[Federal Register Volume 68, Number 152 (Thursday, August 7, 2003)]
[Notices]
[Pages 47032-47038]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20176]


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

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.

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

SUMMARY: In response to a request from ThyssenKrupp Acciai Speciali 
Terni S.p.A. (``TKAST''), 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 Department preliminary determines that SSSS from Italy has been 
sold in the United States at less than normal value during the period 
of

[[Page 47033]]

review (``POR''). If these preliminary results are adopted in our final 
results of this administrative review, we will instruct the U.S. Bureau 
of Customs and Border Protection (``BCBP'') to assess antidumping 
duties equal to the difference between constructed export price and 
normal value.

EFFECTIVE DATE: August 7, 2003.

FOR FURTHER INFORMATION CONTACT: Catherine Bertrand or Robert Bolling, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: 202-482-3207 or 202-482-3434, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 1, 2002, the Department published in the Federal Register a 
notice of opportunity to request an administrative review of the 
antidumping duty order on SSSS from Italy. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 67 FR 44172, (July 1, 
2002). On July 29, 2002, TKAST requested that the Department conduct an 
administrative review of the antidumping duty order. On August 27, 
2002, 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, 67 FR 55000 (August 27, 
2002).
    On August 30, 2002, the Department issued an antidumping duty 
questionnaire to TKAST. On October 4, 2002, TKAST submitted its 
response to Section A of the questionnaire. TKAST requested in its 
October 4, 2002, Section A response at page A-4, that TKAST not be 
required to report the downstream sales of all affiliated parties but 
only report certain downstream sales. October 18, 2002, the Department 
sent TKAST a letter in which it allowed TKAST to report on certain 
downstream sales. See Letter from Department to TKAST dated October 18, 
2002. Also in its October 4, 2002, Section A response at page A-4, 
TKAST requested, that with regard to the U.S. sales, it not be required 
to report the downstream sales of a certain affiliate and that TKAST 
was also unable to determine if any downstream sales were made by a 
certain affiliate to an unaffiliated party. In its October 18, 2003, 
letter to TKAST, the Department stated that TKAST was required to 
report all of TKAST's affiliate's resales to unaffiliated customers in 
the United States.
    On October 15, 2002, TKAST submitted its responses to Sections B, C 
and D of the questionnaire. The Department issued its supplemental 
section A questionnaire on December 20, 2002, and on January 17, 2003, 
TKAST submitted its supplemental Section A response. On February 4, 
2003, the Department issued its supplemental Section B questionnaire 
and on February 28, 2003, TKAST submitted its supplemental Section B 
response. The Department issued its supplemental Section C 
questionnaire on February 26, 2003, and on March 25, 2003, TKAST 
submitted it supplemental Section C response. On March 12, 2003, TKAST 
submitted an updated Section D response. On March 21, 2003, the 
Department issued its supplemental Section D questionnaire to TKAST. On 
April 18, 2003, TKAST submitted its supplemental Section D response. 
The Department issued its second supplemental Sections A-C 
questionnaire on April 23, 2003, and its third supplemental Sections A-
C questionnaire on May 20, 2003. TKAST submitted the second 
supplemental Sections A-C response on May 13, 2003, and the third 
supplemental Sections A-C response on May 23, 2003. On May 13, 2003, 
the Department issued the second supplemental Section D questionnaire, 
and TKAST submitted its second supplemental section D response on May 
27, 2003.
    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 March 24, 2003, the Department extended the 
time limit for the preliminary results in this administrative review by 
120 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, 68 FR 14196 (March 24, 2003).

Period of Review

    The POR is July 1, 2001, through June 30, 2002.

Verification

    As provided in section 782(i) of the Act, the Department conducted 
a sales and cost verification of the information provided by TKAST, 
from June 9, 2003, through June 16, 2003, and a constructed export 
price (``CEP'') verification from May 28, 2003, through May 30, 2003, 
using standard verification procedures, including an examination of 
relevant sales, cost, and financial records, and a selection of 
relevant original documentation. Our verification results are outlined 
in the Report on the Sales and Cost Verification of ThyssenKrupp Acciai 
Speciali Terni S.p.A. (July 21, 2003) (``Sales and Cost Verification 
Report''), and Verification of Constructed Export Price Sales for 
Thyssen Krupp Acciai Speciali Terni USA, Inc. (July 29, 2003) (``CEP 
Verification Report''). Public versions of the verification reports are 
on file in the Central Records Unit, room B-099 of the Herbert C. 
Hoover Department of Commerce building, 1401 Constitution Avenue, NW., 
Washington, DC.

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,\1\ 
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,

[[Page 47034]]

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 BCBP purposes, the 
Department's written description of the merchandise under review is 
dispositive.
---------------------------------------------------------------------------

    \1\ 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.
---------------------------------------------------------------------------

    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 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.'' \2\
---------------------------------------------------------------------------

    \2\ ``Arnokrome III'' is a trademark of the Arnold Engineering 
Company.
---------------------------------------------------------------------------

    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.'' \3\
---------------------------------------------------------------------------

    \3\ ``Gilphy 36'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \4\ ``Durphynox 17'' is a trademark of Imphy, S.A.
---------------------------------------------------------------------------

    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).\5\ 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.'' \6\ 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'' \7\ 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

[[Page 47035]]

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.'' \8\
---------------------------------------------------------------------------

    \5\ This list of uses is illustrative and provided for 
descriptive purposes only.
    \6\ ``GIN4 Mo'' is the proprietary grade of Hitachi Metals 
America, Ltd.
    \7\ ``GIN5'' is the proprietary grade of Hitachi Metals America, 
Ltd.
    \8\ ``GIN6'' is the proprietary grade of Hitachi Metals America, 
Ltd.
---------------------------------------------------------------------------

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. 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.

Constructed Export Price

    In accordance with section 772(b) of the Act, 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 requested a CEP offset with 
respect to its CEP sales in the United States. For further discussion 
on CEP offset, see the ``Level of Trade'' section, infra. 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 two 
channels (i.e., channel one, and channel two). 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, TKAST's 
U.S. based affiliated reseller, 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. Channel two sales are made from the inventory of 
TKAST USA. Accordingly, the Department preliminarily determines that 
TKAST's channel one and two sales were made ``in the United States'' 
within the meaning of section 772(b) of the Tariff Act of 1930, as 
amended (``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 prices to the first unaffiliated purchaser in 
the United States. We made adjustments to the starting price for 
billing adjustments, the alloy surcharge, skid charges and freight 
revenue, where applicable. 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, other U.S. 
transportation expense, U.S. Customs duties, and inland freight from 
the plant/warehouse to port of exit. In accordance with section 
772(d)(1) of the Act, we deducted selling expenses associated with 
economic activities occurring in the United States, including direct 
selling expenses, technical services expenses, inventory carrying 
costs, and other indirect selling expenses.
    For U.S. indirect selling expenses, TKAST provided the Department 
with a recalculated indirect selling expense ratio on page 12 of its 
May 13, 2003 response. However, TKAST did not revise the computer 
database to reflect this recalculated ratio; therefore, the Department 
has revised the computer programs to use the recalculated U.S. indirect 
selling expense ratio. See May 13, 2003 response at page 12 and 
Analysis for the Preliminary Results of Review of Stainless Steel Sheet 
and Strip in Coils from Italy, (``Analysis Memorandum''), dated July 
31, 2003 at 3. In addition, we disallowed TKAST's claimed insurance 
revenue for certain U.S. sales based on the fact that the insurance 
payments did not represent additional revenue, but only reimbursement 
for the costs associated with these insurance claims. See CEP 
Verification Report at pages 9-14, and Analysis Memorandum at 3.
    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, as discussed below, we 
calculated normal value (``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 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 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'') sales, as appropriate.

2. Arm's-Length Test

    TKAST reported that during the POR, it made sales in the home 
market to affiliated and unaffiliated end users and distributors/
retailers. 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

[[Page 47036]]

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 prices to the affiliated party 
were on average 99.5 percent or more of the price to the unrelated 
party, we determined that sales made to the related party were at arm's 
length. See 19 CFR 351.403(c).\9\ While TKAST made sales to affiliated 
parties in the home market during the POR, the Department determined 
that TKAST only needed to report certain affiliated customer's 
downstream sales. See Background Section supra., and TKAST's October 4, 
2002 Section A response at page A-3 through A-4. We ran the arm's 
length test on the remaining sales to affiliated parties and excluded 
those sales which failed the arm's length test, but we did not require 
TKAST to report the downstream sales of these affiliates as TKAST was 
reporting the downstream sales of affiliate(s) that comprised the vast 
majority of affiliated sales. See Background Section supra. In our home 
market NV calculation, we have included TKAST's reported downstream 
sales.
---------------------------------------------------------------------------

    \9\ Because this review was initiated before November 23, 2002, 
the 99.5 percent test applies to this review. See Antidumping 
Proceedings: Affiliated Party Sales in the Ordinary Course of Trade, 
67 FR 69186, 69197 (November 15, 2002).
---------------------------------------------------------------------------

3. Cost of Production

    In the original investigation, the Department determined that TKAST 
made sales in the home market at prices below the 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 and findings at verification.
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. 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 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.

Price-to-Price Comparisons

    For those product comparisons for which there were sales at prices 
above the cost of production (``COP''), we based NV on prices to home 
market customers. 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 revised the credit expense for sales that had an early payment 
discount because TKAST reported a payment date based on the terms of 
payment instead of one reflective of the early payment date. See Sales 
and Cost Verification Report at pages 15-16, and Analysis Memorandum at 
2. We also revised the reported credit expense for the home market 
sales which TKAST factored with a financial institution. For the 
invoices that were factored, the financial institution, usually a bank, 
``purchased'' TKAST's invoices and paid TKAST the value of the invoices 
at the time of factoring, which occurs about once a month. TKAST then 
collected payment from the customer, according to the regular payment 
terms of the sale, and TKAST in turn re-paid the bank. The bank charged 
two fees for this service, which were a fixed commission based on the 
value of the invoice and interest. See TKAST's supplemental Section B 
response dated February 28, 2003, at pages 5 and 6 and Sales and Cost 
Verification Report at 20.
    TKAST reported that it was unable to report actual payment dates 
for its home market sales because the payment information is recorded 
in an accounts receivable system and cannot be linked directly with the 
invoicing system. Therefore, in the payment date field in the response, 
TKAST used the payment term dates and not the date the customer 
actually paid TKAST. See TKAST's Section B response dated October 15, 
2002, at page B-17. Although TKAST cannot electronically track invoices 
and customer payment dates, we believe TKAST would be able to determine 
the actual payment date for a sale if it conducted a manual review of 
its records. See Sales and Cost Verification Report at 20.
    For this administrative review, we are not requiring TKAST to 
conduct a manual review of every sale in order to

[[Page 47037]]

report the actual date on which the customer pays TKAST. However, in 
any subsequent administrative review, the Department will expect TKAST 
to report the actual date on which the customer paid TKAST. Also, in 
this administrative review for the home market credit expense, we used 
the actual credit expense reported by TKAST, which included the 
commission and interest expenses actually paid by TKAST to the 
factoring bank, and allocated it over the home market sales that were 
factored. We determined this was appropriate because TKAST did not 
report the payment date on which it was actually paid by the customer, 
but it did report the actual credit expense, therefore calculating an 
imputed credit expense is unnecessary. See Analysis Memorandum at pages 
2-3.
    We also adjusted the starting price for billing adjustments, alloy 
surcharge, skid charges, and freight revenue. In accordance with 
section 773(a)(6), we deducted home market packing costs and added U.S. 
packing costs. In accordance with the Department's practice, where all 
contemporaneous matches to a U.S. sale observation resulted in 
difference-in-merchandise adjustments exceeding twenty percent of the 
cost of manufacturing (``COM'') of the U.S. product, we based NV on CV.

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.

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 is the level of the constructed sale 
from the exporter to the affiliated importer. See 19 CFR 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 CFR 
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. See TKAST's October 4, 2002 Section A 
response. The only differences are that for warehouse sales, TKAST 
initiates the sale (whereas direct sales are initiated by either 
party), and conducts inventory maintenance, and that 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 channels of distribution for the U.S. market: 
(1) Direct factory sales through TKAST USA to end-users and service 
centers; and (2) warehouse sales from the inventory of TKAST USA to 
end-users and service centers. We reviewed the selling functions and 
services performed by TKAST in the U.S. market, as represented by TKAST 
in its section A response and verification findings. We have determined 
that the selling functions for the two U.S. channels of distribution 
are similar because TKAST provides almost no selling functions to 
either U.S. channel of distribution. TKAST reported that the only 
services it provided for the CEP sales were very limited freight and 
delivery arrangements and very limited warranty services. See TKAST's 
October 4, 2002 Section A response at page A-25 and TKAST's January 17, 
2003 Supplemental Section A response at Exhibit 42. Accordingly, 
because these selling functions are substantially similar for the two 
channels of distribution, we preliminarily determine that there is one 
LOT in the U.S. market.
    In order to determine whether NV was established at a different LOT 
than CEP sales, we examined stages in the marketing process and selling 
functions along the chains of distribution between TKAST and its home 
market customers. We compared the selling functions performed for home 
market sales with those performed with respect to the CEP transaction, 
after deductions for economic activities occurring in the United 
States, pursuant to section 772(d) of the Act, to determine if the home 
market levels of trade constituted more advanced stages of distribution 
than the CEP level of trade. See TKAST's October 4, 2002 Section A 
response at page A-25 and TKAST's January 17, 2003 Supplemental Section 
A response at Exhibit 42. TKAST reported that it provided virtually no 
selling functions for the CEP level of trade and that, therefore, the 
home market level of trade is more advanced than the CEP level of 
trade. To determine whether a CEP offset was

[[Page 47038]]

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.
    Based on our analysis of the channels of distribution and selling 
functions performed for sales in the home market and CEP sales in the 
U.S. market, we preliminarily find that the home market LOT was at a 
more advanced stage of distribution when compared to TKAST's CEP sales 
because TKAST provides many more selling functions in the home market 
(i.e., production guidance, price negotiations, sales calls and 
services, arranging for freight and delivery, technical assistance and 
general selling activities) as compared to selling functions performed 
for its CEP sales (i.e., very limited freight and delivery arrangements 
and very limited warranty services). We were unable to quantify the LOT 
adjustment in accordance with section 773(a)(7)(A) of the Act, as we 
found that the LOT in the home market did not match the LOT of the CEP 
transactions. Accordingly, we did not calculate a LOT adjustment. 
Instead, we applied a CEP offset to the NV for CEP comparisons. To 
calculate the CEP offset, we deducted the home market indirect selling 
expenses from normal value for home market sales that were compared to 
U.S. CEP sales. We therefore limited the home market indirect selling 
expense deduction by the amount of the indirect selling expenses 
deducted in calculating the CEP as required under section 772(d)(1)(D) 
of the Act.

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 
Act.

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
                                                              (Percent)
------------------------------------------------------------------------
ThyssenKrupp Acciai Speciali Terni S.p.A..................         1.54
------------------------------------------------------------------------

    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.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and the BCBP shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have 
calculated an importer-specific assessment rate for merchandise subject 
to this review. The Department will issue appropriate assessment 
instructions directly to the BCBP within 15 days of publication of the 
final results of review. If these preliminary results are adopted in 
the final results of review, we will direct the BCBP to assess the 
resulting assessment rates against the entered customs values for the 
subject merchandise on each of the importer's entries during the review 
period.

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 less than fair value (``LTFV'') 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (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 CFR 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, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Grant Aldonas, Under Secretary.
[FR Doc. 03-20176 Filed 8-6-03; 8:45 am]
BILLING CODE 3510-DS-P