[Federal Register: January 7, 2005 (Volume 70, Number 5)]
[Notices]
[Page 1413-1423]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07ja05-43]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-533-808]
Stainless Steel Wire Rods From India: Preliminary Results of
Antidumping Duty Administrative Review, Intent To Revoke Order In Part,
and Extension of Time for the Final Results of Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from interested parties, the
Department of Commerce is conducting an administrative review of the
antidumping duty order on stainless steel wire rods from India. The
period of review is December 1, 2002, through November 30, 2003. This
review covers three companies.
[[Page 1414]]
We have preliminarily determined that Chandan Steel, Ltd., and
Isibars Steel, Ltd., sold subject merchandise at less than normal value
during the period of review and that the Viraj Group has made sales in
the United States at prices not below normal value.\1\ We have also
preliminarily determined to revoke the order with respect to subject
merchandise produced and exported by Viraj Alloys, Ltd., and VSL Wires,
Ltd.
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\1\ The Viraj Group consists of Viraj Alloys Limited (VAL) and
VSL Wires Limited (VSL).
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We invite interested parties to comment on these preliminary
results. Parties who submit arguments in this segment of the proceeding
are requested to submit with each argument a statement of the issue,
and a brief summary of the argument.
EFFECTIVE DATE: January 7, 2005.
FOR FURTHER INFORMATION CONTACT: Hermes Pinilla or Minoo Hatten, AD/CVD
Operations 5, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
3477 or (202) 482-1690 respectively.
Background
On October 20, 1993, the Department of Commerce (the Department)
published the final determination in the Federal Register that resulted
in the antidumping duty order on certain stainless steel wire rods
(SSWR) from India. See Final Determination of Sales at Less Than Fair
Value: Certain Stainless Steel Wire Rods From India, 58 FR 54110
(October 20, 1993) and Antidumping Duty Order: Certain Stainless Steel
Wire Rods from India, 58 FR 63335 (December 1, 1993). On December 2,
2003, the Department published in the Federal Register a notice of
opportunity to request an administrative review of this antidumping
duty order. See Antidumping or Countervailing Duty Order, Finding, or
Suspended Investigation: Opportunity To Request Administrative Review,
68 FR 67401 (December 2, 2003).
On December 24, 2003, Isibars Steel, Ltd. (Isibars) requested that
the Department initiate an administrative review of the antidumping
duty order on SSWR from India. On December 31, 2003, the Viraj Group
(Viraj) requested that the Department initiate an administrative review
of the antidumping duty order on SSWR from India. On January 22, 2004,
we published in the Federal Register the Notice of Initiation of
Antidumping and Countervailing Duty Administrative Reviews (69 FR 3117)
in which we initiated the administrative review of the antidumping duty
order on SSWR from India with respect to Isibars and Viraj. The
Department did not include Chandan Steel, Ltd. (Chandan) in the
initiation notice for December cases because on December 30, 2003, the
company requested a review as a new shipper. The Department denied this
request after publication of the January 22, 2004, initiation notice
for December cases. This request was denied because the certifications
provided by Chandan in conjunction with its request under section
351.214(b)(2) of the Department's regulations did not satisfy several
requirements of the Department's regulations. However, Chandan's
December 30, 2003, letter requesting a new shipper review also included
a request for an administrative review, which was timely filed in
accordance with section 351.213(b) of the Department's regulations.
Therefore, the Department included Chandan in the 2002-2003
administrative review. Accordingly, all deadlines applicable to the
companies included in the January 2004 initiation notice are applicable
to Chandan.
On July 15, 2004, the Department extended the due date for the
preliminary results. See Stainless Steel Wire Rod from India: Extension
of Time Limit for the Preliminary Results of the Antidumping Duty
Administrative Review, 68 FR 42421 (July 15, 2004). In accordance with
section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act),
the Department extended the due date for the notice of preliminary
results by 100 days, from the original date of September 1, 2004, to
December 10, 2004.
On November 26, 2004, in accordance with section 751(a)(3)(A) of
the Act, the Department extended the due date for the notice of
preliminary results by an additional 20 days from the revised due date
of December 10, 2004, to December 30, 2004. See Stainless Steel Wire
Rods from India: Extension of Time Limit for the Preliminary Results of
the Antidumping Duty Administrative Review, 69 FR 68882 (November 26,
2004).
Period of Review
The period of review (POR) is December 1, 2002, through November
30, 2003.
Scope of the Antidumping Duty Order
The products covered by this order are certain SSWR, which are hot-
rolled or hot-rolled annealed and/or pickled rounds, squares, octagons,
hexagons or other shapes, in coils. SSWR are made of alloy steels
containing, by weight, 1.2 percent or less of carbon and 10.5 percent
or more of chromium, with or without other elements. These products are
only manufactured by hot-rolling, are normally sold in coiled form, and
are of solid cross section. The majority of SSWR sold in the United
States are round in cross-section shape, annealed and pickled. The most
common size is 5.5 millimeters in diameter.
The products are currently classifiable under subheadings
7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and
7221.00.0075 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
proceeding remains dispositive.
Verification
As provided in section 782(i)(3) of the Act, we verified sales and
cost information provided by Chandan from October 25, 2004, through
October 29, 2004, the sales information provided by Isibars from
November 1, 2004, through November 5, 2004, and sales and cost
information provided by Viraj from December 5, 2004, through December
16, 2004, using standard verification procedures, including an
examination of relevant sales, cost, financial records, and selection
of original documentation containing relevant information. For Chandan
and Isibars, our verification results are outlined in the public
versions of the verification reports and are on file in the
Department's Central Records Unit located in Room B-099 of the main
Department of Commerce Building, 14th Street and Constitution Avenue,
NW., Washington, DC. The verification results for Viraj will be
released subsequent to these preliminary results of review.
Verification findings for Viraj and Chandan are reflected in these
preliminary results.
Intent to Revoke
On December 31, 2003, Viraj requested the revocation of the order
covering SSWR from India as it pertains to its sales.
Under section 751(d)(1) of the Act the Department ``may revoke, in
whole or in part'' an antidumping duty order upon completion of a
review. Although Congress has not specified the procedures that the
Department must follow in revoking an order, the Department has
developed a procedure for revocation that is set forth in 19 CFR
351.222. Pursuant to subsection 351.222(b), the Department may revoke
[[Page 1415]]
an antidumping duty order, in part, if it concludes that (i) An
exporter or producer has sold the merchandise at not less than normal
value for a period of at least three consecutive years, (ii) the
exporter or producer has agreed in writing to its immediate
reinstatement in the order if the Secretary concludes that the exporter
or producer, subsequent to the revocation, sold the subject merchandise
at less than normal value, and (iii) the continued application of the
antidumping duty order is no longer necessary to offset dumping.
Subsection 351.222(b)(3) states that, in the case of an exporter that
is not the producer of subject merchandise, the Department normally
will revoke an order in part under subsection 351.222(b)(2) only with
respect to subject merchandise produced or supplied by those companies
that supplied the exporter during the time period that formed the basis
for revocation.
A request for revocation of an order in part must address three
elements. The company requesting the revocation must do so in writing
and submit the following statements with the request: (1) The company's
certification that it sold the subject merchandise at not less than
normal value during the current review period and that, in the future,
it will not sell at less than normal value; (2) the company's
certification that, during each of the consecutive years forming the
basis of the request, it sold the subject merchandise to the United
States in commercial quantities; (3) the agreement to reinstatement in
the order if the Department concludes that the company, subsequent to
revocation, has sold the subject merchandise at less than normal value.
See 19 CFR 351.222(e)(1).
We preliminarily determine that the request from Viraj meets all of
the criteria of 19 CFR 351.222(e)(1). With regard to the criteria of
subsection 351.222(b)(2), our preliminary margin calculations show that
Viraj sold SSWR at not less than normal value during the current review
period. See Preliminary Results of Review section below. In addition,
it sold SSWR at not less than normal value in the two previous
administrative reviews in which it was involved. See Stainless Steel
Wire Rods From India: Notice of Amended Final Results and Partial
Rescission of Antidumping Duty Administrative Review, 68 FR 38301 (June
27, 2003), covering the period December 1, 2000, through November 30,
2001, and Stainless Steel Wire Rods From India: Final Results and
Partial Rescission of Antidumping Duty Administrative Review, 69 FR
29923 (May 26, 2004), covering the period December 1, 2001, through
November 30, 2002 (01-02 SSWR Final Results).
Based on our examination of the sales data submitted by Viraj, we
preliminarily determine that Viraj sold the subject merchandise in the
United States in commercial quantities in each of the consecutive years
cited by Viraj to support its request for revocation. See Analysis
Memorandum for Viraj Alloys Limited and VSL Wires Limited for the
Preliminary Results of the Administrative Review of Stainless Steel
Wire Rods from India, dated December 30, 2004. (Viraj Preliminary
Analysis Memo), which is in the Department's CRU, Room B-099. Thus, we
preliminarily find that Viraj had zero or de minimis dumping margins
for the last three consecutive administrative reviews and sold in
commercial quantities in all three years. Also, we preliminarily
determine that application of the antidumping order to Viraj is no
longer warranted for the following reasons: (1) The company had zero or
de minimis margins for a period of at least three consecutive years;
(2) the company has agreed to immediate reinstatement of the order if
the Department finds that it has resumed making sales at less than fair
value; and (3) the continued application of the order is not otherwise
necessary to offset dumping.
Therefore, we preliminarily determine that Viraj qualifies for
revocation of the order on SSWR from India pursuant to 19 CFR
351.222(b)(2) and that the order with respect to merchandise produced
and exported by Viraj Alloys, Ltd. and VSL Wires, Ltd. should be
revoked.
If these preliminary findings are affirmed in our final results, we
will revoke the order in part with respect to SSWR from India produced
and exported by Viraj Alloys, Ltd., (VAL) and VSL Wires, Ltd., (VSL).
In accordance with 19 CFR 351.222(f)(3), we will terminate the
suspension of liquidation for SSWR produced and exported by VAL and VSL
that were entered, or withdrawn from warehouse, for consumption on or
after December 1, 2003, and will instruct U.S. Customs and Border
Protection (CBP) to refund any cash deposits for such entries.
Affiliation/Collapsing
Viraj
In the previous administrative review, the Department collapsed VAL
and VSL because VAL and VSL were affiliated, would not need to engage
in major retooling to shift production of SSWR from one company to the
other, and were capable, through their sales and production operations,
of manipulating prices or affecting production decisions. See Stainless
Steel Wire Rods From India: Preliminary Results and Partial Rescission
of Antidumping Duty Administrative Review, 68 FR 70765 (December 19,
2003), and, for detailed analysis, see the Memorandum to Edward C. Yang
from Robert Bolling (``Collapsing Memorandum'') (December 12, 2003),
regarding the collapsing of VAL and VSL.
The production and sales structure of the sales currently under
review is similar to that of the 2001-2002 administrative review. The
record shows that VAL and VSL produce subject merchandise that is sold
in the home and U.S. markets by VSL. The record also indicates, as in
earlier reviews, that the various companies which make up the Viraj
group are connected by a series of familial relationships between
directors and significant shareholders.
Section 771(33)(A) of the Act states that the Department considers
affiliated persons as ``members of a family, including brothers and
sisters (whether by the whole or half blood), spouse, ancestors, and
lineal descendants.'' Section 771(33)(E) states that an affiliation
exists when any person directly or indirectly owns, controls, or holds
with power to vote, five percent or more of the outstanding voting
stock or shares of two organizations. Section 771(33)(F) of the Act
also states that, ``two or more persons directly or indirectly
controlling, controlled by, or under common control with, any person,''
shall be considered to be affiliated. A ``person'' may be an
individual, corporation, or group. Further, section 771(33) of the Act
states ``a person shall be considered to control another person if the
person is legally or operationally in a position to exercise restraint
or direction over the other person.'' The Department has analyzed the
information regarding affiliation on the record in this administrative
review, and preliminarily determines that VAL and VSL should be
considered affiliated under sections 771(33)(A), (E), and (F) of the
Act. For a detailed discussion, see memorandum to Barbara Tillman,
Acting Deputy Assistant Secretary, titled ``Antidumping Duty
Administrative Review of Stainless Steel Wire Rods from India:
Collapsing of Viraj Alloys, Ltd. and VSL Wires, Ltd.'' dated November
30, 2004, at pages 3 through 5 (02-03 Viraj Collapsing Memo).
Further, the Department preliminarily determines that VAL and VSL
should be collapsed. As explained in the 02-03 Viraj Collapsing Memo,
VAL and VSL
[[Page 1416]]
have production facilities to produce similar or identical merchandise
without substantial retooling and should be treated as a single entity
in accordance with 19 CFR 351.401(f)(1). Additionally, in determining
whether there is a significant potential for manipulation, as
contemplated by 19 CFR 351.401(f)(2), the Department considers the
totality of the circumstances of the situation and may place more
reliance on some factors than others. The totality of the circumstances
here shows that there is a significant potential for the manipulation
of price or production. See 02-03 Viraj Collapsing Memo.
Based on our analyses of the relationship between VAL and VSL, we
conclude that they warrant treatment as a single entity. Applying the
criteria of our collapsing inquiry as set forth at pages 5 through 9 of
the 02-03 Viraj Collapsing Memo, we find that: (1) VAL and VSL are
affiliated under subsections 771(33)(A), (E), and (F) of the Act; (2) a
shift in production would not require substantial retooling of the
facilities of either company; and (3) there is a significant potential
for price and production manipulation due to the significant degree of
common ownership and the intertwining of operations between the two
companies. Therefore, the Department determines that VAL and VSL are
affiliated and should be collapsed for the purposes of this
administrative review.
Isibars
Isibars is a respondent that requested an administrative review in
this segment of the proceeding. As discussed in detail in the Use of
Facts Available section below, we have preliminarily determined to
apply an adverse-facts-available rate to all sales of Isibars subject
to this review.
For these preliminary results, we have evaluated the information on
the record with respect to Isibars and its affiliates (Zenstar Impex
and Shaktiman Steel Casting Pvt. Ltd.). Based on this information, the
Department has preliminarily determined to treat Isibars and its
affiliates as a single entity and calculate a single dumping margin as
discussed below.
Section 771(33)(F) of the Act provides that two or more persons
directly or indirectly controlling, controlled by, or under common
control with, any person, are affiliated. The Act goes on to state that
a person shall be considered to control another person if that person
is legally or operationally in a position to exercise restraint or
direction over the other person. Evidence of actual control is not
required; it is the ability to control that is at issue. See section
771(33)(G) of the Act; Antidumping Duties; Countervailing Duties; Final
Rule, 62 FR 27296, 27297-27298 (May 19, 1997). Moreover, the Department
may consider control to arise from the potential for manipulation of
price and production. See Certain Welded Carbon Standard Steel Pipe and
Tubes From India; Final Results of New Shippers Antidumping Duty
Administrative Review, 62 FR 47632, 47638 (September 10, 1997).
During the POR, all sales of Isibars' SSWR to the United States
were made by Zenstar Impex (Zenstar). Zenstar also accounted for most
of the home-market sales of Isibars' SSWR. During the last three months
of the POR, Shaktiman Steel Casting Pvt. Ltd. (Shaktiman), made sales
of Isibars' SSWR in the home market but not to the United States.
Isibars claims that it is affiliated with Zenstar and Shaktiman. As
explained below, based on the record, there is no cross ownership among
Isibars, Zenstar, and Shaktiman.
Zenstar is a financing company and does not own any production
facilities. It was founded in 1995 but was a dormant firm, not engaged
in any activities, until its relationship with Isibars began in 2001.
Since then, Zenstar's only activity is to sell Isibars' products.
Zenstar provides the capital for the raw materials and other expenses
incurred in production. Zenstar is the owner of the raw materials and
finished products and those expenses are reflected in its financial
statements. However, Isibars performs the actual transformation of
Zenstar's raw materials and makes all the necessary arrangements for
purchasing raw materials. A fee is paid for this transformation.
Zenstar only sold Isibars' SSWR. See memorandum from the case analyst
to the file titled, ``Verification Report of Home-Market and U.S. Sales
by Isibars Limited,'' dated December 30, 2004 (Isibars Verification
Report), and Memorandum to File From Analyst titled ``Communications
with Isibars Limited,'' dated December 30, 2004 (December 30, 2004
Memo).
Usually, Zenstar pays a job work charge to Isibars after production
is complete. In some cases, Zenstar paid in advance. Zenstar did not
provide any loans to Isibars. Glance, a financing company that owns 80
percent of Zenstar, arranges for loan syndication for Isibars, and a
director at Glance is a former employee of Isibars. See Isibars
Verification Report at pages 2-6 and December 30, 2004, Memo.
Isibars' personnel handle almost all aspects of sales made by
Zenstar. Isibars obtains and deals with the customers, negotiates the
price and terms of sale of SSWR, issues the order confirmations, makes
arrangements for delivery of SSWR directly from the factory to the
customer, collects payment for sales, and gives the payments to Zenstar
to deposit in Zenstar's bank account. Zenstar only prints the invoice
which is sent to the customer. Zenstar does not provide any warranties,
technical or customer service, or registration services to the
customers and cannot approve or reject a particular sale. See Isibars
Verification Report at pages 2-6 and the December 30, 2004, Memo. We
preliminarily conclude that Isibars and Zenstar are affiliated pursuant
to section 771(33)(F) and (G) of the Act. As described above, Zenstar
controls Isibars' production by providing the financing (capital for
raw material and other expenses) and Isibars controls Zenstar's sales
activities. The sales and production activities between these two
companies are intertwined.
Prior to August 1, 2003, Zenstar bought the raw materials for
Isibars' billets and was reimbursed at a charge per unit as described
above. On August 1, 2003, Isibars contracted its entire billet-making
capacity to Shaktiman under an exclusive agreement in which Shaktiman
buys all the scrap and ferro alloys and Isibars uses its machinery,
labor, consumables, etc. to produce billets from Shaktiman's raw
materials. Shaktiman paid Isibars upon completion of the work and did
not provide any loans or advances to Isibars during the POR. Unlike
Zenstar, Shaktiman actually makes the arrangements for purchases of raw
materials. Also, unlike Zenstar, Shaktiman is more involved in the
production process. Shaktiman has its own staff at Isibars' mill for
general supervision, and they consequently influence the production
schedule and accordingly the production costs of Isibars. See Isibars
Verification Report at pages 2-6 and the December 30, 2004 Memo.
Shaktiman sold a major part of Isibars' billets to Zenstar at a
negotiated price, and Isibars converted those billets into SSWR for
Zenstar for a charge. The remainder of the billets were either sold as
billets by Shaktiman or converted into SSWR by Isibars for sale in the
home market by Shaktiman. Shaktiman does not have any production
facilities of its own. All foreign-like product sold by Shaktiman was
processed by Isibars. Shaktiman's only business activity is its
arrangement with Isibars. See Isibars Verification Report at pages 2-6
and December 30, 2004, Memo.
Isibars' personnel handle almost all aspects of sales made by
Shaktiman.
[[Page 1417]]
Isibars obtains and deals with the customers, negotiates the price and
terms of sale of SSWR, issues the order confirmations, makes
arrangements for delivery of SSWR directly from the factory to the
customer, collects payment for sales, and deposits it in Shaktiman's
bank account. Shaktiman only prints the invoice which is sent to the
customer. Shaktiman does not provide any warranties, technical or
customer service, or registration services to the customers and cannot
approve or reject a particular sale. See Isibars Verification Report at
pages 2-6 and December 30, 2004, Memo. The reasons that Isibars'
transactions are structured in such a non-traditional manner are
proprietary in nature and are discussed in Isibars Verification Report
at pages 2-4. We preliminarily find that Isibars and Shaktiman are
affiliated, pursuant to section 771(33)(F) and (G). As described above,
Shaktiman controls Isibars' production by providing the financing
(capital for raw material and other expenses) and Isibars controls
Shaktiman's sales activities. The sales and production activities
between these two companies are intertwined.
Section 351.401(f) of our regulations states that the Department
will treat two or more affiliated producers as a single entity where:
(1) Those producers have production facilities for similar or
identical products that would not require substantial retooling of
either facility in order to restructure manufacturing priorities; and
(2) where there is a significant potential for the manipulation of
price or production.
In identifying a significant potential for the manipulation of
price or production, the Department may consider ``whether operations
are intertwined, such as through the sharing of sales information,
involvement in production and pricing decisions, the sharing of
facilities or employees, or significant transactions between affiliated
producers.''
The Department has long recognized that it is appropriate to treat
certain groups of companies as a single entity, and to determine a
single weighted-average margin for that entity, in order to determine
margins accurately and to prevent manipulation that would undermine the
effectiveness of the antidumping law. The Department ``collapsed''
entities prior to the promulgation of section 351.401(f) of its
regulations. In Queen's Flowers, the CIT upheld the Department's
practice of collapsing two entities that were sufficiently related to
present the possibility of price manipulation. Queen's Flowers de Colon
v. United States, 981 F. Supp 617, 628 (CIT 1997). More recently the
CIT found that collapsing exporters, rather than producers, is
consistent with a ``reasonable interpretation of the antidumping duty
statute.'' See Hontex Enterprises Inc. d/b/a Louisiana Packing Company
v. United States of America, 248 F. Supp. 2d. 1323 (CIT 2003) (Hontex).
While 19 CFR 351.401(f) applies only to producers, the Department
has found it to be instructive in determining whether non-producers
should be collapsed and used the criteria outlined in the regulation in
its analysis. See Freshwater Crawfish Tail Meat From the People's
Republic of China: Final Results of Administrative Antidumping Duty and
New Shipper Reviews, and Final Rescission of New Shipper Review, 65 FR
20948 (April 19, 2000) and accompanying Issues and Decision Memorandum
at section C (the administrative determination under review in Hontex)
and Certain Preserved Mushrooms From the People's Republic of China:
Final Results of Sixth Antidumping Duty New Shipper Review and Final
Results and Partial Rescission of the Fourth Antidumping Duty
Administrative Review, 69 FR 54635 (September 9, 2004) (where the
Department collapsed a producer and its exporters).
Section 351.401(f)(2)(iii) specifically calls on the Department to
examine whether ``operations are intertwined, such as through the
sharing of sales information, involvement in production and pricing
decisions, the sharing of facilities or employees, or significant
transactions between the affiliated {parties{time} .'' The evidence on
the record, from Isibars' submissions and from verification,
demonstrate that Isibars has significant control over the sales of
Shaktiman and Zenstar. Moreover, the operations of Zenstar and
Shaktiman demonstrate that Shaktiman and Zenstar have significant
control over Isibars' production. While Zenstar and Shaktiman hold
title to the goods and they provide complete financing to Isibars,
these three companies' operations are so intertwined that there is a
significant potential for the manipulation of price and production.
Therefore, we find that these entities should be collapsed and assigned
a single dumping margin and that the actual costs incurred by each
company in producing the merchandise under consideration must be used
for purposes of calculating constructed value and cost of production.
Use of Facts Available
In the instant review, despite numerous requests and clarifications
from the Department, Isibars failed to adequately provide the
information necessary for the margin analysis. As explained in detail
below, the Department received deficient, misleading, and incomplete
responses to the questionnaire and supplemental questionnaire from
Isibars for section D. Moreover, the Department was unable to determine
the accuracy of the information that Isibars did provide, which is
necessary for the margin analysis.
On August 18, 2004, we sent the section D questionnaire to Isibars.
On September 21, 2004, the Department received Isibars' section D
response one day late. Isibars' section D response did not answer
question II.A.7, which requested a list of major inputs purchased from
affiliated parties and various information about those inputs such as
the transfer price, the market price, and the affiliates cost of
production. See 19 CFR 351.407(b). Further, Isibars' answers to
questions III.A.1 and III.A.2.a, c, d, and e were insufficient and did
not explain how the cost information contained in Isibars' constructed-
value and cost-of-production databases was derived. For example, when
asked to describe the method it used to compute the cost of direct
materials and to describe how it used its financial accounting records
to compute the cost of direct materials, Isibars responded, ``We have
arrived at the direct material cost based on the input output norms
multiplied by the inefficiency factor multiplied by the yields during
the hot rolled and cold finished products. See Isibars' section D
Response, dated September 21, 2004, page 26. For direct labor, Isibars
responded, ``Direct labor includes labor charges paid by Isibars and
wages including benefits thereon.'' See Isibars' section D Response,
dated September 21, 2004, page 27. Isibars' response did not describe
the method it used, or how it used its financial accounting records, to
compute those expenses used to determine the constructed value and the
cost of production reported in section D. Nor did Isibars explain
whether it reported the actual expenses incurred by Zenstar and
Shaktiman for raw materials or the actual expenses incurred by Isibars
to produce the SSWR.
On October 20, 2004, the Department received Isibars' section D
supplemental response two days late. Notwithstanding the delay, Isibars
did not provide the requested explanation on the fixed and
[[Page 1418]]
variable overhead expenses. Although it provided more information on
how the direct materials and direct labor costs were determined, for
the first time, Isibars explained that it did not report the actual
costs incurred by Isibars for producing the subject merchandise but
instead reported the amount that Zenstar paid Isibars for production.
This explanation is materially different than Isibars' September 21,
2004, response where it stated that ``direct labor includes labor
charges paid by Isibars'' (emphasis added). Further, while Isibars
listed some major inputs purchased from affiliates, it did not list the
most significant major input, the job work charges of Isibars, and did
not provide the requested information with respect to those charges.
Isibars' incomprehensible explanations make it impossible for the
Department to confirm the accuracy of the reported material and labor
costs.
Section 782(c)(1) of the Act provides that if an interested party
``promptly after receiving a request from {the Department{time} for
information, notifies {the Department{time} that such party is unable
to submit the information requested in the requested form and manner,
together with a full explanation and suggested alternative form in
which such party is able to submit the information,'' the Department
may modify the requirements to avoid imposing an unreasonable burden on
that party. Likewise, the August 18, 2004, questionnaire advised
Isibars to contact the Department if it needed clarification. At no
point before submitting its response did Isibars seek clarification or
express confusion with regard to any of these questions.
Section 782(d) of the Act provides that, if the Department
determines that a response to a request for information does not comply
with the request, the Department will inform the person submitting the
response of the nature of the deficiency and shall, to the extent
practicable, provide that person the opportunity to remedy or explain
the deficiency. If that person submits further information that
continues to be unsatisfactory, or this information is not submitted
within the applicable time limits, the Department may, subject to
section 782(e), disregard all or part of the original and subsequent
responses, as appropriate. Consistent with section 782(d), on October
6, 2004, we issued a supplemental questionnaire to Isibars requesting
it to clarify how it calculated the direct materials, direct labor,
variable overhead, and fixed overhead used in the cost-of-production
and constructed-value databases. We also requested that Isibars answer
question II.A.7 concerning its major inputs.
In reviews such as this where the Department is conducting a sales-
below-cost investigation, it is necessary to have the cost-of-
production information. Without this information the Department cannot
determine the reliability of sales prices in the home market and,
whether they form an appropriate basis for determining normal value.
Given Isibars' failure to report its actual cost of production for the
foreign-like product and subject merchandise, the Department is unable
to calculate a dumping margin.
Section 776(a)(2) of the Act provides that, if necessary
information is not available on the record because an interested party
(A) withholds information that has been requested by the Department,
(B) fails to provide such information in a timely manner or in the form
or manner requested, (C) significantly impedes a proceeding under the
antidumping statute, or (D) provides such information but the
information cannot be verified, then the Department shall, subject to
section 782(d) of the Act, use the facts otherwise available in
reaching the applicable determination.
Because Isibars did not report its job-work charges as a major
input purchased by affiliates Zenstar and Shaktiman, did not report its
actual cost of production for this work, and did not provide complete
and adequate responses as to how it computed the amounts for fixed and
variable overhead, we preliminarily find that information specifically
requested by the Department has been withheld. Finally, in the last
review, the Department had similar difficulties obtaining major input
information from Isibars. Given Isibars' familiarity with the requisite
information, we must preliminary conclude that it significantly impeded
this proceeding. Therefore, we preliminarily determine that the use of
facts otherwise available is warranted to determine a margin for
Isibars' sales of merchandise subject to this review.
Section 776(b) of the Act provides that, if the Department finds
that an interested party has failed to cooperate by not acting to the
best of its ability to comply with a request for information, the
Department may use an inference that is adverse to the interests of
that party in selecting from among the facts otherwise available. In
addition, the Statement of Administrative Action accompanying the
Uruguay Round Agreements Act, H. Doc. 316, Vol. 1, 103d Cong. (1994)
(SAA), establishes that the Department may employ an adverse inference
``* * * to ensure that the party does not obtain a more favorable
result by failing to cooperate than if it had cooperated fully.'' See
SAA at 870. It also instructs the Department, in employing adverse
inferences, to consider ``* * * the extent to which a party may benefit
from its own lack of cooperation.'' Id.
In this case, we find that Isibars did not act to the best of its
ability. Despite repeated requests and absent any indication of
confusion or inability to provide the requisite information, Isibars
provided incomplete, unusable responses to section D of our
questionnaire. Although Isibars is appearing in this proceeding pro se,
it has extensive experience with the Department's procedures and
requirements, having participated in several stainless steel bar and
SSWR reviews. In fact, one of the reasons we applied adverse facts
available in the last review of SSWR was because Isibars failed to
provide the requested information on its major inputs supplied by an
affiliate. See Stainless Steel Wire Rods from India: Preliminary
Results and Partial Recision of Antidumping Duty Administrative Review,
68 FR 70765, 70768 (December 19, 2003). Thus, Isibars was aware of the
importance of providing the requested information on major inputs.
Notwithstanding its previous experience, Isibars' responses were not
clear and even misleading as to how it derived its reported cost-of-
production information. Therefore, pursuant to sections 776(a)(2)(A)
and (C) and section 776(b) of the Act, we have preliminarily determined
to use adverse facts available in reaching the preliminary results of
review.
As adverse facts available, we have preliminarily assigned Isibars
a rate of 48.80 percent, which is the highest rate determined in any
segment of the proceeding and the rate currently applicable to Isibars.
See Antidumping Duty Order: Stainless Steel Wire Rods from India, 58 FR
63335 (December 1, 1993) and 01-02 SSWR Final Results. This rate is
based on information provided in the petition.
Section 776(b) of the Act states that an adverse inference may
include reliance on information derived from the petition. See also 19
CFR 351.308(c); Uruguay Round Agreement Act, Statement of
Administrative Action (``SAA'') at 829-831. Section 776(c) of the Act
provides that, when the Department relies on secondary information
(such as the petition rates) as facts available, it must, to the extent
practicable, corroborate that information from independent sources that
are
[[Page 1419]]
reasonably at its disposal. The SAA clarifies that ``corroborate''
means that the Department will satisfy itself that the secondary
information to be used has probative value. See SAA at 870. To
corroborate secondary information, the Department will, to the extent
practicable, examine the reliability and relevance of the information
used. 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;
Preliminary Results of Antidumping Duty Administrative Reviews and
Partial Termination of Administrative Reviews, 61 FR 57391, 57392
(November 6, 1996); Notice of Preliminary Determination of Sales at
Less Than Fair Value and Postponement of Final Determination: Barium
Carbonate From the People's Republic of China, 68 FR 12664 (March 17,
2003). The Department's regulations state that independent sources used
to corroborate may include, but are not limited to, published price
lists, official import statistics and customs data, and information
obtained from interested parties during the particular review. See 19
CFR 351.308(d); SAA at 870. Further, in accordance with F. LII De Cecco
Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1034
(Fed. Cir. 2000), we examine whether information on the record
supporting the selected adverse facts available is reasonable and has
some basis in reality.
The Department first assigned this rate to Isibars in the preceding
review and, at that time, also corroborated the rate, to the extent
practicable. As to corroborating the rate for the current review,
nothing on the record of this review calls into question the
reliability of the rate. Further, the rate has not been judicially
invalidated. There is no reason to believe that the rate we have
selected is inappropriate for use as the total adverse facts-available
rate with respect to Isibars. This rate is Isibars' current rate and,
therefore, applying a lesser rate would reward Isibars for not
cooperating fully. The Department assumes that if an uncooperative
respondent could have demonstrated that its dumping margin is lower
than the highest prior margin it would have provided information
showing the margin to be less. See Rhone Poulenc, Inc. v. United
States, 899 F.2d 1185, 1190-91 (Fed. Cir. 1990). We have preliminarily
selected this rate because it is sufficiently high as to reasonably
assure that Isibars does not obtain a more favorable result by failing
to cooperate than if it had cooperated fully. Therefore, we consider
the selected rate to have probative value and to reflect the
appropriate adverse inferences. Thus, we consider the rate of 48.80
percent as the most appropriate information on the record upon which to
base adverse facts available with respect to Isibars in the instant
review.
The implementing regulation for section 776 of the Act, codified at
19 CFR 351.308(d), states, ``(t)he fact that corroboration may not be
practicable in a given circumstance will not prevent the Secretary from
applying an adverse inference as appropriate and using the secondary
information in question.'' Additionally, the SAA at 870 states
specifically that, where ``corroboration may not be practicable in a
given circumstance,'' the Department may nevertheless apply an adverse
inference. The SAA at 869 emphasizes that the Department need not prove
that the facts available are the best alternative information.
Therefore, in accordance with 776(c) of the Act, we consider the rate
selected to be corroborated to the extent practicable for purposes of
these preliminary results. See CTL Plate from Mexico, where although
the Department was provided no useful information by the parties and
was unaware of other independent sources of information that would
permit further corroboration of the margin calculated in the petition,
the Department found that its efforts corroborated information
contained in the petition to the extent practicable.
Although the Department has already given Isibars a second chance
to correct its response deficiencies, we have decided to issue a second
section D supplemental questionnaire to Isibars to allow it the
opportunity to correct its responses before a final decision is
rendered. We will analyze the sufficiency of the second supplemental
response and, if appropriate, issue our preliminary analysis of that
response prior to the deadline for the case briefs in this review.
Extension of Time for Final Results
Section 751(a)(3)(A) of the Act, requires the Department to issue
the final results of an antidumping duty administrative review within
120 days of the date on which the preliminary results are published.
The Act also provides that the Department may extend the 120-day period
to 180 days, if it determines that it is not practicable to complete
the review within the foregoing time period.
Because of the Department's decision to afford Isibars another
opportunity to correct the deficiencies in its responses, the
Department needs the additional time to analyze Isibars' responses and
conduct a cost verification. For this reason, the Department has
determined that it is not practicable to complete the final results
within the time limit mandated by section 751(a)(3)(A) of the Act.
Therefore, in accordance with that section, the Department is extending
the time limit for completion of the final results by 60 days.
The final results of review are now due no later than 180 days of
the date on which the preliminary results are published. This extension
of the time limit is in accordance with section 751(a)(3)(A) of the
Act.
Normal Value Comparisons
To determine whether sales of subject merchandise from to the
United States by Viraj were made at less than normal value, we compared
the constructed export price (CEP), as appropriate, to the normal
value, as described in the ``Export Price and Constructed Export
Price'' and ``Normal Value'' sections of this notice, below. In
accordance with section 777A(d)(2) of the Act, we calculated monthly
weighted-average prices for normal value and compared these to
individual CEP transactions.
As discussed below, Chandan had no home-market or third-country
sales of subject merchandise during the POR. Therefore, in accordance
with section 773(a)(4) of the Act, we used constructed value as the
basis for normal value when making comparisons.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products described by the Scope of the Antidumping Duty Order section
above, which were produced and sold by Viraj in the home market during
the POR, to be foreign like products for purposes of determining
appropriate 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 next most similar foreign like product on
the basis of the characteristics and reporting instructions listed in
the Department's questionnaire. Where there were no sales of identical
or similar merchandise in the home market to compare to U.S. sales, we
compared U.S. sales to the constructed value of the product.
For Chandan, we compared U.S. sales to the constructed value of the
product because Chandan did not have any home-market or third-country
sales of SSWR during the POR. See the Normal Value section below for
further discussion.
[[Page 1420]]
Export Price and Constructed Export Price
In accordance with section 772(a) of the Act, Export Price (EP) is
the price at which the subject merchandise is first sold (or agreed to
be sold) before the date of importation by the producer or exporter of
the subject merchandise outside of the United States to an unaffiliated
purchaser in the United States or to an unaffiliated purchaser for
exportation to the United States. In accordance with section 772(b) of
the Act, CEP is the price at which the subject merchandise is first
sold (or agreed to be sold) in the United States before or after the
date of importation by or for the account of the producer or exporter
of such merchandise or by a seller affiliated with the producer or
exporter, to a purchaser not affiliated with the producer or exporter,
as adjusted under subsections (c) and (d).
Chandan
For purposes of this review, Chandan has classified all sales as EP
sales. Based on the information on the record, the Department
determines that Chandan's U.S. sales were made ``outside of the United
States'' within the meaning of section 772(a) of the Act and, thus,
have been appropriately classified by Chandan as EP transactions.
The Department calculated EP, in accordance with section 772(a) of
the Act, based on the packed price to the first unaffiliated customer
in the United States. In accordance with section 772(c)(2)(A) of the
Act, the Department made deductions for movement expenses.
Viraj
For purposes of this review, Viraj has classified all of its sales
as CEP sales. Based on the information on the record, we are using CEP
as defined in section 772(b) of the Act.
Viraj has classified those sales made by VSL through Viraj USA Inc.
(``VUI''), an affiliated reseller in the United States, as CEP sales.
VUI sells the goods to the unaffiliated U.S. customer, who makes
payment to VUI.
Based on the record evidence, the Department preliminarily
determines that VSL's U.S. sales through VUI were made ``in the United
States'' within the meaning of section 772(b) of the Act and, thus,
have been appropriately classified by Viraj as CEP transactions.
The Department calculated CEP, in accordance with section 772(b) of
the Act, based on the packed ex-dock duty paid prices to the first
unaffiliated customer in the United States. The Department made
deductions for movement expenses in accordance with section
772(c)(2)(A) of the Act; these included, where appropriate, brokerage
and handling, inland freight, international freight, U.S. customs
duties, marine insurance, and customs clearance and delivery
arrangements. In accordance with section 772(d)(1) of the Act, we
deducted those selling expense associated with economic activities
occurring in the United States, including direct selling expenses (bank
charges and credit expenses) and indirect selling expenses.
We deducted the profit allocated to expenses deducted under
sections 772(d)(1) in accordance with sections 772(d)(3) and 772(f) of
the Act. In accordance with section 772(f) of the Act, we computed
profit based on total revenues realized on sales in both the U.S. and
home markets, less all expenses associated with those sales. We then
allocated profit to expenses incurred with respect to U.S. economic
activity, based on the ratio of total U.S. expenses to total expenses
for both the U.S. and home market.
Duty Drawback
Viraj
In the previous two administrative reviews, the Department denied
Viraj's request for an upward adjustment to the U.S. starting price
based on duty drawback pursuant to section 772(c)(1)(B) of the Act. See
Stainless Steel Wire Rods from India: Final Results of Antidumping Duty
Administrative Review, 67 FR 37391 (May 29, 2002) and 01-02 SSWR Final
Results and accompanying Issues and Decision memorandum at Comment 14.
The Department denied the duty drawback adjustment because the reported
duty drawback was not directly linked to the amount of duty paid on
imports used in the production of merchandise for export as required by
the Department's two-part test, which states there must be: (1) A
sufficient link between the import duty and the rebate, and (2) a
sufficient amount of raw materials imported and used in the production
of the final exported product. See Rajinder Pipes Ltd. v. United
States, 70 F. Supp. 2d 1350, 1358 (CIT September 17, 1999). The Court
of International Trade has upheld the Department's past decisions to
deny respondent an adjustment for duty drawback because there was not
substantial evidence on the record to establish that part one of the
Department's test had been met. See Viraj Group, Ltd. v. United States,
162 F.Supp. 2d 656 (CIT August 15, 2001).
Similarly, in the current review, the Department finds that Viraj
has not provided substantial evidence on the record to establish the
necessary link between the import duty and the reported rebate for duty
drawback. Viraj has reported that it received duty drawback in the form
of duty entitlement certificates which are issued by the Government of
India to neutralize the incidence of basic custom duty on the import of
raw materials used in the production of subject merchandise, but has
failed to establish the necessary link between the import duty paid and
the rebate given by the Government of India. See Viraj's April 12,
2004, response at C-24. As in the previous review, Viraj was not able
to demonstrate that the import duty paid and the duty drawback rebate
were directly linked. Therefore, the Department is denying a duty
drawback credit for the preliminary results of this review.
Normal Value
After testing home market viability, we calculated normal value as
stated in the ``Price-to-CV Comparisons'' and ``Price-to-Price
Comparisons'' sections of this notice.
1. Home-Market Viability
In accordance with section 773(a)(1)(C) of the Act, to determine
whether there was a sufficient volume of sales in the home market to
serve as a viable basis for calculating normal value (i.e., the
aggregate volume of home-market sales of the foreign like product is
greater than or equal to five percent of the aggregate volume of U.S.
sales), we compared the volume of home-market sales of the foreign like
product by Viraj to the volume of its U.S. sales of subject
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act,
because the aggregate volume of home-market sales of the foreign like
product by Viraj was greater than five percent of the aggregate volume
of U.S. sales for the subject merchandise, we determined that sales in
the home market provide a viable basis for calculating normal value. We
therefore based normal value on home-market sales to unaffiliated
purchasers made in the usual commercial quantities and in the ordinary
course of trade for Viraj.
For normal value, we used the prices at which the foreign like
product was first sold for consumption in India, in the usual
commercial quantities, in the ordinary course of trade, and, to the
extent possible, at the same level of trade as the CEP as appropriate.
After testing home-market viability and whether home-market sales were
at
[[Page 1421]]
below-cost prices for Viraj, we calculated normal value as stated in
the ``Price-to-Price Comparisons'' and ``Price-to-CV'' sections of this
notice.
Because we determined that Chandan had neither home-market nor
third-country sales of subject merchandise during the POR, in
accordance with section 773(a)(4) of the Act, we used constructed value
as the basis for calculating normal value.
2. Cost-of-Production Analysis
Because the Department disregarded certain Viraj Group sales made
in the home market at prices below the cost of producing the subject
merchandise in the most recently completed segment of this proceeding
and excluded such sales from normal value, the Department determined
that there are reasonable grounds to believe or suspect that Viraj made
sales in the home market at prices below the cost of producing the
merchandise in this review. See 01-02 SSWR Final Results; section
773(b)(2)(A)(ii) of the Act. As a result, Viraj submitted its section D
questionnaire response to the Department on April 12, 2004.
3. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated cost
of production (``COP'') based on the sum of Viraj's costs of materials
and fabrication for the foreign like product, plus amounts for home
market selling, general and administrative expenses (``SG&A''),
including interest expenses, and packing costs. The Department relied
on the COP data submitted by Viraj in its original and supplemental
cost questionnaire responses for this calculation.
4. Test of Home-Market Prices
We compared the weighted-average COP for Viraj's home-market sales
of the foreign like product as required under section 773(b) of the
Act, in order to determine whether these sales had been made at prices
below the COP. In determining whether to disregard home-market sales
made at prices less than the COP, we examined whether such sales were
made: (1) In substantial quantities within an extended period of time;
and (2) at prices which permitted the recovery of all costs within a
reasonable period of time, in accordance with sections 773(b)(1)(A) and
(B) of the Act. We compared the COP to home market-prices, less any
applicable billing adjustments, movement charges, discounts, and
selling expenses.
5. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, when less than 20
percent of a respondent's sales of a given product were at prices less
than the COP, we did not disregard any below-cost sales of that product
because the below-cost sales were not made in substantial quantities
within an extended period of time. When 20 percent or more of a
respondent's sales of a given product during the POR were at prices
less than the COP, we disregarded the below-cost sales because they
were made in substantial quantities within an extended period of time
pursuant to sections 773(b)(2)(B) and (C) of the Act and, based on
comparisons of prices to weighted-average COPs for the POR, we
determined that these sales 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. See Viraj Preliminary Analysis
Memo. Based on this test, we disregarded below-cost sales with respect
to Viraj.
Price-to-Price Comparisons
Viraj
For those product comparisons for which there were sales at or
above the COP, we based normal value on the packed, ex-factory, or
delivered prices to affiliated or unaffiliated purchasers. When
applicable, we made adjustments for differences in packing and for
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 19 CFR 351.411 and for
differences in circumstances of sale in accordance with section
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410.
In accordance with the Department's practice, where all
contemporaneous matches to a U.S. sale observation resulted in
difference-in-merchandise adjustments exceeding 20 percent of the cost
of manufacturing (``COM'') of the U.S. product, we based normal value
on CV.
Price-to-CV Comparisons
Viraj
In accordance with section 773(a)(4) of the Act, we based normal
value on CV if we were unable to find a home-market match of identical
or similar merchandise. We calculated CV based on the sum of the cost
of materials, fabrication employed by Viraj in producing the subject
merchandise, and SG&A, including interest expenses, and profit. We
calculated the COP included in the calculation of CV as stated above in
the Calculation of COP section of this notice. In accordance with
section 773(e)(2)(A) of the Act, we based SG&A expense and profit on
the amounts incurred and realized by the respondent in connection with
the production and sale of the foreign like product in the ordinary
course of trade for consumption in India. For selling expenses, we used
the actual weighted-average home-market direct and indirect selling
expenses. For CV, we made the same adjustments described in the
Calculation of COP section above.
Our price comparisons reflect adjustments to reported costs and
expenses as a result of findings at verification. For details regarding
these findings and our calculations, see Viraj Preliminary Analysis
Memo.
Chandan
Chandan had neither home-market sales nor third-country sales of
SSWR. Accordingly, pursuant to section 773(a)(4) of the Act, we based
normal value on constructed value. In accordance with section 773(e) of
the Act, we calculated CV based on the sum of Chandan's cost of
materials and fabrication for the subject merchandise, plus amounts for
profit, SG&A, interest, and U.S. packing costs. For further details of
our calculations, see Analysis Memorandum for Chandan Steel Ltd. for
the Preliminary Results of the Administrative Review of Stainless Steel
Wire Rods from India, dated December 30, 2004 (Chandan's Preliminary
Analysis Memo).
Because Chandan does not have a viable comparison market, the
Department cannot determine profit under section 773(e)(2)(A) of the
Act, which requires sales by the respondent in question in the ordinary
course of trade in a comparison market. Likewise, because Chandan does
not have any sales in the same general category of products as the
subject merchandise, we are unable to apply the alternative (i) of
section 773(e)(2)(B) of the Act. Further, the Department cannot
calculate profit based on alternative (ii) of this section without
violating our responsibility to protect respondents' business
proprietary information because Viraj is the only other respondent with
viable home-market sales (19 CFR 351.405(b) requires that a profit
ratio under this alternative be based solely on home-market sales) for
which we have calculated a margin. If we were to use Viraj's profit
ratio exclusively under this alternative, Chandan would be able to
determine Viraj's proprietary profit rate.
[[Page 1422]]
Therefore, we have calculated Chandan's CV profit based on the third
alternative, any other reasonable method, in accordance with section
773(e)(2)(B)(iii) of the Act. As a result, as a reasonable method, we
calculated Chandan's CV profit based on the publicly available
financial information of another Indian steel producer who is not a
respondent in this administrative review. For a detailed discussion of
our calculation see Chandan's Preliminary Analysis Memo.
Except for our calculation of surrogate CV profit, we have relied
on submitted CV information. However, because we determined that
Chandan had calculated its G&A ratio incorrectly, we recalculated
Chandan's G&A ratio based on Chandan's fiscal year data. For a detailed
description of our recalculation, see Chandan's Preliminary Analysis
Memo.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine normal value based on sales in the comparison
market at the same level of trade as the EP or CEP transaction. See
also 19 CFR 351.412. The normal value level of trade is that of the
starting-price sales in the comparison market or, when normal value is
based on CV, that of the sales from which we derive SG&A expenses and
profit. See 19 CFR 351.412(2)(iii). For EP, the level of trade is also
the level of the starting-price sale, which is usually from the
exporter to the importer. See 19 CFR 351.412(2)(i). For CEP, it is the
level of the constructed sale from the exporter to the affiliated
importer. See 19 CFR 351.412(c)(ii).
To determine the level of trade of a sale, we examine stages in the
marketing process and selling functions along the chain of distribution
between the producer and the unaffiliated customer. Substantial
differences in selling activities are a necessary, but not sufficient
condition for determining that there is a difference in the stage of
marketing. See 19 CFR 351.412(c)(2). If the comparison market sales are
at a different level of trade, and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales on which normal value is based and
comparison-market sales at the level of trade of the export
transaction, we make a level-of-trade adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, if the normal value
level is more remote from the factory than the CEP level and there is
no basis for determining whether the differences in the levels between
normal value and CEP sales affect price comparability, we adjust normal
value under section 773(A)(7)(B) of the Act (the CEP offset provision).
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).
In implementing these principles in this review, we obtained
information from Viraj about the marketing stages involved in its U.S.
and home-market sales, including a description of the selling
activities for each channel of distribution. In identifying levels of
trade for CEP, we considered only the selling activities reflected in
the price after the deduction of expenses and profit under section
772(d) of the Act. See Micron Technology, Inc. v. United States, 243
F.3d 1301, 1314-1315 (Fed. Cir. 2001). Generally, if the reported
levels of trade are the same in the home and U.S. markets, the
functions and activities of the seller should be similar. Conversely,
if a party reports differences in levels of trade the functions and
activities should be dissimilar.
In the present review, we performed a level-of-trade analysis for
Viraj. To determine whether an adjustment was necessary, in accordance
with the principles discussed above, we examined information regarding
the distribution systems in both the United States and home markets,
including the selling functions, classes of customer, and selling
expenses.
Viraj claimed three levels of trade in the home market. See Viraj
sections B, C, and D Questionnaire Response, dated April 12, 2004
(``Viraj Sections B-D Response'') at B-17. Additionally, Viraj reported
that it sold through one channel of distribution in the home market:
directly to unaffiliated customers (``actual user'', ``trading
company'', and ``distributors''). See Viraj Sections B-D Response at B-
9. For sales in the home market, Viraj reported that all of its sales
are sold ex-works. See Viraj Sections B-D Response at B-12. Viraj
reported that it performs the following selling functions in the home
market: Sales promotion, packing, order input/processing, and direct
sales personnel. See Viraj section A Questionnaire Response, dated
March 24, 2004, at A-29. Because there is only one channel of
distribution in the home market and identical selling functions are
performed for all home-market sales, we preliminarily determine that
there is one level of trade in the home market.
Viraj claimed three levels of trade in the U.S. market. See Viraj
Sections B-D Response at C-17. Viraj reported that it sold through one
channel of distribution in the U.S. market, directly from its mill to
its U.S. affiliate (i.e., VUI). See Viraj Section B and C Response at
C-10. The Department examined the selling functions and services
performed by Viraj to its U.S. affiliate. We found that the selling
functions (i.e., sales promotion, packing, order input/processing,
direct sales personnel, paying commissions, and providing freight and
delivery) Viraj performs after the section 772(d) adjustments are the
same for all of its U.S. sales. See Viraj section A Questionnaire
Response March 24, 2004 (``Viraj Section A Response'') at A-29.
Therefore, we preliminarily determine that Viraj has one level of trade
in the U.S. market based on its selling functions to the United States.
In order to determine whether normal value was established at a
different level of trade than CEP sales, we examined stages in the
marketing process and selling functions along the chains of
distribution between (1) Viraj and its home market customers and (2)
Viraj and its affiliated U.S. reseller, VUI, after deductions for
expenses and profits. Specifically, we compared the selling functions
performed for home-market sales with those performed with respect to
the CEP transaction, after deductions for economic activities occurring
in the United States, pursuant to section 772(d) of the Act, to
determine if the home-market level of trade constituted a different
level of trade than the CEP level of trade.
Viraj did not request a CEP offset. Nonetheless, in accordance with
the principles discussed above, we examined information regarding the
distribution systems in both the United States and Indian markets,
including the selling functions, classes of customer, and selling
expenses to determine whether a CEP offset was necessary. For CEP
sales, we found that Viraj provided many of the same selling functions
and expenses for its sale to its affiliated U.S. reseller VUI as it
provided for its home-market sales, including sales promotion, packing,
order input/processing, and direct sales personnel. Based on our
analysis of the channels of distribution and selling functions
performed for sales in the home market and CEP sales in the U.S.
market, we preliminarily find that there is no significant difference
in the selling functions performed in the home market and the U.S.
market for CEP sales. Thus, we find that Viraj's normal value and CEP
sales were made at the same level of trade, and no level of trade
adjustment or CEP offset need be granted.
[[Page 1423]]
Currency Conversion
We made currency conversions into U.S. dollars in accordance with
section 773A(a) of the Act, based on the exchange rates in effect on
the dates of the U.S. sales, as certified by the Federal Reserve Bank.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following weighted-average dumping margins exist for the period
December 1, 2002, through November 30, 2003:
------------------------------------------------------------------------
Weighted-
average
Producer or exporter margin
(percent)
------------------------------------------------------------------------
Chandan Steel, Ltd......................................... 1.27
Isibars Steel, Ltd., Zenstar Impex, and Shaktiman Steel 48.80
Casting Pvt. Ltd..........................................
The Viraj Group (Viraj Alloys, Ltd. and VSL Wires, Ltd.)... 0.00
------------------------------------------------------------------------
Pursuant to section 351.224(b) of the Department's regulations, the
Department will disclose to parties calculations performed in
connection with these preliminary results within five days of the date
of publication of this notice. Any interested party may request a
hearing within 30 days of publication of this notice. We will notify
parties of the exact date, time, and place for any such hearing.
Issues raised in hearings will be limited to those raised in the
respective case and rebuttal briefs. Parties who submit case or
rebuttal briefs in these proceedings are requested to submit with each
argument (1) a statement of the issue, and (2) a brief summary of the
argument with an electronic version included. The Department will
notify all parties as to the applicable briefing schedule.
As discussed in the Extension of Final Results section above, the
Department will publish a notice of final results of this
administrative review, which will include the results of its analysis
of issues raised in the case briefs, within 180 days from the
publication of these preliminary results.
Assessment
Upon issuance of the final results of this review, the Department
shall determine, and CBP shall assess, antidumping duties on all
appropriate entries. Pursuant to 19 CFR 351.212(b), the Department has
calculated an assessment rate applicable to all appropriate entries. We
calculated importer-specific duty assessment rates on the basis of the
ratio of the total amount of antidumping duties calculated for the
examined sales to the total entered value, or entered quantity, as
appropriate, of the examined sales for that importer. Upon completion
of this review, where the assessment rate is above de minimis, we will
instruct CBP to assess duties on all entries of subject merchandise by
that importer.
Cash Deposit
The following cash-deposit requirements will be effective upon
publication of the final results of this administrative review 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 this administrative review, as provided by section
751(a)(1) of the Act: (1) The cash-deposit rate for each of the
reviewed companies will be the rate listed in the final results of
review (except that if the rate for a particular company is de minimis,
i.e., less than 0.5 percent, no cash deposit will be required for that
company); (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, a prior 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) the cash-deposit rate for all other
manufacturers or exporters will continue to be the ``all others'' rate
of 48.80 percent, which is the ``all others'' rate established in the
LTFV investigation. These deposit requirements, when imposed, shall
remain in effect until publication of the final results of the next
administrative review.
Notification to Interested Parties
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) 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 the antidumping duties occurred and the subsequent
assessment of double antidumping duties.
These preliminary results are issued and published in accordance
with sections 751(a)(1) and 777(i)(1) of the Act.
Dated: December 30, 2004.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-33 Filed 1-6-05; 8:45 am]