[Federal Register Volume 61, Number 69 (Tuesday, April 9, 1996)]
[Notices]
[Pages 15772-15782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8681]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[A-401-805]
Certain Cut-to-Length Carbon Steel Plate From Sweden; Final
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.
-----------------------------------------------------------------------
SUMMARY: On September 19, 1995, the Department of Commerce (the
Department) published the preliminary results of the administrative
review of the antidumping duty order on certain cut-to-length carbon
steel plate from Sweden. This review covers one manufacturer/exporter
of the subject merchandise to the United States and the period February
4, 1993, through July 31, 1994. We gave interested parties an
opportunity to comment on our preliminary results. Based on our
analysis of the comments received, we have changed the results from
those presented in the preliminary results of review.
EFFECTIVE DATE: April 9, 1996.
FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp,
Office of Agreements Compliance, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-3793.
SUPPLEMENTARY INFORMATION:
Background
On September 19, 1995, the Department published in the Federal
Register (60 FR 48502) the preliminary results of the administrative
review of the antidumping duty order on certain cut-to-length carbon
steel plate from Sweden (58 FR 44168 August 19, 1993). The Department
has now completed this administrative review in accordance with section
751 of the Tariff Act of 1930, as amended (the Act).
Applicable Statute and Regulations
Unless otherwise stated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Scope of this Review
The products covered by this administrative review constitute one
``class or kind'' of merchandise: certain cut-to-length plate. These
products include hot-rolled carbon steel universal mill plates (i.e.,
flat-rolled products rolled on four faces or in a closed box pass, of a
width exceeding 150 millimeters but not exceeding 1,250 millimeters and
of a thickness of not less than 4 millimeters, not in coils and without
patterns in relief), of rectangular shape, neither clad, plated nor
coated with metal, whether or not painted, varnished, or coated with
plastics or other nonmetallic substances; and certain hot-rolled carbon
steel flat-rolled products in straight lengths, of rectangular shape,
hot rolled, neither clad, plated, nor coated with metal, whether or not
painted, varnished, or coated with plastics or other nonmetallic
substances, 4.75 millimeters or more in thickness and of a width which
exceeds 150 millimeters and measures at least twice the thickness, as
currently classifiable in the HTS under item numbers 7208.31.0000,
7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000,
7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000,
7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000,
7212.40.5000, and 7212.50.0000. Included are flat-rolled products of
nonrectangular 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 is grade X-70 plate. These HTS item
numbers are provided for convenience and Customs purposes. The written
description remains dispositive.
The periods of review (POR) are February 4, 1993, through July 31,
1994.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments and rebuttal comments from
SSAB Svenskt Stal AB (SSAB), exporter of the subject merchandise,
(respondent), and from Bethlehem Steel Corporation, U.S. Steel Group, a
Unit of USX Corporation, Inland Steel Industries, Inc., Gulf States
Steel Inc. Of Alabama, Sharon Steel Corporation, Geneva Steel, and
Lukens Steel Company, petitioners. At the request of petitioners and
respondent, the Department held a hearing on November 1, 1995.
Comment 1: Respondent contends that the Department has verified
information on the record to enable the Department to make HM freight
adjustments for one SSAB subsidiary, SSAB Oxelosund (SSOX). Respondent
reported its freight expenses based on a standard to actual ratio.
Respondent claims that the Department verified actual freight costs
incurred by SSOX but could not verify SSOX's standard freight costs.
Respondent argues that if the Department refuses to accept the SSOX
standard freight adjustment, the Department should take actual SSOX
verified HM freight expenses and calculate a HM freight adjustment by
dividing the actual aggregate SSOX freight expenses by total tons sold
during the POR to obtain an actual, per metric ton freight adjustment
for SSOX HM sales.
Respondent contends that the Department should not disallow the
freight adjustment entirely for SSOX home market (HM) sales. Instead,
respondent asserts, the Department should assign values for this
adjustment based on verified SSOX actual freight costs. Respondent
claims that because SSAB incurred freight costs in Sweden, using a zero
adjustment in the home market and the full adjustment in the U.S.
market heavily penalizes SSAB. Respondent also claims that applying a
zero freight adjustment in the home market and a full freight
adjustment in the U.S. market is contrary to law because doing so
prevents apples-to-apples price matches between the two markets.
Respondent argues that the Department should not apply punitive
best information available (BIA) rates for
[[Page 15773]]
freight adjustments to SSAB. Respondent contends that the Department
should recognize SSAB's cooperation in this review when selecting BIA.
Respondent claims that the BIA selected in this review must, as a
matter of law, lead to the calculation of fair and accurate margins.
Petitioners cite to Antifriction Bearings (Other than Tapered
Roller Bearings) and Parts Thereof from France, 57 Fed. Reg. 28360,
28380 (June 24, 1992) (``AFBs 1992'') to argue that SSAB bore the
burden of demonstrating that it was entitled to any adjustments.
Petitioners contend that the Department's consistent practice is to
disallow a favorable HM expense or adjustment when the respondent fails
to meet this burden, as they contend SSAB failed here. Petitioners
maintain that it is the Department's practice to disallow an unverified
expense in the home market while using BIA for the corresponding U.S.
expense. Petitioners argue that the purpose of the BIA provision is not
to lead to calculation of fair and accurate margins, but to enable the
Department to complete its calculation within the statutory deadlines
and to encourage full and accurate reporting by respondents.
Petitioners assert that respondent's suggestion to use SSAB's actual
freight expenses should be rejected as these averages of the actual
costs would bear no correlation to the actual, transaction-specific
costs requested by the Department.
Department's Position: We agree with respondent in part and have
made a BIA adjustment for HM freight. While SSAB could not support its
reported freight adjustment, the Department was presented with evidence
that SSAB had incurred freight expenses in the home market. At
verification, we tied actual freight expenses to the actual expense
SSAB used in its actual-to-standard freight ratio to calculate the
reported freight expense. See Verification Report at 17 and 26.
However, the company was unable to support the standard portion of the
ratio. Therefore, we were unable to use the reported freight expense.
Instead, we have used the average actual SSOX freight charge, per
metric ton by rail and by truck, in our final results as best
information available.
Petitioners' citation to AFBs 1992 supports our position that an
adjustment should be made if respondent can show that it did incur the
expense in question. SSAB did this, even though their reported
adjustment was not adequately supported. Thus petitioners' references
to Timken Company v. United States, 673 F. Supp. 495, 513 (CIT 1987),
LMI-LA Metalli Industriale, S.p.A. v. United States, 712 F. Supp. 959,
965 (CIT 1989) and Zenith Electronics Corp. v. United States, 755 F.
Supp. 397, 415 (CIT 1990) are irrelevant because they refer to the use
of BIA when respondent did not make this basic showing. As BIA, we
chose to use the average actual freight charge. While this is adverse
to respondent, it represents a reasonable alternative in the absence of
supporting information from respondent. See Rhone Poulenc Inc. v.
United States, 899 F. 2d 1185, 1191 (Fed. Cir. 1990), Olympic Adhesives
v. United States, 899 F. 2d 1565, 1572 (Fed. Cir. 1990) and Tianjin
Machinery Import and Export Corporation v. United States, 806 F. Supp.
1008, 1016 (Ct. Int'l Trade 1992).
Comment 2: Respondent argues that the Department should apply a
packing adjustment to SSOX sales in both the U.S. market and the home
market based on verified packing costs for another SSAB subsidiary,
SSAB Tunnplat (SSTP). Respondent contends that a zero HM packing
adjustment is contrary to law as U.S.-HM price comparisons are not
being made based on an apples-to-apples comparison, citing to Lasko
Metal Products, Inc. v. United States, 43 F.3d 1442 (Fed. Cir. 1994)
(``Lasko Metal'') and Koyo Seiko Co., Ltd. v. United States, 746 F.
Supp. 1108, 1110 (CIT 1990) (``Koyo Seiko''). Respondent contends that
the failure to apply a BIA packing charge to both markets would also be
inconsistent with the Department's obligations to obtain fair and
accurate results in the calculation of antidumping duty margins, citing
Oscillating Fans and Ceiling Fans From the People's Republic of China,
56 Fed. Reg. 55271, 55276 (October 25, 1991) (``Oscillating Fans'') and
Certain Cased Pencils From the People's Republic of China, 59 FR 55625,
55634 (November 8, 1994) (``Cased Pencils''). Respondent contends that
the Department should not equate SSOX's inability to produce complete
packing data through a packing department with a failure of SSOX to
substantiate its packing costs. Respondents offer as appropriate BIA
the average cost per metric ton incurred by SSTP for home market and
export packing that is most comparable to the type of packing engaged
in by SSOX for HM and U.S. sales. Respondent argues that the Department
should not use the highest verified SSTP packing charge as the SSOX
U.S. packing adjustment and a zero BIA rate for SSOX sales in Sweden.
Respondent considers the Department's preliminary methodology
``punitive'' and cites AFBs 1992 and Rhone Poulenc to argue against use
of ``punitive'' BIA. Respondent asserts that the Department should use
the verified average SSTP packing costs for SSOX sales in both markets
that are most similar to the type of packing done by SSOX.
Petitioners contend that the Department should select the highest
verified HM SSTP packing cost as BIA for U.S. packing.
Department's Position: We disagree with respondent and have used
the highest reported U.S. packing expense as BIA. Only SSOX calculated
the packing expense on U.S. sales because only SSOX had sales of
subject merchandise to the United States. However, SSOX could not
support its reported U.S. packing expenses at verification. Therefore,
we disallowed the U.S. packing expenses as reported but instead used
SSOX's highest reported U.S. packing expense as BIA.
Respondent's cites to AFBs 1992 and the tier system outlined in
that case are offered as an argument against the Department's use of
``punitive'' BIA. The tier system in AFBs 1992 refers to the
Department's use of total BIA. In fact, our treatment of packing in
this case is supported by the definition of partial BIA in AFBs 1992,
(``Where any adjustments . . . were missing from the sales listings, we
have denied claims for the adjustments . . . because the respondent has
failed to satisfy its burden of proof to be entitled to the adjustment.
We have assigned a value of zero to the claimed adjustments where such
information is missing . . . If other U.S. adjustment information were
missing, we used other transactional information in the response to
estimate these expenses'').
SSOX did not support its reported HM packing expenses at
verification. SSTP was able to support its reported HM packing
expenses. Therefore, we disallowed SSOX's packing expenses for HM sales
but allowed SSTP's packing expenses as reported.
Rhone Poulenc, a case cited by Respondent, articulates the key
justification for using adverse assumptions in our BIA determinations.
In Rhone Poulenc, the Court recognized that ``[i]n order for the
agency's application of the best information rule to be properly
characterized as `punitive,' the agency would have had to reject low
margin information in favor of high margin information that was
demonstrably less probative of current conditions. . . The agency's
approach fairly places the burden of production on the importer, which
has in its possession the information capable of rebutting the agency's
inference.'' SSOX failed to provide
[[Page 15774]]
evidence that it was entitled to a packing adjustment. As BIA, we
allowed no adjustment for home market packing and applied the highest
reported U.S. packing expense to all U.S. sales. While this information
is adverse to respondent, it represents a reasonable alternative in the
absence of supporting information from respondent. See Analysis
Memorandum.
Respondent's reference to Oscillating Fans is not relevant here
because it is a non-market economy case where the Department did not
have the relevant information regarding selling expenses in the
surrogate country. Respondent's cite to Cased Pencils is not relevant
here because it refers to the use of petition data instead of reported
actual expenses.
Comment 3: Respondent argues that the Department should not adjust
all ``via'' sales prices upward. ``Via'' sales are SSAB sales in which
Tibnor AB (TAB), a related distributor, functions as a sales agent.
Respondent contends that the Department should adjust the prices of
only the ``via'' sales determined at verification to have higher
commission rates than those originally reported to the Department.
Respondent maintains that not all ``via'' sales incurred the same
percent commission increase and that the two ``via'' sales that did
show above reported commissions were against company policy and were
aberrational.
Assuming, arguendo, the Department determines it should make an
upward adjustment to all ``via'' sales prices, respondent contends,
citing Stainless Steel Bar From Spain, 59 FR 66931, 66935 (December 28,
1995) (``Stainless Bar 1994''), that the adjustment should be based on
the ratio established at verification on all sales traces. Respondent
maintains the Department should apply a ratio based on the verified
sales traces which reflects the number of sales which the Department
might reasonably conclude have included a higher commission charge. In
the alternative, respondent argues that the upward adjustment to all
``via'' sales prices should be based on the average variances in the
commission rates found at verification. Respondent contends that such
an adjustment would recognize the fact that not all of TAB's
commissions on ``via'' sales were greater than the percentage
originally reported.
Petitioners contend that the Department should use as BIA the
highest reported sale price in each control number sold by TAB.
Petitioners argue that the error rate of nearly 40 percent in the
reported price on TAB ``via'' sales, combined with the fact that the
extent of the misreporting on any given sale is unknown, should lead to
the rejection of the entire TAB ``via'' database. Petitioners cite
Bicycle Speedometers From Japan, 48 FR 42289, 42290 (August 9, 1993)
(``Bicycle Speedometers'') and Gray Portland Cement and Clinker From
Mexico, 55 FR 29244 (July 18, 1990) (``Mexico Cement 1990'') to argue
that the Department should apply as BIA the highest price on any sale
by TAB.
Department's Position: We disagree with respondent and have applied
an upward adjustment to all ``via'' sales consistent with our
preliminary results of review. In all of its questionnaire responses,
SSAB claimed that TAB's commission on ``via'' sales was a set
percentage. See, e.g., October 6, 1994 Questionnaire Response at
Exhibit Z, November 21, 1994 Questionnaire Response at 14, January 13,
1995 Questionnaire Response at 38 and 39, and February 24, 1995
Questionnaire Response at 17. At verification we found that TAB's
commission was not always this percentage. See Sales Verification
Report at 12 and 24. Since the calculation of the reported gross unit
price on the ``via'' sales assumed a constant commission percentage,
the discrepancy in the commission rate also indicated a discrepancy in
the reported gross unit price. As BIA, we made an adjustment to the
reported gross unit prices on ``via'' sales that is consistent with
both the reported information and the information learned at
verification. See Analysis Memorandum. While this is adverse to
respondent, it represents a reasonable alternative in the absence of
supporting information from respondent.
We disagree with respondent's reliance on Stainless Bar 1994, in
which the Department discovered a surcharge on one of six sales
examined at verification and applied its adjustment to only one of
every six reported sales. In that case, the Department chose its
methodology because only one discrepancy was found. In the instant
case, the Department's verfication indicated discrepancies in the
manner gross unit price was reported by respondent. Additionally, in
the instant case, discrepancies were found in a higher proportion of
the sales reviewed than in Stainless Bar 1994.
We disagree with petitioners' suggestion to apply as BIA for all
``via'' sales the highest price on any sale by TAB. Petitioners have
been unable to demonstrate that the Department has used their suggested
BIA in comparable circumstances. Petitioners' cite to Bicycle
Speedometers is not relevant here because in that case BIA was applied
to missing sales which were rejected at verification as untimely.
Petitioners' cite to Mexico Cement 1990 is not relevant here because in
that case BIA was applied to unreported home market sales.
Comment 4: Respondent argues that SSAB sales to TAB are at arm's
length and must be used by the Department to calculate foreign market
value (FMV). According to respondent, the record demonstrates that TAB
pays the same price for subject merchandise, regardless of supplier,
and prices the resale of plate without regard for supplier. Therefore,
respondent asserts, it is impossible for SSAB and TAB to mask sales at
less than fair value by artificially lowering the FMV. Respondent
maintains that TAB is a company with significant operations and sales
of a variety of steel and non-steel products throughout Sweden and
therefore not a shell company. Respondent provided affidavits from SSAB
and TAB company officials claiming that SSAB and TAB conduct their
negotiations at arm's length, that SSAB attempts to obtain the highest
prices possible for subject merchandise sold to TAB, and that TAB
attempts to obtain the lowest possible price from SSAB for the subject
merchandise. Additionally, respondent contends that the Department
should consider the prices at which TAB purchases steel plate from SSAB
compared to the prices at which TAB purchases steel plate from
unrelated suppliers, citing Washington Red Raspberry Comm. v. United
States, 657 F. Supp. 537 (CIT 1987) (``Washington Red Raspberry'').
Respondent argues, citing NEC Home Electronics, Ltd. v. United
States, 54 F. 3d 736 (Fed. Cir. 1995) (``NEC 1995''), that the
Department's arm's-length test, as it applies to SSAB, is an abuse of
the Department's discretion, is arbitrary and capricious and contrary
to law. Respondent contends that given TAB's position in the home
market, the burden imposed on SSAB under the Department's arm's-length
test is ``almost inherently impossible to satisfy.'' Respondent
maintains that there is no justification for the Department to resort
to its statistical arm's-length test. Respondent also argues that the
Department, by using the current arm's-length test, is not following
its prior decisions, citing Citizen Watch Co. v. United States, 733 F.
Supp. 383 (CIT 1990), Timken Co. v. United States, 673 F. Supp. 495
(CIT 1987), Citrosuco Paulista, S.A. v. United States, 704 F. Supp.
1075, 1088 (CIT 1988) and Carlisle Tire & Rubber Co. v. United States,
634 F. Supp. 419 (CIT 1986).
Petitioners argue that the Department's arm's-length test is lawful
[[Page 15775]]
and the Department should continue to exclude sales to TAB. Petitioners
assert that price comparability is the single criterion for determining
whether to use related party sales. Petitioners maintain that the
Department's related party methodology is a reasonable means of
effecting the intent of the statute and the regulation. Petitioners
contend that by adjusting prices for all of the statutorily required
adjustments, and by making comparisons between related and unrelated
buyers at the same level of trade, the Department's test takes into
account all identifiable factors that could result in differences in
prices between related and unrelated buyers. Petitioners argue that the
respondent's affidavits were subjective and cannot establish that the
prices charged by SSAB to TAB were at arm's length. Petitioners assert
that whether SSAB can manipulate TAB's resale prices is irrelevant to
the determination required by the Department's regulations and that the
only relevant inquiry concerns the comparable levels of prices on
SSAB's sales to TAB and to persons not related to SSAB. Petitioners
maintain that the Department's related party methodology represents a
reasonable interpretation of the regulation. Petitioners argue that the
Department's determination not to include SSAB's sales to TAB in the
calculation of FMV was correct and should be adhered to in the final
results.
Department's Position: We agree with petitioners. The CIT held in
Usinor Sacilor v. United States, 872 F. Supp. 1001, 1003-1004 (CIT
1994) that ``[g]iven the lack of evidence showing any distortion of
price comparability, the court finds the application of Commerce arm's-
length test reasonable.'' The arm's-length test compares the prices of
related and unrelated party sales. All identifiable factors that could
result in price differences are considered (e.g., level of trade,
rebates, discounts, taxes, freight, insurance, credit, packing),
ensuring that the resulting prices are comparable.
We disagree with respondent's argument that the Department is not
following its prior decisions by using this test. This test was
established in the original investigation of the flat-rolled steel
cases and has been applied in subsequent reviews and investigations
since that time. See, e.g., Certain Flat-Rolled Carbon Steel Products
from Canada, 58 FR 37099, 37117 (July 9, 1993), Certain Hot-Rolled
Carbon Steel Flat Products from Japan, 58 FR 37154, 37158 (July 9,
1993) (``Japan Flat-Rolled'') and Certain Corrosion-Resistant Carbon
Steel Flat Products from Germany, 60 FR 65264 (December 19, 1995).
Additionally, we disagree with respondent's argument that the test
is too stringent. Because of the Department's inherent and well founded
reluctance to rely on prices between related parties in its analysis,
the Department's test must be stringent. See Japan Flat-Rolled.
Respondent's reference to NEC 1995 is not relevant here. In NEC
1995, the CAFC determined that the standard for proving entitlement to
a level-of-trade adjustment unreasonably precluded respondent from
proving the adjustment. However, the arm's-length test uses SSAB's own
data, not that of an unrelated party and/or a competitor, as was
required in proving the level-of-trade adjustment in NEC 1995.
By way of contrast to the 1987 case, Washington Red Raspberry,
which SSAB cited to argue that we should compare SSAB's prices to TAB
with other suppliers' prices to TAB, we refer to the 1989 case,
affirmed by the CIT in 1994, Television Receivers, Monochrome and Color
From Japan, 54 FR 35517, 35522 (August 28, 1989) (``Televisions 1989'')
(affirmed in NEC Home Electronics v. United States, Slip Op. 94-70 (CIT
1994)). In Televisions 1989, the Department stated ``prices charged by
other manufacturers to unrelated distributors do not demonstrate that
sales were at arm's length because products and production costs may
differ from company to company.'' There are many variables that control
a company's pricing behavior, including the size, location, cost
structure, and financial condition of a firm as well as its specific
strategy to favor its own related suppliers.
Comment 5: Respondent argues that the Department should not
disregard any SSAB HM sales on the grounds that the sales are below the
cost of production (COP). Respondent asserts that the cost test used in
the preliminary determination is based upon narrow ``model'' costs and
prices in a way that is inconsistent with the application of the ``10-
90-10'' test the Department has historically used for disregarding
below-cost sales. Respondent maintains that the Department should
broaden the base for comparing costs and prices. Respondent points out
that if there is only one sale of a particular control number in one
month of the POR, and that sale is below-cost, the sale is
automatically excluded because it was sold over an ``extended period of
time,'' and, this sale was made ``in substantial quantities'' because
it exceeded the Department's ten-percent threshold. Respondent suggests
that the Department can correct this anomaly by reducing the number of
product characteristics it uses to differentiate control numbers.
Alternatively, respondent asserts that the Department can modify its
``substantial quantities'' test to account for the fact that certain
control numbers may have only a few transactions during the POR.
Respondent also suggests that the Department could apply a threshold
percentage, such as a minimum 20 percent of all sales, before
disregarding any below cost sales. Respondent claims that the current
methodology does not give a respondent notice or fair opportunity to
take steps to ensure there are no sales below cost.
Petitioners maintain that the Department is correct in conducting
its analysis on a model-specific basis. Petitioners assert that the
Department has wide discretion in defining models and that the
Department has not abused this discretion. Petitioners argue that
SSAB's argument regarding the ``over-detailed'' nature of the model
definition is without merit and should be rejected.
Department's Position: We disagree with respondent and applied our
cost test in a manner consistent with Department practice, i.e., on a
model-specific basis. See Department's Policy Bulletin 92/3. The
Department has followed this practice consistently for over three
years. The cost test is intended to avoid basing FMV on below-cost
sales. Because FMV is determined on a model-specific basis, the
Department applies the cost test on a model-specific basis, as well.
Comment 6: Respondent argues that the Department should either
disregard the value-added tax (VAT) or apply a tax-neutral VAT
methodology to SSAB sales. Respondent maintains that its customers do
not incur any additional costs for VAT as the VAT they ``pay'' is
reimbursed to them by the government. Respondent requests that the
Department disregard the VAT or adjust for the VAT by using the actual
amount of the VAT, rather than the VAT rate, thereby applying a tax-
neutral methodology. Respondent contends that the current methodology
artificially inflates the absolute dollar margins that would have to be
paid by respondent, even though the percentage margin remains the same.
Petitioners argue that the Department's preliminary results
methodology remains a reasonable interpretation of the statutory
language. Petitioners contend that the methodology conforms to the
statute and it does not contravene legislature intent or place the
domestic industry at a disadvantage.
Department's Position: In light of the Federal Circuit's decision
in Federal
[[Page 15776]]
Mogul v. United States, CAFC No. 94-1097 (1995), the Department has
changed its treatment of HM consumption taxes. Where merchandise
exported to the United States is exempt from the consumption tax, the
Department will add to the U.S. price the absolute amount of such taxes
charged on the comparison sales in the home market. This is the same
methodology that the Department adopted following the decision of the
Federal Circuit in Zenith v. United States, 988 F. 2d 1573, 1582
(1993), and which was suggested by that court in footnote 4 of its
decision. The Court of International Trade (CIT) overturned this
methodology in Federal Mogul v. United States, 834 F. Supp. 1391
(1993), and the Department acquiesced in the CIT's decision. The
Department then followed the CIT's preferred methodology, which was to
calculate the tax to be added to U.S. price by multiplying the adjusted
U.S. price by the foreign market tax rate; the Department made
adjustments to this amount so that the tax adjustment would not alter a
``zero'' pre-tax dumping assessment.
The foreign exporters in the Federal Mogul case, however, appealed
that decision to the Federal Circuit, which reversed the CIT and held
that the statute did not preclude Commerce from using the ``Zenith
footnote 4'' methodology to calculate tax-neutral dumping assessments
(i.e., assessments that are unaffected by the existence or amount of HM
consumption taxes). Moreover, the Federal Circuit recognized that
certain international agreements to which the United States is a party,
in particular the General Agreement on Tariffs and Trade (GATT) and the
Tokyo Round Antidumping Code, required the calculation of tax-neutral
dumping assessments. The Federal Circuit remanded the case to the CIT
with instructions to direct Commerce to determine which tax methodology
it will employ.
The Department has determined that the ``Zenith footnote 4''
methodology should be used. First, as the Department has explained in
numerous administrative determinations and court filings over the past
decade, and as the Federal Circuit has now recognized, Article VI of
the GATT and Article 2 of the Tokyo Round Antidumping Code required
that dumping assessments be tax-neutral. This requirement continues
under the new Agreement on Implementation of Article VI of the General
Agreement on Tariffs and Trade. Second, the URAA (Uruguay Round
Administrative Action) explicitly amended the antidumping law to remove
consumption taxes from the HM price and to eliminate the addition of
taxes to U.S. price, so that no consumption tax is included in the
price in either market. The Statement of Administrative Action (p. 159)
explicitly states that this change was intended to result in tax
neutrality.
While the ``Zenith footnote 4'' methodology is slightly different
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA
law required that the tax be added to U.S. price rather than subtracted
from HM price, it does result in tax-neutral duty assessments. In sum,
the Department has elected to treat consumption taxes in a manner
consistent with its longstanding policy of tax-neutrality and with the
GATT.
Comment 7: Respondent argues that TAB resales of subject
merchandise in Sweden require a level-of-trade adjustment if compared
with SSOX sales in the United States. Respondent contends that if TAB
resales are used in the final results, it must be recognized that a
third level of trade exists for SSAB in Sweden, i.e., indirect sales
out of inventory by TAB to small end-users. Respondent maintains that
there are no sales by SSAB in the United States that are at the same
level of trade as TAB's sales. Respondent contends that if the
Department finds that TAB sales to small end-users must be used to
match sales in the United States, the Department must apply a level-of-
trade adjustment to the TAB prices, citing Stainless Steel Bar From
Spain, 59 FR 66931 (December 28, 1994) (``Stainless Bar 1994'').
Respondent maintains that significant additional costs are incurred
with respect to TAB sales to small end-users. Respondent argues that
there are correlations between selling expenses and level of trade and
between prices and level of trade as in Stainless Bar 1994.
Respondent suggests that the Department should make the level-of-
trade adjustment based on the weighted-average price differential, in
Sweden, between levels of trade. Alternatively, respondent suggests
that the adjustment should be cost-based, reflecting the additional
expenses incurred by TAB in handling, stocking and reselling the
subject merchandise. Respondent maintains that SSAB provided supporting
documentation regarding these additional costs that the Department
verified.
Petitioners contend that SSAB has not overcome the presumption that
its end-user customers are at the same level of trade. Petitioners
argue that evidence shows that SSAB also incurs the same types of
expenses in selling merchandise to certain end-users as TAB does
selling to its customers. Petitioners maintain that the Department has
held that the number of sales is not a determinant of level of trade.
Additionally, petitioners argue that differences in quantities sold are
not a factor in distinguishing level of trade, but rather are addressed
by statute through a quantity discount adjustment. Petitioners assert
that SSAB also failed to show that any differences in the selling
functions of SSAB and TAB at each claimed level of trade affected the
prices charged or the expenses incurred. Petitioners argue that SSAB
has provided insufficient information to rebut the presumption that its
functionally indistinguishable end-user customers should be classified
at a single level of trade. Petitioners maintain that SSAB has failed
to demonstrate that there is little or no overlap between SSAB and TAB.
Petitioners argue that because the end-user purchasers in this case are
functionally equivalent and the functions performed by SSAB and TAB in
selling to them are identical, the Department should continue to
classify all end-users at the same level of trade for the final
results.
Additionally, petitioners argue that even if a level of trade
distinction is incorrectly made, no adjustment is warranted.
Petitioners maintain that to be granted a level-of-trade adjustment,
SSAB must show that differences in the selling functions of SSAB and
TAB at each level of trade affected the prices charged or the expenses
incurred. Petitioners assert that SSAB also failed to meet its burden
of quantifying the amount of its claimed level-of-trade adjustment.
Department's Position: We agree with petitioners. Respondent has
failed to support its contention that the Department should distinguish
between ``small'' and ``large'' end-users. To grant a level-of-trade
adjustment, there must be a significant correlation between prices and
selling expenses on one hand, and levels of trade on the other. See
``Matching at Levels of Trade,'' Import Administration Policy Bulletin
92/1, Department of Commerce (July 29, 1992) (``Policy Bulletin 92/
1''). In addition, respondent failed to show that SSAB and TAB have
different types of customers.
Respondent cites to Stainless Bar 1994 to support its arguments.
However, in that case, there was ``little or no overlap'' between the
customers falling into each category of end-user. In the instant case,
SSAB was unable to provide a consolidated customer list to show
``little or no overlap'' between
[[Page 15777]]
SSAB and TAB customers. SSAB's and TAB's customer code lists include
some of the same customers. See TAB's November 21, 1994 Questionnaire
Response at Exhibit 1, SSAB's November 21, 1994 Questionnaire Response
at Exhibit 17 and SSAB's January 13, 1995 Questionnaire Response at
Exhibit 19.
In addition, respondent's assertion that SSAB and TAB perform
different functions with respect to end-user customers is not supported
by information on the record. Respondent argues that TAB incurs
additional expenses by maintaining inventory and marketing and
distributing the merchandise. SSAB also incurs these expenses when
selling to end-users. See SSAB's October 6, 1994 Questionnaire Response
at 15-16. In Carbon and Alloy Steel Wire Rod From Canada, 59 FR 18791,
18794 (April 20, 1994) the Department stated that comparisons are made
at distinct, discernable levels of trade based on the function each
level of trade performs, such as end-user, distributor and retailer.
SSAB failed to prove that end-use is associated with functional
differences.
As the Department's standard for making a level-of-trade adjustment
is based on price and selling expense differences, SSAB's argument
regarding differences in average quantity and number of sales is
irrelevant here. See Antifriction Bearings from France, et al, 60 FR
10900, 10940 (February 28, 1995) (``AFBs 1995'') and ``Policy Bulletin
92-1.'' In Tapered Roller Bearings and Parts Thereof, Finished and
Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less
in Outside Diameter, and Components Thereof, From Japan, 58 FR 64720
(December 9, 1993), the Department did not grant a respondent a level-
of-trade adjustment because ``although Koyo demonstrated that net
prices vary between levels of trade, it did not provide evidence that
this variation in price was the result of different costs incurred at
different levels of trade.'' See also AFBs 1995 and Laclede Steel Co.
v. United States, Slip Op. 94-160 (decided October 12, 1994). We
repeatedly requested information supporting SSAB's claims for a
distinction between the different levels of trade at verification which
SSAB did not provide. See Sales Verification Report at 37.
Because we did not make a level-of-trade distinction, we are not
addressing respondent's and petitioners' arguments regarding the
quantity of such an adjustment.
Comment 8: Respondent argues that the Department should adjust FMV
for SSAB sales that incurred a small-quantity surcharge. Respondent
maintains that the quantity surcharge should be removed from the HM
price to reflect the quantity differential between the sales in the
U.S. and home market, thereby ensuring an apples-to-apples comparison.
Respondent contends that there is no requirement that respondent apply
a quantity surcharge to all qualifying sales. Respondent maintains that
it reported each of the quantity surcharges on a transaction-by-
transaction basis, and the amount of the surcharge is reflected on each
customer invoice.
Petitioners argue that SSAB has not demonstrated that its sales
satisfied the requirements for a quantity discount. Petitioners assert
that a respondent must show that it consistently applied the discount
or quantity surcharge. Petitioners maintain that SSAB has also failed
to demonstrate that the quantity extras reflect production cost
savings. Petitioners assert that in the final results, the Department
should deny SSAB's requested adjustment.
Department's Position: We agree with petitioners. Respondent was
unable to demonstrate that it met either criteria required by 19 CFR
353.55(b). We found at verification that the surcharge was not
consistently applied, as required by 19 CFR 353.55(b)(1). See
Verification Report at 11-12, 16, and 24-25. SSAB was also unable to
provide documentation demonstrating that the different quantities are
directly associated with cost differentials. See Hussey Copper, Ltd. v.
United States, 834 F. Supp. 413, 428 (CIT 1993) and Brass Sheet and
Strip From Germany, 60 FR 38542, 38544 (July 27, 1995). Therefore, we
did not adjust FMV for SSAB sales for a quantity surcharge.
Comment 9: Respondent argues that Plat Depan sales are outside the
ordinary course of trade and must be disregarded by the Department,
citing Gray Portland Cement and Clinker From Mexico, 60 FR 26865, 26868
(May 19, 1995) (``Mexico Cement 1995''). Respondent maintains that the
ordinary course of trade for SSAB in Sweden, including the ordinary
course of trade for TAB, involves the sale of prime merchandise at
premium prices. Respondent contends that Plat Depan was established
primarily to sell non-prime plate or odd-size prime plates at low
prices. Respondent asserts that the demand for merchandise sold by Plat
Depan in Sweden is marginal when compared with mainstream sales by SSAB
and TAB.
Petitioners argue that the Department cannot analyze any of the
factors normally considered because SSAB chose not to report Plat
Depan's sales. Petitioners assert that because there is no evidence
that these sales were made outside the ordinary course of trade, they
must be considered sales made in the ordinary course of trade.
Petitioners contend that the Department should consider respondent's
failure to report these sales in determining whether to use total BIA.
Department Position: We agree with petitioners in part and have
treated Plat Depan prime sales as sales within the ordinary course of
trade. Company officials indicated at verification that certain sales
of prime merchandise were made through Plat Depan during the POR.
Additionally, company officials did not provide requested information
supporting their claim that these sales were outside the ordinary
course of trade. See Verification Report at 29. Without additional
information, which was not provided by respondent, we were unable to
conclusively determine that SSAB sales through Plat Depan's were
outside the ordinary course of trade. Moreover, Mexico Cement 1995 was
a case in which the Department applied total BIA to a company which was
unable to supply basic information about whether its sales were in the
ordinary course of trade, not a case asking for the exclusion of
particular sales. Hence, it is not pertinent to the issue raised in
this comment.
As in the preliminary results, we assumed that any unmatched U.S.
sales would have matched to the unreported home market sales, including
Plat Depan's sales of prime merchandise. As BIA, we applied SSAB's
final margin determined in the LTFV investigation to any unmatched U.S.
sales. See Comment 11 and Analysis Memorandum.
Comment 10: Respondent argues that the Department's computer
program executes the COP test after merging the SSOX and SSTP sales
with the TAB sales. As a result, respondent contends that the pool of
unrelated sales to which the price of a related-party sale is being
compared includes not only the sales of SSOX and SSTP, but also the
downstream sales by TAB. Respondent maintains that this is contrary to
the logic of the statistical test, and not in keeping with the
Department's practice. Respondent asserts that the Department should
execute the arm's-length test in two steps to correct the error.
Department's Position: We agree with respondent that an error was
made in combining the SSAB and TAB databases and have corrected this
error for these final results. See Analysis Memorandum.
Comment 11: Petitioners argue that the pervasive defects in SSAB's
HM
[[Page 15778]]
database require application of total BIA. Petitioners contend that the
errors cannot be corrected using information on the record and that
when viewed cumulatively, these errors render SSAB's data unusable and
require the use of total BIA. Petitioners argue that SSAB failed to
include a significant, but unknown, number of HM sales in its reported
HM sales database. Petitioners assert that the Department did not
consider the possible effect of the unreported sales on the FMV of the
individual products. Petitioners contend that correct reporting might
have led to changes in model matches and/or FMVs of the matched
products. Petitioners maintain that the Department cannot be certain
that the calculated FMVs represent SSAB's sales prices in the home
market, or that any dumping margin it may calculate based on such
prices is accurate.
Petitioners argue that the Department could not verify twelve of
the 24 HM sales examined at verification due to errors in gross unit
prices, discounts, commissions, ``via'' sales, and credit
documentation. Petitioners also assert that large portions of SSAB's
other HM sales and cost data were unverifiable including unverified
inland freight costs, unverified packing charges, misreported rebates
and missing costs of production.
For these reasons, petitioners argue that the Department must apply
total BIA. Petitioners maintain that to do otherwise would conflict
with the Department's practice in the past and current investigations,
violate the Department's statutory mandate to use verified information
and to obtain representative, undistorted results, and invite
respondents to control the outcome of investigations by selectively
providing the Department with information.
Respondent argues that the sales and cost data submitted to the
Department were, with few and minor exceptions, verified as reported by
SSAB to the Department. Respondent contends that the record evidence
does not support a decision by the Department to discard the database
provided by SSAB and to resort to total BIA in this review. Respondent
argues that while it did not report certain HM downstream sales, these
sales were of minor importance and were not needed to find matches to
SSAB sales in the United States. Respondent contends that the
Department views downstream sales as expendable in situations where the
volume of downstream sales is minor when compared with total HM sales
and the ``main'' sales by a respondent can be expected to provide
adequate comparisons to U.S. sales. Respondent asserts that it is clear
that limited omissions from the downstream sales listing are of
correspondingly limited importance in accurately calculating any
antidumping margins that may exist. Respondent maintains that this is
particularly true considering the Department's decisions in other steel
reviews to completely excuse respondents from reporting any HM
downstream sales.
Respondent also contends that the fact that TAB dropped inactive
customers from the database is evidence of the fact that these
customers could not have accounted for any significant portion of total
SSAB sales during the POR, or of total TAB sales, of subject
merchandise. Respondent maintains that the fact that TAB did not
manually search through its files to locate purged customer sales to
determine if some sales included subject merchandise cannot support the
use of total BIA in this review.
Additionally, respondent argues that the fact that downstream sales
by SSAB subsidiaries Plat Depan and Dickson were not reported does not
justify the use of total BIA. Respondent argues that Plat Depan sales
are limited to seconds and odd-size prime plate and are outside the
ordinary course of trade. Respondent asserts that any Dickson resales
were of non-subject merchandise. Furthermore, respondent argues that
the volume of Plat Depan and Dickson sales is very small when compared
with total downstream sales.
Respondent asserts that all twenty-four HM sales traced by the
Department were verifiable, allowing for minor deficiencies, none of
which, either individually or in the aggregate, support petitioners'
argument that SSAB reported sales should be disregarded and total BIA
should be used by the Department. Respondent argues that all gross unit
prices reported to the Department by SSAB were accurately and
consistently reported, and supported at verification by, SSAB's records
kept in the normal course of business. Respondent maintains that the
record does not support petitioners' argument that SSAB's sales were
unverifiable and cannot support the use of total BIA in this review.
Respondent also maintains that its database does not contain pervasive
errors.
Department's Position: We disagree with petitioners' argument for
application of total BIA. Section 776(c) of the Tariff Act requires the
Department to use BIA ``whenever a party or any other person refuses or
is unable to produce information requested in a timely manner or in the
form required, or otherwise significantly impedes an investigation.''
Respondent generally cooperated with our requests for information and
provided the information requested in a timely manner and in the form
required. Therefore, application of total BIA was not warranted in this
case. However, we applied partial BIA where respondent failed to
satisfy its burden of proof to be entitled to an adjustment and where
errors were found at verification. See e.g., Comments 1, 2, 3, 13, and
20 and Analysis Memorandum. This BIA methodology is consistent with
Department practice. See e.g., AFBs 1992.
The bulk of petitioners' arguments refers to errors in the
downstream database. The errors in the downstream database identified
by petitioners have been corrected, where possible (e.g., missing COP
information). See Analysis Memorandum. However, due to the flaws of the
downstream reporting methodology, the Department rejected respondent's
allocation methodology. See our preliminary results at 48503. In
addition, some of the errors were not correctable (e.g., unreported
sales through Plat Depan and TAB). Finally, the record indicates that
for the overwhelming majority of U.S. sales, the unreported downstream
sales would not have been potential matches. For these reasons, the
Department has applied BIA to all U.S. sales for which there is no HM
match. See Analysis Memorandum.
Comment 12: Petitioners contend that there are export sales in the
HM sales database. Additionally, petitioners assert that SSAB selected
sales regardless of whether the sale was in a foreign currency and even
if the billing address was abroad. Petitioners maintain that the
standard for whether to include sales as HM sales is whether the
respondent knew that the sales were to be exported at the time of the
sale.
Respondent argues that it did not include export sales in the HM
database. Respondent contends that the two verified sales cited by
petitioners as evidence that the HM sales database includes export
sales are sales clearly delivered in the home market and do not support
petitioners' position. Respondent argues that as with the fact that it
invoiced certain sales in a currency other than the Swedish Kronor
(SEK), the fact that certain HM sales may include an exporter's
declaration does not establish that SSAB knew the sales were for
consumption outside Sweden. Respondent argues that a review of the
verified sales, the reasons for reporting HM sales in non-SEK currency
and the fact that the
[[Page 15779]]
Department fully verified the completeness and destinations of the HM
sales reported by SSOX and SSTP demonstrates that the HM sales database
does not include export sales. Accordingly, respondent contends, the
configuration of the HM sales database does not support the use of
total BIA in this review.
Department's Position: We agree with petitioners and have excluded
SSAB's foreign currency sales for these final results. A review of the
SSOX HM sales traces revealed that only the sales made in currencies
other than SEK contained exporter declarations certifying country of
origin. See Verification Exhibits OX-27 and OX-29. None of the SEK-
denominated sales had this declaration. See Verification Exhibits OX-
25, OX-26, OX-28, OX-30-OX-33. The fact that the declarations appeared
only on the non-SEK sales verified by the Department, and not on any of
the SEK sales verified by the Department supports the contention that
SSAB knew or should have known that these sales were destined for
locations outside of Sweden. However, our exclusion of these sales does
not call into question the completeness of SSAB's reporting. We
verified that SSAB coded these sales in its database as domestic sales
because the domestic sales code was based on SSAB's shipping
destination.
Comment 13: Petitioners argue, citing AFBs 1995, that the
Department should not treat SSAB's unverified HM rebates as post-sale
price adjustments, because the Department has indicated that post-sale
price adjustments are generally corrections to the price resulting from
clerical or other data input errors. Moreover, petitioners assert that
such a reclassification undermines the Department's policy of requiring
a respondent to demonstrate that such a rebate is justified. Therefore,
petitioners conclude that SSAB's claimed adjustments must be denied.
Respondent argues that the Department properly deducted SSAB
rebates from the HM price. Respondent contends that to the extent
rebates are offered, the rebates are negotiated and the customer
becomes aware of the rebates through these negotiations that occur
before the sales. Respondent argues that the fact that no documents
were available to establish that the customers were aware of the terms
and conditions before the sales cannot be used as a basis for
penalizing SSAB by totally disregarding HM rebates. Respondent
maintains that to totally disregard the rebates would, in effect,
create a zero BIA rate for rebates in the HM because certain documents
requested at verification do not exist and that this would be contrary
to law. Respondent asserts that the Department is fully justified in
treating SSAB's HM rebates as post-sale price adjustments.
Department's Position: We agree in part with respondents. While
petitioners have asserted that post-sale price adjustments are
``generally corrections to the price resulting from clerical or other
data input errors,'' they have failed to note that in the case which
they cite, the Department also allowed post-sale price adjustments
which were not data input errors, because they reflected the
respondent's ``normal business practice.'' See AFBs 1995. As SSAB has
argued, the post-sale price adjustments in this instance do reflect its
normal business practice. The Department reviewed numerous documents at
verification which confirmed this, and petitioners have not suggested
otherwise. See Verification Exhibits OX-22 and TP-16. Additionally, the
existence of the rebates since the beginning of the administrative
review indicates that the use of these ``rebates'' reflects SSAB's
normal business practice. Nevertheless, in AFBs 1995, the Department
stated that ``as a general matter, the Department only accepts claims
for discounts, rebates and price adjustments as direct adjustments to
price if actual amounts are reported for each transaction.''
Information on the record of this review indicates that these
adjustments were made and reported on a customer-specific, not
transaction-specific, basis. See Verification Report at Exhibits OX-22
and TP-16. Accordingly, the Department will treat them as indirect
selling expenses.
Finally, the Department disagrees with petitioners' assertion that
reclassification undermines the Department's policy with respect to
rebates. Rebates are typically granted as a fixed and constant
percentage of sales. The Department's policy is to treat them as direct
adjustments if they are reported on that basis. See AFBs 1995.
Comment 14: Petitioners maintain that the Department erroneously
calculated HM credit expense. Petitioners argue that because SSAB
failed to give the Department appropriate interest rates and failed to
provide any suitable alternative, the Department must disallow SSAB's
reported HM credit expense, citing Light-Walled Welded Rectangular
Carbon Steel Tubing From Taiwan, 54 FR 5532, 5536 (February 3, 1989)
(``Steel Tubing''). Petitioners contend that if the Department does not
disallow the credit expense and instead recalculates the expense using
BIA, it must select an appropriately adverse BIA interest rate.
Petitioners contend that a consolidated interest rate should be used.
Petitioners suggest that the Department use as BIA the lowest HM rate
reported by SSAB during each of the three years covered by the POR.
Respondent argues that it fully cooperated with the Department and
reported actual borrowing rates incurred for each SSAB company involved
in the sale of subject merchandise during the POR. Respondent argues
that the Department used SSAB's internal borrowing rate because it was
lower than the prevailing market rate in Sweden. Respondent maintains
that if the Department decides to modify the methodology used in the
preliminary results, it should use the prevailing external Swedish
borrowing rates to calculate SSAB's imputed credit expenses in the home
market. Respondent also maintains that it could not report any other
interest rate as no other interest rate existed, and therefore, the
Department may not resort to adverse or punitive BIA interest rates.
Department's Position: We disagree with petitioners' argument that
we should deny SSAB's credit expense entirely. Petitioners' cite to
Steel Tubing is not relevant here. In that case, the Department
disallowed the reported credit expense because respondent was unable to
determine and document which HM sales incurred credit expense, and we
determined that the use of any average expense for all sales would be
highly distortive. In the instant case, SSAB's subsidiaries were able
to prove that SSAB was entitled to a credit adjustment. We also
disagree that we should select the lowest reported interest rate, as
requested by petitioners, because adverse BIA is not called for here.
See U.H.F.C. Co. v. United States, 916 F. 2d 689, 701 (Fed. Cir. 1990).
The only short-term borrowing data that existed in this review was
short-term borrowing data based upon interest rates extended by SSAB-
Stockholm. See Verification Report at Exhibits OX-23, TP-14 and TABS-3.
However, we agree with petitioners' argument that we should have
used a consolidated interest rate in our recalculation of SSAB's credit
expense, rather than separate rates for each subsidiary. One lending
institution, SSAB-Stockholm, provided all funds to the subsidiaries.
Therefore, a consolidated rate for the lending institution as a whole
more accurately reflects SSAB's interest expense than the individual
rates granted on specific loans to subsidiaries. As we stated in
Ferrosilicon from Brazil, 59 FR 732, 736 (January 6, 1994), the cost of
capital is
[[Page 15780]]
fungible, therefore, calculating interest expense based on consolidated
statements is the most appropriate methodology. We have used the
average reported interest rate during each of the three years as a
reasonable surrogate for the consolidated interest rate in our
recalculation of the credit expense.
Comment 15: Petitioners argue that the Department should classify
mill-edge plate from the SSOX plant as prime merchandise. Petitioners
maintain that the Department has identified several factors that
indicate whether a product is secondary or non-prime merchandise and
SSOX's sales of mill-edge plate do not meet these criteria for non-
prime merchandise. Petitioners maintain that there were price
differences between SSOX's mill-edge plate and otherwise identical
prime trim-edge plate. Petitioners assert that there is no evidence
that mill-edge plate is defective. Petitioners note that SSAB has
complete records for all sales of SSOX mill-edge plate. Petitioners
also note that SSOX mill-edge plate is a significant portion of the
total quantity of subject merchandise from SSOX reported on the HM
sales database.
Respondent argues that SSOX mill-edge plate is second-choice
merchandise and should not be reclassified as prime merchandise.
Respondent contends that petitioners have miscalculated record data
related to SSOX HM sales in their price and quantity arguments.
Respondent asserts that SSOX mill-edge plate accounts for only a small
portion of total SSOX sales. Respondent asserts that the record
evidence demonstrates that SSOX mill-edge plate is defective and that
SSOX does not have complete records on mill-edge plate.
Department's Position: We agree with petitioners in part and have
reclassified certain mill-edge plate sales as sales of prime
merchandise. Mill-edge plate is plate with edges that have not been
further processed after rolling in the mill, in contrast to trim-edge
plate which is created by shearing or flame-cutting the edges of mill-
edge plate to produce a product with trimmed edges. Generally,
identical prime (or identical non-prime merchandise) could have either
a mill edge or a trim edge. In our preliminary results, we determined
that all sales of SSOX mill-edge plate should be regarded as sales of
secondary merchandise. We included in this decision all downstream
sales of SSOX mill-edge plate. For these final results, only SSOX's
direct sales of mill-edge plate to unrelated parties were considered
non-prime merchandise.
SSOX company officials explained how they determined which of the
reported sales were prime and non-prime or secondary merchandise. See
Verification Report at 6. SSOX does not keep records for rejected plate
and keeps limited records for mill-edge plate. SSOX does no testing on
mill-edge plate and does not give customers quality certifications for
mill-edge plate. See Verification Report at 7. Additionally, SSOX does
not maintain records on certain characteristics of mill-edge plate.
On the other hand, TAB does not maintain inventory of non-prime
merchandise for quality assurance reasons. See Verification Report at
28. Instead, TAB established Plat Depan to inventory and sell its non-
prime merchandise. Because TAB cannot sell non-prime merchandise, we
concluded that any sales of mill-edge plate through TAB must be sold as
prime merchandise. For the final results, we have treated sales of SSOX
mill-edge plate through TAB as prime plate in our calculations.
Comment 16: Petitioners contend that U.S. credit expenses must be
recalculated correctly using a HM interest rate. Petitioners argue that
both the Department's practice and the holdings of reviewing courts
confirm that the use of a U.S. interest rate to calculate credit is
appropriate only where a party had U.S. borrowings from an unrelated
party or has otherwise shown that it had access to funds at U.S.
interest rates. See LMI-LA Metalli Industriale v. United States, 912 F.
2d 455, 460 (Fed. Cir. 1990), Gray Portland Cement and Clinker from
Japan, 60 FR 43761, 43767 (August 23, 1995) and Certain Carbon Steel
Flat Products from France, 58 FR 37125, 37133 (July 9, 1993). Moreover,
petitioners maintain that the Department should use an adverse BIA
rate. Petitioners argue that SSAB failed to give the Department
acceptable data, yet it was rewarded with a favorable BIA rate.
Petitioners contend that if the Department does use a U.S. interest
rate as BIA, the U.S. prime rate would be a more appropriate selection.
Respondent contends that for purposes of calculating an imputed
credit expense on U.S. sales, the Department correctly used the average
commercial paper rate for the POR. Respondent maintains that SSAB
companies had access to the lower U.S. interest rates through the
related U.S. subsidiary, Swedish Steel, Inc. Respondent asserts that
the Department should use the same credit adjustment to U.S. sales that
was used in the preliminary results.
Department's Position: When a respondent has no U.S. borrowings, it
is no longer the Department's practice to substitute home market
interest rates when calculating U.S. credit expense and U.S. inventory
carrying costs. Rather, the Department will now match the interest rate
used for credit expenses to the currency in which the sales are
denominated. The Department will use the actual borrowing rates
obtained by a respondent, either directly, or through related
affiliates. Where there is no borrowing in a particular currency, the
Department may use external information about the cost of borrowing in
that currency. See Brass Sheet and Strip From Germany 60 FR at 38545,46
(1995)). Because respondent did not supply the Department with an
actual U.S. borrowing rate, for the preliminary results, we turned to
external information and applied the average of the Federal Reserve
Statistical Release one-month commercial paper rates in effect during
the POR to calculate U.S. credit expenses and inventory carrying costs.
For the final results, we have reconsidered our use of the
commercial paper rate. SSAB provided no evidence that it would have had
access to commercial paper rates in the United States during the POR.
There is no clear evidence on the record of this review that SSAB had
access to specific U.S. rates.
In the of U.S. dollar borrowings, we need to arrive at a reasonable
surrogate for imputing U.S. credit expense. There are many and varied
factors that determine at what rate a firm can borrow funds, such as
the size of the firm, its creditworthiness, and its relationship with
the lending bank. Without actual U.S. dollar borrowings and without
substantial evidence on the record indicating what rates a firm is
likely to have received if it had borrowed dollars, it is impossible to
predict the rate at which a company would have borrowed dollars.
Therefore, we chose the average short-term lending rate as calculated
by the Federal Reserve. Each quarter the Federal Reserve collects data
on loans made during the first full week of the mid-month of each
quarter by sampling 340 commercial banks of all sizes. The sample data
are used to estimate the terms of loans extended during that week at
all insured commercial banks. This rate represents a reasonable
surrogate for an actual dollar interest rate because it is calculated
based on actual loans to a variety of actual customers.
For these reasons, we have recalculated SSAB's imputed U.S. credit
expense based on the average lending rate during the POR, as published
by the
[[Page 15781]]
Federal Reserve. See Analysis Memorandum.
Comment 17: Petitioners argue that the Department must make an
adjustment for SSAB's U.S. selling expenses. Petitioners contend that
SSAB reported the amount of its U.S. selling expenses, but failed to
include any of these expenses in its computer sales data. Petitioners
maintain that SSAB should have included these as direct selling
expenses. Petitioners contend that the evidence shows that these
expenses (e.g., expenses incurred by Swedish Steel and SSAB's New
Orleans-based salesperson) resulted at least in part from, and could
have been tied to, specific sales. Petitioners argue that since at
least some of SSAB's U.S. selling expenses were direct in nature, the
Department should follow its standard practice and make the adverse
assumption that all selling expenses in the U.S. market were direct
expenses and adjust FMV for U.S. direct selling expenses.
Respondent argues that the Department should not treat SSAB
indirect U.S. selling expenses as direct selling expenses. Respondent
argues that there is no basis in fact or law upon which the Department
could treat SSAB's indirect U.S. selling expenses as direct expenses
that require an across-the-board adjustment to the foreign market
value. Respondent contends that there is no evidence in this record
that any of these expenses are directly related to any SSAB sales in
the United States.
Department's Position: We agree with respondent. There is no
information on the record to support petitioners' claim that these
expenses (e.g., travel expenses incurred by the New Orleans-based
salesperson) could be tied to specific sales.
Comment 18: Petitioners argue that the Department must deduct
antidumping deposits paid by SSAB or related parties from U.S. price.
Section 772(d)(2)(A) states that the purchase price and exporter's
sales price shall be reduced by U.S. import duties. According to
petitioners, antidumping deposits are ``incident to bringing the
subject merchandise from the place of shipment in the country of
exportation to the place of delivery in the United States'' and are
therefore properly classified as import duties. Furthermore,
petitioners claim that antidumping or countervailing duties are
considered ``import duties'' in trade laws unless the provision
specifically indicates otherwise.
Respondent asserts that there is no evidence in the record to
support the claim that SSAB is paying antidumping duties on imports of
subject merchandise or reimbursing any party for antidumping duties
paid on such imports.
Department's Position: We disagree with petitioners. While section
772(d)(2)(A) requires the deduction of normal ``import duties,'' cash
deposits of estimated antidumping duties are not normal import duties,
and do not qualify for deduction under Section 772. Contrary to
petitioners' argument, the CIT in Federal-Mogul v. United States 813 F.
Supp. 856, 872 (CIT 1993), recognized that the actual amounts of normal
duties to be assessed upon liquidation are known because they are based
upon rates published in the Harmonized Tariff Schedule and the actual
entered value of the merchandise. In contrast, deposits of estimated
antidumping duties are based upon past dumping margins and may bear
little relation to the actual current dumping margin. Thus, the CIT
recognized the distinction between estimated antidumping duties and
``normal'' import duties for purposes of section 772(d)(2)(A).
Petitioners' methodology also conflicts with the holding of the CIT
in PQ Corp. v. United States, 652 F. Supp. 724 (CIT 1987), in which the
court addressed the issue of deduction of estimated antidumping duties
under section 772(d)(2)(A). The court cited with approval the
Department's policy of not allowing estimated antidumping duties, based
upon past margins, to alter the calculation of present margins. The
court explained ``[i]f deposits of estimated antidumping duties entered
into the calculation of present dumping margins, then those deposits
would work to open up a margin where none otherwise exists.'' Id. at
737.
Petitioners argue at length that the Department should not
distinguish between purchase price and exporter's sales price
transactions in deducting antidumping duties. However, because the
Department does not deduct estimated antidumping duties from any
transaction, this argument is inapposite.
The Department agrees with petitioners that statements made in the
URAA are not relevant in this review, which is being conducted under
pre-URAA law. However, the policies of other countries, cited by
petitioners with respect to this issue, are equally irrelevant.
Comment 19: Petitioners argue that the higher of the margin from
the investigation or the highest non-aberrant margin should be selected
as BIA for unmatched U.S. sales. Petitioners contend that the
Department has a practice of applying the highest non-aberrant margin
as BIA in investigations when U.S. sales are unmatched because of the
respondent's failure to report HM sales. Petitioners argue that the
statutory directive to use BIA serves to compensate for the
Department's inability to compel the parties under investigation to
respond to its requests for information. Petitioners contend that for
BIA to be effective, the BIA margin selected by the Department must be
less desirable to the respondent than that which it would have obtained
if the party had responded fully. Petitioners argue that the highest
non-aberrant methodology is reasonable because it is based on
respondents' verified sales data and it induces respondents to report
complete and accurate data for all sales.
Respondent maintains that the Department applied the correct BIA
margin rate to SSAB's U.S. sales that did not have matching HM sales.
Respondent asserts that the Department correctly based the partial BIA
rate on the highest margin rate applied to SSAB in the original
investigation. Respondent argues that the Department should not use the
highest non-aberrant margin as partial BIA in this review because it
would unfairly punish SSAB, a cooperative respondent throughout the
review, who submitted timely, complete, and accurate information.
Respondent maintains that the number of errors in SSAB's submission is
small and the number of sales affected are small in quantity,
therefore, the Department is not justified in using the highest non-
aberrant margin that is the most adverse partial BIA in this review.
Department's Position: We disagree with petitioners. As we
determined in the preliminary results, certain sales were not reported
in SSAB's downstream database, but the sales affected were minimal in
quantity relative to the size of the entire database and to the pool of
potential matches. As a result, consistent with Department practice, we
did not apply the highest transaction-specific margin as BIA, but
instead applied the higher of SSAB's final weighted-average margin from
the less-than-fair-value (LTFV) investigation and SSAB's final
weighted-average margin from this review to the U.S. sales with no HM
matches. See AFBs 1995. Contrary to the position taken by the
petitioners, this approach was approved by the CIT in National Steel
Corp. v. United States, 870 F. Supp. 1130 (CIT 1994). See also Usinor
Sacilor v. United States, 872 F. Supp. 1000, 1007 (CIT 1994). Since the
margin from the LTFV investigation was higher, we used that rate as BIA
on unmatched U.S. sales for these final results.
[[Page 15782]]
Comment 20: Petitioners argue that since all of the sales by SSAB
in the United States were purchase price sales, there is no associated
inventory carrying expense and therefore, in calculating constructed
value for the final results the Department should not reduce the
financing expense by a factor for the inventory carrying costs
attributable to HM merchandise.
Respondent asserts that recalculation of the constructed value
adjustment will have zero effect on the margin. Respondent maintains
that the record evidence demonstrates that the Department never used,
and should not need to use, constructed value in this review.
Department's Position: We agree with respondent. Due to certain
problems in the reported data (See Comments 11 and 20), we used BIA
instead of constructed value data in our calculations. Therefore, no
recalculation is necessary.
Comment 21: Petitioners argue that the Department should reconsider
its BIA for the cost of production values for certain products.
Petitioners maintain that it is the Department's consistent policy to
use the highest reported COP when a respondent has failed to report COP
for one or more products. Petitioners maintain that the Department
requested COP information and SSAB failed to provide it. Petitioners
argue that the Department need not make a second or third request for
the same information to apply a suitably adverse BIA.
Respondent argues that the Department correctly calculated COP for
the sales with missing cost values. Respondent asserts that there is no
basis for any adverse BIA in the Department's calculation of cost for
the subset of HM sales with missing COP. Respondent maintains that the
control numbers with missing cost data are an insignificant portion of
the total sales provided by SSAB. Respondent argues that the use of the
average COP based on the most similar HM sales for the control numbers
with missing costs is reasonable and unbiased. Respondent asserts that
it accurately represents the use of BIA.
Department's Position: We disagree with petitioners. Our
methodology produces a reasonable surrogate for the missing values. We
did not resort to BIA because respondent did not have the opportunity
to correct the cost information.
Comment 22: Petitioners argue that the Department incorrectly
entered the percentage of the 1994 adjustment to TAB's sales quantities
in its margin calculation program.
Respondent asserts that this change would have zero impact on the
antidumping margin calculation.
Department's Position: We agree with petitioners that the
Department used the incorrect percentage of TAB's sales quantities in
the arm's-length test. We have corrected the error for the final
results. See Analysis Memorandum.
Comment 23: Petitioners argue that the Department's recoding of
certain plate characteristics did not have the desired effect because
the Department did not make a similar change to the control numbers.
Petitioners contend that the Department must recalculate the COP for
each of the newly-collapsed control numbers.
Respondent asserts that the net effect of this change is
negligible.
Department's Position: We agree with petitioners that COP should be
recalculated to account for the collapsing of certain characteristics.
We have made this adjustment to our computer programs for the final
results. See Analysis Memorandum.
Comment 24: Petitioners argue that the Department inadvertently
included certain duty and moving expenses in the incorrect location in
the computer program. Petitioners argue that since the statute requires
that these expenses be deducted from USP rather than added to FMV,
these expenses should be included in the calculation of total foreign
movement expenses. See 19 U.S.C. Sec. 1677 b(a)(6)(A). Petitioners also
contend that the Department did not deduct one duty expense for a
merchandise processing fee imposed by the U.S. Customs Service.
Petitioners argue that this should be included in the calculation of
foreign movement expenses.
Department's Position: We agree with petitioners and have corrected
these errors in our final results. See Analysis Memorandum.
Final Results of Review
As a result of our review, we have determined that the following
margin exists:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
SSAB........................... 2/4/93-7/31/94............ 8.28
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
shall issue appraisement instructions directly to the Customs Service.
Furthermore, the following deposit requirements shall be effective
upon publication of this notice of final results of administrative
review, for all shipments of the subject merchandise from Sweden that
are entered, or withdrawn from warehouse, for consumption on or after
the publication date, as provided for by section 751(a)(1) of the Act:
(1) the cash deposit rate for SSAB will be the rate established above;
(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 covered in this
review, or the original 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; and (4) the cash
deposit rate for all other manufacturers or exporters will continue to
be 24.23 percent, the all others rate established in the final
determination of the LTFV investigation. See Final Determination of
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate
From Sweden, 58 FR 37213 (July 9, 1993).
The deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice serves as a final 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 could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with section 353.34(d) of the Department's
regulations. Timely written notification of return/destruction of APO
materials or conversion to judicial protective order is hereby
requested. Failure to comply with the regulations and the terms of an
APO is a sanctionable violation.
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: April 1, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-8681 Filed 4-8-96; 8:45 am]
BILLING CODE 3510-DS-P