[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Notices]
[Pages 18390-18396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9113]
[[Page 18389]]
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Part II
Department of Commerce
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International Trade Administration
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Antidumping Duty Administrative Reviews, Final Results; Notices
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 /
Notices
[[Page 18390]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-816]
Certain Cut-To-Length Carbon Steel Plate From Germany: 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.
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SUMMARY: On October 4, 1996, 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 Germany. This review covers one manufacturer/exporter
of the subject merchandise to the United States during the period of
review (POR), August 1, 1994, through July 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: April 15, 1997.
FOR FURTHER INFORMATION CONTACT: Nancy Decker or Linda Ludwig,
Enforcement Group III, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1324 or (202) 482-3833, respectively.
SUPPLEMENTARY INFORMATION:
Background
On October 4, 1996, the Department published in the Federal
Register (61 FR 51907) the preliminary results of the administrative
review (Preliminary Results) of the antidumping duty order on certain
cut-to-length carbon steel plate from Germany. Antidumping Duty Order
and Amendment of Final Determination of Sales at Less Than Fair Value:
Certain Cut-To-Length Carbon Steel Plate From Germany, 58 FR 44170
(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 Act are references to
the provisions effective January 1, 1995, the effective date of the
amendments made to the Tariff 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).
Scope of this Review
The products covered by this administrative review constitute one
``class or kind'' of merchandise: certain cut-to-length carbon steel
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 Harmonized Tariff
Schedule (HTS) under item numbers 7208.40.3030, 7208.40.3060,
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000,
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030,
7211.14.0045, 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 POR is August 1, 1994, through July 31, 1995. This review
covers entries of certain cut-to-length carbon steel plate by AG der
Dillinger Huttenwerke (Dillinger).
Analysis of Comments Received
We gave interested parties an opportunity to comment on the
preliminary results. We received case and rebuttal briefs from the
respondent (Dillinger) and petitioners (Bethlehem Steel Corporation,
U.S. Steel Company a Unit of USX Corporation, Inland Steel Industries,
Inc., Geneva Steel, Gulf States Steel Inc. of Alabama, Sharon Steel
Corporation, and Lukens Steel Company). At the request of petitioners,
a hearing was held on November 22, 1996. Based upon our analysis of the
comments received, we have changed the results from those presented in
the preliminary results of review.
Comment 1
The petitioners argue that the Department should have characterized
Dillinger's U.S. sales as constructed export price (CEP) transactions
rather than export price transactions (EP). Petitioners argue that
despite the Department's prior characterization of Dillinger's sales as
purchase price, the equivalent of EP sales under the amended statute,
based on substantial new information on the record of this proceeding,
these sales should be classified as CEP.
Petitioners claim first that Francosteel physically warehoused
subject merchandise, citing references in Francosteel's financial
statement to warehouse expenses. Petitioners note that prior to
verification, they had requested that the Department tie references in
Francosteel's financial statements regarding inventory at warehouses
and processors in the U.S. to specific ledger entries. Petitioners
argue that this was not done. Petitioners also argue that in the first
administrative review the Department considered only physical
inventory, effectively discounting other types of inventory such as
financial. Petitioners claim that a physical inventory test limits CEP
sales only to those made after the date of importation and is
inconsistent with PQ Corp. v. United States, 652 F. Supp. 724, 731 (CIT
1987).
Petitioners state that each U.S. sale involves two shipments: one
from Germany to the United States and the other from Francosteel to the
unaffiliated U.S. customer. Petitioners allege that while subject
merchandise entered the United States on July 29, 1995, it was not
shipped to the unaffiliated customer until August 2, 1995, which they
state is evidence that the steel was warehoused by Francosteel. With
respect to financial inventory, petitioners note several references in
Francosteel's financial statements. Petitioners argue that financial
inventory is relevant to the Department's CEP test as it is indicative
[[Page 18391]]
of the affiliated reseller's role in the U.S. sales transactions.
Petitioners next argue that Francosteel negotiates the price of
subject merchandise sold to unaffiliated customers. Petitioners cite
the Department's June 13, 1996, verification report which indicates
that Francosteel ultimately sets the price the unaffiliated U.S.
customer is charged, which petitioners argue is proof that Dillinger's
sales are CEP. Petitioners state that their view is consistent with
Notice of Final Determination of Sales at Less Than Fair Value: Large
Newspaper Printing Presses and Components Thereof, Whether Assembled or
Unassembled, from Germany, 61 FR 38166, 38176 (July 23, 1996).
Petitioners also distinguish the present review from Independent
Radionic Workers of America v. United States, Slip op. 95-45 (CIT Mar.
15, 1995), in which petitioners state the Court of International Trade
(CIT) held that the affiliate's substantial selling functions were not
necessarily inconsistent with a finding of purchase price treatment.
Petitioners contend that Independent Radionic Workers did not involve
the power to negotiate U.S. price. Petitioners argue that Dillinger's
approval of the price negotiated by Francosteel is completely
irrelevant.
Petitioners argue that Francosteel performs numerous other
functions, which, with the role of price setting, petitioners claim go
beyond mere document processor or communications link. Petitioners
argue that among other functions, Francosteel takes title, purchases
subject merchandise from Dillinger and resells it; represents itself as
the seller of the subject merchandise to its U.S. customers; acts as
importer of record; and finances the sale. Petitioners add that
Francosteel frequently remits payment for merchandise to Dillinger
before Francosteel receives payment from its U.S. customers. They state
that certain documentation (e.g., pertaining to total U.S. sales value)
is only available at Francosteel and that more sales activity takes
place in the United States than in Germany with respect to U.S. sales.
Dillinger responds that the Department correctly characterized its
single U.S. sale as export price. The sale was made before the date of
importation and Dillinger claims that direct shipment is the customary
commercial channel for sales of plate to the U.S. customer. Dillinger
disputes petitioners' claim that there was a four-day lapse of time
between entry and shipment to the customer and that this alleged lapse
is evidence of warehousing. Dillinger states that customs entry was
made on the day the vessel entered the waters of the Port of Houston,
but that actual docking occurred several days later. Dillinger notes
that the terms of sale were FOB on the customer's trucks, and that the
merchandise was directly unloaded from the vessel onto the customer's
truck. Respondent states that the Department verified that
Francosteel's warehousing costs were for non-subject merchandise.
Respondent also urges the Department to reject petitioners' ``new
theory of `financial inventory' '' as without support in the statute or
the Department's regulations.
With respect to the negotiation of price, respondent quotes the
Department's verification report which states that ``Francosteel cannot
confirm an order, including price, to the customer before Dillinger has
approved the order'' and ``Dillinger makes all decisions with regard to
price and quantities offered, specifications and delivery times * * *.
Dillinger always approves the price for all sales.'' Thus, consistent
with Francosteel's alleged role as a mere document processor and
communications link, according to respondent, even if Francosteel
thinks it can get better than Dillinger's minimum price guideline, the
final price must still be approved by Dillinger. In response to a
question at the hearing, Dillinger also argued that there is no
evidence in this case that Francosteel got or attempted to get a price
better than Dillinger's minimum price guideline for the sale subject to
this review. See November 22, 1996, hearing transcript at 38.
Department's Position
We agree with petitioners and have determined that respondent's
single U.S. sale should be characterized as a CEP rather than an EP
sale. This determination reverses that reached in the preliminary
results of review. It also differs from the determination reached in
the previous final results of review. See Certain Cut-To-Length Carbon
Steel Plate From Germany: Final Results of Antidumping Duty
Administrative Review, 61 FR 13834, 13843 (March 28, 1996) (Dillinger
First Review). However, we have reexamined the evidence on the record
in this review and, for the following reasons, have determined that it
is more appropriate to consider this a CEP sale.
Whenever sales are made prior to importation through a related
sales agent in the United States, the Department typically determines
whether to characterize the sales as EP based upon the following
criteria: (1) Whether the merchandise was shipped directly to the
unrelated buyer, without being introduced into the related selling
agent's inventory; (2) whether this procedure is the customary sales
channel between the parties; and (3) whether the related selling agent
located in the United States acts only as a processor of documentation
and a communication link between the foreign producer and the unrelated
buyer. See, e.g., Newspaper Printing Presses From Germany, 61 FR at
38175; Certain Corrosion-Resistant Carbon Steel Flat Products From
Korea: Final Results of Antidumping Duty Administrative Review, 61 FR
18547, 18551 (April 26, 1996). This test has been approved by the CIT.
Independent Radionic Workers, Slip Op. 95-45 at 2-3; PQ Corp., 652 F.
Supp. at 733-35.
Applying the first two criteria to the present review, we agree
with respondent that the merchandise was shipped directly to the
unrelated U.S. customer without being introduced into the inventory of
Francosteel, Dillinger's related U.S. selling agent. The Department
verified that the terms of sale were FOB on the customer's trucks, and
that the merchandise was directly unloaded from the vessel onto the
customer's trucks. In addition, FOB shipment to the customer's trucks,
without Francosteel warehousing the subject merchandise, is the
customary channel of distribution. The Department also verified that
the warehousing costs which Francosteel did incur were for non-subject
merchandise. There is no evidence indicating that the subject
merchandise was warehoused as well.
Concerning the third criterion, however, the Department has
determined that Francosteel did act as more than a processor of sales
documents and a communications link between the unrelated U.S. customer
and Dillinger, the producer in Germany. We find that Francosteel played
a major role in negotiating and bringing about the sale, from the
bidding stage through the final contract. See Newspaper Printing
Presses From Germany, 61 FR at 38176. Pursuant to respondent's general
practice, customers in the United States either contact Francosteel or
Francosteel contacts them. The Department verified that Dillinger does
not get involved in the sale until after Francosteel makes the initial
arrangements. Customers place purchase orders with Francosteel. Prior
to sending an order to the mill, Francosteel does a credit check on the
customer. Moreover, even though Dillinger sets the minimum purchase
price after considering the order information it receives from
Francosteel, Francosteel negotiates the sale with the customer with an
aim to obtaining the best price possible. U.S. Sales
[[Page 18392]]
Verification Report, June 13, 1996, at 4-5 (U.S. Verif. Rep.).
Francosteel then invoices the sale, takes title to the merchandise, and
acts as importer of record.
We recognize that, despite Francosteel's involvement in the sales
process, ``Dillinger always approves the price for all sales,'' as the
Department found at verification. Dillinger Sales Verification Report,
June 12, 1996, at 4-5 (Germany Verif. Rep.). We consider Dillinger's
role in the sales process in the United States to be minimal, however.
Francosteel essentially negotiates all sales in accordance with
Dillinger's limited guidelines and the sales take place in the United
States, not in Germany. In the first administrative review, the
Department's determination that Francosteel acted merely as a processor
of sales-related documentation was based mainly upon the finding that
Francosteel lacked ``the flexibility to set the price of the steel.''
Dillinger First Review at 13843; see also Final Determination of Sales
at Less Than Fair Value: Certain Stainless Steel Wire Rod From France,
58 FR 68865, 68869 (1993) (finding that U.S. affiliate participating in
negotiations lacked flexibility to set price). We have determined that
this was not the case during the present review.
We agree with petitioners that this case is distinguishable from
the situation in Independent Radionic Workers. In that case, the CIT
upheld the Department's determination that the sales in question were
purchase price sales (what are now export price sales) despite the fact
that the U.S. subsidiary ``processed purchase orders, performed
invoicing, collected payments, arranged U.S. transportation and was the
importer of record.'' Slip Op. 95-45 at 3. We consider Francosteel's
extensive involvement in negotiating respondent's U.S. sale during this
review, along with Francosteel's other sales activities, to warrant
classifying this sale as CEP. This review is also distinguishable from
this issue in E.I. DuPont de Nemours & Co. v. United States, 841 F.
Supp. 1237 (CIT 1993). In that case, in upholding the Department's
determination that the sales in question were purchase price, the CIT
found that the foreign producer, not the U.S. affiliate, ``negotiated
price and basic sales terms directly with each U.S. customer for each
U.S. sale.'' Id. at 1249. The related affiliate lacked the authority to
set the U.S. customer's price. Id. Francosteel's sales role was much
more significant.
For the foregoing reasons, we have revised the determination in the
preliminary results and have recharacterized respondent's U.S. sale as
CEP.
Comment 2
Petitioners claim that the Department must apply partial facts
available to all theoretical-to-actual weight conversion factors
reported by Dillinger for its home-market sales, because of what
petitioners consider to be significant discrepancies discovered by the
Department. Petitioners note that weight conversion factors were used
in the calculation of multiple variables, and have an impact throughout
the Department's calculations. Despite these significant and persistent
irregularities with the data, in petitioners' words, the Department
merely corrected certain specific conversion factors for the
preliminary results. Petitioners argue that the Department should
apply, as partial facts available, the lowest non-aberrant actual-to-
theoretical weight conversion factor reported by Dillinger. Petitioners
argue that in Gray Portland Cement and Clinker from Mexico: Preliminary
Results of Antidumping Duty Administrative Review, 61 FR 51676, 51677
(October 3, 1996), the respondent inappropriately included long-term
loans in its interest rate calculation and the Department used facts
available and relied upon a properly reported interest rate for one of
respondents' affiliates. Similarly, 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, 61 FR 25200, 25202 (May 20, 1996), petitioners
allege that the Department used partial best information available
(BIA) rather than rely upon or correct respondent's erroneous further
processing cost data.
Respondent counters that the Department acted properly in
correcting the theoretical-to-actual weight conversion factors in the
preliminary results. Dillinger notes that with one exception all sales
with the incorrectly reported conversion factors were of beveled plate
and that the corrected information provided by respondent at
verification was found to be correct by the Department. Respondent
claims that when the Department examined sales with less extreme weight
conversion factors only one error was noted, and that the Department
should not use a sample of ``outlier sales'' to draw inferences about
the entire database.
Department's Position
We agree with respondent. The mistakes found at verification were
not significant, persistent irregularities, as claimed by petitioners.
Unlike Cement and Clinker and Tapered Roller Bearings, the incorrect
data in this instance related to a small and discrete group of
observations and was readily correctable. Rather, as Dillinger
explains, the mistakes found primarily related to a small and discrete
group of home-market sales (sales of beveled plate). The Department
verified the weight conversion factors of various other sales,
including all sales that were potential matches to the U.S. sales, and
found no discrepancies. Consequently, correcting the limited number of
errors was appropriate.
Comment 3
Petitioners argue that Dillinger's reported cost data should be
revised in light of the Department's findings at verification.
Petitioners argue that Dillinger failed to include in its COP
calculation 13th month adjustments concerning certain receivables
written off for Dillinger and Rogesa (Dillinger's affiliated pig iron
supplier). Petitioners state that in the first administrative review,
the Department properly determined that receivables written off
constitute bad debt expenses, and that the write-offs for Saarstahl AG
(SAG) (Dillinger's former sister company) and its subsidiaries were
included in the indirect selling expense portion of Dillinger's COP and
CV data. See Dillinger First Review, 61 FR at 13836-37. Petitioners
argue that the receivables written off in the present review involve
the same parties and arose under the same circumstances as those that
the Department included in COP and CV in the first review. Petitioners
conclude that the Department should treat these receivables in the same
manner in this review.
Respondent states that in its preliminary results the Department
properly rejected the adjustments to cost data proposed by petitioners.
Respondent claims that the expenses related to SAG's bankruptcy
settlement are not related to subject merchandise. Respondent agrees
with the Department's finding in the preliminary results that these
amounts cannot be included in COP and CV.
[[Page 18393]]
Department's Position
The Department correctly did not include these expenses in its
calculation of cost or CV in the preliminary results. Petitioners are
correct that write-offs of receivables which are part of a bankruptcy
settlement may be considered bad debt expenses, which the Department
considers to be ordinary expenses. See, e.g., Dillinger First Review,
61 FR at 13836. Contrary to petitioners' characterization, however, the
receivables in question did not relate to the sale or production of
subject merchandise, unlike other receivables written off during the
previous review. For a more detailed discussion of these receivables,
see the Analysis Memorandum to the File, April 2, 1997, and the Cost
Verification Report, June 25, 1996, at 9, 16-17 (Cost Verif. Rep.). The
Department did not include amounts related to the same accrual during
the previous review in the calculation of COP or CV. See Dillinger
First Review at 13837.
Comment 4
Petitioners argue that Dillinger's reported cost data must be
revised in light of the Department's findings at verification with
respect to expenses related to the depreciation of Rogesa's blast
furnace. Petitioners state that the Department's cost verification
report indicates that only a portion of certain Rogesa 13th month
adjustments, including an amount for depreciation of expenses for a
blast furnace, was included in Dillinger's COP and CV calculations.
Petitioners cite the final results of the first review, and note that
the full amount of the expenses related to the blast furnace should be
recognized in calculating Rogesa's COM. See Dillinger First Review, 61
FR at 13,836.
Dillinger responds that since half of Rogesa's blast furnace output
is contractually devoted to the production of non-subject merchandise
for another company, it would be an error to allocate all of Rogesa's
depreciation over only Dillinger's share of Rogesa's output. Dillinger
argues that the Department could include as a cost either: (1) All of
Rogesa's depreciation divided by Rogesa's total production to arrive at
a per ton figure, or (2) the pro rata share of Rogesa's depreciation
corresponding to Dillinger's pro rata share of Rogesa's output.
Department's Position
Dillinger is correct that it would be an error for the Department
to divide the total blast furnace depreciation by the tonnage of
Rogesa's sales to Dillinger (the tonnage amount used in the
respondent's calculation), as this would overstate Rogesa's cost per
ton of output. To include total blast furnace depreciation, we would
have to divide that amount by Rogesa's total output or multiply it by
Dillinger's pro rata portion of Rogesa's output. Both of these
approaches would result in a lower per unit cost than the methodology
used by Dillinger in its submissions. We have made no further
adjustments.
Comment 5
Petitioners argue that the Department should determine that
Dillinger, through Francosteel, has absorbed AD duties on behalf of its
U.S. customer. Petitioners note that even if the Department determines
that it is not required to conduct an absorption inquiry during this
review, it retains the discretion to do so and should. Petitioners
argue that record evidence demonstrates that the costs of AD and CVD
duties, including cash deposits, are being absorbed by the affiliated
importer and are not being borne by the ultimate U.S. customer.
Petitioners argue that confining absorption inquiries to the second and
fourth reviews under the URAA will encourage respondents to manipulate
the administrative review process to avoid duty absorption findings.
For example, petitioners note that Dillinger claims that it did not
have any imports during the 1995/1996 review period, precluding a duty
absorption inquiry with respect to the second review under the URAA.
Petitioners claim that limiting duty absorption inquiries to the second
and fourth reviews will encourage petitioners to request administrative
reviews simply for the purpose of obtaining a duty absorption
determination, creating additional burdens on the Department,
petitioners, and respondents. Petitioners contend that the statute was
not intended to force petitioners into choosing between incurring
additional costs by requesting a review, when they might not otherwise
choose to do so, or giving up their right to an absorption
determination. Petitioners argue that only minimal additional work
would be required for the Department to conduct a duty absorption
inquiry and that doing so under these circumstances would be an
efficient use of resources.
Respondent supports the Department's decision not to conduct a duty
absorption inquiry in this review and also notes that there is no
evidence on the record to support a finding of duty absorption.
Respondent argues that the test of duty absorption is not whether AD
and CVD duties are being absorbed by the affiliated importer, but
whether these duties have been absorbed by the foreign producer or
exporter. Dillinger argues that, contrary to petitioners' assertions,
there is no verified evidence on the record that demonstrates that
Dillinger has absorbed the duties through Francosteel.
Department's Position
We disagree with petitioners. Section 751(a)(4) of the Act provides
for the Department, if requested, to determine during an administrative
review initiated two or four years after publication of the order
whether AD duties have been absorbed by a foreign producer or exporter
subject to the order if the subject merchandise is sold in the United
States through an importer who is affiliated with such foreign producer
or exporter. As stated in the preliminary results, for transition
orders as defined in section 751(c)(6)(C) of the Act, i.e., orders in
effect as of January 1, 1995, the Department will make a duty
absorption determination, if requested, in any administrative review
initiated in 1996 or 1998. See Preliminary Results, 61 FR at 51980.
This policy is in accordance with the statute as well as the approach
adopted in the Department's proposed regulations. See 61 FR 7308, 7366
(February 27, 1996). Contrary to petitioners' argument, this approach
does not impose an unnecessary burden upon parties. If domestic
interested parties believe duty absorption is taking place, it is
reasonable for them to request a review, during the review periods
specified, in which duty absorption can be properly considered.
Comment 6
Petitioners claim that AD and CVD duties have been reimbursed by
Dillinger, and must be deducted from U.S. price under Sec. 353.26(a) of
the Department's regulations. Petitioners note that the Department
discovered at verification that Dillinger established a financial
provision with respect to AD and CVD duties. Petitioners reject
Dillinger's explanation of this provision--that it exists because
German law requires Dillinger to establish such a provision even if
there is but a remote possibility of a liability. Petitioners state
that Dillinger has no legal obligation to pay AD duties under U.S. law,
as Francosteel is the importer of record and is liable for duties owed.
Petitioners argue that the only explanation for Dillinger establishing
such a provision is that Dillinger voluntarily has accepted this
liability and has reimbursed Francosteel for the duties it has
absorbed.
Petitioners allege that a comparison of Dillinger's and
Francosteel's chart of accounts demonstrates that duties have
[[Page 18394]]
been reimbursed. Petitioners cite Dillinger's Section A response which
indicates that it owed money to affiliated companies for ``taxes and
duties.'' Petitioners claim that Dillinger had ``an agreement to
reimburse antidumping duties'' with its affiliated party and also that
``inappropriate financial intermingling'' occurred, demonstrating that
duties were in fact reimbursed under the Department's test in Final
Results of Administrative Review: Color Television Receivers From the
Republic of Korea. 61 FR 4408 (February 6, 1996). The petitioners also
note that the above evidence further meets the test applied by the
Court of International Trade in Federal Mogul Corp. v. United States,
918 F. Supp. 386, 394 (CIT 1996), which requires only the establishment
of a link between intra corporate transfers and the reimbursement of
antidumping duties. Petitioners cite Cold-Rolled Carbon Steel Flat
Products From the Netherlands; Final Results of Antidumping Duty
Administrative Review, 61 FR 48465, 48470-71 (September 13, 1996), in
support of their argument that duties need not be assessed to make a
finding of reimbursement. The petitioners note that the respondent in
that case both agreed to reimburse duties to be assessed and has
reimbursed for antidumping duty cash deposits made on entries during
the POR.
Petitioners also argue that the Department should adjust U.S. price
to reflect the full amount of duties reimbursed. Petitioners reference
Certain Corrosion-Resistant Carbon Steel Flat Products From Korea;
Final Results of Antidumping Duty Administrative Review, 61 FR 18547,
18564 (April 26, 1996), in which, petitioners claim, the Department
indicated that respondents were entitled to an upward adjustment to
U.S. price for countervailing duties offsetting export subsidies. The
petitioners argue that the statute requires the Department to increase
constructed export price by the amount of ``any countervailing duty
imposed on the subject merchandise * * * to offset an export subsidy''.
Petitioners state that the deduction of estimated duties is not
prohibited by PQ Corp.
Respondent argues that Dillinger has not reimbursed Francosteel for
AD/CVD duties. Respondent notes that at verification officials at
Dillinger denied there was any agreement by Dillinger to reimburse AD/
CVD duties to Francosteel and that officials at Francosteel denied
there was any agreement to have Dillinger reimburse Francosteel for AD
duties (although there may be future discussions with Dillinger
regarding CVD duties). Respondent claims that Dillinger's general
ledger provision relates to fees and expenses that could be incurred in
connection with the AD proceeding. Respondent further notes that the
Department verified that payments against this provision in 1994 and
1995 were for legal, data collection, consulting and translation fees,
and that there is no evidence on the record showing that the subsequent
amounts provisioned in that accrual were of a different nature.
Respondent denies that there was any inappropriate financial
intermingling between Dillinger, Sollac, and Francosteel. Finally,
respondent notes that since there is no evidence on the record of
reimbursement of AD/CVD duties, petitioners' request that U.S. price be
adjusted to reflect the full amount of reimbursed duties is moot.
Department's Position
We disagree with petitioners. Section 353.26 of the Department's
regulations requires the Department to deduct from United States price
(now EP or CEP) the amount of any antidumping duty paid, or reimbursed,
by the producer or exporter, thereby increasing the amount of the duty
ultimately collected. 19 CFR Sec. 353.26(a) (1996); see Proposed
Regulations, 61 FR at 7382 (Sec. 351.402(f)). The Department has
interpreted this regulation as applying regardless of whether the
importer is affiliated to the producer or exporter. See Steel From
Netherlands, 61 FR at 48470; Color Television Receivers From Korea, 61
FR at 4410-11.
As the Department stated in Color Television Receivers From Korea,
however, ``[t]his does not imply that foreign exporters automatically
will be assumed to have reimbursed related U.S. importers for
antidumping duties by virtue of the relationship between them.'' 61 FR
at 4411. The regulation requires ``evidence beyond mere allegation that
the foreign manufacturer either paid the antidumping duty on behalf of
the U.S. importer, or reimbursed the U.S. importer for its payment of
the antidumping duty.'' Federal-Mogul Corp., 918 F. Supp. at 393
(citing Torrington Co. v. United States, 881 F. Supp. 622, 631 (CIT
1995)).
In the present review, contrary to petitioners' assertions, we
found no evidence of inappropriate financial intermingling between
Dillinger and Francosteel, or of either an agreement to reimburse AD
duties or the actual reimbursement of AD duties between the two
affiliated parties. The Department verified that ``Francosteel is
responsible for paying all cash deposits.'' U.S. Verif. Rep. at 13. The
Department also found ``no intention that there will be any
reimbursement of AD duties in the future between Dillinger and
Francosteel.'' Id. Petitioners are correct that Dillinger had
established a general ledger provision in its accounting records with
respect to antidumping and countervailing duties. Dillinger explained
that the provision relates to fees and expenses incurred in connection
with the AD proceeding, and that such a provision is required under
German law ``if there is even a remote possibility of a liability.''
Germany Verif. Rep. at 22. We consider this a reasonable explanation.
Moreover, we verified that all payments against the provision in 1994
and 1995 were for legal, data collection, consulting and translation
fees. Cost Verif. Rep. at 10.
Because we have rejected petitioners' arguments regarding
reimbursement, it is unnecessary to address petitioners' additional
arguments regarding the application of Sec. 353.26 of the regulations
to the reimbursement of cash deposits.
For the foregoing reasons, we have not adjusted Dillinger's CEP as
provided for under Sec. 353.26.
Comment 7
Petitioners argue that regardless of the Department's determination
with respect to reimbursement, the Department must deduct actual AD/CVD
duties from the price used to establish EP or CEP. Petitioners claim
that the plain language and structure of the statute mandate that the
Department make such an adjustment. Specifically, petitioners state
that the phrase ``any * * * United States import duties,'' as used in
section 772(c)(2)(A) of the Act, includes AD and CVD duties, as such
duties are plainly ``incident to bringing the subject merchandise from
the original place of shipment in the exporting country to the place of
delivery in the United States.'' See 19 U.S.C. 1677a(c)(2)(A).
Petitioners note that the relevant provisions of section
772(c)(2)(A) date from the Antidumping Act of 1921. Petitioners argue
that the legislative history of the 1921 Act is silent as to the
definition of ``any * * * United States import duties'' and that the
drafter's failure to provide a definition either in the 1921 Act or its
history indicates that Congress intended no meaning other than the
ordinary one for this term. The petitioners also note that section
772(c)(1)(C) provides that the price used to derive EP or CEP shall be
increased by the amount of any countervailing duty imposed to offset an
export
[[Page 18395]]
subsidy. Petitioners argue that in the 1979 Trade Agreements Act, in
addition to adding section 772(c)(1)(C), Congress added the phrase
``except as provided in paragraph 1(C)'' in section 1677a(c)(2)(A).
This, the petitioners assert, demonstrates that Congress understood the
subsection's reference to ``any * * * United States import duties'' as
including AD and CVD duties; otherwise there would be no reason to
exempt certain CVD duties from the provision.
While petitioners admit that the CIT has never explicitly held that
the provision now included in section 772(c)(2)(A) covers CVD or AD
duties, the Court has held so implicitly. Petitioners cite Federal-
Mogul Corp. v. United States, 813 F. Supp. 856, 872 (CIT 1993). This
case, according to petitioners, requires the Department to deduct any
actual import duties, i.e., duties that can be accurately determined at
the time the Department is calculating the current dumping margins.
Petitioners add that Federal-Mogul's holding that the Department was
correct not to deduct cash deposits of estimated AD or CVD duties was
premised on the fact that estimated duties may not bear any
relationship to the actual AD or CVD duties owed. Petitioners argue
that the clear implication of the Court's reasoning is that actual
duties are in fact ``United States import duties'' subject to section
772(c)(2)(A) and these duties should be deducted from U.S. price.
Petitioners also argue that the Department must deduct the full
amount of CVD duties paid by Francosteel for those entries covered by
the second administrative review of the CVD order as those duties are
determinable.
Petitioners also argue that the Department must deduct the full
amount of the ``actual'' antidumping duties that Francosteel will be
responsible for upon liquidation of the entries of subject merchandise.
Petitioners note that once the final results of review are issued,
Dillinger's antidumping duties will be actually determined.
Petitioners state that the Department has erroneously refrained
from deducting AD and CVD duties from U.S. price on the grounds that
such a deduction will result in double-counting. See Certain Corrosion-
Resistant Steel Flat Products From Korea: Final Results of Antidumping
Duty Administrative Review, 61 FR 18547, 18,563-34 (April 26, 1996).
Petitioners reject this argument, stating that the statute is not
discretionary and that the Department's rationale is inconsistent with
its treatment of other AD adjustments (i.e., doubling antidumping
margins to account for reimbursement in Steel From the Netherlands, 61
FR at 48470-71).
Respondent cites Corrosion-Resistant Steel From Korea and Steel
From the Netherlands in response to petitioners' arguments with respect
to treating AD/CVD duties as a cost. Respondent notes first that the
issue is moot since there was no dumping margin. With respect to
petitioners' argument regarding CVD cash deposits, respondent notes
that the Department rejected a similar argument in Corrosion-Resistant
Steel From Korea and should do so here for the same reasons.
Department's Position
It is the Department's longstanding position that AD and CVD duties
are not a cost within the meaning of section 772(d). AD and CVD duties
are unique. Unlike normal duties, which are an assessment against
value, AD and CVD duties derive from the margin of dumping or the rate
of subsidization found. Logically, AD and CVD duties cannot be part of
the very calculation from which they are derived. This logical
rationale for the Department's interpretation of the statute is
consistent with prior decisions of the CIT. See Federal-Mogul, supra,
813 F. Supp. at 872 (deposits of antidumping duties should not be
deducted from USP because such deposits are not analogous to deposits
of ``normal import duties'').
In particular, petitioners have no basis to draw a distinction
between actual, assessed duties and cash deposits in this context,
based upon Federal Mogul. Petitioners' reasoning is circular rather
than logical. According to petitioners, in calculating the dumping
margin, the Department must take into account the dumping margin. This
cannot be what the CIT intended in Federal Mogul. Such double counting,
i.e., including the same unfair trade practice twice in a single
calculation, is unjustifiable. Only in the limited circumstances
regarding reimbursement, as provided for in Sec. 353.26 of the
Department's regulations, is it appropriate to deduct any amount of
antidumping duties. Thus, petitioners' reliance upon Steel From the
Netherlands, which applied only to reimbursement, is unwarranted as
well.
Moreover, the treatment of AD and CVD duties (already paid or to be
assessed) as a cost to be deducted from the export price is an issue
that was arduously debated during passage of the URAA and ultimately
rejected by Congress. See H.R. 2528, 103rd Cong., 1st Sess. (1993).
Alternatively, Congress directed the Department to investigate, in
certain circumstances, whether AD duties were being absorbed by
affiliated U.S. importers. 19 U.S.C. 1675(a)(4). Thus, Congress put to
rest the issue of AD and CVD duties as a cost. SAA at 885 (``The duty
absorption inquiry would not affect the calculation of margins in
administrative reviews. This new provision of the law is not intended
to provide for the treatment of antidumping duties as a cost.''). See
also H. Rep. No. 103-826(I), 103rd Cong., 2nd Sess. 60 (1994).
Final Results of Review
As a result of our review, we have determined that the following
margin exists:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
AG der Dillinger Huttenwerke.............. 8/1/94-7/31/95 3.00
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between United States price and foreign market 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 publication of this notice of final results of review for all
shipments of plate from Germany 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 company will be the rate for that firm as stated above; (2)
for previously reviewed or investigated companies not listed above, the
cash deposit rate will continue to be the company-specific rate
published for the most recent period; (3) if the exporter is not a firm
covered in this review, 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 (4) if neither the exporter nor the manufacturer
is a firm covered in this review, the cash rate will be 36.00 percent.
This is the ``all others'' rate from the LTFV investigation. See
Antidumping Duty Order and Amendment of Final Determination of Sales at
Less Than Fair Value: Certain Cut-To-Length Carbon Steel Plate From
Germany, 58 FR 44170 (August 19, 1993). These deposit requirements,
when imposed, shall remain in effect until publication of the final
results of the next administrative review.
[[Page 18396]]
This notice serves as a final reminder to importers of their
responsibility under Sec. 353.26 of the Department's regulations 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 a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with Sec. 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 this notice are in accordance with
Sec. 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and Sec. 353.22 of the
Department's regulations.
Dated: April 2, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-9113 Filed 4-14-97; 8:45 am]
BILLING CODE 3510-DS-P