[Federal Register: December 11, 2006 (Volume 71, Number 237)]
[Notices]
[Page 71523-71530]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11de06-27]
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DEPARTMENT OF COMMERCE
International Trade Administration
A-421-807
Certain Hot-Rolled Carbon Steel Flat Products from the
Netherlands; Preliminary Results of Antidumping Duty Administrative
Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to requests from Nucor Corporation, Mittal Steel
USA ISG Inc. (Mittal) and United States Steel Corporation (USS)
(collectively, petitioners), the Department of Commerce (the
Department) is conducting an administrative review of the antidumping
duty order on certain hot-rolled carbon steel flat products (hot-rolled
steel) from the Netherlands. This administrative review covers imports
of subject merchandise from Corus Staal BV (Corus Staal). The period of
review (POR) is November 1, 2004, through October 31, 2005.
We preliminarily determine that sales of hot-rolled steel from the
Netherlands in the United States have been made below normal value
(NV). If these preliminary results are adopted in our final results of
administrative review, we will instruct U.S. Customs and Border
Protection (CBP) to assess antidumping duties based on the difference
between the export price (EP) or constructed export price (CEP) and NV.
Interested parties are invited to comment on these preliminary results.
Parties who submit argument in this proceeding are requested to submit
with the argument: 1) a statement of the issues, 2) a brief summary of
the argument, and 3) a table of authorities.
EFFECTIVE DATE: December 11, 2006.
FOR FURTHER INFORMATION CONTACT: David Cordell or Robert James,
Antidumping and Countervailing Duty Operations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, NW, Washington, DC 20230, telephone:
(202) 482-0408 or (202) 482-0649, respectively.
SUPPLEMENTARY INFORMATION:
Background
On November 29, 2001, the Department published the antidumping duty
order on hot-rolled steel from the Netherlands. See Antidumping Duty
Order: Certain Hot-Rolled Carbon Steel Flat Products from the
Netherlands, 66 FR 59565 (November 29, 2001). Subsequently, on December
23, 2003, the order was amended. See Notice of Amended Antidumping Duty
Order; Certain Hot-Rolled Carbon Steel Flat Products From The
Netherlands, 68 FR 74214 (December 23, 2003).
On November 1, 2005, the Department published the opportunity to
request administrative review of, inter alia, hot-rolled steel from the
Netherlands for the period November 1, 2004 through October 31, 2005.
See Antidumping or Countervailing Duty Order, Finding, or Suspended
Investigation; Opportunity to Request Administrative Review, 70 FR
65883 (November 1, 2005).
In accordance with 19 CFR 351.213(b)(1), on November 30, 2005,
petitioners requested that we conduct an administrative review of sales
of the subject merchandise made by Corus Staal, a producer and exporter
of the subject merchandise.\1\ On December 22, 2005, the Department
published in the Federal Register a notice of initiation of this
antidumping duty administrative review covering the period November 1,
2004, through October 31, 2005. See Initiation of Antidumping and
Countervailing Duty Administrative Reviews and Request for Revocation
in Part, 70 FR 76024 (December 22, 2005).
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\1\ Nucor, Mittal Steel USA, and United States Steel Corporation
each submitted a separate request for review.
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On January 3, 2006, the Department issued its antidumping duty
questionnaire to Corus Staal. Corus Staal submitted its response to
sections A B, C, D, and E of the questionnaire on February 9, 2006.
On January 23, 2006, USS requested that the Department determine
whether antidumping duties have been absorbed during the period of
review by the respondent Corus Staal. On January 24, 2006, the
Department issued a letter inviting Corus Staal to submit on the record
evidence that unaffiliated purchasers will pay the antidumping duties
that may be assessed on entries during the period of review. On
February 9, 2006, Corus Staal submitted its response to the
Department's letter.
On January 31, 2006, Corus Staal requested the Department to excuse
certain affiliates, Corus Vlietjonge BV, Ijzerleeuw BV and Multisteel,
from reporting home market sales. On August 1, 2006, the Department
granted Corus's
[[Page 71524]]
request not to report downstream home market sales by these three
companies.
On April 7, 2006, the Department issued a supplemental section A, B
and C questionnaire, to which Corus Staal responded on April 28, 2006.
On May 4, 2006, the Department issued a section D supplemental
questionnaire. Corus Staal responded on May 25, 2006. On June 16, USS
submitted comments on Corus Staal's April 7, 2006, response. On June
27, 2006, the Department issued a second section A, B and C
supplemental questionnaire and on June 28, 2006 the Department issued a
section D supplemental. Corus Staal filed a response to these
supplementals on July 14, 2006. On June 30, 2006, Corus Staal filed
quantity and value reconciliations as requested in section A of the
questionnaire and on July 25, 2006, Corus Staal filed its 2005 annual
report. On September 8, 2006 and September 27, 2006, Corus filed its
responses to the Department's third and fourth section D supplemental
questionnaires, which the Department had issued on August 14, 2006, and
September 6, 2006. Mittal provided comments on the section D
supplemental questionnaires on June 29, August 11, August 18, September
27 and October 20, 2006.
On March 6, 2006, Mittal filed comments concerning Corus's
utilization of simplified reporting for the merchandise further
manufactured by its U.S. affiliates, Thomas Steel Strip (Thomas Steel)
and Hille & Mueller USA, Inc. (HMU). On March 13, 2006, Corus responded
to Mittal's request that the Department require Corus to supply a
section E response for these sales. On March 22, March 27, April 7,
April 28, May 12, May 16, May 17, May 22 and May 24, 2006, both Mittal
and Corus made numerous submissions on this topic, each of which is
reviewed in the Department's June 15, 2006, memorandum to preliminarily
accept Corus's simplified reporting for Thomas Steel and HMU in this
segment of the proceeding. See Memorandum to Richard Weible, Office
Director 7 from David Cordell, Case Analyst, and Robert James, Program
Manager, regarding Certain Hot-Rolled Carbon Steel Flat Products from
the Netherlands: ``Simplified Reporting'' and Value Added in the United
States by Thomas Steel, dated June 15, 2006. On June 23, 2006, Mittal
responded to the Department's preliminary decision to accept Corus's
``simplified reporting,'' arguing that the law precludes the Department
from relying on the dumping margin to be determined for imports of
Corus's non-further-manufactured imports as a reasonable surrogate for
the dumping margin for its further-manufactured imports. On August 14,
2006, Mittal submitted further comments on this issue. Mittal
reiterated its contentions concerning Corus Staal's simplified
reporting and went on to argue that there is not substantial evidence
on the record to show the value added in the United States by Thomas
Steel and HMU exceeds substantially the value of the imported subject
merchandise. On August 23, 2006, Corus responded to Mittal's comments,
rebutting Mittal's arguments about the value added in the United
States. According to Corus, Mittal has raised no new issues, Corus has
reported its value added data in a manner consistent with the
Department's reporting methodologies, and the value added on Corus's
sales of steel that is further manufactured in the United States
exceeds the statutory and regulatory standards for relying on
simplified reporting.
On October 20, 2006, Mittal submitted comments in response to
Corus's fourth supplemental section D questionnaire. Mittal asked the
Department to obtain additional information from Corus on the steel
produced by the conventional hot-rolling plant (HRM) and steel produced
in a Direct Sheet Plant (DSP). The Department addresses this issue in
section E of the NV section of this Notice: Price-to-Price Comparisons,
below. On November 13, 2006, Mittal submitted pre-preliminary
determination comments to which Corus Staal responded on November 21,
2006.
Because it was not practicable to complete this review within the
normal time frame, on July 12, 2006, we published in the Federal
Register our notice of extension of time limit for this review. See
Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands;
Antidumping Duty Administrative Review; Extension of Time Limit, 71 FR
39304 (July 12, 2006). This extension established the deadline for
these preliminary results as November 30, 2006.
Period of Review
The POR is November 1, 2004, through October 31, 2005.
Scope of the Review
For purposes of this order, the products covered are certain hot-
rolled carbon steel flat products of a rectangular shape, of a width of
0.5 inch or greater, neither clad, plated, nor coated with metal and
whether or not painted, varnished, or coated with plastics or other
non-metallic substances, in coils (whether or not in successively
superimposed layers), regardless of thickness, and in straight lengths,
of a thickness of less than 4.75 millimeters (mm) and of a width
measuring at least 10 times the thickness. Universal mill plate (i.e.,
flat-rolled products rolled on four faces or in a closed box pass, of a
width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness
of not less than 4.0 mm, not in coils and without patterns in relief)
of a thickness not less than 4.0 mm is not included within the scope of
this review. Specifically included within the scope of this order are
vacuum degassed, fully stabilized (commonly referred to as
interstitial-free (IF)) steels, high strength low alloy (HSLA) steels,
and the substrate for motor lamination steels. IF steels are recognized
as low carbon steels with micro-alloying levels of elements such as
titanium or niobium (also commonly referred to as columbium), or both,
added to stabilize carbon and nitrogen elements. HSLA steels are
recognized as steels with micro-alloying levels of elements such as
chromium, copper, niobium, vanadium, and molybdenum. The substrate for
motor lamination steels contains micro-alloying levels of elements such
as silicon and aluminum.
Steel products to be included in the scope of this order,
regardless of definitions in the Harmonized Tariff Schedule of the
United States (HTS), are products in which: i) iron predominates, by
weight, over each of the other contained elements; ii) the carbon
content is 2 percent or less, by weight; and iii) none of the elements
listed below exceeds the quantity, by weight, respectively indicated:
1.80 percent of manganese, or
2.25 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.15 percent of vanadium, or
0.15 percent of zirconium.
All products that meet the physical and chemical description
provided above are within the scope of this order unless otherwise
excluded. The following products, by way of example, are outside or
specifically excluded from the scope of this order:
Alloy hot-rolled steel products in which at least one of
the chemical elements exceeds those listed above (including, e.g., ASTM
specifications A543, A387, A514, A517, A506).
[[Page 71525]]
Society of Automotive Engineers (SAE)/American Iron and
Steel Institute (AISI) grades of series 2300 and higher.
Ball bearings steels, as defined in the HTS.
Tool steels, as defined in the HTS.
Silico-manganese (as defined in the HTS) or silicon
electrical steel with a silicon level exceeding 2.25 percent.
ASTM specifications A710 and A736.
USS Abrasion-resistant steels (USS AR 400, USS AR 500).
All products (proprietary or otherwise) based on an alloy
ASTM specification (sample specifications: ASTM A506, A507).
Non-rectangular shapes, not in coils, which are the result
of having been processed by cutting or stamping and which have assumed
the character of articles or products classified outside chapter 72 of
the HTS.
The merchandise subject to this order is classified in the HTS at
subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00,
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60,
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60,
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30,
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90,
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00,
7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00,
7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30,
7211.19.75.60, and 7211.19.75.90. Certain hot-rolled flat-rolled carbon
steel flat products covered by this order, including: vacuum degassed
fully stabilized; high strength low alloy; and the substrate for motor
lamination steel may also enter under the following tariff numbers:
7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00,
7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30,
7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00,
7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise
may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30,
7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS
subheadings are provided for convenience and customs purposes, the
written description of the scope of this order is dispositive.
Affiliated-Party Sales
During the POR, Corus Staal sold the foreign like product to
several affiliated resellers in the home market. These include Namascor
BV (Namascor), a service center wholly owned by Corus Staal, and Laura
Metaal Holding BV (Laura), a manufacturer and service center in which
Corus Staal's parent company, Corus Nederland BV, has a shareholder
interest. For purposes of our analysis, we utilized Namascor's and
Laura's sales to unaffiliated customers and, where Laura consumed the
subject merchandise purchased from Corus Staal in its manufacturing
operations, we utilized Corus Staal's sales to Laura. In addition,
Corus Staal sold the foreign like product to affiliated companies Corus
Vlietjonge BV (Vlietjonge),\2\ a service center, Ijzerleeuw BV
(Ijzerleeuw) and Multisteel. Vlietjonge is affiliated with Corus Staal
through the former British Steel companies, whose parent, British Steel
PLC, merged with Koninklijke Hoogovens NV (now Corus Nederland BV) in
October 1999 to form the Corus Group PLC. Vlietjonge has a financial
interest in Ijzerleeuw, but has no reported management or operational
control over Ijzerleeuw. Multisteel is a business unit of Corus Service
Center Maastricht, which is a steel service center that Corus states
almost exclusively sells cold-rolled steel products. In a letter dated
January 31, 2006, Corus Staal requested an exemption from reporting
downstream sales by Vlietjonge, Ijzerleeuw and Multisteel because of
the nature and quantity of the products sold. On August 1, 2006, the
Department excused Corus Staal from reporting downstream sales by
Vlietjonge, Ijzerleeuw and Multisteel because of the reasons set out in
the Department's letter to Corus Staal, dated August 1, 2006. See
Letter from Robert James, Program Manager, to Corus Staal dated August
1, 2006. Therefore, we have used Corus Staal's home market sales to
Vlietjonge, Ijzerleeuw and Multisteel and applied our arm's-length test
to these sales.
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\2\ Namascor also resold some of the foreign like product to
Vlietjonge.
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In the U.S. market, Corus Staal sold subject merchandise to Thomas
Steel, a further manufacturer of battery-quality hot band steel, who in
turn also shipped a small portion of this material to HMU, after
further processing the product. Thomas Steel is wholly owned by Corus
USA Inc., which in turn is wholly owned by Corus Staal's parent
company, Corus Nederland BV. Claiming the value-added in the United
States by Thomas Steel exceeded substantially the value of the subject
merchandise as imported, Corus Staal utilized the ``simplified
reporting'' option for the merchandise further processed by Thomas
Steel.
Pursuant to section 772(e) of the Tariff Act of 1930, as amended
(the Act), when the subject merchandise is imported by an affiliated
person and the value added in the United States by the affiliated
person is likely to exceed substantially the value of the subject
merchandise, we will determine the CEP for such merchandise using the
price of identical or other subject merchandise, if there is a
sufficient quantity of sales to provide a reasonable basis for
comparison and we determine that the use of such sales is appropriate.
If there is not a sufficient quantity of such sales or if we determine
that using the price of identical or other subject merchandise is not
appropriate, we may use any other reasonable basis to determine the
CEP. See, e.g., Preliminary Results and Rescission in Part of
Antidumping Duty Administrative Review: Gray Portland Cement and
Clinker From Mexico, 67 FR 57379, 57381 (September 10, 2002) (unchanged
for final results, 68 FR 1816 (January 14, 2003)). Consistent with the
Department's regulations, we have determined for these preliminary
results that the estimated value added in the United States by Thomas
Steel accounted for at least 65 percent of the price charged to the
first unaffiliated customer for the merchandise as sold in the United
States, and therefore, the value added is likely to exceed
substantially the value of the subject merchandise. We have also
preliminarily determined there is a sufficient quantity of sales
remaining to provide a reasonable basis for comparison. See Memorandum
to Richard Weible, Office Director 7 from David Cordell, Case Analyst,
and Robert James, Program Manager, regarding ``Simplified Reporting''
and Value Added in the United States by Thomas Steel,'' dated June 15,
2006.
Duty Absorption
On January 23, 2006, USS requested that the Department determine
whether antidumping duties had been absorbed during the POR by the
respondent. Section 751(a)(4) of the Act provides for the Department,
if requested, to determine, during an administrative review initiated
two or four years after the publication of the order, whether
antidumping duties have been absorbed by a foreign producer or
exporter, if the subject merchandise is sold in the United States
through an affiliated importer. Because Corus Staal BV sold
[[Page 71526]]
to unaffiliated customers in the United States through itself as the
importer of record, and because this review was initiated four years
after the publication of the order, we have made a duty absorption
determination in this segment of the proceeding in accordance with
section 751(a)(4) of the Act.
In determining whether the antidumping duties have been absorbed by
the respondent during the POR, we presume the duties will be absorbed
for those sales that have been made at less than NV. This presumption
can be rebutted with evidence (e.g., an agreement between the
affiliated importer and unaffiliated purchaser) that the unaffiliated
purchaser will pay the full duty ultimately assessed on the subject
merchandise. See, e.g., Certain Stainless Steel Butt-Weld Pipe Fittings
from Taiwan: Preliminary Results of Antidumping Duty Administrative
Review and Notice of Intent to Rescind, 70 FR 39735, 39737 (July 11,
2005). On January 24, 2006, the Department invited evidence from Corus
Staal to demonstrate that its U.S. purchasers will pay any antidumping
duties ultimately assessed on entries during the POR. In its response,
submitted on February 9, 2006, Corus Staal argued that the Department's
decision to initiate a duty absorption inquiry is contrary to law as
Corus Staal is both the producer and exporter and cannot be affiliated
with itself as the importer. Furthermore, Corus Staal argued that the
evidence it has submitted shows Corus Staal ``passes along, and its
unaffiliated U.S. customers pay, the costs associated with antidumping
duties on subject merchandise.''
Corus Staal claims it has negotiated terms with its customers
intending to pass dumping duties on to its customers. Corus, however,
concedes that ``these provisions do not allow for the retroactive
collection of any additional antidumping duties ultimately assessed on
the subject merchandise.'' See Corus Staal's response dated February 9,
2006 at page 9. Furthermore, Corus Staal failed to provide an agreement
between Corus Staal and its unaffiliated purchaser stating the
unaffiliated purchaser will pay the full duty ultimately assessed on
the subject merchandise. With respect to Corus's claim that Corus Staal
is both the producer and exporter and cannot be affiliated with itself
as the importer, the Department notes that the Court of International
Trade (CIT) addressed this issue when it decided ``Commerce's
interpretation of 'affiliated' to include exporters importing through
themselves has been found to be a permissible construction of the
statute.'' See Corus Staal BV v. United States, Slip Op. 06-112 at note
10 (CIT July 25, 2006) citing Agro Dutch Indus., Ltd. v. United States,
Slip. Op. 06-40, 2006 WL 785463 at 13 (CIT March 28, 2006) in which the
CIT stated:
Commerce's interpretation of subsection 1675(a)(4) appears to be a
reasonable, common-sense solution to what Congress attempted to
accomplish with its enactment. This conclusion is inherent from the
statute's focus-upon duty absorption in the foreign producer or
exporter-and therefore even if the meaning of ``affiliate'' were clear,
and resort to legislative history unnecessary, to find that the statute
does not address the circumstance of the foreign producer or exporter
itself acting as the importer of record would result in an apparent
absurdity.
Therefore, because Corus Staal did not rebut the duty absorption
presumption with evidence that the unaffiliated purchaser will pay the
full duty ultimately assessed on the subject merchandise, we
preliminarily find that antidumping duties have been absorbed by Corus
Staal on all U.S. sales made through its importer of record, namely
Corus Staal.
Fair Value Comparisons
To determine whether sales of hot-rolled steel from the Netherlands
to the United States were made at less than fair value, we compared the
EP or CEP to the NV, 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 compared the EPs and
CEPs of individual U.S. transactions to monthly weighted-average NVs.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondent, covered by the descriptions in the
``Scope of the Review'' section of this notice, to be foreign like
products for the purpose of determining appropriate product comparisons
to U.S. sales of hot-rolled steel from the Netherlands.
We have relied on the following 11 criteria to match U.S. sales of
subject merchandise to comparison market sales of the foreign like
product: whether painted or not, quality, carbon content level, yield
strength, thickness, width, whether coil or cut-to-length sheet,
whether temper rolled or not, whether pickled or not, whether mill or
trimmed edge, and whether the steel is rolled with or without patterns
in relief.
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, January 3, 2006,
questionnaire.
Export Price and Constructed Export Price
Section 772(a) of the Act defines EP as ``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, as adjusted under subsection (c).'' Section 772(b)
of the Act defines CEP as ``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 sections 772(c) and (d).''
Corus Staal reported each of its U.S. sales of subject merchandise
as EP transactions. However, after reviewing the evidence on the record
of this review, we have preliminarily determined, as we did in the
2002-2003 review, that certain of Corus Staal's reported EP
transactions are properly classified as CEP sales because these sales
occurred after importation. This determination is consistent with
section 772(c) and (d) of the Act.
During the POR, Corus Staal executed all agreements with U.S.
customers, and amendments related to those agreements, in the
Netherlands. See Corus Staal's February 9, 2006, questionnaire response
(February 9, 2006 QR) at 23, note 18. In addition, Corus Staal also
served as the importer of record for these sales of subject merchandise
entered during the POR.
However, in the case of ``just in time'' (JIT) sales to one
unaffiliated customer, the invoice was issued after the subject
merchandise had entered the United States. In its response to the
Department's section C questionnaire, dated February 9, 2006, Corus
Staal stated that due to a cancellation by the JIT customer, Corus
found it necessary to sell certain steel to another customer in the
United States. In exhibit C-26 of its April 28, 2006, supplemental
response, Corus provided both the
[[Page 71527]]
invoices and the frame agreements governing this transaction. Because
Corus and its unaffiliated customer did not agree on the price and
quantity terms until the invoice was issued, the JIT sales fail to meet
the criteria for EP sales which arise where the ``the first sale to an
unaffiliated person occurs before the goods are imported into the
United States.'' See the Department's January 4, 2006, Questionnaire at
I-7.
Additionally, we do not agree with Corus Staal's claim that the
relevant frame agreement governs the sale between the JIT customer and
Corus, because, as the aforementioned JIT sale demonstrates, an order
was cancelled after importation and sold to another customer in the
United States. Furthermore, in this review, Corus Staal has maintained
it is upon invoicing ``that the final quantity, price and product sold
are ultimately determined.'' See Corus Staal's February 9, 2006, QR at
C-19. Corus Staal further argues `` until this point, both the customer
and Corus can and do make changes that affect the price and quantity of
the product shipped and/or the product supplied. Therefore, there is no
date other than the invoice date that better reflects the time at which
the material terms of a transaction are fixed.'' Id. at C-20.
Furthermore, Corus reiterated its position in its supplemental response
when it stated ``for the POR, use of invoice date most accurately
reflects commercial reality as to the time that the sale took place and
at which the material terms of sale become final and fixed. Use of any
earlier date would ignore the many subsequent changes in terms prior to
invoicing and shipping.'' See Corus Staal's April 28, 2006, SQR at 21.
Thus, Corus Staal's responses indicate that the invoice date is the
appropriate date to use in determining when a sale or agreement of sale
first occurs, as changes often do occur between the frame agreement and
the date of invoice. See Corus Staal's April 28, 2006 SQR at 21.
Therefore, the Department does not find that the frame agreement is the
governing document in determining when a sale is agreed upon or when it
is executed. The statute defines EP sales as those where the goods are
``first sold (or agreed to be sold) before the date of importation''
and because the material terms of sale are fixed in the invoice, which
is issued by Corus after importation, it is clear that in the case of
the JIT sales, the sales do not meet the criterion of having been made
before importation.
Furthermore, the CIT recently decided this issue in the second
administrative review of this proceeding when it held that:
turning to the application of the law to the facts of this case,
Commerce properly applied the definition of 'sold (or agreed to be
sold)' to the case at hand. As the material terms of the sale or
agreement to sell were not fixed until the final invoice, Commerce
could properly conclude that the final invoices determined when a sale
or agreement to sell first occurred. It follows that the sale or
agreement to sell occurred after importation in the United States.
Therefore, Commerce correctly classified the JIT transactions as CEP
transactions pursuant to 19 U.S.C.Sec. 1677a(a) and (b). See Corus
Staal BV v. United States, Slip Op. 06-112 at 20 (Corus Staal) (CIT
July 25, 2006).
In accordance with the CIT's recent decision in Corus Staal, the
Department has preliminarily determined the sales classified as JIT
sales should continue to be reclassified as CEP sales for the purposes
of this review. The price and quantity were not fixed until the invoice
to the U.S. customer was issued as evidenced in the example of one
order to the JIT customer, which was cancelled after importation and
where such goods were then resold to another U.S. customer.
Furthermore, the goods in JIT inventory are physically in the United
States when the invoices containing the fixed price and quantity terms
to the unaffiliated customers are issued. The Department determines
such sales are CEP sales because section 772(b) of the Act defines CEP
as ``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.'' EP sales
are clearly defined as taking place ``before the date of importation''
whereas CEP sales are defined as taking place ``before or after the
date of importation''.
With respect to the remainder of Corus Staal's reported EP sales
(i.e., those sales to unaffiliated U.S. customers made between November
1, 2004 and October 31, 2005), we have continued to classify these as
EP transactions because the contracts governing these sales were signed
by Corus Staal in the Netherlands, and because such sales were invoiced
before importation.
For those sales which we are classifying as EP transactions, we
calculated EP in accordance with section 772(a) of the Act. We based EP
on the packed, delivered, duty paid prices for export to end users and
service centers in the U.S. market. We adjusted gross unit price for
billing errors, freight revenue, and early payment discounts, where
applicable. We also made deductions for movement expenses in accordance
with section 772(c)(2)(A) of the Act; these included, where
appropriate, foreign inland freight, foreign brokerage and handling,
international freight, marine insurance, U.S. customs duties, U.S.
inland freight, U.S. brokerage expenses, and U.S. warehousing expenses.
For CEP sales, we calculated price in conformity with section
772(b) of the Act. We based CEP on the packed, delivered, duty paid
prices to unaffiliated purchasers in the United States. Where
applicable, we made adjustments to gross unit price for billing errors,
freight revenue, and early payment discounts. We also made deductions
for movement expenses in accordance with section 772(c)(2)(A) of the
Act; these included, where appropriate, foreign inland freight, foreign
brokerage and handling, international freight, marine insurance, U.S.
customs duties, U.S. inland freight, U.S. brokerage expenses, and U.S.
warehousing expenses. In accordance with section 772(d)(1) of the Act,
we deducted those selling expenses associated with economic activities
occurring in the United States, including direct selling expenses
(imputed credit, warranty, etc.), inventory carrying costs, and
indirect selling expenses. For CEP sales, we also made an adjustment
for profit in accordance with section 772(d)(3) of the Act.
Level of Trade
In accordance with section 773(a)(1)(B)(i) of the Act, to the
extent practicable, we determine NV based on sales in the comparison
market at the same level of trade (LOT) as the EP/CEP transaction. The
NV LOT is that of the starting price of the comparison sales in the
home market or, when NV is based on constructed value (CV), that of the
sales from which we derive selling, general, and administrative (SG&A)
expenses and profit. For EP, the LOT is also the level of the starting
price sale, which is usually from the exporter to the importer. For
CEP, it is the level of the constructed sale from the exporter to the
importer, after adjustments under section 772(d) of the Act.
To determine whether NV sales are at a different LOT than EP/CEP
sales, we examine stages in the marketing process and selling functions
along the chain of
[[Page 71528]]
distribution between the producer and the customer. If the comparison
market sales are at a different LOT, and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales at different levels of trade in the home
country, we make a LOT adjustment under section 773(a)(7)(A) of the
Act. Finally, for CEP sales, if the NV 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 NV and CEP sales affect
price comparability, we adjust NV under section 773(a)(7)(B) of the Act
(i.e., the CEP offset provision).
In implementing these principles in the instant review, we obtained
information from Corus Staal about the marketing stages involved in its
reported U.S. and home market sales, including a description of the
selling activities performed by Corus Staal and the level to which each
selling activity was performed for each channel of distribution. In
identifying LOTs for U.S. CEP sales, we considered the selling
functions reflected in the starting price after any adjustments under
section 772(d) of the Act.
In the home market, Corus Staal reported two channels of
distribution (sales by Corus Staal and sales through its affiliated
service centers Namascor and Laura) and three customer categories (end
users, steel service centers, and trading companies). See, e.g., Corus
Staal's February 9, 2006, QR at A-21. For both channels of distribution
in the home market, Corus Staal performed similar selling functions,
including strategic and economic planning, advertising, freight and
delivery arrangements, technical/warranty services, and sales logistics
support. The remaining selling activities performed did not differ
significantly by channel of distribution, with the exception of market
research and research and development activities, which were performed
only by Corus Staal. See Corus Staal's February 9, 2006, QR at Exhibit
A-8 and pages A-21 through A-44. Because the selling activities among
the channels of distribution are sufficiently similar, we find that one
LOT exists for Corus Staal's home market sales.
In the U.S. market, Corus Staal reported a single channel of
distribution for its sales of subject merchandise during the POR. For
EP sales made directly to U.S. customers, Corus Staal reported two
customer categories, end users and steel service centers. See, e.g.,
Corus Staal's February 9, 2006, QR at A-23. Corus noted that it shipped
subject merchandise to one affiliated customer in the United States,
Thomas Steel, which in turn shipped a small portion of this material,
after further processing, to HMU. See Id. at A-24. However, as
explained elsewhere in this notice, Thomas Steel and HMU provided data
in simplified reporting format and thus detailed information was not
provided on Thomas Steel's sales activities. Corus notes that it treats
Thomas Steel in the same manner as all unaffiliated U.S. customers for
all purposes. See Id. at A-44.
As noted in the ``Export Price and Constructed Export Price''
section of this notice, we have preliminarily determined that certain
of Corus Staal's reported EP transactions (i.e., sales where invoicing
took place after date of entry) are properly classified as CEP sales.
As to these Corus Staal sales to customers in the United States
which we have reclassified as CEP transactions, we considered whether
such sales were made at the same level of trade. Comparing the selling
activities performed and services offered by Corus Staal on its CEP
sales to customers in the United States to those activities performed
on its home market sales, we found there to be few differences in the
selling functions performed by Corus Staal on its sales to customers in
the United States and those performed for sales in the home market. For
example, on sales to both home market customers and to U.S. customers,
Corus Staal provided similar strategic and economic planning, freight
and delivery services, technical/warranty assistance, research and
development, and sales logistics support. See, e.g., Corus Staal's
February 9, 2006, QR at pages A-22 through A-60. As a result, we
preliminarily find that there is not a significant difference in
selling functions performed in the U.S. and home markets on these
sales. Thus, for those sales which we have preliminarily determined are
CEP sales, we find that Corus Staal's home market sales and sales to
customers in the United States were made at the same LOT. Accordingly,
no LOT adjustment or CEP offset adjustment to NV is warranted for these
CEP sales.
Finally, for those sales which we are continuing to classify as EP,
we compared the selling activities performed and services offered by
Corus Staal on its sales to unaffiliated customers in the United States
to those activities performed on its home market sales, we found there
to be few differences in the selling functions performed by Corus
Staal. Thus, we find that Corus Staal's home market sales and sales to
unaffiliated customers in the United States were made at the same LOT.
Accordingly, no LOT adjustment is necessary.
Normal Value
A. Selection of Comparison Market
To determine whether there is a sufficient volume of sales in the
home market to serve as a viable basis for calculating NV (i.e., the
aggregate volume of home market sales of the foreign like product is
greater than five percent of the aggregate volume of U.S. sales), we
compared the respondent's volume of home market sales of the foreign
like product to the volume of U.S. sales of the subject merchandise, in
accordance with section 773(a)(1)(B) of the Act. Because the
respondent's aggregate volume of home market sales of the foreign like
product was greater than five percent of its aggregate volume of U.S.
sales for the subject merchandise, we determined that the home market
was viable. See, e.g., Corus Staal's February 9, 2006 QR at Attachment
A-2 and Corus Staal's July 14, 2006 SQR at Attachment A-35.
B. Affiliated Party Transactions and Arm's-Length Test
Corus Staal reported sales in the home market to affiliated
resellers and end-users. Sales to affiliated customers in the home
market not made at arm's-length prices are excluded from our analysis
because we consider them to be outside the ordinary course of trade.
See 19 CFR 351.102(b). Prior to performing the arm's-length test on
Corus Staal's sales to affiliated customers, we aggregated multiple
customer codes reported for individual affiliates in order to treat
them as single entities. See Antidumping Proceedings: Affiliated Party
Sales in the Ordinary Course of Trade, 67 FR 69186, 69194 (November 15,
2002) (Modification to Affiliated Party Sales). To test whether the
sales to affiliates were made at arm's-length prices, we compared, on a
model-specific basis, the starting prices of sales to affiliated and
unaffiliated customers net of all direct selling expenses, discounts
and rebates, movement charges, and packing. Where prices to the
affiliated party were, on average, within a range of 98 to 102 percent
of the price of identical or comparable merchandise to the unaffiliated
parties, we determined that the sales made to the affiliated party were
at arm's length. See Modification to Affiliated Party Sales at 69187-
88. In accordance with the Department's practice, we only included in
our margin analysis those sales to affiliated parties that were made at
arm's length.
[[Page 71529]]
C. Cost of Production Analysis
Because we disregarded sales of certain products made at prices
below the cost of production (COP) in the most recently completed
segment of the proceeding at the time of initiation of this review,
i.e., the 2002-2003 review of hot-rolled steel from the Netherlands
(see Certain Hot-Rolled Carbon Steel Flat Products from the
Netherlands; Final Results of Antidumping Duty Administrative Review,
70 FR 18366 (April 11, 2005), we have reasonable grounds to believe or
suspect that Corus Staal made sales of the foreign like product at
prices below the COP, as provided by section 773(b)(2)(A)(ii) of the
Act. Therefore, pursuant to section 773(b)(1) of the Act, we initiated
a COP investigation of sales by Corus Staal.
In accordance with section 773(b)(3) of the Act, we calculated the
weighted-average COP for each model based on the sum of Corus Staal's
material and fabrication costs for the foreign like product, plus
amounts for SG&A and packing costs. The Department relied on the COP
data reported by Corus Staal.
For a list of the product characteristics considered in our
analysis, see the section ``Product Comparisons'' above. We compared
the weighted-average COP figures to the home market sales prices of the
foreign like product as required under section 773(b) of the Act, to
determine whether these sales had been made at prices below COP. On a
product-specific basis, we compared the COP to home market prices net
of billing adjustments, freight revenue, certain minor processing
expenses, discounts and rebates, and any applicable movement charges.
In determining whether to disregard home market sales made at
prices below the COP, we examined, in accordance with sections
773(b)(1)(A) and (B) of the Act whether, within an extended period of
time, such sales were made in substantial quantities and whether such
sales were made at prices which did not permit the recovery of all
costs within a reasonable period of time in the normal course of trade.
Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent
of the respondent's home market sales of a given model were at prices
below the COP, we did not disregard any below-cost sales of that model
because we determined that the below-cost sales were not made within an
extended period of time and in ``substantial quantities.'' Where 20
percent or more of the respondent's home market sales of a given model
were at prices less than COP, we disregarded the below-cost sales
because: (1) they were made within an extended period of time in
``substantial quantities,'' in accordance with sections 773(b)(2)(B)
and (C) of the Act, and (2) based on our comparison of prices to the
weighted-average COPs for the POR, they were at prices which would not
permit the recovery of all costs within a reasonable period of time, in
accordance with section 773(b)(2)(D) of the Act.
Our cost test for Corus Staal revealed that for home market sales
of certain models, less than 20 percent of the sales of those models
were at prices below the COP. We retained all such sales in our
analysis and used them as the basis for determining NV. Our cost test
also indicated that for other models sold by Corus Staal, more than 20
percent of the home market sales of those models were sold at prices
below COP within an extended period of time and were at prices which
would not permit the recovery of all costs within a reasonable period
of time. In accordance with section 773(b)(1) of the Act, we excluded
these below-cost sales from our analysis and used the remaining above-
cost sales as the basis for determining NV.
D. Constructed Value (CV)
While in this preliminary determination no sales are compared to
CV, we nevertheless calculated CV in accordance with section 773(e) of
the Act. We based CV on the sum of the Corus Staal's material and
fabrication costs, SG&A expenses, profit, and U.S. packing costs. We
calculated the COP component of CV and weight-averaged the CVs reported
for identical products produced in both the conventional hot-rolling
mill and direct sheet plant as described above in the ``Cost of
Production Analysis'' section of this notice. In accordance with
section 773(e)(2)(A) of the Act, we based SG&A expenses and profit on
the amounts incurred and realized by the respondent in connection with
the production and sale of the foreign like product in the ordinary
course of trade, for consumption in the foreign country. For selling
expenses, we used the actual weighted-average home market direct and
indirect selling expenses.
E. Price-to-Price Comparisons
We relied on our model match criteria in order to match U.S. sales
of subject merchandise to comparison sales of the foreign like product
based on the reported physical characteristics of the subject
merchandise. 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 following
characteristics and reporting instructions listed in the Department's
questionnaire. These characteristics are: painted, quality, carbon,
yield strength, thickness, width, cut-to-length vs coil, temper rolled,
pickled, edge trim, and patterns in relief. See section 771(16) of the
Act.
As indicated earlier, on October 20, 2006, Mittal asked the
Department to obtain additional information from Corus on products
produced by the DSP mill and hot-rolled mill to ensure that the
Department calculates the most accurate margin possible. However, the
Department has already addressed this issue in the 2001-2002
administrative review of this case where the Department determined
``because the information on the record does not establish sufficient
differences in physical characteristics between conventional hot-rolled
mill and DSP products, we have not made any changes to our model match
criteria for these final results.'' See Certain Hot-Rolled Carbon Steel
Flat Products from the Netherlands; Final Results of Antidumping Duty
Administrative Review, 70 FR 18366 (April 11, 2005) and the
accompanying Issues and Decisions Memorandum at Comment 1. The
Department has no information on the record of this proceeding, other
than Mittal's October 20, 2006, submission, that would support the
Department reexamining our model match criteria for this preliminary
determination.
We calculated NV based on prices to unaffiliated customers or
prices to affiliated customers we determined to be at arm's length. We
adjusted gross unit price for billing adjustments, early payment
discounts, rebates, freight revenue, interest revenue and tolling
revenues, where appropriate. We made deductions, where appropriate, for
foreign inland freight and warehousing, pursuant to section
773(a)(6)(B) of the Act. In addition, we made adjustments for
differences in cost attributable to differences in physical
characteristics of the merchandise (i.e., difmer) pursuant to section
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, as well as for
differences in circumstances of sale (COS) in accordance with section
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We made COS
adjustments for imputed credit expenses, warranty expenses, and credit
insurance. Finally, we deducted home market packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
F. Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Act, we base NV on CV
if we are unable to find a home market match of
[[Page 71530]]
such or similar merchandise. Where appropriate, we make adjustments to
CV in accordance with section 773(a)(8) of the Act. Where we compare CV
to CEP, we deduct from CV the weighted-average home market direct
selling expenses. However, in this review we have preliminarily found
contemporaneous matches for all U.S. sales, and therefore, have not
based NV on CV.
Currency Conversion
We made currency conversions into U.S. dollars based on the
exchange rates in effect on the dates of the U.S. sales as certified by
the Federal Reserve Bank, in accordance with section 773A(a) of the
Act.
Preliminary Results of Review
As a result of our review, we preliminarily determine the weighted-
average dumping margin for the period November 1, 2004, through October
31, 2005, to be as follows:
------------------------------------------------------------------------
Manufacturer / Exporter Margin (percent)
------------------------------------------------------------------------
Corus Staal BV (Corus Staal)........................ 2.52
------------------------------------------------------------------------
The Department will disclose calculations performed in connection
with these preliminary results of review within five days of the date
of publication of this notice in accordance with 19 CFR 351.224(b).
Interested parties may submit case briefs and/or written comments no
later than 30 days after the date of publication of these preliminary
results of review. Rebuttal briefs and rebuttals to written comments,
limited to issues raised in the case briefs and comments, may be filed
no later than 35 days after the date of publication of this notice.
Parties who submit argument in these proceedings are requested to
submit with the argument: 1) a statement of the issue, 2) a brief
summary of the argument, and (3) a table of authorities. An interested
party may request a hearing within 30 days of publication. See 19 CFR
351.310(c). Any hearing, if requested, will be held 37 days after the
date of publication, or the first business day thereafter, unless the
Department alters the date pursuant to 19 CFR 351.310(d). The
Department will issue the final results of these preliminary results,
including the results of our analysis of the issues raised in any such
written comments or at a hearing, within 120 days of publication of
these preliminary results.
Assessment Rates
Upon completion of this administrative review, the Department will
determine, and CBP shall assess, antidumping duties on all appropriate
entries. The Department intends to issue assessment instructions to CBP
15 days after the date of publication of the final results of review.
The Department clarified its ``automatic assessment'' regulation on
May 6, 2003. See Notice of Policy Concerning Assessment of Antidumping
Duties, 68 FR 23954 (May 6, 2003) (Assessment-Policy Notice). This
clarification will apply to entries of subject merchandise during the
period of review produced by Corus Staal BVfor which Corus Staal BV did
not know that the merchandise it sold to an intermediary (e.g., a
reseller, trading company, or exporter) was destined for the United
States. In such instances, we will instruct CBP to liquidate unreviewed
entries at the 2.59 percent all-others rate established in the original
less than fair value (LTFV) investigation, if there is no rate for the
intermediary involved in the transaction. See the Assessment-Policy
Notice for a full discussion of this clarification.
Furthermore, the following deposit requirements will be effective
upon completion 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 the reviewed
company will be the rate established in the final results of the
administrative review (except that no deposit will be required if the
rate is zero or de minimis, i.e., less than 0.5 percent); (2) 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
that established for the most recent period for the manufacturer of the
merchandise; and (3) if neither the exporter nor the manufacturer is a
firm covered in this review, any previous reviews, or the LTFV
investigation, the cash deposit rate will be 2.59 percent, the ``all
others'' rate established in the LTFV investigation. See Antidumping
Duty Order: Certain Hot-Rolled Carbon Steel Flat Products from the
Netherlands, 67 FR 59565 (November 29, 2001).
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
We are issuing and publishing this notice in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: November 30, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-20923 Filed 12-8-06; 8:45 am]