[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51199-51204]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19987]


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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 7, 2002.
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. (KHSP), Krupp Thyssen Nirosta North 
America, Inc. (KTNNA), Krupp VDM GmbH (VDM), and Krupp VDM Technologies 
Corporation (VDMT) (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 July 1, 2000 through 
June 30, 2001.
    We preliminarily determine that there are sales at less than normal 
value by KTN during the period July 1, 2000 through June 30, 2001. 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.

SUPPLEMENTARY INFORMATION:

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 (2002).

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 2, 2001, the Department published 
the Notice of Opportunity to Request Administrative Reviewof stainless 
steel sheet and strip in coils from Germany for the period July 1, 2000 
through June 30, 2001 (66 FR 34910), as corrected, July 24, 2001 (66 FR 
38455).
    On July 31, 2001, petitioners and KTN requested an administrative 
review of KTN's sales for the period July 1, 2000 through June 30, 
2001. On August 20, 2001, we published in the Federal Register a notice 
of initiation of this antidumping duty administrative review covering 
the period July 1, 2000 through June 30, 2001. See Notice of Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Requests for Revocation in Part, 66 FR 43570 (August 20, 2001).
    Because it was not practicable to complete this review within the 
normal time frame, on February 25, 2002, we published in the Federal 
Register our notice of the extension of time limits for the this 
review. See Stainless Steel Sheet and Strips in Coils from Germany; 
Antidumping Duty Administrative Review; Time Limits; Notice of 
Extension of Time Limits, 67 FR 8524 (February 25, 2002). This 
extension established the deadline for these preliminary results as 
July 31, 2002.

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,

[[Page 51200]]

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, 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

[[Page 51201]]

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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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 NVs and 
compared these to individual U.S. transactions.

Constructed Export Price (CEP)

    We calculated CEP in accordance with subsection 772(b) of the 
Tariff Act, because sales to the first unaffiliated purchaser 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, KTN's affiliated U.S. reseller, Ken-Mac, performed further 
processing on some of KTN's U.S. sales. For these sales, we deducted 
the cost of further processing in accordance with section 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 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 to affiliates 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 whether 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-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 first 
administrative review because these sales failed the cost test. See 
Notice of Final Results of Antidumping Duty Administrative Review: 
Stainless Steel Sheet and Strip in Coils from Germany, 67 FR 7668 
(February 20, 2002); see also Stainless Steel Sheet and Strip in Coils 
from Germany; Notice of Preliminary Results of Antidumping Duty 
Administrative Review, 66 FR 42509, 42512 (August 13, 2001). 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:
    In accordance with section 773(f)(2) of the Tariff Act, 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. See KTN Preliminary Results Analysis 
Memorandum, July 31, 2002.
    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

[[Page 51202]]

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 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.

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. Moreover, for CEP sales, we consider only the 
selling activities reflected in the price after the deduction of 
expenses and profit, pursuant to section 772(d) of the Tariff Act. See 
Micron Technology, Inc. v. United States, 243 F.3d 1301, 1314-1315 
(Fed. Cir. 2001).
    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) 
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 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, KTNNA and Thyssen Marathon 
Canada (TMC); (2) consignment CEP sales made through KHSP, KTNNA and 
TMC; (3) inventory sales from KTNNA and TMC; and (4) sales by Ken-Mac. 
All U.S. sales were CEP transactions. Therefore, the U.S. market has 
one LOT.
    When we compared CEP sales (after deductions made pursuant to 
section 772(d) of the Tariff Act) to home market sales, we determined 
that for CEP sales KTN performed fewer customer sales contacts, 
technical services, delivery services, and warranty services. In 
addition, 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. In the home market 
KTN provides marketing further down the chain of distribution by 
providing certain downstream selling functions that are normally 
performed by the affiliated resellers in the U.S. market (e.g., 
technical advice, credit and collection, etc.).
    Based on our analysis, we determined that CEP and the starting 
price of home market sales represent different stages in the marketing 
process, and are thus at different LOTs. Therefore, when we compared 
CEP sales to HM sales, we examined whether a LOT adjustment may be 
appropriate. In this case KTN sold at one LOT in the home market;

[[Page 51203]]

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

    Section 776(a)(2) of the Tariff Act provides that if an interested 
party: (A) Withholds information that has been requested by the 
Department; (B) fails to provide such information in a timely manner or 
in the form or manner requested, subject to subsections 782(c)(1) and 
(e) of the Tariff Act; (C) significantly impedes a determination under 
the antidumping statute; or (D) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsection 782(d) of the Act, use facts otherwise available in reaching 
the applicable determination.
    In our September 6, 2001 questionnaire we requested KTN to report 
the physical characteristics of grade (GRADEH), hot/cold rolled 
(ROLLH), gauge (GAUGEH), finish (FINISHH), metallic coated (MCOATH), 
non-metallic coating (NONMCOTH), width (WIDTHH), temper (TEMPERH), and 
edge trim (EDGEH). In its November 6, 2001 response KTN's affiliated 
home market reseller, Nirosta Service Center GmbH (NSC), was unable to 
provide the physical characteristics of ROLLH, GAUGEH, FINISHH, WIDTHH, 
TEMPERH for a small number of sales. The absence of the noted four 
characteristics precludes our making proper comparisons to these sales 
because of the uniqueness of each characteristic.
    Section 782(c)(1) of the Tariff Act provides that if an interested 
party ``promptly after receiving a request from [the Department] for 
information, notifies [the Department] that such party is unable to 
submit the information requested in the requested form and manner, 
together with a full explanation and suggested alternative form in 
which such party is able to submit the information,''the Department may 
modify the requirements to avoid imposing an unreasonable burden on 
that party.
    Also, section 782(d) of the Tariff Act provides that, if the 
Department determines that a response to a request for information does 
not comply with the request, the Department will inform the person 
submitting the response of the nature of the deficiency and shall, to 
the extent practicable, provide that person the opportunity to remedy 
or explain the deficiency. If that person submits further information 
that continues to be unsatisfactory, or this information is not 
submitted within the applicable time limits, the Department may, 
subject to section 782(e), disregard all or part of the original and 
subsequent responses, as appropriate.
    Additionally, section 782(e) of the Tariff Act states that the 
Department shall not decline to consider information deemed 
``deficient'' under section 782(d) if: (1) The information is submitted 
by the established deadline; (2) the information can be verified; (3) 
the information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    Pursuant to section 782(d) of the Tariff Act, the Department 
informed KTN of the deficiencies in its response. In the Department's 
April 8, 2002 supplemental we requested KTN to remedy the missing 
characteristics or explain in detail why it was not able to provide the 
requested information. KTN's April 26, 2002 supplemental response 
stated the company would have to manually review the invoices and that 
it would not be able to do so within the time permitted. The Department 
again asked KTN to remedy the deficiencies in a second supplemental 
questionnaire sent July 2, 2002. KTN's July 19, 2002 response stated 
the company attempted to the best of its ability to fill in the missing 
product characteristics but, for a small number of sales, could not 
supply the necessary information. However, KTN did not suggest an 
alternative method to remedy the product characteristics for these 
sales.
    In accordance with section 776(a)(2)(B) 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.
    Moreover, section 776(b) of the Tariff Act provides that the 
Department may use an inference adverse when a party has failed to 
cooperate to the best of its ability to the Department's requests for 
information. See also Statement of Administrative Action (SAA) 
accompanying the URAA, H.R. Rep. No. 103-316 at 870 (1994).
    The Department repeatedly requested KTN to instances to report 
product characteristics. As stated above, KTN's April 26, 2002, 
supplemental claimed the company would have to manually review the 
invoices and it would not be able to do so within the time permitted. 
KTN's July 19, 2002 supplement response stated again that it was not 
able to report the product characteristics. Pursuant to section 
782(c)(1) of the Tariff Act, KTN had the opportunity to suggest 
reporting the missing characteristics in an alternative form, yet it 
failed to do so. During the 1999 - 2000 review of S4 from Germany, a 
similar situation occurred where KTN initially could not report the 
physical characteristics of ROLLH, GAUGEH, FINISHH, WIDTHH, and TEMPERH 
for a number of its home market sales. However, it was able to remedy 
the missing characteristics by either calculating the average finish, 
gauge, and width from its packing list data or eventually reporting the 
actual transaction-specific information. See KTN's March 2, 2001 
supplemental A through C response and May 21, 2001 supplemental B and C 
response. KTN is a sophisticated company with experience in the 
procedures of an antidumping investigation and administrative review. 
See Notice of Amended Final Determination of Antidumping Duty 
Investigation: Stainless Steel Sheet and Strip in Coils from Germany, 
67 FR 15178 (March 29, 2002) and Notice of Final Results of Antidumping 
Duty Administrative Review: Stainless Steel Sheet and Strip in Coils 
from Germany, 67 FR 7668 (February 20, 2002).
    Based on the foregoing, we preliminarily conclude that KTN has not 
provided all the information necessary to complete our analysis and has 
not acted to the best of its ability.

[[Page 51204]]

 Therefore, pursuant to 776(b) of the Tariff Act, an adverse inference 
is warranted. We have preliminarily determined that, pursuant to 
section 776(b) of the Tariff Act, it is appropriate to use partial 
adverse facts available in calculating a margin on these sales. In each 
instance where KTN failed to provide one or more necessary model match 
characteristics, we matched this product to the lowest-priced product 
of the same grade sold in the United States by assigning the home 
market transaction the corresponding U.S. control number. For any home 
market sales of grades not sold in the United States which had missing 
characteristics, we assigned this product the home market control 
number of the highest-priced product of the same grade in the home 
market.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the following 
weighted-average dumping margin exists for the period July 1, 2000 
through June 30, 2001:

------------------------------------------------------------------------
                                                        Weighted Average
               Manufacturer / Exporter                       Margin
                                                          (percentage)
------------------------------------------------------------------------
KTN..................................................               5.34
------------------------------------------------------------------------

    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 no 
later than 30 days after the date of publication of these preliminary 
results of review. Rebuttal briefs, limited to issues raised in the 
case briefs, 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 13.48 percent (see Notice of Amended Final 
Determination of Antidumping Duty Investigation: Stainless Steel Sheet 
and Strip in Coils from Germany, 67 FR 15178 (March 29, 2002)).
    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, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-19987 Filed 8-6-02; 8:45 am]
BILLING CODE 3510-DS-S