[Federal Register Volume 65, Number 7 (Tuesday, January 11, 2000)]
[Notices]
[Pages 1597-1601]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-634]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-533-808]


Certain Stainless Steel Wire Rod From India; Preliminary Results 
and Partial Rescission of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results and partial rescission of 
antidumping duty administrative review.

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SUMMARY: In response to a request by Viraj Group, Ltd. (``Viraj''), 
respondent, the Department of Commerce (``the Department'') is 
conducting an administrative review of the antidumping duty order on 
stainless steel wire rod (``SSWR'') from India. The period of review 
(``POR'') is December 1, 1997, through November 30, 1998.
    We have preliminarily determined that respondent Viraj has made 
sales below normal value (``NV''). If these preliminary results are 
adopted in our final results of this administrative review, we will 
instruct the U.S. Customs service to assess antidumping duties on all 
appropriate entries. We invite interested parties to comment on these 
preliminary results. Parties who submit arguments in this segment of 
the proceeding are requested to submit with the argument: (1) A 
statement of the issue, and (2) a brief summary of the argument.

EFFECTIVE DATE: January 11, 2000.

FOR FURTHER INFORMATION CONTACT: Stephen Bailey or Rick Johnson, AD/CVD 
Enforcement Group III, Office 9, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0413 (Bailey) or (202) 482-3818 (Johnson).

SUPPLEMENTARY INFORMATION:

The 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 (``URAA''). In addition, unless 
otherwise indicated, all references to the Department's regulations are 
to the provisions codified at 19 CFR Part 351 (1998).

Background

    On October 20, 1993, the Department published in the Federal 
Register the antidumping duty order on certain stainless steel wire rod 
from India (58 FR 54110). On December 8, 1998, the Department published 
in the Federal Register a notice of opportunity to request an 
administrative review of this antidumping duty order (63 FR 67646).
    On December 29, 1998, Mukand, Ltd. (``Mukand''), Panchmahal Steel, 
Ltd. (``Panchmahal'') and Viraj requested an administrative review of 
the antidumping duty order on certain stainless steel wire rods from 
India. In accordance with 19 CFR 351.221(b), we published a notice of 
initiation of the review of Panchmahal and Viraj on January 25, 1999 
(64 FR 3682), and published a notice of initiation of the review of 
Mukand on February 22, 1999 (64 FR 8542). The review of Mukand was 
initiated at a later date due to an inadvertent omission in the January 
25, 1999 Federal Register notice. Pursuant to 19 CFR 351.213(d)(1), on 
February 23, 1999, Mukand and Panchmahal timely withdrew their requests 
for review.
    Respondent Viraj submitted its Section A questionnaire response on 
March 24, 1999, and its Sections B & C questionnaire responses on April 
19, 1999.
    On May 11, 1999, petitioners submitted a sales-below-cost 
allegation. This allegation was supplemented on July 2, 1999. Based on 
the request by petitioners, on July 23, 1999, the Department initiated 
a sales-below-cost investigation of stainless steel wire rod by Viraj. 
On August 30, 1999, respondent Viraj submitted its response to the 
Section D questionnaire. The Department, however, considered this 
response to be insufficient and requested Viraj to re-submit its 
Section D questionnaire response, which it did on October 14, 1999.
    On August 31, 1999, due to the reasons set forth in the Extension 
of Time Limit for the Preliminary Results of Antidumping Administrative 
Review: Certain Stainless Steel Wire Rod from

[[Page 1598]]

India, the Department extended the due date for the preliminary 
results. In accordance with section 751(a)(3)(A) of the Act, the 
Department extended the due date for the notice of preliminary results 
the maximum 120 days allowable, from the original due date of September 
2, 1999, to January 3, 2000.
    On November 4, 1999, Viraj asked to withdraw its request for this 
review. Pursuant to 19 CFR 351.213(d)(1), if a respondent withdraws its 
request for an administrative review within 90 days of the date of 
publication of the initiation of the review, the Department will 
rescind the review. The Department may extend the time limit if it 
decides that it is reasonable to do so. In this case, Viraj's request 
for rescission has not been granted because the request was filed after 
the 90 day deadline had passed (the administrative review was initiated 
on January 25, 1999), and we do not find that it is otherwise 
reasonable to do so (see Partial Rescission of Review, below, for 
details).
    From December 6-11, 1999, the Department conducted a sales and cost 
verification of Viraj at its production facilities in Tarapur, India. 
The results of this verification are contained in the sales and cost 
verification reports for Viraj, public versions of which are on file in 
the Department's Central Records Unit, Room B-099 of the Main Commerce 
Building.

Scope of the Review

    Imports covered by this review are shipments of SSWR from India. 
SSWR are products which are hot-rolled or hot-rolled annealed and/or 
pickled rounds, squares, octagons, hexagons or other shapes, in coils. 
SSWR are made of alloy steels containing, by weight, 1.2 percent or 
less of carbon and 10.5 percent or more of chromium, with or without 
other elements. These products are only manufactured by hot-rolling and 
are normally sold in coiled form, and are of solid cross-section. The 
majority of SSWR sold in the United States are round in cross-section 
shape, annealed and pickled. The most common size is 5.5 millimeters in 
diameter.
    The SSWR subject to this review are currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030, 
7221.00.0040, 7221.00.045, 7221.00.0060, 7221.00.0075, and 7221.00.0080 
of the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheading is provided for convenience and customs 
purposes, the written description of the merchandise under review is 
dispositive.

Partial Rescission of Review

    Pursuant to 19 CFR 351.213(d)(1) of the Department's regulations, a 
party that requests an administrative review may withdraw such request 
within 90 days of the date of publication of the notice of initiation 
of the administrative review. As noted above in the ``Background'' 
section, because Mukand and Punchmahal have timely withdrawn their 
requests for review, the Department is rescinding the review with 
respect to these two companies. This rescission of administrative 
review and notice are in accordance with section 751(a)(1) of the Act 
and 19 CFR 351.213(d)(1). By contrast, Viraj did not withdraw its 
request for an administrative review in a timely manner. Although under 
section 351.213(d)(1) the Department may extend the deadline for 
withdrawing a request for review, in this case Viraj did not ask for 
recission of the review until after the Department had expended 
substantial resources in conducting the review. In adopting section 
351.213(d)(1) the Department explained that we would take into 
consideration how much time and effort had been devoted to a review in 
deciding whether to permit an untimely withdrawal of request for 
review. Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 
27296, 27317 (1997). In this particular case, the Department has 
solicited and received multiple questionnaire responses and 
supplemental responses from respondent, and, as discussed above, has 
initiated a sales-below-cost investigation. Therefore, we have 
continued with this review with respect to Viraj.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondent, covered by the description in the 
``Scope of the Review'' section, above, and sold in the comparison 
market during the POR, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. Because 
there were no contemporaneous sales of identical or similar foreign 
like product in the comparison market to compare to U.S. sales, we 
compared U.S. sales to constructed value (``CV'').

Date of Sale

    While the Department normally will use the date of invoice as the 
date of sale, we have determined in this case that the purchase order 
date better reflects the date on which Viraj established the material 
terms of sale. In this case, Viraj stated in its April 19, 1999 
questionnaire response that the material terms of sale are set at order 
date. This claim was confirmed at verification. See Memorandum to the 
File: Certain Stainless Steel Wire Rod from India--Antidumping 
Administrative Review 12/01/97 through 11/30/98--Verification of Viraj 
Impoexpo's (``VIL'') and Viraj Alloys (``VAL'') Sales (``Sales 
Verification Report''), at page 5 (January 3, 2000). Although by using 
the order date as date of sale the U.S. sales fall outside of the POR, 
the Department has the discretion to consider U.S. sales which fall 
outside of the POR in its analysis. In accordance with the Department's 
practice, we reviewed sales of merchandise shipped to the United States 
during the POR.

Affiliation

    Viraj is composed of three different companies, two of which are 
involved in the production and sale of subject merchandise. Viraj 
Forgings Ltd., which produces steel forgings, is not involved in the 
production or sale of SSWR. Viraj Alloys, Ltd. (``VAL'') produces steel 
billets which are transferred to Tata SSL, Ltd. (``Tata''), an 
unaffiliated Indian steel company, which is subcontracted to roll the 
billets as a tolling operation. VAL then sells the rolled billets to 
Viraj Impoexpo, Ltd. (``VIL''), which anneals and pickles a certain 
percentage of the rolled billets into SSWR and subsequently exports the 
subject merchandise.

Normal Value Comparisons

    To determine whether sales of subject merchandise to the United 
States were made at less than normal value, we compared the Export 
Price (``EP'') to the NV, as described in the ``Export Price'' and 
``Normal Value'' sections of this notice.

Export Price

    For calculation of the price to the United States, we used EP, in 
accordance with section 772(a) of the Act, because the subject 
merchandise was first sold by Viraj to an unaffiliated purchaser in the 
United States prior to importation and CEP treatment was not otherwise 
indicated. The Department calculated EP for Viraj based on packed, 
delivered prices to customers in the United States. We made deductions 
from the starting price for movement expenses (foreign inland freight, 
ocean freight, insurance, and brokerage and handling) in accordance 
with section 772(c)(2) of the Act. Additionally, we added to the U.S. 
price an amount for duty drawback pursuant to section

[[Page 1599]]

772(c)(1)(B) of the Act. For a further discussion of duty drawback, see 
Sales Verification Report, at pages 11-12, January 3, 2000. As 
discussed above in the ``Date of Sale'' section, we used order date as 
the date of sale.

Normal Value

    After testing (1) home market viability and (2) whether comparison 
market sales were at below-cost prices, we calculated NV as noted in 
the ``Price-to-CV Comparisons'' section of this notice.

1. Comparison Market Viability

    Viraj had no sales of the subject merchandise in the home market 
during the POR. Moreover, the only market outside the United States to 
which Viraj sold the foreign like product during the POR was Turkey. In 
order to determine whether there is a sufficient volume of sales in 
Turkey to serve as a viable basis for calculating NV, we compared 
Viraj's volume of third country sales of the foreign like product to 
the volume of U.S. sales of the subject merchandise, in accordance with 
section 773(a)(1)(B)(ii) of the Act. Because Viraj's aggregate volume 
of third country sales to Turkey was greater than five percent of its 
aggregate volume of U.S. sales for the subject merchandise, we based 
our NV analysis on the prices at which the foreign like product was 
first sold for consumption in Turkey.

2. Cost of Production Analysis

    On May 11, 1999, petitioners filed an allegation that Viraj made 
third country sales at prices that were below the cost of production 
(``COP''), and supplemented this allegation on July 2, 1999. Our 
analysis of the allegation indicated that there were reasonable grounds 
to believe or suspect that Viraj had sold SSWR in the third country 
market at prices less than the COP. Accordingly, on July 23, 1999, 
pursuant to section 773(b) of the Act, we initiated a COP investigation 
to determine whether sales were made at prices less than the COP.
    We conducted the COP analysis described below.
A. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of Viraj's cost of materials and fabrication for the 
foreign like product, including the cost of the tolling operation 
performed by Tata, plus an amount for third country selling, general 
and administrative expenses (``SG&A''), including interest expenses, 
and packing costs, with the following exceptions.

1. Billet-Major Input

    In its original section D questionnaire response, dated August 30, 
1999, VIL reported that it purchases the billets used in the production 
of SSWR from VAL (after Tata further processes the billets). Because 
the billets are produced by VAL, an affiliate of VIL, and because the 
billets are a major input in the production of SSWR sold by VIL, the 
major input rule should be applied to value the billets that VIL 
obtained from VAL (see Notice of Final Results and Partial Recission of 
Antidumping Duty Administrative Review: Certain Pasta From Italy, 64 FR 
6615, 6621 (February 10, 1999)). The major input rule of section 
773(f)(3) of the Act provides that the Department may value inputs 
obtained from affiliated parties at the highest of the transfer price, 
market price, or the affiliated supplier's costs. See, 19 CFR Section 
351.407(b). In this instance, the Department found at verification that 
the transfer price is identical to the market price and above VAL's 
cost of production. See Memorandum to the File: Certain Stainless Steel 
Wire Rod from India-Antidumping Administrative Review 12/01/97 through 
11/30/98--Verification of Viraj Impoexpo's (``VIL'') and Viraj Alloys 
(``VAL'') Cost of Production (``Cost Verification Report'') at page 8 
(January 3, 2000). Therefore, we are valuing input billets at the 
transfer price, as reported in verification exhibit 15 of the Cost 
Verification Report.

2. Fixed Overhead Costs

    At verification, the Department determined that Viraj did not 
include the account items ``Material Handling Charges'' (i.e., freight 
expenses) and ``Repairs to Plant & Machinery'' in its calculation of 
fixed overhead costs. See Cost Verification Report at page 11. Because 
these expenses relate to the production of subject merchandise, we have 
determined that they should be included as fixed overhead costs. 
Accordingly, we have recalculated the ratio of fixed overhead costs to 
the cost of goods sold and adjusted the total cost of manufacture. See 
Memorandum to the File: Analysis Memorandum for the Preliminary Results 
of Review for Viraj (``Analysis Memorandum'') at page 5.

3. Variable Overhead Costs

    At verification, the Department found a minor error by Viraj in its 
calculation of the variable overhead costs for light diesel oil. Based 
on this finding, we have revised Viraj's reported variable overhead 
cost. See Analysis Memorandum at page 5.

4. General and Administrative (``G&A'') Expenses

    At verification, the Department found that Viraj improperly 
included selling expenses in its calculation of G&A expenses. 
Therefore, for purposes of these preliminary results, we have 
recalculated the G&A factor. See Analysis Memorandum at page 4.

5. Interest Expenses

    At verification, the Department found that in addition to reporting 
bank charges as a direct selling expense in its Section B & C response, 
Viraj reported banking charges in its calculation of net interest 
expense. Therefore, for purposes of these preliminary results, we have 
excluded banking charges from the calculation of net interest expense. 
Additionally, at verification we found that Viraj deducted from net 
interest expense an amount for interest usance charges. Because these 
charges were not reported by Viraj in its U.S. or home market sales 
file as a direct selling expense, we preliminarily find that these 
interest usance charges should be included in Viraj's net interest 
expense. See Analysis Memorandum at page 5.

6. Packing

    At verification, the Department found that Viraj calculated its POR 
packing cost based on the sample cost of packing materials during the 
POR, and requested that Viraj recalculate packing expenses based on the 
weighted-average POR cost of packing materials. For purposes of these 
preliminary results, we have used the recalculated packing expense as 
explained in the Sales Verification Report at page 10.
B. Test of Third Country Market Sales Prices
    We compared the weighted-average COP figures to third country 
market sales of the foreign like product as required under section 
773(b) of the Act, in order to determine whether these sales were made 
at prices below COP. In determining whether to disregard third country 
market sales made at prices less than the COP, we examined whether: (1) 
Within an extended period of time, such sales were made in substantial 
quantities, and (2) such sales were made at prices which permitted the 
recovery of all costs within a reasonable period of time. On a product-
specific basis, we compared the COP to the third country market prices, 
less any applicable movement charges.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C), where more than 20 percent of 
respondent's sales of a given product

[[Page 1600]]

were at prices less than the COP, we disregard any below-cost sales of 
that product because we determined that the below-cost sales were made 
in ``substantial quantities.'' As a result of our COP test, we 
preliminarily determine to disregard certain below-cost sales during 
the POR. However, as mentioned above, because there were no 
contemporaneous comparison market matches, we have not used Viraj's 
third country sales as the basis for normal value.

Calculation of Constructed Value

    In accordance with section 773(a)(4) of the Act, we used CV as the 
basis for NV because there were no contemporaneous sales of the foreign 
like product in the comparison market. We calculated CV in accordance 
with section 773(e)(1) of the Act based on the sum of respondent's cost 
of materials, fabrication, SG&A, including interest expenses, and 
profit. We calculated the COP included in the calculation of CV as 
noted above, in the ``Calculation of COP'' section of the notice. In 
accordance with section 773(e)(2)(A) of the Act and 19 CFR 
351.405(b)(1), we based SG&A and profit on the amounts incurred and 
realized by the respondent in connection with the production and sale 
of the foreign like product, in the ordinary course of trade, for 
consumption in the foreign country.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on constructed value (``CV''), that of the sales from 
which we derive selling, general and administrative (``SG&A'') expenses 
and profit. For EP, the U.S. LOT is the level of the starting-price 
sale, which is usually from exporter to importer. As discussed above, 
all of Viraj's sales to the U.S. were EP sales.
    To determine whether NV sales are at a different LOT than EP, we 
examine stages in the marketing process and selling functions along the 
chain of distribution between the producer and the unaffiliated 
customer. If the comparison market sales are at a different LOT, and 
the difference affects price comparability, as manifested in a pattern 
of consistent price differences between the sales on which NV is based 
and comparison-market sales at the LOT of the export transaction, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act.
    In the present review, Viraj did not request a level of trade (LOT) 
adjustment. To ensure that no such adjustment was necessary, in 
accordance with the principles discussed above, we examined information 
regarding the distribution systems in both the U.S. and third country 
market, including the selling functions, classes of customers, and 
selling expenses.
    In both the third country comparison market and the United States, 
Viraj reported one LOT and one distribution system with one class of 
customer (distributors). Viraj stated that it manufactures the 
merchandise after receipt of a final confirmed order and sells directly 
to its customers in the comparison market and in the United States on a 
CIF basis. Viraj reported that it uses a forwarding agent for sales to 
the United States but that in all other aspects it performs identical 
selling functions in both the third country comparison market and the 
United States. These selling functions include soliciting inquiries 
from customers, negotiating with customers, and procurement of export 
orders. Further, Viraj reported that it did not provide other sales-
related services on any of its sales, such as inventory maintenance, 
technical advice, warranty services, or advertising. Therefore, we 
preliminarily conclude that Viraj performs identical selling functions 
in the comparison market and the United States and that a LOT 
adjustment is not warranted.

Price-to-CV Comparisons

    For price-to-CV comparisons, we made a circumstance-of-sale 
adjustment by deducting third country market direct selling expenses 
(i.e., imputed credit and banking charges) and adding U.S. direct 
selling expenses (i.e., imputed credit and banking charges). For 
computing credit expenses, it is the Department's normal practice to 
use an interest rate applicable to loans in the same currency as that 
in which the sales are denominated (see, e.g., Analysis for the 
preliminary determination in the investigation of stainless steel plate 
in coils from Korea--Pohang Iron & Steel Company, 63 FR 59535 (November 
4, 1998). We note that while all sales to the United States are 
denominated in U.S. dollars, the short-term interest rate used by Viraj 
was derived from loans denominated in rupees. Therefore, we have not 
accepted Viraj's reported credit expense for its U.S. sales and have 
instead calculated an imputed credit expense for these sales using the 
U.S. weighted-average effective rate on commercial and industrial loans 
over one month and under one year made by all commercial banks. The 
Federal Reserve calculates this rate quarterly. Loan rates were 
collected from the four quarters corresponding to the POR and then 
weight-averaged by the amount of loans made in each quarter. All 
calculations are shown at Appendix I of the Analysis Memorandum.
    Additionally, at verification, we found that for its U.S. sales, 
Viraj did not include banking charges in the field ``Other Direct 
Selling Expenses'' as stated in its supplemental response, dated June 
25, 1999, at page 3. See Sales Verification Report at page 10. 
Therefore, for purposes of these preliminary results, we have used the 
information obtained at verification to determine banking charges for 
the sales in issue. See Analysis Memorandum, at page 5.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average dumping margin exists for Viraj for the 
period December 1, 1997, through November 30, 1998:

------------------------------------------------------------------------
                                                               Margin
                   Manufacturer/Exporter                      (percent)
------------------------------------------------------------------------
Viraj.....................................................         2.76
------------------------------------------------------------------------

    The Department will disclose calculations performed in connection 
with this preliminary determination within five days of the date of 
publication of this notice. Any interested party may request a hearing 
within 30 days of publication. Any hearing, if requested, will be held 
two days after the scheduled date for submission of rebuttal briefs. 
Issues raised in the hearing will be limited to those raised in the 
case briefs. Case briefs from interested parties may be submitted not 
later than 30 days after the date of publication of this notice in the 
Federal Register; rebuttal briefs may be submitted not later than five 
days thereafter. The Department will publish the final results of this 
administrative review, including its analysis of issues raised in any 
written comments or at a hearing, not later than 120 days after the 
date of publication of this notice.
    Upon issuance of the final results of this review, the Department 
shall determine, and the U.S. Customs Service shall assess, antidumping 
duties on all appropriate entries. If these preliminary results are 
adopted in our final results, we will instruct the Customs Service to 
assess antidumping duties on the merchandise subject to

[[Page 1601]]

review. Upon completion of this review, the Department will issue 
appraisement instructions directly to the Customs Service. In 
accordance with 19 CFR 351.212(b), if applicable, we will calculate an 
importer-specific ad valorem duty assessment rate based on the ratio of 
the total amount of antidumping duties calculated for the examined 
sales to the total customs value of the sales used to calculate those 
duties. This rate will be assessed uniformly on all entries of that 
particular importer made during the POR.
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of these administrative reviews, as provided by section 
751(a)(1) of the Act: (1) For Viraj, a deposit equal to the above 
margin will be required; (2) if the exporter is not a firm covered in 
this review, a prior review, or the original investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent period for the manufacturer of the merchandise; and (3) 
the cash deposit rate for all other manufacturers or exporters will 
continue to be 48.80 percent, the ``All Others'' rate made effective by 
the original investigation.
    These deposit requirements, 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 under 19 CFR 351.402(f)(2) 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) and 777(i)(1) of the Act.

    Dated: January 3, 2000.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-634 Filed 1-10-00; 8:45 am]
BILLING CODE 3510-DS-P