[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51224-51231]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19993]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-824]


Preliminary Results of Antidumping Duty Administrative Review: 
Stainless Steel Sheet and Strip in Coils from Italy

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

ACTION: Notice of the preliminary results of the antidumping duty 
administrative review of stainless steel sheet and strip in coils from 
Italy.

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SUMMARY: In response to requests from domestic interested parties, 
ThyssenKrupp Acciai Speciali Terni S.p.A. (``TKAST'')\1\, a producer 
and exporter of subject merchandise, and ThyssenKrupp AST USA, Inc. 
(``TKAST USA''), an importer of subject merchandise, the Department of 
Commerce (``the Department'') is conducting an administrative review of 
the antidumping duty order on stainless steel sheet and strip in coils 
(``SSSS'') from Italy. This review covers imports of subject 
merchandise from TKAST. The period of review (``POR'') is July 1, 2000 
through June 30, 2001.
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    \1\ On January 18, 2002 Acciai Speciali Terni S.p.A.'s 
shareholders voted to change the company's name to ThyssenKrupp 
Acciai Speciali Terni S.p.A. On February 27, 2002, Acciai Speciali 
Terni USA, Inc. became ThyssenKrupp AST USA, Inc. Throughout most of 
the responses, the companies refer to themselves as TKAST and TKAST 
USA, respectively.
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    The Department preliminary determines that SSSS from Italy has been 
sold in the United States at less than normal value during the POR. If 
these preliminary results are adopted in our final results of this 
administrative review, we will instruct the U.S. Customs Service 
(``Customs'') to assess antidumping duties equal to the difference 
between export price and normal value.

EFFECTIVE DATE: August 7, 2002.

FOR FURTHER INFORMATION CONTACT: Robert A. Bolling at 202-482-3434, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 1401 Constitution Avenue, N.W., Washington, DC 
20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (``Act''), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act. In addition, unless otherwise 
indicated, all citations to the Department's regulations are to the 
regulations codified at 19 C.F.R. part 351 (2001).

Background

    On July 2, 2001, the Department published in the Federal Register a 
notice of opportunity to request an administrative review of the 
antidumping duty order on stainless steel sheet and strip in coils 
(``SSSS'') from Italy. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 66 FR 34910 (July 2, 2001). On July 31, 2001, 
domestic industry parties from the original investigation 
(``petitioners''), TKAST and TKAST USA requested that the Department 
conduct an administrative review of the antidumping duty order. On 
August 20, 2001, the Department initiated an administrative review of 
the antidumping duty order on SSSS from Italy with regard to TKAST. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 66 FR 43570 (August 20, 
2001).
    On August 31, 2001, the Department issued an antidumping duty 
questionnaire to TKAST. On September 21, 2001, TKAST submitted its 
response to Section A of the questionnaire. On November 5, 2001, TKAST 
submitted its responses to Sections A through E of the questionnaire. 
On November 19, 2001, TKAST submitted its cost reconciliation to the 
Department. On December 21, 2001, petitioners submitted comments on 
TKAST's Sections A through C responses, which included concerns 
regarding TKAST's reported insurance revenues, indirect selling 
expenses, and export price sales. On January 31, 2002, petitioners 
submitted comments on TKAST's cost reconciliation, and TKAST's Sections 
D and E responses, which included concerns regarding tying the Section 
D cost data to TKAST's financial statements, the use of fiscal year 
2000 data in reporting costs,

[[Page 51225]]

and supporting documentation on further manufacturing costs.
    On March 14, 2002, the Department issued a supplemental 
questionnaire to Sections A through C. On March 22, 2002, TKAST 
submitted a letter to the Department asking that the Department 
reconsider its request that TKAST report downstream home market sales 
from certain Italian affiliate(s). On March 27, 2002, the Department 
denied TKAST's request and reiterated to TKAST that, pursuant to 
section 351.403(d) of the Department's regulations, TKAST was required 
to report all downstream sales for these Italian affiliate(s). On April 
2, 2002, the Department issued a supplemental questionnaire to Sections 
D and E. On April 8, 2002, TKAST submitted its Section A supplemental 
response. On April 15, 2002, TKAST submitted its Section B supplemental 
response. On April 22, 2002, TKAST submitted its Section C supplemental 
response. On April 30, 2002, TKAST submitted its Sections D and E 
supplemental responses. On May 1, 2002, petitioners submitted 
additional comments on TKAST's reported insurance revenue.
    On May 13, 2002, the Department issued a second supplemental 
questionnaire to Sections A through C. Also on May 13, 2002, TKAST 
submitted downstream sales information for certain Italian 
affiliate(s). On May 24, 2002, TKAST submitted its Sections A through C 
second supplemental responses. On May 30, 2002, TKAST submitted its 
sales reconciliation information.
    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of an administrative review if it 
determines that it is not practicable to complete the review within the 
statutory time limit. On February 26, 2002, the Department extended the 
time limit for the preliminary results in this administrative review by 
ninety days. See Notice of Extension of Time Limit of the Preliminary 
Results of Antidumping Duty Administrative Review: Stainless Steel 
Sheet and Strip in Coils From Italy, 67 FR 9960 (March 5, 2002). On May 
3, 2002, the Department extended the time limit for the preliminary 
results in this administrative review another twenty-five days. See 
Notice of Extension of Time Limit of the Preliminary Results of 
Antidumping Duty Administrative Review: Stainless Steel Sheet and Strip 
in Coils From Italy, 67 FR 32015 (May 13, 2002). On July 26, 2002, the 
Department extended the time limit for the preliminary results in this 
administrative review another five days.
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Period of Review

    The POR is July 1, 2000 through June 30, 2001.

Verification

    On December 21, 2001, petitioners requested that the Department 
conduct a verification in this administrative review. See petitioners' 
letter to the Department, at 53 (December 21, 2001). As provided in 
section 782(i) of the Act, the Department conducted a sales 
verification of the information provided by TKAST, from June 10, 2002 
through June 14, 2002, using standard verification procedures, 
including an examination of relevant sales, cost, financial records, 
and a selection of relevant original documentation. Our verification 
results are outlined in the Report on the Sales Verification of 
ThyssenKrupp Acciai Speciali Terni S.p.A. (July 11, 2002) 
(``Verification Report''), a public version of which is available on 
file in the Central Records Unit, room B-099 of the Herbert C. Hoover 
Department of Commerce building, 1401 Constitution Avenue, N.W., 
Washington, D.C.

Scope of the Review

    For purposes of this administrative review, 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 review is currently classifiable in 
the Harmonized Tariff Schedule of the United States (``HTS'') at 
subheadings: 7219.13.0031, 7219.13.0051, 7219.13.0071, 7219.1300.81,\2\ 
7219.14.0030, 7219.14.0065, 7219.14.0090, 7219.32.0005, 7219.32.0020, 
7219.32.0025, 7219.32.0035, 7219.32.0036, 7219.32.0038, 7219.32.0042, 
7219.32.0044, 7219.33.0005, 7219.33.0020, 7219.33.0025, 7219.33.0035, 
7219.33.0036, 7219.33.0038, 7219.33.0042, 7219.33.0044, 7219.34.0005, 
7219.34.0020, 7219.34.0025, 7219.34.0030, 7219.34.0035, 7219.35.0005, 
7219.35.0015, 7219.35.0030, 7219.35.0035, 7219.90.0010, 7219.90.0020, 
7219.90.0025, 7219.90.0060, 7219.90.0080, 7220.12.1000, 7220.12.5000, 
7220.20.1010, 7220.20.1015, 7220.20.1060, 7220.20.1080, 7220.20.6005, 
7220.20.6010, 7220.20.6015, 7220.20.6060, 7220.20.6080, 7220.20.7005, 
7220.20.7010, 7220.20.7015, 7220.20.7060, 7220.20.7080, 7220.20.8000, 
7220.20.9030, 7220.20.9060, 7220.90.0010, 7220.90.0015, 7220.90.0060, 
and 7220.90.0080. Although the HTS subheadings are provided for 
convenience and Customs purposes, the Department's written description 
of the merchandise under review is dispositive.
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    \2\ Due to changes to the HTS numbers in 2001, 7219.13.0030, 
7219.13.0050, 7219.13.0070, and 7219.13.0080 are now 7219.13.0031, 
7219.13.0051, 7219.13.0071, and 7219.13.0081, respectively.
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    Excluded from the scope of this review 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 HTS, ``Additional 
U.S. Note'' 1(d).
    Flapper valve steel is also excluded from the scope of this review. 
This product 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

[[Page 51226]]

minus 8 ksi, and a hardness (Hv) of between 460 and 590. Flapper valve 
steel is most commonly used to produce specialty flapper valves in 
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 review. 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 less than 0.002 or greater than 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.''\3\
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    \3\ ``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 review. 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.''\4\
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    \4\ ``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.''\5\
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    \5\ ``Durphynox 17'' is a trademark of Imphy, S.A.
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    Also excluded are three specialty stainless steels typically used 
in certain industrial blades and surgical and medical instruments. 
These include stainless steel strip in coils used in the production of 
textile cutting tools (e.g., carpet knives).\6\ This steel is similar 
to AISI grade 420 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.''\7\ 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 100 square microns. An example of this 
product is ``GIN5''\8\ 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.''\9\
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    \6\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \7\ ``GIN4 Mo'' is the proprietary grade of Hitachi Metals 
America, Ltd.
    \8\ ``GIN5'' is the proprietary grade of Hitachi Metals America, 
Ltd.
    \9\ ``GIN6'' is the proprietary grade of Hitachi Metals America, 
Ltd.
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Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
SSSS products covered by the ``Scope of the Review'' section of this 
notice, supra, which were produced and sold by TKAST in the home market 
during the POR, to be foreign like products for the purpose of 
determining appropriate product comparisons to U.S. sales of SSSS 
products. We relied on nine characteristics to match U.S. sales of 
subject merchandise to comparison sales of the foreign like product 
(listed in order of preference): (1) Grade; (2) hot/cold rolled; (3) 
gauge; (4) surface finish; (5) metallic coating; (6) non-metallic 
coating; (7) width; (8) temper; and (9) edge trim. For the grade 
product characteristic, TKAST reported additional grades which were 
specifically permitted by the Department's questionnaire. See Analysis 
Memorandum for ThyssenKrupp Acciai Speciali Terni S.p.A.: Preliminary 
Results of the 2000-2001 Administrative Review of Stainless Steel Sheet 
and Strip in Coils from Italy (July 26, 2002) (``Analysis Memo''). 
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.

Export Price/Constructed Export Price

    In accordance with section 772(a) of the Act, export price (``EP'') 
is the price at which the subject merchandise is first

[[Page 51227]]

sold (or agreed to be sold) before the date of importation by the 
producer or exporter of the subject merchandise outside of the United 
States to an unaffiliated purchaser in the United States or to an 
unaffiliated purchaser for exportation to the United States. In 
accordance with section 772(b) of the Act, constructed export price 
(``CEP'') is the price at which the subject merchandise is first sold 
(or agreed to be sold) in the United States before or after the date of 
importation by or for the account of the producer or exporter of such 
merchandise or by a seller affiliated with the producer or exporter, to 
a purchaser not affiliated with the producer or exporter.
    For purposes of this review, TKAST originally classified its U.S. 
sales as EP and CEP sales. See Section A supplemental response at 
Exhibit A-32. TKAST also argued that it is entitled to a CEP offset 
with respect to its CEP sales in the United States. See Section A 
response at A-21. For further discussion on CEP offset, see the ``Level 
of Trade'' section, infra. TKAST later reclassified its EP sales as CEP 
sales, pursuant to Departmental request. See Section C supplemental 
response at 3. Based on the information on the record, we preliminarily 
find that all of TKAST's U.S. sales are appropriately classified as CEP 
sales.
    TKAST reported that it sold the subject merchandise in the United 
States through three channels (i.e., Channels one, two and three). 
Channel two sales are made from the inventory of TKAST's U.S. based 
affiliated reseller, TKAST USA. Channel three sales involve subject 
merchandise that is sold by TKAST USA to an affiliated U.S. reseller 
(i.e., Ken-Mac), who may or may not further manufacture the merchandise 
before reselling it to an unaffiliated customer. Therefore, because 
sales in channels two and three are sold from the inventory of TKAST's 
U.S. affiliated resellers, it is appropriate to classify these sales as 
CEP sales.
    With respect to channel one sales, TKAST reported that these sales 
are shipped directly from the factory in Italy to the U.S. customer. 
However, TKAST USA serves as the principal point of contact for the 
U.S. customer. For channel one sales, customers place their orders with 
TKAST USA, which then places an order with TKAST. Upon confirmation 
from TKAST, TKAST USA separately issues an invoice to the customer. 
TKAST USA is solely responsible for collecting payment from the U.S. 
customer, and separately responsible for paying TKAST for the 
merchandise. TKAST USA separately invoiced and received payment from 
those customers. Accordingly, the Department preliminarily determines 
that TKAST's channel one sales were made ``in the United States'' 
within the meaning of section 772(b) of the Act and should be treated 
as CEP transactions, consistent with AK Steel Corp. v. United States, 
226 F.3d 1361, 1374 (Fed. Cir. 2000).
    We calculated CEP in accordance with section 772(b) of the Act. We 
based CEP on the packed, CIF or FOB prices to the first unaffiliated 
customer in the U.S. market. We made adjustments to the starting price 
for billing adjustments and the alloy surcharge, where applicable. 
Where appropriate, we made deductions from the starting price for 
credit, repacking, skid charges, and Ken-Mac commissions. We also made 
deductions for the following movement expenses, where appropriate, in 
accordance with section 772(c)(2)(A) of the Act: international freight, 
U.S. inland freight from warehouse/plant to the unaffiliated customer, 
Ken-Mac's U.S. inland freight from warehouse/plant to the unaffiliated 
customer, Ken-Mac warehousing expense, other U.S. transportation 
expense, U.S. Customs duties, and freight equalization charges. In 
accordance with section 772(d)(1) of the Act, we deducted selling 
expenses associated with economic activities occurring in the United 
States, including technical services expenses, inventory carrying 
costs, and other indirect selling expenses. We recalculated the 
insurance revenue factor based on subject merchandise only. See 
Analysis Memo and Verification Report.
    For products that were further manufactured after importation, we 
adjusted for all costs of further manufacturing in the United States in 
accordance with section 772(d)(2) of the Act. We deducted the profit 
allocated to expenses deducted under sections 772(d)(1) and (d)(2) in 
accordance with sections 772(d)(3) and 772(f) of the Act. In accordance 
with section 772(f) of the Act, we computed profit based on total 
revenues realized on sales in both the U.S. and home markets, less all 
expenses associated with those sales. We then allocated profit to 
expenses incurred with respect to U.S. economic activity, based on the 
ratio of total U.S. expenses to total expenses for both the U.S. and 
home market.

Normal Value

    After testing home market viability, we calculated NV as noted in 
the ``Price-to-CV Comparisons'' and ``Price-to-Price Comparisons'' 
sections of this notice.
1. Home Market Viability
    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was a sufficient volume of sales in the home market to 
serve as a viable basis for calculating normal value (``NV'') (i.e., 
the aggregate volume of home market sales of the foreign like product 
is greater than or equal to five percent of the aggregate volume of 
U.S. sales), we compared TKAST's volume of home market sales of the 
foreign like product to the volume of its U.S. sales of the subject 
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act, 
because TKAST'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 that sales in the 
home market provide a viable basis for calculating NV. We therefore 
based NV on home market sales to unaffiliated purchasers and to those 
affiliated customer sales which passed the arm's length test, as 
discussed in the ``Arm's Length Test'' section of this notice, infra, 
made in the usual commercial quantities and in the ordinary course of 
trade.
    Thus, we used as NV the prices at which the foreign like product 
was first sold for consumption in Italy, in the usual commercial 
quantities, in the ordinary course of trade, and, to the extent 
possible, at the same level of trade (``LOT'') as the constructed 
export price (``CEP'') or NV sales, as appropriate. After testing home 
market viability and whether home market sales were at below-cost 
prices, we calculated NV as noted in the ``Price-to-Price Comparisons'' 
and ``Price-to-Constructed Value (``CV'') Comparisons'' sections of 
this notice.

Arm's Length Test

    During the POR, TKAST reported that it made sales of subject 
merchandise in the home market to affiliated customers (resellers and 
end-users). If any sales to affiliated customers in the home market 
were not made at arm's length prices, we excluded them from our 
analysis because we considered them to be outside the ordinary course 
of trade. 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 billing adjustments, 
rebates, movement charges, direct selling expenses, and home market 
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 determine that

[[Page 51228]]

sales made to the affiliated party were at arm's-length. See 19 CFR 
351.403(c); Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27355 (May 19, 1997). In our home market NV calculation, we 
have included TKAST's sales to certain of its affiliated customers 
because these entities passed the Department's arm's length test 
criteria. Conversely, certain other affiliated customers did not pass 
the arm's length test and have therefore been excluded from our home 
market NV calculation. For a further discussion of home market sales 
made by TKAST to affiliated resellers who failed the arm's length test, 
please see the ``Facts Available'' section below.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the COP, we based NV on the home market delivered prices to 
unaffiliated customers or prices to affiliated customers that we 
determined to be at arm's length. We made adjustments, where 
appropriate, for physical differences in the merchandise in accordance 
with section 773(a)(6)(C)(ii) of the Act. Where appropriate, we 
deducted early payment discounts, rebates, credit expenses, warranty 
expenses, and inland freight. We also adjusted the starting price for 
billing adjustments and the alloy surcharge. In accordance with section 
773(a)(6), we deducted home market packing costs and added U.S. packing 
costs. Finally, in accordance with section 773(b)(1) of the Act, where 
there were no usable contemporaneous matches to a U.S. sale 
observation, we based NV on CV.
    We have recalculated certain billing adjustments to be early 
payment discounts because it appears that early payment discounts were 
applicable only on certain home market sales during the POR. When a 
certain payment term code was reported and a billing adjustment was 
applied, the Department has recategorized the billing adjustment as an 
early payment discount in those instances. See Analysis Memo. 
Additionally, we have disallowed TKAST's home market insurance revenue 
adjustment. At verification, the Department discovered that TKAST could 
have reported home market insurance revenue on a sales specific basis 
and should not have allocated this adjustment over the entire home 
market database. See Analysis Memo and Verification Report. Also, we 
have recalculated TKAST's inventory carrying costs to include the alloy 
surcharge in the gross unit price and a new average inventory days. At 
verification, we discovered that TKAST's average days in inventory did 
not include fiscal year 2001. See Analysis Memo and Verification 
Report.
    For reasons discussed below in the ``Level of Trade'' section, we 
have not granted TKAST a CEP offset.

Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a home market match of identical or similar 
merchandise. We calculated CV based on the costs of materials and 
fabrication employed in producing the subject merchandise, selling, 
general and administrative expenses (``SG&A''), and profit. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A expense 
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 Italy. For selling 
expenses, we used the weighted-average home market selling expenses. 
Where appropriate, we made adjustments to CV in accordance with section 
773(a)(8) of the Act. We deducted from CV the weighted-average home 
market direct selling expenses.

2. Cost of Production

    In the original investigation, the Department determined that TKAST 
made sales in the home market at prices below the cost of production 
(``COP'') and, therefore, excluded such sales from NV. See Notice of 
Final Determination of Sales at Less Than Fair Value: Stainless Steel 
Sheet and Strip in Coils From Italy, 64 FR 30750, 30754-55 (June 8, 
1999). Accordingly, the Department had reasonable grounds to believe or 
suspect that TKAST made sales in the home market at prices below the 
COP for this POR. See section 773(b)(2)(A)(ii) of the Act. As a result, 
pursuant to section 773(b)(1) of the Act, we conducted a COP analysis 
of home market sales by TKAST.
A. Calculation of the COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of TKAST's cost of materials and fabrication for 
the foreign like product, plus amounts for home market selling, general 
and administrative expenses (``SG&A''), interest expenses, and packing 
costs. We relied on the COP data submitted by TKAST in its original and 
supplemental cost questionnaire responses. For these preliminary 
results, we did not make any adjustments to TKAST's submitted costs.
B. Test of Home Market Prices
    We compared the weighted-average COP for TKAST to its home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP. In determining whether to disregard home market 
sales made at prices less than the COP, we examined whether such sales 
were made: (1) in substantial quantities within an extended period of 
time; and (2) at prices which permitted the recovery of all costs 
within a reasonable period of time, in accordance with sections 
773(b)(1)(A) and (B) of the Act. We compared the COP to home market 
prices, less any applicable billing adjustments, movement charges, 
discounts, and direct and indirect selling expenses.
C. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of TKAST's sales of a given product were, within an extended 
period of time, at prices less than the COP, we did not disregard any 
below-cost sales of that product because we determined that the below-
cost sales were not made in ``substantial quantities.'' Where 20 
percent or more of TKAST's sales of a given product during the POR were 
at prices less than the COP, we determined such sales to have been made 
in ``substantial quantities'' within an extended period of time, in 
accordance with sections 773(b)(2)(B) of the Act. In such cases, 
because we used POR average costs, we also determined that such sales 
were not made at prices which would permit recovery of all costs within 
a reasonable period of time, in accordance with section 773(b)(2)(D) of 
the Act. We compared the COP for subject merchandise to the reported 
home market prices less any applicable movement charges. Based on this 
test, we disregarded below-cost sales. Where all sales of a specific 
product were at prices below the COP, we disregarded all sales of that 
product.
D. Calculation of Constructed Value
    In accordance with section 773(e)(1) of the Act, we calculated 
constructed value (``CV'') based on the sum of TKAST's cost of 
materials, fabrication, SG&A (including interest expenses), U.S. 
packing costs, direct and indirect selling expenses, and profit. As 
noted in the ``Calculation of the COP'' section, supra, we made no 
adjustments to TKAST's reported cost. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A and profit on the amounts 
incurred and realized by TKAST in

[[Page 51229]]

connection with the production and sale of the foreign like product in 
the ordinary course of trade, for consumption in the foreign country. 
For selling expenses, we used the actual weighted-average home market 
direct and indirect selling expenses.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (``LOT'') as the EP or CEP transaction. The NV 
LOT is that of the starting-price sales in the comparison market or, 
when NV is based on CV, that of the sales from which we derive SG&A 
expenses and profit. For EP sales, the LOT is also the level of the 
starting-price sale, which is usually from the exporter to the 
importer. For CEP sales, the LOT the level of the constructed sale from 
the exporter to the affiliated importer. See 19 C.F.R. 351.412(c)(1). 
As noted in the ``Export Price/Constructed Export Price'' section, 
supra, , we preliminarily find that all of TKAST's U.S. sales are 
appropriately classified as CEP sales.
    To determine whether NV sales are at a different LOT than EP or CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. Substantial differences in selling activities 
are a necessary, but not sufficient condition for determining that 
there is a difference in the stage of marketing. See 19 C.F.R. 
351.412(c)(2). If the comparison market sales are at a different LOT, 
and the difference affects price comparability, as manifested in a 
pattern of consistent price differences between the sales on which NV 
is based and comparison-market sales at the LOT of the export 
transaction, we make a LOT adjustment under section 773(a)(7)(A) of the 
Act. Finally, for CEP sales, if the NV level is more remote from the 
factory than the CEP level and there is no basis for determining 
whether the differences in the levels between NV and CEP sales affect 
price comparability, we adjust NV under section 773(A)(7)(B) of the Act 
(the CEP offset provision). See Notice of Final Determination of Sales 
at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from 
South Africa, 62 FR 61731, 61732 (November 19, 1997).
    In the present administrative review, TKAST requested a CEP offset. 
To determine whether a CEP offset was necessary, in accordance with the 
principles discussed above, we examined information regarding the 
distribution systems in both the United States and Italian markets, 
including the selling functions, classes of customer, and selling 
expenses.
    TKAST reported one LOT in the home market, with two channels of 
distribution: (1) direct factory sales to end-users, manufacturers, 
service centers and distributors; and (2) warehouse sales to end-users, 
service centers and distributors. TKAST performed the same selling 
functions for sales in both home market channels of distribution, 
including production guidance, price negotiations, sales calls and 
services, arranging for freight and delivery, technical assistance and 
general selling activities. The only differences are that in warehouse 
sales TKAST initiates the sale (whereas direct sales are initiated by 
either party) by distributing a ``Pronto'' list of available inventory 
to potential customers, and warehouse sales typically carry no 
guarantee or warranty. Accordingly, because these selling functions are 
substantially similar for both channels of distribution, we 
preliminarily determine that there is one LOT in the home market.
    TKAST reported two LOTs in the U.S. market, with three channels of 
distribution: (1) Direct factory sales through TKAST USA to end-users 
and service centers; (2) warehouse sales from the inventory of TKAST 
USA to end-users and service centers; and (3) sales from the mill 
through TKAST USA to Ken-Mac, its affiliated U.S. further manufacturer/
reseller, which then sells to unaffiliated customers. TKAST performed 
many of the same selling functions for sales in all three U.S. market 
channels of distribution, including approaching the customer in 
conjunction with TKAST USA, processing TKAST USA inquiries and purchase 
orders, offering production and pricing guidance, invoicing TKAST USA, 
arranging for freight and delivery to the U.S. port, and general 
selling activities. Accordingly, because these selling functions are 
substantially similar for the three channels of distribution, we 
preliminarily determine that there is one LOT in the U.S. market.
    In comparing TKAST's home market and U.S. market sales, it appears 
that TKAST offered many of the same selling functions in both market, 
including production and pricing guidance, invoicing, arranging for 
freight and delivery, technical service and other general selling 
activities. Accordingly, we preliminarily determine that sales in the 
home market and in the U.S. market were made at the same LOT and have 
not granted a CEP offset.

Facts Available

    We preliminarily determine that the use of facts available is 
appropriate for one element of TKAST's dumping margin calculation. 
Section 776(a)(2) of the 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 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.
    Consistent with section 776(a)(2)(A)(B) and (C) of the Act, we 
preliminarily determine that use of facts available is warranted for 
home market sales made to certain affiliated resellers who failed the 
arm's length test. The Department's original August 31, 2001, section B 
questionnaire requests that TKAST ``report only the resales by the 
affiliated reseller to unaffiliated customers.'' The Department further 
requested in the August 31, 2001 section A questionnaire that TKAST 
exclude its ``sales to affiliated resellers'' and instead report the 
``resales by the affiliates to unaffiliated customers.'' On March 14, 
2002, the Department further stated that TKAST must report the 
downstream sales of the affiliates with whom its sales were not on an 
arm's length basis.
    On September 21, 2001, TKAST submitted a letter to the Department 
which stated that it did not intend to submit home market sales data by 
the customer that it claimed failed the arm's length test because it 
accounted for only a portion of TKAST's total home market sales during 
the POR. TKAST further stated that TKAST did not have access to the 
sales and other data for companies that are not majority owned by it 
and could not compel such companies to provide such information. On 
November 5, 2001, TKAST stated that it had only reported the ``home 
market sales to, rather than downstream sales by, its affiliated 
resellers of the foreign like product in the home market.'' Regarding 
those affiliates to whom TKAST maintained that it sold on an arm's 
length basis, TKAST stated that their downstream sales would not be 
used by the Department for matching purposes in any event. It further 
stated that ``such sales are not necessary to the Department's analysis 
because home market sales of the same or similar products to 
unaffiliated companies

[[Page 51230]]

provide ample matches'' to TKAST's U.S. sales. On March 21, 2002, TKAST 
submitted a letter in which it requested that the Department not 
require the reporting of downstream sales by a certain affiliate of 
TKAST.
    On March 27, 2002, the Department denied this request in a letter 
to TKAST. The Department stated the following:
    As stated in the Department's original questionnaire, dated August 
31, 2001, at G-6: You must report all your sales to affiliated 
customers. If the Department determines that your sales to affiliated 
customers are at arm's length, the Department will use these sales in 
its analysis. For sales to affiliated resellers, you must report the 
sales from the affiliated resellers to the unaffiliated customers. 
However, if sales to all affiliated customers constitute less than 5% 
of your total sales in the foreign market, or if you are unable to 
collect information on such resales, please notify the official in 
charge in writing immediately so that the Department may consider a 
possible exemption.
    In your September 21, 2001 section A response, at A-3, you failed 
to show that sales to all affiliated customers constituted less than 5% 
of your total sales in the foreign market, nor did you indicate you 
were unable to collect information on resales by the affiliate, 
although you recognized that sales to this affiliate failed the arm's 
length test. Accordingly, the Department restated in its Supp. A-C 
questionnaire, at question 3, that pursuant to section 351.403(d):
    As the table on your affiliates' percentage of sales (at A-30) 
indicates that your sales to all affiliated parties do not account for 
less than five percent of the total sales, you must report the 
downstream home market sales by {the affiliate} and revise your 
database accordingly.
Please note that if you fail to provide accurately the information 
requested within the time provided, the Department may be required to 
base its findings on the facts available. If you fail to cooperate with 
the Department by not acting to the best of your ability to comply with 
a request for information, the Department may use information that is 
adverse to your interest in conducting its analysis.
Accordingly, the Department is requiring that AST report the downstream 
sales of the aforementioned affiliate. However, we are granting AST an 
extension of time in which to report the affiliate's downstream sales 
until c.o.b. April 29, 2002. If you are unable to collect the requested 
information on the affiliates resales, please notify the official in 
charge in writing immediately. We note that failure to provide the 
requested information may require us to use information that is based 
on facts available. Moreover, should the Department find that you 
failed to cooperate by not acting to your best of your ability, we may 
use information that is based on adverse facts available.
    On May 1, 2002, in response to TKAST's request of April 29, 2002, 
the Department further extended the deadline for the reporting of 
downstream sales to May 13, 2002.
    On May 13, 2002, TKAST provided a limited amount of downstream 
sales information. TKAST maintained in this submission that the 
information it provided was the best that it was able to extract and 
that it was not in a ``position to compel the companies to comply with 
requests for information.''
    TKAST failed to provide its downstream sales made by certain 
affiliated resellers as requested by the Department in its August 31, 
2001, and March 14 and 27, 2002, original questionnaire and 
supplemental questionnaires, respectively, in a format that is usable 
by the Department. Therefore, consistent with section 776(a)(2)(A)(B) 
and (C) of the Act, TKAST withheld information that had been requested 
by the Department, failed to provide such information in a timely 
manner or in the form or manner requested, and significantly impeded 
the determination under the antidumping statute, justifying the use 
facts otherwise available in reaching the applicable determination. 
Therefore, we preliminarily determine that use of facts available is 
warranted for home market sales made to certain affiliated resellers 
who failed the arm's length test.
    For these preliminary results, the Department has disregarded all 
affiliated resellers sales that failed the arm's length test, and has 
used the remaining home market sales in its margin calculation.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions in accordance with section 773A of the Act, based on the 
official exchange rates in effect on the dates of the U.S. sales as 
certified by the Federal Reserve Bank of New York. Section 773A(a) of 
the Act directs the Department to use the daily exchange rate in effect 
on the date of sale in order to convert foreign currencies into U.S. 
dollars, unless the daily rate involves a ``fluctuation.'' In 
accordance with the Department's practice, we have determined as a 
general matter that a fluctuation exists when the daily exchange rate 
differs from a benchmark by 2.25 percent. See, e.g., Certain Stainless 
Steel Wire Rods from France; Preliminary Results of Antidumping Duty 
Administrative Review, 61 FR 8915, 8918 (March 6, 1998), and Policy 
Bulletin 96-1: Currency Conversions, 61 FR 9434 (March 8, 1996). The 
benchmark is defined as the rolling average of rates for the past 40 
business days. When we determine a fluctuation exists, we substitute 
the benchmark for the daily rate.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average dumping margin exists for the POR:

------------------------------------------------------------------------
                                                        Weighted-Average
            Producer/Manufacturer/Exporter                   Margin
------------------------------------------------------------------------
ThyssenKrupp.........................................              3.49%
Acciai Speciali Terni S.p.A..........................
------------------------------------------------------------------------

    In accordance with 19 CFR 351.224(b), the Department will disclose 
to the parties to this proceeding the calculations performed in 
connection with these preliminary results within five days of the date 
of publication of this notice.
    Pursuant to 19 CFR 351.309, interested parties may submit written 
comments and/or case briefs on these preliminary results. Comments and 
case briefs must be submitted no later than thirty days after the date 
of publication of this notice. Rebuttal comments and briefs must be 
limited to issues raised in the case briefs and comments, and must be 
submitted no later than five days after time limit for filing case 
briefs and comments. Parties submitting arguments in this proceeding 
are requested to submit with the argument: (1) a statement of the 
issue, and (2) a brief summary of the argument. Case and rebuttal 
briefs and comments must be served on interested parties in accordance 
with 19 CFR 351.303(f). Also, within thirty days of the date of 
publication of this notice, an interested party may request a public 
hearing on the arguments to be raised in the case and rebuttal briefs 
and comments. See 19 CFR 351.310(c). Unless otherwise specified, the 
hearing, if requested, will be held two days after the date for 
submission of rebuttal briefs, or the first working day thereafter. The 
Department will issue the final results of this administrative review, 
including the results of its analysis of issues raised in any case and 
rebuttal briefs and comments, within 120 days of publication of these 
preliminary results.

[[Page 51231]]

Assessment

    Upon issuance of the final results of this administrative review, 
the Department shall determine, and the U.S. Customs Service 
(``Customs'') shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212(b), we have calculated 
exporter/importer-specific assessment rates. We calculated importer-
specific duty assessment rates by dividing the total dumping margins 
for the reviewed sales by the total entered value of those reviewed 
sales for each importer. If these preliminary results are adopted in 
our final results, we will direct Customs not to assess antidumping 
duties on the merchandise subject to review. Upon completion of this 
review, the Department will issue appraisement instructions directly to 
Customs.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be the rate established in the final results of this 
administrative review (except that no deposit will be required if the 
rate is zero or de minimis, i.e., less than 0.5 percent); (2) for 
previously investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review, a prior review, or the original 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 (4) 
if neither the exporter nor the manufacturer is a firm covered in this 
review, a prior review, or the original LTFV investigation, the cash 
deposit rate will continue to be the ``all others'' rate of 11.23 
percent, which is the all others rate established in the LTFV 
investigation. 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 Italy, 64 FR 40567 (July 27, 1999). These 
deposit requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.

Notification to Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 C.F.R. 351.402(f)(2) to file a 
certificate regarding the reimbursement of antidumping duties prior to 
liquidation of the relevant entries during this administrative review 
period. Failure to comply with this requirement could result in the 
Secretary's presumption that reimbursement of antidumping duties 
occurred and the subsequent assessment of double antidumping duties.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-19993 Filed 8-6-02; 8:45 am]
BILLING CODE 3510-DS-S