[Federal Register Volume 63, Number 73 (Thursday, April 16, 1998)]
[Notices]
[Pages 18879-18883]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-10038]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-412-810]


Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From 
the United Kingdom; 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; certain hot-rolled lead and bismuth carbon steel products from 
the United Kingdom.

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SUMMARY: On December 9, 1997, the Department of Commerce (the 
Department) published the preliminary results of its administrative 
review of the antidumping duty order on certain hot-rolled lead and 
bismuth steel products from the United Kingdom. The review covers two 
manufacturers/exporters, British Steel Engineering Steels Limited 
(BSES) and Glynwed Metal Processing Limited (Glynwed), and the period 
March 1, 1996 through February 28, 1997.
    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 16, 1998.

FOR FURTHER INFORMATION CONTACT: Gideon Katz or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION:

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. In addition, unless otherwise indicated, 
all citations to the Department's regulations are to the regulations as 
codified at 19 CFR part 353 (April 1, 1996).

Background

    On December 9, 1997, the Department published in the Federal 
Register (62 FR 64803) the preliminary results of its administrative 
review of the antidumping duty order on certain hot-rolled lead and 
bismuth steel products from the United Kingdom (58 FR 15324, March 22, 
1993). On January 13, 1998, petitioner, Inland Steel Bar Company, 
submitted comments on the Department's preliminary results. On January 
20, 1998, BSES submitted rebuttal comments. We held a hearing on 
January 22, 1998. The Department has now completed the review in 
accordance with section 751 of the Act.

Scope of the Review

    The products covered by this review are hot-rolled bars and rods of 
nonalloy or other alloy steel, whether or not descaled, containing by 
weight 0.03 percent or more of lead or 0.05 percent or more of bismuth, 
in coils or cut lengths, and in numerous shapes and sizes. Excluded 
from the scope of this review are other alloy steels (as defined by the 
Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72, 
note 1(f)), except steels classified as other alloy steels by reason of 
containing by weight 0.4 percent or more of lead, or 0.1 percent of 
more of bismuth, tellurium, or selenium. Also excluded are semi-
finished steels and flat-rolled products. Most of the products covered 
in this review are provided for under subheadings 7213.20.00.00 and 
7214.30.00.00 of the HTSUS. Small quantities of these products may also 
enter the United States under the following HTSUS subheadings: 
7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10, 
00.30, 00.50; 7214.50.00.10, 00.30, 00.50; 7214.60.10, 00.30, 00.50; 
and 7228.30.80.00. HTSUS subheadings are provided for convenience and 
Customs purposes. The written description of the scope of this order 
remains dispositive.
    This review covers two manufacturers/exporters of certain hot-
rolled lead and bismuth steel products, BSES and Glynwed, and the 
period March 1, 1996 through February 28, 1997.

Analysis of the Comments

    We gave interested parties an opportunity to comment on the 
preliminary results of review. We received comments from the 
petitioner, Inland Steel Bar Company, and rebuttal comments from BSES.
    Comment 1: Petitioner alleges that the Department erred in applying 
the arm's-length test after incorporating BSES's model matching 
concordance into the margin calculation program. Citing the September 
26, 1997 ``Antidumping Duty Investigation on Steel Wire Rod from

[[Page 18880]]

Canada Analysis Memorandum for Preliminary Results of Sidbec-Dosco 
(Ispat) Inc. (SDI) and Walker Wire,'' petitioner asserts that the 
Department should follow standard practice and apply the arm's-length 
test prior to incorporating the model matching concordance for BSES.
    Petitioner further asserts that applying the arm's-length test 
prior to incorporating the model matching concordance is consistent 
with the intent of the Statement of Administrative Action (SAA). 
Petitioner concludes that non-arms's-length sales cannot be used in the 
concordance because the SAA, in reference to the starting point for 
calculating normal value, states that the Department will ``ignore 
sales to affiliated parties which cannot be demonstrated to be at arm's 
length prices for purposes of calculating normal value.'' See Uruguay 
Round Agreements Act, Statement of Administrative Action, H.R. Doc. No. 
316, Vol. 1, 103d Cong., 2d Sess. 827 (1994).
    Petitioner also asserts that for Glynwed, the other respondent in 
this review, the Department generated a product concordance after 
completing the arm's-length test. Petitioner states that the Department 
may use different methodologies for different respondents only if it 
(1) offers a reasonable and rational explanation for doing so, and (2) 
demonstrates that the practice is in accordance with the applicable 
statute. Petitioner asserts that the Department offered no reasonable 
and rational explanation for using a different methodology for BSES.
    Petitioner also claims that BSES's allegedly improper model 
matching concordance has a substantial impact on the Department's 
analysis. Petitioner claims that it generated a model matching 
concordance according to the Department's standard methodology, and 
claims that it produced a vastly different model match concordance. 
Petitioner claims that the Department's standard concordance 
methodology is consistent with the statutory preference for computing 
dumping margins on price-to-price comparisons rather than constructed 
value. Petitioner also claims that the Department has the authority to 
revise the concordance, as it did with Glynwed for the preliminary 
results.
    BSES argues that the Department should continue to perform the 
arm's-length test after incorporating the model matching concordance 
supplied by BSES. BSES argues that the Department has the discretion to 
decide the timing of the concordance and that, while the Department's 
practice has been mixed with respect to whether to perform the arm's-
length test before or after applying the model matching concordance, in 
this proceeding the Department's practice has been consistent; the 
Department has always performed the arm's-length test after 
incorporating the model matching concordance provided by BSES. BSES 
maintains that the Department made a determination that this 
methodology works and should maintain that determination unless there 
are good reasons to change.
    BSES suggests that petitioner is objecting to the Department's 
established model matching concordance methodology for the first time 
in this review because, in the circumstances of this fourth review, 
constructed value actually yields a lower margin for BSES than price-
to-price matching. BSES agrees that the methodology has an impact, but 
asserts that the correct methodology should not be chosen based on 
which alternative results in the higher dumping margin. BSES further 
asserts that it is not appropriate for the Department to change 
methodology now because BSES has not had an opportunity to develop a 
factual record, discuss at verification, or defend the point because 
the concordance methodology was not an issue raised or challenged by 
the Department. BSES also claims that the products petitioner proposes 
to match are so dissimilar that normal value (NV) would be based on 
constructed value anyway or on very strange matches. If, however, the 
arm's length test is run after the creation of the concordance, there 
are better matches made.
    Department's Position: We agree with petitioner. Although in prior 
segments of this proceeding we have run the arm's-length test after the 
creation of the concordance, the United States Court of Appeals for the 
Federal Circuit has since ruled that [T]he initial consideration for 
Commerce is whether, under section 1677b(a)(1), the sales are ``in the 
usual commercial quantities and in the ordinary course of trade.'' 19 
U.S.C. 1677b(a)(1). If the sales are not in the ordinary course of 
trade, then Commerce should exclude that specific class of merchandise 
* * * because a determination of the antidumping duty cannot be made.'' 
CEMEX, S.A. v. United States, slip op. 97-1151 at 15 (Fed. Cir. 1998). 
It is clear from this ruling that sales made outside the ordinary 
course of trade, which include those sales failing the arm's-length and 
cost tests, must not be considered in the antidumping margin 
calculation. We have therefore treated the arm's-length and cost tests 
the same way and have run both tests prior to creating the product 
concordance.
    We are making this change to the preliminary results regardless of 
whether the dumping margins would be affected positively or negatively. 
The methodology has not been chosen based on which alternative results 
in a higher margin, but rather on the court's decision.
    BSES's claim that it did not have an opportunity to defend its 
concordance methodology is erroneous, because it had just such an 
opportunity in its rebuttal to petitioner's comments. Furthermore, 
except for the elimination of sales that failed the arm's-length and 
costs tests, as described above, our concordance methodology is 
identical to that used by respondent.
    Comment 2: Petitioner asserts that the Department should redefine 
BSES's CONNUMs (control numbers assigned by respondent to identify each 
unique product by its physical characteristics), aggregating the 
CONNUMs to correspond to residual codes in BSES's cost accounting 
system. Petitioner points out that, for the preliminary results, the 
Department used CONNUMs which BSES segregated to the residual level, 
stating that ``residuals are an essential part of the product.'' See 
Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from the 
United Kingdom; Preliminary Results of Antidumping Administrative 
Review, 62 FR 64803 (December 9, 1997) (Preliminary Results). 
Petitioner contends that not all residual or other chemical differences 
are sufficiently different to constitute separate products for the 
Department's purposes, citing to Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Steel Wire Rod from Canada, 62 FR 51572, 51572 (October 1, 1997) (Steel 
Wire Rod). Petitioner claims that BSES's reported CONNUMs, defined to 
the residual level, over-segregate the merchandise and that this 
produces fewer valid price-to-price comparisons and distorts the margin 
due to overtechnical product differences.
    Petitioner contends that BSES's residual levels can only be 
relevant to the extent that BSES actually tracks these residual costs 
in its own cost accounting system, and, to the extent it does not, it 
has improperly subdivided products that should be considered identical. 
Petitioner states that at verification, the Department found that BSES 
failed to report product-specific costs, as requested by the Department 
in the questionnaire. Petitioner claims that the Department has 
rejected the proposition that identical products must be identical for 
all purposes. Petitioner concludes that any merchandise with

[[Page 18881]]

the same production cost is sufficiently identical to be considered 
identical for model matching comparison purposes, even though customers 
request different residual levels and even if all products in a CONNUM 
are not fully interchangeable commercially. Petitioner states that in a 
separate case the Department has created residual baskets despite the 
fact that customers order by residual levels. See the Department's 
April 21, 1997 questionnaire for the Sales at Less Than Fair Value 
Investigation of Steel Wire Rod from Trinidad and Tobago, page B-9. 
Furthermore, petitioner claims that BSES obscured its cost reporting 
methodology to hide the fact that it was using aggregate costs for 
reporting its CONNUMs. Petitioner concludes that the Department should 
aggregate BSES's CONNUMs to correspond to BSES's cost accounting system 
because 1) these cost codes define the limits at which products can be 
considered different, and 2) they must serve as facts available, due to 
what petitioner says is BSES's misreporting of its costs.
    Petitioner also points out that in respondent's concordance, GRADE 
(a code used to identify chemical composition and tolerance in the 
desired chemical composition) and PRODCOD (the chemical composition 
code used internally by the company to define the chemical makeup of 
its products) are out of sequence in one instance, and that there is 
one instance of an unexplained gap in GRADE.
    BSES argues that its product codes, defined to the residual level, 
designate the relevant physical characteristics and should thus be used 
for model matching. BSES states that its product codes specify the 
exact levels of various required chemical elements in the steel and 
also the highest permissible levels of the undesirable residual 
elements. BSES contends that these codes are used in the ordinary 
course of trade and that the product code is an essential part of the 
product's identity, from order to invoicing, as confirmed by the 
Department at verification. See the January 7, 1998 Memorandum to the 
File from Rebecca Trainor and Gideon Katz through Maureen Flannery and 
Edward Yang: ``Report on the Sales and Cost Verification of British 
Steel Engineering Steels (BSES) in the Fourth Administrative Review of 
the Antidumping Duty Order on Certain Hot-Rolled Lead and Bismuth 
Carbon Steel Products from the United Kingdom'' (Verification Report), 
page 5.
    BSES states that, in other segments of this proceeding, the 
Department rejected petitioner's arguments to ignore any differences in 
the chemical compositions of the two products, and match using a CONNUM 
that ignores residuals, or trace elements. In support of its argument, 
BSES cites Certain Hot-Rolled Lead and Bismuth Carbon Steel Products 
from the United Kingdom; Final Determination of Sales at Less than Fair 
Value (LTFV Investigation Final Determination), 58 FR 6207, 6209 
(January 27, 1993) and Certain Hot-Rolled Lead and Bismuth Carbon Steel 
Products from the United Kingdom; Final Results of Antidumping 
Administrative Review (First Review Final Results), 60 FR 44009, 44011 
(August 24, 1995). BSES states that the Department determined, in both 
instances, that it is appropriate to perform the model match 
concordance using CONNUMs defined to the residual level because ``the 
product differences claimed by [BSES] due to residuals are commercially 
significant and not incidental--they are designed into the product.''
    BSES also argues that redefining the model matching concordance to 
correspond to BSES's cost accounting system is not appropriate because 
the cost accounting system groups product codes only for administrative 
convenience since BSES does not individually track the costs of certain 
similar products. BSES claims that the cost accounting groupings of 
product codes do not suggest lack of product individuality within the 
group, product substitutability, or equal product costs. BSES maintains 
that it is the product code, not the cost grouping, that describes the 
characteristics of steel needed to meet customer specifications. BSES 
further contends that the Department bases its model matching 
methodology on similarity of physical characteristics, not similarity 
of costs.
    BSES argues that petitioner's references to the Department's 
treatment of residuals in the questionnaire and preliminary notice in 
other cases cannot be considered relevant here because these cases 
involve plain carbon wire rod, an entirely different product, and 
producers that have absolutely nothing in common with BSES. BSES 
further argues that BSES' products are highly sophisticated engineering 
steels used in high-performance applications, in which slight 
variations in chemical composition can result in greatly differing 
performance. BSES claims that fine-tuned residuals levels may not be 
vital in plain carbon wire rod, but they are absolutely vital in BSES' 
engineering steels.
    BSES further asserts that redefining the model matching concordance 
would have no practical effect on the margin analysis. BSES claims that 
if the Department implements petitioner's methodology, only three pairs 
of product codes (out of many hundreds) would be affected, and that any 
effect on the margin may be minuscule. Finally, BSES claims that it has 
reported product costs just as instructed, and that this is not a facts 
available situation. BSES contends that the Department should reject 
petitioner's request because it is both unjustified and 
inconsequential.
    Department's Position: The Department disagrees with petitioner. 
The creation of a product concordance inherently relies upon the 
matching of significant physical characteristics, not on cost groupings 
in a company's cost accounting system. As noted by respondent, the 
Department stated in the LTFV Investigation Final Determination that 
``in order for merchandise to be considered identical, all physical 
characteristics * * * must be the same.'' 58 FR at 6207, 6209 (January 
27, 1993).
    Throughout each segment of this proceeding the Department has 
determined that residual content is an essential physical 
characteristic in the creation of the model match product concordance. 
For example, we determined that ``[p]roduct differences due to 
residuals are commercially significant and not incidental, as they are 
designed into the product. Therefore, CONNUM is the appropriate 
variable to be used for model matching.'' See First Review Final 
Results, 60 FR at 44009, 44011 (August 24, 1995). Petitioner has not 
placed on the record evidence that residual or other chemical 
differences are not significant enough to create separate products for 
model matching purposes. In this review, the Department once again 
verified the importance of residuals. We found that residual levels are 
critical to BSES and to its customers. See Sales Verification Report at 
5. Thus, we are making no change in the use of residuals in model 
matching.
    We have corrected one instance in which the GRADEs assigned to 
certain PRODCODs were not consistent with the overall sequence of such 
assignments in the key to matching criteria. There is no evidence that 
there were incorrect matches because of any gap in GRADE.
    Comment 3: Petitioner asserts that the Department should increase 
BSES's general and administrative expenses (G&A) to include the costs 
of a mill closure incurred during the period of review (POR). 
Petitioner states that BSES accrued these costs in the year it 
announced the closure, later setting the 1997 costs off against this 
earlier accrual. Petitioner contends that BSES

[[Page 18882]]

did not include these actual costs of closure in the reported amounts 
for the POR G&A.
    Petitioner claims that BSES's accounting technique artificially and 
improperly eliminated the actual costs incurred by BSES during the POR. 
Petitioner claims that BSES concedes as much in its supplemental 
response by merely stating that the mill closure ``had no effect on the 
FY 1997 profit and loss account.'' See BSES's October 17, 1997 
Supplemental Response, pages 22-23. Petitioner maintains that the 
Department should include these costs in BSES's G&A expenses because 
BSES incurred actual costs associated with the mill closure during the 
POR.
    BSES argues that the Department should not increase G&A expenses to 
include the mill closure costs because BSES reported these expenses in 
its financial accounts for FY 1995 in accordance with British Generally 
Accepted Accounting Principles and, therefore, they do not appear in 
BSES's financial accounts for 1997, the year used as the basis of the 
cost analysis in this review. BSES maintains that the Department's 
practice is to include costs as they appear on a company's audited 
financial statement, and cites to Final Determination of Sales at Less 
Than Fair Value: Sweaters Wholly or in Chief Weight of Man-Made Fiber 
from Taiwan, 55 FR 34585 (August 23, 1990). BSES claims that, because 
the entire closure costs were accrued and reported in BSES's FY 1995 
financial statements, these costs should have no impact on the 1997 
costs used for analysis in this review. BSES further notes that the 
Department verified the reported G&A expenses.
    Department's Position: The Department agrees with petitioner. We 
are including the actual closure costs for this mill in BSES's G&A for 
this POR. It is the Department's general practice to include accruals 
which are recognized in the respondent's audited financial statements 
in the COP/constructed value calculations. See Certain Cut-To-Length 
Carbon Steel Plate from Germany: Final Results of Antidumping Duty 
Administrative Review, 61 FR 13836 (March 28, 1996). However, the 
Department has not in any prior review included the closure costs for 
this mill. See the March 31, 1998 Memorandum to the file from Gideon 
Katz: ``Phone conversation with BSES regarding mill closure costs.'' 
Since it is necessary to account for these costs, and since the actual 
costs were incurred in the 1996-1997 period of review, we are including 
these actual costs in BSES's G&A for this POR.
    Comment 4: Petitioner asserts that the Department should reject 
BSES's reported U.S. packing expenses because the Department found 
these expenses to be inaccurate at verification. Petitioner further 
asserts that the Department should set all U.S. packing costs to the 
highest packing cost calculated for any U.S. sale, and then increase 
all home market prices by this highest reported packing cost.
    BSES argues that the Department should not make the changes to 
packing costs that petitioner requested because the Department already 
made a slight adjustment to packing costs in the preliminary results to 
reflect small discrepancies found at verification. BSES claims that the 
Department would have to make any packing adjustment to both the U.S. 
and home market products because BSES packs all its products in the 
exact same manner. BSES claims that there could thus be no impact on 
the margin. BSES asserts that additional changes would be unnecessary 
and improper.
    Department's Position: The Department disagrees with petitioner. 
The discrepancy in packing costs discovered at verification was minor 
and the verifiers were easily able to derive the correct figures for 
actual packing costs. Thus, it is appropriate to use corrected packing 
costs for both markets, which we did in the preliminary results and are 
continuing to do for these final results.

Final Results of Review

    We determine that the following weighted-average dumping margins 
exist:

------------------------------------------------------------------------
                                                                Margin  
         Manufacturer/exporter              Time period       (percent) 
------------------------------------------------------------------------
British Steel Engineering Steels                                        
 Limited (BSES)(formerly United                                         
 Engineering Steels Limited)..........    03/01/96-02/28/97        18.18
Glynwed Metal Processing Limited                                        
 (Glynwed)............................    03/01/96-02/28/97         7.69
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and NV may vary from the percentages 
stated above. Because there is a concurrent review of the 
countervailing duty order on the subject merchandise, final assessments 
for BSES and Glynwed will reflect the final results of the 
countervailing duty administrative review in accordance with 19 CFR 
353.41(d)(iv). The Department will issue appraisement instructions 
directly to the Customs Service. For assessment purposes, we intend to 
calculate importer-specific assessment rates.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of review for all 
shipments of certain hot-rolled lead and bismuth carbon steel products 
from the United Kingdom entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(2)(C) of the Act: (1) The cash deposit rate for the 
reviewed companies will be the rate listed 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, a prior review, or the original less-than-fair-value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) for all other producers and/or exporters of 
this merchandise, the cash deposit rate shall be 25.82 percent, the 
``all others'' rate established in the LTFV investigation (58 FR 6207, 
January 27, 1993). These deposit requirements 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 subsequent assessment 
of double antidumping duties.

Notification of Interested Parties

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the

[[Page 18883]]

disposition of proprietary information disclosed under APO in 
accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675 (a)(1) and 
19 U.S.C. 1677f(i)(1)) and 19 CFR 353.22.

    Dated: April 7, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-10038 Filed 4-15-98; 8:45 am]
BILLING CODE 3510-DS-P