E7-14159. Stainless Steel Bar from India: Preliminary Results of Antidumping Duty New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

July 23, 2007.

SUMMARY:

The Department of Commerce is conducting a new shipper review of the antidumping duty order on stainless steel bar from India manufactured and exported by Ambica Steels Limited (“Ambica”). In these preliminary results, we find that Ambica made sales of subject merchandise below normal value. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

July 23, 2007.

FOR FURTHER INFORMATION CONTACT:

Devta Ohri or Brandon Farlander, AD/CVD Operations, Office 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington DC 20230; telephone [phone] and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 21, 1995, the Department of Commerce (“Department”) published in the Federal Register the antidumping duty order on stainless steel bar (“SSB”) from India. See Antidumping Duty Orders: Stainless Steel Bar form Brazil, India and Japan, 60 FR 9661 (February 21, 1995).

On August 31, 2006, the Department received a request from Ambica to conduct a new shipper review of the antidumping duty order on stainless steel bar from India. On September 26, 2006, the Department published in the Federal Register, a notice of initiation of a new shipper review of Ambica covering the period February 1, 2006, through July 31, 2006. See Stainless Steel Bar from India: Notice of Initiation of Antidumping Duty New Shipper Review, 71 FR 56105 (September 26, 2006).

On September 26, 2006, the Department issued an antidumping questionnaire to Ambica. We received responses on October 26, 2006, and November 29, 2006.

On December 19, 2006, the petitioners¹ alleged that Ambica made sales below the cost of production (“COP”). We found that the petitioners' allegation provided a reasonable basis to believe or suspect that sales by Ambica in the home market had been made at prices below the cost of production and initiated a sales below cost investigation on January 23, 2007. See Memorandum from Devta Ohri, International Trade Compliance Analyst, to Susan Kuhbach, Senior Office Director, Office 1, AD/CVD Operations, “Petitioners' Allegation of Sales Below the Cost of Production for Ambica Steels Limited,” dated January 23, 2007 (“Sales Below Cost Memorandum”). On January 24, 2006, we requested that Ambica respond to the Section D cost of production section of the Department's original questionnaire. Ambica filed its response to Section D on February 15, 2007.

On March 5, 2007, the Department published an extension of the time limit for the preliminary results of this new shipper review to no later than July 17, 2007. See Stainless Steel Bar from India: Notice of Extension of Time Limit for the Preliminary Results of the 2006 New Shipper Review, 72 FR 9732 (March 5, 2007).

We issued supplemental questionnaires to Ambica in December 2006, March 2007, and April 2007. Ambica responded in December 2006 and May 2007.

Scope of the Order

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

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

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

On May 23, 2005, the Department issued a final scope ruling that SSB manufactured in the United Arab Emirates out of stainless steel wire rod from India is not subject to the scope of this order. See Memorandum from Team to Barbara E. Tillman, “Antidumping Duty Orders on Stainless Steel Bar from India and Stainless Steel Wire Rod from India: Final Scope Ruling,” dated May 23, 2005, which is on file in the CRU in room B-099 of the main Department building. See also Notice of Scope Rulings, 70 FR 55110 (September 20, 2005).

Verification

As provided in section 782(i)(3) of the Tariff Act of 1930, as amended (“the Act”), we intend to verify the information provided by Ambica in September or October 2007.

Period of Review

The period of review (“POR”) is February 1, 2006, through July 31, 2006.

bona fide Analysis

Consistent with the Department's practice, we investigated whether the U.S. transaction reported by Ambica during the POR was a bona fide sale. Among the factors examined was the relationship between Ambica and its reported U.S. customer. Based on our investigation, we preliminarily determine that Ambica's sale was made on a bona fide basis. For our complete analysis, see Memorandum from Devta Ohri, International Trade Compliance Analyst to the File entitled, “bona fide Nature of Ambica Steels Limited's Sales in the New Shipper Review for Stainless Steel Bar from India,” dated July 17, 2007, on file in room B-099 of the main Department of Commerce building.

Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (“the Act”), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act. In addition, all references to the Department of Commerce's regulations are to 19 CFR Part 351 (2007).

Fair Value Comparisons

To determine whether Ambica's sales of SSB to the United States were made at less than normal value (“NV”), we compared export price (“EP”) to NV, as described in the “Export Price” and “Normal Value” sections of this notice.

Pursuant to section 777A(d)(2) of the Act, we compared the EP of individual U.S. transactions to the weighted-average NV of the foreign-like product, where there were sales made in the ordinary course of trade, as discussed in the “Cost of Production Analysis” section, below.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced and sold by the respondent in the home market covered by the description in the “Scope of the Order” section, above, to be foreign-like products for purposes of determining appropriate product comparisons to U.S. sales. In accordance with sections 773(a)(1)(B) and (C) of the Act, in order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared the respondent's volume of home market sales of the foreign-like product to the volume of its U.S. sales of the subject merchandise. For further details, see the “Normal Value” section, below.

We compared U.S. sales to monthly weighted-average prices of contemporaneous sales made in the home market based on the following criteria: (1) General type of finish, (2) Grade, (3) Remelting, (4) Type of final finishing operation, (5) Shape, and (6) Size. Where there were no home market sales of foreign like product that were identical in these respects to the merchandise sold in the United States, we compared U.S. products with the most similar merchandise sold in the home market based on the characteristics listed above, in that order of priority.

Export Price

In accordance with section 772(a) of the Act, EP is defined as the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for exportation to the United States. In accordance with section 772(b) of the Act, constructed export price (“CEP”) is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d).

For Ambica's sales to the United States, we used EP in accordance with section 772(a) of the Act because Ambica's merchandise was sold directly to the first unaffiliated purchaser prior to importation, and CEP was not otherwise warranted based on the facts of record. We calculated EP based on the packed cost, insurance, and freight (“CIF”), or delivered duty paid (“DDP”) price to the first unaffiliated purchaser in the United States. We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act, including domestic inland freight (plant/warehouse to port of exit), international freight, marine insurance, U.S. customs duty, brokerage and handling, and clearing house agent (“CHA”) expenses.

Duty Drawback

Section 772(c)(1)(B) of the Tariff Act provides that EP or CEP shall be increased by among other things, “the amount of any import duties imposed by the country of exportation which have been rebated, or which have not been collected, by reason of the exportation of the subject merchandise to the United States.” The Department determines that an adjustment to U.S. price for claimed duty drawback is appropriate when a company can demonstrate: (1) that the “import duty and rebate are directly linked to, and dependent upon, one another;” and (2) “the company claiming the adjustment can show that there were sufficient imports of the imported raw materials to account for the drawback received on the exported product.” Rajinder Pipes, Ltd. v. United States, 70 F. Supp. 2d 1350, 1358 (Ct. Int'l Trade 1999).

Ambica claimed a duty drawback adjustment based on its participation in the Indian government's Duty Entitlement Passbook Program. The Department finds that Ambica has not provided substantial evidence on the record to meet the requirement for the first prong of the two-prong test, by establishing the necessary link between the import duty and the reported duty drawback. Therefore, because Ambica has failed to meet the Department's requirements, we are denying Ambica's request for a duty drawback adjustment for the preliminary results. See Memorandum from Team to the File “Preliminary Results Calculation Memorandum for Ambica Steels Limited,” dated July 17, 2007 (“Preliminary Results Calculation Memorandum”).

Normal Value

A. Home Market Viability

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign-like product during the POR is equal to or greater than five percent of the aggregate volume of U.S. sales of subject merchandise during the POR), we compared Ambica's volume of home market sales of the foreign-like product to the volume of U.S. sales of subject merchandise, in accordance with 773(a)(1)(C) of the Act. Based on Ambica's reported home market and U.S. sales quantities, we determine that the volume of aggregate home market sales during the POR is equal to or greater than five percent of the aggregate volume of U.S. sales of subject merchandise during the POR. Accordingly, we find that Ambica had a viable home market. Therefore, we based NV on home market sales to unaffiliated purchasers made in the usual quantities and in the ordinary course of trade.

B. Level of Trade

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (“LOT”) as the EP. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. See 19 CFR 351.412(c)(2); see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997). In order to determine whether the comparison market sales were made at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”),^[2] including selling functions,³ class of customer (“customer category”), and the level of selling expenses for each type of sale.

Pursuant to section 773(a)(7)(A) of the Act, in identifying levels of trade for EP and comparison market sales (i.e., NV based on either home market or third country prices),⁴ we consider the starting prices before any adjustments. See Micron Technology, Inc. v. United States, et al., 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001) (affirming this methodology).

When the Department is unable to match U.S. sales to sales of the foreign-like product in the comparison market at the same LOT as the EP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP sales at a different LOT in the comparison market, where available data show that the difference in LOT affects price comparability, we make a LOT adjustment under section 773(a)(7)(A) of the Act.

Ambica reported that its customer base in the home market consists of processors, and in the U.S. market, it consists of distributors. See December 28, 2006 supplemental questionnaire response (“SQR”) at Annexure C (“Selling Functions Chart”). In addition, Ambica has reported two channels of distribution in the home market and one channel distribution in the U.S. market. See December 28, 2006 SQR at 6. In the first channel of distribution in the home market, Ambica made sales directly to its home market customers from the factory. In the second channel of distribution in the home market, Ambica made sales directly to its home market customers via Ambica's distribution warehouses. In Ambica's single channel of distribution to the U.S. market, Ambica made sales directly to its customer.

Ambica reported a single LOT in both the home market and the U.S. market, and has not requested an LOT adjustment. Ambica stated that an LOT adjustment is not applicable because Ambica does not make any additional efforts for sales to either export markets or in the domestic market. See November 29, 2006 section B questionnaire response at 21, November 29, 2006 section C questionnaire response at 22; see also May 11, 2007 section A, B, C and D SQR at 17-18.

We examined the information reported by Ambica regarding the type and level of selling functions performed, and customer categories. Specifically, we considered the extent to which, for instance, sales process/marketing support, freight/delivery, inventory maintenance, and quality assurance/warranty service varied with respect to the different customer categories and channels of distribution (i.e., distributors and processors) across the markets.

We preliminary find the LOTs for the home market channels of distribution similar with regard to sales and marketing, and quality assurance/warranty service. We note some differences with regard to freight and warehousing in the home market channels of distribution and intend to issue a supplemental questionnaire to Ambica to further clarify the extent of the selling activities in these particular selling functions. However, based on the current record of this proceeding, for purposes of these preliminary results, we consider the home market to constitute a single LOT. We compared the U.S. LOT to the LOT reported for sales in the home market. We found the LOT in the United States to be similar to the LOT in the home market. Thus, we preliminarily have compared U.S. sales to home market sales at the same LOT.

C. Cost of Production Analysis

As discussed above, the petitioners provided a reasonable basis to believe or suspect that sales by Ambica in the home market had been made at prices below the cost of production (“COP”) within the meaning of section 773(b) of the Act and we initiated a sales below cost investigation on January 23, 2007. See Sales Below Cost Memorandum.

1. Calculation of COP

We calculated the COP on a product-specific basis, based on the sum of the respondent's cost of materials and fabrication for the foreign-like product, plus amounts for general and administrative (“G&A”) expenses, interest expenses, and the cost of all expenses incidental to placing the foreign-like product packed and in a condition ready for shipment, in accordance with section 773(b)(3) of the Act.

Ambica reported its costs based on the period January through June 2006, rather than the POR (February 1, 2006 through July 31, 2006). We have relied on Ambica's submission for these preliminary results, but we intend to seek Ambica's POR costs in a supplemental questionnaire.

We made the following adjustment to Ambica's reported cost:

• We adjusted Ambica's straightening and finishing costs for cold-rolled products to include the actual conversion costs of Unit II incurred during the cost reporting period.

See Preliminary Results Calculation Memorandum.

2. Test of Home Market Prices

On a product-specific basis, we compared the adjusted weighted-average COP figures for the POR to the home market sales of the foreign-like product, as required under section 773(b) of the Act, to determine whether these sales were made at prices below the COP. The prices were exclusive of any applicable movement charges and indirect selling expenses. In determining whether to disregard home market sales made at prices less than their COP, we examined, in accordance with sections 773(b)(1)(A) and (B) of the Act, whether such sales were made: (1) within an extended period of time in substantial quantities; and (2) at prices which permitted the recovery of all costs within a reasonable period of time.

3. Results of the COP Test

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

We found that, for certain products, more than 20 percent of Ambica's home market sales were at prices less than the COP. Further, the prices at which the merchandise under review was sold did not provide for the recovery of costs within a reasonable period of time. See sections 773 (b)(2)(B), (C), and (D). Therefore, we disregarded these below-cost sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

D. Calculation of Normal Value Based on Home Market Prices

We relied on Ambica's submitted home market sales information, except for the following adjustment:

• We excluded from the home market sales database those sales which Ambica made to domestic customers which were ultimately destined for export.

See Preliminary Results Calculation Memorandum.

We are not making any adjustment for discounting charges, bank commissions, and postal charges that Ambica may have paid on letter of credit sales in the home market. Ambica has not requested an adjustment for these expenses for the preliminary results and the supporting documentation provided by Ambica at Annexure E of the May 2, 2007 SQR does not tie to the home market sales database. We will address this issue further in a supplemental questionnaire.

We calculated NV based on ex-factory prices to unaffiliated customers in the home market. We made adjustments for packing expenses in accordance with sections 773(a)(6)(A) of the Act. We also made adjustments, consistent with section 773(a)(6)(B)(ii) of the Act, for inland freight from plant to the distribution warehouse, warehouse expenses, inland freight from the plant/warehouse to the customer, and inland insurance. In addition, we made adjustments for differences in circumstances of sale (“COS”), in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS adjustments, where appropriate, by deducting direct selling expenses incurred on home market sales (i.e., imputed credit expenses (offset by the addition of interest revenue), and commissions) and adding U.S. direct selling expenses (i.e., imputed credit expenses, commissions, and fumigation expenses). See Preliminary Results Calculation Memorandum.

Preliminary Results of Review

We find that the following dumping margin exists for the period February 1, 2006 through July 31, 2006:

Exporter/manufacturer	Weighted-average margin percentage
Ambica Steels Limited	22.63

Public Comment

The Department will disclose to parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice. Interested parties may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held two days after the date rebuttal briefs are filed. Pursuant to 19 CFR 351.309(c), interested parties may submit cases briefs not later than 30 days after the date of publication of this notice. Parties who submit briefs in these proceedings should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 37 days after the date of publication of this notice. See 19 CFR 351.309(d). Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f)(3). The Department will issue the final results of this new shipper review within 90 days from the issuance of these preliminary results.

Assessment Rates

If these preliminary results are adopted in the final results, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the period of review produced by the respondent for which it did not know its merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

Cash Deposit Requirements

The following cash deposit requirements will be effective upon publication of the final results of this new shipper review for all shipments of SSB from India entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) the cash deposit rate for Ambica will be the rate established in the final results of this new shipper review (except no cash deposit will be required if its weighted-average margin is de minimis, i.e., less than 0.5 percent); (2) if the exporter is not a firm covered in this review, but was covered in a previous review or the original less than fair value (“LTFV”) investigation, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a previous review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers and/or exporters of this merchandise, shall be 12.45 percent, the “all others” rate established in the LTFV investigation. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar from India, 59 FR 66915, (December 28, 1994). These requirements, when imposed, shall remain in effect until further notice.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: July 17, 2007.

Joseph A. Spetrini,

Deputy Assistant Secretary for Import Administration.

Footnotes

1.  Carpenter Technology Corporation, Valbruna Slater Stainless, Inc., Electralloy Corporation, a Division of G.O. Carlson, Inc.

2.  The marketing process in the United States and comparison markets begins with the producer and extends to the sale to the final user or customer. The chain of distribution between the two may have many or few links, and the respondent's sales occur somewhere along this chain. In performing this evaluation, we considered the narrative responses of the respondent to properly determine where in the chain of distribution the sale appears to occur.

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

4.  Where NV is based on CV, we determine the NV LOT based on the LOT of the sales from which we derive selling expenses, general and administrative expenses, and profit for CV, where possible.