings
at verification.
Scope of Investigation
The product covered by this investigation is grain-oriented silicon
electrical steel, which is a flat-rolled alloy steel product containing
by weight at least 0.6 percent of silicon, not more than 0.08 percent
of carbon, not more than 1.0 percent of aluminum, and no other element
in an amount that would give the steel the characteristics of another
alloy steel, of a thickness of no more than 0.56 millimeters, in coils
of any width, or in straight lengths which are of a width measuring at
least 10 times the thickness, as currently classifiable in the
Harmonized Tariff Schedule of the United States (HTSUS) under item
numbers 7225.10.0030, 7226.10.1030, 7226.10.5015 and 7226.10.5065.
Although the HTSUS subheadings are provided for convenience and customs
purposes, our written description of the scope of this proceeding is
dispositive.
Period of Investigation
The period of investigation (POI) is March 1, 1993, through August
31, 1993.
Such or Similar Comparisons
We have determined that the merchandise subject to this
investigation constitutes a single category of such or similar
merchandise.
Best Information Available (BIA)
We were unable to verify Terni's submitted cost of production (COP)
and constructed value (CV) information because the company did not
provide adequate source documentation at verification to substantiate
the accuracy and completeness of its submitted costs. Section 776(b) of
the Act provides that if the Department is unable to verify, within the
time specified, the accuracy and completeness of the factual
information submitted, it shall use BIA as the basis for its
determination. Consequently, we have based this determination on BIA.
For a detailed discussion of the problems encountered in attempting to
verify Terni's cost information, see our response to Comment One under
the ``Interested Party Comments'' section of this notice.
In determining what rate to use as BIA, the Department follows a
two-tiered methodology, whereby the Department may assign lower rates
for those respondents who cooperated in an investigation and rates
based on more adverse assumptions for those respondents found to be
uncooperative in an investigation (See, Final Determination of Sales At
Less Than Fair Value: Certain Hot-Rolled and Cold-Rolled Carbon Steel
Flat Products and Certain Cut-to-Length Steel Plate from Belgium, 58 FR
37082, July 9, 1993).
As detailed in the DOC position to Comment One below, we consider
Terni to have been cooperative. When a company cooperates with our
requests for information but fails to provide that information in a
timely manner or in the form required, it is the Department's practice
to use as BIA the higher of: 1) the average of margins in the petition;
or 2) the calculated margin for another firm for the same class or kind
of merchandise from the same country. Since there was only one less
than fair value margin alleged in the petition and there was no other
respondent in this case, we have applied, as BIA, the single rate
alleged in the petition.
Fair Value Comparisons
To determine whether sales of subject merchandise from Italy to the
United States were made at less than fair value, we compared United
States price (USP) to foreign market value (FMV). USP and FMV were
based on information contained in the petition, as fully described in
the notice of initiation of this investigation (58 FR 49017, September
21, 1993).
Interested Party Comments
Comment 1: Terni argues that the Department should amend its cost
verification report to ``correct and clarify numerous misstatements and
fundamental inaccuracies contained therein.'' Terni asserts that the
cost verification report incorrectly casts the company's actions at
verification as uncooperative. Terni further asserts that its conduct
at the cost verification and throughout this investigation has been
cooperative for the following reasons: (1) Terni provided complete and
timely responses to the Department's requests for information; (2)
Terni completed two successful sales verifications immediately
following the cost verification; and (3) the cost verification was
conducted at an inopportune time for Terni.
Petitioners argue that Terni has been uncooperative and has
significantly impeded this investigation by failing to prepare for, or
cooperatively participate in, the cost verification. Therefore, under
the Department's two-tiered BIA methodology, petitioners assert that
Terni should be assigned the highest margin alleged in the petition as
BIA.
DOC Position: We disagree with Terni's statement regarding the
accuracy of the cost verification report. At verification we found that
Terni: (a) was unprepared and unable to provide source documents in a
timely manner, which impeded the testing that was performed and limited
the amount of testing which could be completed, (b) did not prepare a
reconciliation between cost and financial systems or provide an
explanation of these systems, (c) was unable to support that all
necessary variances were reported, (d) provided differing labor amounts
in the general (or financial) accounting system and the cost (or the
analytical) system and the cost of goods sold calculation prepared at
verification, and was unable to reconcile these discrepancies, (e) did
not provide audited financial statements, and did not reconcile
information to its unaudited statements, and (f) caused delays in other
areas which did not allow the reported amounts for general &
administrative expenses, interest expense, and profit to be examined.
For a more detailed discussion of each of the major problems
encountered at verification and the areas where Terni challenges the
accuracy of the Department's verification report see the cost
verification report, dated June 3, 1994 and the calculation memorandum
dated June 16, 1994, which are both on file in room B-099 of the Main
Commerce Building.
Regarding petitioners' contention that Terni was an uncooperative
respondent, we disagree. Although Terni's cost information was
unverifiable, this failure does not change the fact that its level of
participation throughout this investigation clearly indicates that it
cooperated. Terni provided all information requested in the
questionnaire, permitted verification of its data, and successfully
completed verification of its sales information.
Comment 2: Terni argues that the Department should use its
submitted costs rather than resort to BIA. However, in the event the
Department determines it is justified in using BIA, Terni argues that
the best information available is Terni's data, not information
contained in the petition, because the petition contains numerous
errors in the calculations of COP and CV. Finally, Terni asserts that
if the Department rejects its cost response, the Department could still
use Terni's reported U.S. sales data in making its final determination
because this information was ``successfully'' verified.
Petitioners argue that Terni's submitted costs should not be relied
upon because Terni failed every aspect of the cost verification. In
addition, petitioners contend that the Department should reject Terni's
entire response, including its verified U.S. sales data, and base the
final determination on information provided in the petition.
DOC Position: As discussed in the ``Best Information Available''
section above, during the verification of the cost response, the
Department encountered serious and pervasive problems in its efforts to
verify the information submitted by Terni. Consequently, in accordance
with Section 776(b) of the Act, the Department was compelled to use
BIA.
While we were able to verify Terni's submitted sales data, we were
unable to verify its cost information. Without verified COP/CV data we
do not have a basis to calculate an appropriate FMV, and thus cannot
perform sales comparisons. Even if the Department were to contemplate
using Terni's verified U.S. sales data, there is insufficient CV
information available in the petition to adequately cover the sale of
all products sold by Terni in the United States. Specifically, the CV
specified in the petition covers a single product which differs in
physical characteristics from certain of Terni's U.S. sales.
Additionally, the petition does not provide adequate cost information
on which to base difference in merchandise adjustments. Under such
circumstances, the use of verified U.S. sales data is inappropriate.
The rejection of a respondent's questionnaire responses in toto and
use of BIA is appropriate and consistent with past practice in
instances where a respondent has failed to provide verifiable COP
information. (See e.g., Final Determination of Sales At Less Than Fair
Value: Certain Forged Stainless Steel Flanges from Taiwan, 58 FR 68859,
December 29, 1993); and Final Determination of Sales At Less Than Fair
Value: Certain Hot-Rolled Lead & Bismuth Carbon Steel Products from
France, 58 FR 6203, January 27, 1993.)
Moreover, if the Department were to accept verified sales
information when a respondent's cost information (a substantial part of
the response) does not verify, respondents would be in a position to
manipulate margin calculations by permitting the Department to verify
only that information which the respondent wishes the Department to use
in its margin calculation. Therefore, as described in the ``Best
Information Available'' section above, we have based Terni's margin for
the final determination on BIA. As permitted by Section 776(b) of the
Act, the Department is using, as BIA, information contained in the
petition.
Terni's four comments pertaining to certain errors in the petition
hold no merit. The first comment alleging a mathematical error in
petitioner's calculation of the cost of production is incorrect. Stage
by stage yield factors are missing from petitioner's worksheet but have
obviously been included in their analysis. Petitioners have recognized
the importance of yields by listing at the bottom of the worksheet the
overall yield for each product. This yield factor, however, is an
average yield factor for all stages of the production process and,
therefore cannot be used exclusively for purposes of recalculating
costs on a stage by stage basis. The remaining three comments concern
methodologies used by the petitioners in the calculation of the yield
rate and depreciation and the reliance upon petitioner's costs as a
proxy for Terni's costs. The Department determined that these
methodologies were appropriate for purposes of initiation and continues
to find them reasonable for purposes of calculating CV. Consequently,
these methodologies are appropriate for use as BIA.
Other Comments
Terni made additional comments on various charges and adjustments
contained in its home market and U.S. sales listings. However, since we
are basing our final determination on BIA, those comments are now moot.
Accordingly, no response on behalf of the Department is required.
Continuation of Suspension of Liquidation
In accordance with section 735(c)(4) of the Act, we are directing
the Customs Service to continue to suspend liquidation of all entries
of the subject merchandise from Italy that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register. The Customs Service shall require
a cash deposit or posting of a bond equal to the estimated dumping
margins, as shown below. The suspension of liquidation will remain in
effect until further notice. The weighted-average margins are as
follows:
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter percentage
------------------------------------------------------------------------
All Companies.............................................. 60.79
------------------------------------------------------------------------
International Trade Commission (ITC) Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. The ITC will now determine whether these
imports are materially injuring, or threaten material injury to, the
U.S. industry within 45 days. If the ITC determines that material
injury, or threat of material injury, does not exist with respect to
the subject merchandise, the proceeding will be terminated and all
securities posted will be refunded or cancelled. If the ITC determines
that such injury does exist, the Department will issue an antidumping
duty order directing Customs officials to assess antidumping duties on
all imports of the subject merchandise from Italy entered, or withdrawn
from warehouse, for consumption on or after the effective date of the
suspension of liquidation.
Notice to Interested Parties
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility, pursuant
to 19 CFR 353.34(d), concerning the return or destruction of
proprietary information disclosed under APO. Failure to comply is a
violation of the APO.
This determination is published pursuant to section 735(d) of the
Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).
Dated: June 24, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-16085 Filed 6-30-94; 8:45 am]
BILLING CODE 3510-DS-P
