[Federal Register Volume 64, Number 68 (Friday, April 9, 1999)]
[Notices]
[Pages 17319-17323]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8924]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-533-814]


Stainless Steel Round Wire From India; Final Determination of 
Sales at Less Than Fair Value

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

ACTION: Notice of final determination of antidumping duty 
investigation.

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EFFECTIVE DATE: April 9, 1999.

FOR FURTHER INFORMATION CONTACT: Diane Krawczun or Richard Rimlinger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0198 or (202) 482-4477, 
respectively.

The Applicable Statute and Regulations

    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 (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR Part 351 (April 
1998).

Final Determination

    We determine that stainless steel round wire from India is being 
sold, or is likely to be sold, in the United States at less than fair 
value (LTFV), as provided in section 735 of the Act. The estimated 
margins are shown in the Continuation of Suspension of Liquidation 
section of this notice.

Case History

    The Department issued the preliminary determination in this 
investigation on November 12, 1998. See Notice of Preliminary 
Determinations of Sales at Less Than Fair Value and Postponement of 
Final Determinations--Stainless Steel Round Wire From Canada, India, 
Japan, Spain, and Taiwan; Preliminary Determination of Sales at Not 
Less Than Fair Value and Postponement of Final Determination--Stainless 
Steel Round Wire From Korea, 63 FR 60402 (November 18, 1998) 
(preliminary determination). Since the preliminary determination, the 
following events have occurred.
    In December 1998 and January 1999, we conducted on-site 
verifications of the questionnaire responses submitted by Raajratna 
Metal Industries Limited (Raajratna). We received case briefs from the 
petitioners 1 and the respondent on February 19, 1999, and 
we received rebuttal briefs from the same parties on February 26, 1999. 
We held a public hearing on March 11, 1999.
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    \1\ ACS Industries, Inc., Al Tech Specialty Steel Corp., 
Branford Wire & Manufacturing Company, Carpenter Technology Corp., 
Handy & Harman Specialty Wire Group, Industrial Alloys, Inc., Loos & 
Company, Inc., Sandvik Steel Company, Sumiden Wire Products Corp., 
and Techalloy Company, Inc.
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Scope of Investigation

    The scope of this investigation covers stainless steel round wire 
(SSRW). SSRW is any cold-formed (i.e., cold-drawn, cold-rolled) 
stainless steel product of a cylindrical contour, sold in coils or 
spools, and not over 0.703 inch (18 mm) in maximum solid cross-
sectional dimension. SSRW is made of iron-based alloys containing, by 
weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. Metallic coatings, such as 
nickel and copper coatings, may be applied.
    The merchandise subject to this investigation is classifiable under 
subheadings 7223.00.1015, 7223.00.1030, 7223.00.1045, 7223.00.1060, and 
7223.00.1075 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, the written description of the merchandise under 
investigation is dispositive.

Period of Investigation

    The period of the investigation (POI) is January 1, 1997, through 
December 31, 1997. This period corresponds to the respondent's four 
most recent fiscal quarters prior to the month of the filing of the 
petition (i.e., March 1998).

Fair Value Comparisons

    To determine whether sales of stainless steel round wire from India 
were made at less than fair value, we compared the export price (EP) to 
the normal value (NV). Our calculations followed the methodologies 
described in the preliminary determination except as noted below. See 
also our analysis memorandum dated April 2, 1999, which has been placed 
in the file.

Export Price and Constructed Export Price

    For the price to the United States, we used EP as defined in 
section 772 of the Act. We calculated EP based on the same methodology 
used in the preliminary determination, except that we calculated an 
amount for U.S.

[[Page 17320]]

indirect selling expenses for Raajratna's EP sales as an offset to its 
home-market commissions in accordance with Sec. 351.410(e) of the 
Department's regulations (see our response to Comment 3, below).

Normal Value

    We used NV as defined in section 773 of the Act. We calculated NV 
based on the same methodology used in the preliminary determination. We 
based NV on CV where there was no above-cost HM sale for comparison. In 
accordance with section 773(e)(1) of the Act, we calculated CV based on 
the sum of Raajratna's cost of materials, fabrication, general 
expenses, profit and U.S. packing costs. In general expenses, we 
included HM indirect selling expenses and an amount we calculated to 
cover expenses Raajratna incurred in its Mumbai sales office on certain 
sales which Raajratna had reported.
    Section 776(a)(1) of the Act provides that, if necessary 
information is not available on the record, the Department shall, 
subject to section 782(d) of the Act, use facts otherwise available in 
reaching the applicable determination.
    Raajratna indicated in its response that it was unable to segregate 
and report its U.S. indirect selling expenses. In addition, Raajratna 
did not report its home-market (HM) indirect selling expenses. As facts 
available, we calculated an indirect selling expense factor as an 
offset for Raajratna's HM commissions which we deducted from NV. We 
used the same factor to deduct HM indirect selling expenses from HM 
price in our determination of whether HM sales were made below the cost 
of production (COP) and to add HM indirect selling expenses to 
constructed value (CV).
    Also, Raajratna did not report all of its general and 
administrative (G&A) expenses with respect to its Mumbai (Bombay) sales 
office which assisted Raajratna in obtaining raw materials for the 
manufacture of subject merchandise and in the completion of certain 
sales. We calculated an amount based on Raajratna's response to cover 
these expenses.

Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by model, based on the sum of Raajratna's cost of 
materials, fabrication, general expenses, and packing costs. We relied 
on the COPs submitted by Raajratna except in the following instances 
where the submitted costs were not quantified or valued appropriately: 
(1) we calculated an amount for Raajratna's HM indirect selling 
expenses which we deducted from HM price for COP comparisons and added 
to CV for NV comparisons; (2) we used a revised financial expense ratio 
using cost of sales in the denominator; (3) we included in Raajratna's 
G&A expense portions of expenses incurred in Raajratna's Mumbai office; 
(4) we used a model-specific yield-loss rate to calculate direct 
materials costs; and (5) we added HM packing expenses to COP.

Currency Conversions

    As in the preliminary determination, we made currency conversions 
in accordance with section 773A of the Act. The Department's preferred 
source for daily exchange rates is the Federal Reserve Bank.

Verification

    As provided in section 782(i)(1) of the Act, we verified the 
information submitted by the respondent for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records, as well as 
original source documents provided by the respondent.

Interested Party Comments

Comment 1. Export Incentive System--Adjustment to EP

    Raajratna argues that the Department should add to EP amounts 
received as export incentives under the Indian Government's Duty 
Entitlement Passbook (DEPB) System. Raajratna argues that the DEPB 
benefits received from the Indian Government are directly related to 
exports and are part of Raajratna's net returns on its U.S. sales. 
Raajratna argues further that, alternatively, the Department should 
treat the DEPB benefits as a circumstance-of-sale (COS) adjustment to 
NV because the DEPB program is linked directly to Raajratna's U.S. 
sales. Raajratna cites Fuel Ethanol From Brazil, 51 FR 5572 (1986), and 
Acetylsalicylic Acid From Turkey, 52 FR 24492 (1987) to support its 
position.
    The petitioners respond that Raajratna is not entitled to an 
adjustment for reported DEPB benefits because it failed to meet the 
Department's two-prong test for a duty-drawback adjustment. 
Specifically, the petitioners note that Raajratna was unable to provide 
at verification information which would link the claimed refund amount 
to actual imports of raw materials. The petitioners also argue that the 
prior determinations Raajratna cited are irrelevant and inapplicable 
because both cases precede the Department's two-prong test for making 
duty-drawback adjustments to NV. The petitioners state that, in Fuel 
Ethanol From Brazil, the Department determined that premiums received 
under an export credit program directly related to the export sales 
were COS adjustments but that, because Raajratna's reported DEPB 
adjustments do not qualify as COS adjustments, Fuel Ethanol From Brazil 
is inapplicable for this final determination. The petitioners argue 
further that Raajratna's reliance upon Acetylsalicylic Acid From Turkey 
is also misplaced because the payment at issue was not a government 
benefit but the result of an arm's-length contract.
    Department's Position: Section 772(c)(1)(B) of the Act requires the 
Department to make an upward adjustment to NV for import duties rebated 
by reason of exportation to the United States. We interpret this 
requirement to apply only when the respondent meets our two-prong test 
i.e., that (1) the import duty and rebate are directly linked to, and 
dependent upon, one another; and (2) there were sufficient imports of 
the imported material to account for the duty drawback received for the 
export of the manufactured product (see e.g., Final Results of 
Antidumping Duty Administrative Review: Oil Country Tubular Goods from 
Korea, 64 FR 13169, 13172 (March 17, 1999)). We found during the sales 
verification that, although Raajratna demonstrated actual receipt of 
refund amounts under the DEPB system, it could not supply information 
establishing how the Government of India calculates the amount refunded 
to Raajratna. (See Sales Verification Report.) We also found that 
Raajratna's consumption of imported wire rod dropped significantly 
during the POI. Id. In addition, we found during the cost verification 
that the incentive credits received under the DEPB system are not based 
on the actual amount of the duty paid. (See Verification of Cost of 
Production and Constructed Value Data for Raajratna Metal Industries, 
Ltd., dated February 9, 1999.) Therefore, because Raajratna established 
neither a direct link between the import duty paid by suppliers and 
passed on to Raajratna, nor sufficient imports of wire rod to account 
for the duty it received, we are unable to adjust EP for duty drawback 
under section 772(c)(1)(B) of the Act.
    The prior determinations cited by Raajratna are unsupportive 
because both cases precede the establishment of the two-prong test. See 
Huffy Corp. v. U.S., 632 F. Supp. 50 (CIT 1986). In addition, contrary 
to Raajratna's assertion, benefits received under the DEPB

[[Page 17321]]

system do not qualify for a COS adjustment because benefits received 
constitute revenue to Raajratna. COS adjustments reflect selling 
expenses incurred by a respondent; however, we found at verification 
that the DEPB refunds were not tied to any selling expenses nor were 
they based on actual customs duties Raajratna paid to purchase raw 
materials for the manufacture of subject merchandise. Cost Verification 
Report at 2, 11; Sales Verification Report at 8. Indeed, Raajratna's 
DEPB benefits were based on the FOB sales prices of Raajratna's 
finished goods for export and exceeded substantially the amount of 
customs duties Raajratna paid to import raw materials directly. Thus, 
we have denied Raajratna a COS adjustment. (See section 
773(a)(6)(C)(iii) of the Act and section 351.410(b) of the Department's 
regulations.) Raajratna's reliance upon Fuel Ethanol From Brazil is 
unsupportive here because, in this case, we find that Raajratna's DEPB 
benefits do not qualify for a COS adjustment since they were unrelated 
to differences in selling expenses. Thus, we have denied Raajratna an 
adjustment to EP for refund amounts under the DEPB system.

Comment 2: Export Incentive System--CV Adjustment

    Raajratna argues that, if the Department does not increase U.S. 
prices to reflect the DEPB incentive, it should reduce Raajratna's CV 
by the export incentive earned on Raajratna's U.S. sales. Raajratna 
argues that an adjustment to CV is appropriate because the purpose of 
the export incentive is to reduce the cost of materials to the extent 
of the import duties incurred. Raajratna also argues that reducing CV 
by this incentive is consistent with Department precedent, citing 
Stainless Steel Bar From India, 62 FR 10540 (March 7, 1997) (SS Bar 
From India I), Stainless Steel Bar From India, 63 FR 13622 (March 20, 
1998) (SS Bar From India II), Solid Urea From the Former German 
Democratic Republic, 62 FR 61271 (1997) (Solid Urea From Germany), 
Camargo Correa Metais v. United States, Slip Op. 98-152 (CIT 1998) 
(Camargo Correa Metais), and AK Steel Corp. v. United States, Slip Op. 
97-152 (CIT 1997) (AK Steel Corp.).
    The petitioners argue that the Department should not use the DEPB 
incentive as an offset to Raajratna's CV. The petitioners argue that no 
statutory provision exists which allows for such an offset. The 
petitioners contend that the DEPB incentive is not granted in order to 
offset any additional costs Raajratna incurred in purchasing raw 
materials. The petitioners argue that, since the Department's 
regulations and Antidumping Manual define CV as the costs of producing 
the subject merchandise exported to the United States as if it were 
sold in the home market, CV represents non-export sales made in the 
home market. Raajratna rebuts petitioners' characterization of CV, 
citing Ad Hoc Committee of Florida Producers of Gray Portland Cement v. 
United States, Slip Op. 98-131 at 23 (CIT 1998).
    The petitioners argue further that, because Raajratna's claimed 
DEPB incentives were unrelated to (and exceeded) the actual amount of 
import duties paid, the Department should not use the incentive amounts 
to reduce Raajratna's COP or CV. Also, because Raajratna classifies the 
DEPB incentive as a revenue on its income statement, the petitioners 
argue that offsetting Raajratna's CV by the DEPB benefits constitutes a 
deviation from Raajratna's normal accounting practice and violates 
section 773(f)(1)(A) of the Act, the Statement of Administrative Action 
(H. Doc. 316, 103d Cong., 2d Sess. 821, 834-835 (SAA)), and Department 
practice.
    The petitioners reject the cases cited by Raajratna as 
unsupportive, arguing that the respondent in Camargo Correa Metais 
received a government credit for use against future tax liability in 
the home market, which the Court of International Trade (CIT) 
determined to constitute a refund of the tax. The petitioners 
distinguish this case in that the import duties Raajratna paid were not 
refunded upon exportation because the DEPB incentives it received were 
not based upon import duties paid on raw materials. The petitioners 
also argue that AK Steel Corp. and Solid Urea From Germany are 
unsupportive because they demonstrate the Department's long-standing 
practice to base COP upon a producer's actual costs and to refuse to 
restate such costs to exclude government payments which are linked to 
specific costs.
    Finally, the petitioners argue that, if the Department determines 
that the DEPB incentives should offset Raajratna's reported raw 
materials costs, the Department should cap the DEPB amount by the level 
of import duties and apply it only to Raajratna's CV and not to its 
COP. The petitioners note that Raajratna requests only that its CV 
material costs be adjusted for DEPB benefits. The petitioners argue 
further that an offset to COP for the DEPB benefits is improper because 
no correlation exists between the import duties paid and the DEPB 
benefits received upon exportation.
    Department's Position: We found at verification that the DEPB 
refunds were unrelated to the customs duties Raajratna paid to purchase 
raw materials for the manufacture of subject merchandise. Cost 
Verification Report at 2, 11; Sales Verification Report at 8. Indeed, 
Raajratna's DEPB benefits were based on the FOB sales prices of 
Raajratna's finished goods for export and exceeded substantially the 
amount of customs duties Raajratna paid to import raw materials 
directly. Therefore, because we find no link between the revenue 
Raajratna received and its cost of purchasing raw materials, we are 
unable to decrease Raajratna's COM to reflect the DEPB benefits 
received.
    Although Raajratna cited prior decisions and precedent in support 
of its position, the facts of this case indicate that an offset for raw 
materials costs is not warranted here. First, AK Steel Corp. did not 
address the issue of a downward adjustment to production costs to 
reflect government benefits, as Raajratna maintains. In Solid Urea from 
Germany, the Department agreed with the respondents that, where 
government payments were linked to specific costs and recorded in the 
respondent's financial statements, the respondent's COP should reflect 
government benefits received. Solid Urea from Germany at 61273. Here, 
Raajratna could not link its DEPB payments to specific costs and 
records the payments as revenue; thus to capture the DEPB benefits in 
Raajratna's COP calculation would be inconsistent with Solid Urea from 
Germany. In Camargo Correa Metais, the Department and the CIT found 
that a government tax credit, which constituted a refund, should be 
deducted from the respondent's CV calculation. Id. at 3. Here, however, 
we found that import duties Raajratna paid were not refunded upon 
exportation because the DEPB incentives were not directly based upon 
import duties Raajratna had paid on raw materials. Further, SS Bar from 
India I did not address an adjustment to CV for government benefits 
received. Finally, Raajratna cites to SS Bar from India II, in which 
the Department did not discuss the reasons justifying an adjustment to 
the respondent's CV costs for government credits received. Id. However, 
in the original less-than-fair-value investigation for that case, the 
Department explained that the facts of the case warranted an adjustment 
to CV for government credits received because the revenues were 
``directly related'' to its purchases of domestic raw materials used to 
produce subject merchandise

[[Page 17322]]

and represented an appropriate offset to the respondent's raw materials 
costs. Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Bar from India, 59 FR 66915, 66920 (December 28, 1994). 
Because in this case we found no link between Raajratna's DEPB credits 
received and its raw materials costs, we find no justification for an 
offset to CV for those credits. Thus, where NV is based on CV, we have 
made no adjustment to Raajratna's raw materials costs for DEPB credits 
it received.

Comment 3: COP and CV Calculation

    The petitioners argue that the Department should revise Raajratna's 
reported G&A expense ratio to include expenses incurred in its Mumbai 
office. The petitioners note that Raajratna included in its G&A expense 
ratio only the salary of the Mumbai-office employee performing liaison 
functions but not the expenses incurred in performing those functions. 
The petitioners argue that there are other legitimate G&A costs 
incurred by the Mumbai office for Raajratna's operation as a whole and 
that these should be included in COP and CV in accordance with the 
Department's long-standing practice.
    Department's Position: We agree with the petitioners that we should 
include Raajratna's Mumbai-office expenses in the COP and CV 
calculation. We verified that the Mumbai office is a trading office 
which purchases raw materials consumed in the manufacturing process of 
the subject merchandise and occasionally facilitates HM sales. To 
calculate its general expenses, Raajratna included only the salary of 
the employee assigned to the Mumbai office. Raajratna excluded from the 
calculation of its G&A rate office expenses associated with maintaining 
that employee at the Mumbai office. Consistent with our normal 
methodology, we have allocated a portion of the total expenses of the 
Mumbai office to the merchandise under investigation. (See Fresh 
Atlantic Salmon, 63 FR at 31433.)

Comment 4: HM Indirect Selling Expenses

    The petitioners argue that Raajratna did not report HM indirect 
selling expenses in its calculation of COP and that the Department 
should deduct these expenses from net HM prices before making the 
comparison to COP.
    Department's Position: We agree that we should deduct HM indirect 
selling expenses from net price in our COP calculation. We calculated a 
HM indirect selling expense amount for Raajratna by calculating an 
indirect selling expense factor and applying it to Raajratna's HM 
sales. We deducted this amount from net price for COP. (See Final 
Determination Analysis Memorandum: Stainless Steel Round Wire From 
India, dated April 2, 1999.) We also added HM indirect selling expenses 
to our CV calculations.

Comment 5: Packing Expenses

    The petitioners argue that the Department should add packing 
expenses to the calculation of Raajratna's COP or deduct packing 
expenses from the ``net price COP'' calculation.
    Department's Position: We agree that we must deduct packing costs 
from net price for COP, which we compare to the cost of manufacturing, 
in order to achieve an apples-to-apples comparison. Therefore, we have 
deducted packing expenses from net price for COP for the final 
determination. This is consistent with the methodology we employed for 
all other SSRW investigations (see, e.g., Preliminary Determination 
Analysis Memorandum--SSRW from Canada, Central Wire, dated November 12, 
1998).

Comment 6: Commission Offset

    The petitioners argue that the Department should use facts 
available for Raajratna's commission offset because Raajratna reported 
HM commissions but not U.S. commissions or U.S. indirect selling 
expenses. The petitioners argue that the Department should either omit 
the deduction for HM commissions from its calculation of HM prices or 
set the U.S. offset to the value of the HM commission.
    Department's Position: We agree that Raajratna reported no U.S. 
commissions or U.S. indirect selling expenses. However, rather than 
omit the deduction for HM commissions or set the U.S. offset to the 
value of the HM commission, we have calculated an indirect selling 
expense amount by allocating all indirect selling expenses incurred by 
Raajratna over all sales in both markets. We then offset HM commissions 
by this amount for the final determination in accordance with section 
351.410(e) of the Department's regulations. (See Final Determination 
Analysis Memorandum: Stainless Steel Round Wire From India, dated April 
2, 1999.)

Comment 7: Financial Expense Ratio

    Raajratna noted that the Department should revise its financial 
expense ratio based on the Department's verification findings.
    Department's Position: We agree with Raajratna that we should 
revise the financial expense ratio according to our findings at 
verification and have made this adjustment for the final determination 
based on a company-wide cost-of-sales amount.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing the Customs Service to continue to suspend liquidation of all 
entries of stainless steel round wire from India that are entered, or 
withdrawn from warehouse, for consumption on or after November 18, 
1998, the date of publication of the preliminary determination in the 
Federal Register. The Customs Service shall require a cash deposit or 
the posting of a bond equal to the weighted-average amount by which the 
normal value exceeds the EP, as indicated in the chart below. These 
instructions suspending liquidation will remain in effect until further 
notice.
    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              (percent)
------------------------------------------------------------------------
Raajratna..................................................        18.64
All Others.................................................        18.64
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will, within 45 days, determine 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry. If the ITC determines that material 
injury or threat of material injury does not exist, the proceeding will 
be terminated and all securities posted will be refunded or canceled. 
If the ITC determines that such injury does exist, the Department will 
issue an antidumping duty order directing the Customs Service to assess 
antidumping duties on all imports of the subject merchandise entered, 
or withdrawn from warehouse, for consumption on or after the effective 
date of the suspension of liquidation.
    We are issuing and publishing this determination in accordance with 
sections 735(d) and 777(i)(1) of the Act.


[[Page 17323]]


    Dated: April 2, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-8924 Filed 4-8-99; 8:45 am]
BILLING CODE 3510-DS-P