Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Antidumping Duty Investigation of Stainless Steel Angle From Japan

DEPARTMENT OF COMMERCE

[A-588-834]

Preliminary Determination of Sales at Less Than Fair Value and

Postponement of Final Determination: Antidumping Duty Investigation of

Stainless Steel Angle From Japan

Agency: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: November 10, 1994.

FOR FURTHER INFORMATION CONTACT: Bill Crow, Office of Antidumping

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

14th Street and Constitution Avenue NW., Washington, D.C. 20230;

telephone (202) 482-0116.

PRELIMINARY DETERMINATION: We preliminarily determine that stainless

steel angle (SSA) from Japan is being 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.

Case History

Since the initiation of this investigation on April 28, 1994 (59 FR

23052, May 4, 1994), the following events have occurred.

On May 23, 1994, the International Trade Commission (ITC) issued an

affirmative preliminary injury determination in this proceeding (see

ITC Investigation No. 731-TA-699).

On June 2, 1994, the Department of Commerce (the Department) issued

an antidumping questionnaire to Aichi Steel Works, Ltd., (Aichi). Aichi

submitted responses to the Department's questionnaire in June and July

1994.

On August 23, 1994, the Department issued a supplemental sales

questionnaire to the respondent. Aichi submitted its response to the

supplemental questionnaire on September 19, 1994.

On August 17, 1994, the petitioners, Slater Steels Corporation and

United Steelworkers of America, requested that the Department postpone

the preliminary determination until November 4, 1994, pursuant to 19

CFR 353.15(c)(1994). The Department granted this request on August 24,

1994 (59 FR 44966, August 31, 1994).

On August 10, 1994, the petitioners alleged that Aichi was selling

the subject merchandise in the home market at below its cost of

production. On August 16, 1994, the respondent submitted comments which

questioned the methodology employed in the petitioners' below-cost

allegation. On August 22, 1994, the petitioners revised their original

cost allegation. After analyzing the petitioners' allegation, we found

reasonable grounds to believe or suspect that sales in the home market

were being made at less than the cost of production. Consequently, on

September 7, 1994, the Department initiated an investigation of sales

below cost for Aichi's home market sales, in accordance with section

773(b) of the Act and 19 CFR 353.51. On this date, we presented Aichi

with Section D of the antidumping questionnaire concerning cost of

production. Aichi submitted its response to Section D of the

questionnaire on October 17, 1994.

On November 2, 1994, in accordance with 19 CFR 353.20(b), the

respondent requested that, in the event of an affirmative preliminary

determination, the Department postpone the final determination due to

the complexity of the cost information, and the problems associated

with scheduling verification because of the year-end holidays.

Scope of Investigation

For purposes of this investigation, the term ``stainless steel

angle'' includes hot-rolled, whether or not annealed or descaled,

stainless steel products angled at 90 degrees, that are not otherwise

advanced.

The stainless steel angle subject to this investigation is

currently classifiable under subheadings 7222.40.30.20 and

7222.40.30.60 of the Harmonized Tariff Schedules of the United States

(HTSUS). Although the HTSUS subheadings are 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 November 1, 1993, through

April 30, 1994.

Such or Similar Comparisons

For purposes of the preliminary determination, we have determined

that stainless steel angle constitutes a single ``such or similar''

category of merchandise.

The respondent reported that there were no sales of identical

merchandise in the home market during the POI. Because 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: (1)

stainless steel grade; (2) leg-length; (3) thickness; (4) spine length;

and (5) other characteristics. The Department used Aichi's reported

costs to adjust for physical differences in merchandise.

Fair Value Comparisons

To determine whether sales of stainless steel angle from Japan 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. When comparing the U.S. sales to sales of

similar merchandise in the home market, we made adjustments for

differences in physical characteristics, pursuant to 19 CFR 353.57. In

accordance with 19 CFR 353.58, we made comparisons at the same level of

trade, where possible.

United States Price

We based USP on purchase price, in accordance with section 772(b)

of the Act, because the subject merchandise was sold to an unrelated

purchaser before importation into the United States and because

exporter's sales price methodology was not otherwise indicated.

We made deductions from the U.S. sales price, where appropriate,

for foreign brokerage, foreign inland freight, and insurance.

We recalculated U.S. credit expense based on Aichi's lending rate

to its customers as opposed to Aichi's investment return rate.

We made an adjustment to U.S. price for a consumption tax levied on

comparison sales in Japan in accordance with our practice, pursuant to

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

Corporation and The Torrington Company v. United States, 834 F. Supp.

1391 (CIT 1993). See Preliminary Antidumping Duty Determination: Color

Negative Photographic Paper and Chemical Components from Japan (59 FR

16177, 16179, April 6, 1994), for an explanation of this methodology.

Foreign Market Value

We compared the volume of home market sales of SSA to the volume of

third-country sales to determine whether there was a sufficient volume

of sales in the home market to serve as a viable basis for calculating

FMV, in accordance with section 773 (a)(1)(B) of the Act. We found that

the home market was viable for sales of stainless steel angle, in

accordance with 19 CFR 353.48(a).

We excluded from our analysis those sales in the home market

database with negative quantities or negative sales prices.

We used the Department's arm's-length test to determine whether

sales to related customers were made on an arm's-length basis. Where

possible, we compared related and unrelated party sales at the same

level of trade. For purposes of the preliminary determination, we

considered a party as related to respondent whenever respondent had

substantial ownership in the party. See Appendix II to the Final

Determination of Sales at Less Than Fair Value: Certain Cold-Rolled

Carbon Steel Flat Products from Argentina (58 FR 37077, July 9, 1993)

for more information on the Department's arm's-length test.

In the home market, Aichi sells SSAs through several distribution

channels. Where Aichi sold SSAs through its subsidiary, that

subsidiary's sales to unrelated parties formed the basis of our FMV

calculation. Only a minuscule proportion of Aichi's sales were made to

related parties, either directly, or through its subsidiary. We only

included sales to the related parties that were made at arm's length.

We also excluded certain related party sales from our analysis because

those products could not be compared to unrelated sales and because

these were made in insignificant quantities.

We calculated FMV based on delivered prices. We made deductions for

discounts and rebates, where applicable.

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), as appropriate. Accordingly, in the

present case, we deducted post-sale home market inland freight and

insurance from FMV under the circumstance-of-sale provision of 19 CFR

353.56(a).

For one expense claimed as a rebate by Aichi, we preliminarily

determined that the expense was, in fact, a transfer of funds from the

parent to its subsidiary. This rebate was not passed on to the

unrelated purchaser. Consequently, we did not make any adjustments to

FMV for this claimed rebate.

We deducted home market packing costs and added U.S. packing costs

in accordance with section 773(a)(1) of the Act. We also made

circumstance of sale adjustments for home market direct selling

expenses, which included credit, in accordance with 19 CFR

353.56(a)(2). We reclassified pre-sale warehousing expenses as indirect

selling expenses.

We adjusted for the consumption tax in accordance with our practice

(see ``United States Price'' section of this notice).

Cost of Production (COP)

In order to determine whether home market sales prices were below

COP within the meaning of section 773(b) of the Act, we calculated COP

based on the sum of the respondent's cost of materials, fabrication,

general, and packing expenses, in accordance with 19 CFR 353.51(c).

(See e.g., Preliminary Results of Antidumping Duty Administrative

Review: Polyethylene Terrephthalate Film, Sheet, and Strip from the

Republic of Korea (59 FR 35098, 35099, July 8, 1994). We then compared

the COP to the home market selling prices, net of movement charges and

discounts and rebates.

In accordance with Section 773(b) of the Act, we followed our

standard methodology to determine whether the home market sales of each

product were made at prices below their COP in substantial quantities

over an extended period of time, and whether such sales were made at

prices that would permit recovery of all costs within a reasonable

period of time in the normal course of trade.

To satisfy the requirement of 773(b)(1) that below-cost sales be

disregarded only if made in substantial quantities, we applied the

following methodology. Where we found that over 90 percent of a

respondent's sales of a given product were at prices above the COP, we

did not disregard any below-cost sales because we determined that

respondent's below-cost sales are not made in substantial quantities.

If between ten and 90 percent of a respondent's sales of a given

product were at prices above the COP, we disregarded only the below-

cost sales if made over an extended period of time. Where we found that

more than 90 percent of a respondent's sales of a given product were at

prices below the COP and were sold over an extended period of time, we

disregarded all sales for that model and calculated FMV based on

constructed value (CV), in accordance with section 773(b) of the Act.

In accordance with section 773(b)(1) of the Act, in order to

determine whether below-cost sales had been made over an extended

period of time, we compared the number of months in which below-cost

sales occurred for each product to the number of months in the POI in

which that product was sold. If a product was sold in three or more

months of the POI, we did not exclude below-cost sales unless there

were below-cost sales in at least three months during the POI. When we

found that sales of a product only occurred in one or two months, the

number of months in which the sales occurred constituted the extended

period of time; i.e., where sales of a product were made in only two

months, the extended period of time was two months, where sales of a

product were made in only one month, the extended period of time was

one month. (See, Preliminary Results and Partial Termination of

Antidumping Duty Administrative Reviews: Tapered Roller Bearings, Four

Inches or Less in Outside Diameter, and Components Thereof, From Japan

(58 FR 69336, 69338, December 10, 1993).

Constructed Value (CV)

We calculated constructed value based on the sum of the cost of

materials, fabrication, general expenses, profit, and U.S. packing

cost. In accordance with section 773 (e)(1)(B) of the Act, for general

expenses, which include selling and financial expenses (SG&A), we used

the greater of the reported general expenses or the statutory minimum

of ten percent of the cost of production. For profit, we used the

statutory minimum of eight percent of the cost of manufacturing and

general expenses, because Aichi's reported profit was less than eight

percent of the total of cost of manufacturing and general expenses.

Currency Conversion

We have made currency conversions based on the official exchange

rates, certified by the Federal Reserve Bank of New York, in effect on

the dates of the U.S. sales.

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 stainless

steel angle from Japan, 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 posting of a

bond equal to the estimated preliminary dumping margin, as shown below.

The suspension of liquidation will remain in effect until further

notice.

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

Margin

Producer/manufacturer/exporter percentage

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

Aichi Steel Works, LTD...................................... 14.92

All others.................................................. 14.92

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

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 these imports are materially injuring, or threaten material

injury to, the U.S. industry before the later of 120 days after the

date of this preliminary determination or 45 days after our final

determination.

Postponement of Final Determination

On November 1, 1994, in accordance with 19 CFR 353.20(b),

respondent requested that, in the event of an affirmative preliminary

determination by the Department, the Department postpone the final

determination due to the complexity of the cost information and

problems associated with scheduling verifications with the year-end

holidays. We find no compelling reason to deny the request.

Accordingly, we are postponing the date of the final determination

until not later than 135 days after the date of publication of this

notice.

Public Comment

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

comments in at least ten copies may be submitted by any interested

party to the Assistant Secretary for Import Administration no later

than February 10, 1995, and rebuttal briefs no later than February 17,

1995. We request that parties in this case provide an executive summary

of no more than 2 pages in conjunction with case briefs on the major

issues to be addressed. Further, briefs should contain a table of

authorities. Citations to Commerce determinations and court decisions

should include the page number where cited information appears. In

preparing the briefs, please begin each issue on a separate page. 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 February 23, 1995, at 9 a.m. at the U.S. Department of

Commerce, Room 3708, 14th Street and Constitution Avenue NW,

Washington, D.C. 20230. Parties should confirm 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. Requests should

contain: (1) the party's name, address, 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 presentations will be limited

to the 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: November 4, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-27917 Filed 11-9-94; 8:45 am]

BILLING CODE 3510-DS-P