[Federal Register Volume 70, Number 160 (Friday, August 19, 2005)]
[Notices]
[Pages 48668-48673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4542]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-351-828


Notice of Preliminary Results of the New Shipper Review of the 
Antidumping Duty Order on Certain Hot-Rolled Flat-Rolled Carbon Quality 
Steel Products from Brazil

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

SUMMARY: In response to a request by Comphania Sider[uacute]rgica de 
Tubar[atilde]o (CST), the U.S. Department of Commerce (the Department) 
is conducting a new shipper review of the antidumping duty order on 
certain hot-rolled flat-rolled carbon quality steel products (hot-
rolled steel products) from Brazil for the period March 1, 2004, 
through August 31, 2004. We preliminarily determine that during the 
period of review (POR), CST did not sell subject merchandise at less 
than normal value (NV). Moreover, we have preliminarily determined that 
CST's U.S. sales are bona fide transactions. Our full analysis is set 
forth in the Memorandum to Barbara E. Tillman, Acting Deputy Assistant 
Secretary for Import Administration, Certain Hot-Rolled Flat-Rolled 
Carbon Quality Steel Products from Brazil: New Shipper Review of 
Companhia Sider[uacute]rgica de Tubar[atilde]o (CST), dated August 12, 
2005 (Bona Fide Memo), which is on file in the Central Records Unit 
(CRU), room B-099 of the main Commerce Building. Interested parties are 
invited to comment on these preliminary results. If these preliminary 
results are adopted in the final results of this new shipper review, we 
will issue instructions to U.S. Customs and Border Protection (CBP) as 
described in the ``Assessment Rates'' section below.

EFFECTIVE DATE: August 19, 2005.

FOR FURTHER INFORMATION CONTACT: Angelica Mendoza or David Kurt Kraus, 
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-
3019 or (202) 482-7871, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On March 12, 2002, the Department published in the Federal Register 
the antidumping duty order on hot-rolled steel products from Brazil. 
See Notice of Antidumping Duty Order and of Sales at Less Than Fair 
Value: Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products 
from Brazil, 67 FR 11093 (AD Order). On September 27, 2004, we received 
a request from CST to initiate a new shipper review of CST's U.S. sales 
of hot-rolled steel products from Brazil. On October 28, 2004, the 
Department published the notice of initiation of this new shipper 
antidumping duty review covering the period March 1, 2004, through 
August 31, 2004. See Certain Hot-Rolled Flat-Rolled Carbon Quality 
Steel Products from Brazil: Notice of Initiation of New Shipper 
Antidumping Duty Review, 69 FR 62866 (October 28, 2004).
    On November 12, 2004, we sent a questionnaire to CST and instructed 
CST to respond to Sections A-C. On December 3, 2004, CST submitted its 
response to Section A of the original questionnaire. On January 3, 
2005, CST filed a letter stipulating that it would not be submitting a 
Section E response to the Department's antidumping duty questionnaire 
as such response is not required or warranted. On January 12, 2005, CST 
submitted its response to Sections B and C of the questionnaire.
    On February 2, 2005 the Department received a sales below-cost 
allegation from Nucor Corporation, a petitioner in this review. On 
February 14, 2005, CST responded to this allegation of sales below-
cost. The Department issued the first supplemental Sections A-C 
questionnaire on February 24, 2005. After determining that Nucor 
Corporation provided a reasonable basis for a sales-below cost 
allegation, the Department initiated a sale-below cost investigation 
and issued a modified Section D questionnaire to CST on March 9, 2005. 
See Memorandum to Richard O. Weible, Director, Office 7, ``Petitioner's 
Allegation of Sales Below the Cost of Production for Companhia 
Sider[uacute]rgica de Tubar[atilde]o,'' dated March 9, 2005 (Sales 
Below COP Memo).
    The Department issued its first supplemental Sections A-C 
questionnaire on February 24, 2005. On March 10, 2005, we received 
CST's response to the first supplemental questionnaire (Sections A-C). 
On March 23, 2005, the Department received CST's response to Section D 
of the questionnaire. On April 1, 2005, the Department issued its 
second supplemental questionnaire. We received CST's second 
supplemental questionnaire response on April 13, 2005. On April 20, 
2005, we issued a supplemental Section D questionnaire to CST. We 
received CST's supplemental Section D questionnaire response on May 6, 
2005, which included revised cost, home market and U.S. sales 
databases.
    On June 6, 2005 and June 9, 2005, we issued our sales and cost 
verification agendas to CST. We conducted verification of CST's sales 
information from June 13, 2005, through January 17, 2005. We conducted 
verification of CST's cost information from June 20, 2005, through June 
24, 2005. See Memorandum to the File, through Abdelali Elouaradia, 
``Verification of Home Market and U.S. Sales Questionnaire Responses 
Submitted by Companhia Sider[uacute]rgica de Tubar[atilde]o (CST),'' 
dated July 7, 2005 (Sales Verification Report) and Memorandum to Neal 
M. Halper through Peter Scholl, ``Verification Report on the Cost of 
Production and Constructed Value Data Submitted by Companhia 
Sider[uacute]rgica de Tubar[atilde]o (CST),'' dated August 11, 2005 
(Cost Verification Report). Public versions of both verification 
reports are on file with the CRU. On July 14, 2005, we requested that 
CST submit revised home market and U.S. sales databases to reflect 
minor corrections presented and findings discovered at verification and 
accepted by the Department. The Department received CST's response on 
July 20, 2005.

Period of Review

    The POR for this new shipper review is March 1, 2004, through 
August 31, 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

[[Page 48669]]

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.

Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended 
(the Act), we conducted verification of the sales and cost information 
provided by CST. We used standard verification procedures, including 
examination of relevant sales, financial, and cost records. See Sales 
Verification Report and Cost Verification Report. Our verification 
results are detailed in the verification reports placed in the case 
file in the CRU. We made certain minor revisions to certain sales and 
cost data based on verification findings

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products covered by the ``Scope of the Order'' section above, which 
were produced and sold by CST in the home market during the POR, to be 
foreign like product for the purpose of determining appropriate product 
comparisons to CST's U.S. sales of hot-rolled steel products.
    We relied on the following eleven product characteristics to match 
U.S. sales of subject merchandise to sales in Brazil of the foreign 
like product (listed in order of preference): painted or not-painted, 
quality, carbon content, yield strength, nominal thickness, width, form 
of merchandise, i.e., cut-to-length or coil, temper rolled or skin 
passed, pickled or not pickled, edge trimmed, i.e., trimmed or mill-
edged, and with patterns in relief or without patterns in relief. In 
instances 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. See Appendix V of the Department's antidumping duty 
questionnaire to CST dated November 12, 2004.

Fair Value Comparisons

    To determine whether CST made sales of hot-rolled steel products to 
the United States at less than fair value, we compared the export price 
(EP) to the NV, as described in the ``Export Price'' and ``Normal 
Value'' sections of this notice, below. In accordance with section 
777A(d)(2) of the Act, we compared the EPs of individual U.S. 
transactions to monthly weighted-average NVs.

Export Price

    Section 772(a) of the Act defines 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) of the Act.
    In the instant review, CST sold subject merchandise to the United 
States through its wholly-owned subsidiary, CST Overseas Ltd., located 
in Georgetown, Grand Cayman Islands, and this Cayman Islands-based 
trading company sold the subject merchandise to the first unaffiliated 
U.S. customer. CST reported all of its U.S. sales of subject 
merchandise as EP transactions. After reviewing the evidence on the 
record of this review, we have preliminarily determined that CST's 
transactions are classified properly as EP sales because these sales 
were first sold before the date of importation by CST's subsidiary, CST 
Overseas Ltd., to an unaffiliated purchaser in the United States.
    Such a determination is consistent with section 772(a) of the Act 
and the U.S. Court of Appeals for the Federal Circuit's (Court of 
Appeals') decision in AK Steel Corp. et al. 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 constructed export price 
(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.'' AK Steel, at 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 that 
the phrase ``outside the United States'' had been added to the 1994 
statutory definition of EP. AK Steel, at 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 this case, the exporter is not affiliated and the 
sale took place outside of the U.S.
    For these EP sales transactions, we calculated price in conformity 
with section 772(a) of the Act. We based EP on the packed, delivered 
duty-paid prices to an unaffiliated purchaser in the United States. We 
also made deductions from the EP starting price, where appropriate, for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included foreign inland freight from the plant/warehouse to the 
port of exportation, foreign brokerage and handling, and international 
freight. Pursuant to section 772(c)(1)(B), we adjusted the EP starting 
price for the per unit amount of any import duties imposed by the 
country of exportation, which have been rebated, or which have not been 
collected, by reason of the exportation of the subject merchandise to 
the United States, i.e., duty drawback.

[[Page 48670]]

Normal Value

A. Home Market Viability

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
the aggregate volume of home market sales of the foreign like product 
is equal to or greater than five percent of the aggregate volume of 
U.S. sales), we compared CST's volume of home market sales of the 
foreign like product to the volume of its U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(B) of the Act. 
Pursuant to section 773(a)(1)(B) of the Act and section 351.404(b) of 
the Department's regulations, because CST'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 
determine that sales in the home market provide a viable basis for 
calculating NV. See CST's Section A questionnaire response at Exhibit 
A-1. Moreover, there is no evidence on the record supporting a 
particular market situation in the exporting company's country that 
would not permit a proper comparison of home market and U.S. prices. 
Therefore, we based NV on home market sales in the usual commercial 
quantities and in the ordinary course of trade.
    As such, we used as NV the prices at which the foreign like product 
was first sold for consumption in Brazil, in the usual commercial 
quantities, in the ordinary course of trade and, to the extent 
possible, at the same level of trade (LOT) as EP sales, as appropriate.

B. Arm's-Length Test

    CST reported that during the POR, it made sales in the home market 
to affiliated and unaffiliated original equipment manufacturers (OEMs) 
or end-users and service centers. If any sales to affiliated customers 
in the home market were not made at arm's-length prices, we excluded 
them from our analysis as we consider such sales to be outside the 
ordinary course of trade. See 19 CFR Sec.  351.102(b). To test whether 
sales to affiliates were made at arm's-length prices, we compared, on a 
model-specific basis, the starting prices of sales to affiliated and 
unaffiliated customers net of all discounts and rebates, movement 
expenses, direct selling expenses, and home market packing expenses. In 
accordance with the Department's 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 Sec.  
351.403(c). Conversely, where the affiliated party did not pass the 
arm's-length test, all sales to that affiliated party have been 
excluded from the NV calculation. See Antidumping Proceedings: 
Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 
(November 15, 2002) (Modification to Affiliated Party Sales). Because 
CST's affiliated customers in the home market processed the subject 
merchandise into non-subject merchandise during the POR, we analyzed 
only the sales to the affiliates to determine whether they passed the 
arm's length test. We discovered that certain sales to affiliated 
purchasers in the home market did not pass the arm's-length test; 
accordingly, we have excluded all sales to these affiliated parties 
from the NV calculation.

C. Cost of Production Analysis

    In accordance with section 773(b)(2)(A) of the Act, in order to 
initiate a sales below the cost of production (COP) investigation the 
Department must have ``reasonable grounds'' to believe or suspect that 
sales in the home market or a third country, if appropriate, have been 
made at prices below the COP. An allegation will be deemed to 
demonstrate reasonable grounds if: 1) a reasonable methodology is used 
in the calculation of the COP including the use of the respondent's 
actual data, if available; 2) using this methodology, sales are shown 
to be made at prices below the COP; and 3) the sales allegedly made at 
below cost are representative of a broader range of foreign models that 
may be used as a basis for normal value.
    As noted above, the Department found that the petitioner's 
methodology for evaluating sales at below the cost of production was 
reasonable. See Sales-Below COP Memo dated March 9, 2005. Therefore, 
the Department initiated a sales below cost or production investigation 
on the basis that it has reasonable grounds to believe or suspect, 
pursuant to section 773(b)(2)(A)(ii) of the Act, that CST made sales in 
the home market at prices below the COP for this POR. As a result, in 
accordance with section 773(b)(1) of the Act, we examined whether CST's 
sales in the home market were made at prices below the COP.
1. Calculation of COP
    We compared sales of the foreign like product in the home market 
with POR model-specific COP. In accordance with section 773(b)(3) of 
the Act, we calculated COP based on the sum of the costs of materials 
and fabrication employed in producing the foreign like product, plus 
selling, general and administrative (SG&A) expenses, interest expenses, 
and all costs and expenses incidental to placing the foreign like 
product in packed condition and ready for shipment. In our sales-below-
cost analysis, we relied on home market sales and COP information 
provided by CST in its questionnaire responses, except where noted 
below:

1. We increased CST's reported cost of manufacturing by allocating 
certain unreported manufacturing expenses to hot-rolled coil products.
2. We reduced CST's reported production quantity to reflect the 
verified quantity.
3. We increased the costs reported for certain third party services to 
reflect the actual costs paid for the services.
4. We reclassified certain expenses from manufacturing costs to general 
and administrative expenses.
5. We revised the reported financial expenses by excluding certain 
financial gains.
6. In accordance with section 773(f)(3) of the Act, we increased the 
cost of certain major material inputs purchased from an affiliated 
supplier during the POR.

    For further details regarding these adjustments, see the Memorandum 
to Neal M. Halper, Director, Office of Accounting, ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results'' (COP Memorandum), dated August 12, 2005.
2. Test of Home Market Prices
    We compared CST's weighted-average COPs to its 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 indirect taxes which were not included in 
CST's reported manufacturing costs, i.e., state tax on sales of 
merchandise and services (ICMS) and federal tax on industrialized 
products (IPI), and any applicable movement charges.
    In determining whether to disregard home market sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) of the Act, whether such sales were made in (1) 
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 the normal course of trade.

[[Page 48671]]

3. Results of the COP Test
    Pursuant to section 773(b)(1), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product are at prices less than the COP, we determine 
that the below-cost sales represent ``substantial quantities'' within 
an extended period of time, in accordance with section 773(b)(1)(A) of 
the Act. In such cases, we also determine whether such sales were made 
at prices which would not permit recovery of all costs within a 
reasonable period of time, in accordance with section 773(b)(1)(B) of 
the Act.
    Our cost test revealed that more than twenty percent of CST's home 
market sales of certain products were made at below-cost prices during 
the reporting period and the below-cost sales were made at prices which 
would not permit recovery of all costs within a reasonable period of 
time. Therefore, we disregarded those below-cost sales, while retaining 
the above-cost sales for our analysis.

D. Price-to-Price Comparisons

    We based NV on home market prices to unaffiliated and affiliated 
customers. Home market starting prices were based on packed prices to 
affiliated or unaffiliated purchasers in the home market. We adjusted 
gross unit prices for billing adjustments, interest revenue, and 
Brazilian state and federal taxes (i.e., state tax on sales of 
merchandise and services (ICMS) and federal tax on industrialized 
products (IPI), and federal taxes applied to gross invoice values less 
IPI tax (PIS and COFINS)). We made deductions, where appropriate, for 
inland freight from the plant to the customer or to the port of exit 
and domestic brokerage and handling pursuant to section 773(a)(6)(B) of 
the Act. In addition, we made adjustments for differences in cost 
attributable to differences in physical characteristics of the 
merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 
section 351.411 of the Department's regulations. In accordance with 
section 773(a)(6)(C)(iii) of the Act and section 351.410 of our 
regulations, we adjusted home market starting prices for differences in 
circumstances of sale, i.e., imputed credit and warranty expenses. 
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.
    For sales to a particular home market customer, CST ships hot-
rolled steel products on ocean-going vessels departing from its port, 
Praia Mole, to the port closest to its customer. During our review of 
CST's reporting of domestic brokerage and handling expenses related to 
a pre-selected home market sale to this customer, we discovered 
discrepancies which were not presented by CST at the outset of 
verification as minor corrections that call into question CST's 
reporting of these expenses for all sales to this customer, i.e., 
double-counting of packing expenses and failure to include additional 
charges for demurrage. Moreover, CST failed to comply with the 
verifier's request for documentation to support the total demurrage 
charges reported on page 1 of Verification Exhibit 1 for the shipment 
in question. See Sales Verification Report at 40. Because CST failed to 
properly report these charges and we were unable to verify fully the 
domestic brokerage and handling expenses incurred by CST on certain 
home market sales, we find it necessary, under section 776(a)(2) of the 
Act, to use facts otherwise available as the basis for the preliminary 
results of this new shipper review with respect to domestic brokerage 
and handling expenses. See Sales Verification Report at 34-41 and 
Verification Exhibit 11B.
    According to section 776(b) of the Act, if the Department finds 
that an interested party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information,'' the 
Department may use information that is adverse to the interests of the 
party as facts otherwise available. Adverse inferences are appropriate 
``to ensure that the party does not obtain a more favorable result by 
failing to cooperate than if it had cooperated fully.'' See Statement 
of Administrative Action (SAA) accompanying the URAA, H. Doc. No. 316, 
103d Cong., 2d Session at 870 (1994). Furthermore, ``an affirmative 
finding of bad faith on the part of the respondent is not required 
before the Department may make an adverse inference.'' See Nippon Steel 
Corporation v. United States, 337 F. 3d 1373, 2003 Fed. Cir. (Nippon 
Steel) (``Compliance with the `best of its ability' standard is 
determined by assessing whether respondent has put forth its maximum 
effort to provide Commerce with full and complete answers to all 
inquires * * *'').
    An adverse inference may include reliance on information derived 
from the petition, the final determination in the investigation, any 
previous review, or any other information placed on the record. See 
section 776(b) of the Act. In the Department's verification outline 
issued to CST on June 6, 2005, we requested that CST be prepared to 
provide all supporting documentation relating to its reporting of 
domestic brokerage and handling expenses, which includes demurrage 
charges. See Letter to CST from Abdelali Elouaradia, Program Manager, 
Office 7, Sales Verification Outline, dated June 6, 2005 at 12. As 
described in the Sales Verification Report, CST failed to provide 
supporting documentation for demurrage charges within the time frame 
allowed during verification. See Sales Verification Report at 40. 
Because CST did not make sufficient effort to provide the requested 
information for domestic brokerage and handling expenses in a timely 
manner, we preliminarily determine that CST failed to cooperate to the 
best of their ability with respect to this claimed expense. For 
purposes of these preliminary results, as facts available, we have set 
domestic brokerage and handling expenses to zero (i.e., making no 
adjustment) for CST's sales to this customer for the POR. See 
Memorandum to the File, through Abdelali Elouaradia, Program Manager, 
Office 7, ``Analysis of the Data Submitted by Comphania 
Sider[acute]rgica de Tubar[atilde]o (CST) for the Preliminary Results 
of New Shipper Review,'' dated August 12, 2005 (Prelim Analysis Memo) 
for details.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the home market 
at the same level of trade (LOT) as the export transaction. See also 
section 351.412 of the Department's regulations. The NV LOT is based on 
the level of the starting-price sales in the comparison market or, when 
NV is based on CV, the level of the sales from which we derive SG&A 
expenses and profits. For EP sales, the U.S. LOT is based on the level 
of the starting-price sale, which is usually from the exporter to the 
importer. See section 351.412(c)(1) of the Department's regulations. As 
noted in the ``Export Price'' section above, we preliminarily find that 
all of CST's direct U.S. sales to unrelated customers are properly 
classified as EP sales.
    To determine whether NV sales are at a different LOT than EP sales, 
we examine stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated 
customer. If the comparison market sales are at a different LOT than EP 
sales, and the difference affects price comparability, as

[[Page 48672]]

manifested in a pattern of consistent price differences between 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.
    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 determining whether separate LOTs existed in the home and U.S. 
markets for the respondent, we examine whether the respondent's sales 
involved different marketing stages (or their equivalent) based on the 
channel of distribution, customer categories, and selling functions (or 
services offered) (i.e., order input/processing, packing, freight, 
delivery warranty, engineering, technical assistance, and after-sale 
services) to each customer or customer category, in both markets.
    With respect to sales to the United States, CST stated that it had 
one channel of distribution in which it sold to unaffiliated U.S. 
trading companies. Although CST stated that it incurred no services for 
its U.S. sales, our review of the record indicates that at a minimum 
CST provided order input/processing, packing, freight, and delivery 
services for its sales to unaffiliated U.S. trading companies. See 
CST's Section A questionnaire response at Exhibit A-8. Based upon this 
information, we preliminarily find there to be one LOT for U.S. sales.
    In this review, CST stated that it made sales of hot-rolled steel 
products in the home market via three channels of distribution: 1) to 
unaffiliated OEMs, i.e., end-users, 2) to unaffiliated service centers, 
and 3) to affiliated OEMs. For each home market channel of 
distribution, CST stated that it provided minimal services which 
included engineering services, technical assistance, and after-sale 
services. In particular, we noted at verification that CST's 
engineering and technical assistance services involves answering 
customer inquires as to which product best suits a particular 
application. We also noted that CST's after-sales services consists of 
a brief follow-up with the customer via telephone to inquire as to how 
the product is working for them. See Sales Verification Report at 13. 
In reviewing CST's questionnaire responses and information presented at 
verification, we find that CST also provided the following services, at 
the same level, for sales via all three channels of distribution and to 
all customer categories: order input/processing, warranty services 
(i.e., negotiation of appropriate compensation), packing, freight and 
delivery services. See CST's Section A questionnaire response at 
Exhibit A-8 and A-19-A-21. See also Sales Verification Report at 10-11. 
Based upon this information, we preliminarily find there to be one LOT 
for home market sales.
    In analyzing CST's selling activities for its home and U.S. 
markets, we have preliminarily determined that essentially the same 
level of services were provided for both markets. Other than warranty, 
engineering, technical assistance, and after-sales services, which were 
solely provided on home market sales but did not involve significant 
activities, in both markets CST provided a similar level of services 
for order input/processing, packing, freight, and delivery services. 
See CST's Section A questionnaire response at A-19-A-21. For further 
discussion on the selling activities provided by CST in both markets, 
see the Prelim Analysis Memo. Based upon our review of this 
information, we do not consider the selling functions to vary 
significantly between the U.S. and home market LOTs. Therefore, we have 
preliminarily determined that the LOT for all EP sales is the same as 
the LOT for all sales in the home market. Based on our analysis of 
selling functions and because we find home market and U.S. sales at the 
same LOT, there is no basis for a LOT adjustment under section 
773(a)(7)(A) of the Act for CST.

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act and section 
351.415 of the Department's regulations, based on the exchange rates in 
effect on the dates of the U.S. sales, as certified by Dow Jones 
Business Interactive, LLC (trading as Factiva).

Preliminary Results of New Shipper Review

    As a result of our review, we preliminarily determine that the 
weighted-average dumping margin for the period March 1, 2004, through 
August 31, 2004, to be as follows:

------------------------------------------------------------------------
                                                       Weighted-Average
                Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
Comphania Sider[uacute]rgica de Tubar[atilde]o......                0.00
------------------------------------------------------------------------

    The Department will disclose the calculations performed within 5 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR Sec.  351.224(b). An interested 
party may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR Sec.  351.310(c). Any hearing, if 
requested, ordinarily will be held 37 days after the date of 
publication of these preliminary results, or the first working day 
thereafter. Interested parties may submit case briefs no later than 30 
days after the date of publication of these preliminary results. See 19 
CFR Sec.  351.309(c)(ii). Rebuttal briefs limited to issues raised in 
such briefs, may be filed no later than 35 days after the date of 
publication. See 19 CFR Sec.  351.309(d).
    Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. The Department will issue the final results of this review, 
which will include the results of its analysis of issues raised in any 
such comments, or at a hearing, if requested, not later than 90 days 
after the date of issuance of the preliminary results.

Assessment Rates

    Upon completion of this new shipper review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. Upon issuance of the final results of this new shipper review, 
if any calculated importer-specific assessment rates are above de 
minimis (i.e., at or above 0.5 percent), the Department will issue 
appropriate assessment instructions directly to CBP within 15 days of 
publication of the final results of this review.

Cash Deposit Requirements

    CST may continue to post a bond or other security in lieu of cash 
deposits for certain entries of subject merchandise exported by CST. As 
CST has certified that it both produced and exported the subject 
merchandise, CST's bonding option is limited only to such merchandise 
for which it is both the producer and exporter. Bonding will no longer 
be permitted to fulfill security requirements for CST's shipments after 
publication of the final results of this new shipper review.
    The following deposit rate will be effective upon publication of 
the final

[[Page 48673]]

results of this new shipper review for shipments of hot-rolled steel 
products from Brazil entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(2)(C) of the Act: (1) for subject merchandise that is both 
produced and exported by CST, the cash deposit rate will be the rate 
established in the final results of this review, except if the rate is 
less than 0.5 percent and, therefore, de minimis, the cash deposit will 
be zero, (2) for previously reviewed or 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) the cash 
deposit rate for all other manufacturers or exporters will continue to 
be 42.12 percent, which is the ``all others'' rate established in the 
LTFV investigation. See AD Order, 67 FR at 11094. These cash deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR Sec.  351.402(f) to file a certificate 
regarding the reimbursement of antidumping and/or countervailing 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 and/or countervailing 
duties occurred and the subsequent increase in antidumping duties by 
the amount of antidumping and/or countervailing duties reimbursed.
    This new shipper review is issued and published in accordance with 
sections 751(a)(2)(B) and 777(i)(1) of the Act.

    Dated: August 12, 2005.
Barbara E. Tillman,
Acting Assistant Secretary for Import Administration.

APPENDIX I

    Unpublished Memorandum to Barbara E. Tillman, Acting Deputy 
Assistant Secretary for Import Administration Certain Hot-Rolled Flat-
Rolled Carbon Quality Steel Products from Brazil: New Shipper Review of 
Companhia Sider[uacute]rgica de Tubar[atilde]o (CST), dated August 12, 
2005.
[FR Doc. E5-4542 Filed 8-18-05; 8:45 am]
BILLING CODE 3510-DS-S