[Federal Register Volume 62, Number 32 (Tuesday, February 18, 1997)]
[Notices]
[Pages 7206-7215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3913]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-427-811]
Certain Stainless Steel Wire Rods From France: Final Results of
Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
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[[Page 7207]]
SUMMARY: On October 10, 1996, the Department of Commerce (the
Department) published the preliminary results of the second
administrative review of the antidumping duty order on certain
stainless steel wire rods from France. This review covers Imphy S.A.,
and Ugine-Savoie, two manufacturers/exporters of the subject
merchandise to the United States. The period of review (POR) is January
1, 1995, through December 31, 1995. 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: February 18, 1997.
FOR FURTHER INFORMATION CONTACT: Stephen Jacques, AD/CVD Enforcement
Group III, Office 9, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-
3434.
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act), by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
current regulations, as amended by the interim regulations published in
the Federal Register on May 11, 1995 (60 FR 25130).
Background
On October 10, 1996, the Department published in the Federal
Register the preliminary results of the second administrative review of
the antidumping duty order on certain stainless steel wire rods from
France (61 FR 53199, October 10, 1996). The Department has now
completed this administrative review in accordance with section 751 of
the Act.
Scope of the Review
The products covered by this administrative review are certain
stainless steel wire rods (SSWR), products which are hot-rolled or hot-
rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or
other shapes, in coils. SSWR are made of alloy steels containing, by
weight, 1.2 percent or less of carbon and 10.5 percent or more of
chromium, with or without other elements. These products are only
manufactured by hot-rolling, are normally sold in coiled form, and are
of solid cross section. The majority of SSWR sold in the United States
is round in cross-sectional shape, annealed, and pickled. The most
common size is 5.5 millimeters in diameter.
The SSWR subject to this review is currently classifiable under
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030,
7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and
7221.00.0080 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheadings are provided for convenience
and Customs purposes, our written description of the scope of the order
is dispositive.
Verification
As provided in section 782(i) of the Act, we verified information
provided by the respondent by using standard verification procedures,
including onsite 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.
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received comments and rebuttal comments from
Imphy S.A. and Ugine-Savoie, manufacturers/exporters of the subject
merchandise (respondents), and from Al Tech Specialty Steel Corp.,
Armco Stainless & Alloy Products, Carpenter Technology Corp., Republic
Engineered Steels, Talley Metals Technology, Inc., and United
Steelworkers of America, AFL-CIO/CLC (petitioners).
Comment 1: Respondents argue that the Department incorrectly set
the payment date for every U.S. sale to the projected final results
date instead of only those sales with unreported payment dates.
Petitioners contend that respondents' assertion that the Department
incorrectly set the payment dates for all U.S. sales is wrong.
Petitioners argue that the Department's computer program correctly used
the projected date of the final results for only those U.S. sales with
unreported payment dates and that the Department should reject
respondents' proposed computer code correction.
Petitioners further note that the sample computer printout from the
Department's preliminary margin calculations indicates that the date of
payment for all ten sample sales remained the same after the execution
of the programming language that established a payment date for those
sales with unreported payment dates. Petitioners assert that a review
of the Department's sample sales in the preliminary results
demonstrates that the Department did not reset the payment date and
therefore there is no need for the Department to revise the computer
code as recommended by respondents.
Department's Position: We agree with petitioners. In the
preliminary results, the computer program correctly set the date of
payment to the projected final results date only for those sales with
unreported payment dates. Therefore, for the final results, we have
made no changes to the computer program.
Comment 2: Respondents allege that the Department's formula to
calculate U.S. credit expense for unpaid sales had two errors. First,
respondents contend that the formula used an unadjusted gross unit
price instead of being based on the gross unit price less discounts and
billing adjustments plus freight revenue. Second, respondents assert
that the Department used the home market interest rate rather than the
appropriate U.S. short-term rate.
Petitioners agree with respondents that modifications of the
computer program are necessary to adjust gross price and to use the
correct rate of interest in the credit calculation.
Department's Position: We agree and have corrected the calculation
of credit expenses for the final results.
Comment 3: Respondents contend that the price paid by Imphy to an
affiliated supplier for remelting services is an arm's-length price and
should not have been adjusted by the Department. Respondents assert
that the price Imphy paid for subcontracted remelting services is a
negotiated, arm's-length price based on the affiliate's budgeted cost
for the remelting services that included both fixed and variable costs.
Respondents argue that this subcontracting arrangement is fair and
benefits both Imphy and the affiliated party. In support of their
position, respondents state that the arrangement allowed the affiliated
party to make use of its excess remelting capacity, and thus to lower
its overall cost of operations. Respondents also assert that the
arrangement benefits Imphy which has the ability to efficiently produce
products requiring the remelting process.
Respondents note that the Department disregarded the actual price
charged by the affiliated party on the ground that the price did not
reflect variances from
[[Page 7208]]
budgeted costs or SG&A expenses. However, respondents assert that
variances can go in either direction and do not affect the arm's-length
nature of the price. In addition, respondents claim that arm's-length
prices do not necessarily have to be at or above cost of production for
purposes of section 773(f)(2). Consequently, respondents assert that
there is no justification for the Department having adjusted the price.
Also, respondents contend that the remelting services did not represent
a ``major input'' for which cost information is pertinent pursuant to
section 773(f)(3). Accordingly, respondents argue that the Department
should retract its adjustment to the price Imphy paid the affiliated
party and, instead, utilize the verified, actual price paid for such
services in computing cost of manufacture.
Petitioners disagree with respondents and contend that
respondents'' arguments are similar to those submitted by a respondent
in a Bearings review that were rejected by the Department. See Final
Results of Antidumping Duty Administrative Reviews and Revocation in
Part of an Antidumping Finding: 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, 61 FR 57629, 57643-4 (November 7, 1996)(Bearings).
Petitioners contend that there is no statutory requirement that the
remelting cost be a ``major input'' to the production of subject
merchandise for the Department to disregard a transfer price between
affiliated parties that is below cost. Petitioners note that section
773(f)(2) of the amended statute gives the Department authority to
disregard ``any element of value'' in transactions between affiliated
parties that does not reflect the market value of the merchandise.
Petitioners note that Imphy had no remelter other than its
affiliated supplier to use as a basis for establishing market value.
Accordingly, the Department examined the cost of the remelting rather
than the transfer price. Petitioners contend that the Department's
practice in this regard was in accordance with Section 773(f)(2) and
consistent with the past practice in the Bearings review.
Petitioners also disagree with respondents'' contention that cost
variances can go in either direction and do not affect the arm's-length
nature of the price. Petitioners argue that Imphy had relied on
estimated costs that understated actual costs. Consequently,
petitioners assert that the addition of the cost variances permitted
the Department to account for all costs incurred.
Department's Position: We agree with petitioners. Pursuant to
section 773(f)(2), the Department, in general, determines whether the
affiliated party prices were below normal market value. We do not use
transfer prices between related companies if such prices do not fairly
reflect the amount usually reflected in the sales of the merchandise
under consideration.
As we discussed in the Bearings case, related party parts or inputs
do not need to be a ``major input'' for the Department to examine
whether they are obtained at a transfer price which reflects their
normal market value. Two separate sections of the Act allow the
Department to disregard transfer prices for transactions between
affiliated parties: section 773(f)(2) allows us to disregard such
transactions if the transfer prices for ``any element of value'' do not
reflect their normal market value and section 773(f)(3) allows the
Department to disregard such transactions if the transfer prices for
``major inputs'' are below their cost of production.
In this review, the affiliated party did not sell remelting
services to unaffiliated customers, nor did Imphy purchase remelting
services from any unaffiliated party during the POR. Consequently,
there were no arm's-length prices to serve as a basis of comparison. In
such situations, ``Commerce generally use[s] the cost of the components
as representative of the value reflected in the market under
consideration.'' (See Bearings, 61 FR at 57644; and NSK Ltd. v. United
States, 910 F. Supp. 663, 669 (CIT 1995)). Therefore, in accordance
with our standard practice, we have based the value of the remelting
services on cost, including variances and SG&A, for the final results.
Comment 4: Respondents allege that the Department improperly
overstated the adjustment to cost of manufacture for products involving
remelting services. Respondents note that in its preliminary results,
the Department stated that it intended to increase the cost of
manufacture for remelting services to include the sum of the affiliated
party's cost variance, activity variance and SG&A that was not included
in the price that Imphy paid to the affiliated party. Respondents
contend that the Department adjusted the total cost of manufacture for
those Imphy products utilizing the remelting services, instead of
adjusting only the manufacturing cost. Respondents argue that the
Department incorrectly increased all of the materials, labor and
overhead costs for the product, rather than adjusting the cost
attributable to the remelting services obtained from the related party.
Respondents argue that the Department should correct its calculation
error by applying an adjustment factor.
Petitioners agree with respondents that the Department overstated
the adjustment to cost of manufacture for remelting services.
Department's Position: We agree with respondents and petitioners.
We have applied the adjustment factor for remelting cost variances and
SG&A to the cost of remelting only and not to the total cost of
manufacture.
Comment 5: Respondents allege that the Department should have made
a circumstance-of-sale adjustment to constructed value (CV) for home
market credit expense. Respondents contend that the Department should
recognize the propriety of subtracting home market credit expense from
CV as a circumstance-of-sale (COS) adjustment, as the Department has
previously done (citing Notice of Final Determination of Sales at Less
Than Fair Value: Large Newspaper Printing Presses and Components
Thereof, Whether Assembled or Unassembled, From Japan, 61 FR 38139,
38147 (July 23, 1996) (Newspaper Printing Presses)).
Respondents argue that the Department's general methodology
regarding the determination of normal value and COS adjustments
recognizes that home market price covers all costs and expenses,
including the imputed home market credit expense. Respondents assert
that imputed credit expenses are likewise included in determining CV
and an adjustment should be made. Respondents contend that the profit
included in the CV calculation represents the difference between the
home market prices and production and SG&A expenses included in CV.
They assert that since home market credit expense is included in home
market price, it is imbedded in the calculated CV through a combination
of the interest expense and home market profit. Therefore, respondents
argue that to ensure an apples-to-apples comparison, the Department
must subtract home market credit expense from CV as a COS adjustment.
Petitioners note that respondents' arguments concerning a COS
adjustment to CV for imputed home market credit expense were rejected
by the Department in the amended final results of the first
administrative review (See Amended Final Results of Certain Stainless
Steel Wire Rods from France,
[[Page 7209]]
61 FR 58523, 58524 (November 15, 1996)).
Petitioners note further that in its amended final, the Department
cited Final Determination of Sales at Less Than Fair Value: Certain
Pasta from Italy, 61 FR 30326, 30361 (June 14, 1996) which states that
the Department is required to calculate selling, general and
administrative costs, including interest expenses, based upon the
actual experience of the company. Petitioners assert that because the
interest expense for CV now reflects actual amounts incurred and not
imputed credit expense, a COS adjustment for home market imputed credit
is inappropriate. Petitioners contend that in Newspaper Printing
Presses, the Department also stated that it can only account for actual
credit expenses in CV and that ``imputed credit is, by its nature, not
an actual expense.''
Petitioners also disagree with respondents' arguments that imputed
credit expenses are ``imbedded in the calculated CV'' and therefore
subject to adjustment. Petitioners assert that this analysis is not
valid, as it attempts to equate the expenses incurred in production of
the product with the final price of the product by assuming the profit
component necessarily reflects opportunity costs. Petitioners contend
that respondents' argument would result in the assumption that any
component that did not reflect an actual cost is somehow imbedded in
the profit figure and, hence, require a COS adjustment. Petitioners
argue that such a result would be inconsistent with the express
statutory language limiting expenses included in CV to ``actual''
expenses (See 19 U.S.C. 1677b(e)).
Department's Position: We agree with respondents. As we stated in
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, Germany, Italy et al.; Final Results of
Antidumping Duty Administrative Reviews, 62 FR 2081, 2119 (January 15,
1997), consistent with section 773(a)(8) of the Act, an adjustment to
NV is appropriate when CV is the basis for NV. The Department uses
imputed credit expenses to measure the effect of specific respondent
selling practices in the United States and the comparison market.
Therefore, for these final results, we have deducted imputed credit
expenses as a COS adjustment from CV in the calculation of NV. To the
extent that the amended final of Wire Rod from France (See, 61 FR
58523, 58524 (November 15, 1996)) describes the Department's
methodology differently, it was in error.
Comment 6: Respondents contend that the Department's product
concordance inadvertently matched to CV those U.S. sales that had a
entry date outside the POR. Respondents request the Department modify
the model match program to correct this error.
Petitioners agree with respondents and contend the error should be
corrected for the final results.
Department's Position: We agree and have corrected the error for
the final results.
Comment 7: Respondents contend that the Department should clarify
language regarding its duty assessment methodology. They assert that
the methodology stated in the preliminary results is consistent with
the assessment methodology set forth in the Department's proposed
regulations and preamble, as well with the duty assessment methodology
stated in Final Results of Antidumping Duty Administrative Reviews and
Revocation in Part of an Antidumping Finding: 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, 61 FR 57629, 57649 (November 7, 1996);
however, respondents claim that the language in the Department's
preliminary results is unclear.
Petitioners contend that the Department's assessment methodology
must ensure that the full amount of dumping duties is collected.
Petitioners claim that the Department should follow the duty assessment
language in the preliminary results of this review and assess a
weighted-average ad valorem margin calculated by dividing the total
dumping duties due by the total EP and CEP values calculated by the
Department.
Department's Position: The Department will follow the duty
assessment language in the preliminary results. Therefore, the
Department shall determine, and the U.S. Customs Service shall assess,
antidumping duties on all appropriate entries. We have calculated an
importer-specific ad valorem duty assessment rate based on the ratio of
the total amount of antidumping duties calculated for the examined
sales made during the POR to the total customs value of the sales used
to calculate those duties. This rate will be assessed uniformly on all
entries of that particular importer made during the POR. As noted in
the preliminary results, this is equivalent to dividing the total
amount of antidumping duties, which are calculated by taking the
difference between statutory NV and statutory EP or CEP, by the total
statutory EP or CEP value of the sales compared, and adjusting the
result by the average difference between EP or CEP and customs value
for all merchandise examined during the POR.
Comment 8: Respondents allege that the Department's computer
program erroneously set at zero the profit for any sale with a negative
profit, regardless of whether the sale passed the Department's below-
cost test. They assert that pursuant to section 773(b)(1), individual
sales of a particular product that are made at a loss are outside the
ordinary course of trade only if 20 percent or more of the sales of
that product are at prices below the cost of production. Respondents
argue that unless 20 percent or more of the sales of the product were
made below cost, all sales of the product, including those sold at a
loss, are by definition in the ordinary course of trade. Respondents
further contend that section 773(e)(2)(A) provides that the calculation
of CV profit be based on the actual amount of profit realized on all
sales in the ordinary course of trade of the foreign like product. They
allege that by excluding the amount of the losses on certain sales in
the ordinary course of trade, the Department overstated CV profit.
Department's Position: We agree with respondents that this is a
ministerial error and have revised the final results in order to
calculate CV profit on the actual amount of profit on all sales in the
ordinary course of trade.
Comment 9: Respondents allege that in the preliminary results, the
Department weight-averaged the profit percentage calculated on each
individual sale, rather than calculating an aggregate profit and COP
amount and then calculating the percentage. Respondents allege that
this percentage methodology is a departure from the Department's
customary practice and artificially inflated respondents' CV profit
rate. Respondents argue that the Department has recognized that
calculating the CV profit ratio by first computing a profit percentage
for each home market sales transaction, and then weight-averaging the
percentages by quantity, introduces serious distortion into the
calculations (see, Final Results of Antidumping Duty Administrative
Review: Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from
the United Kingdom, 61 FR 56514 (November 1, 1996)). Respondents
request that the Department make the same correction in this review.
Department's Position: We agree with respondents. In accordance
with our position outlined in Lead and Bismuth
[[Page 7210]]
Carbon Steel Products, we have revised our computer programming
language for the final results.
Comment 10: Petitioners assert that the Department should revise
its CEP calculation by deducting all direct and indirect selling
expenses that relate to U.S. sales as required by statute (see 19
U.S.C. 1677a(d)(1) (1996)). Petitioners claim the statutory language is
mandatory, allowing no room for discretion in agency interpretation as
to which expenses may or may not be deducted.
Petitioners claim that the Department's conclusion that the URAA
changed prior law with respect to the calculation of CEP is not
consistent with the statute or the SAA (see, 19 U.S.C 1677d(1)). They
argue that the Department must deduct all indirect selling expenses
incurred by the foreign producer or exporter in its home country that
related to U.S. sales (see, Silver Reed America, Inc. v. United States,
12 CIT 250, 683 F. Supp. 1393, 1397 (1988).
Petitioners further contend that the URAA did not limit the types
of deductions to CEP from prior law, but rather provided a more precise
definition without changing the calculation of export price or CEP.
They note that the SAA states ``[t]he statute is intended to merely
provide a more precise definition and not change the calculation of
export price or constructed export price'' (see, SAA at 824).
Petitioners contend that even if the SAA suggested a change in agency
practice, it cannot override the plain statutory language requiring the
deduction of all selling expenses (see, Chevron U.S.A., Inc. v.
National Resources Defense Council, Inc., 467 U.S. 837, 843 (1984)).
Petitioners argue that even if the Department determines that all
indirect selling expenses relating to U.S. sales are no longer
deductible from CEP, at a minimum it must deduct inventory carrying
costs incurred after importation in calculating CEP, as these costs are
necessarily attributable to U.S. sales. In support of their position,
petitioners cite Silver Reed and Notice of Final Determination of Sales
at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326, 30352
(June 14, 1996).
Respondents contend that petitioners have submitted the same
argument concerning deduction of indirect selling expenses in the first
administrative review and that the Department properly rejected their
contention. They argue that there is nothing new in the law or the
facts of this review that should cause the Department to reconsider its
decision. Respondents assert that these indirect expenses should not be
deducted from CEP as they do not represent expenses ``associated with
economic activities occurring the United States'' (see, SAA at 153).
Respondents state the Department's approach in this review is
consistent with its practice in other cases (see, Calcium Aluminate
Flux From France; Preliminary Results of Antidumping Duty
Administrative Review, 61 FR 40396, 40397 (August 2, 1996) and
Preliminary Results of Antidumping Duty Administrative Reviews of
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France, Germany, Italy, Japan, Romania, Singapore,
Thailand and the United Kingdom, 61 FR 35713, 35716 (July 8, 1996).
They also contend that the Department's decision is consistent with the
Proposed Regulations as the commentary of the Proposed Regulations
makes a clear distinction between expenses associated with selling to
the affiliated reseller in the United States and those expenses
attributable to the sale made to the affiliated reseller's unaffiliated
customer. Respondents claim that the expenses at issue are clearly
expenses associated with selling to the affiliated reseller in the
United States and thus, are not properly deducted in the calculation of
CEP.
Finally, respondents disagree with petitioners' request to deduct,
at a minimum, inventory carrying costs incurred after import.
Respondents assert that these expenses relate to the respondents' U.S.
affiliate and not to the unaffiliated U.S. customer.
Department's Position: We disagree with petitioners. As we stated
in the final results of the first administrative review of this order
(see Certain Stainless Steel Wire Rods from France: Final Results of
Antidumping Duty Administrative Review, 61 FR 47874, 47882 (September
11, 1996) (Wire Rod from France)), the Department does not deduct
indirect expenses incurred in selling to the affiliated U.S. importer
under section 772(d) of the Act. See Notice of Final Determination of
Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 30326,
30352 (June 14, 1996). As stated clearly in the SAA, section 772(d) of
the Act is intended to provide for the deduction of expenses associated
with economic activities occurring in the United States. See SAA at
823; see also, GATT 1994 Antidumping Agreement, article 2.4. However,
some of the respondents' indirect expenses incurred in the home market
are actually associated with economic activities in the United States.
Specifically, liability insurance purchased in France is associated
with U.S. economic activities to the extent it covers subject
merchandise while warehoused in the United States. On the other hand,
some indirect selling expenses involved in this case relate solely to
the sale to the affiliated importer. For example, the inventory
carrying costs incurred prior to exportation relate solely to the sale
to the affiliated importer. Further, unlike the situation in Pasta from
Italy, the inventory carrying costs in the present case do not relate
exclusively to the product sold to the unaffiliated purchaser in the
Untied States as verified by the Department (cf. Pasta from Italy, 61
FR at 30352). We agree with petitioners that the inventory carrying
costs incurred after import relate to respondents' economic activity in
the United States and are properly deducted as indirect selling
expenses.
Comment 11: Petitioners contend that the Department should begin
its level-of-trade analysis with the starting price to the unaffiliated
purchaser, as required by statute (See 19 U.S.C. 1677a(b)). Petitioners
argue that comparison of an adjusted CEP to an unadjusted normal value
in an apples-to-oranges comparison and is inconsistent with past agency
practice (See Porcelain-on-Steel Cooking Ware from Mexico, 58 FR 43227,
43330 (August 16, 1993) and AOC International, Inc. v. United States,
721 F. Supp. 314, 317 (1989), citing Smith-Corona Group v. United
States, 713 F.2d 1568, 1572 (Fed. Cir. 1983), cert. denied, 465 U.S.
1022 (1984)).
Petitioners argue that use of the starting CEP price as the basis
of the level-of-trade comparison would result in a finding of no
differences in levels of trade between CEP and normal value (NV) sales
and, thus, no basis for a CEP offset. Thus, they contend that by
defining the CEP level of trade based on an adjusted price rather than
the starting price, the Department has created a level of trade for CEP
sales that is different from the EP sales and the NV sales, even though
in commercial reality the level of trade of all these sales is the
same.
Respondents argue that petitioners challenged the Department's
decision to grant a CEP offset in the first administrative review and
that the Department rejected their argument. Respondents contend that
the Department's decision in this review is consistent with the first
administrative review as well as other reviews (See Tapered Rolling
Bearings, 61 FR 57391, 57395; Large Newspaper Printing Presses, 61 FR
38139, 38143; Aramid
[[Page 7211]]
Fiber Formed of Poly Para-Phenylene Terephthalamide from the
Netherlands: Preliminary Results of Antidumping Duty Administrative
Review, 61 FR 15766, 15768 (April 9, 1996)). Respondents claim that
there is nothing new in the law or the facts of the second
administrative review to alter the Department's decision from those in
the preliminary results.
Department's Position: We disagree with petitioners' contention
that the Department should base the level of trade on the starting
price of CEP sales. As the Department has previously discussed (See
Wire Rod from France, and Antifriction Bearings (Other Than Tapered
Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan,
Romania, Singapore, Thailand and the United Kingdom; Preliminary
Results of Antidumping Duty Administrative Reviews, 61 FR 35713 (July
8, 1996); Proposed Regulations, 61 FR at 7347), the Department believes
that this position is not supported by the SAA, and that it is neither
reasonable nor logical. The statute requires that comparisons between
NV and EP or CEP are to be made, to the extent practicable, at the same
level of trade. Section 773(a)(1)(B) of the Act.
In CEP cases, the starting price is not the basis for comparison.
The comparison is based on the CEP, which is net of the CEP deductions.
Thus, it is the level of trade of that comparison price (the CEP) that
is relevant. If the starting price is used to determine the level of
trade for CEP sales, the Department's ability to make meaningful
comparisons at the same level of trade (or appropriate adjustments for
differences in levels of trade) would be severely undermined in cases
involving CEP sales. Using the starting price to determine the level of
trade of both EP and CEP sales would result in a finding of different
levels of trade for an EP and a CEP sale adjusted to a price that
reflected the same selling functions. Moreover, using the adjusted CEP
for establishing the level of trade is consistent with the purposes of
the CEP adjustment; to determine what the sales price would have been
had the transaction been an export price sale. See Proposed Regulations
at 61 FR at 7347. Accordingly, we have followed our practice in Wire
Rod from France, which specifies that the level of trade analyzed for
EP sales is that of the starting price, and for CEP sales it is the
level of trade of the price after the deduction of U.S. selling
expenses and profit.
Comment 12: Petitioners assert that the Department should calculate
dumping margins based on all sales made during the POR, regardless of
when entries were made (before or after suspension of liquidation).
Petitioners assert that this practice has been sustained by the Court
of International Trade (see, The Ad Hoc Committee of Southern
California Producers of Gray Portland Cement v. United States, 914 F.
Supp. 535, 544 (1995) and NSK Ltd. v. United States, 825 F. Supp. 315,
320 (1993)). They further state that although the Department may not
assess duties on CEP sales that entered prior to suspension of
liquidation, the Gray Portland Cement case allows the Department to use
those sales in the calculation of dumping margins.
Petitioners contend that the Department's preliminary decision to
exclude from its analysis sales made during the POR of merchandise
entered into the U.S. prior to suspension of liquidation has granted
respondents a license to dump merchandise following issuance of the
antidumping duty order in this case.
Petitioners argue that in the hearing of the previous review,
counsel for respondents admitted that the respondents had restructured
their business in an effort to avoid dumping liability. Petitioners
assert that by linking sales with entries, respondents excluded a large
part of the high margin sales from the dumping calculation.
Petitioners assert that there is an issue of potential price
manipulation as their analysis reveals that respondents inconsistently
priced CEP sales that entered the U.S. prior to suspension of
liquidation when compared to POR sales. Specifically, they allege that
gross unit prices differ in a number of instances for identical CEP
products sold on the same day to the same customer off the same
invoice. Petitioners argue that these sales from the same commercial
invoice would constitute a package price to the customer. They allege
that the respondents should not be permitted to avoid a finding of
dumping by inconsistent pricing.
Further, petitioners state that their analysis indicates that the
difference in the net prices cannot be explained by the difference in
inventory carrying costs between the products.
Lastly, petitioners contend that given the evidence of differing
prices on the same invoice for products sold in the POR, some of which
entered both prior and after suspension of liquidation, the Department
should reconsider its decision to exclude those sales that entered
prior to suspension of liquidation. If the Department decides to
exclude those sales, petitioners alternatively request that the
Department average the two gross unit prices to determine the actual
price the customer paid for the merchandise.
Respondents agree with the Department's decision to exclude
merchandise proven to have entered the U.S. prior to suspension of
liquidation. Respondents argue that the decision is legally correct.
They further assert that the arguments raised by petitioners are
identical to the arguments made in the first administrative review
which the Department rejected. Respondents contend that there is no
need for the Department to reconsider its decision.
Respondents also state that petitioners' allegations of
inconsistent pricing and sales manipulation are devoid of substance,
involve distorted analysis and ignore the verified facts. Respondents
claim that petitioners' claims are flawed as they are based on three
faulty assumptions: first, petitioners assume the Control Number
(CONNUM) represents the product as sold in the U.S., whereas it
designates the product as imported; second, petitioners are comparing
different line items of an invoice and therefore comparing sales of
different products; and third, petitioners performed a misleading
comparison of net, rather than gross, prices.
Respondents note that the Department examined and rejected this
issue in the first administrative review. Also, respondents assert that
the Department examined invoices mentioned in petitioners' case brief
and found no validity to petitioners' claim.
Department's Position: We agree with respondents. As we stated in
Wire Rod from France and the preliminary results of this review, the
exclusion of sales of merchandise entered prior to suspension of
liquidation requires that a respondent must demonstrate, to the
satisfaction of the Department, the linkage between the entry and the
sale. (See, e.g., Certain Corrosion-Resistant Carbon Steel Flat
Products from Australia; Preliminary Results of Antidumping Duty
Administrative Review, 60 FR 42507 (1995) (the Department did not
exclude certain sales because the respondent was unable to link the
sales to specific pre-suspension entries)). This stringent requirement,
coupled with the provisions on critical circumstances, eliminates any
significant risk of using pre-suspension entries to manipulate or
distort margins following the issuance of an order.
We disagree with petitioners' contention that linkage would
encourage dumping as most producers would not have the necessary
linkage information that would meet the
[[Page 7212]]
Department's requirements in a verification. In fact, the necessary
linkage has been demonstrated in only one other case. (See High-
Tenacity Rayon Filament Yarn, Preliminary Results of Antidumping Duty
Administrative Review, 59 FR 32181 (June 22, 1994)).
We examined the issue of potential manipulation of prices and
dumping margins throughout the review, including at our verifications
of respondents. We found no evidence of ``paired sales,'' where the
price of the sale that entered prior to suspension of liquidation was
priced lower than a simultaneous sale of the same merchandise to the
same customer. After examining the issue, we found no evidence that
respondents were engaged in price manipulation with sales of pre-POR
entries (see Final Analysis Memorandum). In the absence of price
manipulation, and for the reasons discussed in Wire Rod from France, we
have excluded sales of merchandise which entered the United States
prior to the suspension of liquidation from the dumping margin
calculation.
Comment 13: Petitioners argue that the Department should treat
post-sale warehousing incurred by MAC as a direct selling expense.
Petitioners state that respondents admitted that MAC incurs post-sale
warehousing expenses in connection with staged-delivery sales, but
failed to identify these costs as direct U.S. selling expenses.
Petitioners contend that it is Departmental practice to treat post-sale
warehousing expenses as direct selling expenses that must be deducted
from U.S. price.
Respondents argue that petitioners' position that post-sale
warehousing should have been reported as a direct selling expense is
incorrect. Respondents state that they correctly reported their
warehousing expenses according to the Department's questionnaire
instructions. Respondents contend that the warehousing expenses do not
fit the Department's criteria for direct selling expenses and are
properly classified as indirect selling expenses.
Department's Position: We disagree with both petitioner and
respondent, since warehousing is not a selling expense, either direct
or indirect. Rather it is a movement expense and deducted from the
starting price under section 772(c)(2)(A), as confirmed by the
Statement of Administrative Action (SAA) (see H.R. Doc. 316, Vol. 1,
103d Cong., 2d sess. (1994) at 823).
Comment 14: Petitioners contend that the Department should treat
costs incurred by Techalloy with respect to this antidumping proceeding
as direct U.S. selling expenses. Petitioners argue that these were
actual costs for sales of subject merchandise imported during the POR
and that respondents did not include these costs in the direct or
indirect selling expenses or in the valued-added general and
administrative expenses for products that were further manufactured by
Techalloy.
Respondents argue that there is no basis for the Department to
treat administrative costs connected to an administrative review as
direct selling expenses. Respondents contend that it is the
Department's practice to exclude expenses related to participation in
an antidumping proceeding from the margin calculation, and not treat
them as a selling expense (citing, Color Television Receivers From the
Republic of Korea: Final Results of Administrative Review of
Antidumping Review of Antidumping Duty Order, 58 FR 50333, 50336
(September 27, 1993); Antifriction Bearings (Other Than Tapered Roller
Bearings) and Parts Thereof From France: et al.: Final Results of
Antidumping Duty Administrative Reviews, 57 FR 28360, 28413 (June 24
1992); Television Receivers, Monochrome and Color, From Japan: Final
Results of Antidumping Duty Administrative Review, 56 FR 38417, 38418
(August 13, 1991)).
Respondents also assert that the Department's practice has been
upheld by the Court of International Trade (citing Federal Mogul Corp.
v. United States, 813 F. Supp. 856 (Ct. Int'l Trade 1993) (``Federal-
Mogul''); Zenith Electronics Corp. v. United States, 770 F. Supp. 648
(Ct. Int'l Trade 1991); Daewoo Electronics Co. Ltd. v. United States,
712 F. Supp. 931 (Ct. Int'l Trade 1989)).
Department's Position: We disagree with petitioners. In this
review, we have followed the Department's policy from previous reviews,
which the CIT sustained in Daewoo Electronics. We do not consider
expenses incurred in connection with participating in an antidumping
review to constitute expenses related to sales made during this POR.
Such expenses are incurred to defend against an allegation of dumping.
Accordingly, they are not expenses incurred in selling merchandise in
the United States. Moreover, to deduct administrative review related
expenses as selling expenses would effectively penalize respondents
based on their participation in proceedings before the Department.
Therefore, we have not deducted administrative review related expenses
for the final results.
Comment 15: Petitioners allege that respondents failed to report
U.S. inland freight from port to warehouse for certain U.S. sales.
Respondents contend that their U.S. freight expense was fully and
properly reported in the questionnaire response. Furthermore,
respondents argue that the Department's sales verification at Imphy
confirmed the accuracy of the freight amounts and that no discrepancies
were found.
Department's Position: We disagree with petitioners. We examined
this issue at verification and confirmed the accuracy of the
questionnaire response for freight. In addition, we found no evidence
that respondents did not report freight amounts. Therefore, we have
accepted the reported amounts for freight expense for the final
results.
Comment 16: Petitioners contend that respondents reported erroneous
amounts for freight revenues in respondents' questionnaire response.
Petitioners assert that the reported sales terms are those generally
applicable to the customer, rather than for the specific sale.
Petitioners claim that the respondents' supplemental questionnaire
response provided dubious explanations and raised serious questions as
to the ``special services'' provided to customers and how the
respondents recorded these costs. Petitioners contend that the
Department should not accept respondents' reported freight revenues for
the final results for two terms of sale given the serious problems
associated with the reported freight revenue.
Respondents contend that there is no substance to petitioners'
assertion that there are errors in respondents' reported freight
revenue. Respondents assert that the sales terms that appear on the
invoice and that are reported in the response are the normal sales
terms for the customer because respondents' computer system only allows
one sales term to be associated with a customer. Respondents note that
the transactions listed by petitioners in their case brief are
instances where the respondents accommodated a customer's special
request to deliver merchandise using alternative transportation.
Respondents contend that they bill the customer for the service and
correctly reported this in the questionnaire response. Respondents also
note that the Department examined this issue at verification and found
no discrepancies.
Department's Position: We agree with respondents. We examined this
issue at verification and found no evidence that respondents reported
incorrect amounts for freight revenues. At verification, we selected
and examined sales concerning
[[Page 7213]]
this issue that petitioner identified in their pre-verification
comments to the Department. We found no discrepancies between
respondents' submissions and their records. We also found no evidence
to contradict respondents' claim in the supplemental questionnaire
response that the terms of sale reported in the U.S. sales file are the
normal sales terms for each customer and that respondents billed the
customer for the cost of the alternative transportation source that was
reported in the U.S. sales file as freight revenue. In addition, we
agree with respondents that in cases where alternative transportation
sources were used, the amount billed the customer appears as freight
revenue on the U.S. sales file. Thus, for sales that used the
alternative transportation, the freight revenue was greater than the
expense. Consequently, we have used the reported freight revenue
amounts for the final results.
Comment 17: Petitioners contend that the Department should revise
its calculation of constructed value (CV) profit by excluding from the
profit calculation those sales that were otherwise excluded from the
Department's analysis as non-arm's length sales. Petitioners assert
that the statute is mandatory in requiring the Department to calculate
CV profit based on sales in the ordinary course of trade (See 19 U.S.C.
1677b(e)(2)(A)). Petitioners contend that transactions disregarded
under section 773(f)(2) as non-arm's length sales, and transactions
disregarded as below-cost, are explicitly defined as outside the
ordinary course of trade (See 19 U.S.C. 1677(15)). Thus, they contend
that section 773(e)(2)(A) prohibits the Department from using sales
that are outside the ordinary course of trade in the CV profit
calculation. In addition, petitioners argue that the calculation of
profit is pursuant to section 773(e)(2)(A) and not section
773(e)(2)(B). They argue that in a recent determination, the Department
indicated that while sales at below-cost prices might be included in
the profit calculation when that calculation was undertaken pursuant to
section 773(e)(2)(B) of the statute, sales that were otherwise excluded
at below-cost prices could not be included in the profit calculation
where section 773(e)(2)(A) of the statute applies (See Certain Welded
Carbon Steel Pipes and Tubes from Thailand: Final Results of
Antidumping Duty Administrative Review, FR 61 56515, 56518 (November 1,
1996)). Accordingly, petitioners assert that the Department should
exclude non-arm's length sales in the calculation of CV profit.
Respondents agree with petitioners that the Department erroneously
included sales outside the ordinary course of trade, e.g., non arm's-
length sales in the CV profit calculation.
Department's Position: We agree with both respondents and
petitioners that we should exclude non-arm's length sales from the CV
profit calculation.
Comment 18: Petitioners contend that the Department should adjust
respondents' reported net interest expenses so that long-term income is
not deducted from total net interest expenses. Petitioners state that
it is the Department's policy to calculate net interest expenses by
subtracting short-term interest income from the total of short-term and
long-term interest expenses. However, petitioners allege that the net
interest expenses reported by respondents and used in the preliminary
results, subtracted long-term interest income from total interest
expenses.
Respondents had no rebuttal to this comment.
Department's Position: We agree with petitioners. It is the
Department's policy in calculating net interest expense for COP to
include interest expense relating to both long-and short-term
borrowings and to reduce the amount of interest expense incurred by any
interest income earned on short-term investments on its working capital
(See Department of Commerce Questionnaire of March 21, 1996 at page D-
20). Respondents' net interest expense reported to the Department
included a deduction for long-term interest income; therefore, for the
final results, the Department added the amount of long-term interest
income to respondents' net interest expense figure.
Comment 19: Petitioners contend that the Department should revise
respondents' general and administrative (G&A) expenses to include
expenses recorded in the financial link account. Petitioners note that
in the LTFV investigation, the Department found that costs listed in
respondents' financial link account had not been included in the
expenses reported, even though respondents could not identify or
reconcile those costs and, therefore, the Department included the costs
in the calculation of interest and G&A rates (See Final Determination
of Sales at Less Than Fair Value: Certain Stainless Steel Wire Rods
from France, 58 FR 68865, 68874 (December 29, 1993)). Petitioners
contend that it is the Department's policy where additional costs
cannot be identified or reconciled, to include such costs in the
calculation of COP and CV. Accordingly, petitioners urge the Department
to revise the general and administrative expenses for Imphy and Ugine-
Savoie to include the costs and expenses in the financial link account.
Respondents state that there is no evidence on the record to
suggest that the account relates in any way to the subject merchandise
and, therefore, there is no basis for the Department to include it in
the G&A expenses. Respondents assert that they properly reported all
G&A expenses and that the Department examined this issue at
verification. They further contend that the ``Financial Link Account''
is a function of the consolidation process among the several hundred
companies in the Usinor-Sacilor group. Thus, respondents argue that the
account does not reflect an expense attributable to a particular
company and therefore there are no grounds for imputing the balance in
the account to respondents' cost for subject merchandise.
Department's Position: We agree with petitioners. As we did in the
LTFV Final Determination, we have included the amount in the financial
link account in the calculation of the general and administrative
expenses. At verification, respondents stated that due to the large
number of companies submitting information to the parent company,
neither Usinor-Sacilor nor Imphy could segregate Imphy's costs from the
costs of the other companies in the Usinor-Sacilor group that were also
included in the financial link account. Since these costs could not be
specifically identified or reconciled, it is possible that they relate
to the subject merchandise. It is the Department's practice to include
all costs relevant to the subject merchandise in the calculation of COP
and CV; therefore we included these additional costs in the calculation
of the G&A rates (See Final Determination of Sales at Less Than Fair
Value: Certain Stainless Steel Wire Rods from France, 58 FR 68885,
68874 (December 29, 1993)).
Comment 20: Petitioners contend that the Department should adjust
the cost of manufacture for subcontracted coating work by an affiliated
party. Petitioners note that at verification, the Department found that
Imphy subcontracts both remelting and coating to affiliated party
suppliers. Petitioners note that the Department found that Imphy failed
to report cost variances and GS&A expenses for the affiliated remelter
and adjusted remelting costs accordingly. Petitioners state that given
the error found in these costs, and given respondents' failure to
demonstrate the arm's-length nature of the coating costs reported, the
Department should assume that subcontracted coating costs are
[[Page 7214]]
similarly understated and adjust them accordingly for the final
results.
Petitioners argue that adjustment of Imphy's coating expenses for
cost variances and SG&A expenses would be consistent with law. In
support of their position, petitioners cite decisions by the Court of
International Trade in NSK Ltd. v. United States, 910 F. Supp. 663, 671
(1995) and Micron Technology v. United States, 893 F. Supp. 21, 37
(1995).
Respondents argue that under section 773(f)(2) the Department may
examine the arm's-length nature of transactions between affiliated
parties. Respondents contend that such an examination is discretionary
and the statute does not require the Department to do so. Respondents
assert that the coating work performed by the affiliated party did not
represent a ``major input'' for which cost information is pertinent
pursuant to section 773(f)(3). Respondents note that the coating amount
as a percentage of the cost of goods sold is extremely small.
Respondents argue that since they provided all requested
information concerning coating and because the Department did not
request that respondents provide further coating information, there is
no basis for the Department to adjust the price Imphy paid for the
subcontracted work.
Department's Position: We agree with respondents. During the cost
of production verification, the Department found that the prices that
respondents paid to an affiliate for subcontracted remelting did not
include the affiliated party's cost variance expenses nor the
affiliated party's selling, general and administrative expenses and,
for that reason, an adjustment was made to the reported remelting
costs. See Comment 3.
However, the coating is performed by another affiliated company.
Respondents reported that this affiliated party performed coating
services at arm's-length prices. We examined the issue of arm's-length
prices in depth at verification. At verification we found that, other
than the affiliated party's prices for remelting services, all other
affiliated party prices for inputs were comparable to arm's-length
prices (for a more detailed discussion of this issue, please see the
public version of the Cost of Production Verification Report of Imphy,
S.A., October 7, 1996, at 10-15).
Comment 21: Petitioners allege that the Department's computer
margin calculation program did not convert respondents' reported U.S.
repacking expenses from a per-pound basis to a per kilogram basis.
Respondents did not comment on this issue.
Department's Position: We agree with petitioners and have properly
converted the repacking expense for the final results.
Comment 22: Petitioners contend that the Department failed to
deduct U.S. commissions in the calculation of U.S. price for
respondents' CEP and CEP further manufactured (CEP/FM) sales.
Respondents agree with petitioners. However, respondents contend
that petitioners' proposed solution contains three typographical errors
in the variable names.
Department's Position: We agree with petitioners and will deduct
U.S. commissions paid to unaffiliated selling agents for CEP and CEP/FM
sales for the final results. We also agree with respondents' assertion
concerning the typographical errors and we will make the necessary
corrections for the final results.
Comment 23: Petitioners assert that although the Department
adjusted the cost of manufacture for remelting services, the Department
failed to adjust respondents' cost of manufacture (COM) for CV for the
remelting services. Petitioners request that the Department revise
respondents' COM for CV using the programming language used to adjust
the COM for home market sales.
Respondents assert that in the event that the Department disagrees
with respondents and determines that it is proper to adjust COM for
products remelted by the affiliated party, they recognize that it would
also be appropriate similarly to adjust the reported cost of
manufacture for constructed value purposes.
Department's Position: We agree with petitioners and have revised
respondents' COM for CV for the final results.
Comment 24: Petitioners note that during verification the
Department found that there were two experimental heat sales in the
respondents' home market sales database. Petitioners note that the
experimental heat sales were incorrectly identified as secondary
material in the respondents' May 21, 1996 submission. Petitioners
request that the Department correct respondents' coding for these two
sales for the final results.
Respondents agree with petitioners concerning the experimental heat
sales. However, respondents contend that the petitioners' proposed
programming change to the computer program is incorrect. Respondents
request that the Department use the computer code submitted in their
rebuttal brief.
Department's Position: We agree that the two sales from the
experimental heat should be classified as prime material. We also agree
with respondents concerning the computer code needed to correct the
error and have corrected this error in our final results.
Comment 25: Petitioners assert that the Department should
recalculate the G&A and interest expenses for home market COP and CV to
reflect the changes the Department made to respondents' COM. They note
that the Department revised respondents' COM for understating certain
costs by failing to account for total remelting expenses. Therefore,
they contend that G&A and interest expenses for COP and CV must be
revised accordingly.
Respondents state that in the event that the Department disagrees
with respondents and determines that it is proper to adjust COM for
products remelted by the affiliated party, they recognize that it is
also proper to recalculate G&A and interest amounts, to ensure that
these items remain at the same percentage of the revised COM.
However, respondents assert that petitioners' proposed computer
language corrections are wrong and suggest modifications.
Department's Position: We agree with petitioners and have revised
the G&A and interest expenses for COP and CV. We also agree with
respondents concerning the computer coding to correct the error and
have included it in the final results.
Comment 26: Petitioners allege that the Department made a data
entry error by misspelling one of respondents' product codes in the
computer program.
Department's Position: We agree and have corrected this error for
the final results.
Final Results of Review
As a result of our review, we have determined that the following
margins exist:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Imphy/Ugine-Savoie....................... 1/1/95-12/31/95 6.53
------------------------------------------------------------------------
The Department shall determine, and the Customs service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and normal value may vary from
the percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon
[[Page 7215]]
publication of this notice of final results of review for all shipments
of certain stainless steel wire rods from France 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
rates for the reviewed companies will be the rates for those firms as
stated above; (2) if the exporter is not a firm 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 (3) the cash deposit rate
for all other manufacturers or exporters will continue to be 24.51
percent for stainless steel wire rods, the all others rate established
in the LTFV investigation. See Amended Final Determination and
Antidumping Duty Order: Certain Stainless Steel Wire Rods from France
(59 FR 4022, January 28, 1994).
These deposit requirements, when imposed, shall remain in effect
until publication of the final results of the next administrative
review.
This notice serves as a 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 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: February 7, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-3913 Filed 2-14-97; 8:45 am]
BILLING CODE 3510-DS-P