Notice of Final Determination of Sales at Less Than Fair Value: Grain-Oriented Electrical Steel From Italy

DEPARTMENT OF COMMERCE

[A-475-811]

Notice of Final Determination of Sales at Less Than Fair Value:

Grain-Oriented Electrical Steel From Italy

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: July 1, 1994.

FOR FURTHER INFORMATION CONTACT: Jennifer L. Katt or Lori Way, Office

of Antidumping Investigations, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-

0498 and 482-0656, respectively.

Final Determination

The Department of Commerce (the Department) determines that grain-

oriented electrical steel (GOES) from Italy is being, or is likely to

be, sold in the United States at less than fair value, as provided in

section 735 of the Tariff Act of 1930, as amended (the Act). The

estimated margins are shown in the ``Suspension of Liquidation''

section of this notice.

Case History

Since the notice of the preliminary determination and postponement

of the final determination on February 2, 1994 (59 FR 5991, February 9,

1994), the following events have occurred:

We conducted verification of the respondents' (ILVA S.p.A. and

Acciai Speciali Terni, S.r.l. (collectively Terni)) sales and cost

questionnaire responses in Italy and the United States in May 1994.

Terni and the petitioners in this investigation (Allegheny Ludlum

Corp., Armco, Inc., The United Steelworkers of America, Butler Armco

Independent Union and Zanesville Armco Independent Union) submitted

case briefs on June 10, 1994, and rebuttal briefs on June 15, 1994. No

public hearing was requested.

On June 20, 1994, a meeting took place where representatives from

the Italian government expressed their concerns regarding our findings

at verification.

Scope of Investigation

The product covered by this investigation is grain-oriented silicon

electrical steel, which is a flat-rolled alloy steel product containing

by weight at least 0.6 percent of silicon, not more than 0.08 percent

of carbon, not more than 1.0 percent of aluminum, and no other element

in an amount that would give the steel the characteristics of another

alloy steel, of a thickness of no more than 0.56 millimeters, in coils

of any width, or in straight lengths which are of a width measuring at

least 10 times the thickness, as currently classifiable in the

Harmonized Tariff Schedule of the United States (HTSUS) under item

numbers 7225.10.0030, 7226.10.1030, 7226.10.5015 and 7226.10.5065.

Although the HTSUS subheadings are provided for convenience and customs

purposes, our written description of the scope of this proceeding is

dispositive.

Period of Investigation

The period of investigation (POI) is March 1, 1993, through August

31, 1993.

Such or Similar Comparisons

We have determined that the merchandise subject to this

investigation constitutes a single category of such or similar

merchandise.

Best Information Available (BIA)

We were unable to verify Terni's submitted cost of production (COP)

and constructed value (CV) information because the company did not

provide adequate source documentation at verification to substantiate

the accuracy and completeness of its submitted costs. Section 776(b) of

the Act provides that if the Department is unable to verify, within the

time specified, the accuracy and completeness of the factual

information submitted, it shall use BIA as the basis for its

determination. Consequently, we have based this determination on BIA.

For a detailed discussion of the problems encountered in attempting to

verify Terni's cost information, see our response to Comment One under

the ``Interested Party Comments'' section of this notice.

In determining what rate to use as BIA, the Department follows a

two-tiered methodology, whereby the Department may assign lower rates

for those respondents who cooperated in an investigation and rates

based on more adverse assumptions for those respondents found to be

uncooperative in an investigation (See, Final Determination of Sales At

Less Than Fair Value: Certain Hot-Rolled and Cold-Rolled Carbon Steel

Flat Products and Certain Cut-to-Length Steel Plate from Belgium, 58 FR

37082, July 9, 1993).

As detailed in the DOC position to Comment One below, we consider

Terni to have been cooperative. When a company cooperates with our

requests for information but fails to provide that information in a

timely manner or in the form required, it is the Department's practice

to use as BIA the higher of: 1) the average of margins in the petition;

or 2) the calculated margin for another firm for the same class or kind

of merchandise from the same country. Since there was only one less

than fair value margin alleged in the petition and there was no other

respondent in this case, we have applied, as BIA, the single rate

alleged in the petition.

Fair Value Comparisons

To determine whether sales of subject merchandise from Italy to the

United States were made at less than fair value, we compared United

States price (USP) to foreign market value (FMV). USP and FMV were

based on information contained in the petition, as fully described in

the notice of initiation of this investigation (58 FR 49017, September

21, 1993).

Interested Party Comments

Comment 1: Terni argues that the Department should amend its cost

verification report to ``correct and clarify numerous misstatements and

fundamental inaccuracies contained therein.'' Terni asserts that the

cost verification report incorrectly casts the company's actions at

verification as uncooperative. Terni further asserts that its conduct

at the cost verification and throughout this investigation has been

cooperative for the following reasons: (1) Terni provided complete and

timely responses to the Department's requests for information; (2)

Terni completed two successful sales verifications immediately

following the cost verification; and (3) the cost verification was

conducted at an inopportune time for Terni.

Petitioners argue that Terni has been uncooperative and has

significantly impeded this investigation by failing to prepare for, or

cooperatively participate in, the cost verification. Therefore, under

the Department's two-tiered BIA methodology, petitioners assert that

Terni should be assigned the highest margin alleged in the petition as

BIA.

DOC Position: We disagree with Terni's statement regarding the

accuracy of the cost verification report. At verification we found that

Terni: (a) was unprepared and unable to provide source documents in a

timely manner, which impeded the testing that was performed and limited

the amount of testing which could be completed, (b) did not prepare a

reconciliation between cost and financial systems or provide an

explanation of these systems, (c) was unable to support that all

necessary variances were reported, (d) provided differing labor amounts

in the general (or financial) accounting system and the cost (or the

analytical) system and the cost of goods sold calculation prepared at

verification, and was unable to reconcile these discrepancies, (e) did

not provide audited financial statements, and did not reconcile

information to its unaudited statements, and (f) caused delays in other

areas which did not allow the reported amounts for general &

administrative expenses, interest expense, and profit to be examined.

For a more detailed discussion of each of the major problems

encountered at verification and the areas where Terni challenges the

accuracy of the Department's verification report see the cost

verification report, dated June 3, 1994 and the calculation memorandum

dated June 16, 1994, which are both on file in room B-099 of the Main

Commerce Building.

Regarding petitioners' contention that Terni was an uncooperative

respondent, we disagree. Although Terni's cost information was

unverifiable, this failure does not change the fact that its level of

participation throughout this investigation clearly indicates that it

cooperated. Terni provided all information requested in the

questionnaire, permitted verification of its data, and successfully

completed verification of its sales information.

Comment 2: Terni argues that the Department should use its

submitted costs rather than resort to BIA. However, in the event the

Department determines it is justified in using BIA, Terni argues that

the best information available is Terni's data, not information

contained in the petition, because the petition contains numerous

errors in the calculations of COP and CV. Finally, Terni asserts that

if the Department rejects its cost response, the Department could still

use Terni's reported U.S. sales data in making its final determination

because this information was ``successfully'' verified.

Petitioners argue that Terni's submitted costs should not be relied

upon because Terni failed every aspect of the cost verification. In

addition, petitioners contend that the Department should reject Terni's

entire response, including its verified U.S. sales data, and base the

final determination on information provided in the petition.

DOC Position: As discussed in the ``Best Information Available''

section above, during the verification of the cost response, the

Department encountered serious and pervasive problems in its efforts to

verify the information submitted by Terni. Consequently, in accordance

with Section 776(b) of the Act, the Department was compelled to use

BIA.

While we were able to verify Terni's submitted sales data, we were

unable to verify its cost information. Without verified COP/CV data we

do not have a basis to calculate an appropriate FMV, and thus cannot

perform sales comparisons. Even if the Department were to contemplate

using Terni's verified U.S. sales data, there is insufficient CV

information available in the petition to adequately cover the sale of

all products sold by Terni in the United States. Specifically, the CV

specified in the petition covers a single product which differs in

physical characteristics from certain of Terni's U.S. sales.

Additionally, the petition does not provide adequate cost information

on which to base difference in merchandise adjustments. Under such

circumstances, the use of verified U.S. sales data is inappropriate.

The rejection of a respondent's questionnaire responses in toto and

use of BIA is appropriate and consistent with past practice in

instances where a respondent has failed to provide verifiable COP

information. (See e.g., Final Determination of Sales At Less Than Fair

Value: Certain Forged Stainless Steel Flanges from Taiwan, 58 FR 68859,

December 29, 1993); and Final Determination of Sales At Less Than Fair

Value: Certain Hot-Rolled Lead & Bismuth Carbon Steel Products from

France, 58 FR 6203, January 27, 1993.)

Moreover, if the Department were to accept verified sales

information when a respondent's cost information (a substantial part of

the response) does not verify, respondents would be in a position to

manipulate margin calculations by permitting the Department to verify

only that information which the respondent wishes the Department to use

in its margin calculation. Therefore, as described in the ``Best

Information Available'' section above, we have based Terni's margin for

the final determination on BIA. As permitted by Section 776(b) of the

Act, the Department is using, as BIA, information contained in the

petition.

Terni's four comments pertaining to certain errors in the petition

hold no merit. The first comment alleging a mathematical error in

petitioner's calculation of the cost of production is incorrect. Stage

by stage yield factors are missing from petitioner's worksheet but have

obviously been included in their analysis. Petitioners have recognized

the importance of yields by listing at the bottom of the worksheet the

overall yield for each product. This yield factor, however, is an

average yield factor for all stages of the production process and,

therefore cannot be used exclusively for purposes of recalculating

costs on a stage by stage basis. The remaining three comments concern

methodologies used by the petitioners in the calculation of the yield

rate and depreciation and the reliance upon petitioner's costs as a

proxy for Terni's costs. The Department determined that these

methodologies were appropriate for purposes of initiation and continues

to find them reasonable for purposes of calculating CV. Consequently,

these methodologies are appropriate for use as BIA.

Other Comments

Terni made additional comments on various charges and adjustments

contained in its home market and U.S. sales listings. However, since we

are basing our final determination on BIA, those comments are now moot.

Accordingly, no response on behalf of the Department is required.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(4) of the Act, we are directing

the Customs Service to continue to suspend liquidation of all entries

of the subject merchandise from Italy that are entered, or withdrawn

from warehouse, for consumption on or after the date of publication of

this notice in the Federal Register. The Customs Service shall require

a cash deposit or posting of a bond equal to the estimated dumping

margins, as shown below. The suspension of liquidation will remain in

effect until further notice. The weighted-average margins are as

follows:

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

Margin

Manufacturer/producer/exporter percentage

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

All Companies.............................................. 60.79

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

International Trade Commission (ITC) Notification

In accordance with section 735(d) of the Act, we have notified the

ITC of our determination. The ITC will now determine whether these

imports are materially injuring, or threaten material injury to, the

U.S. industry within 45 days. If the ITC determines that material

injury, or threat of material injury, does not exist with respect to

the subject merchandise, the proceeding will be terminated and all

securities posted will be refunded or cancelled. If the ITC determines

that such injury does exist, the Department will issue an antidumping

duty order directing Customs officials to assess antidumping duties on

all imports of the subject merchandise from Italy entered, or withdrawn

from warehouse, for consumption on or after the effective date of the

suspension of liquidation.

Notice to Interested Parties

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility, pursuant

to 19 CFR 353.34(d), concerning the return or destruction of

proprietary information disclosed under APO. Failure to comply is a

violation of the APO.

This determination is published pursuant to section 735(d) of the

Act (19 U.S.C. 1673d(d)) and 19 CFR 353.20(a)(4).

Dated: June 24, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-16085 Filed 6-30-94; 8:45 am]

BILLING CODE 3510-DS-P