Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From Germany: Final Results of Antidumping Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-811]

Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From

Germany: Final Results of Antidumping 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 April 6, 1999, the Department of Commerce published the

preliminary results of the administrative review of the antidumping

duty order on certain lead and bismuth carbon steel products from

Germany (64 FR 16703). This review covers Saarstahl AG, a manufacturer/

exporter of the subject merchandise to the United States, and the

period March 1, 1997, through February 28, 1998. We conducted a

verification of Saarstahl's antidumping duty questionnaire responses

and gave interested parties an opportunity to comment on the

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

the correction of certain data, we have revised our margin calculation;

however, the final results do not differ from the preliminary results.

The final results are listed below in the ``Final Results of Review''

section of this notice.

EFFECTIVE DATE: August 9, 1999.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Rebecca

Trainor, Office 2, AD/CVD Enforcement Group I, Import Administration,

Room B099, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, NW., Washington DC

20230; telephone (202) 482-4136, or 482-4007, respectively.

SUPPLEMENTARY INFORMATION:

Background

On April 6, 1999, the Department of Commerce (the Department)

published in the Federal Register the preliminary results of the 1997-

1998 administrative review of the antidumping duty order on certain

lead and bismuth carbon steel products from Germany (64 FR 16703)

(Preliminary Results). We conducted verification of Saarstahl AG's

(Saarstahl) antidumping duty questionnaire responses from April 27

through May 7, 1999, and issued our report on June 1, 1999 (see

Memorandum to the File: Sales and Cost of Production Verification)

(Verification Report). On June 17, 1999, and June 23, 1999, Ispat

Inland Inc. and USS/KOBE Steel Co. (the petitioners), and Saarstahl

submitted case and rebuttal briefs, respectively. Following the return

to the petitioners of their June 10, 1999, submission, which contained

untimely submitted factual information, on June 29, 1999, the

petitioners resubmitted their June 17, 1999, brief with references to

the June 10 submission redacted, in accordance with the Department's

instructions. Both parties withdrew their respective requests for a

hearing.

The Department has now completed its administrative review in

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

Act).

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Act are references

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 the regulations at 19 CFR part 351

(1998).

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 7213.20.00.00 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; 7213.31.60.00; 7213.39.00.30; 7213.39.00.60;

7213.39.00.90; 7213.91.30.00; 7213.91.45.00; 7213.91.60.00; 7213.99.00;

7214.40.00.10, 7214.40.00.30, 7214.40.00.50; 7214.50.00.10;

7214.50.00.30, 7214.50.00.50; 7214.60.00.10; 7214.60.00.30;

7214.60.00.50; 7214.91.00; 7214.99.00; 7228.30.80.00; and

7228.30.80.50. HTSUS subheadings are provided for convenience and

Customs purposes. The written description of the scope of this

proceeding is dispositive.

Duty Absorption

On April 28, 1998, the petitioners requested that the Department

determine whether antidumping duties had been absorbed during the

period of review (POR). Section 751(a)(4) of the Act provides for the

Department, if requested, to determine during an administrative review

initiated two or four years after the publication of the order, whether

antidumping duties have been absorbed by a foreign producer or

exporter, if the subject merchandise is sold in the United States

through an affiliated importer. In this case, Saarstahl sold to the

United States through an importer that is affiliated within the meaning

of section 751(a)(4) of the Act.

Section 351.213(j)(2) of the Department's regulations provides that

for transition orders (i.e., orders in effect on January 1, 1995), the

Department will conduct duty absorption reviews, if requested, for

administrative reviews initiated in 1996 or 1998. Because the order

underlying this review was issued prior to January 1, 1995, and this

review was initiated in 1998, a duty absorption determination in this

segment of the proceeding is necessary. As we have found that there is

no dumping margin for Saarstahl with respect to its U.S. sales, we have

also found that there is no duty absorption.

Changes Since the Preliminary Results

We have made the following changes from the preliminary results:

1. We included payment dates for certain home market sales that

were not included in the preliminary results, according to Saarstahl's

April 28, 1999, submission and the verification results. Accordingly,

we revised the imputed credit expenses for those sales.

2. We reallocated the materials, labor, and overhead costs reported

by Saarstahl, in accordance with our verification findings (see

Verification Report at pages 5-6). The reallocation did not change the

total cost of manufacturing reported. We used the computer programming

language

[[Page 43147]]

supplied by Saarstahl in its case brief to accomplish the reallocation.

3. We revised the reported depreciation, general and administrative

(G&A), and financial expense ratios to reflect corporate-wide costs,

rather than rolled products division expenses, based on our

verification findings.

4. We corrected the reported billing adjustments for two home

market sales, based on verification findings.

5. We added an early payment discount for one home market sale,

based on verification findings.

6. We revised the payment dates for certain home market and U.S.

sales to reflect the actual date Saarstahl received payment, based on

verification findings. Accordingly, we revised the imputed credit

expenses for those sales. (A separate issue concerning payment dates is

discussed below at Comment 5.)

7. We revised the reported home market and U.S. indirect selling

expenses to exclude bank fees reported separately.

8. We revised the arm's length test to affiliated customers to

account for level of trade in making affiliated to unaffiliated price

comparisons, in accordance with the Department's practice (see, e.g.,

Final Results and Partial Rescission of Antidumping Duty Administrative

Review: Certain Pasta From Turkey, 63 FR 68429, 68432, December 11,

1998). We also corrected an error in the programming language which

prevented the program from performing a complete comparison of

affiliated to unaffiliated customer prices. We did not make the

programming change suggested in Saarstahl's case brief at page 6, as we

determined that Saarstahl's proposal did not correct the error.

9. We revised the reported production quantity for one product,

based on our verification findings, for purposes of weight-averaging

the costs of production. See Comment 4 below for further discussion.

Interested Party Comments

Comment 1: Casting Type as a Product Matching Criterion

The petitioners contend that casting type--i.e., whether a product

is produced from bloom-cast billets or continuous cast billets--should

be included in the Department's model matching hierarchy as the second

most important criterion. The petitioners argue that the type of

casting has a much greater impact on cost and commercial value than any

of the remaining product characteristics, as indicated, according to

the petitioners, by Saarstahl's own cost information.

Saarstahl responds that the petitioners failed to introduce any

timely information concerning quantifiable physical differences between

bloom-cast and billet-cast products. Therefore, Saarstahl states that

the Department must maintain the determination made in the preliminary

results and decline to add casting type as a product matching

characteristic.

DOC Position: We disagree with the petitioners and we continue to

make product comparisons based on chemical composition, shape, cut

(i.e., coil or cut-to-length), size, and grade, as in our preliminary

results and in the underlying less-than-fair value (LTFV)

investigation.

As discussed in the preliminary results Model Match Methodology

Memorandum from the Team to Irene Darzenta Tzafolias, dated March 22,

1999 (Model Match Methodology Memorandum), for purposes of selecting

model match criteria, the Department normally relies on physical

characteristics of the merchandise that are identifiable and/or

quantifable (see, e.g., Notice of Preliminary Determination of Sales at

Less Than Fair Value and Postponement of Final Determination: Melamine

Institutional Dinnerware Products From Indonesia, 61 FR 43333, 43334,

August 22, 1996, and Notice of Preliminary Results of Antidumping Duty

Administrative Review: Porcelain-on-Steel Cookware From Mexico, 63 FR

1430, 1431, January 9, 1998). Casting type is a production method, not

a physical characteristic of the merchandise. As such, it is not an

appropriate criterion for inclusion in our model match methodology.

Throughout this segment of the proceeding, the petitioners have

argued that bloom casting makes the finished merchandise ``better.''

The physical characteristic that makes the product better, say

petitioners in their July 2, 1998, and August 6, 1998, letters, is the

more uniform distribution of lead and bismuth within the steel, and

enhanced manganese sulfide formation. In effect, the petitioners

contend that these factors, as apparently determined by the casting

method, are so important that they outweigh the shape, cut form, size,

and grade of the merchandise in determining the most similar match. We

find no basis on the record to support this contention.

No party has provided any information, nor did we find any evidence

at verification, to indicate that customers order products specifying,

among other things, lead and bismuth distribution and manganese sulfide

formation. No party has provided any timely information, nor did we

find any evidence at verification, that lead and bismuth distribution

and manganese sulfide formation are measured, quantified, and tracked

through the production process. Instead, the evidence on the record, as

we verified, shows that customers order the subject merchandise by

chemical composition (including grade), shape, cut form, and size. We

found no evidence that either casting type, lead and bismuth

distribution, or sulfide qualities were specified as part of a customer

order. The only link between a customer order specification and the

production process that we observed at verification was that, where

ultrasound testing of the billet was requested, Saarstahl had to

utilize a bloom cast billet (see Verification Report at pages 9-10).

There is no information on the record of this proceeding, however, that

a customer specification for ultrasound testing is equivalent to a

specification for bloom casting.

We recognize that bloom casting results in a higher cost for

producing the subject merchandise. However, a cost difference alone is

not a sufficient basis to establish a model matching characteristic. As

we noted in the last segment of the administrative review of the

companion antidumping duty order on the subject merchandise from the

United Kingdom, ``the creation of a product concordance inherently

relies upon the matching of significant physical characteristics, not

on cost groupings in a company's cost accounting system.'' (See, Notice

of Final Results of Antidumping Duty Administrative Review: Certain

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

Kingdom, 63 FR 18879, 18881, April 16, 1998.) Consistent with our usual

practice to compute weighted-average costs for identical (in terms of

the Department's matching characteristics) merchandise produced at

multiple production lines or facilities with different costs (see,

e.g., the Department's standard antidumping duty administrative review

questionnaire at page D-2), we have followed our preliminary results

methodology and calculated a weighted-average cost of bloom-cast and

billet-cast models with the same physical characteristics.

Comment 2: Casting Type of Saarstahl's U.S. Sales

The petitioners contend that Department practice considers the data

on mill test certificates to be definitive evidence of the physical

characteristics of the merchandise sold. Therefore, based on the

statement in the mill certificate that Saarstahl's U.S. sales

[[Page 43148]]

were produced from billets made from continuous cast blooms, the

petitioners argue that, in fact, the U.S. sales were produced from

continuous cast blooms. As such, the petitioners assert that the

Department should apply facts available in calculating the margins for

these sales due to the misreporting of the product and its attendant

costs. In the alternative, should the Department conclude that the

sales in question were actually produced from continuous cast billets,

rather than blooms, the petitioners contend that the Department should

disregard the U.S. sales in this review. According to the petitioners,

because the mill certificates indicate that the merchandise was made

from blooms, Saarstahl misled its customer as to the production of the

merchandise and provided it with an inferior product than that

indicated on each mill certificate. Thus, the petitioners continue, the

U.S. sales cannot form an appropriate basis for the calculation of a

dumping margin.

Saarstahl notes that its submissions in the course of this

proceeding and the Department's examination of this issue at

verification, including examination of production certificates, casting

records and production instructions, all conclusively confirm that

Saarstahl's U.S. sales were produced from continuous cast billets and

not bloom-cast billets. Saarstahl adds that the petitioners fail to

mention that directly below the statement in question on the mill test

certificates is a reduction ratio that shows that the merchandise could

not possibly have been made from blooms. Saarstahl continues that there

is no basis on the record to support the petitioners' bald assertion

that Saarstahl misled its customers about the nature of the

merchandise. Saarstahl states that it produced the merchandise using

its normal production process for leaded steels (i.e., billet-casting),

and that there is no evidence that Saarstahl's production from

continuous cast billets is in any way deficient or inferior.

DOC Position: We agree with Saarstahl. As Saarstahl notes, the

Department thoroughly examined this issue at verification. While the

mill certificates for the sales in question contain language that

suggests the sales were produced from blooms, as cited by the

petitioners, the same mill certificates also include the reduction

ratio, which, as Saarstahl states, provides a quantifiable measure of

the rolling process. As Saarstahl claimed and we verified, the

reduction ratio on the mill certificate indicates a billet-cast

product. All of the other evidence examined at verification, including

customer purchase orders, invoices, heat certificates, heat production

logs, and production ``recipes,'' showed that the sales were produced

from continuous cast billets (see Verification Report at pages 9-11).

In light of the substantial evidence in support of Saarstahl's

characterization of the U.S. sales as produced from continuous cast

billets, as opposed to the petitioners' reliance on a single line in

the mill certificate referencing continuous cast blooms, we conclude

that the U.S. sales were produced from continuous cast billets. Thus,

application of facts available in lieu of the use of the reported and

verified data, as urged by the petitioners, is not warranted in this

case.

We also find no factual basis on the record for the petitioner's

contention that, if the sales were not produced from blooms, Saarstahl

misled its customer. The customer's purchase order did not specify

production method. Further, none of the sales documentation reported

and reviewed at verification misrepresented the production of

Saarstahl's sales to its customer. As discussed previously, the bloom-

cast notation on the mill certificate is followed by the reduction

ratio, which shows that cast billets were used in the production

process. Thus, it appears that the customer received sufficient

information to determine if its specifications were met. We also found

no indication that Saarstahl's customer rejected the merchandise or

otherwise complained about the product for alleged misrepresentation.

In sum, there is no basis on the record to reject Saarstahl's reported

POR sales.

Comment 3: Adjusting Saarstahl's Costs for Over-reporting

Saarstahl states that, at verification, it demonstrated that it

over-reported certain costs of production because it reported costs

based on exchange rate loss estimates and imputed personnel expenses

for fringe benefits, as recorded in its cost accounting system.

According to Saarstahl, its actual expenses for these items were lower

than reported, as it experienced an exchange rate gain during the POR,

and its actual personnel expenses were lower than the imputed amount.

Therefore, Saarstahl contends that the Department should adjust its

costs downward to reflect these actual costs.

The petitioners respond that these adjustments should not be made

because they represent new information provided by Saarstahl for the

first time at verification. The petitioners state that these

adjustments are inconsistent with Saarstahl's own cost accounting

system and should be rejected.

DOC Position: We agree with the petitioners that the information is

untimely. While we successfully verified Saarstahl's costs, as reported

to the Department in a timely manner, the claimed adjustments between

the cost and financial accounting systems were never reported to the

Department prior to verification. Thus, these adjustments were not part

of the cost of production questionnaire response that was the subject

of verification.

Comment 4: Correction of Production Quantities for Weight-Averaging of

Costs

The petitioners state that, if the Department declines to include

casting method as a product characteristic, as discussed above, then it

should correct the reported production quantities used for the weight-

averaging of costs. The petitioners refer to the Department's finding

at verification that Saarstahl did not subtract the production

quantities of bloom-cast and secondary merchandise from the billet-cast

total, resulting in the double-counting of some products and the

understatement of costs in the weighted-average total. Accordingly, the

petitioners contend that the Department should adjust the production

quantities in calculating the weighted-average costs.

Saarstahl states that it properly reported its cost of production

based upon the explicit directions given by the Department. Saarstahl

claims that the Department's observation that, for sales sampled at

verification, Saarstahl over-reported the production quantity for

billet-cast products is not universally true for all of Saarstahl's

reported products. Should the Department combine and weight-average its

reported costs, as it did for the preliminary results, Saarstahl

contends that the Department should do so in a way that does not

negatively impact Saarstahl.

DOC Position: Although we stated in the Verification Report at

pages 18-19 that the double-counting of production quantities for a

billet-cast product observed at verification appeared to apply to all

of Saarstahl's billet-cast products, further analysis of the cost of

production data indicates that this situation is not necessarily the

case. For example, the cost of production data base includes products

where the reported production quantity for a bloom-cast product is

greater than the production quantity reported for a billet-cast product

with identical physical characteristics. Therefore, we have revised the

reported production quantity only for the product identified in the

Verification Report for which we

[[Page 43149]]

verified that the production quantity was double counted.

Comment 5: Bill of Exchange Payment Date

Saarstahl asserts that it properly reported the date it received a

bill of exchange from a home market customer as the payment date for

purposes of calculating imputed credit. Saarstahl states that a bill of

exchange is a negotiable monetary instrument that has a cash value on

the date of its receipt, thus Saarstahl's reporting of the bill receipt

in the same manner as a cash payment was proper.

DOC Position: We have made no changes to Saarstahl's reporting of

sales paid by a bill of exchange. Even if a bill of exchange receipt

were considered to be equivalent to a cash payment, in these particular

circumstances, there is no significant difference in calculating

imputed credit between Saarstahl's reporting method, which includes an

extra fee charged to the customer to account for either the extra

payment period or discounting of the bill at a bank (see Verification

Report at pages 23-24), and a methodology based on the actual date cash

was received. Therefore, for purposes of this review, we have made no

adjustment.

Final Results of the Review

As a result of this review, we have determined that the following

margins exist for the period March 1, 1997 through February 28, 1998:

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

Margin

Manufacturer/exporter Period (percent)

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

Saarstahl AG (Saarstahl)................... 3/1/97-2/28/98 0.00

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

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. We have

calculated an importer-specific assessment rate based on the ratio of

the total amount of antidumping duties calculated for the examined

sales to the total entered value of those same sales. This rate will be

assessed uniformly on all entries of that particular importer made

during the POR. The Department will issue appropriate appraisement

instructions directly to the Customs Service. In accordance with 19 CFR

351.106(c)(2), we will instruct the Customs Service to liquidate

without regard to antidumping duties all entries of the subject

merchandise during the POR for which the importer-specific assessment

rate is zero or de minimis (i.e., less than 0.50 percent).

Further, the following deposit requirements shall be effective for

all shipments of the subject merchandise from Germany that are entered,

or withdrawn from warehouse, for consumption on or after the

publication date of the final results of this administrative review, as

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

for Saarstahl will be the rate established above in the ``Final Results

of Review'' section; (2) for previously 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, or the original 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) the cash deposit rate for all other manufacturers

or exporters of this merchandise will continue to be 85.05 percent, the

all others rate established in the final determination of the LTFV

investigation (58 FR 6205, January 27, 1993).

The deposit requirements, when imposed, 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 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.

This notice serves as the only 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

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

This administrative review and notice are in accordance with

sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.

Dated: July 30, 1999.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 99-20449 Filed 8-6-99; 8:45 am]

BILLING CODE 3510-DS-P