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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-810]

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From

the United Kingdom; Final Results of Antidumping Duty Administrative

Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review; certain hot-rolled lead and bismuth carbon steel products from

the United Kingdom.

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SUMMARY: On December 10, 1996, the Department of Commerce (the

Department) published the preliminary results of its administrative

review of the antidumping duty order on certain hot-rolled lead and

bismuth carbon steel products from the United Kingdom. The review

covers one manufacturer/exporter and the period March 1, 1995 through

February 29, 1996.

We gave interested parties an opportunity to comment on our

preliminary results. Based on our analysis of the comments received,

and the correction of certain clerical errors, we have changed the

results from those presented in the preliminary results of review.

EFFECTIVE DATE: March 17, 1997.

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

Import Administration, International Trade Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, NW.,

Washington, DC 20230; telephone: (202) 482-4733.

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).

SUPPLEMENTARY INFORMATION:

Background

On December 10, 1996, the Department published in the Federal

Register (61 FR 65022) the preliminary results of its administrative

review of the antidumping duty order on certain hot-rolled lead and

bismuth carbon steel products from the United Kingdom (58 FR 15324,

March 22, 1993). The Department has now completed the 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,

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 one manufacturer/exporter of certain hot-rolled

lead and bismuth steel products, British Steel Engineering Steels

limited (BSES), formerly United Engineering Steels Limited (UES), and

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

Duty Absorption

As part of this review, we are considering, in accordance with

section 751(a)(4) of the Act, whether BSES absorbed antidumping duties.

See the preliminary results of this review (61 FR 65022, December 10,

1996). For these final results of review, we find that antidumping

duties have been absorbed by BSES. For a further discussion of this

issue, see comments 1 and 2 below.

Analysis of the Comments Received

We gave interested parties an opportunity to comment on the

preliminary results of review. We received comments and rebuttal

comments from the petitioner, Inland Steel Bar Co., and BSES.

Comment 1: BSES contends that the Department lacks the authority to

conduct a duty absorption inquiry in this, the third administrative

review of this case, because the Act only permits such inquiries to be

made in the second and fourth administrative reviews after the order is

published.

Petitioner maintains that the Department was correct in conducting

this duty absorption inquiry. Petitioner contends that BSES ignores the

fact that, because this order was in effect on January 1, 1995, it is a

transition order under the Act. Petitioner argues that the issue date

for transition orders, as prescribed by the Act for the interpretation

of sunset-related deadlines, is not the date of the original Federal

Register publication, but rather the effective date of the World Trade

Organization (WTO) agreement, January 1, 1995. As support for its

argument, petitioner cites the URAA, Statement of Administrative Action

(SAA) in H.R. Doc. No. 316, 103d Cong., 2nd Sess. (1994) at 882.

Petitioner also contends that section 351.213(j) of the

Department's proposed antidumping regulations follows this timing

interpretation and provides that for transition orders, if requested,

the Department will make an absorption inquiry for administrative

reviews initiated in 1996. According to petitioner, the preamble to the

proposed antidumping regulations states explicitly that, for transition

orders, ``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.''

Department's Position: We disagree with BSES that the Department

lacks the authority to conduct a duty absorption inquiry in this

review. Because the order for the subject merchandise was in existence

as of the date the WTO agreement entered into force with respect to the

United States, it is deemed to be a transition order. See section

751(c)(6)(C) of the Act. See also the SAA at 882. With respect to

transition orders, section 351.213(j)(2) of the Department's proposed

antidumping regulations explains that the Department will conduct a

duty

[[Page 18745]]

absorption inquiry, if requested, beginning in the second year of

review of such orders. See 61 FR 7307, 7366 (February 27, 1996). The

preamble to the proposed antidumping regulations states that, for

transition orders, ``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.'' 61 FR 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. Because this review was initiated in 1996, the Department's

duty absorption is deemed to be undertaken in the second year of

review.)

Comment 2: BSES maintains that, if the Department declines to

terminate the absorption inquiry, it must find that BSES has not

absorbed antidumping duties. BSES further maintains that the existence

of dumping margins does not necessarily mean that duty absorption has

occurred. If this were the case, then the Department's obligation to

conduct an absorption review would be meaningless, and there would be

no need for a separate inquiry by the Department and the International

Trade Commission (ITC).

BSES further maintains that the question of liability for

antidumping duties is fundamentally different from the question of

absorption in that the absorption inquiry involves at least two very

distinct concepts that differentiate it from the ordinary dumping

analysis. First, the absorption inquiry is intended to provide

information to the ITC for consideration in a future sunset review. See

sections 751(a)(4) and 752(a)(1)(D) of the Act. Secondly, BSES

maintains that the Department should recognize that the small dumping

margins that BSES has not yet succeeded in eliminating are not evidence

of absorption.

BSES contends that, in determining whether a respondent's pricing

policies demonstrate an intent to pass on or absorb duties, the

Department may and should consider a respondent's sales prices in the

aggregate and thus should offset the sale-specific dumping margins

found in the review by the negative margins found in the review. BSES

notes that the Department's preliminary review results found that BSES

had a very low dumping margin and argues that the Department should

recognize that BSES's pattern of pricing shows that it has

conscientiously raised its prices and reduced its margin and thus has

not absorbed antidumping duties. BSES recognizes the Department's

traditional methodology of setting negative dumping margins at zero in

the calculation of the weighted-average dumping margin, but argues that

there is no policy reason to ignore negative margins in duty absorption

inquiries, and that there certainly is no such requirement in the

statute or regulations.

Petitioner maintains that, during the debates over the URAA, the

domestic industry pointed out that the full remedial impact of dumping

duties was not always reflected in the marketplace. Petitioner argues

that, although 19 CFR 353.26 (1994) prohibited an exporter from

reimbursing an importer of record for antidumping duties, nothing

prohibited a respondent from acting as an importer of record, and

thereby absorbing underpayment of duties. As a result, Congress amended

the statute to direct the Department to identify these instances of

duty absorption because they could be relevant in the Commission's

sunset review determination on the likelihood of continuing or

recurring material injury if an antidumping order is revoked.

Department's Position: We disagree with BSES. An investigation as

to whether there is duty absorption does not simply involve reading the

margin of the final results. As the Department noted in the preliminary

results of this review, the determination that duty absorption exists

is also based on the lack of any information on the record that the

first unrelated customer will be responsible for paying the duty that

is ultimately assessed. Absent such an irrevocable agreement between

the affiliated U.S. respondent and the first unrelated customer, there

is no basis for the Department to conclude that the duty attributable

to the margin is not being absorbed by the respondent.

This is an instance where the existence of a margin raises an

initial presumption that the respondent is, in fact, absorbing the

duty. As such, the burden of producing evidence to the contrary shifts

to the respondent. See Creswell Trading Co., Inc. v. United States, 15

F.3d 1054 (Fed. Cir. 1994). Here, the respondent has failed to place

evidence on the record in support of its position that it is not

absorbing the duties. Further, while the fact that respondent's margin

has fallen indicates that the level of dumping has decreased, it does

not indicate the absence of duty absorption in this review period, as

there is still a positive margin.

We disagree with BSES that negative and positive margins should be

aggregated. The Department treats so-called ``negative'' margins as

being equal to zero in calculating a weighted-average margin because

otherwise exporters would be able to mask their dumped sales with non-

dumped sales. See Final Determination of Sales at Less Than Fair Value;

Professional Electric Cutting Tools and Professional Electric Sanding/

Grinding Tools from Japan, 58 FR 30149 (May 26, 1993). It would be

inconsistent on one hand to calculate margins using positive margin

sales, which is the Department's practice, and then argue, in effect,

that there are no margins because credit should be given for nonmargin

sales. Thus, those sales which are used to determine whether there are

margins should also be used to determine whether there is duty

absorption.

Whether or not respondents ``intended'' to absorb duties is also

irrelevant to the Department's inquiry. The Act does not provide a

basis for the Department to render judgements on the intentions of

respondents, but instead to make an empirical finding as to whether

absorption is occurring.

Comment 3: Petitioner claims that some grades of scrap purchased by

BSES from its affiliated parties were not at arm's-length transaction

prices. If the scrap price from BSES's affiliated supplier is less than

the scrap price from its unaffiliated supplier, petitioner claims, it

is not an arm's-length transaction. To account for such grades that

were not at arm's-length prices, petitioner maintains that the

Department should increase BSES's total cost of production by the

difference between the price paid to affiliated parties and the price

paid to unaffiliated parties. Petitioner contends that the overall

average for all grades of scrap does not recognize that individual

grades of scrap may not have been purchased from affiliated parties in

an arm's-length transaction. As support for its argument, petitioner

cites 19 U.S.C.A. 1677b(f)(2) (1996 Supp.); also, Final Results of

Antidumping Duty Administrative Review; Dynamic Random Access Memory

Semiconductors of One Megabit or Above From the Republic of Korea, 61

FR 20216, 20221 (May 6, 1996); Final Results of Antidumping Duty

Administrative Review; Tapered Roller Bearings, Four Inches or Less in

Outside Diameter, and Certain Components Thereof, from Japan, 56 FR

65228, 65237 (December 16, 1991); and Final Determination of Sales at

Less Than Fair Value; Certain Granite Products From Italy, 53 FR 27187,

27193 (July 19, 1988).

BSES contends that scrap is not a uniform commodity with a single,

stable, established price. The market is

[[Page 18746]]

volatile, with prices varying from period to period and from supplier

to supplier. BSES claims that each month it and its suppliers assess

the market and negotiate the price for each grade of scrap to be

purchased in the coming month. The relationship does not affect the

negotiated price. BSES further claims that both affiliated and

unaffiliated suppliers sell to BSES in a tight cluster of prices that

hover closely to theoretical market price, which sometimes is slightly

higher than the average and sometimes slightly lower, but always

dictated by the going market price. BSES notes that, out of 21 grades

supplied by both affiliated and unaffiliated suppliers, affiliated

suppliers' average prices were higher for 12 of these grades and

unaffiliated suppliers higher for 9 grades. BSES maintains that the

affiliated scrap prices for many of the grades are understated, since

its most important affiliated suppliers do not include freight to

BSES's location in their prices while the unaffiliated suppliers sell

on a delivered basis. BSES notes that, where scrap sales were made on

an ex-factory basis, BSES included its freight expense in the material

cost used in the reporting of the cost of production and constructed

value (CV). BSES claims that petitioner has distorted its scrap data,

to conclude that the data show affiliated prices to be generally lower

than unaffiliated prices.

Department's Position: We agree with BSES that scrap purchases from

affiliated suppliers were made at arm's-length prices, and that

therefore no adjustment to scrap prices is warranted. As BSES notes,

the overall weighted-average price for all grades of scrap during the

fiscal year is somewhat higher from affiliated suppliers than from

unaffiliated suppliers. See memorandum to the file from Leon McNeill,

April 9, 1997.

Comment 4: Petitioner argues that, for the upcoming administrative

review, the Department should require respondent to allocate each

individual rebate over only those sales benefitting from the rebate

rather than over all sales.

BSES contends that no changes should be made to the Department's

analysis in either this review or future reviews.

Department's Position: Since this comment refers to an upcoming

administrative review of this order, it is not relevant to this review.

Therefore, for these final results, the Department has not taken any

action on this issue.

Comment 5: BSES argues that the Department failed to make a

circumstance-of-sale (COS) adjustment for home market imputed credit

expenses for CV comparisons. BSES notes that, in the preliminary

results, the Department added imputed U.S. credit expenses to the

foreign unit prices in dollars (FUPDOL). However, it failed to make a

corresponding adjustment for home market credit expenses by subtracting

such expenses from the CV. BSES suggests that the Department make this

correction by calculating separately a weighted-average imputed home

market credit expense in addition to the total actual direct selling

expenses, and then deducting the weighted average home market credit

expenses from CV. BSES maintains that the Department's normal value

calculation methodology recognizes that home market price includes all

cost and expenses, including imputed credit expense, since the

Department makes a COS adjustment for this expense in price-to-price

comparisons. Similarly, a COS adjustment is also required for CV, since

imputed credit expenses are included in CV. BSES cites section 773(e)

of the Act, which directs the Department to calculate CV as the sum of

actual expenses incurred in the manufacture of the product sold in the

United States, plus the actual selling expenses from the home market

sales file, plus general and administrative expenses (including net

interest expense), plus the actual profit realized on home market

sales. BSES argues that since the Department added imputed U.S. credit

to the FUPDOL, to ensure a fair comparison it must correspondingly

deduct home market credit from CV. BSES contends that the Department's

Office of Accounting has endorsed the methodology and it is also

reflected in the following cases: Final Results of Administrative

Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 61 FR

69067 (December 31, 1996) and Final Determination of Sales at Less Than

Fair Value; Large Newspaper Printing Presses from Japan (LNPPs from

Japan), 61 FR 38139, 38147-48 (July 23, 1996).

Petitioner argues that since the Department did not include home

market imputed credit in CV, it is not appropriate to deduct a home

market credit expense from CV. Petitioner notes that although the

Department has reached the opposite conclusion in several recent cases,

including LNPPs from Japan, as cited by BSES, it should apply the pre-

URAA policy of adjusting CV for imputed credit expenses.

Department's Position: We agree with BSES that a COS adjustment

should be made for home market imputed credit expenses in CV

comparisons. Under the URAA, for both COP and CV, the statute provides

that selling, general and administrative expenses be based on actual

amounts incurred by the exporter for production and sale of the foreign

like product. Consistent with section 773(a)(6) of the Act, adjustments

to normal value are appropriate where CV is the basis of normal value.

The Department uses imputed credit expenses to measure the effect of a

specific respondent's selling practices in the United States and the

comparison market. See Antifriction Bearings (Other Than Tapered Roller

Bearings) and Parts Thereof from France, Germany, Italy, Japan,

Singapore, and the United Kingdom; Final Results of Administrative

Reviews, 62 FR 2119-20 (January 15, 1997). Because export price is the

basis for United States price in this review, the adjustment entails

adding U.S. imputed credit to the CV, and subtracting home market

imputed credit from the CV. The U.S. imputed credit was added for the

preliminary results; for these final results, we have also subtracted

the home market imputed credit. See section 773(a)(6)(c)(iii) of the

Act.

Comment 6: BSES contends that the Department inadvertently deducted

the home market quantity adjustment twice at lines 149 and 321 of the

preliminary margin program.

Department's Position: We agree with BSES and have revised our

computer programming language accordingly for these final results of

review.

Comment 7: BSES argues that the Department erroneously applied a

conversion factor to U.S. credit insurance. BSES claims that, since

U.S. credit insurance is denominated in U.S. dollars, applying the

conversion factor is incorrect.

Department's Position: We agree with BSES and have revised our

computer programming language accordingly for these final results of

review.

Comment 8: BSES maintains that the Department erred in converting

U.S. packing from pounds sterling to U.S. dollars twice in calculating

the FUPDOL for both price-to-price and CV comparisons.

Department's Position: We agree with BSES and have revised our

computer programming language accordingly for these final results.

Comment 9: BSES claims that the Department misspelled the

commission offset variable in the preliminary margin program. As a

result, the commission offset was not applied to the FUPDOL for price-

to-price comparisons where the U.S. commissions are greater than or

equal to the home market indirect selling expenses.

Department's Position: We agree with BSES, and have revised our

computer

[[Page 18747]]

programming language accordingly for these final results.

Comment 10: Petitioner argues that the Department inadvertently

used the field MONTHU to establish the year for a concordance entry.

Department's Position: We agree with petitioner. Accordingly, for

these final results, we have revised our computer programming language

to make the appropriate clerical error correction.

Correction of Clerical Error

For the preliminary results, we failed to include direct selling

expenses, indirect selling expenses, and U.S. packing expenses in the

amount by which the profit ratio was multiplied in calculating CV

profit. For these final results, we have included these expenses in the

calculation of CV profit.

Final Results of Review

As a result of our review, we determine that the following

weighted-average margin exists:

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

Margin

Manufacturer/exporter Period of review (percent)

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

British Steel Engineering Steels Limited

(BSES)(formerly United Engineering Steels

Limited)................................. 3/1/95-2/29/96 4.56

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

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentage stated above. Because there is a concurrent review of the

countervailing duty order on the subject merchandise, final assessments

for BSES will reflect the final results of the countervailing duty

administrative review in accordance with 19 CFR 353.41(d)(iv). The

Department will issue appraisement instructions directly to the Customs

Service.

Furthermore, the following deposit requirements will be effective

upon publication of this notice of final results of 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 by section

751(a)(1) of the Act: (1) The cash deposit rate for the reviewed

company will be the rate listed above; (2) for previously reviewed or

investigated companies not listed above, the cash deposit rate 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 review, a

prior review, or the original less-than-fair-value (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 requirements shall remain in effect

until publication of the final results of the next administrative

review.

This notice serves as a final 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 subsequent assessment

of double antidumping duties.

Notification to Interested Parties

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification of

return/destruction of APO materials or conversion to judicial

protective order is hereby requested. Failure to comply with the

regulations and the terms of an APO is a sanctionable violation.

This administrative review and notice are in accordance with

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

Dated: April 9, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-9971 Filed 4-16-97; 8:45 am]

BILLING CODE 3510-DS-P