[Federal Register Volume 65, Number 174 (Thursday, September 7, 2000)]
[Notices]
[Pages 54215-54220]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-22989]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-811]


Grain-Oriented Electrical Steel From Italy; Notice of Preliminary 
Results of Antidumping Administrative Review

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

ACTION: Notice of preliminary results of antidumping duty 
administrative review.

-----------------------------------------------------------------------

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on grain-oriented 
electrical steel from Italy in response to a request by the respondent, 
Acciai Speciali Terni S.p.A. (AST). This review covers one 
manufacturer/exporter of the subject merchandise to the United States 
during the period of review (POR), August 1, 1998 through July 31, 
1999.
    We have preliminarily determined that sales of subject merchandise 
have been made below normal value (NV). If these preliminary results 
are adopted in our final results of administrative review, we will 
instruct the U.S. Customs Service to assess antidumping duties on all 
appropriate entries.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
comment a statement of the issue and a brief summary of the comment.

EFFECTIVE DATE: September 7, 2000.

FOR FURTHER INFORMATION CONTACT: Samantha Denenberg or Maureen 
McPhillips, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-1386 or (202) 482-0196, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act) are to the provisions effective January 1, 
1995, the effective date of the amendments made to the Act by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to the Department's regulations are to 19 CFR 
part 351 (1999).

Background

    The Department published in the Federal Register an antidumping 
duty order on grain-oriented electrical steel from Italy on August 12, 
1994 (59 FR 41431). On August 11, 1999, we published in the Federal 
Register a notice of opportunity to request an administrative review of 
the antidumping order on grain-oriented electrical steel from Italy, 
covering the period August 1, 1998 through July 31, 1999. On August 31, 
1999, AST requested that the Department conduct an administrative 
review of its exports of grain-oriented electrical steel. The 
Department initiated this administrative review on October 1, 1999 (64 
FR 53318).
    On January 5, 2000, the petitioner submitted a timely allegation, 
pursuant to section 773(b) of the Act, that AST had made sales in the 
home market at less than the cost of production (COP). Our analysis of 
the allegation indicated that there were reasonable grounds to believe 
or suspect that AST sold grain-oriented electrical steel in the home 
market at prices that were less than the COP. Accordingly, we initiated 
a COP investigation with respect to AST. See ``Memorandum to Richard 
Weible from Linda Ludwig--Initiation of Sales Below Cost of Production 
in the Antidumping Duty Administrative Review of Grain-Oriented Steel 
from Italy,'' February 7, 2000.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for the preliminary results of an administrative review if 
it determines that it is not practicable to complete the review within 
the statutory time limit of 245 days. On March 17, 2000, the Department 
published a notice of extension of the time limit for the preliminary 
results of review to August 30, 2000 (65 FR 14535).
    The Department sent its initial questionnaire to the respondent on 
October 8, 1999. AST responded to section A on November 11, 1999 and 
sections B and C on November 24, 1999. AST responded to our February 4, 
2000 supplemental section A questionnaire on February 10, 2000. We 
released our supplemental questions for sections B and C on February 
22, 2000, and received AST's response on March 22, 2000. On May 3, 
2000, we issued a second supplemental questionnaire on sections A, B, 
and C. We received AST's response on May 17, 2000. On May 26, 2000, the 
Department requested additional information on AST's ``temporary in 
bond'' (TIB) U.S. transactions. AST responded to this request on June 
1, 2000.
    The petitioners, Allegheny Ludlum Corp., AK Steel, the Butler Armco 
Independent Union, the United Steelworkers of America, and the 
Zanesville Armco Independent Union, responded to AST's response to 
sections A through C on December 7, 1999. On March 3 and April 6, 2000, 
the petitioners submitted comments on AST's supplemental responses to 
sections A and C. In addition, the petitioners addressed the issues in 
this case in subsequent submissions on April 26, May 25, and July 14, 
2000.
    The Department is conducting this review in accordance with section 
751(a) of the Act.

Scope of Review

    The product covered by this review is grain-oriented silicon 
electrical steel, which is a flat-rolled alloy steel product containing 
by weight at least 0.6 percent of silicon, not more than 0.08 percent 
of carbon, not more than 1.0 percent of aluminum, and no other element 
in an amount that would give the steel the characteristics of another 
alloy steel, of a thickness of no more than 0.560 millimeters, in coils 
of any width, or in straight lengths which are of a width measuring at 
least 10 times the thickness, as currently classifiable in the 
Harmonized Tariff Schedule of the United States (HTS) under item 
numbers 7225.30.7000, 7225.40.7000, 7225.50.8085, 7225.99.0090, 
7226.11.1000, 7226.11.9030, 7226.11.9060, 7226.91.7000, 7226.91.8000, 
7226.92.5000, 7226.92.7050, 7226.92.8050, 7226.99.0000, 7228.30.8050, 
and 7229.90.1000. Although the HTS subheadings are provided for 
convenience and customs purposes, our written descriptions of the scope 
of these proceedings are dispositive.

Verification

    As provided in section 782(i) of the Act, we verified AST's sales 
information from June 5, 2000 through June 9, 2000,

[[Page 54216]]

in Terni, Italy, using standard verification procedures, including on-
site inspection of AST's manufacturing facilities. On June 27-28, 2000, 
we verified AST's submitted U.S. sales data at its AST-USA facilities. 
We also verified AST's submitted cost information from July 10 through 
July 16, 2000, in Terni, Italy.

Date of Sale

    The Department considers the date of sale to be the date on which 
all substantive terms of sale are agreed upon by the parties. This 
normally includes the price, quantity, delivery terms and payment 
terms. In accordance with 19 CFR 351.401(i), the date of sale will 
normally be the date of the invoice, as recorded in the exporter's or 
producer's records kept in the ordinary course of business, unless 
satisfactory evidence is presented that the exporter or producer 
establishes the material terms of sale on some other date. In some 
instances, it may not be appropriate to rely on the date of invoice as 
the date of sale because the evidence may indicate that the material 
terms of sale were established on some date other than the invoice 
date. See Preamble to the Department's Antidumping Duties; 
Countervailing Duties; Final Rule 62 FR 27296, 27349-50 (May 19, 1997); 
Final Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol 
from Taiwan, 61 FR 14064 (Comment 1)(March 29, 1996).
    For these preliminary results, we have determined that the record 
evidence indicates that the invoice date is the date on which AST 
established the material terms of sale in the home market. In the U.S. 
market, the shipment date is the date in which the terms of sale are 
set because the shipment date precedes the invoice date. While AST 
stated in its November 2, 1999 response that for both the U.S. market 
and the home market, the terms of sale, such as price and quantity, are 
established at the time of order confirmation and rarely change from 
the order confirmation date to the date of invoice, we have found 
evidence that the terms of sale are not always set at the time of order 
confirmation. The sales traces reviewed at verification did not provide 
evidence that the material terms of sale are always set at the time of 
order confirmation. See ``Sales Verification of Sections A-C 
Questionnaire Responses Submitted by Acciai Speciali Terni S.p.A.; 
Acciai Speciali Terni USA, Inc.,'' August 30, 2000; and ``AST USA Sales 
Verification Report,'' August 30, 2000.

Affiliated Parties/Downstream Sales

    AST contends that it is affiliated with Electroterni, but denies 
any affiliation with Nuova Eletrofer (``NE''). Under section 771(33)(E) 
of the Act, the Department will determine that companies are affiliated 
where a company directly or indirectly owns, controls, or holds power 
to vote, five percent or more of the outstanding voting stock or shares 
of any organization. Regarding ownership, AST owns 24% of Electroterni 
and NE owns the remaining shares. AST does not directly own shares in 
NE, but rather, NE is wholly owned by another party.
    There is considerable cross-representation between NE and 
Electroterni. The owner of NE serves on the board of Eletroterni. 
Additionally, NE and Electroterni jointly own another company which 
also purchases subject material from Electroterni. This joint company's 
board of directors includes the owner of NE and the managing director 
of Electroterni. Moreover, NE and Electroterni's internal operations 
seem to be inextricably linked. The owner of NE is responsible for 
establishing the internal price lists for both NE and Electroterni.
    AST considers NE and Electroterni to be a ``group'' of companies. 
AST makes most of its business decisions with regard to this ``group,'' 
rather than with NE and Electroterni individually. For example, AST 
negotiates a common framework sales agreement and a common rebate 
agreement jointly with Electroterni and NE. Both Electroterni and NE 
have a longstanding relationship with AST, and AST serves as the major 
supplier of both companies. It is the Department's contention that by 
virtue of the linked operations of NE and Electroterni, as well as 
AST's own treatment of NE and Electroterni as a group for sales and 
rebate purposes, it is inappropriate for AST to consider itself only 
affiliated with one party and not the other. Consequently, for purposes 
of this preliminary determination, we have decided to treat AST as 
affiliated with both Electroterni and NE, based on the totality of the 
circumstances.
    We requested AST to report Electroterni's and NE's sales to the 
first unaffiliated customer during the POR. Although AST contended that 
it did not have the power to oblige NE to report its downstream sales, 
both Electroterni and NE complied with our request in a timely manner 
and reported their home market sales to the first unaffiliated 
customer. Additionally, both NE and Electroterni made staff available 
to answer the Department's questions during the sales verification.
    Petitioners maintain that of those sales AST made to its 
affiliates, AST should identify which sales were subsequently resold by 
the affiliates, and which sales were further processed by the 
affiliates into non-subject merchandise, in order to avoid ``double-
counting'' of sales in the margin calculation. See Letter to the 
Secretary from Collier Shannon Rill & Scott, April 25, 2000, at 8. AST 
maintains that it is not able to determine this information, nor can 
AST provide a link between the AST home market sales data set and the 
downstream data set. AST also maintains that it is not necessary for 
them to do so.
    At verification, we confirmed that the records AST keeps in the 
normal course of business do not indicate whether sales to Electroterni 
and/or NE would result in resales or be consumed in the manufacture of 
non-subject merchandise. We also noted that neither of the affiliates 
maintained computer systems that allow them to link their inventory 
back to the AST invoices. See ``Sales Verification of Sections A-C 
Questionnaire Responses Submitted by Acciai Speciali Terni S.p.A. and 
Acciai Speciali Terni USA, Inc.,'' August 30, 2000.
    Rather than ``double-counting'' the downstream sales by using AST's 
sales to Electroterni and NE, we have excluded from our analysis the 
sales made by AST to these two companies and used Electroterni's and 
NE's sales to the first unaffiliated customer in our analysis. See 
Notice of Final Determination of Sales At Less Than Fair Value; 
Stainless Steel Sheet and Strip in Coils from the United Kingdom, 64 FR 
30688 (June 8, 1999).

Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B)(i) 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. The NV LOT is 
that of the starting price of sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general and administrative expenses (SG&A) and profit. For EP, the LOT 
is also the level of the starting price sale, which is usually from the 
exporter to the importer. For CEP, it is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and

[[Page 54217]]

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 a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the differences in the levels between NV and 
CEP sales affect price comparability, we adjust NV under section 
773(A)(7)(B) of the Act (the CEP offset provision). See Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In this administrative review, AST requested a LOT adjustment for 
its home market sales, maintaining that a different level of trade 
exists between AST sales to the United States and the affiliated 
reseller's sales in the home market. AST maintains that it has two 
channels of distribution in the Italian market for sales by AST (direct 
factory and warehouse sales) and one channel of distribution in the 
U.S. market (direct factory). To determine if a LOT adjustment was 
necessary, in accordance with the principles discussed above, we 
examined information regarding the distribution systems in both the 
United States and Italian markets, including the selling functions, 
classes of customer, and selling expenses. We, therefore, compared the 
difference in the selling functions performed by AST and its affiliated 
entities, Electroterni and NE, in the home market, and compared them to 
those performed by AST and AST USA in the U.S. market.
    For AST's direct factory sales in the home market, customers place 
their orders in advance of delivery; AST then plans its production 
schedule to allow delivery according to the customer's requirements. 
After production, the product is immediately shipped to the customer. 
AST also makes home market sales of the foreign like product from 
inventory. In contrast with direct sales, AST, rather than the 
customer, typically initiates these sales by alerting potential 
customers of the immediate availability of specific products.
    In its March 22, 2000 supplemental questionnaire response, AST 
stated that it coded all of its reported home market sales as the same 
LOT because its invoicing system could not distinguish between direct 
factory and inventory sales. On May 17, 2000, in its supplemental 
response to sections A-C, AST stated that virtually all GOES is sold to 
one class of customers (i.e., transformer manufacturers), indicating 
that there is a single LOT in the home market. Subsequently, in a 
revised home market sales listing, AST added a code to designate sales 
of GOES by service centers/end-users (i.e., Electroterni and NE).
    In determining whether separate LOTs actually existed in the home 
market, we examined whether AST's home market sales involved different 
selling functions along the chain of distribution between AST and its 
unaffiliated customers. AST maintained that it provided technical 
advice, freight and delivery services, warranty services, and credit 
terms on a moderate level for both direct factory sales and warehouse 
sales. There was no inventorying associated with direct factory sales, 
while there was a moderate degree of inventory expense for warehouse 
sales. For its sales from the warehouse, AST provided technical advice, 
freight and delivery, warranty, and credit terms.
    AST's affiliates NE and Electroterni follow a similar sales process 
to that of AST. NE and Electroterni's customers initiate requests for 
merchandise, and these companies sell mainly from inventory. NE and 
Electroterni may at times service the same customers as AST. However, 
most of the customers are smaller end-users than those serviced by AST. 
NE and Electroterni offer similar selling functions with regard to 
sales of GOES material. For a complete description of the selling 
functions offered by AST, NE, and Electroterni, see the LOT section of 
the verification report, ``Sales Verification of Sections A-C 
Questionnaire Responses Submitted by Acciai Speciali Terni S.p.A. and 
Acciai Speciali Terni USA, Inc.,'' (August 30, 2000).
    Based on the evidence on the record, we have determined that one 
level of trade exists in the home market. As late as May 17, 2000, in 
its supplementary response to sections A-C, AST stated that virtually 
all GOES was sold to one class of customers (i.e., transformer 
manufacturers). Subsequently, in a revised home market sales listing, 
AST added a code of ``2'' to designate sales of GOES by service 
centers/end-users. Although AST claimed that such sales were at a 
different LOT, it did not provide any narrative explanation or matrix 
which would serve to distinguish those coded ``1'' from those coded 
``2.'' Moreover, AST indicates that it provided technical advice, 
freight and delivery services, warranty services, and credit terms on a 
moderate level to customers of both direct factory sales and warehouse 
sales. The additional inventorying done for warehouse customers is not 
sufficient to warrant a LOT adjustment.
    We also examined information regarding the distribution system in 
the United States, including the selling functions, classes of 
customer, and selling expenses, and noted no evidence that more than 
one level of trade exists in the U.S. market. AST stated that its U.S. 
sales of the merchandise under review were all direct factory sales. 
For U.S. direct factory sales, the U.S. customer places an order with 
AST USA, which in turn places the order with AST. These sales are 
produced to order and shipped directly to the customer. For sales in 
the U.S. market, AST stated that it provided AST USA with freight and 
delivery services and some aid in extending credit. AST characterizes 
its level of involvement in these selling activities as low level. AST 
states that it provides no assistance to AST USA in the areas of 
technical advice, inventory carrying costs, and warranty services. For 
direct factory sales between AST USA and the first unrelated customer, 
AST USA provides technical advice, freight and delivery service, and 
credit terms on a moderate level. Services for inventory carrying and 
warranty are not offered.
    While AST claims differences in selling functions in connection 
with each channel of distribution in both the home market and U.S. 
market, we find that the actual differences in selling functions 
between channels are relatively minor (see Exhibit SA-6 of AST's 
``Response to the Department's Supplementary Questionnaire,'' February 
18, 2000). Therefore, we find that the LOT in the U.S. market is 
similar to the LOT in the home market, and therefore, no level of trade 
adjustment is required.
    Given the evidence on the record, we conclude that AST did not 
adequately support its claim that there are two levels of trade in the 
home market and that it should be granted a CEP offset because its CEP 
sales are at a less remote LOT than AST's home market sales. Therefore, 
we preliminarily determine that only one LOT exists in the home market, 
only one level of trade exists in the U.S. market, that there is not a 
substantial difference in the levels of trade between the U.S. market 
and the home market, and that a CEP offset is not warranted.

``In-Bond'' Transactions

    AST and its U.S. affiliate, AST USA, sold subject merchandise to 
U.S. customers during the POR which AST stated was entered into the 
U.S.

[[Page 54218]]

Customs territory under temporary import bond (TIB), with a final 
destination of Mexico. AST did not report these sales in its initial 
section C response to the Department's October 8, 1999 questionnaire. 
AST reported these transactions (see ``Letter from AST to the 
Secretary,'' June 1, 2000) in response to the Department's request in 
its supplemental questionnaire of May 26, 2000. AST maintained, 
however, that to its knowledge, none of the merchandise was entered for 
consumption into the United States and consequently, these transactions 
should not be properly included in any calculation of antidumping 
duties or deposit rates. AST reported transaction-specific information 
on product characteristics, delivery terms, payment date, quantity, and 
price. AST states that, due to the short time provided for its 
response, it was not able to determine whether all such transactions 
were TIBs as opposed to other types of Customs' bonded transactions. 
Moreover, AST contended that time constraints prevented AST from 
reporting the adjustments associated with these sales.
    There is insufficient record evidence supporting AST's claim that 
those ``TIB'' entries should not be included in the antidumping 
calculations because AST has not provided transaction-specific 
information covering these sales. Accordingly, for these preliminary 
results, the Department has included those ``in bond'' transactions 
billed to a U.S. customer in the calculation of the preliminary dumping 
margin. However, the Department invites all interested parties to this 
proceeding to comment on the transactions in question.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in Italy during the POR, are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied on six 
characteristics to match U.S. sales of subject merchandise to 
comparison market sales of the foreign like product: core loss, 
thickness/gauge, permeability, slitting, coating, and form.

Comparisons to Normal Value

    To determine whether sales of subject merchandise to the United 
States were made at less than NV, we compared the CEP to NV, as 
described in the ``Constructed Export Price'' and ``Normal Value'' 
sections of this notice. In accordance with section 777A(d)(2) of the 
Act, we calculated monthly weighted-average home market prices for NV 
and compared these to individual U.S. transaction prices.

Constructed Export Price

    In its initial submission, AST reported its U.S. sales as EP sales. 
For sales in the United States, section 772(a) of the Act states that 
EP is the price at which the subject merchandise is first sold (or 
agreed to be sold) before the date of importation by the producer or 
exporter of the subject merchandise outside the United States to an 
unaffiliated purchaser in the United States. Section 772(b) of the Act 
states that CEP is the price at which the subject merchandise is first 
sold (or agreed to be sold) in the United States before or after the 
date of importation by or for the account of the producer or exporter 
of such merchandise or by a seller affiliated with the producer or 
exporter, to a purchaser not affiliated with the producer or exporter.
    Although AST originally reported its U.S. sales as EP sales, it 
reclassified its U.S. sales as CEP sales, citing the recent decision of 
the United States Court of Appeals for the Federal Circuit (CAFC) in AK 
Steel Corp., et al. v. United States, et al. No. 99-1296 (Fed. Cir. 
February 23, 2000)(AK Steel Corp.). See also ``AST's Supplemental 
Response to the Secretary,'' March 22, 2000.
    The Department agrees with AST's reclassification of these sales as 
CEP sales because the subject merchandise was first sold to an 
unaffiliated purchaser by AST's affiliate, AST USA. The U.S. customer 
places an order with AST USA who in turn places the order with AST. AST 
USA typically places an order months in advance of delivery, allowing 
AST to plan its production schedule so that delivery can be made 
directly from the factory to the U.S. customer. Although the subject 
merchandise is sent directly from the factory to the unaffiliated 
customer, it is AST USA that invoices the unaffiliated U.S. customer 
and receives payment. Therefore, upon its analysis, the Department has 
treated AST's U.S. sales as CEP sales, as defined in section 772(b) of 
the Act.
    The Department calculated CEP for AST based on a packed CIF-
delivered, duty paid basis. In accordance with section 772(c) of the 
Act, we reduced CEP by movement expenses (international freight, inland 
freight, U.S. brokerage fees, and duties). We deducted those selling 
expenses associated with economic activities occurring in the United 
States, including direct selling expenses (credit costs), and indirect 
selling expenses in accordance with section 772(d)(1) of the Act. We 
changed the denominator of AST's reported home market indirect selling 
expenses in order to reflect more accurately the foreign indirect 
selling expenses incurred. Other minor changes were made to other 
adjustments as a result of the verification. See ``Sales Verification 
of Sections A-C Questionnaire Responses Submitted by Acciai Speciali 
Terni S.p.A. and Acciai Speciali Terni USA, Inc.,'' and ``Analysis 
Memorandum of the Preliminary Results on Grain-Oriented Electrical 
Steel,'' (August 30, 2000). Since these sales were CEP sales, we also 
made an adjustment for profit in accordance with section 772(d)(3) of 
the Act.

Cost of Production Analysis (COP)

    Pursuant to section 773(b)(1) of the Act, we initiated a COP 
investigation of sales made by AST in the home market.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP, by control number, based on the sum of the cost 
of materials and fabrication, G&A expenses, and packing costs. We 
relied on the submitted COP data except in the following instances (see 
COP and CV Calculation Memorandum from Garri Gzirian and Taija 
Slaughter to Neal Halper, August 30, 2000):
    1. We found a clerical error in the Company's calculations of the 
adjustments intended to correct the understatement of total standard 
material and processing costs resulting from non-slit and thickness 
adjustments. Specifically, AST should have treated certain items in its 
calculations as negative and not positive values. We corrected this 
error for the purposes of preliminary determination.
    2. We found that AST did not include in the reported costs the cost 
of outside processing, which under the Company's cost accounting system 
is accounted for as a variance. Likewise, AST did not include the 
``Other Variance'' amount, which captures all remaining differences 
between actual and standard costs. For the purposes of preliminary 
determination, we included the cost of outside processing and the 
``Other Variance'' amount in the reported costs.
    3. AST adjusted its standard processing cost for cost center-
specific variances. These cost centers are used to process more then 
just grain-oriented electrical steel products.
    However, the Company weight-averaged these variances without regard 
to the percentage each cost center contributed to production of the 
merchandise under consideration.

[[Page 54219]]

Instead, the variances were weight-averaged based on the total standard 
costs associated with each cost center. For the purposes of preliminary 
determination, we adjusted this calculation to reflect the percentage 
of time each cost center was processing the merchandise under 
consideration.
    4. AST adjusted its standard material cost by a weighted-average 
raw material variance. The specific raw materials generating the 
variances (e.g., carbon steel scrap) are used to produce more then just 
grain-oriented electrical steel. However, the Company weight-averaged 
these variances without regard to the percentage of each raw material 
that went into production of a unit of merchandise under consideration. 
Instead, the variances were weight-averaged based on the standard costs 
of the total company-wide consumption of each raw material. For the 
purposes of preliminary determination, we adjusted this calculation to 
factor in the share of each raw material in a unit of the merchandise 
under consideration.
    5. AST included in calculations of the interest expense factor 
certain income and expense items that are either not interest related, 
or do not qualify for a short-term interest income offset. For the 
purposes of preliminary determination, we adjusted the Company's 
interest expense factor calculations for those items.

B. Test of Home Market Prices

    We compared the adjusted weighted-average COP to the comparison-
market sales prices of the foreign like product, as required under 
section 773(b) of the Act. In determining whether to disregard home 
market sales made at prices less than the COP, we examined whether such 
sales were made in substantial quantities over an extended period of 
time, and at prices which permitted the recovery of all costs within a 
reasonable period of time. On a connum-specific basis, we compared the 
revised COP to the home market prices, less any applicable movement 
charges, discounts, rebates and direct and indirect selling expenses.

C. Results of the COP Test

    Pursuant to section 773(b)(2)(C), where less than 20 percent of the 
respondent's sales of a given product were made at prices below the 
COP, we did not disregard any below-cost sales of that product because 
we determined that the below-cost sales were not made in ``substantial 
quantities.'' Where twenty percent or more of the respondent's home 
market sales of a given product were made at prices below the COP, we 
disregarded the below-cost sales because such sales were found to be 
made within an extended period of time in ``substantial quantities,'' 
in accordance with sections 773(b)(2)(B) and (C) of the Act, and 
because the below-cost sales of the product were at prices which would 
not permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act.
    Based on this test, we excluded from our analysis certain 
comparison-market sales of AST's grain-oriented electrical steel that 
were made at below-COP prices within the POR. (See ``Analysis 
Memorandum of the Preliminary Results from the Team to the File,'' 
August 30, 2000).

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
normal value (i.e., the aggregate volume of home market sales of the 
foreign like product is five percent or more of the aggregate volume of 
U.S. sales), we compared the respondents volume of home market sales of 
the foreign like product to the volume of U.S. sales of the subject 
merchandise, in accordance with 19 CFR 351.404(b). We determined that 
the quantity of the foreign like product sold in the exporting country 
was sufficient to permit a proper comparison with the sales of the 
subject merchandise to the United States because AST made sales in its 
home market which were greater than five percent of its sales in the 
U.S. market. Therefore, in accordance with section 773(a)(1)(B)(i) of 
the Act, we based NV on home market sales in Italy.
    We calculated NV based on packed, delivered prices in the home 
market. Since AST reported its sales net of any discounts, we made 
adjustments to the starting price for rebates, where appropriate. We 
also made deductions, where appropriate, for inland freight, 
warehousing, and inland insurance pursuant to section 773(a)(6)(B) of 
the Act. For all comparisons, we made circumstance-of-sale adjustments, 
where appropriate, for differences in credit expenses, warranty, 
technical service expenses, and royalties, pursuant to section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410(c).
    We changed the denominator of AST's reported home market indirect 
selling expenses in order to reflect more accurately the expenses 
incurred. Other minor changes were made to other adjustments as a 
result of the verification. See ``Sales Verification of Sections A-C 
Questionnaire Responses Submitted by Acciai Speciali Terni S.p.A. and 
Acciai Speciali Terni USA, Inc.,'' and ``Analysis Memorandum of the 
Preliminary Results on Grain-Oriented Electrical Steel,'' (August 30, 
2000). We made adjustments to NV for differences in packing expenses, 
in accordance with section 773(a)(6) of the Act. We also made 
adjustments to NV, where appropriate, for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 
351.411.
    We preliminarily determine that the following dumping margin exists 
for the period August 1, 1998 through July 31, 1999:

Preliminary Results of Review

------------------------------------------------------------------------
                                                             Weighted-
                                                              average
                  Manufacturer/exporter                       margin
                                                             (percent)
------------------------------------------------------------------------
Acciai Speciali Terni, S.p.A............................           10.79
------------------------------------------------------------------------

Within 5 days of the date of publication of this notice, in accordance 
with 19 CFR 351.224(b), the Department will disclose its calculations. 
Any interested party may request a hearing within 30 days of 
publication of these preliminary results in accordance with 19 CFR 
351.310(c). Interested parties may submit case briefs within 30 days of 
the date of publication of this notice in accordance with 19 CFR 
351.309(c)(2). Rebuttal briefs, which must be limited to issues raised 
in the case briefs, may be filed no later than 35 days after the date 
of publication. Any hearing, if requested, will be held 37 days after 
the publication of this notice, or the first workday thereafter. 
Parties who submit briefs are requested to submit with the brief (1) a 
statement of the issue, (2) a brief summary of the argument and (3) a 
table of authorities. Further, we would appreciate it if parties 
submitting written comments would provide the Department with an 
additional copy of the public version of any such comments on diskette. 
The Department will publish, within 120 days of publication of these 
preliminary results, a notice of the final results of this 
administrative review, which will include the results of its analysis 
of issues raised by the parties in any such comments.
    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
this review.

Duty Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate

[[Page 54220]]

entries. Pursuant to 19 CFR 351.212(b)(1), we have calculated an 
importer-specific ad valorem duty assessment rate based on the ratio of 
the total amount of the dumping margin calculated for the examined 
sales to the total entered value of those same sales. In order to 
estimate the entered value, we subtracted movement expenses incurred on 
U.S. transactions from the gross sales value. This rate will be 
assessed uniformly on all entries of that specific importer made during 
the POR. In accordance with 19 CFR 351.106(c)(2), we will instruct the 
Customs Service to liquidate without regard to antidumping duties any 
entries for which the assessment rate is de minimis, i.e., less than 
0.5 percent.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this antidumping duty review 
for all shipments of grain-oriented electrical steel, from Italy, 
entered, or withdrawn from warehouse, for consumption on or after the 
publication date, as provided by section 751(a) of the Act: (1) The 
cash deposit rate for AST will be the rate established in the final 
results; (2) if the exporter is not a firm covered in this review, a 
prior review, or the original less-than-fair-value (LTFV) 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (3) the cash deposit rate for all other 
manufacturers or exporters will continue to be 60.79 percent, the ``all 
others'' rate made effective by the LTFV investigation. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review. The Department 
will issue appraisement instructions directly to the Customs Service.

Notification of Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under section 19 CFR 351.402(f)(2) of the 
Department's regulations 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 administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)).

    Dated: August 30, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-22989 Filed 9-6-00; 8:45 am]
BILLING CODE 3510-DS-P