[Federal Register Volume 66, Number 156 (Monday, August 13, 2001)]
[Notices]
[Pages 42509-42514]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20272]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-825]


Stainless Steel Sheet and Strip in Coils From Germany; Notice of 
Preliminary Results of Antidumping Duty Administrative Review

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

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

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EFFECTIVE DATE: August 13, 2001.

SUMMARY: In response to a request from Allegheny Ludlum, AK Steel 
Corporation, Butler Armco Independent Union, J&L Specialty Steel, Inc., 
North American Stainless, United Steelworkers of America, AFL-CIO/CLC, 
and Zanesville Armco Independent Organization (collectively, 
petitioners) and respondent Krupp Thyssen Nirosta GmbH (KTN) and Krupp 
Hoesch Steel Products, Inc. (Krupp) (collectively, KTN), the Department 
of Commerce (the Department) is conducting an administrative review of 
the antidumping duty order on stainless steel sheet and strip in coils 
(S4) from Germany. The review covers one manufacturer/exporter of the 
subject merchandise to the United States during the period January 4, 
1999 through June 30, 2000.
    We preliminarily determine that there are sales at less than normal 
value by KTN during the period January 4, 1999 through June 30, 2000. 
If these preliminary results are adopted in our final results of 
review, we will instruct the U.S. Customs Service to assess antidumping 
duties based on the difference between the United States Price (USP) 
and normal value (NV).
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the arguments: (1) A statement of the issues and (2) a 
brief summary of the arguments (no longer than five pages, including 
footnotes).

FOR FURTHER INFORMATION CONTACT: Patricia Tran, Michael Heaney, or 
Robert James at (202) 482-1121, (202) 482-4475, or (202) 482-0649, 
respectively, Antidumping and Countervailing Duty Enforcement Group 
III, Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Tariff Act), are references to the provisions 
effective January 1, 1995, the effective date of the amendments made to 
the Tariff Act by the Uruguay Round Agreements Act (URAA). In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to the regulations codified at 19 CFR Part 351 (2000).

SUPPLEMENTARY INFORMATION:

Background

    The Department published an antidumping duty order on S4 from 
Germany on July 27, 1999. See Notice of Amended Final Determination of 
Sales at Less than Fair Value and Antidumping Duty Order; Stainless 
Steel Sheet and Strip in Coils from Germany (Antidumping Duty Order), 
64 FR 40557 (July 27, 1999). On July 20, 2000, the Department published 
the Notice of Opportunity to Request Administrative Review of stainless 
steel sheet and strip in coils from Germany for the period January 4, 
1999 through June 30, 2000 (65 FR 45035).
    On July 28, 2000, petitioners requested an administrative review of 
KTN's sales for the period January 4, 1999 through June 30, 2000. On 
July 31, 2000, KTN also requested a review of its sales for the same 
time period. On September 6, 2000, we published in the Federal Register 
a notice of initiation of this antidumping duty administrative review 
covering the period January 4, 1999 through June 30, 2000. See Notice 
of Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 65 FR 53980 (September 6, 
2000).
    Because it was not practicable to complete this review within the 
normal time frame, on February 28, 2001, we published in the Federal 
Register our notice of the extension of time limits for this review. 
See Stainless Steel Sheet and Strips in Coils from Germany; Antidumping 
Duty Administrative

[[Page 42510]]

Review; Time Limits; Notice of Extension of Time Limits, 66 FR 12759 
(February 28, 2001). This extension established the deadline for these 
preliminary results as July 31, 2001.

Scope of the Review

    For purposes of this order, the products covered are certain 
stainless steel sheet and strip in coils. Stainless steel is an alloy 
steel containing, by weight, 1.2 percent or less of carbon and 10.5 
percent or more of chromium, with or without other elements. The 
subject sheet and strip is a flat-rolled product in coils that is 
greater than 9.5 mm in width and less than 4.75 mm in thickness, and 
that is annealed or otherwise heat treated and pickled or otherwise 
descaled. The subject sheet and strip may also be further processed 
(e.g., cold-rolled, polished, aluminized, coated, etc.) provided that 
it maintains the specific dimensions of sheet and strip following such 
processing.
    The merchandise subject to this order is classified in the 
Harmonized Tariff Schedule of the United States (HTS) at subheadings: 
7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 
7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 
7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 
7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 
7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 
7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 
7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 
7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 
7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 
7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 
7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 
7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 
7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 
7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 
7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. 
Although the HTS subheadings are provided for convenience and Customs 
purposes, the Department's written description of the merchandise under 
review is dispositive.
    Excluded from the scope of this order are the following: (1) Sheet 
and strip that is not annealed or otherwise heat treated and pickled or 
otherwise descaled; (2) sheet and strip that is cut to length; (3) 
plate (i.e., flat-rolled stainless steel products of a thickness of 
4.75 mm or more); (4) flat wire (i.e., cold-rolled sections, with a 
prepared edge, rectangular in shape, of a width of not more than 9.5 
mm); and (5) razor blade steel. Razor blade steel is a flat-rolled 
product of stainless steel, not further worked than cold-rolled (cold-
reduced), in coils, of a width of not more than 23 mm and a thickness 
of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent 
chromium, and certified at the time of entry to be used in the 
manufacture of razor blades. See Chapter 72 of the HTSUS, ``Additional 
U.S. Note'' 1(d).
    In response to comments by interested parties, the Department has 
determined that certain specialty stainless steel products are also 
excluded from the scope of this order. These excluded products are 
described below.
    Flapper valve steel is defined as stainless steel strip in coils 
containing, by weight, between 0.37 and 0.43 percent carbon, between 
1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent 
manganese. This steel also contains, by weight, phosphorus of 0.025 
percent or less, silicon of between 0.20 and 0.50 percent, and sulfur 
of 0.020 percent or less. The product is manufactured by means of 
vacuum arc remelting, with inclusion controls for sulphide of no more 
than 0.04 percent and for oxide of no more than 0.05 percent. Flapper 
valve steel has a tensile strength of between 210 and 300 ksi, yield 
strength of between 170 and 270 ksi, plus or minus 8 ksi, and a 
hardness (Hv) of between 460 and 590. Flapper valve steel is most 
commonly used to produce specialty flapper valves for compressors.
    Also excluded is a product referred to as suspension foil, a 
specialty steel product used in the manufacture of suspension 
assemblies for computer disk drives. Suspension foil is described as 
302/304 grade or 202 grade stainless steel of a thickness between 14 
and 127 microns, with a thickness tolerance of plus-or-minus 2.01 
microns, and surface glossiness of 200 to 700 percent Gs. Suspension 
foil must be supplied in coil widths of not more than 407 mm, and with 
a mass of 225 kg or less. Roll marks may only be visible on one side, 
with no scratches of measurable depth. The material must exhibit 
residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm 
over 685 mm length.
    Certain stainless steel foil for automotive catalytic converters is 
also excluded from the scope of this order. This stainless steel strip 
in coils is a specialty foil with a thickness of between 20 and 110 
microns used to produce a metallic substrate with a honeycomb structure 
for use in automotive catalytic converters. The steel contains, by 
weight, carbon of no more than 0.030 percent, silicon of no more than 
1.0 percent, manganese of no more than 1.0 percent, chromium of between 
19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of 
no more than 0.045 percent, sulfur of no more than 0.03 percent, 
lanthanum of between 0.002 and 0.05 percent, and total rare earth 
elements of more than 0.06 percent, with the balance iron.
    Permanent magnet iron-chromium-cobalt alloy stainless strip is also 
excluded from the scope of this order. This ductile stainless steel 
strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 
percent cobalt, with the remainder of iron, in widths 228.6 mm or less, 
and a thickness between 0.127 and 1.270 mm. It exhibits magnetic 
remanence between 9,000 and 12,000 gauss, and a coercivity of between 
50 and 300 oersteds. This product is most commonly used in electronic 
sensors and is currently available under proprietary trade names such 
as ``Arnokrome III.'' \1\
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    \1\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
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    Certain electrical resistance alloy steel is also excluded from the 
scope of this order. This product is defined as a non-magnetic 
stainless steel manufactured to American Society of Testing and 
Materials (ASTM) specification B344 and containing, by weight, 36 
percent nickel, 18 percent chromium, and 46 percent iron, and is most 
notable for its resistance to high temperature corrosion. It has a 
melting point of 1390 degrees Celsius and displays a creep rupture 
limit of 4 kilograms per square millimeter at 1000 degrees Celsius. 
This steel is most commonly used in the production of heating ribbons 
for circuit breakers and industrial furnaces, and in rheostats for 
railway locomotives. The product is currently available under 
proprietary trade names such as ``Gilphy 36.'' \2\
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    \2\ ``Gilphy 36'' is a trademark of Imphy, S.A.
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    Certain martensitic precipitation-hardenable stainless steel is 
also excluded from the scope of this order. This high-strength, ductile 
stainless steel product is designated under the Unified Numbering 
System (UNS) as S45500-grade steel, and contains, by weight, 11 to 13 
percent chromium, and 7 to 10 percent nickel. Carbon, manganese, 
silicon and molybdenum each comprise, by weight, 0.05 percent or less, 
with phosphorus and sulfur each comprising, by weight, 0.03 percent or 
less. This steel has copper,

[[Page 42511]]

niobium, and titanium added to achieve aging, and will exhibit yield 
strengths as high as 1700 Mpa and ultimate tensile strengths as high as 
1750 Mpa after aging, with elongation percentages of 3 percent or less 
in 50 mm. It is generally provided in thicknesses between 0.635 and 
0.787 mm, and in widths of 25.4 mm. This product is most commonly used 
in the manufacture of television tubes and is currently available under 
proprietary trade names such as ``Durphynox 17.'' \3\
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    \3\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Finally, three specialty stainless steels typically used in certain 
industrial blades and surgical and medical instruments are also 
excluded from the scope of this order. These include stainless steel 
strip in coils used in the production of textile cutting tools (e.g., 
carpet knives).\4\ This steel is similar to ASTM grade 440F, but 
containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also 
contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 
0.020 percent or less, and includes between 0.20 and 0.30 percent 
copper and between 0.20 and 0.50 percent cobalt. This steel is sold 
under proprietary names such as ``GIN4 Mo.'' The second excluded 
stainless steel strip in coils is similar to AISI 420-J2 and contains, 
by weight, carbon of between 0.62 and 0.70 percent, silicon of between 
0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, 
phosphorus of no more than 0.025 percent and sulfur of no more than 
0.020 percent. This steel has a carbide density on average of 100 
carbide particles per square micron. An example of this product is 
``GIN5'' steel. The third specialty steel has a chemical composition 
similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, 
molybdenum of between 1.15 and 1.35 percent, but lower manganese of 
between 0.20 and 0.80 percent, phosphorus of no more than 0.025 
percent, silicon of between 0.20 and 0.50 percent, and sulfur of no 
more than 0.020 percent. This product is supplied with a hardness of 
more than Hv 500 guaranteed after customer processing, and is supplied 
as, for example, ``GIN6.'' \5\
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    \4\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \5\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Verification

    As provided for in section 782(i) of the Act, we verified the 
information submitted by KTN. We used standard verification procedures, 
including on-site inspection of the manufacturer's facilities and 
examination of relevant sales and financial records. Our verification 
findings are outlined in the sales and cost verification reports which 
are on file in Room B-099 of the main Department of Commerce building. 
See Home Market Verification of Information Submitted by KTN, July 16, 
2001; Verification Report on the Further Manufacturing Cost Data 
Submitted by Ken-Mac Metals, Inc., June 18, 2001; and Verification 
Report on the Cost of Production and Constructed Value Data Submitted 
by KTN, June 22, 2001.

Fair Value Comparisons

    To determine whether sales of S4 in the United States were made at 
less than fair value, we compared United States Price (USP) to normal 
value (NV), as described in the ``United States Price'' and ``Normal 
Value'' sections of this notice. In accordance with section 777A(d)(2) 
of the Tariff Act, we calculated monthly weighted-average prices for NV 
and compared these to individual U.S. transactions.

United States Price (USP)

    We calculated CEP, in accordance with subsection 772(b) of the 
Tariff Act, because sales to the first unaffiliated purchaser that took 
place after importation into the United States. We based CEP on the 
packed, delivered, duty paid or delivered prices to unaffiliated 
purchasers in the United States. We made adjustments for price or 
billing errors, where applicable. We also made deductions for movement 
expenses in accordance with section 772(c)(2)(A) of the Tariff Act; 
these included, where appropriate, foreign inland freight, marine 
insurance, U.S. customs duties, U.S. inland freight, foreign brokerage 
and handling, international freight, foreign inland insurance, and U.S. 
warehousing expenses. In accordance with section 772(d)(1) of the 
Tariff Act, we deducted those selling expenses associated with economic 
activities occurring in the United States, including direct selling 
expenses (credit costs, warranty expenses, commissions and other direct 
selling expenses), inventory carrying costs, and indirect selling 
expenses. We offset credit expenses by the amount of interest revenue 
on sales. For CEP sales, we also made an adjustment for profit in 
accordance with section 772(d)(3) of the Tariff Act.
    For those sales in which material was sent to an unaffiliated U.S. 
processor to be further processed, we made an adjustment based on the 
transaction-specific further-processing amounts reported by KTN. In 
addition, Ken-Mac performed some further processing of some of KTN's 
U.S. sales. For these sales, we deducted the cost of further processing 
in accordance with 772(d)(2) of the Tariff Act. In calculating the cost 
of further manufacturing for Ken-Mac, we relied upon the further 
manufacturing information provided by KTN.

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 NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the respondent's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1) of the 
Tariff Act. As KTN's aggregate volume of home market sales of the 
foreign like product was greater than five percent of its aggregate 
volume of U.S. sales of the subject merchandise, we determined that the 
home market was viable. Therefore, we have based NV on home market 
sales in the usual commercial quantities and in the ordinary course of 
trade.
    Sales to affiliated customers in the home market not made at arm's-
length prices (if any) were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. If sales 
were not made at arm's-length then the Department used the sale from 
the affiliated party to the first unaffiliated party. See 19 CFR 
351.102. To test whether these sales were made at arm's-length prices, 
we compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct selling expenses, and packing. Where, for the tested models of 
subject merchandise, prices to the affiliated party were on average 
99.5 percent or more of the price to the unaffiliated parties, we 
determined that sales made to the affiliated party were at arm's 
length. See 19 CFR 351.403(c). In instances where no price ratio could 
be calculated for an affiliated customer because identical merchandise 
was not sold to unaffiliated customers, we were unable to determine 
that these sales were made at arm's-length prices and, therefore, 
excluded them from our analysis. See Final Determination of Sales at 
Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products 
from Argentina, 58 FR 37062, 37077 (July 9, 1993) and Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination; Emulsion Styrene-

[[Page 42512]]

Butadiene Rubber from Brazil, 63 FR 59509, 59512 (November 4, 1998). 
Where the exclusion of such sales eliminated all sales of the most 
appropriate comparison product, we made a comparison to the next most 
similar model.

Cost of Production (COP) Analysis

    The Department disregarded certain sales made by KTN in the less-
than-fair-value (LTFV) investigation because these sales were at prices 
below KTN's cost of production (see Notice of Final Determination of 
Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils 
from Germany, 64 FR 30710, 30716 (June 8, 1999)) Thus, in accordance 
with section 773(b)(2)(A)(ii) of the Tariff Act, there are reasonable 
grounds to believe or suspect that sales of S4 in the home market were 
made at prices below their cost of production (COP) in the current 
review period. Accordingly, pursuant to section 773(b) of the Tariff 
Act, we initiated a cost investigation to determine whether sales made 
during the POR were at prices below their respective COP.
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus an amount for general 
and administrative expenses (G&A), interest expenses, and home market 
packing costs. We relied on the COP data submitted by KTN, except where 
noted below:
    Where KTN's reported transfer prices for purchases of nickel from 
an affiliated party were not at arm's length, we increased these prices 
to reflect the prevailing market prices. Further, we revised the 
slitting costs reported by KTN's home market resellers by calculating 
one average cost for the service provided. See Memorandum from Taija 
Slaughter to Neal Halper, Director Office of Accounting, dated July 31, 
2001.
    In accordance with section 773(b)(1) of the Tariff Act, in 
determining whether to disregard home market sales made at prices below 
COP, we examined whether such sales were made within an extended period 
of time in substantial quantities, and whether such sales were made at 
prices which would permit recovery of all costs within a reasonable 
period of time.
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of KTN's sales of a given model were at prices less than 
COP, we did not disregard any below-cost sales of that model because 
these below-cost sales were not made in substantial quantities. Where 
20 percent or more of KTN's home market sales of a given model were at 
prices less than the COP, we disregarded the below-cost sales because 
such sales were found to be made: (1) In substantial quantities within 
the POR (i.e., within an extended period of time) in accordance with 
section 773(b)(2)(B) of the Tariff Act, and (2) 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 Tariff Act (i.e., the sales 
were made at prices below the weighted-average per-unit COP for the 
POR). We used the remaining sales as the basis for determining NV, if 
such sales existed, in accordance with section 773(b)(1) of the Tariff 
Act.

Constructed Value

    In accordance with section 773(e)(1) of the Tariff Act, we 
calculated CV based on the sum of respondent's cost of materials, 
fabrication, SG&A, including interest expenses, profit, and U.S. 
packing costs. In accordance with section 773(e)(2)(A) of the Tariff 
Act, we based SG&A and profit on the amounts incurred and realized by 
KTN in connection with the production and sale of the foreign like 
product in the ordinary course of trade for consumption in the foreign 
country. We used the CV data KTN supplied in its section D supplemental 
questionnaire response, except for the adjustments that we made for COP 
above.

Price-Based Normal Value

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers that we determined to be at arm's 
length. We made adjustments for interest revenue, discounts, and 
rebates where appropriate. We made deductions, where appropriate, for 
foreign inland freight, handling, and warehousing, pursuant to section 
773(a)(6)(B) of the Tariff Act. In addition, when comparing sales of 
similar merchandise, we made adjustments for differences in cost 
attributable to differences in physical characteristics of the 
merchandise pursuant to section 773(a)(6)(C)(ii) of the Tariff Act and 
19 CFR 351.411. We also made adjustments for differences in 
circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses and warranty expenses. We also 
made an adjustment, where appropriate, for the CEP offset in accordance 
with section 773(a)(7)(B) of the Tariff Act. See Level of Trade and CEP 
Offset section below. Finally, we deducted home market packing costs 
and added U.S. packing costs in accordance with sections 773(a)(6)(A) 
and (B) of the Tariff Act.
    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV if we were unable to find a contemporaneous home market match of 
such or similar merchandise. Where appropriate, we made adjustments to 
CV in accordance with section 773(a)(8) of the Tariff Act. Where we 
compared CV to CEP, we deducted from CV the weighted-average home 
market direct selling expenses. We also made an adjustment, where 
appropriate, for the CEP offset in accordance with section 773(a)(7)(B) 
of the Tariff Act.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to 
the extent practicable, we determine NV based on sales in the 
comparison market at the same level of trade (LOT) as the CEP 
transaction. The NV LOT is that of the starting price sales in the 
comparison market or, when NV is based on CV, that of the sales from 
which we derive selling, general and administrative (SG&A) expenses and 
profit. 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 CEP 
sales, 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 a LOT adjustment under section 
773(a)(7)(A) of the Tariff 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 affects price comparability, we adjust NV under section 
773(a)(7)(B) of the Tariff Act (the CEP offset provision). (See e.g., 
Certain Carbon Steel Plate from South Africa, Final Determination of 
Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997)).
    In implementing these principles in this review, we asked KTN to 
identify the specific differences and similarities in selling functions 
and support services between all phases of marketing in the home market 
and the United States. KTN identified four channels of distribution in 
the home market: (1) Mill direct sales (2) mill inventory sales (3)

[[Page 42513]]

service center inventory sales, and (4) service center processed sales. 
For all channels KTN performs similar selling functions such as 
negotiating prices with customers, setting similar credit terms, 
arranging freight to the customer, and conducting market research and 
sales calls. The remaining selling activities did not differ 
significantly by channel of distribution. Because channels of 
distribution do not qualify as separate levels of trade when the 
selling functions performed for each customer class or channel are 
sufficiently similar, we determined that one level of trade exists for 
KTN's home market sales.
    For the U.S. market KTN reported four channels of distribution: (1) 
Back-to-back CEP sales made through KHSP and Thyssen Marathon Canada 
(TMC); (2) consignment CEP sales made through KHSP and TMC; (3) 
inventory sales from TMC; and (4) services center sales thru Ken-Mac. 
All U.S. sales were CEP transactions. The Department examines the 
selling functions at the level of the constructed sale from the 
exporter to the importer (i.e., the sale from Krupp Thyssen Nirosta 
Export (KTN's home market affiliate) in Germany to affiliated U.S. 
importers). These selling functions included negotiating prices with 
customers, offering technical advice, arranging delivery services, 
providing after-sale warranties, and conducting market research and 
sales calls. However, KTN performed fewer of these selling functions in 
the U.S. market than it did in the home market. Additionally, the 
differences in selling functions performed for home market and CEP 
transactions indicates that home market sales involved a more advanced 
stage of distribution than CEP sales. See KTN Preliminary Analysis 
Memorandum, July 31, 2001, a public version of which is on file in Room 
B-099 of the main Department of Commerce building. Because we compared 
CEP sales to HM sales at a different level of trade, we examined 
whether a LOT adjustment may be appropriate. In this case KTN sold at 
one LOT in the home market; therefore, there is no basis upon which to 
determine whether there is a pattern of consistent price differences 
between levels of trade. Further, we do not have the information which 
would allow us to examine pricing patterns of KTN's sales of other 
similar products, and there is no other record evidence upon which such 
an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment but the LOT in Germany for KTN is at a more 
advanced stage than the LOT of the CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Tariff Act, 
as claimed by KTN. Where there were commissions in U.S. market but not 
the home market, we calculated the CEP offset as the lesser of either 
the U.S. commissions or the home market indirect selling expenses. 
Where there were commissions in both the U.S. and home markets, we 
calculated the CEP offset as the lesser of either the home market 
indirect selling expenses or the difference between the U.S. and home 
market commissions. Where there were commissions in the home market but 
not the U.S. market, we set the CEP offset equal to zero. We performed 
these calculations in accordance with 772(d)(1)(D) of the Tariff Act. 
We applied the CEP offset to NV, whether based on home market prices or 
CV.

Facts Available

    In accordance with section 776(a)(1) of the Tariff Act, in these 
preliminary results we find it necessary to use partial facts available 
in those instances where the respondent did not provide us with certain 
information necessary to conduct our analysis. In a small number of 
cases, KTN's affiliated U.S. reseller, Ken-Mac, was unable to confirm 
the origin of the subject merchandise it sold during the POR. 
Therefore, KTN provided data about these particular resales through 
Ken-Mac in a separate database. KTN reported that it allocated these 
sales of ``unattributable'' merchandise amongst the potential suppliers 
of the material based on relative percentage, by volume, of stainless 
steel and strip purchased during the POR by Ken-Mac from each supplier. 
In addition to KTN, potential suppliers of this merchandise include, 
among others, Mexinox S.A. de C.V. (Mexinox) and Acciai Speciali Terni 
(AST), producers which are subject to the companion antidumping duty 
administrative reviews covering S4 in coils from Mexico and Italy, 
respectively. At our sales verification of Ken-Mac, we thoroughly 
reviewed this issue and determined that Ken-Mac had acted to the best 
of its ability in attemping to trace the origin of the subject 
merchandise that it sold during the POR.
    Because of the unknown origin of certain of Ken-Mac's resales of 
subject merchandise, KTN has, in effect, not provided all the 
information necessary to complete our analysis. Therefore, we have 
preliminarily determined that, pursuant to section 776(a) of the Tariff 
Act, it is appropriate to use the facts otherwise available in 
calculating a margin on these sales. Section 776(a) of the Tariff Act 
provides that the Department will, subject to section 782(d), use the 
facts otherwise available in reaching a determination if ``necessary 
information is not available on the record.'' Therefore, for these 
preliminary results, we have calculated a margin on Ken-Mac's 
``unattributable'' resales by applying the overall margin calculated on 
all other Ken-Mac sales/resales of subject merchandise to the weighted-
average price of these ``unattributable'' sales. We then weighted the 
result by allocating a portion of the ``unattributable'' database 
representing the ratio of Ken-Mac's purchases of stainless steel from 
Germany to stainless steel purchases from all vendors.
    The Department incorporated KTN's May 21, 2001 submission of Krupp 
VDM GmbH (Krupp VDM) sales into KTN's home market and U.S. market sales 
data to calculate a weighted-average margin. However, a section D 
response was not included along with Krupp VDM's sales information. KTN 
did report in Krupp VDM's sales listing TOTCOM and VCOM; additional 
information on the record allowed the Department to calculate Krupp 
VDM's COP without resorting to facts available. The Department 
calculated Krupp VDM's total cost of production (TOTCOP) by first 
constructing Krupp VDM's general and administrative expenses (GNA) and 
interest expense (INTEX) from its audited 1999 and 2000 financial 
statements. See KTN's May 21, 2001 submission at exhibit C-4. The 
TOTCOP was calculated by adding GNA, INTEX and Krupp VDM's reported 
TOTCOM. See KTN's Preliminary Analysis Memorandum, July 31, 2001.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the following 
weighted-average dumping margin exists for the period January 4, 1999 
through June 30, 2000:

Manufacturer/Exporter: KTN
Weighted Average Margin (percentage): 2.81

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within thirty 
days of publication. See CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
business day thereafter, unless the Department alters the date pursuant 
to 19 CFR 351.310(d). Interested parties may submit case briefs or 
written comments no later than 30 days after the

[[Page 42514]]

date of publication of these preliminary results of review. Rebuttal 
briefs and rebuttals to written comments, limited to issues raised in 
the case briefs and comments, may be filed no later than 35 days after 
the date of publication of this notice. Parties who submit argument in 
these proceedings are requested to submit with the argument (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 issue final results of these administrative 
reviews, including the results of our analysis of the issues in any 
such written comments or at a hearing, within 120 days of publication 
of these preliminary results.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. In accordance 
with 19 CFR 351.212(b)(1), we will calculate ad valorem assessment 
rates for the merchandise based on the ratio of the total amount of 
antidumping duties calculated for the examined sales made during the 
POR to the total customs value of the sales used to calculate those 
duties. This rate will be assessed uniformly on all entries that 
particular importer made during the POR. The Department will issue 
appropriate appraisement instructions directly to the Customs Service 
upon completion of the review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of S4 in coils from Germany entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Tariff Act:
    (1) The cash deposit rate for KTN will be the rate established in 
the final results of review;
    (2) If the exporter is not a firm covered in this review or the 
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) If neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be 25.37 percent (see Antidumping Duty Order 64 FR 
40557, 40559).
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) 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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act.

    Dated: July 31, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 01-20272 Filed 8-10-01; 8:45 am]
BILLING CODE 3510-DS-P