[Federal Register Volume 63, Number 177 (Monday, September 14, 1998)]
[Notices]
[Pages 49078-49080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-24599]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-122-822]


Notice of Court Decision: Certain Corrosion-Resistant Carbon 
Steel Flat Products From Canada

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

ACTION: Notice of court decision

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SUMMARY: On July 23, 1998, the United States Court of International 
Trade (``CIT'') affirmed the determination made by the Department of 
Commerce (``the Department'') pursuant to a remand of the final results 
of administrative review in the case of certain corrosion-resistant 
carbon steel flat products from Canada. AK Steel Corp. et al. v. United 
States, Slip Op. 98-106 (CIT, July 23, 1998) (``AK Steel''). In its 
remand determination, the Department corrected ministerial errors in 
the calculation of Stelco Inc.'s (``Stelco'') margin, eliminated the 
credit for partial reversal of prior period charges from Dofasco 
Inc.'s/Sorevco's (``Dofasco'') cost calculation, and determined that 
Continuous Colour Coat's (``CCC'') post-invoicing price adjustment 
methodology for credit and debit notes allocated to multiple sales was 
acceptable.

EFFECTIVE DATE: August 3, 1998.

FOR FURTHER INFORMATION CONTACT: Lyn Baranowski (Dofasco), Carrie Blozy 
(CCC), N. Gerard Zapiain (Stelco) or Rick Johnson, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W. Washington, D.C. 
20230; telephone: (202) 482-1385, 482-0165, 482-1395, or 482-3818, 
respectively.

SUPPLEMENTARY INFORMATION: On March 28, 1996, the Department published 
its final results of administrative review of the antidumping order on 
corrosion-resistant steel from Canada. See Certain Corrosion-Resistant 
Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate 
From Canada; Final Results of Antidumping Duty Administrative Reviews, 
61 FR 13815 (March 28, 1996) (``Final Results''). The review covered 
three manufacturers/exporters, CCC, Dofasco, and Stelco, of the subject 
merchandise for the period February 4, 1993, through July 31, 1994.
    On November 14, 1997, in its Memorandum Opinion in the case of AK 
Steel Corp. et. al. v. United States, Slip Op 97-152 (CIT, November 14, 
1997) (``Memorandum Opinion''), the CIT remanded three issues to the 
Department. For CCC, the Department was ordered to reconsider post-
invoicing adjustments to price and indicate where on the record the 
adjustments in question are shown to be properly related, either 
directly or through allocation, to specific sales transactions. 
Memorandum Opinion at 58. For Dofasco, the Department was ordered to 
reconsider Dofasco's partial reversal of restructuring charges. The CIT 
determined that the Department must ``eliminate the credit for the 
reversals unless it can articulate a rational reason for abandoning its 
past practice.'' Memorandum Opinion at 32. Finally, for Stelco, the 
Department requested, and was granted, a remand to correct ministerial 
errors in Stelco's final margin calculation.

I. CCC

A. Background

    In its final results of administrative review, the Department 
determined that CCC's price adjustment methodology regarding credit or 
debit notes for sales in both the home market and United States was 
acceptable. Specifically, the Department determined that the allocation 
of a credit or debit note over multiple invoices was reasonable and 
accepted these notes as direct adjustments. Final Results at 13822.

B. Post-Invoicing Price Adjustments

    Through an examination of the record, the Department determined 
that of the twenty home market and U.S. sales examined during 
verification, only four home market and zero U.S. sales involved post-
invoicing adjustments. For the first two home market sales, the 
Department found an acceptable level of price specificity in CCC's 
price adjustment methodology. The third home market sale involved a 
credit note which referenced one work-order. The work-order contained 
multiple invoices and CCC allocated the credit note to all transactions 
made pursuant to the work-order on a weighted average basis. Because of 
CCC's inability to match the returned merchandise to the coil 
identified on the internal complaint

[[Page 49079]]

form, the Department determined that CCC's allocation of the credit 
note across sales made pursuant to the work-order identified on the 
internal complaint form was sufficiently specific. Finally, the fourth 
home market sale involved a debit note issued to a customer that did 
not reference a specific invoice or work-order. The Department 
concluded that a more specific allocation was not feasible, and that 
CCC's methodology does not distort the normal value and in turn the 
dumping margin.
    Therefore, the Department determined that CCC's post-invoicing 
price adjustment methodology for credit and debit notes allocated to 
multiple sales was acceptable.

II. Dofasco

A. Background

    In calculating Dofasco's Cost of Production (``COP'') and 
Constructed Value (``CV'') during the less-than-fair value (``LTFV'') 
investigation, the Department included in their entirety certain 
estimated expenditures related to restructuring of the corporation. 
Final Results, 61 FR at 13825 (citing Final Determination of Sales at 
Less Than Fair Value: 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 Canada, 58 FR 37099, 37108 (July 9, 1993)). The 
Department determined that estimated expenditures related to 
restructuring should be included in their entirety as part of Dofasco's 
COP and CV, because these expenditures were on Dofasco's financial 
statements and were considered ordinary expenses that Dofasco charged 
against its 1992 income.
    In the final results of this administrative review, the Department 
determined that Dofasco's prior period reversal of a portion of 
restructuring estimates should be allowed because Dofasco's financial 
statements include certain partial reversals of those earlier 
restructuring estimates (the reductions were included in Dofasco's 
financial statements in 1993 and 1994 as a credit to costs).

B. Prior Period Reversal Credit

    In defendant's memorandum dated April 15, 1997, the Department 
requested a remand to clarify its policy with respect to the reversal 
charges and to determine if the adjustments made for Dofasco were 
consistent with that practice and policy. The court did not grant 
immediate remand, but ordered the Department to explain and describe 
its policy and past practice. As articulated before the court, the 
Department's past practice regarding reversal of charges for a prior 
period has two components. As a first step, the Department will rely 
upon a respondent's books and records prepared in accordance with the 
home country's Generally Accepted Accounting Principles (``GAAP'') 
unless those accounting principles do not reasonably reflect the costs 
of producing the merchandise. See Certain Cut-to-Length Carbon Steel 
Plate from Germany: Final Results of Antidumping Administrative Review, 
61 FR 13834, 13837 (March 28, 1996), in which the Department did not 
allow a reversal of prior period costs because to do so would be to 
distort the costs in the subsequent period; see also Final 
Determination of Sales at Less Than Fair Value: Small Diameter Circular 
Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe from 
Italy, 60 FR 31981, 31991 (June 19, 1995), in which the Department 
noted that reducing a subsequent year's costs because of the reversal 
in that year of a prior year's estimate would mean distorting the 
actual production costs incurred in a subsequent year.
    As a second step in the analysis, the Department may recognize an 
exception to its general rule in cases such as this one. The Department 
stated that the matching principle of accounting may be superseded by 
the concept of conservatism (the concept that certain expenses relating 
to liabilities for current and future periods be accrued in the first 
accounting period in which they can be estimated) in certain situations 
such as this one. Because in the LTFV investigation the Department 
included, in its entirety, the amount of estimated expenditures in the 
COP/CV calculation and because implementation of the multi-year 
restructuring plan was still in progress during the review, the 
Department determined that it was reasonable to allow Dofasco to 
include in its COP/CV calculation certain adjustments or reversals to 
the estimated expenditures accrued in 1992.
    In response, the court stated that first, the concept of 
conservatism does not supersede the concept of matching, but should be 
incorporated into it. Secondly, the court stated that corrections to 
the financial records in one period should be made only in that same 
period; it is respondent's responsibility to correct estimates promptly 
and in the same proceeding to which they are applicable. Third, the 
court said that although it may not have been appropriate for the 
Department to include all costs for a multi-year restructuring in the 
LTFV investigation cost calculation, that proceeding is not before the 
court. Finally, the court stated that allowing a credit against costs 
accounted for years earlier when they were estimated but not incurred 
may result in a double distortion and may impact the company in the 
current period. The court also said that the Department's 
rationalization, that it ``must abide by its long standing policy'' 
(see Final Results, 61 FR 13825), does not stand scrutiny because its 
practice is the opposite of what it did in the instant case. As such, 
the Court remanded this issue to the Department with the instruction 
that the Department was to eliminate the credit for the reversals 
unless it could articulate a rational reason for abandoning its past 
practice.
    In its redetermination on remand, the Department eliminated the 
credit for the partial reversal of a prior period charge from the 
calculation of Dofasco's costs, as instructed by the Court. In 
addition, in reviewing the margin calculation, the Department 
identified and corrected ministerial errors in the calculation of 
interest expenses, general and administrative expenses, and variable 
and total cost of manufacturing for model match purposes. See Analysis 
Memorandum dated January 28, 1998, for more information concerning this 
issue.

III. Stelco

A. Background

    In its final results, the Department calculated a margin for 
Stelco's imports of corrosion resistant product using our standard 
calculation programs. On April 19, 1996, petitioners alleged that there 
were three ministerial errors in the Department's margin calculation 
program for this product. The Department agreed with petitioners but 
was unable to correct these errors prior to jurisdiction vesting with 
the CIT.

B. Ministerial Errors

    The ministerial errors at issue consist of the following:
    1. In the Final Results, 61 FR 13816, the Department stated that it 
intended to follow the ``Zenith footnote 4'' methodology for adjusting 
United States Price (``USP'') for home market consumption taxes. 
Pursuant to this methodology, when merchandise exported to the United 
States is exempt from home market consumption taxes, the Department 
adds to USP the absolute amount of such taxes charged on comparison 
sales in the home market. Inadvertently, the Department

[[Page 49080]]

failed to calculate USP in accordance with this methodology.
    2. The Department intended to correct an adjustment to certain 
sales that resulted in double counting. Final Results at 13832. 
However, the Department failed to recalculate USP in accordance with 
this methodology.
    3. In the Final Results at 13832, the Department stated that it 
intended to treat Stelco's slitting expenses as further manufacturing 
costs for purposes of calculating exporter's sales price. Nevertheless, 
the Department neglected to make these adjustments in the calculations 
for the final results.
    In its redetermination on remand, the Department corrected these 
ministerial errors in Stelco's margin calculation.
    Results of Redetermination on Remand: The Department filed its 
redetermination with the CIT on January 28, 1998. See Final Results of 
Redetermination on Remand, AK Steel Corp. et al. v. United States, 
Court No. 96-05-01312. On July 23, 1998, the CIT affirmed the 
Department's remand determination.
    As a result of the remand determination, the Department re-
calculated the weighted average margins for Dofasco and Stelco. The 
final dumping margins for the period February 4, 1993, through July 31, 
1994 are as follows:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
CCC........................................................         1.96
Dofasco....................................................         1.72
Stelco.....................................................         5.62
------------------------------------------------------------------------

    In its decision in Timken Co. v. United States, 893 F.2d 337 (Fed. 
Cir. 1990) (``Timken''), the United States Court of Appeals for the 
Federal Circuit held that, pursuant to 19 U.S.C. section 1516a(e), the 
Department must publish a notice of a court decision which is not ``in 
harmony'' with a Department determination, and must suspend liquidation 
of entries pending a ``conclusive'' court decision. The CIT's July 23, 
1998 decision in AK Steel constitutes a decision not in harmony with 
the Department's final results of review. Publication of this notice 
fulfills the Timken requirement. Accordingly, the Department will 
continue to suspend liquidation pending the expiration of the period of 
appeal, or, if appealed, until a ``conclusive'' court decision.

    Dated: September 4, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-24599 Filed 9-11-98; 8:45 am]
BILLING CODE 3510-DS-P