[Federal Register Volume 61, Number 194 (Friday, October 4, 1996)]
[Notices]
[Pages 51898-51901]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25534]



[[Page 51898]]

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DEPARTMENT OF COMMERCE
[A-401-805]


Certain Cut-to-Length Carbon Steel Plate From Sweden: 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 requests from interested parties, the 
Department of Commerce (the Department) is conducting an 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 August 
1, 1994 through July 31, 1995.
    We have preliminarily determined that sales have been made below 
normal value (NV) by the company subject to this review. If these 
preliminary results are adopted in our final results of these 
administrative review, we will instruct U.S. Customs to assess 
antidumping duties equal to the difference between the export price 
(EP) or constructed export price (CEP) and the NV.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments in this proceeding are requested 
to submit with each argument (1) a statement of the issue and (2) a 
brief summary of the argument.

EFFECTIVE DATE: October 4, 1996.

FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp, 
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:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA).

Background

    On August 19, 1993, the Department published in the Federal 
Register (58 FR 44162) the antidumping duty order on certain cut-to-
length carbon steel plate from Sweden. On August 31, 1995, 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, 
requested a review for SSAB Svenskt Stal AB (SSAB). On August 31, 1995, 
SSAB also requested a review for its exports of subject merchandise. On 
September 9, 1995, in accordance with 19 C.F.R. 353.22(c), we initiated 
the administrative review of this order for the period August 1, 1994, 
through July 31, 1995 (60 FR 46818). The Department is now conducting 
this administrative review in accordance with section 751(a) of the 
Act.
    SSAB's two affiliated steel producing companies, SSAB Oxelosund AB 
(SSOX) and SSAB Tunnplat AB (SSTP), produced the subject merchandise at 
three production facilities. The SSOX facility was the source of all 
subject merchandise sold in the US and the vast majority of potential 
matches.

Scope of Review

    Certain cut-to-length plate includes 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 non-rectangular 
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 period of review (POR) is August 1, 1994, through July 31, 
1995.

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the information provided by respondent, using standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
versions of the verification reports (Memorandum to the File from 
Elizabeth Patience and Lisa Raisner, September 25, 1996, the SSAB Sales 
Verification Report; Memorandum to the File from Elizabeth Patience and 
James Rice, September 25, 1996, the U.S. Sales Verification Report; 
Memorandum to the File from Elizabeth Patience and Alex Braier, 
September 25, 1996, the Downstream Sales Verification Report; 
Memorandum from Theresa Caherty and Elizabeth Patience, September 20, 
1996, the Cost Verification Report).

Facts Available

    On February 6, 1996, petitioners requested that the Department 
initiate a cost investigation of SSAB. The Department initiated a cost 
of production (COP) investigation of SSAB on March 15, 1996. In its 
initial Section D questionnaire, the Department specified that the COP 
and constructed value (CV) figures should be based on the actual costs 
incurred by the company during the POR and recorded in the normal 
accounting system. The initial questionnaire also specified that the 
submitted costs must reconcile to the actual costs reported in the cost 
accounting system used by the company to prepare its financial 
statements. Moreover, the initial questionnaire specified that if the 
company did not intend to use its normal accounting system and cost 
allocation methods to compute COP and CV, the company must contact the 
Department before preparing the response; SSAB did not contact us 
before it submitted the response on April 17, 1996. After reviewing 
SSAB's Section D response, we noted that the company did not use its 
normal accounting system to calculate COP and CV data. Specifically, we 
found that the response was based on a special system (``kalkyl'') 
which is not used in the respondent's normal accounting system. The 
kalkyl system is, in essence, a sales estimating tool. In

[[Page 51899]]

accordance with Section 782(d), on May 7, 1996 and June 14, 1996, the 
Department issued supplemental Section D questionnaires, which 
requested that SSAB provide a complete explanation of the kalkyl 
system. The supplemental questionnaires also requested worksheets that 
reconciled the submitted cost information to the financial accounting 
records. The supplemental Section D questionnaires further instructed 
the company to contact the Department if there was any uncertainty as 
to these instructions. On August 1, 1996, in advance of the scheduled 
COP/CV verification, the Department issued an agenda for the COP/CV 
verification. The agenda stated that the cost data submitted to the 
Department must be reconciled to the company's general ledger, cost 
accounting system, and financial statements. Additionally, the agenda 
indicated specific steps that would be followed at verification to 
reconcile the submitted cost data to the normal accounting books and 
records. The agenda also stated that if the company had any questions 
or if any of the verification procedures could not be performed, the 
officials should contact the Department. The company made minor 
inquiries about the supplemental questionnaire but did not discuss with 
the Department its use of the kalkyl system or its inability to perform 
the necessary reconciliation. In addition, they made no inquiries about 
the verification agenda.
    In accordance with Section 782(i), from August 12 through August 
16, 1996, the Department conducted a verification of the company's 
submitted cost data. SSOX was unable to reconcile its submitted cost 
data to its normal accounting books and records. At verification, we 
found that the system used to prepare the cost response was a special 
version of the kalkyl system. SSOX was unable to reconcile its normal 
kalkyl system to this ``modified'' kalkyl system. Further, SSOX was 
unable to reconcile its financial accounting system to its ``normal'' 
kalkyl system. In short, SSOX was unable to reconcile its submitted 
cost data to its normal accounting books and records and was thus 
unable to demonstrate that the submitted COP and CV data was based on 
the company's actual production experience. (For a more detailed 
explanation, see the public version of the Cost Verification Report.)
    Because the company was unable to reconcile the submitted costs to 
its normal accounting books and records, the verification could not 
proceed in an orderly and timely manner. Therefore, major areas of the 
response and significant items identified in the agenda were not tested 
or were incomplete. These areas included materials, labor, variable 
overhead, fixed overhead, and transactions with affiliated entities.
    Our verification testing and other evidence on the record regarding 
SSAB's use of a modified kalkyl system indicate that this system had a 
significant distortive impact on SSAB's reported COP and CV data. 
SSAB's failure to reconcile its submitted costs to its normal books and 
records prevents us from quantifying the magnitude of the distortions 
which exist in its submitted data. (For a more detailed explanation, 
see the public version of the Cost Verification Report.)
    Section 776(a)(2) of the Act provides that if an interested party 
or any other person--(A) withholds information that has been requested 
by the administering authority, (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to subsections (c)(1) and (e) of section 
782, (C) significantly impedes a proceeding under this title, or (D) 
provides such information but the information cannot be verified as 
provided in section 782(i), the administering authority * * * shall, 
subject to section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.
    Subsection (e) provides that the Department shall not decline to 
consider information that is submitted by an interested party and is 
necessary to the determination but does not meet all the applicable 
requirements established by the Department if--
    (1) the information is submitted by the deadline established for 
its submission,
    (2) the information can be verified,
    (3) the information is not so incomplete that it cannot serve as a 
reliable basis for reaching the applicable determination,
    (4) the interested party has demonstrated that it acted to the best 
of its ability in providing the information and meeting the 
requirements established by the Department with respect to the 
information, and
    (5) the information can be used without undue difficulties.
    SSAB's failure to reconcile its submitted costs to its financial 
accounting system constitutes a verification failure under Section 
776(a)(2)(D) of the Act. We must therefore consider whether the 
submitted cost data is useable under Section 782(e) of the Act.
    When examined in light of the requirements of section 782(e), the 
facts in this case indicate that SSAB's reported cost data is so 
thoroughly and systematically flawed as to render it unusable. First, 
for the reasons detailed above, the accuracy of SSAB's submitted cost 
data could not be verified, as required by section (e)(2). Second, 
because of the flaws in its cost data, (which are detailed in the Cost 
Verification Report) SSAB's submitted cost data ``cannot serve as a 
reliable basis for reaching the applicable determination'' under 
section (e)(3), nor can it ``be used without undue difficulties'' under 
section (e)(5). Third, in its failure to provide cost information that 
could be reconciled to its financial statements, and its failure to 
give the Department fair notice of this defect, SSAB has not acted to 
the ``best of its ability'' in meeting the Department's requirements, 
pursuant to section 782(e)(4) of the Act.
    The use of facts available is also subject to section 782(d) of the 
Act. Subsection 782(d) provides that if the Department ``determines 
that a response to a request for information * * * does not comply with 
the request, {the Department} shall promptly inform the person 
submitting the response of the nature of the deficiency and shall, to 
the extent practicable, provide that person with an opportunity to 
remedy or explain the deficiency in light of the time limits 
established for completion of investigations or reviews under this 
title.'' SSAB had ample opportunity to correct the defects in its 
submitted cost data. As indicated above, the deficiency in SSAB's 
submissions in reconciling its submitted costs to its accounting 
records was brought to its attention in a supplemental questionnaire 
and again during verification. SSAB, however, failed to modify its 
methodology to comply with the Department's instructions.
    For the foregoing reasons, the Department has determined that, 
insofar as SSAB's cost data could not be verified, section 776(a) of 
the Act requires the Department to use the facts available with respect 
to this data. However, the Department must also determine whether (1) 
the use of facts available for SSAB's cost data renders the rest of 
SSAB's submitted information (i.e., the sales data) unusable, and (2) 
whether the use of adverse information as facts available is warranted.
    First, we have determined that the required use of facts available 
for SSAB's cost data renders its sales data unusable. Because of the 
flawed nature of the cost data, home market sales

[[Page 51900]]

cannot be tested to determine whether they were made at prices above 
production cost. Insofar as the Department can only make price-to-price 
comparisons (normal value to export price) on those home market sales 
that are made above cost, the systematically flawed nature of the cost 
data makes these comparisons impossible. A second problem with using 
the home market sales data is the absence of reliable difference in 
merchandise figures (DIFMERs). Under section 773(a)(6)(C), when 
comparing normal value to export price or constructed export price, the 
Department is required to account for the effect of physical 
differences between the merchandise sold in each market. In this case, 
DIFMERs were required for substantially all United States and home 
market matches. Because DIFMER data is based on cost information from 
the section D response (which as discussed above could not be 
verified), the effect of physical differences could not be determined 
by the Department.
    In the absence of home market sales data (i.e., when the home 
market is viable but there are insufficient sales above COP to compare 
with U.S. sales), the Department would normally resort to the use of 
constructed value as normal value. However, the constructed value 
information reported by SSAB includes the discredited cost data. 
Therefore, the use of facts available for cost of production data 
precludes the use of the submitted constructed value information.
    Ranged public data submitted by other respondents was not an 
available alternative basis of normal value, nor was the petitioners' 
own cost data. The petitioners' cost data is not on the record in this 
review because their allegation of sales below cost of production was 
based on SSAB's data. Moreover, because SSAB is the only participant in 
this proceeding, we do not have ranged public data submitted by other 
respondents to use as facts available.
    The Department's prior practice has been to reject a respondent's 
submitted information in toto when flawed and unreliable cost data 
renders any price-to-price comparison impossible. The rationale for 
this policy is contained in Notice of Final Determination of Sales at 
Less than Fair Value: Grain-Oriented Electrical Steel From Italy, 59 FR 
33952, 33953-54 (July 1, 1994), (Electrical Steel From Italy), where 
the respondent failed the cost verification. The Department explained 
that the rejection of a respondent's questionnaire response in toto is 
appropriate and consistent with past practice in instances where a 
respondent failed to provide verifiable COP information:
    If the Department were to accept verified sales information when a 
respondent's cost information (a substantial part of the response) does 
not verify, respondents would be in a position to manipulate margin 
calculations by permitting the Department to verify only that 
information which the respondent wishes the Department to use in its 
margin calculation.
    That is the situation with SSAB, which has provided, in proper 
form, sales information which could be verified, but has not provided 
cost data which could be verified (see detailed discussion of 
verification testing in the Cost Verification Report). Although 
Electrical Steel from Italy was a case involving the Best Information 
Available (BIA) under the ``old'' statute, it is evidence of the 
Department's practice of regarding verified sales information as 
unusable when the corresponding cost data is so flawed that price-to-
price comparisons are rendered impossible. Cf. Certain Corrosion-
Resistant Carbon Steel Flat Products from Korea: Final Results of 
Antidumping Duty Administrative Review, 61 FR 18547, 18559 (April 26, 
1996) (the use of total BIA warranted where reliable price-to-price 
comparisons are not possible).
    Accordingly, we find that there is no reasonable basis for 
determining normal value for SSAB in this review. As a result, we could 
not use SSAB's U.S. sales data in determining an antidumping margin. 
The Department, therefore, had no choice but to resort to a total facts 
available methodology.
    With regard to which total facts available are appropriate, section 
776(b) provides that adverse inferences may be used against a party 
that has failed to cooperate by not acting to the best of its ability 
to comply with requests for information. See also SAA at 870. 
Specifically, section 776(b) of the Act provides that, where the 
Department ``finds that an interested party has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information from [the Department] * * * [the Department] may use an 
inference that is adverse to the interests of that party in selecting 
from among the facts otherwise available.''
    As discussed above, SSAB failed to reconcile the reported costs to 
its financial accounting records. Moreover, SSAB made no effort to 
provide the Department with notice of this defect. We have thus 
determined that SSAB has not acted to the best of its ability to comply 
with our requests for information. Accordingly, consistent with section 
776(b) of the Act, we have applied total adverse facts available.
    Section 776(b) authorizes the Department to use as adverse facts 
available information derived from the petition, the final 
determination, a previous administrative review, or other information 
placed on the record. Section 776(c) provides that the Department 
shall, to the extent practicable, corroborate ``secondary information'' 
by reviewing independent sources reasonably at its disposal. The SAA, 
at 870, makes it clear that ``secondary information'' includes 
information from the petition in the less-than-fair-value (LTFV) 
investigation and information from a previous Section 751 review of the 
subject merchandise. The SAA also provides that ``corroborate''' means 
simply that the Department will satisfy itself that the secondary 
information to be used has probative value. Id.
    For our total adverse FA margin, we considered both the highest 
transaction margin from the first administrative review, a review which 
included only SSAB, and the BIA rate from the LTFV investigation, which 
was based on an average of petition rates. We chose the latter because, 
while SSAB did not act to the best of its ability in responding to our 
cost information requests, it did cooperate with respect to certain 
aspects of this review.
    To corroborate the LTFV BIA rate of 24.23 percent, we examined the 
basis of the rates contained in the petition. The US price in the 
petition was based on actual prices from invoices, quotes to U.S. 
customers, and IM-145 import statistics. Additionally, the foreign 
market value was based on actual price quotations to home market 
customers, home market price lists and published reports of domestic 
prices. Home market price quotations were obtained through a market 
research report. See, Initiation of Antidumping Duty Investigations and 
Postponement of Preliminary Determinations: Certain Hot-Rolled Carbon 
Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, 
Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain 
Cut-to-Length Carbon Steel Plate From Various Countries, 57 FR 33488 
(July 29, 1992). As we stated in the Final Determination of Sales at 
LTFV: Certain Pasta From Turkey, 61 FR 30309 (June 14, 1996), export 
prices which are based on U.S. import statistics are considered 
corroborated. In addition, price lists and published reports of 
domestic prices which support the petition margin are independent 
sources. With regard to

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market research reports, we have accepted these as corroborative in 
light of the Department's practice of confirming the accuracy of such 
reports prior to initiation. See Pasta From Turkey at 30312. Thus, the 
LTFV BIA rate is corroborated.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the dumping 
margin (in percent) for the period August 1, 1994, through July 31, 
1995 to be as follows:

------------------------------------------------------------------------
                                                                 Margin 
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
SSAB.........................................................      24.23
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of the date of publication of this 
notice. Any hearing, if requested, will be held 44 days after the date 
of publication or the first business day thereafter. Case briefs and/or 
other written comments from interested parties may be submitted not 
later than 30 days after the date of publication. Rebuttal briefs and 
rebuttals to written comments, limited to issues raised in those 
comments, may be filed not later than 37 days after the date of 
publication of this notice. The Department will publish the final 
results of this administrative review, including its analysis of issues 
raised in any written comments or at a hearing, not later than 180 days 
after the date of publication of this notice.
    Upon issuance of the final results of review, the Department shall 
determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of these administrative review, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for the reviewed 
company will be the rate established in the final results of this 
review; (2) if the exporter is not a firm covered in this review, a 
prior review, or the original less-than-fair-value (LTFV) 
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 (3) the cash deposit rate for all other 
manufacturers or exporters will continue to be the ``all others'' rate 
made effective by the final results of the 1993-1994 administrative 
review of this order. (See, Certain Cut-to-Length Carbon Steel Plate 
From Sweden; Final Results of Antidumping Duty Administrative Review, 
61 FR 15772 (April 9, 1996).) As noted in these final results, this 
rate is the ``all others'' rate from the relevant LTFV investigation. 
(See, Final Determination, 58 FR 37213 (July 9, 1993).) These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.
    This notice also 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 could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22(c)(5).

    Dated: September 25, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25534 Filed 10-3-96; 8:45 am]
BILLING CODE 3510-DS-P