Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom; Preliminary Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

[A-412-810]

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From

the United Kingdom; Preliminary Results of Antidumping Administrative

Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review; certain hot-rolled lead and bismuth carbon steel

products from the United Kingdom.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on certain hot-

rolled lead and bismuth carbon steel products from the United Kingdom

in response to requests by respondent, British Steel Engineering Steels

Limited (BSES), and petitioner, Inland Steel Bar Company. This review

covers the period March 1, 1995 through February 29, 1996.

We have preliminarily determined that sales have been made below

normal value (NV). Interested parties are invited to comment on these

preliminary results. Parties who submit comments are requested to

submit with each comment (1) a statement of the issue and (2) a brief

summary of the comment.

EFFECTIVE DATE: December 10, 1996.

FOR FURTHER INFORMATION CONTACT:G. Leon McNeill or Maureen Flannery,

AD/CVD Enforcement, Import Administration, International Trade

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

Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-

4733.

SUPPLEMENTARY INFORMATION:

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 Round 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 FR 25130).

Background

The Department published in the Federal Register the antidumping

duty order on certain hot-rolled lead and bismuth carbon steel products

from the United Kingdom on March 22, 1993 (58 FR 15324). On March 4,

1996, we published in the Federal Register (61 FR 8238) a notice of

opportunity to request an administrative review of the antidumping duty

order on certain hot-rolled lead and bismuth carbon steel products from

the United Kingdom covering the period March 1, 1995 through February

29, 1996.

In accordance with 19 CFR 353.22(a)(1), BSES and the petitioner,

Inland Steel Bar Company, requested that we conduct an administrative

review of BSES's sales. We published a notice of initiation of this

antidumping duty administrative review on April 25, 1996 (61 FR 18378).

The Department is conducting this administrative review in accordance

with section 751 of the Act.

Scope of the Review

The products covered by this review are hot-rolled bars and rods of

nonalloy or other alloy steel, whether or not descaled, containing by

weight 0.03 percent or more of lead or 0.05 percent or more of bismuth,

in coils or cut lengths, and in numerous shapes and sizes. Excluded

from the scope of this review are other alloy steels (as defined by the

Harmonized Tariff Schedule of the United States (HTSUS) Chapter 72,

[[Page 65023]]

note 1 (f)), except steels classified as other alloy steels by reason

of containing by weight 0.4 percent or more of lead, or 0.1 percent or

more of bismuth, tellurium, or selenium. Also excluded are semi-

finished steels and flat-rolled products. Most of the products covered

in this review are provided for under subheadings 7213.20.00 and

7214.30.00.00 of the HTSUS. Small quantities of these products may also

enter the United States under the following HTSUS subheadings:

7213.31.30.00, 60.00; 7213.39.00.30, 00.60, 00.90; 7214.40.00.10,

00.30, 00.50; 7214.50.00.10, 00.30, 00.50; 7214.60.00.10, 00.30, 00.50;

and 7228.30.80.00. HTSUS subheadings are provided for convenience and

Customs purposes. The written description of the scope of this order

remains dispositive.

This review covers the subject merchandise manufactured by BSES,

and the period March 1, 1995 through February 29, 1996.

Duty Absorption

On May 17, 1996, the petitioner requested that the Department

determine whether antidumping duties had been absorbed by BSES during

the period of review (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 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 antidumping regulations

provides that the Department will make a duty absorption determination,

if requested, for any administrative review initiated in 1996 or 1998.

See 61 FR 7308, 7366 (February 27, 1996). The preamble to the proposed

antidumping 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 antidumping 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 determination 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 certain hot-rolled lead and bismuth carbon

steel products from the United Kingdom 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

determination during a review initiated in 1996. This being a review

initiated in 1996, we are making a duty-absorption determination as

part of this segment of the proceeding.

The statute provides for a determination on duty absorption if the

subject merchandise is sold in the United States through an affiliated

importer. In this case, BSES is itself the importer of record, i.e.,

the exporter and the importer are the same entity. Therefore, the

importer and the exporter are ``affiliated'' within the meaning of

751(a)(4). Furthermore, we have preliminarily determined that there is

a dumping margin for BSES on 50 percent of its U.S. sales during the

POR. In addition, we cannot conclude from the record that the

unaffiliated purchaser in the United States will pay the ultimately

assessed duty. Under these circumstances, therefore, we preliminarily

find that antidumping duties have been absorbed by BSES on 50 percent

of its U.S. sales.

United States Price

We based United States price on export price (EP), as defined in

section 772(a) of the Act, because the merchandise was sold directly by

the exporter to unaffiliated U.S. purchasers prior to the date of

importation and constructed export price was not indicated by other

facts of record. BSES reported that EP was based on packed, delivered

prices to customers in the United States. We made deductions, where

applicable, for foreign inland freight, FOB charges in the United

Kingdom, ocean freight, marine insurance, U.S. Customs duties,

brokerage and handling charges, merchandising processing fees, and U.S.

inland freight charges, in accordance with 19 CFR 353.41(d). We also

made an adjustment for invoice corrections (billing adjustments) made

after shipment.

BSES's sales in the United Kingdom and to the United States were

made in quantities of less than 25 metric tons and 25 metric tons or

more. As in all prior segments of the proceeding, where possible we

matched U.S. sales to U.K. sales within the same quantity group: 25

tons or more, or less than 25 tons. (See Final Determination of Sales

at Less Than Value; Certain Hot-Rolled Lead and Bismuth Carbon Steel

Products from the United Kingdom, 58 FR 6207, January 27, 1993; and

Preliminary Results of Antidumping Duty Administrative Review; Certain

Hot-Rolled Lead and Bismuth Carbon Steel Products from the United

Kingdom, 50 FR 10063, February 23, 1995.)

No other adjustments to EP were claimed or allowed.

Normal Value

In order to determine whether there was a sufficient volume of

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

we compared BSES's volume of home market sales of the foreign like

product to the volume of U.S. sales of the subject merchandise, in

accordance with section 773(a)(1)(B) of the Act. Because BSES'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 of the

subject merchandise, we determined that the home market provides a

viable basis for calculating NV for BSES.

Many of BSES's home market sales were made to affiliated original

equipment manufacturers (OEMs). It is the Department's practice, in

situations where home market sales are made to affiliated parties, to

determine whether sales to affiliated parties might be appropriate to

use as the basis of NV by comparing prices of those sales to prices of

sales to unaffiliated parties, on a model-by-model basis. See Final

Results of Antidumping Duty Administrative Reviews, Partial Termination

of Administrative Reviews, and Revocation in Part of Antidumping Duty

Orders; Antifriction Bearings (Other Than Tapered Roller Bearings) and

Parts Thereof from France, et al. 60 FR 10900, February 28, 1995. (See

preliminary notice for discussion.) Because BSES made home market sales

to affiliated OEMs during the POR, we tested these OEM sales to ensure

that, on average, the affiliated-party sales were made at arm's length.

To conduct this test, we compared the gross unit prices of sales to

affiliated and unaffiliated customers net of all movement charges,

direct selling expenses, invoice corrections, rebates and packing. As a

result of our arm's-length test, we disregarded sales to the affiliated

OEM customers in the home market because the prices charged to

affiliated customers were less than 99.5 percent of the prices charged

to

[[Page 65024]]

unaffiliated customers. We did not require respondent to provide

downstream sales by these customers because these customers further

manufactured the subject merchandise into merchandise not comparable to

the merchandise covered by the order. BSES also sold through affiliated

resellers to unaffiliated customers and reported these unaffiliated-

customer transactions. We used these unaffiliated transactions in our

determination of NV.

BSES did not report its home market sales of leaded rod produced by

Scunthorpe Rod Mill (SRM), an affiliated party, because it claimed that

such merchandise was not a match to its sales of leaded bar to the

United States. BSES provided a list of all SRM's potential products,

including their product characteristics and product identification

control numbers. In addition, BSES provided a theoretical sales file

that identified every leaded rod product that SRM could possibly have

produced or sold in each of the months of the POR. Upon examination of

this information, we determined that the leaded rod produced by SRM was

never the identical or most similar match to BSES's sales of leaded bar

to the United States during the POR.

Cost of Production Analysis

Pursuant to section 773(b) of the Act, in this review we initiated

a COP investigation of BSES. We did this because, in the administrative

review of BSES for the most recent period (as of the time our decision

to initiate a COP investigation was made), we disregarded from our

calculations BSES's home market sales found to be below the cost of

production (COP). See Final Results of Antidumping Administrative

Review; Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from

the United Kingdom, 60 FR 44009, August 24, 1995. Therefore, in

accordance with section 773(b)(2)(A)(ii) of the Act, the Department had

reasonable grounds to believe or suspect that sales below the COP may

have occurred during this review period.

Before making any NV comparisons, we conducted the COP analysis

described below.

A. Calculation of COP

We calculated the COP based on the sum of BSES's cost of materials

and fabrication employed in producing 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. We relied on the home market sales and COP information provided by

BSES in its questionnaire responses.

B. Test of Home Market Prices

After calculating COP, we tested whether home market sales of lead

and bismuth steel were made at prices below COP within an extended

period of time in substantial quantities, and whether such prices

permitted recovery of all costs within a reasonable period of time. We

compared the model-specific COP to the reported home market prices less

any applicable movement charges, rebates, and direct and indirect

selling expenses.

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 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

disregarded the below-cost sales because we determined that the below-

cost sales were made within an extended period of time in ``substantial

quantities'' in accordance with sections 773(b)(2) (B) and (C) of the

Act, and because, based on our comparisons of prices to weighted-

average COPs for the POR, we determined that the below-cost sales of

the product were at prices which would not permit recovery of all costs

within a reasonable period of time, as defined in section 773(b)(2)(D)

of the Act. Based on this test, we disregarded below-cost sales made by

BSES.

Price-to-Price Comparisons

Pursuant to section 777A(d)(2), we compared the EPs of individual

transactions to the monthly weighted-average price of sales of the

foreign like product where there were sales at prices above COP, as

discussed above. We based NV on packed, delivered prices to

unaffiliated purchasers in the home market. We made adjustments, where

applicable, in accordance with section 773(a)(6) of the Act. Where

applicable, we made adjustments to home market price for invoice

corrections, rebates, and inland freight. We also made a circumstance-

of-sale adjustment for differences in credit insurance and product

liability insurance expenses pursuant to section 773(a)(6)(C)(iii) of

the Act. Respondent claimed home market credit insurance expenses and

product liability insurance expenses as direct adjustments to NV. Since

such expenses are on a sale-by-sale basis and directly related to sales

of the foreign like product, we have treated these home market expenses

as direct selling expenses. U.S. credit insurance and product liability

insurance are U.S. direct selling expenses. Accordingly, we made the

circumstance-of-sale adjustments by adding the amounts of U.S. credit

insurance and product liability insurance for each U.S. sale to the NV,

and subtracting the home market amounts from NV. We also added U.S.

commissions for each U.S. sale to the NV. In order to adjust for

differences in packing between the two markets, we increased home

market price by U.S. packing costs and reduced it by home market

packing costs. Prices were reported net of value added taxes (VAT) and,

therefore, no deduction for VAT was necessary. We made adjustments,

where appropriate, for physical differences in merchandise in

accordance with section 773(a)(6)(C)(ii) of the Act.

Constructed Value

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

based on the sum of BSES's cost of materials and fabrication employed

in producing the subject merchandise, SG&A and profit incurred and

realized in connection with production and sale of the foreign like

product, and U.S. packing costs. In accordance with section

773(e)(2)(A), we based SG&A and profit on the amounts incurred and

realized by BSES in connection with the production and sale of the

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

in the foreign country. We used the costs of materials, fabrication,

and general and administrative expenses as reported in the CV portion

of BSES's questionnaire response. We used the U.S. packing costs as

reported in the U.S. sales portion of BSES's questionnaire response. We

based selling expenses and profit on the information reported in the

home market sales portion of BSES's questionnaire response. For selling

expenses, we used the average per-unit home market selling expenses of

home market sales of the foreign like product, exclusive of sales

disregarded under the cost test, weighted by the total quantity sold

for these sales. For actual profit, we first calculated the difference

between the home market sales value and home market COP, for all above-

cost home market sales of the foreign like product, exclusive of sales

disregarded under the cost test, and divided the sum of these

differences by the total home market COP for these sales. We then

multiplied this percentage by the COP for each U.S. model to derive an

actual profit.

[[Page 65025]]

Commission Offset

Because there are commissions on U.S. sales and not on home market

sales, we made an adjustment for indirect selling expenses in the home

market to offset the U.S. commissions, in accordance with 19 CFR

353.56(b)(1).

We based the commission offset amount on the amount of the home

market indirect selling expenses. We limited the home market indirect

selling expense deduction by the amount of the commissions incurred on

sales to the United States.

Preliminary Results of the Review

As a result of our comparison of EP and NV, we preliminarily

determine that the following weighted-average dumping margin exists:

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

Margin

Manufacturer/exporter Period (percent)

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

British Steel Engineering Steels Limited

(BSES) (formerly United Engineering

Steels Limited)........................ 3/1/95-2/29/96 2.84

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

Parties to the proceeding may request disclosure within 5 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 publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

briefs, may be filed not later than 37 days after the date of

publication. The Department will publish a notice of final results of

this administrative review, which will include the results of its

analysis of issues raised in any such comments.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between EP and NV may vary from the percentage stated

above. Upon completion of this review, the Department will issue

appraisement instructions directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative review for all

shipments of certain hot-rolled lead and bismuth carbon steel products

from the United Kingdom entered, or withdrawn from warehouse, for

consumption on or after the publication date, as provided for by

section 751(a)(2)(c) of the Act: (1) The cash deposit rate for the

reviewed company will be the rate established in the final results of

this review; (2) for merchandise exported by manufacturers or exporters

not covered in this review but covered in the original less-than-fair-

value (LTFV) investigation or a previous review, the cash deposit 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 or 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; and (4) for all other

producers and/or exporters of this merchandise, the cash deposit rate

shall be 25.82 percent, the ``all others'' rate established in the LTFV

investigation (58 FR 6207, January 27, 1993).

These deposit rates, when imposed, shall remain in effect until

publication of the final results of the next administrative review.

This notice also 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 in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)) and 19 CFR 353.22.

Dated: December 2, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-31250 Filed 12-9-96; 8:45 am]

BILLING CODE 3510-DS-P