Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Bar From Italy

DEPARTMENT OF COMMERCE

[A-475-813]

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Stainless Steel Bar From Italy

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 4, 1994.

FOR FURTHER INFORMATION CONTACT: Kate Johnson or Irene Darzenta, Office

of Antidumping Investigations, Import Administration, U.S. Department

of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC

20230; telephone (202) 482-4929 or 482-6320, respectively.

Preliminary Determination

The Department of Commerce (the Department) preliminarily

determines that stainless steel bar (SSB) from Italy is being, or is

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

provided in section 733 of the Tariff Act of 1930, as amended (the

Act). The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Scope of Investigation

The merchandise covered by this investigation is SSB. For purposes

of this investigation, the term ``stainless steel bar'' means articles

of stainless steel in straight lengths that have been either hot-

rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-

finished, or ground, having a uniform solid cross section along their

whole length in the shape of circles, segments of circles, ovals,

rectangles (including squares), triangles, hexagons, octagons or other

convex polygons. SSB includes cold-finished SSBs that are turned or

ground in straight lengths, whether produced from hot-rolled bar or

from straightened and cut rod or wire, and reinforcing bars that have

indentations, ribs, grooves, or other deformations produced during the

rolling process.

Except as specified above, the term does not include stainless

steel semi-finished products, cut length flat-rolled products (i.e.,

cut length rolled products which if less than 4.75 mm in thickness have

a width measuring at least 10 times the thickness, or if 4.75 mm or

more in thickness having a width which exceeds 150 mm and measures at

least twice the thickness), wire (i.e., cold-formed products in coils,

of any uniform solid cross section along their whole length, which do

not conform to the definition of flat-rolled products), and angles,

shapes and sections.

The SSB subject to this investigation is currently classifiable

under subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005,

7222.20.0045, 7222.20.0075 and 7222.30.0000 of the Harmonized Tariff

Schedule of the United States (HTSUS). Although the HTSUS subheading is

provided for convenience and customs purposes, our written description

of the scope of this investigation is dispositive.

Period of Investigation

The period of investigation (POI) is July 1, 1993, to December 31,

1993.

Case History

Since the notice of initiation on January 19, 1994 (59 FR 3844,

January 26, 1994), the following events have occurred.

On February 14, 1994, the International Trade Commission (ITC)

issued an affirmative preliminary injury determination (USITC

Publication 2734, February 1994).

On February 28, 1994, we named Acciaierie Valbruna S.r.l.

(Valbruna) and Foroni S.p.A. (Foroni) as respondents in this

investigation and issued antidumping questionnaires to both companies.

These companies accounted for at least 60 percent of the exports of the

subject merchandise to the United States during the POI, in accordance

with 19 CFR 353.42(b). We presented the questionnaire to Valbruna at

its facility in Vicenza, Italy, on March 3, 1994, and to Foroni at its

facility in Gorle Minore, Italy, on March 7, 1994.

We received responses to Section A of the Department's

questionnaire on March 21, 1994, from Foroni and on March 22, 1994 from

Valbruna.

On March 25, 1994, we received comments on the issue of class or

kind of merchandise from interested parties, per the Department's

invitation for such comments in its notice of initiation. On April 13,

1994, we received rebuttal comments on this issue. On May 11, 1994, we

determined that SSB constitutes one class or kind of merchandise. (See

May 11, 1994, Decision Memorandum to Barbara Stafford from The Team Re:

Class or Kind of Merchandise.)

On March 31, 1994, we sent Sections A through D of the Department's

questionnaire to Cogne S.p.A. (Cogne) because it requested that it be

included in the investigation as a voluntary respondent. On April 14,

1994, Cogne notified the Department that it had decided not to

participate as a voluntary respondent in the investigation.

On April 26, 1994, the Department received a request from

petitioners to postpone the preliminary determination until July 28,

1994. On May 16, 1994, we published in the Federal Register (59 FR

25447), a notice announcing the postponement of the preliminary

determination until not later than July 28, 1994, pursuant to

petitioners' request, in accordance with 19 CFR 353.15(c) and (d).

On April 29 and May 2, 1994, we received responses to Sections B

and C of the Department's questionnaire from Foroni and Valbruna,

respectively.

On May 18, 1994, petitioners alleged that Valbruna sold the subject

merchandise in Italy at prices below its cost of production (COP).

Petitioners supplemented their original allegation on June 3, 13, and

22, 1994. Respondent rebutted the allegation on May 24, June 9, 15, 27,

and 28, 1994. On June 24, 1994, we determined that petitioners'

allegation provided a reasonable basis to believe or suspect below cost

sales, pursuant to section 353.51(a) of the Department's regulations.

Accordingly, we initiated a sales below cost investigation for Valbruna

on June 24, and issued Section D of the Department's questionnaire on

the same date.

On May 20, 1994, we issued a supplemental questionnaire to both

respondents. Valbruna submitted its supplemental response on June 6,

1994, and Foroni on June 8, 1994.

On July 19, 1994, Valbruna requested an extension of time until

August 5, 1994, to respond to the Section D questionnaire. The

Department granted such an extension on July 20, 1994.

Also, on July 20, 1994, respondent Valbruna requested that, in the

event of an affirmative determination in this investigation, the

Department postpone the final determination until 135 days after the

date of publication of the preliminary determination in the Federal

Register.

Such or Similar Comparisons

We have determined that all the products covered by this

investigation constitute a single category of such or similar

merchandise. We made fair value comparisons on this basis. In

accordance with the Department's standard methodology, we first

compared identical merchandise. Where there were no sales of identical

merchandise in the home market to compare to U.S. sales, we made

similar merchandise comparisons on the basis of the criteria defined in

Appendix V to the antidumping questionnaire, on file in Room B-099 of

the main building of the Department of Commerce.

We altered the order of the SSB grades specified within the grade

criterion of Appendix V to account for certain other SSB grades which

Foroni sold during the POI, but which were not taken into account in

Appendix V.

We also reversed the order of the size and shape criteria in

Appendix V. In our original questionnaire issued on February 28, 1994,

the fifth and sixth matching criteria were shape and size,

respectively. However, based on the advice of our in-house technical

expert, we reversed the order of these two criteria. Subsequently,

Valbruna requested that the Department reconsider the reversal of these

criteria in Appendix V. Specifically, it argued that the distinguishing

factor of SSBs as compared to all other stainless steel products is

that they can be supplied in a variety of shapes and that the COP and

price of SSBs are influenced significantly more by shape than size. In

light of the arguments raised by Valbruna, we reversed the hierarchy of

these criteria to reflect the order in our original Appendix V.

Fair Value Comparisons

To determine whether sales of SSB from Italy to the United States

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

(``USP'') to the foreign market value (``FMV''), as specified in the

``United States Price'' and ``Foreign Market Value'' sections of this

notice. In accordance with 19 CFR 353.58, we made comparisons at the

same level of trade, where possible.

United States Price

Foroni

All of Foroni's U.S. sales to the first unrelated purchaser took

place after importation into the United States. Therefore, we based USP

on exporter's sales prices (ESP), in accordance with section 772(c) of

the Act. In accordance with section 772(d) of the Act, we calculated

ESP based on FOB warehouse and FOB port prices to unrelated customers

in the United States. We made deductions, where appropriate, for

foreign brokerage, ocean freight (including foreign inland freight and

loading/unloading charges), U.S. brokerage and handling, U.S. inland

freight, U.S. import duties, and export taxes. For those sales of

subject merchandise with FOB U.S. port sales terms, we made no

deduction for the U.S. inland freight charges reported in respondent's

U.S. sales listing.

We also deducted credit expenses, warranty expenses, product

liability premiums, quality control expenses, and commissions paid to

an employee, in accordance with section 772(e)(2) of the Act. We also

deducted U.S. indirect selling expenses, including pre-sale warehousing

costs incurred in the United States, advertising, and inventory

carrying costs.

We did not make an adjustment for payroll taxes reported by Foroni

for the preliminary determination because Foroni did not provide

sufficient explanation as to how these expenses should be treated. We

will review these expenses at verification and reconsider the issue for

the final determination. In addition, we made no adjustment for U.S.

packing expenses because Foroni claims that it does not pack the

subject merchandise and, therefore, did not report this expense.

Valbruna

For Valbruna, we based USP on both ESP and purchase price (PP), in

accordance with section 772 of the Act, because Valbruna made sales

both before and after importation into the United States. We calculated

both PP and ESP based on packed prices to unrelated customers. In

accordance with section 772(d)(2)(A) of the Act, for both PP and ESP

sales we made deductions, where appropriate, for ocean freight

(including foreign inland freight, foreign inland insurance, marine

insurance and foreign brokerage and handling), U.S. import duties, U.S.

merchandise processing and harbor maintenance fees, U.S. inland

freight, U.S. brokerage and handling, and containerization expenses

(including drayage, stripping, and storage expenses). We added freight

income (i.e., freight charges paid by the customer but not included in

the gross price) to both ESP and PP sales.

For ESP sales only, we further deducted credit expenses and

warranty expenses, in accordance with section 772(e)(2) of the Act. We

also deducted indirect selling expenses incurred in Italy on sales to

the United States, as well as indirect selling expenses incurred in the

United States, and inventory carrying costs. We recalculated indirect

selling expenses incurred in the United States to reflect respondent's

reported methodology.

We also made an adjustment to USP for the value-added tax (VAT)

paid on the comparison sales in Italy in accordance with our practice,

pursuant to the Court of International Trade (CIT) decision in Federal-

Mogul Corp. and The Torrington Co. v. United States, Slip Op. 93-194

(CIT October 7, 1993). (See Final Determination of Sales at Less Than

Fair Value: Calcium Aluminate Cement, Cement Clinker and Flux from

France, 59 FR 14136, March 25, 1994).

Foreign Market Value

In order to determine whether there were sufficient sales of SSB in

the home market to serve as a viable basis for calculating FMV, we

compared the volume of home market sales of SSB to the volume of third

country sales of SSB in accordance with section 773(a)(1)(B) of the

Act. Based on this comparison, we determined that both respondents had

viable home markets with respect to sales of SSB during the POI.

Foroni

We calculated FMV based on ex-factory prices charged to unrelated

customers in the home market.

Pursuant to 19 CFR 353.56(a)(2), we deducted credit expenses and

quality control expenses. We also deducted home market indirect selling

expenses capped by the sum of U.S. commissions and indirect selling

expenses (including inventory carrying costs), in accordance with 19

CFR 353.56(b).

We made adjustments, where appropriate, for differences in the

physical characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act.

We did not make an adjustment for VAT for Foroni based on its claim

that it and its home market customers qualify for exemptions under the

Italian VAT program.

We also made no adjustment for home market packing expenses because

Foroni claims that it does not pack the subject merchandise and,

therefore, did not report this expense.

Valbruna

We calculated FMV based on packed prices charged to related and

unrelated customers in the home market. For purposes of the preliminary

determination, we included arm's-length sales to related customers,

pursuant to 19 CFR 353.45.

We deducted cash discounts. We added freight income (i.e., freight

charges paid by the customer but not included in the gross price) to

both ESP and PP sales.

In light of the Court of Appeals for the Federal Circuit's (CAFC)

decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland

Cement V. United States, 13 F.3d 398 (Fed. Cir. 1994), the Department

no longer can deduct home market movement charges from FMV pursuant to

its inherent power to fill in gaps in the antidumping statute. Instead,

we will adjust for those expenses under the circumstance-of-sale

provision of 19 CFR 353.56(a) and the exporter's sales price offset

provision of 19 CFR 353.56(b)(2), as appropriate. Accordingly, in the

present case, we deducted post-sale home market movement charges from

FMV under the circumstance-of-sale provision of 19 CFR 353.56(a). This

adjustment included home market inland freight (including inland

insurance). We adjusted for pre-sale warehousing charges associated

with pre-sale movement charges in the ESP offset.

For comparison to ESP sales, we also deducted credit expenses and

home market commissions from FMV. We then deducted home market indirect

selling expenses capped by the sum of U.S. indirect selling expenses

and inventory carrying costs.

For comparison to PP sales, we made a circumstance-of-sale

adjustment for differences in credit expenses and warranty expenses,

pursuant to 19 CFR 353.56(a)(2). We also deducted home market

commissions from FMV and added to FMV the U.S. indirect selling

expenses capped by the amount of home market commissions.

For purposes of the preliminary determination, we considered pre-

sale warehousing expenses to be indirect selling expenses because

respondent has not adequately demonstrated that such expenses are

directly attributable to particular sales of the subject merchandise.

We also did not allow Valbruna's claim of imputed VAT expenses.

While there may be an opportunity cost or income associated with the

payment of VAT, that fact alone is not a sufficient basis for the

Department to make an adjustment. (See Final Determination of Sales at

Less Than Fair Value: Sulfur Dyes, Including Sulfur Vat Dyes, from the

United Kingdom, 58 FR 3253, January 8, 1993.)

For both ESP and PP sales, we deducted home market packing costs

and added U.S. packing costs, in accordance with section 773(a)(1) of

the Act.

We made adjustments, where appropriate, for differences in the

physical characteristics of the merchandise, in accordance with section

773(a)(4)(C) of the Act.

We adjusted for VAT in accordance with our practice. (See the

``United States Price'' section of this notice, above.)

Cost of Production

Petitioners alleged that Valbruna made home market sales of subject

merchandise at prices below its COP. Based on petitioners' allegation,

and in accordance with section 773(b) of the Act, we initiated a COP

investigation to determine whether Valbruna made home market sales at

prices below its COP over an extended period of time. Although

Valbruna's COP questionnaire response will be received too late to be

considered for the preliminary determination, it will be verified and

considered for the final determination.

Currency Conversion

We made currency conversions based on the official exchange rates

in effect on the dates of the U.S. sales as certified by the Federal

Reserve Bank of New York. See 19 CFR 353.60(a).

Verification

As provided in section 776(b) of the Act, we will verify the

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to suspend liquidation of all entries of SSB from

Italy, as defined in the ``Scope of Investigation'' section of this

notice, 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 the

posting of a bond equal to the estimated preliminary dumping margins,

as shown below. The suspension of liquidation will remain in effect

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

follows:

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

Margin

Manufacturer/producer/exporter percent

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

Acciaierie Valbruna S.r.l.................................... 0.57

Foroni S.p.A................................................. 6.13

All Others................................................... 4.11

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

ITC Notification

In accordance with section 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine whether imports of the subject merchandise are

materially injuring, or threaten material injury to, the U.S. industry,

before the later of 120 days after the date of the preliminary

determination or 45 days after our final determination.

Postponement of Final Determination

Pursuant to section 735(a)(2)(A) of the Act, on July 20, 1994,

respondent Valbruna, a significant producer of the subject merchandise,

requested that, in the event of an affirmative preliminary

determination in this investigation, the Department postpone its final

determination until 135 days after the date of publication of an

affirmative preliminary determination. Pursuant to 19 CFR 353.20(b),

because our preliminary determination is affirmative, and no compelling

reasons for denial exist, we are postponing the final determination

until the 135th day after the date of publication of this notice in the

Federal Register.

Public Comment

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary for Import Administration no later than November 9, 1994, and

rebuttal briefs no later than November 16, 1994. In accordance with 19

CFR 353.38(b), we will hold a public hearing, if requested, to give

interested parties an opportunity to comment on arguments raised in

case or rebuttal briefs. Tentatively, the hearing will be held on

November 18, 1994 at 9:30 a.m. at the U.S. Department of Commerce, room

1414, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

Parties should confirm by telephone the time, date, and place of the

hearing 48 hours before the scheduled time.

Interested parties who wish to request a hearing must submit a

written request to the Assistant Secretary for Import Administration,

U.S. Department of Commerce, room B-099, within ten days of the

publication of this notice in the Federal Register. Request should

contain: (1) The party's name, address, and telephone number; (2) the

number of participants; and (3) a list of the issues to be discussed.

In accordance with 19 CFR 353.38(b), oral presentation will be limited

to issues raised in the briefs.

This determination is published pursuant to section 733(f) of the

Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).

Dated: July 28, 1994.

Barbara R. Stafford,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-19069 Filed 8-3-94; 8:45 am]

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