[Federal Register Volume 63, Number 174 (Wednesday, September 9, 1998)]
[Notices]
[Pages 48181-48184]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24166]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-201-809]


Certain Cut-to-Length Carbon Steel Plate from Mexico: Preliminary 
Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to request from the respondent and petitioners in 
the original investigation, the Department of Commerce (the Department 
) is conducting an administrative review of the antidumping duty order 
on certain cut-to-length (CTL) carbon steel plate from Mexico. This 
review covers one manufacturer/exporter of the subject merchandise. The 
period of review (POR) is August 1, 1996, through July 31, 1997.
    We preliminarily determine that sales have been made below normal 
value (NV). If these preliminary results are adopted in our final 
results of administrative review, we will instruct U.S. Customs to 
assess antidumping duties based on the difference between export price 
(EP) and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in this proceeding are requested 
to submit with the argument: (1) a statement of the issue; and (2) a 
brief summary of the argument.

EFFECTIVE DATE: September 9, 1998.

FOR FURTHER INFORMATION CONTACT:
Heather Osborne or John Kugelman, Enforcement Group III, Office 8, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone (202) 482-3019 (Osborne), 482-0649 
(Kugelman).

SUPPLEMENTARY INFORMATION: 

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are references to the provision effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act. In addition, unless otherwise 
indicated, all reference to the Department's regulations are to 19 CFR 
351, as published in the Federal Register on May 19, 1997 (62 FR 
27296).

Background

    The Department published an antidumping duty order on certain CTL 
carbon steel plate from Mexico on August 19, 1993 (58 FR 44165). The 
Department published a notice of opportunity to request an 
administrative review of the antidumping duty order for the 1996/97 
review period on August 4, 1997 (62 FR 41925). On August 29, 1997, 
respondent Altos Hornos de Mexico (AHMSA) requested that the Department 
conduct an administrative review of the antidumping duty order on 
certain CTL carbon steel plate from Mexico. On September 2, 1997, the 
petitioners in the original less-than-fair-value (LTFV) investigation 
(Bethlehem Steel Corporation, Geneva Steel, Gulf Lakes Steel, Inc., of 
Alabama, Inland Steel Industries Inc., Lukens Steel Company, Sharon 
Steel Corporation, and U.S. Steel Group (a unit of USX Corporation)) 
filed a similar request. We published a notice of initiation of the 
review on September 25, 1997 (62 FR 50292).
    Under the Act, the Department may extend the deadline for 
completion of administrative reviews if it determines that it is not 
practicable to complete the review within the statutory time limit of 
365 days. On March 13, 1998, the Department extended the time limit for 
the preliminary results in this case. See Cut-to-Length Carbon Steel 
Plate from Mexico; Extension of Time Limits for Antidumping Duty 
Administrative Review, 63 FR 13216 (March 18, 1998).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    The products covered in this review 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 coil 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 7208.31.0000, 
7208.32.0000, 7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000, 
7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000, 
7211.12.0000, 7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000, 
7212.40.5000, and 7212.50.0000. Included in this review are flat-rolled 
products of non-rectangular cross-section where such cross-section is 
achieved subsequent to the rolling process (i.e., products which have 
been ``worked after rolling''); for example, products which have been 
beveled or rounded at the edges. Excluded from this review is grade X-
70 plate.
    These HTS item numbers are provided for convenience and U.S. 
Customs purposes. The written descriptions remain dispositive.
    The POR is August 1, 1996, through July 31, 1997. This review 
covers entries of certain cut-to-length carbon steel plate by AHMSA.

[[Page 48182]]

Verification

    As provided in section 782(i)(3) of the Act, we verified 
information provided by the respondent using standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
version of the verification report.

Use of Facts Available

    We preliminarily determine that, in accordance with sections 
776(a)(2)(A) and 776(b) of the Act, the use of facts available is 
appropriate for AHMSA because it did not cooperate to the best of its 
ability in the course of this review. As discussed in more detail 
below, AHMSA failed to provide cost data from its normal accounting 
system. In addition, AHMSA withheld from the Department information 
from its normal cost accounting system until the end of verification. 
Because of these failures, the Department finds that AHMSA failed to 
comply to the best of its ability with the Department's requests for 
information.
    In its initial Section D questionnaire, the Department specified 
that the COP and constructed value (CV) figures should be based on the 
actual costs incurred by the company during the POR and recorded in the 
normal accounting system. The initial questionnaire also specified that 
the submitted costs must reconcile to the actual costs recorded in the 
cost accounting system used by the company to prepare its financial 
statements. Moreover, the initial questionnaire specified that if the 
company did not intend to use its normal accounting system and cost 
allocation methods to compute COP and CV, the company must contact us 
before preparing the response; AHMSA did not contact us before it 
submitted the response on March 30, 1997. After reviewing AHMSA's 
response, we noted that the company did not use its normal accounting 
system to calculate COP and CV data. AHMSA stated in its questionnaire 
response that the company's normal cost accounting system did not 
capture costs to the level of detail requested by the Department. 
Therefore, AHMSA claimed that it was necessary to use its sales pricing 
model to develop the COP and CV data. AHMSA's sales pricing model is 
not used in its normal accounting system. Additionally, the sales 
pricing model accounted for steel-grade cost differences but did not 
account for any other physical characteristic cost differences (e.g., 
thickness, width, surface finish).
    In accordance with Section 782(d), on April 23, 1997, the 
Department issued a supplemental questionnaire, which requested AHMSA 
to explain the sales pricing model and to clarify information about the 
reported product-specific costs. In response to the Department's 
supplemental request, AHMSA stated that ``there is no narrower product 
breakdown of costs. That is, AHMSA does not maintain costs for specific 
grades of plate.''
    On June 5, 1998, in advance of the scheduled COP/CV verification, 
the Department issued an agenda for the COP/CV verification. The agenda 
stated that, for selected products, the verifiers were to obtain and 
review data from AHMSA's normal cost accounting system. At 
verification, the Department found that AHMSA's normal cost accounting 
system did distinguish costs at a level more detailed than the level 
the company submitted in its questionnaire responses (see Cost 
Verification Report, August 27, 1998). Despite the Department's 
numerous requests during the verification, AHMSA officials withheld its 
normal cost accounting system product-specific cost records until the 
end of the verification. Without adequate time to analyze this 
information, the Department was unable to test the reliability of this 
data. We noted, however, that the normal cost accounting system costs 
were significantly different from the submitted grade-specific 
information.
    Additionally, at verification we found that AHMSA's sales pricing 
model and its reported costs failed to include significant plate 
production costs for various cost centers. Moreover, the Department was 
unable to determine whether there were additional cost centers related 
to plate production that were not included in the reported costs.
    Our verification testing and other evidence on the record regarding 
AHMSA's submitted cost methodology indicate that this methodology 
significantly distorted AHMSA's reported COP and CV. AHMSA's failure to 
use the product-specific costs recorded in its normal books and records 
prevents us from quantifying the magnitude of the distortions which 
exist in its submitted data. Sections 776(a)(2)(A) and 776(a)(2)(D) of 
the Act provide that if an interested party or any other person (A) 
withholds information, (B) fails to provide information within the time 
or in the form and manner requested, (C) significantly impedes a 
proceeding under this title, or (D) provides such information but the 
information cannot be verified, the administering authority, subject to 
section 782(d) of the Act, shall use the facts available.
    Section 782(e) of the Act provides that the Department shall not 
decline to consider information that is submitted by an interested 
party and that is necessary to the determination but which does not 
meet all the applicable requirements established by the Department if--

(1) the information is submitted by the deadline established for its 
submission,
(2) the information can be verified,
(3) the information is not so incomplete that it cannot serve as a 
reliable basis for reaching the applicable determination,
(4) the interested party has demonstrated that it acted to the best 
of its ability in providing the information and meeting the 
requirements established by the Department with respect to the 
information, and
(5) the information can be used without undue difficulties.
    AHMSA's failure to reconcile its submitted costs to its financial 
accounting system constitutes a verification failure under section 
776(a)(2)(D) of the Act. We must therefore consider whether the 
submitted cost data is usable under section 782(e) of the Act.
    First, as discussed above, the accuracy of AHMSA's submitted cost 
data could not be verified, as required by section 776(e)(2) of the 
Act. Second, because of the flaws in its cost data, which are detailed 
in the Cost Verification Report, AHMSA's submitted cost data ``cannot 
serve as a reliable basis for reaching the applicable determination'' 
under section 776(e)(3) of the Act, nor can it ``be used without undue 
difficulties'' under section 776(e)(5) of the Act. By its failure to 
provide cost information that could be reconciled to its normal 
accounting system, and its failure to give the Department fair notice 
of this defect, AHMSA has not acted to the ``best of its ability'' to 
meet the Department's requirements, pursuant to section 782(e)(4) of 
the Act.
    Therefore, the Department has determined that, since AHMSA's cost 
data could not be verified, section 776(a) of the AHMSA requires the 
Department to use the facts available with respect to this data. 
However, the Department must also determine whether (1) the use of 
facts available for AHMSA's cost data renders the rest of AHMSA's 
submitted information (i.e., the sales data) not usable, and (2) 
whether the use of adverse information as facts available is warranted.
    First, we have determined that the required use of facts available 
for

[[Page 48183]]

AHMSA's cost data renders its sales data not usable. Because of the 
flawed nature of the cost data, home market sales cannot be tested to 
determine whether they were made at prices at or above production cost. 
Since the Department can only make price-to-price comparisons (NV to 
EP) using those home market sales that did not fail the cost test, the 
systematically flawed nature of the cost data makes these comparisons 
impossible.
    In the absence of home market sales data (i.e., when the home 
market is viable but there are insufficient sales above COP to compare 
with U.S. sales), the Department would normally resort to the use of CV 
as NV. However, the CV information reported by AHMSA includes the 
unverifiable cost data. Therefore, the necessity for use of facts 
available for COP data precludes the use of the submitted CV 
information.
    The Department's prior practice has been to reject a respondent's 
submitted information in toto when flawed and unreliable cost data 
renders any price-to-price comparison impossible. See Notice of Final 
Determination of Sales at Less than Fair Value: Grain-Oriented 
Electrical Steel From Italy, 59 FR 33952 (July 1, 1994) (Electrical 
Steel From Italy) (where the respondent failed the cost verification). 
The Department explained that the rejection of a respondent's 
questionnaire response in toto is appropriate and consistent with past 
practice in instances where a respondent failed to provide verifiable 
COP information. See also Certain Corrosion-Resistant Carbon Steel Flat 
Products from Korea: Final Results of Antidumping Duty Administrative 
Review, 61 FR 18547, 18559 (April 26, 1996) (use of total BIA warranted 
where reliable price-to-price comparisons are not possible).
    If the Department were to accept verified sales information when a 
respondent's cost information (a substantial part of the response) does 
not verify, respondents would be in a position to manipulate margin 
calculations by permitting the Department to verify only that 
information which the respondent wishes the Department to use in its 
margin calculation. AHMSA has provided sales information in proper form 
which could be verified, but has not provided cost data which could be 
verified (see detailed discussion of verification testing in the Cost 
Verification Report). Although Electrical Steel from Italy involved the 
use of best information available (BIA) under the prior statute, the 
Department's practice of regarding verified sales information as 
unusable when the corresponding cost data is so flawed that price-to-
price comparisons are rendered impossible is still valid because the 
Department's concerns about potential manipulation are unchanged.
    Accordingly, we find that there is no reasonable basis for 
determining NV for AHMSA in this review. As a result, we could not use 
AHMSA's U.S. sales data in determining a dumping margin. The 
Department, therefore, had no choice but to resort to total facts 
available.
    With regard to which total facts available are appropriate, section 
776(b) of the Act provides that adverse inferences may be used when a 
party has failed to cooperate by not acting to the best of its ability 
to comply with requests for information. See also the Statement of 
Administrative Action, H. Doc. 3216, 103rd Cong. 2d Sess. at 870 (1996) 
(SAA). Specifically, section 776(b) of the Act provides that, where the 
Department ``finds that an interested party has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information from the administering authority [the Department] may use 
an inference that is adverse to the interests of that party in 
selecting from among the facts otherwise available.'' As discussed 
above, AHMSA failed to reconcile the reported costs to its normal cost 
accounting system. Moreover, AHMSA made no effort to provide the 
Department with notice of this defect. We have thus determined that 
AHMSA has not acted to the best of its ability to comply with our 
requests for information. Accordingly, consistent with section 776(b) 
of the Act, we have applied total adverse facts available.
    The statute provides no ``clear obligation'' or preference for 
relying on a particular source in determining adverse facts available. 
As determined in Certain Cut-to-Length Carbon Steel Plate from Sweden: 
Final Results of Antidumping Review, 62 FR 18396, at 18398 (April 15, 
1997) (Carbon Steel Plate from Sweden), the Department may use as facts 
available the final determination in the LTFV proceeding, even when the 
LTFV determination is based on best information available. In this 
case, as adverse facts available we have used the highest rate from any 
prior segment of the proceeding, 49.25 percent. Because AHMSA is the 
only company subject to the review of CTL carbon steel plate from 
Mexico and did not participate in the LTFV investigation, the highest 
rate is derived from the original petition, and was used as the BIA 
rate in the LTFV investigation.
    Whereas in this review, the Department must base the entire dumping 
margin for a respondent in an administrative review on the facts 
available because the respondent failed to cooperate, section 776(b) of 
the Act authorizes the Department to use an inference adverse to the 
interests of the respondent in choosing the facts available. Section 
776(b) also authorizes the Department to use as adverse facts available 
information derived from the petition, the final determination, a 
previous administrative review, or other information placed on the 
record. The SAA clarifies that information from the petition and prior 
segments of the proceeding is ``secondary information.'' See SAA at 
870. If the Department relies on secondary information as facts 
available, section 776(c) of the Act provides that the Department 
shall, to the extent practicable, corroborate such information using 
independent sources reasonably at its disposal. The SAA further 
provides that corroborate means simply that the Department will satisfy 
itself that the secondary information to be used has probative value. 
However, where corroboration is not practicable, the Department may use 
uncorroborated information.
    To corroborate the LTFV BIA rate of 49.25 percent, we examined the 
basis of the rates contained in the petition. The U.S. price in the 
petition was based on actual prices from invoices, quotes to U.S. 
customers, and IM-145 import statistics. Additionally, the foreign 
market value was based on actual price quotations to home market 
customers, home market price lists, and published reports of domestic 
prices. Home market price quotations were obtained through a market 
research report. (See Initiation of Antidumping Duty Investigations and 
Postponement of Preliminary Determinations: Certain Hot-Rolled Carbon 
Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, 
Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain 
Cut-to-Length Carbon Steel Plate From Various Countries, 57 FR 33488 
(July 29, 1992).) Export prices which are based on U.S. import 
statistics are considered corroborated. In addition, price lists and 
published reports of domestic prices which support the petition margin 
are independent sources. With regard to the normal values contained in 
the petition, the Department was provided no useful information by the 
respondent or other interested parties, and is aware of no other 
independent sources of information that would enable us to further 
corroborate the margin calculation in the petition. We note that the 
SAA at 870 specifically states that where ``corroboration may not be

[[Page 48184]]

practicable in a given circumstance,'' the Department may nevertheless 
apply an adverse inference. Based on these reasons, the Department 
considers the LTFV rate used as adverse facts available in this review 
to be corroborated.

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period September 1, 1996, through 
August 31, 1997:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
AHMSA.......................................................       49.25
------------------------------------------------------------------------

    The Department will issue disclosure documents within five days of 
the date of publication of this notice. Interested parties may also 
request a hearing within 30 days of publication. If requested, a 
hearing will be held as early as convenient for the parties but 
normally not later than 37 days after the date of publication or the 
first work day thereafter. Interested parties may submit case briefs 
not later than 30 days after the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 5 days after the filing of case 
briefs. The Department will issue a notice of the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such briefs or at a hearing, within 120 days 
from the publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of certain CTL carbon steel plate from Mexico 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 company will be the rate established in 
the final results of this review; (2) for merchandise exported by 
manufacturers or exporters not covered in this review but covered in 
the original investigation of sales at less than fair value (LTFV) or a 
previous review, the cash deposit 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 or a previous review, or the original 
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 49.25 percent, the 
``all others'' rate established in the LTFV investigation (58 FR 37192, 
July 9, 1993).
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility 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 determination is issued and published in accordance with 
sections 751(a)(1) of the Act (19 U.S.C. 1675(a)) and 19 CFR 351.213.

    Dated: August 31, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-24166 Filed 9-8-98; 8:45 am]
BILLING CODE 3510-DS-M