[Federal Register Volume 59, Number 126 (Friday, July 1, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-16085]


[[Page Unknown]]

[Federal Register: July 1, 1994]


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DEPARTMENT OF COMMERCE
[A-475-811]

 

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

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

EFFECTIVE DATE: July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Jennifer L. Katt or Lori Way, Office 
of Antidumping Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0498 and 482-0656, respectively.

Final Determination

    The Department of Commerce (the Department) determines that grain-
oriented electrical steel (GOES) from Italy is being, or is likely to 
be, sold in the United States at less than fair value, as provided in 
section 735 of the Tariff Act of 1930, as amended (the Act). The 
estimated margins are shown in the ``Suspension of Liquidation'' 
section of this notice.

Case History

    Since the notice of the preliminary determination and postponement 
of the final determination on February 2, 1994 (59 FR 5991, February 9, 
1994), the following events have occurred:
    We conducted verification of the respondents' (ILVA S.p.A. and 
Acciai Speciali Terni, S.r.l. (collectively Terni)) sales and cost 
questionnaire responses in Italy and the United States in May 1994.
    Terni and the petitioners in this investigation (Allegheny Ludlum 
Corp., Armco, Inc., The United Steelworkers of America, Butler Armco 
Independent Union and Zanesville Armco Independent Union) submitted 
case briefs on June 10, 1994, and rebuttal briefs on June 15, 1994. No 
public hearing was requested.
    On June 20, 1994, a meeting took place where representatives from 
the Italian government expressed their concerns regarding our findings 
at verification.

Scope of Investigation

    The product covered by this investigation is grain-oriented silicon 
electrical steel, which is a flat-rolled alloy steel product containing 
by weight at least 0.6 percent of silicon, not more than 0.08 percent 
of carbon, not more than 1.0 percent of aluminum, and no other element 
in an amount that would give the steel the characteristics of another 
alloy steel, of a thickness of no more than 0.56 millimeters, in coils 
of any width, or in straight lengths which are of a width measuring at 
least 10 times the thickness, as currently classifiable in the 
Harmonized Tariff Schedule of the United States (HTSUS) under item 
numbers 7225.10.0030, 7226.10.1030, 7226.10.5015 and 7226.10.5065. 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this proceeding is 
dispositive.

Period of Investigation

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

Such or Similar Comparisons

    We have determined that the merchandise subject to this 
investigation constitutes a single category of such or similar 
merchandise.

Best Information Available (BIA)

    We were unable to verify Terni's submitted cost of production (COP) 
and constructed value (CV) information because the company did not 
provide adequate source documentation at verification to substantiate 
the accuracy and completeness of its submitted costs. Section 776(b) of 
the Act provides that if the Department is unable to verify, within the 
time specified, the accuracy and completeness of the factual 
information submitted, it shall use BIA as the basis for its 
determination. Consequently, we have based this determination on BIA. 
For a detailed discussion of the problems encountered in attempting to 
verify Terni's cost information, see our response to Comment One under 
the ``Interested Party Comments'' section of this notice.
    In determining what rate to use as BIA, the Department follows a 
two-tiered methodology, whereby the Department may assign lower rates 
for those respondents who cooperated in an investigation and rates 
based on more adverse assumptions for those respondents found to be 
uncooperative in an investigation (See, Final Determination of Sales At 
Less Than Fair Value: Certain Hot-Rolled and Cold-Rolled Carbon Steel 
Flat Products and Certain Cut-to-Length Steel Plate from Belgium, 58 FR 
37082, July 9, 1993).
    As detailed in the DOC position to Comment One below, we consider 
Terni to have been cooperative. When a company cooperates with our 
requests for information but fails to provide that information in a 
timely manner or in the form required, it is the Department's practice 
to use as BIA the higher of: 1) the average of margins in the petition; 
or 2) the calculated margin for another firm for the same class or kind 
of merchandise from the same country. Since there was only one less 
than fair value margin alleged in the petition and there was no other 
respondent in this case, we have applied, as BIA, the single rate 
alleged in the petition.

Fair Value Comparisons

    To determine whether sales of subject merchandise from Italy to the 
United States were made at less than fair value, we compared United 
States price (USP) to foreign market value (FMV). USP and FMV were 
based on information contained in the petition, as fully described in 
the notice of initiation of this investigation (58 FR 49017, September 
21, 1993).

Interested Party Comments

    Comment 1: Terni argues that the Department should amend its cost 
verification report to ``correct and clarify numerous misstatements and 
fundamental inaccuracies contained therein.'' Terni asserts that the 
cost verification report incorrectly casts the company's actions at 
verification as uncooperative. Terni further asserts that its conduct 
at the cost verification and throughout this investigation has been 
cooperative for the following reasons: (1) Terni provided complete and 
timely responses to the Department's requests for information; (2) 
Terni completed two successful sales verifications immediately 
following the cost verification; and (3) the cost verification was 
conducted at an inopportune time for Terni.
    Petitioners argue that Terni has been uncooperative and has 
significantly impeded this investigation by failing to prepare for, or 
cooperatively participate in, the cost verification. Therefore, under 
the Department's two-tiered BIA methodology, petitioners assert that 
Terni should be assigned the highest margin alleged in the petition as 
BIA.
    DOC Position: We disagree with Terni's statement regarding the 
accuracy of the cost verification report. At verification we found that 
Terni: (a) was unprepared and unable to provide source documents in a 
timely manner, which impeded the testing that was performed and limited 
the amount of testing which could be completed, (b) did not prepare a 
reconciliation between cost and financial systems or provide an 
explanation of these systems, (c) was unable to support that all 
necessary variances were reported, (d) provided differing labor amounts 
in the general (or financial) accounting system and the cost (or the 
analytical) system and the cost of goods sold calculation prepared at 
verification, and was unable to reconcile these discrepancies, (e) did 
not provide audited financial statements, and did not reconcile 
information to its unaudited statements, and (f) caused delays in other 
areas which did not allow the reported amounts for general & 
administrative expenses, interest expense, and profit to be examined. 
For a more detailed discussion of each of the major problems 
encountered at verification and the areas where Terni challenges the 
accuracy of the Department's verification report see the cost 
verification report, dated June 3, 1994 and the calculation memorandum 
dated June 16, 1994, which are both on file in room B-099 of the Main 
Commerce Building.
    Regarding petitioners' contention that Terni was an uncooperative 
respondent, we disagree. Although Terni's cost information was 
unverifiable, this failure does not change the fact that its level of 
participation throughout this investigation clearly indicates that it 
cooperated. Terni provided all information requested in the 
questionnaire, permitted verification of its data, and successfully 
completed verification of its sales information.
    Comment 2: Terni argues that the Department should use its 
submitted costs rather than resort to BIA. However, in the event the 
Department determines it is justified in using BIA, Terni argues that 
the best information available is Terni's data, not information 
contained in the petition, because the petition contains numerous 
errors in the calculations of COP and CV. Finally, Terni asserts that 
if the Department rejects its cost response, the Department could still 
use Terni's reported U.S. sales data in making its final determination 
because this information was ``successfully'' verified.
    Petitioners argue that Terni's submitted costs should not be relied 
upon because Terni failed every aspect of the cost verification. In 
addition, petitioners contend that the Department should reject Terni's 
entire response, including its verified U.S. sales data, and base the 
final determination on information provided in the petition.
    DOC Position: As discussed in the ``Best Information Available'' 
section above, during the verification of the cost response, the 
Department encountered serious and pervasive problems in its efforts to 
verify the information submitted by Terni. Consequently, in accordance 
with Section 776(b) of the Act, the Department was compelled to use 
BIA.
    While we were able to verify Terni's submitted sales data, we were 
unable to verify its cost information. Without verified COP/CV data we 
do not have a basis to calculate an appropriate FMV, and thus cannot 
perform sales comparisons. Even if the Department were to contemplate 
using Terni's verified U.S. sales data, there is insufficient CV 
information available in the petition to adequately cover the sale of 
all products sold by Terni in the United States. Specifically, the CV 
specified in the petition covers a single product which differs in 
physical characteristics from certain of Terni's U.S. sales. 
Additionally, the petition does not provide adequate cost information 
on which to base difference in merchandise adjustments. Under such 
circumstances, the use of verified U.S. sales data is inappropriate.
    The rejection of a respondent's questionnaire responses in toto and 
use of BIA is appropriate and consistent with past practice in 
instances where a respondent has failed to provide verifiable COP 
information. (See e.g., Final Determination of Sales At Less Than Fair 
Value: Certain Forged Stainless Steel Flanges from Taiwan, 58 FR 68859, 
December 29, 1993); and Final Determination of Sales At Less Than Fair 
Value: Certain Hot-Rolled Lead & Bismuth Carbon Steel Products from 
France, 58 FR 6203, January 27, 1993.)
    Moreover, if the Department were to accept verified sales 
information when a respondent's cost information (a substantial part of 
the response) does not verify, respondents would be in a position to 
manipulate margin calculations by permitting the Department to verify 
only that information which the respondent wishes the Department to use 
in its margin calculation. Therefore, as described in the ``Best 
Information Available'' section above, we have based Terni's margin for 
the final determination on BIA. As permitted by Section 776(b) of the 
Act, the Department is using, as BIA, information contained in the 
petition.
    Terni's four comments pertaining to certain errors in the petition 
hold no merit. The first comment alleging a mathematical error in 
petitioner's calculation of the cost of production is incorrect. Stage 
by stage yield factors are missing from petitioner's worksheet but have 
obviously been included in their analysis. Petitioners have recognized 
the importance of yields by listing at the bottom of the worksheet the 
overall yield for each product. This yield factor, however, is an 
average yield factor for all stages of the production process and, 
therefore cannot be used exclusively for purposes of recalculating 
costs on a stage by stage basis. The remaining three comments concern 
methodologies used by the petitioners in the calculation of the yield 
rate and depreciation and the reliance upon petitioner's costs as a 
proxy for Terni's costs. The Department determined that these 
methodologies were appropriate for purposes of initiation and continues 
to find them reasonable for purposes of calculating CV. Consequently, 
these methodologies are appropriate for use as BIA.

Other Comments

    Terni made additional comments on various charges and adjustments 
contained in its home market and U.S. sales listings. However, since we 
are basing our final determination on BIA, those comments are now moot. 
Accordingly, no response on behalf of the Department is required.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(4) of the Act, we are directing 
the Customs Service to continue to suspend liquidation of all entries 
of the subject merchandise from Italy that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. The Customs Service shall require 
a cash deposit or posting of a bond equal to the estimated dumping 
margins, as shown below. The suspension of liquidation will remain in 
effect until further notice. The weighted-average margins are as 
follows: 

------------------------------------------------------------------------
                                                                Margin  
              Manufacturer/producer/exporter                 percentage 
------------------------------------------------------------------------
All Companies..............................................       60.79 
------------------------------------------------------------------------

International Trade Commission (ITC) Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will now determine whether these 
imports are materially injuring, or threaten material injury to, the 
U.S. industry within 45 days. If the ITC determines that material 
injury, or threat of material injury, does not exist with respect to 
the subject merchandise, the proceeding will be terminated and all 
securities posted will be refunded or cancelled. If the ITC determines 
that such injury does exist, the Department will issue an antidumping 
duty order directing Customs officials to assess antidumping duties on 
all imports of the subject merchandise from Italy entered, or withdrawn 
from warehouse, for consumption on or after the effective date of the 
suspension of liquidation.

Notice to Interested Parties

    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility, pursuant 
to 19 CFR 353.34(d), concerning the return or destruction of 
proprietary information disclosed under APO. Failure to comply is a 
violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

    Dated: June 24, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-16085 Filed 6-30-94; 8:45 am]
BILLING CODE 3510-DS-P