Stainless Steel Bar From India: Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-810]

Stainless Steel Bar From India: 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.

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SUMMARY: On November 10, 1997, the Department of Commerce published the

preliminary results of the second administrative review of the

antidumping duty order on stainless steel bar from India. We gave

interested parties an opportunity to comment on the preliminary

results. Based on our analysis of the comments received, we have made

certain changes for the final results.

This review covers one producer/exporter of stainless steel bar to

the United States during the period February 1, 1996, through January

31, 1997. The review indicates the existence of dumping margins during

the review period.

EFFECTIVE DATE: March 20, 1998.

FOR FURTHER INFORMATION CONTACT: Craig Matney or Zak Smith, Import

Administration, AD/CVD Enforcement Group I, Office 1, U.S. Department

of Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C.

20230; telephone (202) 482-1778 or 482-1279, respectively.

Applicable Statute and Regulations

The Department of Commerce is conducting this administrative review

[[Page 13623]]

in accordance with section 751 of the Tariff Act of 1930, as amended.

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 by the Uruguay Round

Agreements Act. In addition, unless otherwise indicated, all citations

to the Department's regulations are to those codified at 19 CFR part

353 (April 1997).

SUPPLEMENTARY INFORMATION:

Background

On November 10, 1997, the Department of Commerce (``the

Department'') published the preliminary results of the administrative

review of the antidumping duty order on stainless steel bar from India

(62 FR 10540) (``preliminary results''). The manufacturer/exporter in

this review is Mukand Limited (``Mukand'' or ``respondent''). We

received comments from the respondent and rebuttal comments from the

petitioners (Al Tech Specialty Steel Corp., Carpenter Technology Corp.,

Crucible Specialty Metals Division, Crucible Materials Corp.,

Electralloy Corp., Republic Engineered Steels, Slater Steels Corp.,

Talley Metals Technology, Inc. and the United Steelworkers of America

(AFL-CIO/CLC)).

In their December 18, 1997, rebuttal comments, petitioners argue

that the respondent's case brief should be removed from the record

because it failed to comply with the Department's requirements for

obtaining extensions. Specifically, the petitioners claim that the

respondent's letter requesting the extension did not present sufficient

specificity regarding the rationale for the extension in order to meet

the Department's ``good cause'' standard for extension.

We have determined that respondent sufficiently justified its

extension request. Therefore, we did not reject the respondent's brief

as untimely. We agree that the respondent's original letter requesting

the extension lacked extensive explanation of the reasons for the

request. However, the Department requested and received a more

extensive explanation from the respondent before deciding to accept the

respondent's brief (see December 12, 1997, Memorandum from Craig W.

Matney to File). We also note that the petitioners did not file a case

brief by the original deadline and were offered the opportunity to file

a case brief by the extended deadline; thus their position was not

prejudiced by the respondent's delayed filing.

Scope of the Review

For purposes of this administrative review, the term ``stainless

steel bar'' means articles of stainless steel in straight lengths that

have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or

otherwise cold-finished, or ground, having a uniform solid cross

section along their whole length in the shape of circles, segments of

circles, ovals, rectangles (including squares), triangles, hexagons,

octagons, or other convex polygons. Stainless steel bar includes cold-

finished stainless steel bars that are turned or ground in straight

lengths, whether produced from hot-rolled bar or from straightened and

cut rod or wire, and reinforcing bars that have indentations, ribs,

grooves, or other deformations produced during the rolling process.

Except as specified above, the term does not include stainless

steel semi-finished products, cut length flat-rolled products (i.e.,

cut length rolled products which if less than 4.75 mm in thickness have

a width measuring at least 10 times the thickness or if 4.75 mm or more

in thickness have a width which exceeds 150 mm and measures at least

twice the thickness), wire (i.e., cold-formed products in coils, of any

uniform solid cross section along their whole length, which do not

conform to the definition of flat-rolled products), and angles, shapes

and sections.

The stainless steel bar subject to this administrative review is

currently classifiable under subheadings 7222.11.0005, 7222.11.0050,

7222.19.0005, 7222.19.0050, 7222.20.0005, 7222.20.0045, 7222.20.0075,

and 7222.30.0000 of the Harmonized Tariff Schedule of the United States

(``HTSUS''). Although the HTSUS subheadings are provided for

convenience and customs purposes, our written description of the scope

of this order is dispositive.

Interested Party Comments

In accordance with 19 CFR 353.38, we invited interested parties to

comment on our preliminary results. We received written comments from

the petitioners and the respondent. Based on our analysis of the

comments received, we have made certain corrections that changed our

results (see Comments 2 and 5).

Comment 1: Department's Correction of Home Market Sales Data

The respondent contends that the Department incorrectly increased

the gross unit price on several home market sales used in the margin

calculation. According to the respondent, the warehousing customer

surcharge, which was purportedly the Department's reason for the

increase, was already included in the gross price for the sales in

question because they occurred after November 1, 1996. The respondent

states that, for consignment sales after this date, warehousing charges

were included in the gross price, rather than invoiced as a separate

charge as was the previous practice. Mukand argues that the Department

verified that there were no separate warehouse charges for these sales

because they did not appear on the invoices which the Department

examined (see November 20, 1997, Verification Report, Exhibit 7) and

Mukand did not add these charges to gross unit price in Mukand's

changes to its sales listing which it provided at the beginning of

verification (see Verification Exhibit 1).

The petitioners state that the Department found at verification

that Mukand failed to include the warehouse charge on the sales and,

thus, properly adjusted its calculations in the preliminary results.

The petitioners state that a comparison of Mukand's June 4, 1997, home

market sales submission with its September 22, 1997, home market sales

submission shows that Mukand failed to increase gross unit price for

the amount shown in the earlier submission's warehouse expense field

for these sales.

Department's Position. In these final results, we have continued to

increase the gross unit price for several specific sales by the

warehouse charge that had been listed in the warehousing expense field

(DISWARH) in Mukand's earlier submission because we find Mukand's

argument to be inconsistent with the explanation the company provided

at verification.

Mukand listed an amount in the DISWARH field in its questionnaire

response for the sales in question. At verification, Mukand explained

that it had listed income received from the warehousing surcharge

erroneously as an expense in the DISWARH field and it would correct

this by removing the amount from the DISWARH field and adding it to the

gross unit price in its post-verification data submission. However, in

its post-verification submission it did not list the amounts in

question either in the DISWARH field or as an addition to gross unit

price for the sales in question even though, at verification, Mukand

had explained that it had added an amount to the gross unit price. As a

result, for our preliminary results, we added the amount to gross unit

price.

In its case brief Mukand stated, for the first time, that it had

changed its

[[Page 13624]]

invoicing policy which affected sales after November 1, 1996.

Identifying this change at such a late stage of the review does not

give the Department the opportunity to analyze and verify the position

Mukand is now advocating with respect to the above-referenced sales.

Therefore, we have not changed our calculation of normal value from

that in our preliminary results.

Comment 2: Addition of Interest Revenue to Home Market Price in

Calculating CV Profit

The respondent claims that the addition of interest revenue earned

from late payments to its home market prices when calculating

constructed value (``CV'') profit is erroneous because the sale revenue

and the interest revenue are two separate transactions. Furthermore,

Mukand maintains, if the Department includes such interest revenue in

the profit calculation, the rate Mukand charges for late payment should

be offset by its short-term cost of borrowing. The respondent also

argues that the revenue from late payment charges is included in its

net interest costs and, thus, by including this charge in total

revenue, the Department double-counted interest earned from late

payments. Finally, respondent states that comparing U.S. sales, where

its customers pay within the stated payment terms, to a CV that

includes interest for late payments is not an ``apples-to-apples''

comparison.

The petitioners counter that the interest revenue Mukand earned

from late payments originate from the same transaction as the revenue

from the sale and thus should be included in the total sales revenue

used to calculated CV profit. The petitioners assert that revenues from

late-payment charges are actually reflected in the respondent's

accounting records, while imputed credit expenses are not. The

petitioners contest the respondent's claim that the interest it earned

from late payments was double-counted. They state that interest revenue

was included in the calculation only as an offset to interest expenses.

Lastly, the petitioners state that CV is the model-specific cost of the

U.S. product as if it were sold in the home market, and thus the

payment patterns of Mukand's U.S. customers are irrelevant.

Department's Position. Mukand's financial statements support its

assertion that it subtracted interest which it earned from the late

payments from its reported interest expense. Thus we have accounted for

such interest in Mukand's costs when calculating CV profit. Therefore,

we agree with the respondent that we double-counted this interest in

our preliminary results by including it in revenue when calculating CV

profit. We have adjusted our calculations accordingly.

Comment 3: Sales Used in Calculating CV Profit

The respondent claims that the Department improperly excluded

below-cost sales in the home market profit margin calculation it used

to determine CV profit. In support of this assertion the respondent

cites Torrington v. U.S., 19 ITRD 1673, 1676 (Fed. Cir. October 15,

1997), which states that below-cost sales can only be excluded from

foreign market value if they are deemed outside the ordinary course of

trade, and, according to the respondent, sales below-cost are not, on

their face, outside the ordinary course of trade.

The petitioners respond that the Department correctly excluded

below-cost sales from the calculation of CV profit in accordance with

Section 771(15)(A) of the Act, which states that below-cost sales are

to be considered outside the ordinary course of trade. Furthermore, the

petitioners cite the preamble to the Department's new regulations which

clarifies that, unlike old-law practice, all below-cost sales are to be

excluded from the calculation of CV profit (see 52 FR 27296, 27359 (May

19, 1997)). The petitioners also state that exclusion of below-cost

sales in the calculation of CV profit is consistent with recent

Department practice.

Department's Position. We agree with the petitioners that Section

771(15)(A) of the Act defines below-cost sales as out of the ordinary

course of trade. Therefore, it is appropriate to exclude them from the

CV profit calculation in accordance with section 773(e)(2) of the Act.

See, also, Section 773(b)(1) of the Act. The case cited by the

respondent is an old-law case and thus is not applicable to the instant

case. Therefore, we have continued to exclude below-cost sales in our

calculation of profit for CV.

Comment 4: CV Profit at Different Levels of Trade

Citing Antifriction Bearings from France, 62 FR 54043, 54063, the

respondent states that CV profit should be calculated on a level-of-

trade-specific basis. Citing the Department's preliminary results (see

62 FR 60482, 60483), the petitioners assert that the the respondent has

admitted and the Department verified that there is no difference in the

level of trade between the U.S. and home market and, thus, a single CV

profit ratio should be calculated.

Department's Position. The respondent did not claim and we did not

find a difference in the level of trade between the two markets (see

preliminary results at 60483). Thus, we have continued to use a single

CV profit rate calculated based on all foreign like products at the

single level of trade we found in the home market.

Comment 5: Reduction of CV Interest Expense

The respondent alleges that the Department double-counted its

interest expense by failing to remove the actual interest expenses

associated with its accounts receivable assets from the CV interest

factor while accounting for these expenses as a reduction from U.S.

price through an imputed credit deduction. The respondent states that

the Department should reduce the CV interest factor to account for the

percentage of total assets accounted for by accounts receivable. The

respondent claims that this is the Department's standard practice and

that the questionnaire erroneously neglected to inform the respondent

to make this adjustment.

The petitioners respond that the adjustment requested by the

respondent is inconsistent with the Department's policy as expressed in

the questionnaire.

Department's Position. We no longer allow a reduction to interest

expense to account for the percentage of total assets accounted for by

accounts receivable because we no longer include an amount for imputed

credit in the CV. However, we note that we did make an error in making

our circumstance-of-sale adjustments by not deducting home market

imputed expenses before adding U.S. imputed expenses and have adjusted

the calculations accordingly. See, e.g., Certain Stainless Steel Wire

Rods from France, 62 FR 7206, 7209 (February 18, 1997).

Comment 6: Duty Drawback

The respondent asserts that the Department, in Certain Welded

Carbon Standard Steel Pipes and Tubes from India (62 FR 47632

(September 10, 1997)) (``Pipes and Tubes''), found that the Indian

Passbook Scheme is a proper drawback program. Therefore, according to

the respondent, the only remaining question is whether the Passbook

Scheme credits it received were rebates for import duties on the raw

material used to produce bar for export. The respondent claims that

they were and, thus, the Department should have made an upward

adjustment to the U.S. price. Citing to the Department's verification

report, Mukand states that the

[[Page 13625]]

Department verified that its input costs were inclusive of import

duties. As an alternate drawback claim, Mukand provides a calculation

for the annual average per metric ton amount of duty paid on nickel,

chrome, and scrap and implies that the Department could use this as its

adjustment.

The petitioners maintain that Mukand has failed the Department's

two-part test for drawback claims because the respondent failed to

demonstrate that there is a direct link between the duties imposed and

those rebated or that it imported a sufficient amount of raw materials

to account for the drawback received. With regard to Mukand's alternate

claim, the petitioners state that Mukand has calculated this claim

based on trial balance amounts that include customs duties and

``other'' amounts; thus, according to petitioners, there is no way for

the Department to know the exact duties paid. Furthermore, the

petitioners contend, there is no way to determine whether these imports

were used for domestic or export production. Petitioners state that the

Department's denial of Mukand's drawback claim in the preliminary

results is consistent with the previous administrative review of this

order, citing Stainless Steel Bar from India: Preliminary Results of

Antidumping Administrative Review, 62 FR 10540, 10541 (March 7, 1997)

(``Stainless Steel Bar''), which explains the Department's policy for

granting such claims. Finally, the petitioners assert that the

Department found at verification that the drawback claim was based not

on Mukand's actual imports but rather on a theoretical amount of

imported billets. For all of these reasons petitioners contend that the

Department should not accept respondent's duty-drawback claim.

Department's Position. We disagree with Mukand that the Passbook

Scheme credits it received necessarily represent the duties imposed on

the imported raw material it used to produce bar for export. In fact,

Mukand did not calculate the credits it received based on the raw

materials it actually imported (i.e., nickel, chrome, and scrap) but,

rather, on a theoretical amount of a different product (i.e., stainless

steel billets) contained in the subject merchandise. See Verification

Report at 9 on the public record in room B-099 of the main Commerce

Department building. Because the credit was not calculated based on the

product actually imported, the import duty actally paid and the rebate

received are not directly linked. Therefore, Mukand has not met the

first part of the Department's test for making an upward adjustment to

U.S. price for duty-drawback.

When evaluating a duty-drawback program, the Department considers

whether the import duty and rebate are directly linked to, and

dependent upon, one another and whether the company claiming the

adjustment can show that there were sufficient imports of the imported

raw materials to account for the drawback received on the exported

product. Pipes and Tubes, 47634. The Court of International Trade has

upheld this test. See, e.g., Federal-Mogul Corp. v. United States, 862

F. Supp. 384, 409 (CIT 1994). While in Pipes and Tubes we did find that

the link between the import duties paid and the rebate was sufficient,

as noted above, such a link does not exist in the instant case. Because

we have not found a direct link in the instant case, we have not

considered whether Mukand met the second part of our standard.

Comment 7: Differing Selling Costs

The respondent suggests that, if the Department does not make a

duty-drawback adjustment for the Passbook Scheme, it should make an

adjustment for the different costs of selling due to the scheme. The

respondent claims that the Passbook Scheme lowers its input costs on

exports, thereby allowing it to charge a lower price on export sales.

The petitioners counter that the adjustment claimed by the respondent

has no basis in law and that there is no evidence on the record to

demonstrate that Mukand's inputs cost less for exports due to the

Passbook Scheme. The petitioners further assert that the Department

made a circumstance-of-sale adjustment for differences in selling costs

in the preliminary results and that no further adjustments are

necessary.

Department's Position. We agree with the petitioners. The statute

requires circumstance-of-sale adjustments for differences in selling

expenses. The adjustment requested by the respondent is for differences

in input costs, not selling expenses. We note that we include the

revenue Mukand received from the Passbook Scheme in the calculation of

CV as an offset to input costs.

Comment 8: Indirect Selling Expenses Deduction

The respondent claims that the Department incorrectly reduced U.S.

price by indirect selling expenses incurred outside of the United

States. The respondent states that this U.S. price reduction was not in

accordance with either Section 772(d)(1) of the Act or Department

practice as stated in Cold-Rolled Carbon Steel Flat Products from the

Netherlands, 62 FR 47418, 47419 (1997).

The respondent also asserts that the Department stated in its

preliminary results that the U.S. price should be reduced for indirect

selling expenses up to the amount of home market commissions less the

warehouse expenses incurred by Mukand's commissionaires. However, the

respondent claims, the Department stated that it did not have adequate

information to subtract the warehouse expenses from home market

commissions. The respondent asserts that the Department does have

adequate information to make this adjustment.

The petitioners state that the Department did not deduct indirect

selling expenses from U.S. price but, rather, calculated a commission

offset in accordance with section 353.56(c) of the Department's

regulations. The petitioners state that such an offset is consistent

with Department practice when commissions are paid on home market sales

but not on U.S. sales. In addition, the petitioners state that the

Department, in fact, has not stated on the record of this case that the

warehouse expenses incurred by Mukand's commissionaires should be

subtracted from home market commissions.

Department's Position. We calculated a commission offset in

accordance with section 353.56(b)(1) of the our regulations and our

practice. The section of the Act cited by the respondent, 772(d)(1),

applies to constructed export price calculations. In the instant case,

all of the transactions are export price sales; therefore this section

is not applicable.

With respect to the respondent's second point, that the home market

commissions should be reduced by an amount for the commissionaire's

warehousing expenses, the Department did not state in the preliminary

results that it lacked information to calculate such an offset.

Furthermore, no persuasive argument has been made that such an

adjustment is warranted. Thus, in these final results, we have not made

any adjustment to the commission offset for such charges.

Final Results of Review

As a result of this review, we determine that Mukand's weighted-

average dumping margin is 5.53 percent for the period February 1, 1996,

through January 31, 1997.

The results of this review shall be the basis for the assessment of

antidumping duties on entries of merchandise covered by the review and

for future deposits of estimated duties for the manufacturer/exporter

subject to this review. We have calculated an importer-

[[Page 13626]]

specific duty assessment rate based on the ratio of the total amount of

antidumping duties calculated for the examined sales made during the

period of review (``POR'') to the total value of subject merchandise

entered during the POR. Mukand did not provide entered value for these

export price sales. In order to estimate the entered value, we

subtracted international movement expenses (e.g., international

freight) from the gross sales value. This importer-specific rate will

be assessed uniformly on all entries made during the POR. The

Department will issue appraisement instructions directly to the Customs

Service.

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 of these

final results of this administrative review, as provided by section

751(a)(1) of the Act: (1) The cash deposit rate for Mukand will be 5.53

percent; (2) for companies not covered in this review, but covered in

previous reviews or the original less-than-fair-value investigation,

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 investigation,

but the manufacturer is, the cash deposit rate will be the most recent

rate established for the manufacturer of the merchandise; and (4) if

neither the exporter nor the manufacturer is a firm covered in this or

any previous review or the original investigation, the cash deposit

rate will be the ``all others'' rate of 12.45 percent established in

the final determination of sales at less than fair value (59 FR 66915,

December 28, 1994).

These deposit requirements will remain in effect until publication

of the final results of the next administrative review.

This notice also 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 the subsequent

assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective orders (``APOs'') of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d)(1). Timely written notification

of the 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 determination is issued and published in accordance with

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

Dated: March 10, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-7351 Filed 3-19-98; 8:45 am]

BILLING CODE 3510-DS-P