[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51204-51210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19988]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-822]


Stainless Steel Sheet and Strip in Coils from Mexico; 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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SUMMARY: In response to requests from respondent ThyssenKrupp Mexinox 
S.A. de C.V. (Mexinox) and ThyssenKrupp Mexinox USA, Inc. (Mexinox USA) 
(collectively, Mexinox)\1\, and Allegheny Ludlum, AK Steel Corporation 
(formerly Armco, Inc.), J&L Specialty Steel, Inc., North American 
Stainless, Butler-Armco Independent Union, Zanesville Armco Independent 
Union, and the United Steelworkers of America, AFL-CIO/CLC 
(collectively, petitioners), 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 in coils) 
from Mexico (A-201-822). This review covers one manufacturer/exporter 
(Mexinox) of the subject merchandise to the United States during the 
period July 1, 2000 to June 30, 2001.
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    \1\ On July 26, 2002, we published in the Federal Register the 
final results of our determination that ThyssenKrupp Mexinox S.A. de 
C.V. is the successor-in-interest to Mexinox S.A. de C.V. for 
purposes of determining antidumping duty liability. See Stainless 
Steel Sheet and Strip in Coils from Mexico: Final Results of Changed 
Circumstances Antidumping Duty Administrative Review, 67 FR 48878 
(July 26, 2002).
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    We preliminarily determine that sales of S4 in coils from Mexico 
have been made below the 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 
based on the difference between the constructed export price (CEP) and 
NV. Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in these proceedings are requested 
to submit with the argument: (1) a statement of the

[[Page 51205]]

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issues and (2) a brief summary of the argument.

EFFECTIVE DATE: August 7, 2002.

FOR FURTHER INFORMATION CONTACT: Deborah Scott or or Robert James, AD/
CVD Enforcement, Group III, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230, telephone : (202) 
482-2657 or (202) 482-0649, respectively.

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 Rounds Agreements Act. In addition, 
unless otherwise indicated, all citations to the Department's 
regulations are to 19 CFR Part 351 (2001).

Background

    On July 27, 1999, the Department published in the Federal Register 
the Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Antidumping Duty Order on stainless steel sheet and strip in 
coils from Mexico (64 FR 40560). On July 2, 2001, the Department 
published the Notice of Opportunity to Request Administrative Review 
of, inter alia, stainless steel sheet and strip in coils from Mexico 
for the period July 1, 2000 through June 30, 2001 (66 FR 34910).
    In accordance with 19 CFR 351.213 (b)(1), Mexinox and the 
petitioners requested that we conduct an administrative review of 
Mexinox. 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 (66 FR 43570).
    Because it was not practicable to complete this review within the 
normal time frame, on March 6, 2002, we published in the Federal 
Register our notice of the extension of time limits for this review (67 
FR 10133). 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, 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.

[[Page 51206]]

    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.''\2\
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    \2\ ``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.''\3\
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    \3\ ``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.''\4\
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    \4\ ``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).\5\ 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.''\6\
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    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo,'' ``GIN5'' and ``GIN6'' are the proprietary 
grades of Hitachi Metals America, Ltd.
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Sales Made Through Affiliated Resellers

A. U.S. Market

    As noted in Mexinox's October 12, 2001 questionnaire response at 
10, Ken-Mac Metals Inc. (Ken-Mac) is an affiliated reseller that sold 
subject merchandise in the United States during the POR. Thus, we have 
included in our preliminary margin calculation resales of Mexinox 
subject merchandise made through Ken-Mac.

B. Home Market

    Mexinox Trading, S.A. de C.V. (Mexinox Trading), a wholly-owned 
subsidiary of Mexinox, sells both subject and non-subject merchandise 
in the home market. In its October 12, 2001 questionnaire response, 
Mexinox reported that sales through Mexinox Trading represented less 
than five percent of Mexinox's total sales of subject merchandise in 
the home market. Because Mexinox Trading's sales of subject merchandise 
were less than five percent of home market subject merchandise sales, 
and because Mexinox certified these sales passed the Department's 
arm's-length test, pursuant to section 351.403 (c) and (d) of the 
Department's regulations, we permitted Mexinox to report its sales to 
Mexinox Trading rather than require it to report downstream sales by 
Mexinox Trading to the first unaffiliated customer.

Fair Value Comparisons

    To determine whether sales of S4 in coils from Mexico to the United 
States were made at less than fair value, we compared the CEP\7\ to the 
NV, as described in the ``Constructed Export Price'' and ``Normal 
Value'' sections of this notice, below. In accordance with section 
777A(d)(2) of the Tariff Act, we compared individual CEPs to monthly 
weighted-average NVs.
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    \7\ Mexinox categorized some of its U.S. sales as CEP sales and 
some as export price (EP) sales. However, as discussed below in the 
``Level of Trade'' section, we have determined that all of Mexinox's 
U.S. sales are properly classified as CEP sales for these 
preliminary results.
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Transactions Reviewed

    For its home market and U.S. sales Mexinox reported the date of 
invoice as the date of sale, in keeping with the Department's stated 
preference for using the invoice date as the date of sale (19 CFR 
351.401(i)). Mexinox stated the invoice date represented the date when 
the essential terms of sales, i.e., price and quantity, are 
definitively set, and that up to the time of shipment and invoicing, 
these terms were subject to change. Because petitioners alleged that 
Mexinox did not provide adequate support for its claim that price and 
quantity may change at any time between the final order acceptance date 
(confirmation date) and the final invoice date, the Department 
requested that Mexinox provide additional information concerning the 
nature and frequency of price and quantity changes occurring between 
the date of order and date of invoice. We also requested that Mexinox 
report the order date for each transaction. Mexinox responded to our 
request on May 8, 2002. Based on our analysis of the information 
submitted by Mexinox, we have preliminarily determined the date of 
invoice is the appropriate date of sale because record evidence 
indicates that in a number of instances the price and quantity changed 
between the date of the order

[[Page 51207]]

acceptance and the date of invoice. Therefore, we find Mexinox's claim 
that price and quantity terms are subject to negotiation until the date 
of invoice is substantiated.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, we considered 
all products produced by the respondent covered by the description in 
the ``Scope of the Review'' section, above, and sold in the home market 
during the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the next most similar foreign like 
product on the basis of the characteristics and reporting instructions 
listed in the Department's questionnaire.

Level of Trade

    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 of the comparison 
sales in the home 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 sales affect price comparability, we adjust NV under section 
773(a)(7)(B) of the Tariff Act (the CEP offset provision).
    In our September 6, 2001 questionnaire, we asked Mexinox 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. Mexinox identified two channels of distribution 
in the home market: (1) retailers, and (2) end-users. For both 
channels, Mexinox performs similar selling functions such as pre-sale 
technical assistance and after-sales warranty services. See, e.g., 
Attachment A-21 of Mexinox's May 8, 2002 submission. Because channels 
of distribution do not qualify as separate LOTs when the selling 
functions performed for each customer class are sufficiently similar, 
we determined one LOT exists for Mexinox's home market sales. See 
Certain Stainless Steel Wire Rods from France: Final Results of 
Antidumping Duty Administrative Review, 63 FR 30185, 30190 (June 3, 
1998).
    For the U.S. market Mexinox reported two LOTs: (1) sales designated 
as EP transactions, which consisted, in some cases, of sales made 
directly to unaffiliated U.S. customers (``direct shipments''), and in 
other cases of sales made from the stock of finished goods held at the 
Mexican factory in San Luis Potosi to unaffiliated U.S. customers 
(``SLP stock sales''); and (2) CEP sales made through Mexinox USA's 
Brownsville warehouse to service centers and end users. For both direct 
shipments and SLP stock sales (i.e., those considered by Mexinox to be 
EP sales), Mexinox USA acted as the importer of record, collected 
purchase orders, invoiced the customer and collected payment. See, 
e.g., Mexinox's October 12, 2001 questionnaire response at A-35 and 36 
and Mexinox's November 7, 2001 questionnaire response at C-51. Thus, 
following the criteria set forth by the U.S. Court of Appeals for the 
Federal Circuit (the Federal Circuit) in AK Steel Corp. v. United 
States, 226 F.3d 1361 (Fed. Cir. 2000) (AK Steel), we determine 
Mexinox's direct shipments and SLP stock sales constitute a sale 
between Mexinox USA and its U.S. customer. In AK Steel the Federal 
Circuit, noting that CEP is defined as the price at which subject 
merchandise is first sold in the United States and EP as the price at 
which subject merchandise is first sold outside the United States, 
stated, ``the location of the sale appears to be critical to the 
distinction between the two categories.'' See AK Steel at 1369. Because 
Mexinox's sales of merchandise to its U.S. customers took place within 
the United States, we have classified Mexinox's direct shipments and 
SLP stock sales as CEP sales for these preliminary results.
    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 Mexinox performed fewer customer sales contacts, 
technical services, inventory maintenance, and warranty services. See, 
e.g., Mexinox's October 12, 2001 original questionnaire response at A-
31 and Attachment A-21 of Mexinox's May 8, 2002 supplemental 
questionnaire response. In addition, the differences in selling 
functions performed for home market and CEP transactions indicate home 
market sales involved a more advanced stage of distribution than CEP 
sales. In the home market Mexinox provides marketing further down the 
chain of distribution by providing certain downstream selling functions 
that are normally performed by service centers 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 home market sales, we examined whether a level-of-trade 
adjustment may be appropriate. In this case, Mexinox 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 Mexinox's sales of other 
similar products, and there are no other respondents or other record 
evidence on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a LOT adjustment and the level of trade in Mexico for Mexinox is 
at a more advanced stage than the level of trade of the CEP sales, a 
CEP offset is appropriate in accordance with section 773(a)(7)(B) of 
the Tariff Act, as claimed by Mexinox. We based the amount of the CEP 
offset on the amount of home market indirect selling expenses, and 
limited the deduction for home market indirect selling expenses to the 
amount of indirect selling expenses deducted from CEP in accordance 
with section 772(d)(1)(D) of the Tariff Act. We applied the CEP offset 
to NV, whether based on home market prices or CV.
    In addition to the three U.S. channels of distribution discussed 
above (direct sales, SLP stock sales, and sales through Mexinox's 
affiliate, Mexinox USA), Mexinox reported U.S. sales through one other 
channel of distribution: CEP sales through its affiliated reseller Ken-
Mac (see the section on ``Affiliation'' above). For purposes of this 
preliminary determination, we treated this channel

[[Page 51208]]

of distribution as equivalent to the level of trade of other CEP sales.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Tariff 
Act for those sales to the first unaffiliated purchaser that took place 
after importation into the United States. We based CEP on packed prices 
to unaffiliated purchasers in the United States. We made adjustments 
for discounts, rebates, and debit/credit notes 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, foreign inland insurance, foreign brokerage and 
handling, U.S. customs duties, U.S. inland freight, U.S. brokerage, and 
U.S. warehousing expenses. As further directed by 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 and warranty expenses), inventory 
carrying costs, and other indirect selling expenses. We also made an 
adjustment for profit in accordance with section 772(d)(3) of the 
Tariff Act, and added duty drawback to the starting price in accordance 
with section 772(c)(1)(B) of the Tariff Act. For those sales in which 
the 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 Mexinox. In addition, the U.S. 
affiliated reseller Ken-Mac performed some further manufacturing of 
some of Mexinox'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 Mexinox.

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 our September 6, 2001 questionnaire at G-6, we requested that 
Mexinox provide sales and cost data for all affiliates involved with 
the production or sale of the merchandise under review during the POR 
in both the home and U.S. markets. In its October 12, 2001 
questionnaire response at 10, Mexinox indicated its affiliated 
reseller, Ken-Mac, sold subject merchandise in the United States during 
the POR. In its November 7, 2001 submission, Mexinox provided data 
related to Ken-Mac's resales of subject merchandise to unaffiliated 
customers in the United States. At page S1-2 of its May 8, 2002 
supplemental questionnaire response, Mexinox indicated that Ken-Mac was 
unable to confirm the origin of some of the stainless steel material it 
sold during the POR. Therefore, Mexinox reported data on these 
particular resales through Ken-Mac in a separate database, indicating 
the quantity of each transaction that could be allocated reasonably to 
Mexinox. To designate a portion of these ``unattributable'' sales as 
resales of subject merchandise by Ken-Mac, Mexinox first calculated the 
relative percentage, by volume, of stainless steel merchandise that 
Ken-Mac purchased during the POR from Mexinox and other vendors. Then, 
of Ken-Mac's purchases of stainless steel merchandise from Mexinox, 
Mexinox determined the relative percentage, by volume, of subject 
stainless steel merchandise and non-subject stainless steel 
merchandise. See Attachment KMC-25 of Mexinox's June 3, 2002 
submission. Thus, because of the unknown origin of certain of Ken-Mac's 
resales of subject merchandise, Mexinox has, in effect, not provided 
all the information necessary to complete our analysis.
    Since Mexinox has not provided all of the information necessary to 
perform our analysis, we have preliminarily determined that, pursuant 
to section 776(a)(1) of the Tariff Act, it is appropriate to use the 
facts otherwise available in calculating a margin on Ken-Mac's 
``unattributable'' sales. Section 776(a)(1) 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.'' Hence, for these 
preliminary results, we have calculated a margin on Ken-Mac's 
``unattributable'' resales by applying the overall margin calculated on 
all other sales/resales of subject merchandise to the weighted-average 
price of these sales reported in Ken-Mac's ``unattributable'' sales 
database. See also Stainless Steel Sheet and Strip in Coils From 
Mexico; Final Results of Antidumping Duty Administrative Review, 67 FR 
6490 (February 12, 2002). We note that for these preliminary results we 
have not used an adverse inference, as provided under section 776(b) of 
the Tariff Act, to calculate a margin on Ken-Mac's ``unattributable'' 
sales.

Normal Value

A. Selection of Comparison Market

    To determine whether there is 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 is 
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)(B) of the Tariff Act. Because the 
respondent'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 for the subject merchandise, we determined the home market was 
viable. See, e.g., Mexinox's June 3, 2002 supplemental questionnaire 
response at Attachments A-35 (quantity and value chart), B-46 (home 
market sales listing), and C-43 (U.S. market sales listing).

B. Affiliated-Party Transactions and Arm's-Length Test

    Sales to affiliated customers in the home market not made at arm's-
length prices are excluded from our analysis because we consider them 
to be outside the ordinary course of trade. See 19 CFR 351.102(b). To 
test whether 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 minus 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 
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 
margin calculation. See, e.g., 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 (Nov. 8, 
1998), citing to Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 
37062 (July 9, 1993). Where the exclusion of such sales eliminated all 
sales of the most appropriate comparison product, we made a comparison 
to the next most

[[Page 51209]]

similar model. For these preliminary results, we found that none of 
Mexinox's affiliated home market customers failed our arm's-length 
test.

C. Cost of Production Analysis

    Because we disregarded sales of certain products made at prices 
below the cost of production (COP) in the investigation of S4 in coils 
from Mexico (see Notice of Final Determination of Sales at Less Than 
Fair Value: Stainless Steel Sheet and Strip in Coils From Mexico, 64 FR 
30790 (June 8, 1999)),\8\ we have reasonable grounds to believe or 
suspect that sales of the foreign like product under consideration for 
the determination of NV in this review for Mexinox may have been made 
at prices below the COP, as provided by section 773(b)(2)(A)(ii) of the 
Tariff Act. Therefore, pursuant to section 773(b)(1) of the Tariff Act, 
we initiated a COP investigation of sales by Mexinox.
---------------------------------------------------------------------------

    \8\ Since initiating the instant review, we completed our first 
administrative review of S4 in coils from Mexico, in which we also 
found home market sales below COP. See Stainless Steel Sheet and 
Strip in Coils from Mexico; Final Results of Antidumping Duty 
Administrative Review, 67 FR 6490 (February 12, 2002), as amended, 
Notice of Amended Final Results of Antidumping Duty Administrative 
Review: Stainless Steel Sheet and Strip in Coils from Mexico, 67 FR 
15542 (April 2, 2002)).
---------------------------------------------------------------------------

    To calculate COP, in accordance with section 773(f)(3) of the 
Tariff Act, we revised Mexinox's reported material costs to reflect the 
highest of cost of production, transfer price, or market price for 
those materials obtained from affiliated parties. We added the revised 
material costs to the respondent's reported cost of fabrication for the 
foreign like product, plus amounts for SG&A and packing costs, in 
accordance with section 773(b)(3) of the Tariff Act. We then computed 
weighted-average COPs during the POR, and compared the weighted-average 
COP figures to home market sales prices of the foreign like product as 
required under section 773(b) of the Tariff Act, in order to determine 
whether these sales had been made at prices below COP. On a product-
specific basis, we compared the COP to the home market prices, less any 
applicable movement charges and discounts.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) of the Tariff Act: (1) whether within an extended 
period of time, such sales were made in substantial quantities; and (2) 
whether such sales were made at prices which permitted the recovery of 
all costs within a reasonable period of time in the normal course of 
trade.
    Where twenty percent or more of the respondent's sales of a given 
product were at prices below the COP, we found sales of that model were 
made in ``substantial quantities'' within an extended period of time, 
in accordance with sections 773(b)(2) (B) and (C) of the Tariff Act. 
Based on our comparison of prices to the weighted-average per-unit cost 
of production for the POR, we determined whether the below-cost prices 
were such as to provide for recovery of costs within a reasonable 
period of time, in accordance with section 773(b)(2)(D) of the Tariff 
Act.
    Our cost test for Mexinox revealed that fewer than twenty percent 
of Mexinox's home market sales of certain products were at prices below 
Mexinox's COP. We therefore concluded that for such products, Mexinox 
had not made below-cost sales in substantial quantities. See section 
773 (b)(2)(C)(i) of the Tariff Act. We therefore retained all such 
sales in our analysis. For other products, more than twenty percent of 
Mexinox's sales were at below-cost prices. In such cases we disregarded 
the below-cost sales, while retaining the above-cost sales for our 
analysis.

D. Constructed Value

    In accordance with section 773(e) of the Tariff Act, we calculated 
CV based on the sum of the respondent's cost of materials, fabrication, 
SG&A expenses, profit, and U.S. packing costs. In accordance with 
section 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and 
profit on the amounts incurred and realized by the respondent in 
connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country. 
We deducted from CV the weighted-average home market direct selling 
expenses incurred on sales made in the ordinary course of trade.

E. Price-to-Price Comparisons

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers we determined to be at arm's length. We 
made adjustments for debit or credit notes, discounts, rebates, 
interest revenue, and insurance revenue, where appropriate. We made 
deductions, where appropriate, for foreign inland freight, insurance, 
handling, and warehousing, pursuant to section 773(a)(6)(B) of the 
Tariff Act. In addition, 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, as well as 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. As noted in the ``Level of Trade'' section of 
this notice, we also made an adjustment for the CEP offset in 
accordance with section 773(a)(7)(B) of the Tariff Act. 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.

F. Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Tariff Act, we based NV 
on CV if we were unable to find a 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.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales, as certified 
by the Federal Reserve Bank, in accordance with section 773A(a) of the 
Tariff Act.

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)
------------------------------------------------------------------------
Mexinox..............................................               6.01
------------------------------------------------------------------------

    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 per 19 
CFR 351.310(d). Interested parties may submit case briefs or written 
comments no later than 30 days after the 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

[[Page 51210]]

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 this administrative review, 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 importer-specific 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 of 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 Mexico 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 Mexinox 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 the all others rate from the investigation (30.85 
percent; 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 Mexico, 64 FR 40560, 40562 (July 27, 1999)).
    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. 02-19988 Filed 8-6-02; 8:45 am]
BILLING CODE 3510-DS-S