Vol. 60 No. 148 Wednesday, August 2, 1995 p 39355 (Notice) ---- page 39355 ---- International Trade Administration [A-428-814] Certain Cold-Rolled Carbon Steel Flat Products From Germany; Preliminary Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of Preliminary Results of Antidumping Duty Administrative Review. SUMMARY: In response to a request by the respondent, the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on Certain Cold-Rolled Carbon Steel Flat Products From Germany (A-428-814). The review covers sales from one manufacturer of the subject merchandise to the United States during the period August 18, 1993 through July 31, 1994. We have preliminarily determined that sales have been made below foreign market value (FMV). If these preliminary results are adopted in our final results of the administrative review, we will instruct U.S. Customs to assess antidumping duties equal to the difference between the United States price (USP) and FMV. Interested parties are invited to comment on these preliminary results. EFFECTIVE DATE: August 2, 1995. FOR FURTHER INFORMATION CONTACT: Steve Bezirganian or Robin Gray, Office of Agreements Compliance, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230, telephone: (202) 482-1395 or (202) 482-0196, respectively. SUPPLEMENTARY INFORMATION: Applicable Statute and Regulations Unless otherwise indicated, all citations to the statute and to the Department's regulations are references to the provisions as they existed on December 31, 1994. Background On July 9, 1993 the Department published in the Federal Register (58 FR 37136) the final affirmative antidumping duty determination on certain cold-rolled carbon steel flat products from Germany, for which we published an amendment and an antidumping duty order on August 19, 1993 (58 FR 44170). On August 3, 1994, the Department published the notice of ``Opportunity to Request an Administrative Review'' of this order for the period August 18, 1993 through July 31, 1994 (59 FR 39543). C.D. Walzholz, J.N. Eberle & Cie, GmbH, Rochlinger Kaltwalzwerk and Thyssen Stahl AG (Thyssen) requested an administrative review. We initiated the administrative review on September 8, 1994 (59 FR 46391). Subsequently, C.D. Walzholz, J.N. Eberle & Cie, GmbH, and Rochlinger Kaltwalzwerk requested that they be allowed to withdraw from the administrative review. On April 12, 1995, we published a ``Notice of Partial Termination of Administrative Review of Antidumping Order'' with respect to these three respondents (60 FR 18581). The Department is conducting this review in accordance with section 751 of the Tariff Act of 1930, as amended (the Tariff Act). Scope of the Review The products covered by this review include cold-rolled (cold- reduced) carbon steel flat-rolled products, of rectangular shape, neither clad, plated nor coated with metal, whether or not painted, varnished or coated with plastics or other nonmetallic substances, 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 HTS under item numbers 7209.11.0000, 7209.12.0030, 7209.12.0090, 7209.13.0030, 7209.13.0090, 7209.14.0030, 7209.14.0090, 7209.21.0000, 7209.22.0000, 7209.23.0000, 7209.24.1000, 7209.24.5000, 7209.31.0000, 7209.32.0000, 7209.33.0000, 7209.34.0000, 7209.41.0000, 7209.42.0000, 7209.43.0000, 7209.44.0000, 7209.90.0000, 7210.70.3000, 7210.90.9000, 7211.30.1030, 7211.30.1090, 7211.30.3000, 7211.30.5000, 7211.41.1000, 7211.41.3030, 7211.41.3090, 7211.41.5000, 7211.41.7030, 7211.41.7060, 7211.41.7090, 7211.49.1030, 7211.49.1090, 7211.49.3000, 7211.49.5030, 7211.49.5060, 7211.49.5090, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7217.11.1000, 7217.11.2000, 7217.11.3000, 7217.19.1000, 7217.19.5000, 7217.21.1000, 7217.29.1000, 7217.29.5000, 7217.31.1000, 7217.39.1000, and 7217.39.5000. Included in this review are flat-rolled products of nonrectangular 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 bevelled or rounded at the edges. Excluded from this review is certain shadow mask steel, i.e., aluminum-killed, cold-rolled steel coil that is open-coil annealed, has a carbon content of less than 0.002 percent, is of 0.003 to 0.012 inch in thickness, 15 to 30 inches in width, and has an ultra flat, isotropic surface. These HTS item numbers are provided for convenience and Customs purposes. The written description remains dispositive. The period of review (POR) is August 18, 1993 through July 31, 1994. This review covers sales of cold-rolled carbon steel by one manufacturer (Thyssen). United States Price The Department used exporter's sales price (ESP) because all sales to the first unrelated purchaser in the United States, whether before or after importation, met the requirements set forth by Section 772(c) of the Tariff Act. ESP was based on the packed prices at which the merchandise was sold under various terms to unrelated purchasers in the United States. We made adjustments, where applicable, for foreign inland freight, plant freight, ocean freight, marine insurance, brokerage and handling, U.S. inland freight, U.S. duty, U.S. credit, discounts, inventory carrying costs, technical service expenses, warranties, warehousing, and indirect selling expenses (which include interest on fixed assets, other U.S.-incurred selling expenses, and export selling expenses). We also adjusted ESP for value added in further manufacturing, including an allocation of profit earned on U.S. sales. We adjusted USP for taxes in accordance with our practice as outlined in various determinations, including Silicomanganese from Venezuela; Final Determination of Sales at Less Than Fair Value, 59 FR 55435, 55439 (November 7, 1994). At the German and U.S. verifications, Thyssen suggested various corrections to be made to its database. At verification, the Department accepted the changes because each change was minor and ministerial in nature. On May 12, 1995, the Department instructed Thyssen to make all of the changes to its database, excluding the change suggested by Thyssen for certain discounts, as explained below. On May ---- page 39356 ---- 22, 1995, Thyssen submitted a revised tape which incorporated these corrections. Based on a review of all of Thyssen's submissions and the Department's findings at verification, the Department determined that the revised May 22, 1995, tape contains the following problems: (1) the identification and deletion of what Thyssen characterized as ``duplicate'' invoices in a manner inconsistent with the changes suggested by Thyssen at verification; (2) unexplained changes to unshipped balances for one order; (3) changes to quantity of U.S. sales from Richburg, a division of Thyssen, Inc. (TINC), other than those suggested by Thyssen at verification, and other inconsistencies in the changes which Thyssen did suggest; (4) unexplained quantity and price changes for four observations; and (5) errors in the discount field for one U.S. customer. Due to these discrepancies we are unable to perform an accurate calculation for certain sales. Counsel for petitioners has argued that the Department should use total BIA in this case due to the deficiencies in Thyssen's response. We have determined, however, that resorting to total best information available (``BIA'') is not warranted because Thyssen's U.S. database is not sufficiently flawed such that the response as a whole is unreliable. See National Steel Corporation v. United States, 870 F. Supp. 1130, 1135 (CIT 1994); see also the July 20, 1995, decision memorandum from Richard O. Weible to Roland L. MacDonald. Instead, we used a margin based upon BIA only for those sales of U.S. products where we did not have complete and accurate information. The adversity of the information used as partial BIA depends upon the level of sufficiency of the information provided. When partial BIA is warranted, but the errors in the information submitted constitute a failure to provide the necessary data, the Department consistently applies adverse BIA. Id. (citing, inter alia, Certain Corrosion-Resistant Carbon Steel Flat Products From Finland, 58 Fed. Reg. 37,122, 37,124 (1993)). By contrast, when only a minor adjustment in the data is involved or there is an inadvertent gap in the record, we apply a less adverse or neutral surrogate. Nat'l Steel at 1136. Thyssen's revised database did contain unauthorized changes and other unexplained problems. However, the sales affected are minimal in quantity, and the apparent inaccuracies consist mostly of data-entry problems rather than omissions or insufficiencies in Thyssen's reporting. For these reasons, we have not applied the most adverse partial BIA. We have chosen as BIA Thyssen's weighted-average margin from the original investigation. We disallowed the exchange rate expense which Thyssen claimed due to unexplained changes in this expense in the May 22, 1995 submission. (See Analysis Memorandum to the File, June 16, 1995). Also, due to inaccurate and deficient information provided during the verification of product characteristics for one U.S. sale, we are assigning to that sale a margin based on BIA, as previously described. Further, Thyssen failed to report contemporaneous home market sales for 1992 requirements contract sales by the Budd Company, a related parts manufacturer. We have assigned these sales a margin based on BIA, as previously described (see Analysis Memorandum to the File, June 16, 1995). Finally, Thyssen failed to include in its database a storage/warehouse expense incurred by TINC on certain U.S. sales. We adjusted U.S. price to account for this expense, where appropriate (see Analysis Memorandum to the File, June 16, 1995). Also, due to errors noted at verification, we adjusted warehousing expense for the automotive division for both fiscal years. No other adjustments were claimed or allowed. Foreign Market Value Based on a comparison of the volume of home market and third country sales, we determined that the home market was viable. Therefore, in accordance with section 773(a)(1)(A) of the Tariff Act, we based FMV on the packed prices at which the merchandise was sold under various terms to related and unrelated purchasers in the home market. Based on a review of Thyssen's submissions and findings at verification, the Department determined that Thyssen need not report the home market sales made by Thyssen's related parties to the first unrelated party (downstream sales). The vast majority of the products sold by these related parties in the home market possessed physical characteristics that made them less similar to those imported into the United States than those sold directly by Thyssen to its related and unrelated home market customers in transactions suitable for matching purposes. The Department determined that only a small portion of the downstream sales could provide potential matches to the company's U.S. sales. Considering the burden that would have been required to report these sales relative to the potential utility of the sales, we determined that they need not be reported (see Analysis Memorandum to the File, June 16, 1995). Petitioners alleged that Thyssen sold cold-rolled carbon steel in the home market at prices below their cost of production (COP). Based on this allegation, the Department determined that it had reasonable grounds to believe or suspect that Thyssen had sold steel flat products in the home market at below cost prices. A cost investigation was therefore initiated in accordance with section 773(b) of the Tariff Act. As a result, we investigated whether Thyssen sold such or similar merchandise in the home market at prices below the COP. In accordance with 19 CFR 353.51(c), we calculated COP for Thyssen as the sum of reported materials, labor, factory overhead, and general expenses. We compared COP to home market prices, discounts, and movement expenses. Based on our verification of Thyssen's cost response, we made the following adjustments to its COP data: 1. We recalculated the allocation of the thirteenth month adjustment on the basis of costs reported in the unconsolidated Thyssen Stahl income statements for the respective fiscal years. 2. We reduced the claimed interest income offset by eliminating dividend income. 3. We recalculated net financing expense on a model-specific basis by applying the net financing expense ratio to the COM of each unique product. After computing COP, we compared the VAT-neutral product- specific COP to the VAT-neutral reported prices net of movement charges and discounts. In accordance with section 773(b) of the Tariff Act, in determining whether to disregard home market sales made at prices below the COP, we examined whether such sales were made in substantial quantities over an extended period of time, and whether such sales were made at prices which permitted recovery of all costs within a reasonable period of time in the normal course of trade. To satisfy the requirement of Section 773(b)(1) that below cost sales be disregarded only if made in substantial quantities, we applied the following methodology. For each model for which less than 10 percent, by quantity, of the home market sales during the POR were made at prices below COP, we included all sales of that model in the computation of FMV. For each model for which 10 percent or more, but less that 90 percent, of the home market sales during the POR were priced below COP, we excluded those sales priced ---- page 39357 ---- below COP, provided that they were made over an extended period of time. For each model for which 90 percent or more of the home market sales during the POR were priced below COP and were made over an extended period of time, we disregarded all sales of that model in our calculation and, in accordance with section 773(b) of the Tariff Act, we used the constructed value (CV) of those models, as described below. See, e.g., Mechanical Transfer Presses from Japan, Final Results of Antidumping Duty Administrative Review, 59 FR 9958 (March 2, 1994). In accordance with section 773(b)(1) of the Tariff Act, to determine whether sales below cost had been made over an extended period of time, we compared the number of months in which sales below cost occurred for a particular model to the number of months in which that model was sold. If the model was sold in fewer than three months, we did not disregard below-cost sales unless there were below-cost sales of that model in each month sold. If a model was sold in three or more months, we did not disregard below-cost sales unless there were sales below cost in at least three of the months in which the model was sold. See Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From Japan and Tapered Roller Bearings, Four Inches or Less in Outside Diameter, and Components Thereof, From Japan; Final Results of Antidumping Duty Administrative Reviews, 58 FR 64720, 64729 (December 8, 1993). Because Thyssen provided no indication that its below-cost sales of models within the ``greater than 90 percent'' and the ``between 10 and 90 percent'' categories were at prices that would permit recovery of all costs within a reasonable period of time and in the normal course of trade, we disregarded those sales of models within the ``10 to 90 percent'' category which were made below cost over an extended period of time. In addition, as a result of our COP test for home market sales of models within the ``greater than 90 percent'' category, we based FMV on CV for all U.S. sales for which there were insufficient sales of the comparison home market model at or above COP. Finally, where we found, for certain of Thyssen's models, home market sales for which less than 10 percent were made below COP, we used all home market sales of these models in our comparisons. We also used CV as FMV for those U.S. sales for which there was no contemporaneous sale of such or similar merchandise in the home market. We calculated CV in accordance with section 773(e) of the Tariff Act. We included the cost of materials, labor, factory overhead, and U.S. packing in our calculations. Where the general expenses were less than the statutory minimum of 10 percent of the cost of manufacture (COM), we calculated general expenses as 10 percent of the COM. Where the actual profits were less than the statutory minimum of 8 percent of the COM plus general expenses, we calculated profit as 8 percent of the sum of COM plus general expenses. Based on our verification of Thyssen's cost response, we made the same adjustments to respondent's CV data as we made to its COP data, as discussed above. In accordance with section 773 of the Tariff Act, for those U.S. models for which we were able to find a home market such or similar match that had sufficient above-cost sales, we calculated FMV based on the packed prices at which the merchandise was sold under various terms to unrelated purchasers or to related purchasers (where an arm's-length relationship was demonstrated) in the home market. We made adjustments, where applicable, for freight, inland insurance, discounts, credit and warehousing in accordance with 19 CFR 353.56(a)(1). We adjusted FMV for indirect selling expenses in the home market, which include plant freight, warranty, technical services, inventory carrying costs and other indirect selling expenses. We limited the home market indirect selling expense deductions by the amount of indirect selling expenses incurred in the United States, in accordance with 19 CFR 353.56(b)(2). FMV was also adjusted for differences in physical characteristics. After deducting home market packing, we added packing expenses incurred in Germany for U.S. sales to FMV. We adjusted for the German value added tax. No other adjustments were claimed or allowed. Preliminary Results of Review As a result of our comparison of USP to FMV we preliminarily determine that the following margin exists for the period August 18, 1993 through July 31, 1994: Manufacturer/reseller/exporter Margin (percent) Thyssen 4.80 Interested parties may request disclosure within 5 days of the date of publication of this notice and may request a hearing within 10 days of publication. Any hearing, if requested, will be held 44 days after the date of publication or the first business day thereafter. Case briefs and/or written comments from interested parties may be submitted no later than 30 days after the date of publication. Rebuttal briefs and rebuttals to written comments, limited to issues raised in those comments, may be filed not later than 37 days after the date of publication of this notice. The Department will publish the final results of these administrative reviews including the results of its analysis of issues raised in any such written comments or at a hearing. The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Individual differences between the USP and FMV may vary from the percentages stated above. 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 the final results of these administrative reviews, as provided for by section 751(a)(1) of the Tariff Act. A cash deposit of estimated antidumping duties shall be required on shipments of certain cold-rolled carbon steel flat products from Germany as follows: (1) The cash deposit rate for the reviewed company will be the rate established in the final results of this review; (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 LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) If neither the exporter nor the manufacturer is a firm covered in this review, the cash deposit rate will be 19.02 percent. This is the ``all others'' rate from the LTFV investigation. See Antidumping Duty Order and Amendment to Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products From Germany, 58 FR 44170 (August 19, 1993). This notice also serves as a preliminary 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 Department's presumption that reimbursement of antidumping duties occurred and the ---- page 39358 ---- subsequent assessment of double antidumping duties. This administrative review and this notice are in accordance with section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22. Dated: July 26, 1995. Susan G. Esserman, Assistant Secretary for Import Administration.