[Federal Register Volume 63, Number 54 (Friday, March 20, 1998)]
[Notices]
[Pages 13622-13626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-7351]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-533-810]


Stainless Steel Bar From India: 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 November 10, 1997, the Department of Commerce published the 
preliminary results of the second administrative review of the 
antidumping duty order on stainless steel bar from India. We gave 
interested parties an opportunity to comment on the preliminary 
results. Based on our analysis of the comments received, we have made 
certain changes for the final results.
    This review covers one producer/exporter of stainless steel bar to 
the United States during the period February 1, 1996, through January 
31, 1997. The review indicates the existence of dumping margins during 
the review period.

EFFECTIVE DATE: March 20, 1998.

FOR FURTHER INFORMATION CONTACT: Craig Matney or Zak Smith, Import 
Administration, AD/CVD Enforcement Group I, Office 1, U.S. Department 
of Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C. 
20230; telephone (202) 482-1778 or 482-1279, respectively.

Applicable Statute and Regulations

    The Department of Commerce is conducting this administrative review

[[Page 13623]]

in accordance with section 751 of the Tariff Act of 1930, as amended. 
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 by the Uruguay Round 
Agreements Act. In addition, unless otherwise indicated, all citations 
to the Department's regulations are to those codified at 19 CFR part 
353 (April 1997).

SUPPLEMENTARY INFORMATION:

Background

    On November 10, 1997, the Department of Commerce (``the 
Department'') published the preliminary results of the administrative 
review of the antidumping duty order on stainless steel bar from India 
(62 FR 10540) (``preliminary results''). The manufacturer/exporter in 
this review is Mukand Limited (``Mukand'' or ``respondent''). We 
received comments from the respondent and rebuttal comments from the 
petitioners (Al Tech Specialty Steel Corp., Carpenter Technology Corp., 
Crucible Specialty Metals Division, Crucible Materials Corp., 
Electralloy Corp., Republic Engineered Steels, Slater Steels Corp., 
Talley Metals Technology, Inc. and the United Steelworkers of America 
(AFL-CIO/CLC)).
    In their December 18, 1997, rebuttal comments, petitioners argue 
that the respondent's case brief should be removed from the record 
because it failed to comply with the Department's requirements for 
obtaining extensions. Specifically, the petitioners claim that the 
respondent's letter requesting the extension did not present sufficient 
specificity regarding the rationale for the extension in order to meet 
the Department's ``good cause'' standard for extension.
    We have determined that respondent sufficiently justified its 
extension request. Therefore, we did not reject the respondent's brief 
as untimely. We agree that the respondent's original letter requesting 
the extension lacked extensive explanation of the reasons for the 
request. However, the Department requested and received a more 
extensive explanation from the respondent before deciding to accept the 
respondent's brief (see December 12, 1997, Memorandum from Craig W. 
Matney to File). We also note that the petitioners did not file a case 
brief by the original deadline and were offered the opportunity to file 
a case brief by the extended deadline; thus their position was not 
prejudiced by the respondent's delayed filing.

Scope of the Review

    For purposes of this administrative review, the term ``stainless 
steel bar'' means articles of stainless steel in straight lengths that 
have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or 
otherwise cold-finished, or ground, having a uniform solid cross 
section along their whole length in the shape of circles, segments of 
circles, ovals, rectangles (including squares), triangles, hexagons, 
octagons, or other convex polygons. Stainless steel bar includes cold-
finished stainless steel bars that are turned or ground in straight 
lengths, whether produced from hot-rolled bar or from straightened and 
cut rod or wire, and reinforcing bars that have indentations, ribs, 
grooves, or other deformations produced during the rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness or if 4.75 mm or more 
in thickness have a width which exceeds 150 mm and measures at least 
twice the thickness), wire (i.e., cold-formed products in coils, of any 
uniform solid cross section along their whole length, which do not 
conform to the definition of flat-rolled products), and angles, shapes 
and sections.
    The stainless steel bar subject to this administrative review is 
currently classifiable under subheadings 7222.11.0005, 7222.11.0050, 
7222.19.0005, 7222.19.0050, 7222.20.0005, 7222.20.0045, 7222.20.0075, 
and 7222.30.0000 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 this order is dispositive.

Interested Party Comments

    In accordance with 19 CFR 353.38, we invited interested parties to 
comment on our preliminary results. We received written comments from 
the petitioners and the respondent. Based on our analysis of the 
comments received, we have made certain corrections that changed our 
results (see Comments 2 and 5).

Comment 1: Department's Correction of Home Market Sales Data

    The respondent contends that the Department incorrectly increased 
the gross unit price on several home market sales used in the margin 
calculation. According to the respondent, the warehousing customer 
surcharge, which was purportedly the Department's reason for the 
increase, was already included in the gross price for the sales in 
question because they occurred after November 1, 1996. The respondent 
states that, for consignment sales after this date, warehousing charges 
were included in the gross price, rather than invoiced as a separate 
charge as was the previous practice. Mukand argues that the Department 
verified that there were no separate warehouse charges for these sales 
because they did not appear on the invoices which the Department 
examined (see November 20, 1997, Verification Report, Exhibit 7) and 
Mukand did not add these charges to gross unit price in Mukand's 
changes to its sales listing which it provided at the beginning of 
verification (see Verification Exhibit 1).
    The petitioners state that the Department found at verification 
that Mukand failed to include the warehouse charge on the sales and, 
thus, properly adjusted its calculations in the preliminary results. 
The petitioners state that a comparison of Mukand's June 4, 1997, home 
market sales submission with its September 22, 1997, home market sales 
submission shows that Mukand failed to increase gross unit price for 
the amount shown in the earlier submission's warehouse expense field 
for these sales.
    Department's Position. In these final results, we have continued to 
increase the gross unit price for several specific sales by the 
warehouse charge that had been listed in the warehousing expense field 
(DISWARH) in Mukand's earlier submission because we find Mukand's 
argument to be inconsistent with the explanation the company provided 
at verification.
    Mukand listed an amount in the DISWARH field in its questionnaire 
response for the sales in question. At verification, Mukand explained 
that it had listed income received from the warehousing surcharge 
erroneously as an expense in the DISWARH field and it would correct 
this by removing the amount from the DISWARH field and adding it to the 
gross unit price in its post-verification data submission. However, in 
its post-verification submission it did not list the amounts in 
question either in the DISWARH field or as an addition to gross unit 
price for the sales in question even though, at verification, Mukand 
had explained that it had added an amount to the gross unit price. As a 
result, for our preliminary results, we added the amount to gross unit 
price.
    In its case brief Mukand stated, for the first time, that it had 
changed its

[[Page 13624]]

invoicing policy which affected sales after November 1, 1996. 
Identifying this change at such a late stage of the review does not 
give the Department the opportunity to analyze and verify the position 
Mukand is now advocating with respect to the above-referenced sales. 
Therefore, we have not changed our calculation of normal value from 
that in our preliminary results.

Comment 2: Addition of Interest Revenue to Home Market Price in 
Calculating CV Profit

    The respondent claims that the addition of interest revenue earned 
from late payments to its home market prices when calculating 
constructed value (``CV'') profit is erroneous because the sale revenue 
and the interest revenue are two separate transactions. Furthermore, 
Mukand maintains, if the Department includes such interest revenue in 
the profit calculation, the rate Mukand charges for late payment should 
be offset by its short-term cost of borrowing. The respondent also 
argues that the revenue from late payment charges is included in its 
net interest costs and, thus, by including this charge in total 
revenue, the Department double-counted interest earned from late 
payments. Finally, respondent states that comparing U.S. sales, where 
its customers pay within the stated payment terms, to a CV that 
includes interest for late payments is not an ``apples-to-apples'' 
comparison.
    The petitioners counter that the interest revenue Mukand earned 
from late payments originate from the same transaction as the revenue 
from the sale and thus should be included in the total sales revenue 
used to calculated CV profit. The petitioners assert that revenues from 
late-payment charges are actually reflected in the respondent's 
accounting records, while imputed credit expenses are not. The 
petitioners contest the respondent's claim that the interest it earned 
from late payments was double-counted. They state that interest revenue 
was included in the calculation only as an offset to interest expenses. 
Lastly, the petitioners state that CV is the model-specific cost of the 
U.S. product as if it were sold in the home market, and thus the 
payment patterns of Mukand's U.S. customers are irrelevant.
    Department's Position. Mukand's financial statements support its 
assertion that it subtracted interest which it earned from the late 
payments from its reported interest expense. Thus we have accounted for 
such interest in Mukand's costs when calculating CV profit. Therefore, 
we agree with the respondent that we double-counted this interest in 
our preliminary results by including it in revenue when calculating CV 
profit. We have adjusted our calculations accordingly.

Comment 3: Sales Used in Calculating CV Profit

    The respondent claims that the Department improperly excluded 
below-cost sales in the home market profit margin calculation it used 
to determine CV profit. In support of this assertion the respondent 
cites Torrington v. U.S., 19 ITRD 1673, 1676 (Fed. Cir. October 15, 
1997), which states that below-cost sales can only be excluded from 
foreign market value if they are deemed outside the ordinary course of 
trade, and, according to the respondent, sales below-cost are not, on 
their face, outside the ordinary course of trade.
    The petitioners respond that the Department correctly excluded 
below-cost sales from the calculation of CV profit in accordance with 
Section 771(15)(A) of the Act, which states that below-cost sales are 
to be considered outside the ordinary course of trade. Furthermore, the 
petitioners cite the preamble to the Department's new regulations which 
clarifies that, unlike old-law practice, all below-cost sales are to be 
excluded from the calculation of CV profit (see 52 FR 27296, 27359 (May 
19, 1997)). The petitioners also state that exclusion of below-cost 
sales in the calculation of CV profit is consistent with recent 
Department practice.
    Department's Position. We agree with the petitioners that Section 
771(15)(A) of the Act defines below-cost sales as out of the ordinary 
course of trade. Therefore, it is appropriate to exclude them from the 
CV profit calculation in accordance with section 773(e)(2) of the Act. 
See, also, Section 773(b)(1) of the Act. The case cited by the 
respondent is an old-law case and thus is not applicable to the instant 
case. Therefore, we have continued to exclude below-cost sales in our 
calculation of profit for CV.

Comment 4: CV Profit at Different Levels of Trade

    Citing Antifriction Bearings from France, 62 FR 54043, 54063, the 
respondent states that CV profit should be calculated on a level-of-
trade-specific basis. Citing the Department's preliminary results (see 
62 FR 60482, 60483), the petitioners assert that the the respondent has 
admitted and the Department verified that there is no difference in the 
level of trade between the U.S. and home market and, thus, a single CV 
profit ratio should be calculated.
    Department's Position. The respondent did not claim and we did not 
find a difference in the level of trade between the two markets (see 
preliminary results at 60483). Thus, we have continued to use a single 
CV profit rate calculated based on all foreign like products at the 
single level of trade we found in the home market.

Comment 5: Reduction of CV Interest Expense

    The respondent alleges that the Department double-counted its 
interest expense by failing to remove the actual interest expenses 
associated with its accounts receivable assets from the CV interest 
factor while accounting for these expenses as a reduction from U.S. 
price through an imputed credit deduction. The respondent states that 
the Department should reduce the CV interest factor to account for the 
percentage of total assets accounted for by accounts receivable. The 
respondent claims that this is the Department's standard practice and 
that the questionnaire erroneously neglected to inform the respondent 
to make this adjustment.
    The petitioners respond that the adjustment requested by the 
respondent is inconsistent with the Department's policy as expressed in 
the questionnaire.
    Department's Position. We no longer allow a reduction to interest 
expense to account for the percentage of total assets accounted for by 
accounts receivable because we no longer include an amount for imputed 
credit in the CV. However, we note that we did make an error in making 
our circumstance-of-sale adjustments by not deducting home market 
imputed expenses before adding U.S. imputed expenses and have adjusted 
the calculations accordingly. See, e.g., Certain Stainless Steel Wire 
Rods from France, 62 FR 7206, 7209 (February 18, 1997).

Comment 6: Duty Drawback

    The respondent asserts that the Department, in Certain Welded 
Carbon Standard Steel Pipes and Tubes from India (62 FR 47632 
(September 10, 1997)) (``Pipes and Tubes''), found that the Indian 
Passbook Scheme is a proper drawback program. Therefore, according to 
the respondent, the only remaining question is whether the Passbook 
Scheme credits it received were rebates for import duties on the raw 
material used to produce bar for export. The respondent claims that 
they were and, thus, the Department should have made an upward 
adjustment to the U.S. price. Citing to the Department's verification 
report, Mukand states that the

[[Page 13625]]

Department verified that its input costs were inclusive of import 
duties. As an alternate drawback claim, Mukand provides a calculation 
for the annual average per metric ton amount of duty paid on nickel, 
chrome, and scrap and implies that the Department could use this as its 
adjustment.
    The petitioners maintain that Mukand has failed the Department's 
two-part test for drawback claims because the respondent failed to 
demonstrate that there is a direct link between the duties imposed and 
those rebated or that it imported a sufficient amount of raw materials 
to account for the drawback received. With regard to Mukand's alternate 
claim, the petitioners state that Mukand has calculated this claim 
based on trial balance amounts that include customs duties and 
``other'' amounts; thus, according to petitioners, there is no way for 
the Department to know the exact duties paid. Furthermore, the 
petitioners contend, there is no way to determine whether these imports 
were used for domestic or export production. Petitioners state that the 
Department's denial of Mukand's drawback claim in the preliminary 
results is consistent with the previous administrative review of this 
order, citing Stainless Steel Bar from India: Preliminary Results of 
Antidumping Administrative Review, 62 FR 10540, 10541 (March 7, 1997) 
(``Stainless Steel Bar''), which explains the Department's policy for 
granting such claims. Finally, the petitioners assert that the 
Department found at verification that the drawback claim was based not 
on Mukand's actual imports but rather on a theoretical amount of 
imported billets. For all of these reasons petitioners contend that the 
Department should not accept respondent's duty-drawback claim.
    Department's Position. We disagree with Mukand that the Passbook 
Scheme credits it received necessarily represent the duties imposed on 
the imported raw material it used to produce bar for export. In fact, 
Mukand did not calculate the credits it received based on the raw 
materials it actually imported (i.e., nickel, chrome, and scrap) but, 
rather, on a theoretical amount of a different product (i.e., stainless 
steel billets) contained in the subject merchandise. See Verification 
Report at 9 on the public record in room B-099 of the main Commerce 
Department building. Because the credit was not calculated based on the 
product actually imported, the import duty actally paid and the rebate 
received are not directly linked. Therefore, Mukand has not met the 
first part of the Department's test for making an upward adjustment to 
U.S. price for duty-drawback.
    When evaluating a duty-drawback program, the Department considers 
whether the import duty and rebate are directly linked to, and 
dependent upon, one another and whether the company claiming the 
adjustment can show that there were sufficient imports of the imported 
raw materials to account for the drawback received on the exported 
product. Pipes and Tubes, 47634. The Court of International Trade has 
upheld this test. See, e.g., Federal-Mogul Corp. v. United States, 862 
F. Supp. 384, 409 (CIT 1994). While in Pipes and Tubes we did find that 
the link between the import duties paid and the rebate was sufficient, 
as noted above, such a link does not exist in the instant case. Because 
we have not found a direct link in the instant case, we have not 
considered whether Mukand met the second part of our standard.

Comment 7: Differing Selling Costs

    The respondent suggests that, if the Department does not make a 
duty-drawback adjustment for the Passbook Scheme, it should make an 
adjustment for the different costs of selling due to the scheme. The 
respondent claims that the Passbook Scheme lowers its input costs on 
exports, thereby allowing it to charge a lower price on export sales. 
The petitioners counter that the adjustment claimed by the respondent 
has no basis in law and that there is no evidence on the record to 
demonstrate that Mukand's inputs cost less for exports due to the 
Passbook Scheme. The petitioners further assert that the Department 
made a circumstance-of-sale adjustment for differences in selling costs 
in the preliminary results and that no further adjustments are 
necessary.
    Department's Position. We agree with the petitioners. The statute 
requires circumstance-of-sale adjustments for differences in selling 
expenses. The adjustment requested by the respondent is for differences 
in input costs, not selling expenses. We note that we include the 
revenue Mukand received from the Passbook Scheme in the calculation of 
CV as an offset to input costs.

Comment 8: Indirect Selling Expenses Deduction

    The respondent claims that the Department incorrectly reduced U.S. 
price by indirect selling expenses incurred outside of the United 
States. The respondent states that this U.S. price reduction was not in 
accordance with either Section 772(d)(1) of the Act or Department 
practice as stated in Cold-Rolled Carbon Steel Flat Products from the 
Netherlands, 62 FR 47418, 47419 (1997).
    The respondent also asserts that the Department stated in its 
preliminary results that the U.S. price should be reduced for indirect 
selling expenses up to the amount of home market commissions less the 
warehouse expenses incurred by Mukand's commissionaires. However, the 
respondent claims, the Department stated that it did not have adequate 
information to subtract the warehouse expenses from home market 
commissions. The respondent asserts that the Department does have 
adequate information to make this adjustment.
    The petitioners state that the Department did not deduct indirect 
selling expenses from U.S. price but, rather, calculated a commission 
offset in accordance with section 353.56(c) of the Department's 
regulations. The petitioners state that such an offset is consistent 
with Department practice when commissions are paid on home market sales 
but not on U.S. sales. In addition, the petitioners state that the 
Department, in fact, has not stated on the record of this case that the 
warehouse expenses incurred by Mukand's commissionaires should be 
subtracted from home market commissions.
    Department's Position. We calculated a commission offset in 
accordance with section 353.56(b)(1) of the our regulations and our 
practice. The section of the Act cited by the respondent, 772(d)(1), 
applies to constructed export price calculations. In the instant case, 
all of the transactions are export price sales; therefore this section 
is not applicable.
    With respect to the respondent's second point, that the home market 
commissions should be reduced by an amount for the commissionaire's 
warehousing expenses, the Department did not state in the preliminary 
results that it lacked information to calculate such an offset. 
Furthermore, no persuasive argument has been made that such an 
adjustment is warranted. Thus, in these final results, we have not made 
any adjustment to the commission offset for such charges.

Final Results of Review

    As a result of this review, we determine that Mukand's weighted-
average dumping margin is 5.53 percent for the period February 1, 1996, 
through January 31, 1997.
    The results of this review shall be the basis for the assessment of 
antidumping duties on entries of merchandise covered by the review and 
for future deposits of estimated duties for the manufacturer/exporter 
subject to this review. We have calculated an importer-

[[Page 13626]]

specific duty assessment rate based on the ratio of the total amount of 
antidumping duties calculated for the examined sales made during the 
period of review (``POR'') to the total value of subject merchandise 
entered during the POR. Mukand did not provide entered value for these 
export price sales. In order to estimate the entered value, we 
subtracted international movement expenses (e.g., international 
freight) from the gross sales value. This importer-specific rate will 
be assessed uniformly on all entries made during the POR. The 
Department will issue appraisement instructions directly to the Customs 
Service.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of these 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for Mukand will be 5.53 
percent; (2) for companies not covered in this review, but covered in 
previous reviews or the original less-than-fair-value investigation, 
the cash deposit rate will continue to be the company-specific rate 
published for the most recent period; (3) if the exporter is not a firm 
covered in this review, a prior review, or the original investigation, 
but the manufacturer is, the cash deposit rate will be the most recent 
rate established for the manufacturer of the merchandise; and (4) if 
neither the exporter nor the manufacturer is a firm covered in this or 
any previous review or the original investigation, the cash deposit 
rate will be the ``all others'' rate of 12.45 percent established in 
the final determination of sales at less than fair value (59 FR 66915, 
December 28, 1994).
    These deposit requirements will remain in effect until publication 
of the final results of the next administrative review.
    This notice also 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 a reminder to parties subject to 
administrative protective orders (``APOs'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification 
of the 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: March 10, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-7351 Filed 3-19-98; 8:45 am]
BILLING CODE 3510-DS-P