[Federal Register Volume 64, Number 157 (Monday, August 16, 1999)]
[Notices]
[Pages 44483-44488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21200]
[[Page 44483]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-588-824]
Certain Corrosion-Resistant Carbon Steel Flat Products From
Japan: Preliminary Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration, U.S.
Department of Commerce.
ACTION: Notice of preliminary results of the antidumping duty
administrative review of certain corrosion-resistant carbon steel flat
products from Japan.
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SUMMARY: In response to requests from interested parties, the
Department of Commerce (``the Department'') is conducting an
administrative review of the antidumping duty order on certain
corrosion-resistant carbon steel flat products from Japan. This review
covers two manufacturers of the subject merchandise. The period of
review (``POR'') is August 1, 1997 through July 31, 1998.
We have preliminarily determined that certain sales subject to this
review have been made below normal value (``NV''). If these preliminary
results are adopted in our final results of this administrative review,
we will instruct the U.S. Customs Service to assess antidumping duties
based on the difference between the export price (``EP'') and the NV.
EFFECTIVE DATE: August 16, 1999.
FOR FURTHER INFORMATION CONTACT: Doreen Chen, Brandon Farlander, or
Rick Johnson, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-
0413, 482-0182, or 482-3818, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (``the Act''), are to the provisions effective January
1, 1995, the effective date of the amendments made to the Act by the
Uruguay Round Agreements Act (``URAA''). In addition, unless otherwise
indicated, all citations to the Department's regulations are to 19 CFR
Part 351 (1998).
Background
On July 19, 1993, the Department published in the Federal Register
(58 FR 37154) the antidumping duty order on certain corrosion-resistant
carbon steel flat products from Japan. On August 31, 1998, Nippon Steel
Corporation (``NSC'') and Kawasaki Steel Corporation (``KSC'')
requested reviews of their exports to the United States of corrosion-
resistant steel. On September 29, 1998, in accordance with section 751
of the Act, we published a notice of initiation of administrative
review of this order for the period August 1, 1997 through July 31,
1998 (63 FR 51893).
Under section 751(a)(3)(A) of the Act, the Department may extend
the deadline for completion of an administrative review if it
determines that it is not practicable to complete the review within the
statutory time limit of 365 days. On February 24, 1999, the Department
published a notice of extension of the time limit for the preliminary
results of this review to August 1, 1999. See Corrosion-Resistant
Carbon Steel Flat Products From Japan: Extension of Time Limit for
Preliminary Results of the Antidumping Duty Administrative Review, 64
FR 9127 (February 24, 1999). Petitioners submitted comments for
consideration for the preliminary results for NSC and KSC on July 22,
1999, and July 20, 1999, respectively. The Department is conducting
this review in accordance with section 751(a) of the Act.
Scope of Reviews
This review covers flat-rolled carbon steel products, of
rectangular shape, either clad, plated, or coated with corrosion-
resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel-or
iron-based alloys, whether or not corrugated or painted, varnished or
coated with plastics or other nonmetallic substances in addition to the
metallic coating, in coils (whether or not in successively superimposed
layers) and of a width of 0.5 inch or greater, or in straight lengths
which, if of a thickness less than 4.75 millimeters, are of a width of
0.5 inch or greater and which measures at least 10 times the thickness
or if of a thickness of 4.75 millimeters or more are of a width which
exceeds 150 millimeters and measures at least twice the thickness, as
currently classifiable in the Harmonized Tariff Schedule of the United
States (``HTSUS'') under item numbers 7210.30.0030, 7210.30.0060,
7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000,
7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000,
7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000,
7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000,
7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530,
7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, and
7217.90.5090. Included are flat-rolled products of non-rectangular
cross-section where such cross-section is achieved subsequent to the
rolling process (i.e., products which have been worked after rolling)--
for example, products which have been beveled or rounded at the edges.
Excluded are flat-rolled steel products either plated or coated with
tin, lead, chromium, chromium oxides, both tin and lead (``terne
plate''), or both chromium and chromium oxides (``tin-free steel''),
whether or not painted, varnished or coated with plastics or other
nonmetallic substances in addition to the metallic coating. Also
excluded are clad products in straight lengths of 0.1875 inch or more
in composite thickness and of a width which exceeds 150 millimeters and
measures at least twice the thickness. Also excluded are certain clad
stainless flat-rolled products, which are three-layered corrosion-
resistant carbon steel flat-rolled products less than 4.75 millimeters
in composite thickness that consist of a carbon steel flat-rolled
product clad on both sides with stainless steel in a 20%-60%-20% ratio.
The HTS item numbers are provided for convenience and Customs purposes.
The written description remains dispositive of the scope of this
review.
Also excluded are certain corrosion-resistant carbon steel flat
products meeting the following specifications: (1) widths ranging from
10 millimeters (0.394 inches) through 100 millimeters (3.94 inches);
(2) thicknesses, including coatings, ranging from 0.11 millimeters
(0.004 inches) through 0.60 millimeters (0.024 inches); and (3) a
coating that is from 0.003 millimeters (0.00012 inches) through 0.005
millimeters (0.000196 inches) in thickness and that is comprised of
either two evenly applied layers, the first layer consisting of 99%
zinc, 0.5% cobalt, and 0.5% molybdenum, followed by a layer consisting
of chromate, or three evenly applied layers, the first layer consisting
of 99% zinc, 0.5% cobalt, and 0.5% molybdenum followed by a layer
consisting of chromate, and finally a layer consisting of silicate.
Verification
As provided in section 782(i) of the Act, we verified sales
information provided by NSC and sales and cost information provided by
KSC, using standard verification procedures, including on-site
inspection of the
[[Page 44484]]
manufacturer's facilities and the examination of relevant sales and
financial records. Our verification results are outlined in the public
versions of the verification reports, which are on file with the
Department in the Central Records Unit, Room B-099.
Transactions Reviewed
In accordance with section 751 of the Act, the Department is
required to determine the EP (or Constructed Export Price (``CEP''))
and NV of each entry of subject merchandise.
NSC
On October 9, 1998, respondent requested that it be relieved from
reporting certain information, e.g., price adjustments, for home market
sales by certain of NSC's affiliated manufacturers. Respondent argued
that it should not be required to report such information on sales by
these affiliated manufacturers because these sales were not exported to
the United States and would not provide the most similar product
matches to the subject merchandise under review. Therefore, respondent
reported only matching characteristics for these sales.
In addition, for other home market sales by affiliated parties, NSC
stated that it was unable to collect sales data from all affiliated
resellers. See Questionnaire Response, dated December 8, 1998 at p. B-
5. For further discussion of NSC's downstream sales, see Normal Value
(Section C, ``Downstream Sales''), below.
KSC
KSC reported export sales that occurred in only one month and
consisted of only prime merchandise. On October 6, 1998, KSC requested
that it report sales from only a six-month home market period because
KSC's export sales occurred in only one month. On October 20, 1998, we
allowed KSC to report sales for a six month period in accordance with
section 351.414(e)(2)(ii)-(iii) of the Department's regulations. On
November 12, 1998, KSC requested that the Department allow it to report
only merchandise similar to U.S. sales. Specifically, KSC requested
that it only report sales and cost information for prime merchandise.
On November 20, 1998, we granted KSC's requests, subject to
verification that its U.S. sale of subject merchandise consisted of
only prime merchandise and occurred in only one month.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by respondents covered by the description in the
``Scope of the Review'' section of this notice, (supra), and sold in
the home market during the period of review (``POR''), to be foreign
like products for purposes of determining appropriate product
comparisons to U.S. sales. Where there were no sales of identical
merchandise in the home market to compare to U.S. sales, we compared
U.S. sales to the most similar foreign like product on the basis of the
characteristics listed in Appendix V of the Department's September 19,
1998 antidumping questionnaire. In making product comparisons, we
matched foreign like products based on the physical characteristics
reported by respondents and verified by the Department. Consistent with
Department practice, we matched a given U.S. sale to foreign market
sales of the next most similar model when all sales of the most
comparable model were below cost.
Fair Value Comparisons
To determine whether sales of subject merchandise to the United
States were made at less than fair value, we compared the EP to the NV,
as described in the ``United States Price'' and ``Normal Value''
sections of this notice. In accordance with section 777A(d)(2) of the
Act, we calculated monthly weighted-average prices for NV and compared
these to individual U.S. transaction prices.
Level of Trade (``LOT'')
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on CV, that of the sales from which we derive SG&A
expenses and profit. For EP, the U.S. LOT is also the level of the
starting-price sale, which is usually from exporter to importer.
To determine whether NV sales are at a different LOT than EP, we
examine stages in the marketing process and selling functions along the
chain of distribution between the producer and the unaffiliated
customer. If the comparison-market sales are at a different LOT, and
the difference affects price comparability, as manifested in a pattern
of consistent price differences between the sales on which NV is based
and comparison-market sales at the LOT of the export transaction, we
make a LOT adjustment under section 773(a)(7)(A) of the Act. See Notice
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November
19, 1997).
NSC
In the present review, NSC claimed that only one LOT existed and
did not request a LOT adjustment. To evaluate LOTs, we examined
information regarding the distribution systems in both the U.S. and
home market, including the selling functions, classes of customer, and
selling expenses.
NSC reported one LOT in the home market based on two classes of
customers: trading companies and end-users. We examined the reported
selling functions and found that NSC provides the same selling
functions to its home market customers regardless of channel of
distribution. We preliminarily conclude that the selling functions
between the reported channels of distribution are sufficiently similar
to consider them as one LOT in the comparison market.
NSC stated that it sells to one LOT in the United States: trading
companies. We compared the selling functions performed at the home
market LOT and the LOT in the United States and found them
substantially similar. Of the thirteen selling functions reported for
home market sales, twelve of the selling functions were identical to
U.S. sales. For a further discussion of the Department's LOT analysis,
see Analysis Memorandum: Preliminary Results of the Antidumping Review
of Corrosion-Resistant Carbon Steel Flat Products for NSC (``Analysis
Memo: Preliminary Results for NSC''), (August 2, 1999). Therefore, the
Department preliminarily finds that no LOT adjustment is warranted for
NSC.
KSC
To evaluate LOTs, we examined information regarding the
distribution systems in both the U.S. and home market, including the
selling activities, classes of customers, and selling expenses. In the
present review, KSC reported two LOTs in the home market and one LOT in
the U.S. market. KSC stated that the LOTs in the home market have
consistent price differences. Thus, KSC requested an LOT adjustment if
sales at different LOTs are compared. In the U.S. market, KSC reported
one channel of distribution in the one LOT, i.e., sales through an
unaffiliated trading company.
In the home market, KSC reported two channels of distribution in
the first LOT:
[[Page 44485]]
(1) sales to unaffiliated trading companies; and (2) sales directly to
end-users (unaffiliated and affiliated). In both channels of
distribution, sales were made by either KSC or its affiliated producer,
Kawatetsu Galvanizing Co., Ltd. (``Kawahan''). KSC reported one channel
of distribution in the second LOT: sales through KSC's affiliated
reseller, Kawasho Corporation (``Kawasho'') to distributors and end-
users. These sales were made by both KSC and Kawahan.
For the preliminary results, we disagree with KSC's classification
for the above channels of distribution, and have established the
following two LOTs in the home market: (1) affiliated and unaffiliated
trading companies; and (2) end-users. KSC and Kawahan sold subject
merchandise to two types of customers: (1) trading companies
(affiliated or unaffiliated), and (2) end-users. These sales represent
two different points in the chain of distribution between the producers
and the final end-user. That is, in the one instance (sales to trading
companies), the subject merchandise passes through the intermediary
parties, while in the other case, sales are made without any
intervening parties. As a result, these sales to different points in
the distribution chain appear to represent different levels of trade in
the home market.
The Department then examined whether any differences existed with
respect to the selling activities KSC performed in making sales to
these two types of customers. Regarding the selling activities with
respect to the sales to end-users, KSC and Kawahan conducted the
following twelve selling activities: market intelligence, end-user
information, end-user contact lead role, marketing services, credit
checks, end-user price negotiations, daily issues end-user contact,
warehousing, processing, arranging for freight, payment collection, and
evaluating warranty claims. KSC and Kawahan's level of involvement in
these twelve selling activities was high.
Regarding sales to trading companies, KSC and Kawahan conducted the
following nine selling activities to its affiliated trading company:
market intelligence, end-user information, end-user contact lead role,
marketing services, end-user price negotiations, daily issues end-user
contact, warehousing, processing, and evaluating warranty claims. KSC
and Kawahan's level of involvement in these nine selling activities was
at a low level except for evaluating warranty claims, which was at a
high level. KSC and Kawahan conducted the following eleven selling
activities to its unaffiliated trading companies: market intelligence,
end-user information, end-user contact lead role, marketing services,
credit checks, end-user price negotiations, daily issues end-user
contact, warehousing, processing, arranging for freight, and evaluating
warranty claims. However, KSC and Kawahan's level of involvement in
these eleven selling activities was at a low level, except for
warehousing, processing, arranging for freight, and evaluating warranty
claims, which were at a high level. Based on this information, we find
that KSC and Kawahan's selling activities to its trading companies,
whether affiliated or unaffiliated, were at the same LOT.
We determined that differences existed with respect to selling
activities KSC and Kawahan performed in making sales to these two types
of customers. For sales to end-users, KSC and Kawahan's level of
involvement for all twelve selling activities was high, whereas, for
sales to trading companies (either affiliated or unaffiliated), KSC and
Kawahan's level of involvement was in only nine selling activities for
the affiliated trading company and eleven selling activities for the
unaffiliated trading companies, as noted above. In addition, of these
nine selling activities that KSC and Kawahan was involved in for its
affiliated trading company, KSC and Kawahan's level of involvement was
low for eight selling activities. Finally, of the eleven selling
activities that KSC and Kawahan was involved in for its unaffiliated
trading companies, KSC and Kawahan's level of involvement was low for
seven selling activities.
Based on the different points in the chain of distribution and the
differences in selling functions between the trading companies and the
end-users, the Department preliminarily finds that two levels of trade
exist for KSC's sales in the home market. Furthermore, the U.S. sales
were at the same LOT as KSC's home market sales to trading companies.
The Department then checked to determine whether a pattern of
consistent price differences existed between the two home market levels
of trade. The Department found that no pattern of consistent price
differences existed between the home market LOTs by running a pattern
of price difference SAS program. Therefore, we did not adjust NV to
account for any differences in LOT. For a further discussion of the
Department's LOT analysis, see Analysis Memorandum: Preliminary Results
of the Antidumping Review of Corrosion-Resistant Carbon Steel Flat
Products for KSC (``Analysis Memo: Preliminary Results for KSC'')
(August 2, 1999).
Date of Sale
It is the Department's current practice normally to use the invoice
date as the date of sale; we may, however, use a date other than the
invoice date if we are satisfied that a different date better reflects
the date on which the exporter or producer establishes the material
terms of sale. See 19 CFR 351.401(i) (62 FR at 27411).
NSC
For its home market and U.S. sales, NSC reported the date of
shipment. NSC stated that the invoice/shipment date best reflects the
date on which the material terms of sale are established, and that
price and/or quantity can and do change between order confirmation date
and invoice/shipment date. To ascertain whether NSC accurately reported
the date of sale, the Department requested information concerning the
nature and frequency of price and quantity changes occurring between
the date of order confirmation and date of invoice. See Supplemental
Questionnaire for Section A (November 13, 1998).
In its December 11, 1998, December 29, 1998 and February 18, 1999,
responses, NSC indicated that there were numerous instances in which
the essential terms of sale changed subsequent to the confirmation of
the original orders in the U.S. and home markets. NSC reported the
percentage of total quantity shipped that had changes in the material
terms of sale subsequent to the confirmation of original orders in the
U.S. and home markets. See December 11, 1998 Supplemental Response at
p. 1; Verification Exhibit 1, Revised Exhibit SS-A5 of the February 19,
1999 Supplemental Response; and Analysis Memo: Preliminary Results for
NSC (August 2, 1999).
At verification, we examined NSC's selling practices and found that
it records sales in its financial records by date of invoice/shipment.
We reviewed several sales observations for which the price and quantity
changed subsequent to the original order. We reviewed and confirmed the
accuracy of NSC's reported percentage of the number of sales that had
material changes in terms of sale subsequent to the order confirmation.
We are satisfied that the date of invoice/shipment best reflects the
date on which material terms of sale were established for NSC's U.S.
and home market sales. Therefore, the Department is preliminarily using
the dates of sales reported by NSC.
[[Page 44486]]
KSC
For its home market and U.S. sales, KSC reported the date of
invoice/shipment as the date of sale. KSC stated that the invoice/
shipment date best reflects the date on which the material terms of
sale are established and that price and/or quantity can and do change
between order confirmation date and invoice/shipment date. To ascertain
whether KSC accurately reported the date of sale, the Department
requested information concerning the nature and frequency of price and
quantity changes occurring between the date of order confirmation and
date of invoice. See Supplemental Questionnaire for Section A dated
November 13, 1998.
In its December 4, 1998 and March 22, 1999 supplemental
questionnaire responses, KSC indicated that there were numerous
instances in which material terms of sales, such as price and quantity,
changed subsequent to the confirmation of the original orders in the
U.S. and home markets. KSC reported the percentages of orders which had
a change in the material terms of sale after the order confirmation
date (see KSC's March 22, 1999 Supplemental Questionnaire Response at
p. 6-7) and the percentages of home market sales of subject merchandise
that were revised after shipment (Id. at pp. 9-10; Sales Verification
Exhibit (``SVE'') 37). As this involves proprietary information, see
Analysis Memo: Preliminary Results for KSC (August 2, 1999).
At verification, we examined KSC's selling practices and found that
KSC records sales in its financial records by date of invoice/shipment.
We reviewed several sales observations for which the price and quantity
changed subsequent to the original order. We reviewed and confirmed the
accuracy of KSC's reported percentage of the number of sales that had
material changes in terms subsequent to the order confirmation. We are
satisfied that the date of invoice/shipment best reflects the date on
which material terms of sales were established for KSC's U.S. and home
market sales. Therefore, the Department is preliminarily using the
dates of sales reported by KSC.
United States Price
For calculation of the price to the United States, we used EP
because the subject merchandise was sold prior to importation, directly
or indirectly to the first unaffiliated purchaser in the United States
and CEP was not otherwise warranted.
NSC
The Department calculated EP for NSC based on packed, prepaid or
delivered prices to customers in the United States. We made adjustments
to the starting price, net of billing adjustments, for movement
expenses (foreign and U.S. movement, brokerage and handling, and U.S.
Customs duties), in accordance with section 772(c)(2) of the Act.
KSC
The Department calculated EP for KSC based on packed, prepaid or
delivered prices to customers in the United States. We made adjustments
to the starting price, net of billing adjustments, for movement
expenses (foreign and U.S. movement, brokerage and handling, and U.S.
Customs duties), in accordance with section 772(c)(2) of the Act.
Normal Value
After testing home market viability and whether home market sales
were made at prices that were below the cost of production, we
calculated NV as noted in the ''Price-to-Price Comparisons'' and
''Price-to-CV Comparison'' sections of this notice. In addition, in
accordance with section 773(a)(1)(B)(i) of the Act, where possible, we
based NV on sales at the same level of trade (``LOT'') as the U.S.
price. See the Level of Trade section above.
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
is equal to or greater than five percent of the aggregate volume of
U.S. sales), we compared each respondent's volume of home market sales
of the foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act. Since
each respondent's aggregate volume of home market sales of the foreign
like product was greater than five percent of its aggregate volume of
U.S. sales for the subject merchandise, we determined that the home
market was viable for both respondents. Therefore, we have based NV on
home market sales in the usual commercial quantities and in the
ordinary course of trade.
B. Arm's Length Test
Sales to affiliated customers in the home market not made at arm's
length prices (if any) were excluded from our analysis because we
considered them to be outside the ordinary course of trade. See 19 CFR
351.102. To test whether these sales were made at arm's length prices
for each company, we compared, on a model-specific basis, the prices of
sales to affiliated and unaffiliated customers net of all applicable
discounts, rebates, billing adjustments, movement charges, direct
selling expenses, and packing. Where, for the tested models of subject
merchandise, prices to the affiliated party were on average 99.5
percent or more of the price to unaffiliated parties, we determined
that sales made to the affiliated party were at arm's length and used
those sales in determining NV. See 19 CFR 351.403(c). In instances
where no price ratio could be constructed for an affiliated customer
because identical merchandise was not sold to unaffiliated customers,
we were unable to determine that these sales were made at arm's length
prices and, therefore, excluded them from our LTFV analysis. See Notice
of Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077
(July 9, 1993). Where the exclusion of such sales eliminated all sales
of the most appropriate comparison product, we made a comparison to the
next most similar product.
C. Downstream Sales
Pursuant to section 351.403 of the Department's regulations, the
Department does not normally require the reporting of downstream sales
if total sales of the foreign like product by a firm to all affiliated
customers account for five percent or less of the firm's total sales of
the foreign like product. The questions concerning the reporting of
downstream sales are complicated, and the resolution of such questions
depends on a number of considerations, including the nature of the
merchandise sold to and by the affiliate, the volume of sales to the
affiliate, the levels of trade involved, and whether sales to
affiliates were made at arm's length. Id. In addition, the Department
normally will not require the respondent to report the affiliate's
downstream sales unless the sales to the affiliate fail the arm's
length test. Id. The Department believes that imposing the burden of
reporting small numbers of downstream sales often is not warranted, and
that the accuracy of determinations generally is not compromised by the
absence of such sales. Id.
As discussed below, after examining the data placed on the record,
the Department has preliminarily determined that for both NSC and
Kawasaki, there are sufficient matches
[[Page 44487]]
of sales in the home market, and that the downstream sales in question
account for less than five percent of each firm's total home market
sales of subject merchandise. Thus, for purposes of these preliminary
results, the Department has allowed this limited reporting for
downstream sales since we found adequate home market matches to U.S.
sales.
NSC
In its response to the questionnaire, NSC stated that it was unable
to collect sales data from all affiliated resellers. See Questionnaire
Response, dated December 8, 1998 at p. B-5. (As this involves
proprietary information, see Analysis Memo: Preliminary Results for
NSC, August 2, 1999.) Thus, NSC only reported sales by one affiliated
reseller. Id. The Department requested that NSC further explain its
selection methodology for reporting sales by affiliated resellers. See
Second Supplemental Questionnaire dated November 13, 1998 at p. 1. NSC
elaborated concerning its inability to report sales, its methodology in
reporting certain transactions and the impact of reporting resales on
the dumping margin. See Second Supplemental Questionnaire Response
dated December 11, 1998 at pp. 4-5. Based on these responses, for the
preliminary results, we have used the data as provided by NSC for the
purposes of establishing NV.
KSC
KSC stated that it was not able to report all affiliated downstream
sales information, because neither KSC nor its affiliates maintain the
necessary information. See KSC's March 22, 1999 Supplemental Response,
page 21. As reported by KSC, KSC/Kawahan sells to Kawasho Corporation
(``Kawasho''), who then sells the product to affiliated processors/
distributors. At verification, we examined documentation for these
transactions. However, as reported by KSC, when the affiliated
processor/distributor sells the merchandise back to Kawasho (after
further processing the merchandise), most of the affiliated processors/
distributors do not maintain information to link these sales to the
prior purchases from Kawasho. Thus, KSC provided limited downstream
sales made by its affiliated reseller, Kawasho (specifically, KSC
reported downstream sales for only one of Kawasho's affiliated
processors/distributors); and reported sales made by Kawahan (itself a
producer of subject merchandise affiliated with KSC) to its affiliates
and non-affiliates, but did not report Kawahan's affiliates' sales to
its downstream customers. KSC was unable to report Kawahan's
affiliates' sales to its downstream customers because Kawahan cannot
recover any product characteristic data to link its affiliates' sales
to Kawahan's sale to its affiliates. In addition, one of Kawahan's
affiliated customers refused to provide its downstream sales data,
despite Kawahan's request. At verification, we examined KSC's ability
to report the sales from affiliates of Kawahan and Kawasho. See Sales
Verification Report for additional information. We also reviewed, at
verification, Kawasaki's claim that Kawasho's total sales of KSC-and
Kawahan-produced subject merchandise to affiliated resellers are less
than five percent of total home market sales, as stated in KSC's
October 28, 1998, section A response, page A-3. We found no
discrepancies. See SVE 31, Analysis of Kawasho's Sales to Affiliated
Resellers. Because this issue includes proprietary information, see
Analysis Memo: Preliminary Results for KSC for further discussion.
Based on these responses, for the preliminary results, we have used the
data as provided by KSC for the purposes of establishing NV.
D. Cost of Production (COP) Analysis
For the class or kind of merchandise under review, the Department
disregarded sales below the cost of production (``COP'') in the last
completed review as of the date of the issuance of the antidumping
questionnaire for NSC (Certain Corrosion-Resistant Carbon Steel Flat
Products Final Results of Antidumping Duty Administrative Review, 64 FR
12951 (Mar 16, 1999) and for Kawasaki (Certain Corrosion-Resistant
Carbon Steel Flat Products from Japan:(see Certain Hot-Rolled Carbon
Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products,
and Certain Corrosion-Resistant Carbon Steel Flat Products from Japan:
Final Determinations of Sales at Less Than Fair Value), 58 FR 37154
(July 9, 1993)). We therefore had reasonable grounds to believe or
suspect, pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of
the foreign like product under consideration for the determination of
NV in this review may have been made at prices below the COP. Pursuant
to section 773(b)(1) of the Act, we initiated COP investigations of
sales by respondents in the home market.
1. Calculation of COP
We compared each respondent's sales of the foreign like product in
the home market with each respondent's model-specific COP figure for
the POR. In accordance with section 773(b)(3) of the Act, we calculated
each respondent's COP based on the sum of the costs of materials and
fabrication employed in producing the foreign like product plus SG&A
expenses and all costs and expenses incidental to placing the foreign
like product in condition packed and ready for shipment. In our COP
analysis, we used each respondent's home market sales and COP
information provided in its questionnaire responses, with the following
exceptions. First, where KSC reported more than one cost for the same
CONNUM, we calculated a single weighted-average cost for each CONNUM
using the reported production quantities. Second, we revised variable
cost of manufacturing because KSC double counted labor costs. Third, we
revised KSC's financial expense rate. See Analysis Memo: Preliminary
Results for KSC for further information.
2. Test of Home Market Prices
After calculating each respondent's COP, we tested whether home
market sales of subject merchandise were made at prices below COP and,
if so, whether the below-cost sales were made within an extended period
of time in substantial quantities and at prices that did not permit
recovery of all costs within a reasonable period of time. Because each
individual price was compared to the POR average COP, any sales that
were below cost were also not at prices which permitted cost recovery
within a reasonable period of time. We compared model-specific COPs to
the reported home market prices less any applicable movement charges,
discounts, and rebates.
3. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a respondent's sales of a given model were at prices less
than COP, we did not disregard any below-cost sales of that model
because the below-cost sales were not made in substantial quantities
within an extended period of time. Where 20 percent or more of a
respondent's sales of a given model during the POR were at prices less
than the weighted-average COPs for the POR, we disregarded the below-
cost sales because they were made within an extended period of time in
substantial quantities in accordance with sections 773(b)(2)(B) and (C)
of the Act, and were at prices which would not permit recovery of all
costs within a reasonable period of time in accordance with section
773(b)(2)(D) of the Act.
[[Page 44488]]
4. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated CV
based on the sum of respondent's cost of materials, fabrication, SG&A,
including interest expenses, and profit. We calculated the COP included
in the calculation of CV as noted above, in the ''Calculation of COP''
section of the notice. In accordance with section 773(e)(2)(A) of the
Act, we based SG&A and profit on the amounts incurred and realized by
the respondent in connection with the production and sale of the
foreign like product in the ordinary course of trade, for consumption
in the foreign country.
Price-to-Price Comparisons
NSC
For those models for which there was a sufficient quantity of sales
at prices above COP, we based NV on home market prices to unaffiliated
purchasers, as well as affiliated purchasers passing the arm's length
test, in accordance with 19 CFR 351.403. Home market prices were based
on the packed, ex-factory or delivered prices to unaffiliated
purchasers in the home market.
We calculated the starting price net of discounts, and other sales
adjustments, where applicable. We made adjustments, where applicable,
for packing and movement expenses in accordance with sections
773(a)(6)(A) and (B) of the Act. We also made adjustments for
differences in cost attributable to differences in physical
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)
of the Act and for differences in circumstances of sale (``COS'') in
accordance with 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For
comparison to EP, we made COS adjustments by deducting home market
direct selling expenses (credit, royalties, discounts, and warranty
expenses, where applicable) and adding U.S. direct selling expenses
(credit, warranty, royalties, and discounts, where applicable).
KSC
For those models for which there was a sufficient quantity of sales
at prices at or above COP, we based NV on home market prices to
unaffiliated purchasers, as well as affiliated purchasers passing the
arm's length test, in accordance with 19 CFR 351.403. Home market
prices were based on the packed, ex-factory or delivered prices to
unaffiliated purchasers in the home market.
We calculated the starting price net of billing adjustments and
rebates, where applicable. We made adjustments, where applicable, for
packing and movement expenses in accordance with sections 773(a)(6)(A)
and (B) of the Act. We also made adjustments for differences in cost
attributable to differences in physical characteristics of the
merchandise pursuant to section 773(a)(6)(C)(ii) of the Act and for
differences in circumstances of sale (``COS'') in accordance with
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. For comparison to EP,
we made COS adjustments by deducting home market direct selling
expenses (credit, advertising, royalties, technical service, and
warranty expenses, where applicable) and adding U.S. direct selling
expenses (credit, and advertising expenses, where applicable).
Price-to-CV Comparisons
For price-to-CV comparisons, if necessary, we made adjustments to
CV in accordance with section 773(a)(8) of the Act.
Preliminary Results of Review
As a result of our review, we preliminarily determine the weighted-
average dumping margins for NSC and KSC, for the period August 1, 1997
through July 31, 1998, to be as follows:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
NSC................................... 08/01/97-07/31/98 2.48
KSC................................... 08/01/97-07/31/98 1.32
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Any interested party may
request a hearing within 30 days of publication. Any hearing, if
requested, will be held 37 days after the date of publication or the
first business day thereafter. Case briefs from interested parties may
be submitted not later than 30 days after the date of publication of
this notice. Rebuttal briefs, limited to issues raised in those briefs,
may be filed not later than 35 days after the date of publication of
this notice. The Department will publish the final results of this
administrative review, including its analysis of issues raised in the
case and rebuttal briefs, not later than 120 days after the date of
publication of this notice.
Upon issuance of the final results of review, the Department shall
determine, and the U.S. Customs Service shall assess, antidumping
duties on all appropriate entries. In accordance with 19 CFR
351.212(b), we calculated an importer-specific ad valorem duty
assessment rate based on the ratio of the total amount of antidumping
duties calculated for the examined sales to the total customs value of
the sales used to calculate those duties. This rate will be assessed
uniformly on all entries of that particular importer during the POR.
Furthermore, the following deposit requirements will be effective
for all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided by section 751(a) of the Act: (1) the cash deposit rate for
NSC and KSC will be that established in the final results of review
(except that if the rate is zero or de minimis, i.e., less than 0.5
percent, no cash deposit rate will be required for that company); (2)
for previously investigated companies not listed above, 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 less than fair value
(``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; (4) the cash deposit rate for all
other manufacturers or exporters will continue to be the ``all others''
rate of 40.19 percent, established in the LTFV investigation for
corrosion-resistant steel products from Japan (see Final Determination,
58 FR 37154 (July 9, 1993)). These requirements, when imposed, shall
remain in effect until publication of the final results of the next
administrative review.
Notification of Interested Parties
This notice 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.
These results of the administrative review are issued and published
in accordance with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: August 9, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21200 Filed 8-13-99; 8:45 am]
BILLING CODE 3510-DS-P
