Certain Corrosion-Resistant Carbon Steel Flat Products From Japan: Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-588-824]

Certain Corrosion-Resistant Carbon Steel Flat Products From

Japan: Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, U.S.

Department of Commerce.

ACTION: Notice of Preliminary Results of the Antidumping Duty

Administrative Review of Certain Corrosion-Resistant Carbon Steel Flat

Products From Japan.

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SUMMARY: In response to requests from interested parties, the

Department of Commerce (the Department) is conducting an administrative

review of the antidumping duty order on certain corrosion-resistant

carbon steel flat products from Japan. This review covers one

manufacturer of the subject merchandise. The period of review (``POR'')

is August 1, 1996 through July 31, 1997.

We have preliminarily determined that sales subject to this review

have been made below normal value (``NV''). If these preliminary

results are adopted in our final results of these administrative

reviews, we will instruct the U.S. Customs Service to assess

antidumping duties based on the difference between the export price

(``EP'') and the NV.

EFFECTIVE DATE: September 8, 1998.

FOR FURTHER INFORMATION CONTACT: Doreen Chen, Stephen Jacques, or Rick

Johnson, Import Administration, International Trade Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, DC 20230; telephone: (202) 482-0413, 482-1391, or 482-3818,

respectively.

SUPPLEMENTARY INFORMATION:

[[Page 47466]]

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are to the provisions effective January 1,

1995, the effective date of the amendments made to the Act by the

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

indicated, all citations to the Department's regulations are to 19 CFR

part 351 (62 FR 27379, May 19, 1997).

Background

On July 19, 1993, the Department published in the Federal Register

(58 FR 37154) the antidumping duty orders on certain corrosion-

resistant carbon steel flat products from Japan.(``Final

Determination''). On August 13, 1997, Nippon Steel Corporation

(``NSC'') requested a review of its exports of corrosion-resistant

steel. On September 25, 1997, in accordance with section 751 of the

Act, we published a notice of initiation of administrative review of

this order for the period August 1, 1996 through July 31, 1997 (62 FR

50292).

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for completion of an administrative review if it

determines that it is not practicable to complete the review within the

statutory time limit of 365 days. On February 9, 1998 the Department

published a notice of extension of the time limit for the preliminary

results in the review to July 2, 1998. See Corrosion-Resistant Carbon

Steel Flat Products From Japan: Extension of Time Limit for Preliminary

Results of the Antidumping Duty Administrative Review, 63 FR 26144

(February 9, 1998). On May 12, 1998, the Department published a notice

of extension of the time limit for the preliminary results in the

review to August 31, 1998. See Corrosion-Resistant Carbon Steel Flat

Products From Japan: Extension of Time Limit for Preliminary Results of

the Antidumping Duty Administrative Review, 63 FR 26144 (May 12, 1998).

The Department is conducting this review in accordance with section

751(a) of the Act.

Scope of Reviews

This review of ``certain corrosion-resistant steel flat products''

covers flat-rolled carbon steel products, of rectangular shape, either

clad, plated, or coated with corrosion-resistant metals such as zinc,

aluminum, or zinc-, aluminum-, nickel-or iron-based alloys, whether or

not corrugated or painted, varnished or coated with plastics or other

nonmetallic substances in addition to the metallic coating, in coils

(whether or not in successively superimposed layers) and of a width of

0.5 inch or greater, or in straight lengths which, if of a thickness

less than 4.75 millimeters, are of a width of 0.5 inch or greater and

which measures at least 10 times the thickness or if of a thickness of

4.75 millimeters or more are 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 7210.30.0030,

7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000,

7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000,

7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090,

7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000,

7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500,

7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060,

and 7217.90.5090. Included are flat-rolled products of non-rectangular

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 are flat-rolled steel products either plated or coated with

tin, lead, chromium, chromium oxides, both tin and lead (``terne

plate''), or both chromium and chromium oxides (``tin-free steel''),

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

nonmetallic substances in addition to the metallic coating. Also

excluded are clad products in straight lengths of 0.1875 inch or more

in composite thickness and of a width which exceeds 150 millimeters and

measures at least twice the thickness. Also excluded are certain clad

stainless flat-rolled products, which are three-layered corrosion-

resistant carbon steel flat-rolled products less than 4.75 millimeters

in composite thickness that consist of a carbon steel flat-rolled

product clad on both sides with stainless steel in a 20%-60%-20% ratio.

The HTS item numbers are provided for convenience and Customs purposes.

The written description remains dispositive of the scope of this

review.

Verification

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

sales information provided by NSC, using standard verification

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

facilities and the examination of relevant sales and financial records.

Our verification results are outlined in the public versions of the

verification reports, which are on file with the Department in the

Central Records Unit, Room B-099.

Transactions Reviewed

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

required to determine the EP (or CEP) and NV of each entry of subject

merchandise. On November 18, 1997, respondent requested that it be

relieved from reporting certain information, e.g. price adjustments for

sales by NSC's affiliated manufacturers. Respondent argued that it

should not be required to report such information on sales by

affiliated manufacturers because these sales were not exported to the

United States and would not provide the most similar product matches to

the subject merchandise under review. See November 18, 1997 letter.

Therefore, respondent reported only matching characteristics, date of

sale, quantity and price for these sales.

The Department directed respondent to report sales by affiliated

resellers. See Department's September 19, 1997 antidumping

questionnaire and supplemental questionnaire dated January 15, 1998 at

p.1. In the response to the questionnaire, respondent stated that it

was unable to collect sales data from all affiliated resellers. See

Questionnaire Response, dated November 25, 1997 at p. B-6; Supplemental

Questionnaire Response dated February 12, 1998 at p. S-1-3. Respondent

only reported sales by one affiliated reseller. Id. The Department

asked respondent to further explain its inability to report sales by

affiliated resellers. See Second Supplemental Questionnaire dated April

14, 1998 at p. 1-2. Respondent elaborated concerning its inability to

report sales, its methodology in reporting certain transactions and the

impact of reporting resales on the dumping margin. See Second

Supplemental Questionnaire Response dated May 13, 1998 at pp. 1-14. The

Department preliminarily allowed this limited reporting for downstream

sales since we found adequate home market matches to U.S. sales. As

this issue involves proprietary information, please see the

Department's Decision Memorandum: Fourth Administrative Review of the

Antidumping Duty Order on Certain Corrosion-Resistant Carbon Steel Flat

Products from Japan for a complete explanation of this issue.

[[Page 47467]]

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 of this notice, (supra), and sold in

the home market during the period of review (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

most similar foreign like product on the basis of the characteristics

listed in Appendix V of the Department's September 19, 1997 antidumping

questionnaire. In making 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 subject merchandise to the United

States were made at less than fair value, we compared the EP to the NV,

as described in the ``United States Price'' and ``Normal Value''

sections of this notice. In accordance with section 777A(d)(2) of the

Act, we calculated monthly weighted-average prices for NV and compared

these to individual U.S. transaction prices.

United States Price

For calculation of the price to the United States, we used EP when

the subject merchandise was sold directly or indirectly to the first

unaffiliated purchaser in the United States prior to importation and

when constructed export price (CEP) was not otherwise warranted, based

on facts on the record.

The Department calculated EP for NSC based on packed, prepaid or

delivered prices to customers in the United States. We made adjustments

to the starting price, net of billing adjustments, for movement

expenses (foreign and U.S. movement, brokerage and handling, and U.S.

Customs duties), in accordance with section 772(c)(2) of the Act.

It is the Department's current practice normally to use the invoice

date as the date of sale; we may, however, use a date other than the

invoice date if we are satisfied that a different date better reflects

the date on which the exporter or producer establishes the material

terms of sale. See 19 CFR 351.401(i) (62 FR at 27411).

Accordingly, as allowed by the exception set forth in section

351.401(i) of the regulations, we used the date of order confirmation

as date of sale for all of NSC's sales in both the U.S. market and the

home market. Because in this review the date of order better reflects

the date on which the material terms of sale are established, we will

not use the date of invoice as the new regulations prescribe. We did

not use date of shipment as the date of sale, as reported by

respondent, because, we determined that date of shipment did not

represent the date on which the material terms of sale are established.

See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR at

27349.

Normal Value

The Department determines the viability of the home market as the

comparison market by comparing the aggregate quantity of home market

and U.S. sales. We found that respondent's quantity of sales in its

home market exceeded five percent of its sales to the United States for

the relevant class or kind of merchandise. Therefore, we have

determined that respondent's home market sales are viable. Moreover,

there is no evidence on the record supporting a particular market

situation in the exporting country that would not permit a proper

comparison of home market and U.S. prices. Therefore, we used home

market sales for purposes of comparison with sales of the subject

merchandise to the United States, pursuant to section 773(a)(1)(C) of

the Act. 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 usual commercial quantities

and in the ordinary course of trade, at the same level of trade as the

EP sale.

In accordance with section 773(a)(4) of the Act, we used CV as the

basis for NV when there were no above-cost contemporaneous sales of

identical or similar merchandise in the comparison market. We

calculated CV in accordance with section 773(e) of the Act. We included

the cost of materials and fabrication, SG&A expenses, and profit. In

accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses

and profit on the amounts incurred and realized by 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.

We used sales to affiliated customers only where we determined such

sales were made at arm's-length prices, i.e., at prices comparable to

prices at which the firm sold identical merchandise to unaffiliated

customers.

For the class or kind of merchandise under review, the Department

disregarded sales below the cost of production (``COP'') in the last

completed review as of the date of the issuance of the antidumping

questionnaire (see Certain Hot-Rolled Carbon Steel Flat Products,

Certain Cold-Rolled Carbon Steel Flat Products, and Certain Corrosion-

Resistant Carbon Steel Flat Products from Japan: Final Determinations

of Sales at Less Than Fair Value, 58 FR 37154 (July 9, 1993)). We

therefore had reasonable grounds to believe or suspect, pursuant to

section 773(b)(2)(A)(ii) of the Act, that sales of the foreign like

product under consideration for the determination of NV in this review

may have been made at prices below the COP. Pursuant to section

773(b)(1) of the Act, we initiated COP investigations of sales by

respondent in the home market.

We compared sales of the foreign like product in the home market

with the model-specific cost of production figure for the POR

(``COP''). In accordance with section 773(b)(3) of the Act, we

calculated the COP based on the sum of the costs of materials and

fabrication employed in producing the foreign like product plus

selling, general and administrative (SG&A) expenses and all costs and

expenses incidental to placing the foreign like product in condition

packed and ready for shipment. We revised respondent's reported G & A

expense ratio to include certain non-operating income and expense

items. We revised the reported transfer price of electricity obtained

from affiliates to reflect the market value paid to non-affiliates. The

market price was higher than the transfer price. See Memorandum to the

File: OA Analysis Memorandum for the Preliminary Results of Review,

August 31, 1998. In our COP analysis, we used home market sales and COP

information provided by the respondent in its questionnaire responses.

After calculating COP, we tested whether home market sales of

subject merchandise were made at prices below COP and, if so, whether

the below-cost sales were made within an extended period of time in

substantial quantities and at prices that did not permit recovery of

all costs within a reasonable period of time. Because each individual

price was compared against the POR-long average COP, any sales that

were below cost were also not at prices which permitted cost recovery

within a reasonable period of time. We compared model-specific COPs to

the reported home market prices less any applicable

[[Page 47468]]

movement charges, discounts, and rebates.

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

percent of a respondent's sales of a given model were at prices less

than COP, we did not disregard any below-cost sales of that model

because the below-cost sales were not made in substantial quantities

within an extended period of time. Where 20 percent or more of a

respondent's sales of a given model during the POR were at prices less

than the weighted-average COPs for the POR, we disregarded the below-

cost sales because they 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 were at prices which would not permit recovery of all

costs within a reasonable period of time in accordance with section

773(b)(2)(D) of the Act.

In accordance with section 773(a)(1)(B)(i) of the Act, where

possible, we based NV on sales at the same level of trade (``LOT'') as

the U.S. price. See the Level of Trade Section below.

The Department determined in the final determination of the most

recently completed segment of this proceeding in which NSC has

participated (Certain Hot-Rolled Carbon Steel Flat Products, Certain

Cold-Rolled Carbon Steel Flat Products, and Certain Corrosion-Resistant

Carbon Steel Flat Products From Japan: Final Determinations of Sales at

Less than Fair Value, 58 FR 37154, July 9, 1993) that it would be

inappropriate to resort directly to constructed value (CV), in lieu of

foreign market sales, as the basis for NV if the Department finds

foreign market sales of merchandise identical or most similar to that

sold in the United States to be outside the ``ordinary course of

trade.'' Therefore, we will match a given U.S. sale to foreign market

sales of the next most similar model when all sales of the most

comparable model are below cost. The Department will use CV as the

basis for NV only when there are no above-cost sales that are otherwise

suitable for comparison. Therefore, in this proceeding, when making

comparisons in accordance with section 771(16) of the Act, we

considered all products sold in the home market as described in the

``Scope of Review'' section of this notice, above, that were in the

ordinary course of trade for purposes of determining appropriate

product comparisons to U.S. sales. Where there were no sales of

identical merchandise in the home market made in the ordinary course of

trade to compare to U.S. sales, we compared U.S. sales to sales of the

most similar foreign like product made in the ordinary course of trade,

based on the characteristics listed in Sections B and C of our

antidumping questionnaire. This methodology is pursuant to the ruling

of the Court of Appeals for the Federal Circuit in CEMEX v. United

States, 133 F.3d 1098 (Fed Cir. 1998), and has been implemented to the

extent that the data on the record permitted.

For those models for which there was a sufficient quantity of sales

at prices above COP, we based NV on home market prices to unaffiliated

purchasers, in accordance with 19 CFR 351.403. Home market prices were

based on the packed, ex-factory or delivered prices to unaffiliated

purchasers in the home market.

We calculated the starting price net of discounts, rebates, and

post-sale adjustments, where applicable. We treated rebates that were

granted after the date of sale as post-sale price adjustments. The

Department allows post-sale price adjustments that reflect the

respondent's normal business practice. See Antifriction Bearings (Other

Than Tapered Roller Bearings) and Parts Thereof from France, et al.

(AFBs); Final Results of Antidumping Duty Administrative Review,

Partial Termination of Administrative Review, and Revocation in Part of

Antidumping Duty Orders, 60 FR 10900, 10930 (Feb. 28, 1995); Certain

Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-

Length Carbon Steel Plate from Canada: Final Results of Antidumping

Duty Administrative Review, 61 FR 13815, 13823 (March 28, 1996). At

verification, we examined documentation which adequately demonstrated

that the adjustments to rebates reflect respondent's normal course of

trade of conducting ongoing price negotiations with its HM customers.

In addition, we preliminarily determine that respondent has reported

rebates on a transaction-specific basis.

Although it is our general policy to allow rebates only when the

terms of sale are predetermined, the purpose of requiring respondent to

prove that the buyer was aware of the conditions to be fulfilled and

the approximate amount of the rebates at the time of the sale is to

protect against manipulation of the dumping margins by a respondent

once it learns that certain sales will be subject to review. See AFB's

at 10930; Certain Corrosion-Resistant Carbon Steel Flat Products and

Certain Cut-to-Length Carbon Steel Plate from Canada at 13823. In the

instant case, because we found that adjustments to rebates are part of

respondent's normal business practice, we are satisfied that respondent

is not engaged in the manipulation of dumping margins through the use

of rebates. For a further description of the Department's treatment of

these expenses, see the Analysis Memo, dated August 31 at p. 3.

We made adjustments, where applicable, for packing and movement

expenses in accordance with sections 773(a)(6)(A) and (B) of the Act.

We also made adjustments for differences in cost attributable to

differences in physical characteristics of the merchandise pursuant to

section 773(a)(6)(C)(ii) of the Act and for differences in

circumstances of sale (``COS'') in accordance with 773(a)(6)(C)(iii) of

the Act and 19 CFR 351.410. For comparison to EP, we made COS

adjustments by deducting home market direct selling expenses (credit,

royalties and warranty expenses) and adding U.S. direct selling

expenses (credit and warranty expenses). When comparisons were made to

EP sales on which commissions were paid, but no commissions were paid

on the foreign market sales, we made adjustments for home market

indirect selling expenses and inventory carrying costs to offset these

U.S. commissions pursuant to 19 CFR section 351.410(b) or 351.410(e).

Level of Trade (``LOT'')

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (``LOT'') as the EP or CEP transaction. The NV

LOT is that of the starting-price sales in the comparison market or,

when NV is based on constructed value (``CV''), that of the sales from

which we derive selling, general and administrative (``SG&A'') expenses

and profit. For EP, the U.S. LOT is also the level of the starting-

price sale, which is usually from exporter to importer.

To determine whether NV sales are at a different LOT than EP, we

examine stages in the marketing process and selling functions along the

chain of distribution between the producer and the unaffiliated

customer. If the comparison-market sales are at a different LOT, and

the difference affects price comparability, as manifested in a pattern

of consistent price differences between the sales on which NV is based

and comparison-market sales at the LOT of the export transaction, we

make an LOT adjustment under section 773(a)(7)(A) of the Act. See

Notice of Final Determination of Sales at Less Than Fair Value: Certain

Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731

(November 19, 1997).

[[Page 47469]]

In the present review, respondent claimed that only one LOT existed

and did not request a LOT adjustment. To evaluate LOTs, we examined

information regarding the distribution systems in both the U.S. and

home market, including the selling functions, classes of customer, and

selling expenses.

Respondent reported one LOT in the home market based on two classes

of customers: trading companies and end users. We examined the reported

selling functions and found that NSC provides the same selling

functions to its home market customers regardless of channel of

distribution. We preliminarily determine that the selling functions

between the reported channels are sufficiently similar to consider them

as one LOT in the comparison market.

NSC stated that it sells to one LOT in the United States: trading

companies. We compared the selling functions performed at the home

market LOT and the LOT in the United States and found them

substantially similar. Of the thirteen selling functions reported for

home market sales, twelve of the selling functions were identical to

U.S. sales. For a further discussion of the Department's LOT analysis,

see Memorandum to the File: Analysis Memorandum for the Preliminary

Results of Review, August, 31 1998.

Preliminary Results of Reviews

As a result of our reviews, we preliminarily determine the

weighted-average dumping margins for NSC for the period August 1, 1996

through July 31, 1997 is as follows:

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

Margin

Manufacturer/exporter Time period (percent)

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

NSC..................................... 8/1/96-7/31/97 1.93

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

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 30 days of publication. Any hearing, if

requested, will be held 37 days after the date of publication or the

first business day thereafter. Case briefs from interested parties may

be submitted not later than 30 days after the date of publication of

this notice. Rebuttal briefs, limited to issues raised in those briefs,

may be filed not later than 35 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 the

case and rebuttal briefs, not later than 120 days after the date of

publication of this notice.

Upon issuance of the final results of review, the Department shall

determine, and the U.S. Customs Service shall assess, antidumping

duties on all appropriate entries. In accordance with 19 CFR

351.212(b), we calculated an importer-specific ad valorem duty

assessment rate based on the ratio of the total amount of antidumping

duties calculated for the examined sales to the total customs value of

the sales used to calculate those duties. This rate will be assessed

uniformly on all entries of that particular importer during the POR.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise entered, or withdrawn from

warehouse, for consumption on or after the publication date, as

provided by section 751(a) of the Act: (1) the cash deposit rate for

NSC will be that established in the final results of review (except

that no deposit will be required for a firm with a zero or de minimis

margin, i.e., a margin less than 0.5 percent); (2) for merchandise

exported by manufacturers or exporters not covered in this review, but

covered in the LTFV investigation or previous review, the cash deposit

rate will continue to be the company-specific rate published for the

most recent segment; (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 the ``all others'' rates established in the LTFV

investigations, which was 40.19 percent for corrosion-resistant steel

products (see Final Determination, 58 FR 37154 (July 9, 1993)). 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 351.402(f) 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.

These results of the administrative review are issued and published

in accordance with sections 751(a)(1) and 777(i)(1)of the Act.

Dated: August 31, 1998.

Joseph A. Spetrini

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-24069 Filed 9-4-98; 8:45 am]

BILLING CODE 3510-DS-P