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

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## Record

- **Collection:** Federal Register
- **Document type:** Notice
- **Published:** September 8, 1998
- **Citation:** 63 FR 47465

## Text

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.

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

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

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A98-24069. Public record. Not legal advice.