[Federal Register Volume 59, Number 27 (Wednesday, February 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-2998]


[[Page Unknown]]

[Federal Register: February 9, 1994]


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DEPARTMENT OF COMMERCE
[A-475-811]

 

Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Grain-Oriented Electrical Steel 
From Italy

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: February 9, 1994.

FOR FURTHER INFORMATION CONTACT: Jeffery B. Denning or Jennifer L. 
Katt, Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue NW., Washington, DC 20230; telephone 
(202) 482-4194 and 482-0498, respectively.

PRELIMINARY DETERMINATION: We preliminarily determine that grain-
oriented electrical steel (``GOES'') from Italy is being, or is likely 
to be, sold in the United States at less than fair value, as provided 
in section 733 of the Tariff Act of 1930, as amended (the ``Act''). The 
estimated margins are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the initiation of this investigation on September 15, 1993, 
(58 FR 49017, September 21, 1993), the following events have occurred:
    On October 20, 1993, the United States International Trade 
Commission (``ITC'') issued an affirmative preliminary injury 
determination (see Investigation No. 701-TA-355, 58 FR 54168).
    On November 4, 1993, the Department of Commerce (``Department'') 
published a revision to the scope of this investigation (see 58 FR 
58838, November 4, 1993). That scope revision is reflected below in the 
``Scope of the Investigation'' section of this notice.
    In November 1993, the Department issued its antidumping duty 
questionnaire to ILVA S.p.A. and Acciai Speciali Terni (``Terni''), the 
sole Italian producer of subject merchandise during the period of 
investigation. After formal transmittal of the questionnaire, officials 
from the Department traveled to Terni's production facilities in Italy 
in order to outline the Department's antidumping procedures, answer 
questions Terni might have concerning the proceeding and discuss any 
difficulties Terni may encounter in meeting the Department's reporting 
requirements.
    In November and December, respectively, Terni submitted its 
responses to Sections A and B through D of our questionnaire.
    In December 1993, the Department issued a supplemental 
questionnaire, and in January 1994, Terni submitted its response to 
that supplement.
    On January 26, 1994, Terni requested a postponement of the final 
determination in this investigation.

Postponement of Final Determination

    Pursuant to section 735(a)(2)(A) of the Act, on January 26, 1994, 
Terni requested that, in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination until not more than 135 days after the date of 
publication of the affirmative preliminary determinations. Pursuant to 
19 CFR 353.20(b), if our preliminary determination is affirmative, and 
the Department receives a request from producers or resellers who 
account for a significant portion of the exports under investigation, 
we will, absent compelling reasons to the contrary, grant the request.
    Because no such compelling reasons exist, we are postponing the 
final determination until the 135th day after the date of publication 
of this notice in the Federal Register.

Scope of the Investigation

    The product covered by this investigation is grain-oriented silicon 
electrical steel, which is a flat-rolled alloy steel product containing 
by weight at least 0.6 percent of silicon, not more than 0.08 percent 
of carbon, not more than 1.0 percent of aluminum, and no other element 
in an amount that would give the steel the characteristics of another 
alloy steel, of a thickness of no more than 0.56 millimeters, in coils 
of any width, or in straight lengths which are of a width measuring at 
least 10 times the thickness, as currently classifiable in the 
Harmonized Tariff Schedule of the United States (``HTS'') under item 
numbers 7225.10.0030, 7226.10.1030, 7226.10.5015 and 7226.10.5065. 
Although the HTS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this proceeding is 
dispositive.
    The HTS subheadings listed here reflect a revision from those 
identified in our Notice of Initiation, and in our published Revision 
of Scope of Investigations (58 FR 58838, November 4, 1993). This 
revision is due to the fact that the Harmonized Tariff Schedule has 
been amended so that there are now specific HTS subheadings for grain-
oriented silicon electrical steel. This revision of identified HTS 
numbers pertains to this investigation, as well as the concurrent 
antidumping investigation from Japan (A-588-831) and countervailing 
duty investigation from Italy (C-475-812).

Period of Investigation

    The period of investigation (``POI'') is March 1, 1993, through 
August 31, 1993.

Such or Similar Comparisons

    We have determined that the class or kind of merchandise subject to 
this investigation constitutes a single such or similar category. In 
making our fair value comparisons, in accordance with the Department's 
standard methodology, we first compared identical merchandise, as 
determined by the model-matching criteria contained in Appendix V of 
the questionnaire (``Appendix V''), on file in Room B-099 of the main 
building of the Department of Commerce (``Public File''). Since there 
were sales of identical merchandise in the home market to compare to 
U.S. sales, all of our price-to-price comparisons involved identical 
merchandise.
    Because Terni reported a single level of trade for both the home 
and United States markets, in accordance with 19 CFR 353.58, all 
comparisons were made at the same level of trade.

Fair Value Comparisons

    To determine whether Terni's sales of GOES from Italy to the United 
States were made at less than fair value, we compared the United States 
price (``USP'') to the foreign market value (``FMV''), as specified in 
the ``United States Price'' and ``Foreign Market Value'' sections of 
this notice.

United States Price

    All of Terni's U.S. sales to the first unrelated purchaser took 
place prior to importation into the United States. Therefore, in 
accordance with section 772(b) of the Act, our calculation of USP was 
based on the purchase price (``PP'') methodology.
    We calculated Terni's PP sales based on packed and delivered prices 
to unrelated customers in the United States. We made deductions, where 
appropriate, for U.S. brokerage and handling, U.S. duty and customs 
fees and freight expenses. We have also made adjustments for the value-
added tax paid on comparison sales in Italy. These adjustments are made 
pursuant to Federal-Mogul Corp. and The Torrington Co. v. United 
States, 834 F. Supp. 1391 (CIT, 1993). For discussion of this 
adjustment see, Final Results of Administrative Review: Certain 
Industrial Forklifts from Japan, (59 FR 1374, January 10, 1994) and 
Final Determination of Sales at Less Than Fair Value: Certain Stainless 
Steel Wire Rods from France, (58 FR 68865, December 29, 1993).

Foreign Market Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
FMV, we compared the volume of home market sales of subject merchandise 
to the volume of third country sales of subject merchandise, in 
accordance with section 773(a)(1)(B) of the Act. As a result we 
determined that the home market was viable, and therefore, we have 
based FMV on home market sales.
    We used the Department's related party test to determine whether 
sales to related customers were made on an arm's length basis. See 
Appendix II to Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, (58 FR 
37077, July 9, 1993), for a discussion of this test. We excluded from 
our price-to-price comparisons any sales to related customers we 
determined were not at arm's length. Additionally, after issuance of 
the questionnaire, Terni stated in a submission that it sold only one 
type of GOES in the United States (conventional permeability GOES), but 
sold this as well as other types of GOES in its home market (high 
permeability GOES and ``downgraded'' GOES). Terni claimed that during 
the POI it had home market sales of identical merchandise, as 
determined by the Department's model-matching criteria, for all 
``models'' of GOES sold in the United States, and requested that it be 
allowed to limit its reporting of home market sales on that basis. We 
agreed to Terni's request. Consequently, Terni was required to provide 
full reporting of all home market sales of conventional permeability 
GOES, as well as the following information for all remaining home 
market sales of subject merchandise:

    (1) All the Appendix V product characteristics for each unique 
product, as determined by that criteria, for all home market POI 
sales of subject merchandise;
    (2) The total POI volume and value of sales, broken down for 
each month of the POI, for each unique home market product, as 
determined by Appendix V and;
    (3) Sample sales invoices and order confirmations for POI sales 
of each unique product, as determined by Appendix V.

(See Memorandum from Team to Richard W. Moreland, dated December 10, 
1993, in the Public File)

Cost of Production

    Based on allegations contained in the petition, and in accordance 
with section 773(b) of the Act, we initiated an investigation to 
determine whether Terni's home market POI sales were made at prices 
below its cost of production (``COP''), and over an extended period of 
time.

A. Calculation of COP

    We calculated COP based on the sum of Terni's cost of materials, 
fabrication, general expenses and home market packing reported on its 
sales database, in accordance with section 773(b) of the Act. We relied 
on the submitted COP, except in the following instances where the costs 
were not appropriately quantified or valued:
    1. We disallowed G&A expenses reported on a divisional basis for 
the POI. We were unable to determine ILVA S.p.A.'s annual G&A costs 
based on the information submitted. As BIA, pursuant to section 776(c) 
of the Act, we used the average 1992 SG&A percentage for the domestic 
industry as reported in petitioner's cost allegation dated August 26, 
1993. Since we could not breakout the selling expenses from this 
percentage, we disregarded all submitted selling and G&A expenses, and 
used the domestic average SG&A rate.
    2. Terni's submitted financial expense was calculated based 
exclusively on interest expense incurred on a divisional basis during 
the period March 1 to August 31, 1993. The Department's policy is to 
compute a company's interest expense percentage using its audited 
consolidated annual financial statements for the year that most closely 
represents the POI. As BIA, we recalculated interest expense based on 
1992 ILVA Group consolidated financial statements.

(See Concurrence Memorandum, dated January 28, 1994, for discussion of 
these adjustments)

B. Test of Home Market Sale Prices

    After calculating COP, we tested whether, as required by section 
773(b) of the Act, Terni's home market sales of subject merchandise 
were made at prices below COP, in substantial quantities, and over an 
extended period of time, according to the following methodology:
    On a model-specific basis, (as determined by Appendix V) we 
compared COP to reported prices, minus movement charges and rebates. If 
over 90 percent of the sales of a model were at prices equal to or 
greater than the COP, we did not disregard any below-cost sales of that 
model because we determined that the below-cost sales were not made in 
``substantial quantities''. If between ten and 90 percent of the sales 
of a given model were at prices equal to or greater than the COP, we 
discarded only the below-cost sales, provided sales of that model were 
also found to be made over an extended period of time. Where we found 
that more than 90 percent of the sales of a model were at prices below 
the COP and sold over an extended period of time, in accordance with 
section 773(b) of the Act, we disregarded all sales of that model, and 
calculated FMV based on constructed value (``CV'').
    In order to determine whether sales were made over an extended 
period of time, we performed the following analysis on a model-specific 
basis: (1) if a respondent sold a product in only one month of the POI 
and there were sales in that month below the COP, or (2) if a 
respondent sold a product during two months or more of the POI and 
there were sales below the COP during two or more of those months, then 
below-cost sales were considered to have been made over an extended 
period of time. Otherwise the below-cost sales were not considered as 
having been made over an extended period of time.

C. Results of COP Test

    We found that for certain models of GOES more than 90 percent of 
home market sales were at below-COP prices and were made over an 
extended period of time. Since Terni provided no indication that these 
sales were at prices that would permit recovery of all costs within a 
reasonable period of time and in the normal course of trade, we based 
FMV on CV for all U.S. sales left without an identical match to home 
market sales as a result of our application of the COP test.

D. Calculation of CV

    We calculated CV based on the sum of Terni's cost of materials, 
fabrication, general expenses and U.S. packing costs as reported in the 
U.S. sales database. We made the adjustments described above for COP. 
In accordance with section 773(e)(1)(B)(i) and (ii) of the Act we 
included: (1) the greater of Terni's reported general expenses, 
adjusted as detailed above, or the statutory minimum of ten percent of 
the cost of manufacture (``COM'') and; (2) for profit, we used the 
statutory minimum, eight percent of COM and general expenses (because 
actual profit on home market sales was less than eight percent).

Price-to-Price Comparisons

    For those products for which there were an adequate number of sales 
at prices above the COP, we based FMV on home market prices. We 
calculated FMV based on delivered prices, inclusive of packing and VAT 
to customers in the home market. Based upon application of our related 
party test, we made comparisons only to home market sales to unrelated 
parties. Since all comparisons of U.S. and home market sales involved 
identical merchandise, we made no adjustments, pursuant to 19 CFR 
353.57, for physical differences in merchandise. We deducted credit and 
warranty expenses. In addition we made deductions, where appropriate, 
for rebates and inland freight. We subtracted home market packing and 
added U.S. packing costs. Pursuant to section 773(a)(4)(B) of the Act 
and 19 CFR 353.56(a)(2), we made circumstance-of-sale-adjustments for 
imputed credit and, where appropriate, certain U.S. warehousing 
expenses. We recalculated credit for those sales that had missing 
payment and or shipment dates. For sales with unreported shipment and 
payment dates, we used a weighted-average credit days for our imputed 
credit calculations. For sales with only unreported payment dates, we 
used the date of the preliminary determination as the paydate (see 
Concurrence Memorandum).
    We included in FMV the amount of the VAT collected in the home 
market (19 percent). We also calculated the amount of tax that was due 
solely to the inclusion of price deductions in the original tax base 
(i.e., 19 percent of the sum of any adjustments, expenses and charges 
that were deducted from the tax base). We deducted this amount from the 
FMV after all other additions and deductions had been made. By making 
this additional tax adjustment, we avoid a distortion that would cause 
the creation of a dumping margin even when pre-tax dumping is zero (see 
Concurrence Memorandum).

Price to CV Comparisons

    Where we compared Terni's U.S. prices to CV, we deducted from FMV 
the weighted-average home market direct selling expenses and added the 
U.S. model specific direct selling expenses.

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank of New York.

Verification

    As provided in section 776(b) of the Act, we will verify 
information that we determine is acceptable for use in making our final 
determination.

Suspension of Liquidation

    In accordance with section 733(d)(1) of the Act, we are directing 
the Customs Service to suspend liquidation of all entries of GOES from 
Italy that are entered, or withdrawn from warehouse, for consumption on 
or after the date of publication of this notice in the Federal 
Register. The Customs Service shall require a cash deposit or posting 
of a bond equal to the estimated preliminary dumping margins, as shown 
below. This suspension of liquidation will remain in effect until 
further notice. The estimated preliminary less than fair value dumping 
margins are as follows: 

------------------------------------------------------------------------
                                                               Weighted-
                                                                average 
               Producer/manufacturer/exporter                   margin  
                                                              percentage
------------------------------------------------------------------------
ILVA S.p.A. and Acciai Speciali Terni.......................       5.62 
All others..................................................       5.62 
------------------------------------------------------------------------

ITC Notification

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

Public Comment

    Interested parties who wish to request a hearing must submit a 
written request to the Assistant Secretary for Import Administration, 
U.S. Department of Commerce, room B-099, within ten days of the 
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.
    In accordance with 19 CFR 353.38, case briefs or other written 
comments in at least ten copies must be submitted to the Assistant 
Secretary no later than May 6, 1994, and rebuttal briefs no later than 
May 12, 1994. A hearing, if requested, will be held on May 17, 1994, at 
1 pm at the U.S. Department of Commerce in room 1815. Parties should 
confirm by telephone the time, date, and place of the hearing 48 hours 
prior to the scheduled time. In accordance with 19 CFR 353.38(b), oral 
presentations will be limited to issues raised in the briefs.
    We will make our final determination not later than 135 days after 
publication of this determination in the Federal Register.
    This determination is published pursuant to section 733(f) of the 
Act and 19 CFR 353.15(a)(4).

    Dated: February 2, 1994.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 94-2998 Filed 2-8-94; 8:45 am]
BILLING CODE 3510-DS-P