[Federal Register Volume 59, Number 152 (Tuesday, August 9, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19422]
[[Page Unknown]]
[Federal Register: August 9, 1994]
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DEPARTMENT OF COMMERCE
[A-401-603]
Stainless Steel Hollow Products From Sweden; Preliminary Results
of Antidumping Duty Administrative Review
AGENCY: International Trade Administration/Import Administration,
Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to a timely request from Sandvik AB, AB Sandvik
Steel, and the Sandvik Steel Company (collectively, Sandvik), the
Department of Commerce (the Department) is conducting an administrative
review of the antidumping duty order on seamless stainless steel hollow
products (SSHP) from Sweden. This review covers one manufacturer and/or
exporter of this merchandise, Sandvik, during the period December 1,
1990 through November 30, 1991.
The preliminary results of this review indicate the existence of
dumping margins for Sandvik during the period of review. As a result,
the Department has preliminarily determined to assess dumping duties
equal to the calculated differences between U.S. prices and foreign
market values. Interested parties are invited to comment on these
preliminary results of review.
EFFECTIVE DATE: August 9, 1994.
FOR FURTHER INFORMATION CONTACT:
Charles Vannatta or Tom Futtner in the Office of Antidumping
Compliance; International Trade Administration; U.S. Department of
Commerce; Washington, DC 20230; telephone number (202) 482-5253.
SUPPLEMENTARY INFORMATION:
Background
On December 2, 1991, the Department published in the Federal
Register an ``Opportunity to Request an Administrative Review'' (56 FR
61229) of the antidumping duty order on seamless SSHP from Sweden (52
FR 45985), December 3, 1987). On December 13, 1991, Sandvik requested
an administrative review of the antidumping duty order. On January 23,
1992, the Department initiated an administrative review for the period
December 1, 1990 through November 30, 1991 (57 FR 2705). The Department
is now conducting this review in accordance with Section 751 of the
Tariff Act of 1930, as amended (the Tariff Act).
Scope of the Review
The merchandise covered by this review is seamless SSHP, including
pipes, tubes, hollow bars, and blanks of circular cross-section,
containing over 11.5 percent chromium by weight. This merchandise is
currently classified under subheadings 7304.41.00 and 7204.49.00 of the
Harmonized Tariff Schedule (HTS). The HTS numbers are provided for
convenience and Customs purposes. The written description remains
dispositive.
This review covers sales and entries made during the period of
review by one Swedish manufacturer and/or exporter, Sandvik, of
seamless SSHP to the United States. The period covered by this review
is December 1, 1990 through November 30, 1991.
The Department has determined that there are three such or similar
categories of merchandise: (1) pipes and tubes; (2) redraw hollows; and
(3) hollow bars. During this review period, Sandvik sold only pipes and
tubes in the United States. Sandvik also imported redraw hollows into
the United States, which Sandvik subsequently further manufactured into
pipes and tubes and sold to unrelated customers in the United States.
For these latter sales, such or similar comparisons were made between
the foreign market sales value of redraw hollows and the U.S. sales
value of the imported redraw hollows, which the Department calculated
as the U.S. sales value of the pipe or tube sold to the unrelated U.S.
customer less the value added by the U.S. further manufacturing.
United States Price
In calculating the U.S. price, the Department used purchase price
(PP) and exporter's sales price (ESP), both as defined in Section 772
of the Tariff Act. PP and ESP were based upon the packed, delivered
prices, net of discounts, to unrelated customers in the United States.
The Department made adjustments to the U.S. price, where appropriate,
for freight and insurance charges for movement from Sweden to the
United States, U.S. brokerage and handling expenses, U.S. duties, U.S.
inland freight and insurance charges, rebates, and U.S. packaging
costs. For ESP sales, the Department also adjusted the U.S. price for
commissions, credit expenses, royalties, direct selling expenses
incurred in both Sweden and the United States, and indirect selling
expenses, which included Sandvik's reported indirect selling expenses,
product liability insurance premiums, and inventory carrying costs
incurred in both Sweden and the United States.
In addition to the aforementioned adjustments, the Department
deducted, for sales involving imported redraw hollows which were
further manufactured into pipes and tubes by the Sandvik Steel Company,
the value added in the United States after importation and the portion
of profit from the U.S. sale which was attributable to the U.S. value
added, pursuant to Section 772(e)(3) of the Tariff Act. The Department
considered all such sales to be ESP sales. The U.S. value added
consists of further manufacturing costs incurred in converting an
imported redraw hollow into a finished pipe or tube. The Department
calculated profit or loss by deducting from the sales price of the
finished pipe or tube: (1) the foreign manufacturing costs of the
imported redraw hollow; (2) the U.S. further manufacturing costs of the
finished pipe or tube; and (3) all other selling expenses incurred by
Sandvik.
The Department allocated the total profit or loss from the U.S.
sale to the imported redraw hollow and to the U.S. value added based
upon the ratio of the manufacturing costs of the redraw hollow and the
U.S. further manufacturing costs to the total foreign and U.S.
manufacturing costs. The Department adjusted the U.S. price only for
the profit or loss attributable to the U.S. further manufacturing
costs.
Foreign Market Value
In order to determine whether there was a sufficient volume of
sales of SSHP in the home market to serve as a basis for calculating
foreign market value (FMV), the Department compared the quantity of
home market sales to the aggregate quantity of third country sales, in
accordance with Section 773(a)(1) of the Tariff Act. The quantity of
home market sales was less than five percent of the aggregate quantity
of third country sales. Therefore, the Department based FMV on third
country sales (19 CFR 353.48).
In selecting the appropriate third country market to use for
comparison purposes, the Department first determined which third
country markets had adequate volumes of sales within the meaning of 19
CFR 353.49(b)(1). The Department determined that the volume of sales to
a third country market was adequate if the quantity of sales of such or
similar merchandise equalled or exceeded five percent of the quantity
of sales in the United States. The Department then selected the third
country market with the largest volume of sales, and whose organization
and development is most like that of the United States, as the most
appropriate market for comparison, in accordance with 19 CFR
353.49(b)(2) and 19 CFR 353.49(b)(3). Therefore, for Sandvik's sales to
the first unrelated U.S. customer of seamless stainless pipe and tube,
both imported pipe and tubes and those which were further manufactured
in the United States from imported redraw hollows, the Department based
FMV on Sandvik's sales in Germany.
In this review, the petitioner alleged that Sandvik sold pipes,
tubes, and redraw hollows in the German market at prices below their
cost of production. Based on the evidence presented in the petitioner's
allegation, the Department initiated a cost of production inquiry of
this merchandise.
The Department based the cost of production on the cost data
submitted by Sandvik in response to the Department's questionnaire.
Sandvik adjusted its cost data to conform with generally accepted
accounting principles (GAAP) used in the United States. Sandvik's cost
records are based upon Swedish GAAP, while its financial statements
conform to U.S. GAAP. Under Swedish GAAP, production costs must include
an imputed interest expense, and depreciation must be based upon
replacement costs. Sandvik adjusted its cost data by replacing imputed
interest with actual interest expenses, and by basing its depreciation
expense on historical costs rather than replacement costs.
The Department performed a model-specific cost of production test,
in which the Department examined whether each German sale was priced
below the merchandise's cost of production. The Department defines the
cost of production as the sum of direct material, direct labor,
variable and fixed factory overhead, general expenses, and packaging.
For each model, the Department compared this sum to the reported German
unit price, net of price adjustments and movement expenses. In
accordance with Section 773(b) of the Tariff Act, the Department also
examined whether the German sales of each model were made at prices
below their cost of production in substantial quantities over an
extended period of time, and whether such sales were made at prices
which would permit recovery of all costs within a reasonable period of
time in the normal course of trade.
For each model where less than ten percent of the quantity sold in
the German market during the seventeen months of reported German sales
were made at prices below the cost of production, the Department
included all sales of that model in its computation of FMV. For each
model where ten percent or more, but less than ninety percent, of the
quantity sold in the German market over the seventeen month period were
priced below the merchandise's cost of production, the Department
excluded from its calculation of FMV those German sales which were
priced below the merchandise's cost of production provided that these
below-cost sales were made over an extended period of time. For each
model where ninety percent or more of the quantity sold in the German
market over the seventeen month period were priced below the cost of
production, the Department disregarded all sales of that model from its
analysis, and used constructed value as described below.
In order to determine whether below-cost sales had been made over
an extended period of time, the Department compared the number of
months in which below-cost sales occurred for each product to the
number of months in which each model was sold over the seventeen month
period. If a product was sold in fewer than three months during the
seventeen month period, the Department did not exclude the below-cost
sales unless there were below-cost sales in each month of sale. If a
product was sold in three or more months, the Department did not
exclude the below-cost sales unless there were below-cost sales in at
least three months during the seventeen months of the reported German
sales.
Where there were adequate sales of a such or similar product in the
contemporaneous month at a given level of trade (as identified in the
model match), the Department based FMV upon the C.I.F. and delivered
prices, net of discounts, to unrelated customers in Germany. The
Department made adjustments, where appropriate, for freight and
insurance charges for movement from Sweden to Germany, German brokerage
and handling expenses, German inland freight for movement to the
customer, and rebates.
Where all German sales of a such or similar product in the
contemporaneous month at a given level of trade (as identified in the
model match) were excluded from the Department's analysis because the
German sales were priced below the cost of production, or where no
German sales of such or similar merchandise were found, then the
Department used the constructed value of the merchandise sold in the
United States as the basis for FMV. The Department calculated the
constructed value, in accordance with Section 773(e) of the Tariff Act,
as the sum of the cost of manufacture of the product sold in the United
States, German selling, general and administrative (SG&A) expenses, and
German profit. The cost of manufacture of the product sold in the
United States is the sum of direct material, direct labor, and variable
and fixed factory overhead expenses. For German SG&A expenses, the
Department used the larger of the actual SG&A expenses reported by
Sandvik or ten percent of the cost of manufacture, the statutory
minimum for foreign SG&A expenses. For German profit, the Department
used the larger of the actual profit reported by Sandvik or the
statutory minimum of eight percent of the sum of the cost of
manufacture and SG&A expenses.
For those products where Sandvik did not submit the necessary
constructed value information, the Department used the best information
available. As the best information available, the Department evaluated
these sales at the highest weighted-average dumping margin which
Sandvik had received in any previous final result or determination, or
which was calculated for the U.S. sales evaluated in this
administrative review using FMV. This highest weighted-average dumping
margin is 20.47 percent, which is the margin found in the final
determination of the orginal less-than-fair-value investigation.
The Department deducted both Swedish and German packaging expenses
for the German sale from the German unit price (for price-based FMV's),
and added the Swedish export packaging expenses for the U.S. sale to
the FMV, based upon either the German unit price or the constructed
value, in accordance with Section 773(a)(1) of the Tariff Act.
For comparisons involving ESP sales, the Department deducted the
U.S. and German credit, warranty, royalties, and direct selling
expenses from both the U.S. unit price and either the German unit price
or the constructed value, respectively. The Department also adjusted
the FMV, based either upon German unit prices or the constructed value,
for Sandvik's German indirect selling expenses, which included its
reported German indirect selling expenses, product liability insurance
premiums, and inventory carrying costs. The adjustment for the Germans
indirect selling expenses was limited to the sum of the indirect
selling expenses, product liability insurance, inventory carrying
costs, and commissions incurred for the U.S. sale, in accordance with
19 CFR 353.56(b).
For comparisons involving PP sales, the Department deducted the
German credit, warranty, royalties, and direct selling expenses from
the German unit price or the constructed value, and added the U.S.
credit, warranty, royalties, and direct selling expenses to the FMV,
based upon either the German unit price or the constructed value, in
accordance with 19 CFR 353.56(a)(2). The Department added the amount of
the commissions incurred for the U.S. sale to the FMV, based upon
either the German unit price or the constructed value, and deducted the
amount of the German indirect selling expenses, as defined above, up to
the amount the commissions incurred for the U.S. sale, in accordance
with CFR 353.56(b)(1).
Where there were no German sales of identical merchandise for
price-based FMV comparisons of a U.S. sale, the Department used German
sales of a similar product, and made an adjustment to the German unit
price for differences in the physical characteristics of the
merchandise, in accordance with Section 773(a)(4)(c) of the Tariff Act.
Where there were no German sales of similar merchandise to use for
comparison to a U.S. sale, the Department used the constructed value of
the merchandise sold in the United States as the basis for FMV, as
noted above.
Sandvik claims that the Department, whenever possible, should
compare U.S. sales to German sales of the same quantity range, and,
whenever this is not possible, that the Department should make a
quantity discount adjustment. In support of its position, Sandvik
argues that there is an inverse relationship between the sales price
and quantity of merchandise sold. The Department has determined that
the evidence on the record does not justify either comparing only sales
of similar quantities or making a quantity discount adjustment. Based
on Sandvik's sales listings, the Department examined the monthly
weighted-average unit prices on a model-specific basis for each unique
combination of the channel of distribution, level of trade, month of
sale (i.e., to recognize the impact of the fluctuating alloy
surcharge), and quantity bracket, which are the factors that, according
to Sandvik, have an impact on the sale's price. When taking into
account all of these price-influencing factors, the Department found
numerous instances where the average price for sales of a smaller
quantity bracket was lower than the average price for sales of a larger
quantity bracket. Therefore, Sandvik's argument concerning the inverse
relationship between price and quantity sold is not supported by the
information which it has submitted on the record.
In both Germany and the United States, Sandvik sells merchandise
out of inventory (ex-stock) as well as merchandise which is produced
and shipped directly from the factory (ex-mill). Sandvik argues that
the Department should match sales, wherever possible, made through the
same channel of distribution, or make an adjustment to take into
account Sandvik's higher costs of selling merchandise out of inventory.
The Department believes that its adjustments, including those for
inventory carrying costs and other indirect selling expenses,
adequately account for any cost differences associated with selling the
merchandise through different distribution channels. Therefore, there
is no reason to take special account of this factor in making
comparisons or any additional adjustments.
Sandvik also argues that the Department should compare U.S. sales
with German sales at the same level of trade, and, if this is not
possible, that the Department should make an adjustment when comparing
sales across levels of trade. The Department has followed its long-
standing practice of comparing, where possible, U.S. sales with German
sales made at the same level of trade. However, with regard to a level
of trade adjustment, Sandvik did not demonstrate that there were
differences in prices at different levels of trade. The Department
examined Sandvik's reported unit sales prices for each product, level
of trade, channel of distribution, month of sale, and quantity
brackets, and could not discern any consistent pattern in the prices
charged between distributors and end-users. Furthermore, the Department
found many instances where the prices charged to end-users were less
than the prices charged to distributors. Therefore, the Department has
made no level of trade adjustment.
Preliminary Results of Review
As a result of this administrative review, the Department
preliminarily determines that the following weighted-average dumping
margin exists for the period December 1, 1990 through November 30,
1991:
------------------------------------------------------------------------
Dumping
Manufacturer/exporter margin
percent
------------------------------------------------------------------------
Sandvik.................................................... 10.54
------------------------------------------------------------------------
Interested parties may request disclosure within five days of the
date of publication of this notice. Interested parties may also request
a public hearing within 10 days of the date of publication of this
notice. Any hearing, if requested, will be held 44 days after the date
of publication, or the first workday thereafter. Case briefs and/or
written comments may be submitted to the Department not later than 30
days after the date of publication. Rebuttal briefs and rebuttals to
written comments, limited to issues raised in those comments, may be
filed with the Department not later than 37 days after the date of
publication. The Department will include in its publication of the
final results of administrative review an analysis of the issues raised
in any written comments or at the hearing.
The Department will determine, and the U.S. Customs Service will
assess, antidumping duties on all appropriate entries. Individual
differences between the U.S. price and the FMV may vary from the
percentage stated above. The Department will issue appraisement
instructions directly to the U.S. Customs Service.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of seamless SSHP from Sweden, entered for consumption, or
withdrawn from warehouse for consumption, on or after its publication
date, as provided by Section 751(a)(1) of the Tariff Act:
(1) The cash deposit rate for Sandvik AB will be that established
in the final results of this administrative review;
(2) For subject merchandise exported by manufacturers or exporters
not covered in this review but covered in previous reviews or in the
original less-than-fair-value investigation, a cash deposit based upon
the most recently published rate in a final result or determination for
which the manufacturer or exporter received a company-specific rate;
(3) For subject merchandise exported by an exporter not covered in
this review, a prior review, or the original investigation, but where
the manufacturer of the merchandise has been covered by this or a prior
final result or determination, a cash deposit based upon the most
recently published company-specific rate for that manufacturer; and
(4) For merchandise exported by all other manufacturers and
exporters who are not covered by this or any previous administrative
review conducted by the Department, the cash deposit rate will be the
``all others'' rate established in the less-than-fair-value
investigation.
On May 25, 1993, the Court of International Trade (CIT) in Floral
Trade Council v. United States, Slip Op. 93-79, and Federal-Mogul
Corporation and the Torrington Company v. United States, Slip Op. 93-
83, decided that once an ``all others'' rate is established for a
company it can only be changed through an administrative review. The
Department has determined that in order to implement these decisions,
it is appropriate to reinstate the ``all others'' rate from the less-
than-fair-value investigation (or that rate as amended for correction
of clerical errors as a result of litigation) in proceedings governed
by antidumping duty orders. Thus, the ``all others'' rate for this
proceeding is 28.60 percent.
This notice also serves as a preliminary reminder to all importers
of their responsibility under 19 CFR 353.26 to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during the 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.
This administrative review and notice are in accordance with
Section 751(a)(1) of the Tariff Act (19 USC 1675(a)(1)) and 19 CFR
353.22.
Dated: July 30, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-19422 Filed 8-8-94; 8:45 am]
BILLING CODE 3510-DS-M