Certain Cut-to-Length Carbon Steel Plate from Germany: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-428-816]

Certain Cut-to-Length Carbon Steel Plate from Germany:

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to requests from the respondent, AG der Dillinger

Huttenwerke (Dillinger), and from petitioners (Bethlehem Steel

Corporation, U.S. Steel Group a Unit of USX Corporation, Inland Steel

Industries, Inc., Geneva Steel, Gulf States Steel Inc. of Alabama,

Sharon Steel Corporation, and Lukens Steel Company), the Department of

Commerce (the Department) is conducting an administrative review of the

antidumping duty order on certain cut-to-length carbon steel plate from

Germany. This review covers the above manufacturer/exporter of the

subject merchandise to the United States. The period of review (POR) is

August 1, 1994, through July 31, 1995.

We preliminarily determine no dumping margin exists for Dillinger

during the POR. Interested parties are invited to comment on these

preliminary results. Parties who submit argument in this proceeding

should also submit with the argument (1) a statement of the issue, and

(2) a brief summary of the argument.

EFFECTIVE DATE: October 4, 1996.

FOR FURTHER INFORMATION CONTACT: Nancy Decker or Linda Ludwig,

Enforcement Group III, Import Administration, International Trade

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

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

5811 or (202) 482-3833, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act), by the

Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise

indicated, all citations to the Department's regulations are to the

current regulations, as amended by the interim regulations published in

the Federal Register on May 11, 1995 (60 Fed. Reg. 25130).

Background

On July 9, 1993, the Department published in the Federal Register

(58 Fed. Reg. 37136) the final affirmative antidumping duty

determination on certain cut-to-length carbon steel plate from Germany.

We published an amended final determination and an antidumping duty

order on August 19, 1993 (58 Fed. Reg. 44170). On August 1, 1995, the

Department published the Opportunity to Request an Administrative

Review of this order for the period August 1, 1994-July 31, 1995 (60

Fed. Reg. 39150). The Department received requests for an

administrative review of Dillinger's exports from Dillinger itself, a

producer/exporter of the subject merchandise, and from the petitioners.

We initiated the review on September 8, 1995 (60 Fed. Reg. 46817).

On November 20, 1995, the petitioners requested that the Department

determine whether antidumping duties had been absorbed by Dillinger

during the POR, pursuant to section 751(a)(4) of the Act. Section

751(a)(4) provides for the Department, if requested, to determine

during an administrative review initiated two years or four years after

publication of the order whether antidumping duties have been absorbed

by a foreign producer or exporter subject to the order if the subject

merchandise is sold in the United States through an importer who is

affiliated with such foreign producer or exporter. Section 751(a)(4)

was added to the Act by the URAA. The

[[Page 51908]]

Department's interim regulations do not address this provision of the

Act.

For transition orders as defined in section 751(c)(6)(C) of the

Act, i.e., orders in effect as of January 1, 1995, section

351.213(j)(2) of the Department's proposed regulations provides that

the Department will make a duty absorption determination, if requested,

for any administrative review initiated in 1996 or 1998. See Notice of

Proposed Rulemaking and Request for Public Comments, 61 Fed. Reg. 7308,

7366 (February 27, 1996) (``Proposed Regulations''). The commentary to

the proposed regulations explains that reviews initiated in 1996 will

be considered initiated in the second year and reviews initiated in

1998 will be considered initiated in the fourth year. Id. at 7317.

Although these proposed regulations are not yet binding upon the

Department, they do constitute a public statement of how the Department

expects to proceed in construing section 751(a)(4) of the amended

statute. This approach assures that interested parties will have the

opportunity to request a duty absorption study on entries for which the

second and fourth years following an order have already passed, prior

to the time for sunset review of the order under section 751(c).

Because the order on carbon steel plate from Germany has been in effect

since 1993, this is a transition order. Therefore, based on the policy

stated above, the Department will first consider a request for an

absorption study if a review is initiated in 1996.

Under the Act, the Department may extend the deadline for

completion of administrative reviews if it determines that it is not

practicable to complete the review within the statutory time limit of

365 days. On April 1, 1996, the Department extended the time limits for

the preliminary and final results in this case. See Extension of Time

Limit for Antidumping Duty Administrative Reviews, (61 Fed.Reg. 14291

(1996)).

The Department is conducting this review in accordance with section

751 of the Act.

Scope of the Review

The products covered by this administrative review constitute one

``class or kind'' of merchandise: certain cut-to-length carbon steel

plate. These products include hot-rolled carbon steel universal mill

plates (i.e., flat-rolled products rolled on four faces or in a closed

box pass, of a width exceeding 150 millimeters but not exceeding 1,250

millimeters and of a thickness of not less than 4 millimeters, not in

coils and without patterns in relief), of rectangular shape, neither

clad, plated nor coated with metal, whether or not painted, varnished,

or coated with plastics or other nonmetallic substances; and certain

hot-rolled carbon steel flat-rolled products in straight lengths, of

rectangular shape, hot rolled, neither clad, plated, nor coated with

metal, whether or not painted, varnished, or coated with plastics or

other nonmetallic substances, 4.75 millimeters or more in thickness and

of a width which exceeds 150 millimeters and measures at least twice

the thickness, as currently classifiable in the Harmonized Tariff

Schedule (HTS) under item numbers 7208.31.0000, 7208.32.0000,

7208.33.1000, 7208.33.5000, 7208.41.0000, 7208.42.0000, 7208.43.0000,

7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.11.0000, 7211.12.0000,

7211.21.0000, 7211.22.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000,

and 7212.50.0000. Included are flat-rolled products of nonrectangular

cross-section where such cross-section is achieved subsequent to the

rolling process (i.e., products which have been ``worked after

rolling'')--for example, products which have been beveled or rounded at

the edges. Excluded is grade X-70 plate. These HTS item numbers are

provided for convenience and Customs purposes. The written description

remains dispositive.

Verification

As provided in section 782(i) of the Tariff Act, we verified

information provided by the respondent by using standard verification

procedures, including on-site inspection of the manufacturer's

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the verification

reports, the public versions of which are available.

Transactions Reviewed

In accordance with Section 751 of the Act, the Department is

required to determine the normal value and export price (EP) of each

entry of subject merchandise during the relevant review period.

In determining normal value, based on a review of Dillinger's

submissions and verification findings, the Department determined that

Dillinger need not report its home market downstream sales because that

they would not be used in the calculation of normal value. See Decision

Memorandum on Reporting Downstream Sales, April 11, 1996.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all

products produced by the respondent, covered by the description in the

Scope of the Review section, above, and sold in the home market during

the POR, to be foreign like products for purposes of determining

appropriate product comparisons to U.S. sales. 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 listed in Appendix III of

the Department's September 14, 1995 antidumping questionnaire. In

making the product comparisons, we matched foreign like products based

on the physical characteristics reported by the respondent and verified

by the Department.

Fair Value Comparisons

To determine whether sales of certain cut-to-length carbon steel

plate by Dillinger to the United States were made at less than fair

value, we compared the export price (EP) to the normal value (NV), as

described in the ``Export Price'' and ``Normal Value'' sections of this

notice. In accordance with section 777A(d)(2), we calculated monthly

weighted-average prices for NV and compared these to individual U.S.

transactions.

Export Price

We used EP as defined in sections 772(a) of the Act.

We calculated EP based on packed prices to unaffiliated customers

in the United States. Where appropriate, we made deductions from the

starting price for foreign inland freight, foreign brokerage and

handling, international freight, marine insurance, U.S. brokerage and

handling, and U.S. Customs duties. Based on our verification of

Dillinger's U.S. sales response, we made adjustments to Dillinger's

reported foreign inland freight.

Normal Value

Based on a comparison of the aggregate quantity of home market and

U.S. sales, we determined that the quantity of the foreign like product

sold in the exporting country was sufficient to permit a proper

comparison with the sales of the subject merchandise to the United

States, pursuant to section 773(a) of the Act. Therefore, in accordance

with section 773(a)(1)(B)(i) of the Act, we based NV on the price at

which the foreign like product was first sold for consumption in the

home market, in the

[[Page 51909]]

usual commercial quantities and in the ordinary course of trade.

Where appropriate, we deducted rebates, credit expenses, global

credits and debits, inland freight, inland insurance, and packing. We

also deducted value-added tax (VAT) from the reported gross unit price,

since the reported price included VAT. We did not adjust the starting

price for commissions in the home market because Dillinger did not

demonstrate that the commissions, paid to related parties, were at

arm's-length. Based on our verification of Dillinger's home market

sales response, we made adjustments on certain sales to Dillinger's

reported indirect selling expenses and weight conversion factors.

We also increased NV by U.S. packing costs in accordance with

section 773(a)(6)(A) of the Act. We made adjustments to NV for

differences in cost attributable to differences in physical

characteristics of the merchandise, pursuant to section

773(a)(6)(C)(ii) of the Act. In accordance with the Department's

practice, where for the most similar product match the difference in

merchandise adjustment for any product comparison exceeded 20 percent,

we based NV on CV.

As set forth in section 773(a)(1)(B)(i) of the Act and in the

Statement of Administrative Action (SAA) at pages 829-831, to the

extent practicable, the Department will calculate normal values based

on sales at the same level of trade as the U.S. sales. When the

Department is unable to find sales in the comparison market at the same

level of trade as the U.S. sale(s), the Department may compare sales in

the U.S. and foreign markets at different levels of trade. See, Final

Determination of Sales at Less Than Fair Value: Certain Pasta from

Italy (61 Fed. Reg. 30326, June 14, 1996) (``Pasta from Italy'').

In accordance with section 773(a)(7)(A), if sales at different

levels of trade are compared, the Department will adjust the normal

value to account for the difference in level of trade if two conditions

are met. First, there must be differences between the actual selling

functions performed by the seller at the level of trade of the U.S.

sale and the level of trade of the normal value sale. Second, the

differences between the levels of trade must affect price comparability

as evidenced by a pattern of consistent price differences between sales

at the different levels of trade in the market in which normal value is

determined.

In its questionnaire responses, Dillinger stated that there were no

differences in its selling activities by customer categories within

each market. In order to independently confirm the absence of separate

levels of trade within or between the U.S. and home markets, we

examined Dillinger's questionnaire responses for indications that

Dillinger's function as a seller differed among customer categories.

Pursuant to section 773(a)(1)(B)(i) of the Act, and the SAA at 827, in

identifying levels of trade for directly observed (i.e., not

constructed) export price and normal values sales, we considered the

selling functions reflected in the starting price, before any

adjustments. Where possible, we further examined whether each selling

function was performed on a substantial portion of sales. (See Proposed

Rulemaking, (61 Fed. Reg. at 7348)).

Dillinger sold to end-users in the U.S. market. In the home market,

Dillinger sold to two categories of customers and performed the same

selling functions between sales to all its home market customers, as

well as to U.S. customers. Thus, our analysis of the questionnaire

response leads us to conclude that sales within each market and between

markets are not made at different levels of trade. Accordingly, we

preliminarily find that all sales in the home market and the U.S.

market are made at the same level of trade. Therefore, all price

comparisons are at the same level of trade and an adjustment pursuant

to section 773(a)(7)(A) is unwarranted.

Further, we added U.S. commissions to NV, and because we disallowed

all home market commissions (because as noted above Dillinger did not

demonstrate that the commissions paid to related parties were at arm's

length), we deducted from NV the lesser of either (1) the amount of

commission paid on a U.S. sale for a particular product, or (2) the

amount of indirect selling expenses incurred on the home market sales

for a particular product.

Cost of Production Analysis

Based on the fact that the Department had disregarded sales in the

LTFV investigation (the most recently completed investigation/review of

Dillinger at the time of initiation in this review) because they were

made below the cost of production (COP), the Department found

reasonable grounds in this review, in accordance with section

773(b)(2)(A)(ii) of the Act, to believe or suspect that respondent made

sales in the home market at prices below the cost of producing the

merchandise. As a result, the Department initiated an investigation to

determine whether the respondent made home market sales during the POR

at prices below their COP within the meaning of section 773(b) of the

Act.

Before making any fair value comparisons, we conducted the COP

analysis described below.

A. Calculation of COP

We calculated the COP based on the sum of respondents' cost of

materials and fabrication for the foreign like product, plus amounts

for home market selling, general, and administrative expenses (SG&A),

and packing costs in accordance with section 773(b)(3) of the Act.

Based on our verification of Dillinger's cost response, we adjusted

Dillinger's reported COP to reflect certain adjustments to the cost of

manufacturing, general and administrative expenses, and indirect

selling expenses.

B. Test of Home Market Prices

We used the respondent's weighted-average COP, as adjusted (see

above), for the period July 1994 to June 1995. We compared the

weighted-average COP figures to home market sales of the foreign like

product as required under section 773(b) of the Act. In determining

whether to disregard home-market sales made at prices below the COP, we

examined whether (1) within an extended period of time, such sales were

made in substantial quantities, and (2) such sales were made at prices

which permitted the recovery of all costs within a reasonable period of

time. On a product-specific basis, we compared the COP to the home

market prices (not including VAT), less any applicable movement

charges, rebates, and global credits and debits.

C. Results of COP Test

Pursuant to section 773(b)(2)(C), where less than 20 percent of

respondent's sales of a given product were at prices less than the COP,

we did not disregard any below-cost sales of that product because we

determined that the below-cost sales were not made in ``substantial

quantities.'' Where 20 percent or more of a respondent's sales of a

given product during the POR were at prices less than the COP, we found

that sales of that model were made in ``substantial quantities,'' in

accordance with section 773(b)(2)(B) of the Act, and were not at prices

which would permit recovery of all costs within a reasonable period of

time, in accordance with section 773(b)(2)(D) of the Act. When we found

that below-cost sales had been made in ``substantial quantities'' and

were not at prices which would permit recovery of all costs within a

reasonable period of time, we disregarded the below-cost sales in

accordance with section 773(b)(1) of the Act. Where all sales of a

specific product were at prices

[[Page 51910]]

below the COP, we disregarded all sales of that product, and calculated

NV based on CV.

D. Calculation of CV

In accordance with section 773(e) of the Act, we calculated CV

based on the sum of respondents' cost of materials, fabrication, SG&A,

U.S. packing costs, interest expenses and profit as reported in the

U.S. sales database. In accordance with sections 773(e)(2)(A), we based

SG&A and profit on the amounts incurred and realized by the respondent

in connection with the production and sale of the foreign like product

in the ordinary course of trade, for consumption in the foreign

country. For selling expenses, we used the weighted-average home market

selling expenses. Based on our verification of Dillinger's cost

response, we adjusted Dillinger's reported CV to reflect adjustments to

cost of manufacturing, general and administrative expenses, and

indirect selling expenses. Where we compared CV to EP, we added U.S.

commissions to CV, and then we deducted from CV the lesser of either

(1) the amount of commission paid on a U.S. sale for a particular

product, or (2) the amount of indirect selling expenses incurred on the

home market sales for a particular product.

Currency Conversion

For purposes of the preliminary results, 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.

Section 773A(a) directs the Department to use a daily exchange rate in

order to convert foreign currencies into U.S. dollars, unless the daily

rate involves a ``fluctuation.'' In accordance with the Department's

practice, we have determined as a general matter that a fluctuation

exists when the daily exchange rate differs from a benchmark by 2.25

percent. The benchmark is defined as the rolling average of rates for

the past 40 business days. When we determined a fluctuation existed, we

substituted the benchmark for the daily rate. However, for the

preliminary results in this review we have not determined that a

fluctuation exists, and we have not substituted the benchmark for the

daily rate.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that no

margin exists for AG der Dillinger Huttenwerke during the period 8/1/

94-7/31/95.

Parties to the proceeding may request disclosure within five days

of the date of publication of this notice. Any interested party may

request a hearing within 10 days of publication. Any hearing, if

requested, will be held 44 days after the date of publication or the

first business day thereafter. Case briefs and/or other written

comments from interested parties may be submitted not later than 30

days after the date of publication. Rebuttal briefs and rebuttals to

written comments, limited to issues raised in those comments, may be

filed not later than 37 days after the date of publication of this

notice. The Department will publish the final results of this

administrative review, including its analysis of issues raised in any

written comments or at a hearing, not later than 180 days after the

date of publication of this notice.

The following deposit requirements will be effective upon

publication of the final results of this antidumping duty review for

all shipments of certain cut-to-length carbon steel plate from Germany,

entered, or withdrawn from warehouse, for consumption on or after the

publication date, as provided by section 751(a) of the Tariff Act: (1)

The cash deposit rate for the reviewed company will be that established

in the final results of review; (2) for exporters not covered in this

review, but covered in the LTFV investigation or a previous review, the

cash deposit rate will continue to be the company-specific rate from

the LTFV investigation; (3) if the exporter is not a firm covered in

this review, a previous review, or the original 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; (4)

the cash deposit rate for all other manufacturers or exporters will

continue to be 36.00 percent, the ``All Others'' rate made effective by

the LTFV investigation. These requirements, when imposed, shall remain

in effect until publication of the final results of the next

administrative review.

This notice serves as a preliminary reminder to importers of their

responsibility under 19 CFR 353.26 to file a certificate regarding the

reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are published in accordance

with section 751(a)(1) of the Act and 19 CFR 353.22.

Dated: September 25, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-25539 Filed 10-3-96; 8:45 am]

BILLING CODE 3510-DS-P