[Federal Register Volume 70, Number 65 (Wednesday, April 6, 2005)]
[Notices]
[Pages 17406-17411]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1574]



[[Page 17406]]

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DEPARTMENT OF COMMERCE

International Trade Administration

A-351-828


Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from 
Brazil; Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY:  In response to a request from Companhia Sider[uacute]rgica 
Nacional (CSN), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
certain hot-rolled flat-rolled carbon quality steel products from 
Brazil (A-351-828). This administrative review covers imports of 
subject merchandise produced and exported by CSN. The period of review 
(POR) is March 1, 2003, through February 29, 2004.
    We preliminarily find that during the POR, CSN did not make sales 
of the subject merchandise at less than normal value (NV). However, 
since the subject merchandise was further manufactured in the United 
States by CSN LLC, and affiliated party, and sold to an unaffiliated 
U.S. customer as a galvanized product outside the scope of the 
antidumping order, we intend to verify the further manufacturing costs 
and sales information reported by CSN LLC for the final results. The 
briefing schedule will be extended accordingly. If these preliminary 
results are adopted in the final results of this administrative review, 
we will instruct U.S. Customs and Border Protection (CBP) to liquidate 
appropriate entries without regard to antidumping duties.
    Interested parties are invited to comment on these preliminary 
results, including the Department's analysis regarding the date of 
sale. Parties who submit argument in this proceeding are requested to 
submit with the argument: 1) a statement of the issues, 2) a brief 
summary of the argument, and 3) a table of authorities.

EFFECTIVE DATE:  April 6, 2005.

FOR FURTHER INFORMATION CONTACT: Helen Kramer or Kristin Najdi, AD/CVD 
Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230, telephone: (202) 482-
0405 or (202) 482-8221, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 12, 2002, the Department published the antidumping duty 
order on certain hot-rolled flat-rolled carbon quality steel products 
from Brazil. See Antidumping Duty Order: Certain Hot-Rolled Flat-Rolled 
Carbon Quality Steel Products from Brazil, 67 FR 11093 (March 12, 2002) 
(``AD Order''). On March 1, 2004, the Department published the 
opportunity to request administrative review of, inter alia, certain 
hot-rolled flat-rolled carbon quality steel products from Brazil for 
the period March 1, 2003, through February 29, 2004. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 69 FR 9584 (March 1, 
2004).
    In accordance with 19 CFR 351.213(b)(2), on March 31, 2004, CSN 
requested that we conduct an administrative review of its sales of the 
subject merchandise. On April 28, 2004, the Department published in the 
Federal Register a notice of initiation of this antidumping duty 
administrative review covering the period March 1, 2003, through 
February 29, 2004. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews, 69 FR 23170 (April 28, 2004).
    On May 10, 2004, the Department issued its antidumping duty 
questionnaire to CSN. On May 24, 2004, CSN requested that the 
Department agree to a limited home market reporting period, because the 
review in question only involved a single sale. Therefore, instead of 
providing the Department with home market sales throughout the POR, CSN 
proposed reporting home market sales made during the same six month 
``window'' period as the U.S. sale, namely, November 2003, through 
April 2004. In the same letter, CSN also informed the Department that 
it intended to prepare a section D response to reflect costs of 
production during the 2003 fiscal year, not the POR. CSN explained that 
the subject merchandise sold to the U.S. market was all further-
processed and sold as non-subject merchandise in the United States by 
its U.S. affiliate, CSN LLC, before delivery to the unaffiliated 
customer, and requested that it be allowed to limit its reporting of 
U.S. production costs to the actual month of production, instead of 
relying on the production experience for the entire twelve-month POR. 
Finally, CSN requested that the Department allow CSN to report its 
sales to its home market affiliate, Ind[uacute]tria Nacional de 
A[ccedil]os Laminados INAL S.A. (INAL), instead of downstream sales of 
further manufactured merchandise, due to complexities of calculating 
further manufacturing costs for all of INAL's sales of further 
manufactured hot-rolled steel. CSN stated that the Department could 
then decide whether to use these sales in its analysis based on whether 
CSN's sales to INAL pass the arm's length test. On June 4, 2004, the 
Department responded to CSN's requests by 1) agreeing to limit the 
reporting period for home market sales to the six-month window of the 
U.S. sale; 2) rejecting CSN's request to report costs for the 2003 
fiscal year; 3) rejecting CSN's request to limit its period for 
reporting further manufacturing costs to one month; and 4) allowing CSN 
to report its home market sales to INAL instead of downstream sales, if 
these pass the arm's length test.
    CSN submitted its response to section A of the Department's 
questionnaire on June 15, 2004, and its responses to sections B and C 
on July 6, 2004. On July 30, 2004, United States Steel Corporation, a 
petitioner, submitted comments challenging the validity of this review. 
The petitioner specifically questioned whether the subject merchandise 
exported to the United States was actually manufactured by CSN, 
alleging that another Brazilian company was the manufacturer of the 
imports in question. The Department issued a supplemental section A, B, 
and C questionnaire on August 10, 2004, in which it informed CSN that 
its sales to INAL had failed the arm's length test and that it was 
required to report INAL's downstream sales. CSN filed its response on 
August 31, 2004, and submitted a revised sales listing on September 7, 
2004, that included INAL's sales to unaffiliated parties. The 
Department received the sales reconciliation package from CSN on 
October 12, 2004, and on October 15, 2004, it issued its outline and 
agenda for the sales verification.
    During the most recently completed segment of the proceeding in 
which CSN participated, the antidumping administrative review of the 
suspension agreement, the Department found and disregarded sales that 
failed the cost test. See Certain Hot-Rolled Flat-Rolled Carbon Quality 
Steel Products from Brazil: Preliminary Results of Antidumping Duty 
Administrative Review of Suspension Agreement, 66 FR 41500 (August 8, 
2001) (``Suspension Agreement''). Pursuant to section 773(b)(2)(A)(ii) 
of the Tariff Act of 1930, as amended (the Act), we had reasonable 
grounds to believe or suspect that sales by this company of the foreign 
like product under consideration for the determination of NV in this 
review were

[[Page 17407]]

made at prices below the cost of production (COP). Therefore, we 
instructed CSN to also complete sections D and E of the Department's 
initial questionnaire, issued May 10, 2004. CSN submitted its responses 
to these sections on July 14, 2004. Import Administration's Office of 
Accounting issued a supplemental questionnaire regarding CSN's 
responses to sections D and E on October 26, 2004 and on November 24, 
2004, CSN submitted its supplemental response.
    On October 18, 2004, Nucor Corporation (Nucor), a domestic 
interested party, requested that the Department rescind the instant 
review. Nucor alleged that the date of the only reported POR sale by 
CSN fell outside of the POR, thus invalidating this entire segment of 
the proceeding.
    Because it was not practicable to complete the preliminary results 
of this review within the normal time frame, we fully extended the time 
limit for this review until March 31, 2005. See Notice of Extension of 
Time Limit for Preliminary Results of Antidumping Duty Administrative 
Review: Certain Hot-Rolled Carbon Steel Flat Products from Brazil, 69 
FR 60142 (October 7, 2004).

Verification

    As provided in section 782(i) of the Act, we verified the sales and 
cost information provided by CSN for use in our preliminary results 
using standard verification procedures, including on-site inspection of 
the manufacturer's facilities and the examination of relevant sales and 
financial records. We verified CSN's sales responses from October 25, 
2004, through October 29, 2004, and cost responses from February 21, 
2005, through February 25, 2005, at CSN's Presidente Vargas plant in 
Volta Redonda, Brazil. The results of these verifications are found in 
the sales verification report dated January 6, 2005, and the cost 
verification report dated March 31, 2005, on file in the Central 
Records Unit (CRU) of the Department in room B-099 of the main 
Department of Commerce Building, 14th Street and Constitution Avenue, 
NW, Washington, DC. See Memorandum to the File, Through Abdelali 
Elouaradia, Program Manager, From Helen M. Kramer and Kristin A. Najdi, 
Case Analysts: Verification of Home Market and U.S. Sales Information 
Submitted by Companhia Sider[uacute]rgica Nacional in the 
Administrative Review of Certain Hot-Rolled Flat-Rolled Carbon Quality 
Steel Products from Brazil for the Period March 1, 2003, through 
February 29, 2004, dated January 6, 2005, (Sales Verification Report); 
and Memorandum to Neal M. Halper, Director, Office of Accounting, 
Through Theresa Caherty, Program Manager, From Trinette Ruffin, 
Accountant: Verification Report on the Cost of Production and 
Constructed Value Data Submitted by Companhia Sider[uacute]rgica 
Nacional, dated March 31, 2005 (Cost Verification Report).
    We intend to verify at CSN LLC's plant in Terre Haute, Indiana, all 
information pertaining to the U.S. sales and further manufacturing 
costs incurred in the United States.

Period of Review

    The POR is March 1, 2003, through February 29, 2004.

Scope of the Order

    For purposes of this order, the products covered are certain hot-
rolled flat-rolled carbon-quality steel products, meeting the physical 
parameters described below, regardless of application.
    The hot-rolled flat-rolled carbon-quality steel products subject to 
this review are of a rectangular shape, of a width of 0.5 inch of 
greater, neither clad, plated, nor coated with metal and whether or not 
painted, varnished, or coated with plastics of other non-metallic 
substances, in coils (whether or not in successively superimposed 
layers) regardless of thickness, and in straight lengths, of a 
thickness less than 4.75 mm and of a width measuring at least 10 times 
the thickness. Specifically included in this scope are vacuum degassed, 
fully stabilized (IF) steels, high strength low alloy (HSLA) steels, 
and the substrate for motor lamination steels. Steel products to be 
included in the scope of this agreement, regardless of HTSUS 
definitions, are products in which: (1) iron predominates, by weight, 
over each of the other contained elements; (2) the carbon content is 2 
percent of less, by weight; and (3) none of the elements listed below 
exceeds certain specified quantities.
    The merchandise subject to the order is currently classifiable 
under subheadings 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 7211.19.30.00, 
7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 7211.19.75.60, 
7211.19.75.90, 7212.40.10.00, 7212.40.50.00, and 7212.50.00.00 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Certain hot-
rolled flat-rolled carbon-quality steel covered by this agreement, 
including vacuum degassed and fully stabilized, high strength low 
alloy, and the substrate for motor lamination steel may also enter 
under tariff numbers 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 
7225.30.70.00, 7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 
7226.11.90.30, 7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 
7226.91.50.00, 7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. 
Although the HTSUS subheadings are provided for convenience and CBP 
purposes, the written description of the scope of the order is 
dispositive.

Fair Value Comparisons

    To determine whether CSN made sales of hot-rolled flat-rolled 
carbon quality steel to the United States at less than fair value, we 
compared the constructed export price (CEP) to the NV, as described in 
the ``Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below. In accordance with section 777A(d)(2) of the Act, we 
compared the CEP of the single U.S. transaction falling within the 
period of review to monthly weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by CSN covered by the descriptions in the ``Scope of 
the Order'' section of this notice to be foreign like products for the 
purpose of determining appropriate product comparisons to CSN's U.S. 
sale of the subject merchandise.
    We have relied on the following eleven criteria to match U.S. sales 
of the subject merchandise to sales in Brazil of the foreign like 
product: whether or not painted, quality, carbon content, yield 
strength, nominal thickness, width, cut-to-length or coil, whether or 
not temper rolled, whether or not pickled, edge trim, and whether or 
not containing patterns in relief.
    In order to make a valid comparison between the two markets, we 
converted the quantity sold in the United States from pounds (lb) to 
metric tons (MT), and changed prices from a ``per lb'' basis to a ``per 
MT'' basis.
    Since there were sales of identical merchandise in the home market 
in the same month as the date of the U.S. sale,

[[Page 17408]]

we did not have to compare the U.S. sale to the next most similar 
foreign like product on the basis of the characteristics and reporting 
instructions listed in the Department's May 10, 2004 questionnaire.

Date of Sale

    CSN requested this review on the basis of the date of its entry of 
subject merchandise and the date of the unaffiliated U.S. customer's 
purchase order within the POR. On October 18, 2004, Nucor alleged that 
the purchase order did not establish the material terms of sale because 
the amount of a surcharge imposed by CSN LLC on the further 
manufactured merchandise was not known until the month of shipment. 
Nucor argued that, since shipment occurred after the POR, the final 
price to the U.S. customer was not determined until after the end of 
the POR, and thus there was no sale for the Department to review. As 
such, they assert that we should rescind the review.
    We agree in part with Nucor. As CSN explains, the imposition of 
surcharges was a practice that developed on an industry-wide basis in 
the United States during 2004, mainly in response to the rapidly rising 
cost of steel scrap, which increased production costs for non-
integrated manufacturers of steel. See CSN's January 31, 2005, 
submission, ``Certain Hot-Rolled Carbon Steel Flat Products from 
Brazil: CSN Response to the January 18, 2005 Supplemental 
Questionnaire,'' on file in the CRU. Although the CSN LLC policy of 
adding a surcharge to sales made during this period was made known to 
CSN LLC's customers in periodic bulletins announcing the effective date 
of new surcharges, the monthly surcharges were not explicitly linked to 
a predictable or market formula, and on the date of its purchase order, 
the customer could not anticipate the final amount due. Because CSN LLC 
did not conclusively set the actual price on the sales until the date 
of the invoice, the material terms of sale were established on the 
invoice date, and not the date of the original purchase order. This 
determination is consistent with 19 CFR 351.401(i) and the decision of 
the U. S. Court of International Trade in Allied Tube and Conduit Corp. 
v. United States, 132 F. Supp. 2d 1087 (CIT 2001) (``Allied Tube''). In 
Allied Tube, the plaintiff asked the court to reject the invoice date 
as the date of sale. The CIT declared, `` the party seeking to 
establish a date of sale other than the invoice date bears the burden 
of producing sufficient evidence to 'satisfy' the Department that 'a 
different date better reflects the date on which the exporter or 
producer establishes the material terms of sale.''' See Allied Tube, 
132 F. Supp. 2d at 1090. Furthermore, ``as elaborated by Department 
practice, a date other than invoice date 'better reflects' the date 
when 'material terms of sale' are established if the party shows that 
the 'material terms of sale' undergo no meaningful change (and are not 
subject to meaningful change) between the proposed date and the invoice 
date.'' Id. The CIT ruled that the plaintiff in this case ``failed to 
cite sufficient evidence to compel a rejection of the regulatory 
presumption in favor of invoice date as the date of sale.'' Id. See 
also Hornos Electricos de Venezuela, S.A. v. United States, 285 F. 
Supp. 2d 1353, 1367-1368 (CIT 2003). Thus, the Department's rejection 
of the date of the purchase order as the date of sale is warranted, 
since CSN failed to establish that the material terms of sale were set 
on the purchase order date. Therefore, for purposes of these 
preliminary results of review, the appropriate date of sale is the date 
of the invoice, which sets the final price to the customer.
    We disagree with Nucor that the absence of a sale during the POR is 
a basis for terminating this review. While section 751(a)(2)(A) of the 
Act states that a dumping calculation should be performed for each 
entry during the POR, section 351.213(e) of the Department's 
regulations gives the Department flexibility in this regard by stating 
that the review can be based on entries, exports, or sales. Indeed, the 
Department's normal practice for CEP sales made after importation is to 
examine each transaction that has a date of sale within the POR and to 
liquidate POR entries based on the dumping margin calculated on those 
POR sales. See section 351.212 of the Department's regulations and the 
preamble to that section of Antidumping Duties; Countervailing Duties; 
Final Rule, 62 FR 27296, 27314-15 (May 19, 1997).
    We have also recognized that unique circumstances could lead us to 
base the margin for CEP sales on the sales entered rather than sold 
during the POR. Here, the respondent requesting an administrative 
review of its POR entries had only one entry during the POR, but no POR 
sales upon which to calculate a dumping margin for that entry. Because 
the entry during the POR can be tied to a sale occurring after the end 
of the POR and there are no other U.S. sales during the POR that could 
be considered for examination as a proxy for the post-POR sale, it is 
appropriate to determine the duties to be assessed on this entry based 
on the corresponding sale. Therefore, because the purpose of an 
administrative review is to establish the antidumping duty for entries, 
as well as to establish a new cash deposit rate (see section 751(a)), 
and we are able to tie the sale occurring shortly after the end of the 
POR to the entry during the POR, we are using this U.S. sale and the 
corresponding home market sales in the month of the U.S. sale in our 
margin calculation. Thus, we are conducting this review on the basis of 
the date of entry within the POR, and linking the entered subject 
merchandise to the appropriate sale to the unaffiliated U.S. customer.
    We will instruct the CBP to liquidate the specific entry at the 
calculated rate. If CSN is a respondent in an administrative review 
covering the period March 1, 2004, through February 28, 2005, we will 
exclude this U.S. sale from our margin calculation.

Constructed Export Price

    Section 772(b) of the Act defines constructed export price (CEP) as 
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, as 
adjusted under sections 772(c) and (d).
    In contrast, section 772(a) of the Act defines export price (EP) as 
the price at which the subject merchandise is first 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, as adjusted under section 772(c).
    In the instant review, CSN sold subject merchandise through an 
affiliated company, CSN LLC of Terre Haute, Indiana. CSN reported its 
single U.S. sale of subject merchandise as a CEP transaction and 
explained that its U.S. affiliate, CSN LLC, further manufactured the 
subject merchandise. The resulting product sold to the unaffiliated 
U.S. customer falls outside the scope of this antidumping duty order.
    After reviewing the evidence on the record of this review, we have 
preliminarily found that this particular CSN transaction is classified 
properly as a CEP sale because the sale occurred in the United States 
and was made through its U.S. affiliate to an unaffiliated U.S. buyer. 
Such a determination is consistent with section 772(b) of the Act and 
the U.S. Court of Appeals for the

[[Page 17409]]

Federal Circuit's decision in AK Steel Corp. v. United States, 226 F. 
3d 1361, 1374 (Fed. Cir. 2000) (``AK Steel''). In AK Steel, the Court 
of Appeals examined the definitions of EP and CEP, noting ``the plain 
meaning of the language enacted by Congress in 1994, focuses on where 
the sale takes place and whether the foreign producer or exporter and 
the U.S. importer are affiliated, making these two factors dispositive 
of the choice between the two classifications.'' See AK Steel, 226 F. 
3d at 1369. The Court of Appeals declared, `` the critical differences 
between EP and CEP sales are whether the sale or transaction takes 
place inside or outside the United States and whether it is made by an 
affiliate,'' and noted the phrase ``outside the United States'' had 
been added to the 1994 statutory definition of EP. See AK Steel, 226 F. 
3d at 1368-70. Thus, the classification of a sale as either EP or CEP 
depends upon where the contract for sale was concluded (i.e., in or 
outside the United States) and whether the foreign producer or exporter 
is affiliated with the U.S. importer. In the case of this review, we 
find that CSN LLC, which is affiliated with CSN, the Brazilian 
manufacturer and exporter, concluded the contract of sale inside the 
United States, thereby supporting the classification of this sale as 
CEP.
    For this particular CEP sales transaction, we calculated price in 
conformity with section 772(b) of the Act. We based CEP on the packed, 
delivered prices to an unaffiliated purchaser in the United States. 
Pursuant to section 772(c)(2)(A) of the Act, we made deductions for 
movement expenses; these included foreign inland freight, foreign 
inland insurance, foreign brokerage and handling, international 
freight, marine insurance, U.S. brokerage and handling, U.S. customs 
duties, and inland freight to the unaffiliated U.S. customer. In 
accordance with section 772(d)(1) of the Act, we deducted those selling 
expenses associated with economic activities occurring in the United 
States, including imputed credit expenses and indirect selling 
expenses. We also made adjustments for the cost of further 
manufacturing and profit from economic activities in the United States, 
in accordance with sections 772(d)(2) and (3) of the Act.

Normal Value

A. Home Market Viability

    To determine whether there is a sufficient volume of sales in the 
home market to serve as a viable basis for calculating NV, we compared 
CSN's volume of home market sales of the foreign like product to the 
volume of U.S. sales of the subject merchandise, in accordance with 
section 773(a)(1)(B) of the Act. Because CSN'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 the home market was viable. See CSN's section A 
Questionnaire Response at Attachment A-1, dated June 15, 2004.

B. Price-to-Price Comparisons

    CSN reported sales in the home market to an affiliated company, 
INAL. The Department calculates NV based on sales to affiliated parties 
only if it is satisfied that the prices to the affiliates are 
comparable to the prices at which sales are made to unaffiliated 
parties, i.e., sales at arm's length.
    To test whether these sales were made at arm's length, we compared 
the starting prices of sales to affiliated and unaffiliated customers 
net of all movement and direct selling expenses, discounts and packing. 
In current practice, if the prices charged to an affiliated party were, 
on average, between 98 and 102 percent of the prices charged to 
unaffiliated parties for merchandise identical or most similar to that 
sold to the affiliated party, we consider the sales to be at arm's 
length prices. See 19 CFR 351.403(c). Conversely, where sales to the 
affiliated party do not pass the arm's length test, we exclude all 
sales to that affiliated party from the NV calculation, as was the case 
in this review. We found that the sales to INAL failed the arm's length 
test, and therefore we disregarded them and used INAL's downstream 
sales to unaffiliated customers in our calculation of NV.
    We calculated NV based on prices to unaffiliated customers. We 
adjusted gross unit price for billing adjustments, interest revenue and 
indirect taxes. We made deductions, where appropriate, for foreign 
inland freight, warehousing expense and insurance, pursuant to section 
773(a)(6)(B) of the Act. In addition, we made adjustments for 
differences in circumstances of sale for imputed credit expenses and 
commissions, in accordance with section 773(a)(6)(C)(iii) of the Act 
and 19 CFR 351.410. Finally, we deducted home market packing costs and 
added U.S. packing costs in accordance with sections 773(a)(6)(A) and 
(B) of the Act.

C. Cost of Production Analysis

    At the time the questionnaire was issued in this administrative 
review, the antidumping duty administrative review of the suspension 
agreement was the most recently completed segment of this proceeding. 
In accordance with section 773(b)(2)(A)(ii) of the Act, and consistent 
with the Department's practice, because we disregarded certain below-
cost sales by CSN in the review of the suspension agreement, we found 
reasonable grounds to believe or suspect that this respondent made 
sales in the home market at prices below the cost of producing the 
merchandise. We, therefore, initiated a cost investigation with regard 
to CSN in order to determine whether this respondent made home market 
sales during the POR at prices below COP within the meaning of section 
773(b)(2)(A)(ii) of the Act.
    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP for each model based on the sum of CSN's material 
and fabrication costs for the foreign like product, plus amounts for 
selling expenses, general and administrative expenses (G&A), interest 
expenses and packing costs. The Department relied on the COP data 
reported by CSN, except for the G&A expense ratios. We revised their 
reported home market and U.S. G&A expense ratios to correct for fees 
that were incurred by the U.S. affiliate, CSN LLC, but which CSN 
reported as expenses in Brazil. For changes made to the COP 
information, see Memorandum to Neal Harper from Trinette Ruffin, Cost 
of Production and Constructed Value Calculation Adjustments for the 
Preliminary Results Companhia Siderurgica Nacional (CSN), dated March 
31, 2005 (COP Memo).
    We compared the weighted-average COP figures to the home market 
sales prices of the foreign like product as required under section 
773(b) of the Act, to determine whether these sales had been made at 
prices below COP. On a product-specific basis, we compared the COP to 
home market prices net of any applicable billing adjustments, state 
ICMS and federal IPI indirect taxes (which were not included in CSN's 
reported manufacturing costs), and any applicable movement charges.
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 
twenty percent of a respondent's sales of a given product were at 
prices less than the COP, we do not disregard any below-cost sales of 
that product because the below-cost sales were not made in 
``substantial quantities.'' Where twenty percent or more of a 
respondent's sales of a given product during the POR were at prices 
less than the COP, we determine such sales to have been made in 
substantial quantities.
    Our cost test revealed that more than twenty percent of CSN's home 
market

[[Page 17410]]

sales of certain products were made at below-cost prices during the 
reporting period. Therefore, we disregarded those below-cost sales, 
while retaining the above-cost sales for our analysis.

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 export transaction. The NV LOT is 
that of the starting-price sales in the comparison market. For CEP, it 
is the level of the constructed sale from the exporter to the importer. 
We consider only the selling activities reflected in the U.S. price 
after the deduction of expenses incurred in the United States and CEP 
profit under section 772(d) of the Act. See Micron Technology Inc. v. 
United States, 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001).
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. We analyze whether different selling activities 
are performed, and whether any price differences (other than those for 
which other allowances are made under the Act) are shown to be wholly 
or partly due to a difference in LOT between the CEP and NV. Pursuant 
to section 773(a)(7)(A) of the Act, we make an upward or downward 
adjustment to NV for LOT if the difference in LOT involves the 
performance of different selling activities and is demonstrated to 
affect price comparability, based on a pattern of consistent price 
differences between sales at different LOTs in the country in which NV 
is determined. Finally, if the NV LOT is at a more advanced stage of 
distribution than the LOT of the CEP, but the data available do not 
provide an appropriate basis to determine a LOT adjustment, we reduce 
NV by the amount of indirect selling expenses incurred in the foreign 
comparison market on sales of the foreign like product, but by no more 
than the amount of the indirect selling expenses incurred for CEP 
sales. See section 773(a)(7)(B) of the Act (the CEP offset provision).
    In analyzing differences in selling functions, we determine whether 
the LOTs identified by the respondent are meaningful. See Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19, 
1997). If the claimed LOTs are the same, we expect that the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that LOTs are different for different groups of sales, the 
functions and activities of the seller should be dissimilar. See 
Porcelain-on-Steel Cookware from Mexico: Final Results of 
Administrative Review, 65 FR 30068 (May 10, 2000). In the present 
review, CSN claimed that there was no LOT in the home market comparable 
to the LOT of the CEP sale, and that consequently it was not in a 
position to calculate an LOT adjustment. Pursuant to the Department's 
practice, CSN requested a CEP offset adjustment to NV. See CSN's 
section B Questionnaire Response at page 21, dated July 6, 2004.
    CSN claimed three LOTs in the home market based on distinct 
channels of distribution to two categories of customers: distributors 
and end-users. CSN's channels of distribution were direct sales from 
the mill to customers, sales through branches located at service 
centers where further processing services were provided, such as 
cutting and slitting, and downstream sales made through CSN's 
affiliate, INAL. We examined the reported selling functions and found 
that CSN's home market selling functions for all customers include pre-
sale technical assistance, continuous technical service, price 
negotiation/customer communications, processing of customer orders, 
freight and delivery arrangements, sales calls and visits, credit 
evaluation, and warranty and return services. In addition, CSN also 
performs inventory maintenance for all customers except end-users 
buying directly from CSN. Finally, CSN makes small quantity sales only 
through INAL. See CSN's section A Questionnaire Response at Exhibit 11, 
June 15, 2004. We preliminarily find that there are three LOTs in the 
home market: (1) direct sales, (2) sales through branches, and (3) 
sales through INAL.
    CSN's U.S. sale was made through one channel of distribution to its 
U.S. affiliate. Pursuant to the Department's practice, we determined 
the LOT of the U.S. sale based on the selling functions performed for 
the sale to CSN LLC, which include price negotiation/customer 
communications, processing customer orders, and freight and delivery 
arrangements. See CSN's section A Questionnaire Response at Exhibit 11, 
June 15, 2004. We preliminarily find that there is only one LOT in the 
U.S. market.
    We compared CSN's channels of distribution and selling functions in 
the home market with the selling functions for U.S. sales to its 
affiliate, CSN LLC. CSN's selling functions for sales to the United 
States are less numerous and less complex than CSN's selling functions 
for its home market sales in any of the channels of distribution. 
Further, in the home market, the chain of distribution is further from 
the factory, e.g., many sales are made to distributors and may go 
through branches where they are further processed. We therefore 
preliminarily agree with CSN's claim that there is no LOT in the home 
market comparable to the LOT of the CEP sale, and that there is no 
basis to calculate an LOT adjustment. We then examined whether a CEP 
offset may be appropriate. Pursuant to section 351.412(f) of the 
Department's regulations, we grant a CEP offset only where NV is 
determined at a more advanced LOT than the LOT of the CEP price, and 
despite the fact that a person has cooperated to the best of its 
ability, the data available do not provide an appropriate basis to 
determine whether the difference in LOT affects price comparability. 
Accordingly, because the data available do not provide an appropriate 
basis for making an LOT adjustment, but the LOTs in the home market are 
at more advanced stages of distribution than the LOT of the CEP sale, 
we preliminarily find that a CEP offset adjustment is appropriate, in 
accordance with section 773(a)(7)(B) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Dow Jones Reuters 
Business Interactive LLC (trading as Factiva).

Preliminary Results of Review

    As a result of our review, we preliminarily find the weighted-
average dumping margin for the period March 1, 2003, through February 
29, 2004, to be as follows:

------------------------------------------------------------------------
                                                                 Margin
                   Manufacturer / Exporter                     (percent)
------------------------------------------------------------------------
Companhia Sider[uacute]rgica Nacional........................       0.00
------------------------------------------------------------------------

    The Department will disclose calculations performed in connection 
with these preliminary results of review within five days of the date 
of publication of this notice in accordance with 19 CFR 351.224(b). 
Case briefs for this review must be submitted to the Department no 
later than fourteen days after the date of the final U.S. verification 
report issued in this proceeding. Rebuttal briefs must be filed seven 
days from the deadline date for case briefs. Parties submitting 
arguments in this proceeding are requested to submit with the argument: 
1) a statement of the issue, 2) a brief summary of the argument, and 
(3) a

[[Page 17411]]

table of authorities. Case and rebuttal briefs and comments must be 
served on interested parties in accordance with section 351.303(f) of 
the Department's regulations.
    Also, an interested party may request a hearing within 30 days of 
the date of publication of this notice. See section 351.310(c) of the 
Department's regulations. Unless otherwise specified, the hearing, if 
requested, will be held two days after the date for submission of 
rebuttal briefs, or the first business day thereafter. The Department 
will issue the final results of this administrative review, including 
the results of its analysis of the issues raised in any briefs or 
comments at a hearing, within 120 days of publication of these 
preliminary results.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an 
importer-specific ad valorem rate for merchandise subject to this 
review. The Department will issue appropriate assessment instructions 
directly to CBP 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 CBP to assess the resulting assessment rates 
(ad valorem) against the entered customs values for the subject 
merchandise on each of the importer's entries during the review period.

Cash Deposit Requirements

    The following cash deposit requirements will be effective upon 
completion 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 CSN will be the 
rate established in the final results of the administrative review 
(except that no deposit will be required if the rate is zero or de 
minimis, i.e., less than 0.50 percent); (2) for previously reviewed or 
investigated companies not covered in this review, 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, any prior review, or the original 
LTFV investigation, the cash deposit rate for all other manufacturers 
or exporters will continue to be 42.12 percent, the ``all others'' rate 
established in the LTFV investigation. See AD Order, 67 FR at 11094.

Notification to Interested Parties

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

    Dated: March 31, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-1574 Filed 4-5-05; 8:45 am]
BILLING CODE 3510-DS-S