[Federal Register Volume 60, Number 36 (Thursday, February 23, 1995)]
[Notices]
[Pages 10061-10064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4456]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-412-810]


Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From 
the United Kingdom; Preliminary Results of Antidumping Duty 
Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

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SUMMARY: In response to a request by a manufacturer/exporter, United 
Engineering Steels Limited (UES), the Department of Commerce (the 
Department) is conducting the first administrative review of the 
antidumping duty order on certain hot-rolled lead and bismuth carbon 
steel products (lead and bismuth steel) from the United Kingdom (U.K.). 
The review covers one manufacturer/exporter, UES, and entries of the 
subject merchandise into the United States during the period September 
28, 1992 through February 28, 1994. We have preliminarily determined 
that sales have been made below the foreign market value (FMV). If 
these preliminary results are adopted in our final results of 
administrative review, we will instruct U.S. Customs to assess 
antidumping duties equal to the difference between the United States 
price (USP) and the FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: February 23, 1995.

FOR FURTHER INFORMATION CONTACT:
Nooshen Amiri or Maureen Flannery, Office of Antidumping Compliance, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION:

Background

    On March 4, 1994, the Department published in the Federal Register 
(59 FR 10368) a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on lead and bismuth steel from 
the U.K. (58 FR 15324). On March 31, 1994, a manufacturer/exporter, 
UES, requested that we conduct an administrative review in accordance 
with section 353.22(a) of the Department's regulations (19 CFR 
353.22(a)). We published the notice of initiation of the antidumping 
duty administrative review on April 15, 1994 (59 FR 18099), covering 
the period September 28, 1992 through February 28, 1994. The Department 
has now conducted the review in accordance with section 751 of the 
Tariff Act of 1930, as amended (the Act).

Scope of the Review

    The products covered by this review are hot-rolled bars and rods of 
nonalloy or other alloy steel, whether or not descaled, containing by 
weight 0.03 percent or more of lead or 0.05 percent of bismuth, in 
coils or cut lengths, and in numerous shapes and sizes. Excluded from 
the scope of this review are other alloy steels (as defined by the 
Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72, 
note 1 (f)). except steels classified as other alloy steels by reason 
of containing by weight 0.4 percent or more of lead, or 0.1 percent or 
more of bismuth, tellurium, or selenium. Also excluded are semi-
finished steels and flat-rolled products. Most of the products covered 
in this review are provided for under subheadings 7213.20.00 and 
7214.30.00.00 of the HTSUS. Small quantities of these products may also 
enter the United States under the following HTSUS subheadings: 
7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10, 
00.30, 00.50; 7214.50.00.10, 00.30, 00.50;7214.60.00.10, 00.30, 00.50; 
and 7228.30.80.00. HTSUS subheadings are provided for convenience and 
Customs purposes. The written product description remains dispositive.
    This review covers sales of the subject merchandise manufactured by 
UES and entered into the United States during the period September 28, 
1992 through February 28, 1994.

United States Price

    The Department used purchase price (PP), as defined in section 772 
of the Act, in calculating USP for UES because all sales were made 
directly to unrelated parties prior to importation into the United 
States. USP was based on packed, delivered prices to customers in the 
United States. We made deductions, where applicable, for cash 
discounts, rebates, foreign inland freight, FOB charges in the U.K., 
ocean freight, marine insurance, U.S. Customs duties and merchandise 
processing fees, harbor maintenance fees, brokerage and handling 
charges, and U.S. inland freight charges. We also made an adjustment 
for invoice corrections (billing adjustments) made after shipment. 
While UES's shipments to the Untied States are transported by a related 
carrier, British Steel Shipping, [[Page 10062]] UES established that 
the related carrier charges UES arm's-length rates. Therefore, we used 
actual ocean freight rates reported.
    We adjusted USP for value-added taxes (VAT) in accordance with our 
practice as outlined in Silicomanganese from Venezuela, Preliminary 
Determination of Sales at Less Than Fair Value, 59 FR 31204 (June 17, 
1994). No other adjustments were claimed or allowed.
    We used the date of shipment as the date of sale for both U.S. 
sales and home market sales because a substantial percentage of both 
U.S. orders and home market orders were significantly amended 
subsequent to the original purchase order, and the price and quantity 
were set on the date of shipment.

Foreign Market Value

    In calculating FMV for UES, the Department used home market sales 
or constructed value (CV), as defined in section 773 of the Act.
    To determine whether there were sufficient sales of lead and 
bismuth steel in the home market to serve as the basis for calculating 
FMV, we compared the volume of home market sales to the volume of third 
country sales, in accordance with section 773(a)(1) of the Act. We 
found that sales in the home market constituted a sufficient basis for 
FMV, in accordance with 19 CFR 353.48(a).
    Many of UES's home market sales were made to related customers. In 
order to determine whether sales to related parties might be 
appropriate to use as the basis of FMV, the Department compares prices 
of those sales to prices to unrelated parties, on a model-by-model 
basis. When possible, the Department uses unrelated party sales at the 
same level of trade as the related party sales for this comparison. UES 
did not have sales to unrelated customers in the home market at the 
same level of trade and in similar quantities as those to related 
customers. In the home market, UES sold to related cold finishers and 
unrelated resellers. Home market sales to related cold finishers were 
generally large quantity sales, while home market sales to unrelated 
resellers were generally small quantity sales. In the U.S. market, UES 
sold to unrelated cold finishers in large quantities.
    UES claimed that its home market sales to related finishers were 
made at arm's-length prices, and that any price differences among 
customers reflect market factors and the fact that high-volume, long-
term customers are able to negotiate lower prices than smaller 
customers, related or not. In support of its argument, UES submitted a 
comparison of related prices with unrelated prices, allegedly showing 
that UES's related-party prices satisfy the Department's customary 
arm's-length test. UES also submitted an analysis of prices to a party 
that was acquired by UES during the period of review, in support of its 
contention that relationship does not determine price levels. Finally, 
UES submitted a number of sample invoices it issued to an unrelated 
third-country customer, which it claimed was comparable in size and 
purchase volume with UES's major related home market customers, to show 
that its related-party prices were market-based.
    Petitioner, Inland Steel Bar Company, asserted that home market 
sales to related parties were not made on an arm's-length basis and 
that UES's analysis did not take into account all customer rebates and 
discounts. Petitioner further asserted that UES failed to perform its 
arm's-length test on a model-specific basis. Regarding the comparison 
of prices paid by a party before it was acquired by UES with the prices 
paid after it was acquired, petitioner claimed that the comparison was 
inapposite, as market pricing conditions changed significantly since 
the company was acquired, and home market prices increased for all 
customers. Regarding UES's comparison of prices in a third-country 
market with prices to related customers in the home market, petitioner 
claimed that prices charged by UES in third countries have no bearing 
on this review because market conditions in third countries vary from 
those in the home market.
    We agree with petitioner that differences in market conditions 
across countries or time periods could invalidate certain of UES's 
analyses. We further agree with petitioner that UES's analysis of data 
from this review fails to provide an accurate assessment of whether its 
related-party sales were made at arm's length because it did not 
account for certain rebates and it did not perform its arm's-length 
test on a model group-by-model group basis.
    For these reasons, we used the only information that was available 
in the record, we compared related-customer sales with unrelated-
customer sales on a model group-by-model group basis regardless of 
level of trade. When sales to related customers were made at arm's-
length prices, we included them in the calculation of FMV. UES made no 
claim for an adjustment due to differences in quantities. We invite 
comments on the issue of how to perform an arm's-length test in cases 
such as this, where home market sales to related and unrelated 
customers are made at different levels of trade and in different 
quantities.
    In accordance with 19 CFR 353.58 and 353.55, we compared U.S. sales 
to home market sales made at the same level of trade, and in similar 
commercial quantities, where possible. That is, we compared U.S. sales 
of 25 metric tons (MT) or more with home market sales of 25 MT or more, 
and U.S. sales of less than 25 MT with home market sales of less than 
25 MT, because surcharges apply to home market sales of less than 25 
MT, but not to home market sales of 25 MT or more. Quantity surcharges 
do not apply to any U.S. sales.
    Because the Department found sales at less than their cost of 
production (COP) during the less-than-fair-value (LTFV) investigation, 
in accordance with our standard practice, we found reasonable grounds 
to believe or suspect that UES had made sales at prices below its COP 
in the home market during the period of review (POR). Thus, in 
accordance with section 773(b) of the Act, we investigated whether UES 
had home market sales that were made at less than their COP over an 
extended period of time, and in substantial quantities during this POR.
    To determine whether home market prices were below the COP, we 
calculated the COP based on the sum of UES's cost of materials, 
fabrication, general expenses, and packing, in accordance with 19 CFR 
353.51(c). We made the following adjustments to UES's reported costs: 
(1) we increased cost of manufacturing for labor-related expenses; and 
(2) we increased general and administrative expenses for costs 
attributed to discontinued operations. The latter were part of UES's 
general and administrative expenses that UES had failed to include in 
its reported costs. We compared home market selling prices, net of 
movement charges, rebates, and invoice corrections, to each product's 
COP. We found that certain sales were made at prices below the COP.
    To determine whether the below-cost sales were made in substantial 
quantities over an extended period of time, we applied our following 
standard practice. If over 90 percent of a UES's sales of a given model 
were at prices above the COP, we did not disregard any below-cost sales 
because we determined that the below-cost sales were not made in 
substantial quantities over an extended period of time. If between 10 
and 90 percent of UES's sales of a given model were at prices above the 
COP, we disregarded only the below-cost sales, if we found that these 
[[Page 10063]] had been made over an extended period of time. Where we 
found that more than 90 percent of a UES's sales were at prices below 
the COP over an extended period of time, we disregarded all sales for 
that model and calculated FMV based on CV.
    To determine if sales below cost were made over an extended period 
of time, we compared the number of months in which sales below cost had 
occurred for a particular model to the number of months in which the 
model was sold. If the model was sold in three or fewer months, we did 
not find that below-cost sales were made over an extended period of 
time unless there were sales below cost of that model in each month. If 
a model was sold in more than three months, we did not find that below-
cost sales were made over an extended period of time unless there were 
sales below cost in at least three of the months in which the model was 
sole. See, e.g., Tapered Roller Bearings from Japan, Final Results of 
Antidumping Duty Administrative Review, 58 FR 64720 (Dec. 9, 1993). See 
also Antifriction Bearings from France, et al., Preliminary Results of 
Antidumping Duty Administrative Review, 59 FR 9463 (Feb. 28, 1994).
    For those models for which there was an adequate number of sales at 
prices above the COP, we based FMV on home market prices to related and 
unrelated purchasers, in accordance with 19 CFR 353.45(a). We used 
prices to related purchasers only if such prices were made at arm's 
length (see arm's-length discussion above). We calculated FMV based on 
packed, delivered prices. We made deductions, where appropriate, for 
rebates and invoice corrections. Pursuant to section 773(a)(4)(B) of 
the Act, and 19 CFR 353.56(a)(2), we made circumstance-of-sale 
adjustments, where appropriate, for differences in credit expenses, 
warranty expenses, warehousing expenses, inland freight, and 
commissions. We also made a circumstance-of-sale adjustment for 
differences in credit insurance expenses. Credit insurance charges for 
U.S. sales were assessed on a sale-by-sale basis, while in the home 
market, a single amount was charged for insurance, regardless of the 
level of sales. We therefore preliminarily determine as we determined 
in the final determination of sales at LTFV for this case, that credit 
insurance is a direct expense in the U.S. market, and an indirect 
expense in the home market. Accordingly, we made this adjustment by 
adding the amount of credit insurance assessed on each U.S. sale to the 
FMV. When commissions were paid on the U.S. sale and not on the home 
market sale, we made an adjustment for indirect selling expenses in the 
home market to offset the commissions in the U.S. market.
    Because the home market prices were reported net of VAT, we added 
to the home market price the amount of VAT incurred on each individual 
home market sale.
    Where appropriate, we made further adjustments to FMV to account 
for differences in physical characteristics of the merchandise, in 
accordance with 19 CFR 353.57.
    Petitioner argued against using differences in ``residuals,'' or 
trace elements, as a criterion in determining whether home market 
merchandise was most similar to merchandise sold to the United States. 
However, product differences due to residuals are commercially 
significant and not incidental, as they are designed into the product. 
Therefore, we continued to consider residuals in model matching, as we 
did in the LTFV investigation of this case.
    For those models without an adequate number of sales made at prices 
above the COP, in accordance with section 773(b) of the Act, we based 
FMV on CV. We calculated the CV based on the sum of the cost of 
materials, fabrication, general expenses, U.S. packing cost, and 
profit, in accordance with section 773(e) of the Act. We adjusted UES's 
CV data in the same manner as we adjusted its COP data as discussed 
above. In accordance with section 773(e)(1)(B)(i) of the Act, we 
included in CV the greater of the company's reported general expenses 
or the statutory minimum of ten percent of the cost of manufacture 
(COM). For profit we used the actual profit earned by UES where the 
actual figure was higher than the statutory minimum of eight percent of 
the sum of COM and general expenses, or the statutory minimum of eight 
percent where the actual profit was lower, in accordance with section 
773(e)(1)(B)(ii) of the Act. We made circumstance-of-sale adjustments, 
where appropriate, for differences in direct selling expenses, 
including credit, credit insurance, warranty, inland freight, and 
policy stock warehousing.
    No other adjustments were claimed or allowed.

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 verified information 
provided by respondent by using standard verification procedures, 
including the examination of relevant sales and financial records, and 
selection of original source documentation containing relevant 
information.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following dumping margin exists for the period September 28, 1992 
through February 28, 1994.

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           Manufacturing/exporter             Period of review    Margin
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United Engineering Steels Ltd. (UES).......     9/28/92-2/28/94     4.03
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    Any interested party may request a hearing within 10 days of 
publication of this notice. Any hearing will be held 44 days after the 
date of publication of this notice, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the 
publication date of this notice. Rebuttal briefs, limited to issues 
raised in the case briefs, may be filed not later than 37 days after 
the date of publication of this notice. The Department will publish a 
notice of the final results of this administrative review, which will 
include the result of its analysis of issues raised in any such case 
briefs.
    The following deposit requirements shall be effective for all 
shipments of the subject merchandise that are entered, or withdrawn 
from warehouse for consumption, on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for the reviewed 
company shall be those rates established in the final results of this 
review; (2) for previously reviewed or 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 prior review, or the original 
LTFV investigation, but the manufacturer is, the cash deposit rate 
shall be the rate established for the most recent period for the 
manufacturer of the merchandise; and (4) if neither the exporter nor 
the manufacturer is a firm covered in this or any previous review, the 
cash deposit rate will be 25.82 percent, the all others rate 
established in the LTFV investigation. [[Page 10064]] 
    These deposit requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.
    This notice serves as a preliminary reminder to 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 this review period. Failure to comply with this 
requirement will 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 Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: February 15, 1995.
Paul L. Joffe,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 95-4456 Filed 2-22-95; 8:45 am]
BILLING CODE 3510-DS-P