03-18132. Notice of Preliminary Determination of Sales at Less Than Fair Value: Prestressed Concrete Steel Wire Strand From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Determination of Sales at Less Than Fair Value.

EFFECTIVE DATE:

July 17, 2003.

FOR FURTHER INFORMATION CONTACT:

Tisha Loeper-Viti at [phone], or Martin Claessens at [phone]; AD/CVD Enforcement Office V, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Preliminary Determination

We preliminarily determine that prestressed concrete steel wire strand (PC strand) 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 733 of the Tariff Act of 1930, as amended (the Act). The preliminary margin assigned to Tata Iron and Steel Co. Ltd. is based on adverse facts available (AFA). The estimated margin of sales at LTFV is shown in the Suspension of Liquidation section of this notice.

Interested parties are invited to comment on this preliminary determination. We will make our final determination not later than 75 days after the date of this preliminary determination.

Case History

This investigation was initiated on February 20, 2003.^[1] See Notice of Initiation of Antidumping Duty Investigations: Prestressed Concrete Steel Wire Strand From Brazil, India, the Republic of Korea, Mexico, and Thailand, 68 FR 9050 (February 27, 2003) (Initiation Notice). Since the initiation of the investigation, the following events have occurred:

The U.S. Department of Commerce (the Department) set aside a period for all interested parties to raise issues regarding product coverage. See Initiation Notice, 68 FR at 9050. No comments were received from interested parties in this investigation.

The Department issued a letter on March 7, 2003, to interested parties in all of the concurrent PC strand antidumping investigations, providing an opportunity to comment on the Department's proposed model match characteristics and its hierarchy of characteristics. The petitioners submitted comments on March 18 and 20, 2003. The Department also received comments on model matching from respondents in the concurrent investigation involving Mexico on March 18, 2003. These comments were taken into consideration by the Department in developing the model matching characteristics and hierarchy for all of the PC strand antidumping investigations.

On March 17, 2003, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that imports of the products subject to this investigation are materially injuring an industry in the United States producing the domestic like product. See Prestressed Concrete Steel Wire Strand From Brazil, India, Korea, Mexico, and Thailand, 68 FR 13952 (March 21, 2003).

On April 4, 2003, the Department issued its antidumping questionnaire to Tata SSL Ltd.^[2] The Department was subsequently informed that Tata SSL Ltd. had been retroactively amalgamated with Tata Iron and Steel Co. Ltd. (TISCO) and was now known as TISCO (Wire Division).^[3] We received responses to Sections A-D of the antidumping questionnaire from TISCO and issued it supplementary questionnaires where appropriate. TISCO failed to respond to the Department's second supplemental Section D questionnaire, issued on July 1, 2003, in which the Department requested detailed information and supporting documentation regarding the company's costs of production. (See, Facts Available section of this notice for a discussion as to why TISCO's Section D response was deemed unuseable for this preliminary determination.)

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.

In the petition, the petitioners identified five producers of PC strand in India. We examined company-specific export data obtained from the U.S. Bureau of Customs and Border Protection (BCBP), the Iron and Steel Works of the World (14th ed.), and the Tata Group's websites which indicate that Tata SSL is the only producer of the subject merchandise within the Tata Group during the period of investigation (POI). Furthermore, we have no evidence suggesting that any other Indian company is exporting PC strand to the United States. See memorandum from Daniel O'Brien, International Trade Compliance Analyst, to Gary Taverman, Director, Office 5, Re: Selection of Respondents, dated April 4, 2003.

Period of Investigation

The POI is January 1, 2002, through December 31, 2002. This period corresponds to the four most recent fiscal quarters prior to the month of filing of the petition (i.e., January, 2003) involving imports from a market economy, and is in accordance with our regulations. See 19 CFR 351.204(b)(1).

Scope of Investigation

For purposes of this investigation, PC strand is steel strand produced from wire of non-stainless, non-galvanized steel, which is suitable for use in prestressed concrete (both pretensioned and post-tensioned) applications. The product definition encompasses covered and uncovered strand and all types, grades, and diameters of PC strand.

The merchandise under investigation is currently classifiable under subheadings 7312.10.3010 and 7312.10.3012 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.

Facts Available

For the reasons discussed below, we determine that the use of adverse facts available is appropriate for the preliminary determination with respect to TISCO.

A. Use of Facts Available

Section 776(a)(2) of the Act provides that, if an interested party withholds information requested by the Department, fails to provide such information by the deadline or in the form or manner requested, significantly impedes a proceeding, or provides information which cannot be verified, the Department shall use, subject to section 782(d) and (e) of the Act, facts otherwise available in reaching the applicable determination. Section 782(d) of the Act provides that if the Department determines that a response to a request for information does not comply with the Department's request, the Department shall promptly inform the responding party and provide an opportunity to remedy the deficient submission. Section 782(e) of the Act further states that 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.

In this case, TISCO has failed to provide pertinent information requested by the Department necessary to properly calculate an antidumping margin for its preliminary determination. Specifically, TISCO failed to provide the requested detailed cost of manufacturing information for the steel wire rod input used to produce the subject merchandise. In addition, TISCO failed to provide the following requested information, all of which was pertinent to the Department's calculations: (1) A description of the steel making and wire rod production facilities' normal cost accounting system and how it is used to record, classify, aggregate, and allocate the costs incurred to produce different grades and dimension of products; (2) a description of the level of product specificity over which the steel making and wire rod production facilities' cost accounting system normally captures production costs; (3) an explanation of how the product specific costs recorded in the steel making and wire rod production facilities' normal accounting system compare to the reported cost data; (4) a listing and description of all differences between costs computed under respondents normal steel making and wire rod production cost and financial accounting systems and the reported costs, including an explanation of why it was necessary to depart from respondent's normal accounting practices in order to compute the submitted COP and constructed value (CV) figures; (5) an indication of whether its steel making and wire rod facilities utilized inputs obtained from affiliated suppliers; (6) a description of the company's steel making and wire rod production facilities; and (7) a copy of either the audited financial statements for the year ended March 31, 2003, or if not yet available, a copy of the draft financial statements for the same period. The cost of steel wire rod constitutes a significant percentage of the total cost of manufacturing the subject merchandise, and detailed information on the steelmaking and rolling stages of the wire rod production process is critical for the Department to analyze adequately the reported cost information. As a result of TISCO's failure to provide the above requested information, the Department is unable to use the reported steel wire rod cost of manufacturing data. Thus, in reaching our preliminary determination, pursuant to sections 776(a)(2)(A), (B), and (C) of the Act, we have based TISCO's margin rate on facts available.

B. Application of Adverse Inferences for Facts Available

In applying facts otherwise available, section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August 30, 2002). Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Rep. No. 103-316, at 870 (1994) (SAA). Furthermore, “{affirmative} evidence of bad faith on the part of a respondent is not required before the Department may make an adverse inference.” See Antidumping Countervailing Duties: Final Rule, 62 FR 27296, 27340 (May 19, 1997).

In this case, TISCO has failed to timely provide a complete and useable response to the Department's Section D questionnaires, which included two supplemental questionnaires. The original questionnaire was issued on April 4, 2003, to which TISCO submitted its Section D response on May 27, 2003. In order to address the deficiencies in TISCO's response, the Department issued the first supplemental Section D questionnaire on June 6, 2003. TISCO's response was received on June 24 and 25, 2003. On July 1, 2003, the Department issued the second supplemental section D questionnaire, once again requesting detailed cost of manufacturing information for the steel wire rod input used to produce the subject merchandise, in addition to numerous other important methodological inquires. In this questionnaire we noted that in its previous submission, TISCO failed to provide the requested detailed cost of manufacturing for the steel wire rod used to produce the subject merchandise, and that this information is necessary for the Department to analyze adequately the response.

We established July 7, 2003, as the due date for the second supplemental section D questionnaire in order to allow the Department adequate time to analyze the response and to incorporate it into the calculation of the dumping margin for the preliminary determination. TISCO, however, having been informed of the importance of the requested information for the Department's analysis, failed to respond, even after the Department had granted it another extension of the deadline, i.e., until July 9, 2003. TISCO's failure to provide this critical information in a timely manner has rendered its entire submission inadequate and unusable for the preliminary determination. This constitutes a failure on the part of this company to cooperate “to the best of its ability to comply with a request for information” by the Department within the meaning of section 776 of the Act. Therefore, the Department has preliminarily determined that in selecting from among the facts otherwise available, an adverse inference is warranted. See, e.g., Notice of Final Determination of Sales at Less than Fair Value: Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 42985, 42986 (July 12, 2000) (the Department applied total AFA where respondent failed to respond to the antidumping questionnaires).

C. Selection and Corroboration of Information Used as Facts Available

Where the Department applies AFA because a respondent failed to cooperate by not acting to the best of its ability to comply with a request for information, section 776(b) of the Act authorizes the Department to rely on information derived from the petition, a final determination, a previous administrative review, or other information placed on the record. See also 19 CFR 351.308(c); SAA at 829-831. In this case, because we are unable to calculate a margin based on TISCO's own data and because an adverse inference is warranted, we assign to TISCO the highest margin from the proceeding, which is the highest margin alleged for India in the petition, as recalculated in the initiation and described in detail below. See Initiation Notice, 68 FR at 9052.

When using facts otherwise available, section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition), it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. 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 Department's regulations state 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 19 CFR 351.308(d); see also SAA at 870.

To assess the reliability of the petition margin for the purposes of this investigation, to the extent appropriate information was available, we reviewed the adequacy and accuracy of the information in the petition for both this preliminary determination and during our pre-initiation analysis. See Office of AD/CVD Enforcement Initiation Checklist, at 15 (February 20, 2003) (Initiation Checklist). Also, as discussed below, we examined evidence supporting the calculations in the petition to determine the probative value of the margins in the petition for use as AFA for purposes of this preliminary determination. In accordance with section 776(c) of the Act, to the extent practicable, we examined the key elements of the constructed export price (CEP) and normal value (NV) calculations on which the margins in the petition were based. See Memorandum from Martin Claessens, International Trade Compliance Analyst, to Gary Taverman, Director, Office 5, Re: Corroboration of Data Contained in the Petition for Assigning Facts Available Rates, dated July 10, 2003 (Corroboration Memo).

1. Corroboration of Constructed Export Price

The petitioners based CEP on prices for sales of PC strand from an Indian producer, through its U.S. affiliate, to an unaffiliated U.S. purchaser. The petitioners calculated U.S. price by subtracting imputed credit expenses, international freight and insurance, U.S. merchandise processing and harbor maintenance fees, and U.S. inland freight. The petitioners also subtracted an amount for commissions.

We compared the U.S. market price quotes with official U.S. import statistics and U.S. customs data, and found the prices used by the petitioners to be reliable.

2. Corroboration of Normal Value

With respect to the NV, the petitioners provided a home market price for low-relaxation PC strand that was obtained from foreign market research. See Memorandum to the File Re: Telephone Conversation with Market Researcher Regarding the Petitions for Imposition of Antidumping: Prestressed Concrete Steel Wire Strand from India, dated February 7, 2003. To calculate the NV, the petitioners deducted imputed credit expenses and inland freight from the home market prices.

The petitioners also provided information demonstrating reasonable grounds to believe or suspect that sales of PC strand in the home market were made at prices below the fully absorbed cost of production (COP), within the meaning of section 773(b) of the Act, and requested that the Department conduct a country-wide sales-below-cost investigation.

Pursuant to section 773(b)(3) of the Act, COP consists of the cost of manufacturing (COM), selling, general, and administrative (SG&A) expenses, financial expenses, and packing expenses. The petitioners calculated COM based on their own production experience, adjusted for known differences between costs incurred to produce PC strand products in the United States and India using publicly available data. To calculate SG&A, the petitioners relied upon amounts reported in the March 31, 2002 financial statements of Tata SSL Ltd. To calculate interest expense, the petitioners relied upon the March 31, 2002 financial statements of TISCO. Based upon a comparison of the price of the foreign like product in the home market to the calculated COP of the product, we found reasonable grounds to believe or suspect that sales of the foreign like product were made below the COP, within the meaning of section 773(b)(2)(A)(i) of the Act. Accordingly, the Department initiated a country-wide cost investigation. For initiation purposes and for the purposes of this preliminary determination, we recalculated the labor costs by first indexing the costs in the foreign denominated currency and then converting the costs to U.S. dollars based on the prevailing exchange rate for the comparison period. In addition, we adjusted the petitioners' COP and CV calculations to be based on the currency rates from the Import Administration website rather than on Federal Reserve Bank currency rates. Finally, we have recalculated G&A and interest to remove allocations of certain expenses between COM and SG&A. To be conservative, we have reclassified all amounts where allocations were made, as COM. See Initiation Checklist at 14 and Attachments II, III, IV, V and VI.

Pursuant to sections 773(a)(4), 773(b) and 773(e) of the Act, the petitioners based NV on CV. The petitioners calculated CV using the same COM, SG&A and interest expense figures used to compute the India home market costs. Consistent with 773(e)(2) of the Act, the petitioners included in CV an amount for profit. For profit, the petitioners relied upon amounts reported in Tata SSL Ltd.”s March 31, 2002 financial statements.

The implementing regulation for section 776 of the Act, at 19 CFR 351.308(d), 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 the secondary information in question.” Additionally, we note that 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.” There are no independent sources for the cost data used to calculated the CV in the petition. Where relevant information was available from TISCO's audited financial statements, that information was used in the calculation of CV.

Therefore, based on our efforts, described above, to corroborate information contained in the petition, and in accordance with section 776(c) of the Act, we consider the margins in the petition to be corroborated to the extent practicable for purposes of this preliminary determination.

Accordingly, in selecting AFA with respect to TISCO, we have applied the margin rate of 102.07 percent, which is the highest estimated dumping margin set forth in the notice of initiation. See Initiation Notice, 68 FR at 9052.

D. All Others Rate

Section 735(c)(5)(B) of the Act provides that, where the estimated weighted-averaged dumping margins established for all exporters and producers individually investigated are zero, 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 facts available margins to establish that “All Others” rate. Where the data do not permit weight-averaging such rates, the SAA provides that we use other reasonable methods. See SAA at 873. Because the petition contained five estimated dumping margins which we subsequently adjusted in our pre-initiation analysis, we have used these adjusted dumping margins to create an “All Others” rate. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from Germany, 68 FR 7980, 7983 (February 19, 2003). Specifically, in this case we have used the simple average of both the price-to-price margin and the price-to-constructed value margin from the initiation notice, which takes into account the Department's pre-initiation adjustments as described above under Normal Value. Therefore, we have calculated a margin of 83.65 percent as the “All Others” rate.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing the BCBP to suspend liquidation of all entries of PC strand from India, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing the BCBP to require a cash deposit or the posting of a bond equal to the dumping margin as indicated in the chart below, adjusted for export subsidies found in the preliminary determination of the companion countervailing duty investigation. Specifically, consistent with our longstanding practice, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct the BCBP to require a cash deposit or posting of a bond equal to the amount by which the normal value exceeds the CEP, as indicated below, less the amount of the countervailing duty determined to constitute an export subsidy. Accordingly, for cash deposit purposes, we are subtracting from TISCO's cash deposit rate that portion of the rate attributable to the export subsidies found in the affirmative countervailing duty determination for this respondent (i.e., 34.99 percent). After the adjustment for the cash deposit rate attributed to export subsidies, the resulting cash deposit rate will be 67.08 for TISCO and 48.66 for “All Others.” These instructions suspending liquidation will remain in effect until further notice.

The dumping margins are as follows:

Producer/exporter	Margin (percentage)
Tata Iron and Steel Co. Ltd	102.07
All Others	83.65

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination. If the final determination in this proceeding is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of PC strand from India are materially injuring, or threaten material injury, to the U.S. industry.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs within 30 days of the date of publication of this notice. See 19 CFR 351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days after the deadline for the submission of case briefs. See 19 CFR 351.309(d). 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. Further, we request that parties submitting briefs and rebuttal briefs provide the Department with a copy of the public version of such briefs on diskette.

In accordance with section 774 of the Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs. If a request for a hearing is made, we will tentatively hold the hearing two days after the deadline for submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). The Department will make its final determination no later than 75 days after the date of this preliminary determination.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act.

Dated: July 10, 2003.

Jeffrey May,

Acting Assistant Secretary for Grant Aldonas, Under Secretary.

Footnotes

1.  The petitioners in this investigation are American Spring Wire Corp., Insteel Wire Products Company, and Sumiden Wire Products Corp.

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 cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production of the foreign like product and the constructed value of the merchandise under investigation. Section E requests information on further manufacturing.

3.  On May 3, 2003, the respondent notified the Department that under a “Scheme of Amalgamation,” Tata SSL Ltd. and Tata Iron and Steel Co. Ltd. were united as a single company, with Tata SSL Ltd. becoming known as Tata Iron and Steel Co. Ltd. (Wire Division). This amalgamation was approved by the High Court of Judicature at Bombay on April 21, 2003 with an effective date retroactive to April 1, 2002.