Import Administration, International Trade Administration, Department of Commerce.
Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review of Stainless Steel Sheet and Strip in Coils From Taiwan.
The Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on stainless steel sheet and strip in coils (“SSSS”) from Taiwan in response to requests from respondents Yieh United Steel Corporation (YUSCO), Tung Mung Development Co., Ltd. (Tung Mung) and Chia Far Industries Co., Ltd. (Chia Far), and petitioners  who requested a review of YUSCO, Tung Mung, and Ta Chen Stainless Pipe Company Ltd. (Ta Chen), and any of its affiliates within the meaning of section 771(33) of the Tariff Act of 1930, as amended (“the Act”). This review covers imports of subject merchandise from YUSCO, Tung Mung, Ta Chen, and Chia Far. The period of review (“POR”) is June 8, 1999 through June 30, 2000.
Our preliminary results of review indicate that Chia Far has sold subject merchandise at less than normal value (“NV”) during the POR, and that YUSCO and Tung Mung did not make any sales below normal value during the POR. In addition, we have preliminarily determined to rescind the review with respect to Ta Chen because it had no shipments of subject merchandise to the United States during the period of review. If these preliminary results are adopted in our final results of this administrative review, we will instruct the U.S. Customs Service to assess antidumping duties on suspended entries on all appropriate entries.
We invite interested parties to comment on these preliminary results. Parties who submit arguments in this segment of the proceeding should also submit with each argument (1) a statement of the issue and (2) a brief summary of the argument.
August 8, 2001.Start Further Info
FOR FURTHER INFORMATION CONTACT:
Michael Panfeld (Ta Chen); Stephen Shin (Chia Far); Stephen Bailey (YUSCO), Mesbah Motamed (Tung Mung); or Rick Johnson, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0172, (202) 482-0413, (202) 482-1102, (202) 482-1382 or (202) 482-3818, respectively.End Further Info End Preamble Start Supplemental Information
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (“the Act”), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (2000).
On July 20, 2000, the Department published in the Federal Register a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on stainless steel sheet and strip in coils from Taiwan. See Notice of Opportunity to Request Administrative Review of Antidumping or Countervailing Duty Start Printed Page 41510Order, Finding, or Suspended Investigation, 65 FR 45035 (July 20, 2000). On July 28, 2000, petitioners requested a review of YUSCO, Tung Mung and Ta Chen and its affiliates within the meaning of section 771(33) of the Act. See Petitioners: Stainless Steel Sheet and Strip in Coils from Taiwan: Request for Administrative Review of Antidumping Duty Order, July 28, 2000. On July 26, 2000, YUSCO, a producer and exporter of subject merchandise during the POR, in accordance with 19 CFR 351.213(b)(2), requested an administrative review of the antidumping order covering the period June 8, 1999, through June 30, 2000. See YUSCO: Stainless Steel Sheet and Strip in Coils from Taiwan: Request for Administrative Review of Antidumping Duty Order, July 26, 2000. On July 31, 2000, Tung Mung and Chia Far, producers and exporters of subject merchandise during the POR, in accordance with 19 CFR 351.213(b)(2), requested an administrative review of the antidumping order covering the period June 8, 1999, through June 30, 2000. See Chia Far: Stainless Steel Sheet and Strip in Coils from Taiwan: Request for Administrative Review of Antidumping Duty Order, July 31, 2000; See Tung Mung: Stainless Steel Sheet and Strip in Coils from Taiwan: Request for Administrative Review of Antidumping Duty Order, July 31, 2000. On September 6, 2000, the Department published in the Federal Register a notice of initiation of administrative review of this order. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 65 FR 53980 (September 6, 2000). The initiation was amended on November 30, 2000 to include the name of Chia Far. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 65 FR 71299 (November 30, 2000).
Under section 751(a)(3)(A) of the Act, the Department may extend the deadline for completion of an administrative review if it determines that it is not practicable to complete the review within the statutory time limit. On January 8, 2001, the Department extended the time limit for the preliminary results in this review to July 1, 2001. See Stainless Steel Sheet and Strip in Coils From Taiwan: Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review, 66 FR 2884 (January 12, 2001). On May 14, 2001, the Department extended the time limit for the preliminary in this review for an additional 30 days. See Stainless Steel Sheet and Strip in Coils From Taiwan: Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review, 66 FR 28147 (May 22, 2001). The preliminary results are now due for signature on July 31, 2001.
On September 28, 2000, and in subsequent submissions on October 4, 12, and 31, 2000, Ta Chen informed the Department that it had no shipments of subject merchandise to the United States during the period of review (POR). We have confirmed this with the U.S. Customs Service. See Memorandum from Michael Panfeld to the File: U.S. Customs Data Query for Entries During the 1999-2000 Antidumping Duty Administrative Review on Stainless Steel Sheet and Strip in Coils From Taiwan, July 31, 2001 (“the Customs memo”).
Ta Chen has also stated that its U.S. affiliate (“TCI”) had resales of SSSS from Taiwan during the POR. However, Ta Chen has stated that these sales were from inventory that was entered into the United States prior to the suspension of liquidation. The Department has previously determined that “(s)ales of merchandise that can be demonstrably linked with entries prior to the suspension of liquidation are not subject merchandise and therefore are not subject to review by the Department.” See Certain Stainless Wire Rods From France: Final Results of Antidumping Duty Administrative Review, 61 FR 47874, 47875 (September 11, 1996); see also Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27314 (May 19, 1997).
Ta Chen has certified that of TCI's resales of Taiwanese merchandise from its U.S. warehouse inventory during the POR, all merchandise entered before the POR. The Department's Customs inquiry indicates that such merchandise did not enter the United States after the suspension of liquidation. Consequently, in accordance with 19 CFR 351.213(d)(3) and consistent with our practice, we are preliminarily rescinding our review for Ta Chen. For further discussion, see the “Partial Rescission of Review” section of this notice, below.
The Department is conducting this administrative review in accordance with section 751 of the Act.
As provided in section 782(i) of the Act, we verified sales information provided by Chia Far, from June 16, 2001 to June 22, 2001, using standard verification procedures, including an examination of relevant sales, cost, and financial records, and selection of original documentation containing relevant information. In addition, we verified sales information provided by Tung Mung and YUSCO from April 25, 2001 to May 2, 2001 and from June 25, 2001 to June 29, 2001, respectively. Our verification results are outlined in the public version of the verification reports and are on file in the Central Records Unit (“CRU”) located in room B-099 of the main Department of Commerce Building, 14th Street and Constitution Avenue, N.W., Washington, D.C.
Scope of the Review
For purposes of this review, the products covered are certain stainless steel sheet and strip in coils. Stainless steel is an alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject sheet and strip is a flat-rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness, and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed (e.g., cold-rolled, polished, aluminized, coated, etc.) provided that it maintains the specific dimensions of sheet and strip following such processing.
The merchandise subject to this order is classified in the Harmonized Tariff Schedule of the United States (HTS) at subheadings: 7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81 , 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7126.96.36.199, 7188.8.131.52, 7184.108.40.206, 7220.127.116.11, 7220.20.60.05, 718.104.22.168, 722.214.171.124, 7126.96.36.199, 7188.8.131.52, 7220.20.70.05, 7184.108.40.206, 7220.127.116.11, 718.104.22.168, 722.214.171.124, 7220.20.80.00, 7126.96.36.199, 7188.8.131.52, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTS subheadings are provided for convenience and Customs purposes, the Start Printed Page 41511Department's written description of the merchandise covered by this order is dispositive.
Excluded from the scope of this order are the following: (1) sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled, (2) sheet and strip that is cut to length, (3) plate (i.e., flat-rolled stainless steel products of a thickness of 4.75 mm or more), (4) flat wire (i.e., cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm), and (5) razor blade steel. Razor blade steel is a flat-rolled product of stainless steel, not further worked than cold-rolled (cold-reduced), in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent chromium, and certified at the time of entry to be used in the manufacture of razor blades. See Chapter 72 of the HTS, “Additional U.S. Note” 1(d).
In response to comments by interested parties, the Department also determined that certain specialty stainless steel products were excluded from the scope of the investigation and the subsequent order. These excluded products are described below.
Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness (Hv) of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves in compressors.
Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus-or-minus 2.01 microns, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm, and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection and flatness of 1.6 mm over 685 mm length.
Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of the order. This stainless steel strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of less than 0.002 or greater than 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron.
Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of this order. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.” 
Certain electrical resistance alloy steel is also excluded from the scope of this order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials (“ASTM”) specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. The product is currently available under proprietary trade names such as “Gilphy 36.” 
Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of this order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System (“UNS”) as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging, and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent or less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4 mm. This product is most commonly used in the manufacture of television tubes and is currently available under proprietary trade names such as “Durphynox 17.” 
Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of the order. These include stainless steel strip in coils used in the production of textile cutting tools (e.g., carpet knives). This steel is similar to AISI grade 420, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 0.020 percent or less, and includes between 0.20 and 0.30 percent copper and between 0.20 and 0.50 percent cobalt. This steel is sold under proprietary names such as “GIN4 Mo.” The second excluded stainless steel strip in coils is similar to AISI 420-J2 and contains, by weight, carbon of between 0.62 and 0.70 percent, silicon of between 0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, phosphorus of no more than 0.025 percent and sulfur of no more than 0.020 percent. This steel has a carbide density on average of 100 carbide particles per 100 square microns. An example of this product is “GIN5” steel. The third specialty steel has a chemical composition similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, molybdenum of between 1.15 and 1.35 percent, but lower manganese of between 0.20 and 0.80 percent, phosphorus of no more than 0.025 percent, silicon of between 0.20 and 0.50 percent, and sulfur of no more than 0.020 percent. This product is supplied with a hardness of more than Hv 500 guaranteed after customer Start Printed Page 41512processing, and is supplied as, for example, “GIN6”.
Partial Rescission of Review
As noted above, Ta Chen informed the Department that it had no shipments of subject merchandise to the United States during the POR. We have confirmed this with the U.S. Customs Service. Therefore, in accordance with 19 CFR 351.213(d)(3) and consistent with the Department's practice, we are preliminarily rescinding our review with respect to Ta Chen. See e.g., Certain Welded Carbon Steel Pipe and Tube from Turkey; Final Results and Partial Rescission of Antidumping Administrative Review, 63 FR 35190, 35191 (June 29, 1998); and Certain Fresh Cut Flowers from Colombia; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 62 FR 53287, 53288 (Oct. 14, 1997).
Facts Available (FA)
1. Application of FA
Section 776(a)(2) of the Act provides that if any 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 an antidumping investigation; or (D) provides such information but the information cannot be verified, the Department shall use facts otherwise available in making its determination. Pursuant to section 782(d) of the Act, if the Department:
“determines that a response to a request for information under this title does not comply with the request, the administering authority [* * *] shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of investigations or reviews under this title. If that person submits further information in response to such deficiency and either (1) the administering authority [* * *] finds that such response is not satisfactory, or (2) such response is not submitted within the applicable time limits, then the administering authority [* * *] may, subject to subsection (e), disregard all or part of the original and subsequent responses.”
As shown below, in the case of Chia Far, the Department gave the respondent several opportunities to correct deficient submissions, however, Chia Far did not adequately correct the significant problems on the record. Thus, for the reasons discussed in more detail below, the Department has determined a dumping margin based on the facts available.
On September 7, 2000, the Department sent Chia Far a questionnaire requesting that it provide information regarding any sales that it made to the United States during the POR. On October 12, 2000 and November 1, 2000, Chia Far submitted its Section A and Section C responses to the Department in which the company claimed that Chia Far was not affiliated with any of its U.S. customers and that all U.S. sales should be classified as EP sales. Based on these responses, the Department had no reason to believe that any affiliation issues existed between Chia Far and its U.S. customers. On May 24, 2001 petitioners submitted an allegation that Chia Far is affiliated by virtue of a principal/agent relationship with one of its U.S. customers. See Petitioners' Submission Re: Stainless Steel Sheet and Strip in Coils from Taiwan, May 24, 2001. Based on petitioners' allegation, the Department sent a questionnaire on May 25, 2001 requesting that Chia Far answer questions concerning its relationship with this U.S. customer during the POR and affording Chia Far an additional opportunity to report its sales to this U.S. customer as CEP sales. Chia Far stated that it was not affiliated with the U.S. customer as affiliation is defined in Appendix I of the Department's questionnaire. See Chia Far's Supplemental Response, June 4, 2001, at 6—8. On June 18, 2001, petitioners submitted comments on Chia Far's June 4, 2001 supplemental response, documenting a relationship of principal/agent between Chia Far and this certain U.S. customer. See Petitioners' Submission Re: Stainless Steel Sheet and Strip in Coils from Taiwan, June 18, 2001, at 13-14.
During the course of verification, Chia Far made verbal claims that it had evidence rebutting the information provided in petitioners' June 18, 2001 submission and that it intended to submit such information on the record. See Chia Far Sales Verification Report to Edward Yang through Rick Johnson (“Sales Verification Report”), July 11, 2001 at page 7. However, Chia Far failed to provide the Department with such information. Thus, no information affirmatively refuting Chia Far's principal/agent relationship, as documented in petitioners' submission, was ever placed on the record and pursuant to the time limits specified in section 351.301(c)(1) of the Department's regulations, the deadline for submitting new factual information has passed.
In determining whether a principal/agent relationship exists, the Department first examines whether an explicit agreement exists from the alleged principal, authorizing the agent to act on its behalf in a specified context. This agreement must not only state that such a relationship exists, but the alleged agent must expressly consent to such representation on behalf of the principal. See Notice of Final Determination of Sales at Less than Fair Value: Engineered Process Gas Turbo-Compressor Systems, Whether Assembled or Unassembled, and Whether Complete or Incomplete, from Japan (“Gas Turbo Compressors”), 62 FR 24392, 24402-24403 (May 5, 1997) (expressing the principal/agent test). However, the Department also recognizes that while agency relationships are “frequently established by a written contract, this is not essential.” See id at 24403. In the absence of an agency contract, the Department usually examines the following five criteria as outlined in Gas Turbo Compressors in considering whether a principal/agent relationship exists:
1. the foreign producer's role in negotiating price and other terms of sale;
2. the extent of the foreign producer's interaction with the U.S. customer;
3. whether the agent/reseller maintains inventory;
4. whether the agent/reseller takes title to the merchandise and bears the risk of loss; and 5. whether the agent/reseller further processes or otherwise adds value to the merchandise.
See id. As shown in Gas Turbo Compressors, the Department examines these criteria to determine whether the principal company “effectively controlled the price” in the transaction with the U.S. customer, whether the principal company's identity “was disclosed,” whether the agent “maintain(s) inventory of, or further processes, the subject merchandise,” and the extent of contact between the principal and the agent's end-customer. See id.
In the case at hand, the Department found correspondence at verification which appears to document that Chia Far's relationship with the U.S. customer satisfies the criteria for a principal/agent relationship. Because of the proprietary nature of this issue, for further discussion, please see Preliminary Determination in the First Administrative Review of Stainless Steel Sheet and Strip from Taiwan: Adverse Start Printed Page 41513Facts Available Corroboration Memorandum, to Edward Yang through Rick Johnson (“AFA Memo: Chia Far”), July 31, 2001, at 2-4.
Based on the record evidence and facts appearing on the record of this review, the Department therefore considers Chia Far to be affiliated with the U.S. customer in question.
The Department notes that pursuant to the requirements of section 782(d) of the Act, Chia Far was given several opportunities to disclose information concerning its relationship with this U.S. customer (i.e., its Section A, Section B, and June 4, 2001 responses and its rebuttal to petitioners' initial allegation) but did not do so. Because Chia Far withheld this information, which would have allowed the Department to explore this issue in a more timely fashion, the Department was unable to explore the affiliation issue concerning this customer through additional supplemental questionnaires. As noted earlier, after petitioners' initial allegation, the Department again afforded Chia Far the opportunity to report this information. See Department's Supplemental Questionnaire, May 25, 2001. Thus, the Department finds that Chia Far possessed opportunities to correct, explain, and refute all the evidence on the record.
As a result, the record evidence and facts of the review show that Chia Far is affiliated with this U.S. customer. However, Chia Far's present database incorrectly reported sales to this customer as EP sales and did not include the first sale to an unaffiliated purchaser from this agent, nor does it contain the necessary data for CEP adjustments. Without this information, the Department is unable to accurately calculate a dumping margin. Moreover, because Chia Far has failed to respond accurately to the Department's initial Section A and Section C questionnaires and supplemental questionnaires, the Department is unable to further explore this issue within the statutory deadlines for completing this review.
Chia Far has reported sales to this agent as EP sales. Thus, the Department does not have Chia Far's sales to the first unaffiliated U.S. customer or the corresponding sales information necessary to calculate U.S. price. Moreover, because EP sales are reported based upon entry date into the United States during the POR while CEP sales are reported based upon a date of sale by the U.S. affiliate during the POR, a change in classification from EP to CEP may well result in a different universes of sales being reported. Consequently, Chia Far's response may be both inaccurate, in terms of reporting appropriate U.S. prices, and incomplete in terms of the sales which were reported.
Furthermore, sales to this agent make up a significant proportion of Chia Far's total reported sales to the United States during the POR. For the remaining sales, the number and volume of sales are insignificant in comparison to the volume of sales through Chia Far's affiliate. Thus, there is no reason to believe that Chia Far's sales to other U.S. customers would significantly reflect Chia Far's U.S. selling practices. Therefore, the Department finds that it is necessary to apply facts available to all of Chia Far's U.S. sales during the POR. For a further discussion, please see AFA Memo: Chia Far.
2. Selection of Adverse FA
When the Department finds that a party has not participated in a review to the “best of its ability,” it may apply adverse facts available. Section 776(b) of the Act provides:
“If the administering authority [* * *] 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 from the administering authority [* * *], the administering authority [* * *], in reaching the applicable determination under this title, may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available.”
See also Statement of Administrative Action (“SAA”) accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. 870 (1994) (discussing the need to apply adverse facts available when a party does not participate to the “best of its ability”). Section 776(b) further states that an adverse inference may include reliance on information derived from the petition, the final determinational results of prior reviews, or any other information placed on the record. In addition, the 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. In employing adverse inferences, the SAA instructs the Department to consider “the extent to which a party may benefit from its own lack of cooperation.” The Department is further guided by the CIT decision in Nippon Steel Corp. v. United States, 118 F. Supp.2d 1366, 1378-79 (Oct. 26, 2000) in which the Court directed that to apply an adverse inference in selecting from the facts available, the Department must find that a respondent did not comply with the agency's information requests in a manner consistent with the behavior of a reasonable respondent.
Chia Far explicitly denied on two occasions that it had a principle/agency relationship with this U.S. customer. In fact, in one response Chia Far stated:
Chia Far and this customer do not have, did not have in the POR, and did not have prior to the POR a principal/agent relationship, either in fact (via an agency contract) or in theory.
See Chia Far's Reply to Petitioners' Comments Re: CEP Sales, May 17, 2001, at 2. The evidence on the record, however, indicates that several years ago, a principle/agency relationship was formed between Chia Far and this U.S. customer. No evidence on the record refutes that this relationship existed in the past or continues to exist to this day. In fact, information found at verification appeared to further support the argument that such a relationship continued to exist throughout the POR.
Because the Department finds that Chia Far did not supply us with accurate and complete information, and, in fact, provided us with inaccurate and misleading information, we determine that Chia Far did not cooperate by complying with our requests for information and did not provide information on the level of that of a “reasonable respondent.” We therefore find that Chia Far did not act to the “best of its ability” in responding to the Department's questionnaires, and in order to ensure that it does not benefit from its lack of cooperation, pursuant to section 776(b) of the Act, we find that a total adverse inference is warranted in selecting from among the facts otherwise available.
The Department's practice when selecting an adverse FA rate from among the possible sources of information has been to ensure that the margin is sufficiently adverse so “as to effectuate the purpose of the FA rule to induce respondents to provide the Department with complete and accurate information in a timely manner.” Static Random Access Memory Semiconductors From Taiwan; Final Determination of Sales at Less Than Fair Value, 63 FR 8909, 8932 (February 23, 1998).
In order to ensure that the rate is sufficiently adverse so as to induce cooperation from Chia Far in future reviews, we have assigned to Chia Far, as total adverse FA, the highest margin from the investigation for Taiwan of 34.95 percent. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip from Taiwan, 64 FR 30592 (June 8, 1999) (“Taiwan SSSS”).Start Printed Page 41514
Information from prior segments of the proceeding, such as involved here, constitutes “secondary information” under section 776(c) of the Act. Secondary information is described in the SAA as “information derived from the petition that gave rise to the investigation or review, the final determination concerning subject merchandise, or any previous review under section 751 concerning the subject merchandise.” SAA at 870. Section 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate secondary information used for FA by reviewing independent sources reasonably at its disposal. The SAA provides that to “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value. See id. As noted in 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) (“TRBs”), to corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information used. Although the investigation rate of 34.95 percent constitutes secondary information, the information has already been corroborated in the LTFV investigation. During the investigation, the Department examined the accuracy and adequacy of the price-to-price information in the petition and corroborated the price-to-price petition comparison. Additionally, during the investigation, the Department examined the accuracy and adequacy of the key elements of middleman dumping calculations on which the middleman dumping petition was based, and corroborated this information. See Taiwan SSSS at 30599-30600; See also Persulfates from the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review, 66 FR 18439, 18441 (April 9, 2001) (employing a petition rate used as adverse FA in a previous segment as the adverse FA in the current review). Nothing on the record of the instant review calls into question the reliability of this rate. Furthermore, although this rate stems from a middleman dumping analysis, we note that it nonetheless represents the facts available regarding the price levels which Chia Far might sell at in competing with other producers of Taiwan in the U.S. and Taiwan markets. Thus, we find the rate is reliable.
With respect to the relevance aspect of corroboration in this review for adverse FA, the Department stated in TRBs that it will “consider information reasonably at its disposal as to whether there are circumstances that would render a margin irrelevant. Where circumstances indicate that the selected margin is not appropriate as adverse FA, the Department will disregard the margin and determine an appropriate margin.” See TRBs at 57392; See also Fresh Cut Flowers from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 61 FR 6812, 6814 (February 22, 1996) (disregarding the highest margin in the case as best information available because the margin was based on another company's uncharacteristic business expense resulting in an extremely high margin). The Department finds that the administrative record of this review does not contain information which indicates that the application of this rate would be inappropriate in the instant review or that the margin is not relevant. Furthermore, the rate has not been judicially invalidated. Thus, we are applying, as adverse FA, the 34.95 percent margin from the original investigation of sales at LTFV, and have satisfied the corroboration requirements under section 776(c) of the Act. See AFA Memo: Chia Far at 5-7.
Normal Value Comparisons
To determine whether respondent's sales of subject merchandise from Taiwan to the United States were made at less than fair value, we compared the export price (“EP”) and constructed export price (“CEP”), as appropriate, to the NV, as described in the “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 NV and compared these to individual EP and CEP transactions. We made corrections to reported U.S. and home market sales data based on the Department's findings at verification, as appropriate.
In accordance with section 771(16) of the Act, we considered all products covered by the Scope of the Review section above, which were produced and sold by YUSCO and Tung Mung 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.
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, constructed export price (“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.
For purposes of this review, YUSCO has classified its sales as export price (“EP”) sales. In alleging that its U.S. sales should be considered EP sales, YUSCO stated that “(it) sold subject merchandise directly to an importer in the United States during the POR. The Department, therefore, should treat YUSCO's U.S. sales as export price sales.” See YUSCO's September 28, 2000 Section A Questionnaire Response (Section A response), at 2.
Based on the information on the record, we are using export price as defined in section 772(a) of the Act because the merchandise was sold, prior to importation, by YUSCO to an unaffiliated purchaser for exportation to the United States, and constructed export price (CEP) methodology was not otherwise warranted based on the facts on the record. YUSCO identified one channel of distribution for U.S. sales (sales to an unaffiliated U.S. distributor) for its U.S. sales during the POR. We based EP on packed prices to Ta Chen International (“TCI”), a U.S. distributor, for export to the United States. We made deductions for inland freight (from YUSCO's plant to the port of export), international freight, marine insurance, container handling fees, certification handling fees, and foreign brokerage and Start Printed Page 41515handling in accordance with section 772(c) of the Act.
The Department treated each of Tung Mung's U.S. market transactions as EP sales because the merchandise was sold, prior to importation, by Tung Mung to an unaffiliated purchaser for exportation to the United States, and constructed export price (CEP) methodology was not otherwise warranted based on the facts on the record. We based EP on the packed prices to unaffiliated purchasers in the United States. We made deductions for domestic inland freight, brokerage and handling, harbor duty, bank charges, international ocean freight, and marine insurance (where applicable). Additionally, we added to the U.S. price an amount for duty drawback pursuant to section 772(c)(1)(B) of the Act. See Antidumping Duty Administrative Review for Stainless Steel Sheet and Strip in Coils from Taiwan: Analysis Memorandum for Tung Mung, from Edward C. Yang to Joseph Spetrini, July 31, 2001, for a further discussion of this issue.
For YUSCO and Tung Mung, we compared the aggregate volume of home market sales of the foreign like product and U.S. sales of the subject merchandise to determine whether the volume of the foreign like product sold in Taiwan was sufficient, pursuant to section 773(a)(1)(C) of the Act, to form a basis for NV. Because the volume of home market sales of the foreign like product was greater than five percent of the U.S. sales of subject merchandise for all three companies, in accordance with section 773(a)(1)(B)(i) of the Act, we have based the determination of NV upon the home market sales of the foreign like product. Thus, we used as NV the prices at which the foreign like product was first sold for consumption in Taiwan, in the usual commercial quantities, in the ordinary course of trade, and, to the extent possible, at the same level of trade (“LOT”) as the CEP or NV sales, as appropriate.
After testing home market viability and whether home market sales were at below-cost prices, we calculated NV as noted in the “Price-to-Price Comparisons” and “Price-to-Constructed Value (“CV”) Comparison” sections of this notice.
Cost of Production (“COP”) Analysis
YUSCO and Tung Mung
Because the Department determined that YUSCO and Tung Mung made sales in the home market at prices below the cost of producing the subject merchandise in the investigation and therefore excluded such sales from normal value, the Department determined that there are reasonable grounds to believe or suspect that YUSCO and Tung Mung made sales in the home market at prices below the cost of producing the merchandise in this review. See section 773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a cost of production inquiry to determine whether YUSCO and Tung Mung made home market sales during the POR at prices below their respective COP within the meaning of section 773(b) of the Act.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of YUSCO's and Tung Mung's cost 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. We used home market sales and COP information provided by YUSCO and Tung Mung in its questionnaire responses.
B. Test of Home Market Prices
We compared the weighted-average COP from June 8, 1999 through June 30, 2000 (“cost reporting period”) for YUSCO and Tung Mung, adjusted where appropriate, to their home market sales of the foreign like product as required under section 773(b) of the Act. In determining whether to disregard home market sales made at prices less than the COP, we examined whether: (1) Within an extended period of time, such sales were made in substantial quantities; and (2) such sales were made at prices which permitted the recovery of all costs within a reasonable period of time.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product within an extended period of time are at prices less than the COP, we do not disregard any below-cost sales of that product because the below-cost sales are not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product during the extended period are at prices less than the COP, we determine such sales to have been made in “substantial quantities.” See section 773(b)(2)(C)(i) of the Act. The extended period of time for this analysis is the POR. See section 773(b)(2)(B) of the Act. Because each individual price was compared against the weighted average COP for the cost reporting period, any sales that were below cost were also at prices which did not permit cost recovery within a reasonable period of time. See section 773(b)(2)(D). We compared the COP for subject merchandise to the reported home market prices less any applicable movement charges. Based on this test, we disregarded below-cost sales from our analysis for YUSCO and Tung Mung. Where all sales of a specific product were at prices below the COP, we disregarded all sales of that product.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated YUSCO's and Tung Mung's constructed value (“CV”) based on the sum of their cost of materials, fabrication, SG&A, including interest expenses, and profit. We calculated the COPs included in the calculation of CV as noted 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 and profit on the amounts incurred and realized by YUSCO and Tung Mung in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country.
We based normal value (“NV”) on the home market prices to unaffiliated purchasers and those affiliated customer sales which passed the arm's length test. We made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.
We calculated NV based on the home market prices to unaffiliated home market customers. We made adjustments, where applicable, for rebates and for movement expenses (i.e., inland freight from plant to customer) in accordance with section 773(a)(6)(B) of the Act. We made circumstance-of-sale adjustments for warranty expense, where appropriate. At verification, the Department noted inaccuracies in YUSCO's reported date of shipment, and consequently the value of its reported imputed credit expenses. Specifically, YUSCO reported the scheduled date, rather than the actual date of shipment, taken from the company's delivery notice. YUSCO reported that the scheduled date of shipment preceded the actual date of shipment by an average of six days. Start Printed Page 41516YUSCO acknowledged its error at verification and formally withdrew its claim for imputed credit expenses in a letter dated June 29, 2001. (See Letter from YUSCO to the Department, dated June 29, 2001.) Therefore, to correct this error, the Department disallowed imputed credit for all sales with reported positive credit expenses. For sales with reported negative credit expense, the Department added six days to the reported shipment date (i.e., scheduled shipment date), and recalculated credit accordingly. See YUSCO: Analysis Memo. In accordance with section 773(a)(6), we deducted home market packing costs and added U.S. packing costs.
We based home market prices on the packed, delivered prices to unaffiliated purchasers in the home market. We made adjustments, where applicable, in accordance with section 773(a)(6) of the Act. Such adjustments included adjustments for packing expenses. Where applicable, we made adjustments for movement expenses. To adjust for differences in circumstances of sale between the home market and the United States, we reduced home market prices by the amounts for direct selling expenses (i.e., credit and warranty expenses) and added U.S. credit expenses.
YUSCO and Tung Mung
In accordance with section 773(a)(4) of the Act, we base NV on CV if we are unable to find suitable home market sales of the foreign like product. We did not use CV for YUSCO or Tung Mung for these preliminary results of review.
Level of Trade
In accordance with section 773(a)(1)(B) 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 transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive 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.
To determine whether NV sales are at a different LOT than EP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated 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 on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Carbon Steel Plate from South Africa, 62 FR 61731, 61746 (November 19, 1997).
In the present review, YUSCO did not request a LOT adjustment. 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 Taiwan markets, including the selling functions, classes of customer, and selling expenses.
For the home market (“HM”), YUSCO reported one level of trade. See October 30, 2001 Questionnaire Response from YUSCO, at B-32. YUSCO sold through one channel of distribution in the HM: Directly from its plant to local distributors. For these HM customers, YUSCO provided inland freight and warranty services where appropriate. Because there is only one sales channel, we preliminarily determine that there is one LOT in the home market.
For the U.S. market, YUSCO reported one level of trade. See October 30, 2001 Questionnaire Response from YUSCO, at C-26. YUSCO sold through one channel of distribution in the U.S. market: To an unaffiliated local distributor. For U.S. sales, YUSCO provided inland freight from the plant to the port of export. YUSCO also provided for container, certification and document handling fees at the port of export along with marine transportation and insurance. YUSCO did not incur any expenses in the United States for its U.S. sales. Because there is only one sales channel, we preliminarily determine that there is one LOT in the home market.
Based on our analysis of the selling functions performed for sales in the HM and U.S. market, we preliminarily determine that, despite the existence of certain minor additional selling expenses (i.e., container, certification and document handling fees at the port of export) incurred by YUSCO for its U.S. sales, there is not a significant difference in the selling functions performed in the HM and U.S. market and that these sales are made at the same LOT. Therefore, a LOT adjustment is not appropriate.
In the present review, Tung Mung stated that a LOT adjustment was not applicable. To determine whether an adjustment is 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.
In the home market (“HM”), Tung Mung reported two levels of trade. See November 6, 2000 Questionnaire Response from Tung Mung, at B-26. In the HM, Tung Mung stated that it sold through two channels of distribution: Made to order sales; and, supplied from inventory sales. However, Tung Mung was unable to differentiate sales based on channel of distribution and reported all sales, therefore, as “both made to order and supplied from inventory.” Because Tung Mung claimed that it could not distinguish its level of trade based on channels of distribution, it reported home market level of trade based on its two customer types: Distributors and end-users.
For sales in the HM, Tung Mung performed sales-related activities, including arranging for freight and delivery and warranty for both distributors and end-users. Therefore, based on Tung Mung's selling functions performed for each type of customer, we preliminarily determine that there is one LOT in the home market.
In the U.S. market Tung Mung reported two levels of trade. See November 6, 2000 Questionnaire Response from Tung Mung, at C-23. In the U.S. market, Tung Mung stated that it sold through one channel of distribution: Made to order sales. However, Tung Mung sold merchandise to two types of customers, distributors and trading companies, and reported its U.S. level of trade based on customer type.
For U.S. sales to both distributors and trading companies, Tung Mung performed many of the same major selling functions, including freight and delivery and warranty services. Therefore, based on Tung Mung's selling functions performed for each type of customer, we preliminarily determine that there is one LOT in the U.S. market.
Finally, because the selling functions performed for both HM and EP sales are identical, we preliminarily determine that there is not a significant difference in the selling functions performed in the home market and U.S. market and that these sales are made at the same LOT. Start Printed Page 41517Therefore, a LOT adjustment is not appropriate.
For purposes of the preliminary results, we made currency conversions in accordance with section 773A of the Act, based on the official exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank of New York. Section 773A(a) of the Act directs the Department to use the daily exchange rate in effect on the date of sale in order to convert foreign currencies into U.S. dollars, unless the daily rate involves a “fluctuation.” In accordance with the Department's practice, we have determined as a general matter that a fluctuation exists when the daily exchange rate differs from a benchmark by 2.25 percent. See, e.g., Certain Stainless Steel Wire Rods from France; Preliminary Results of Antidumping Duty Administrative Review, 61 FR 8915, 8918 (March 6, 1998), and Policy Bulletin 96-1: Currency Conversions, 61 FR 9434 (March 8, 1996). The benchmark is defined as the rolling average of rates for the past 40 business days. When we determine a fluctuation exists, we substitute the benchmark for the daily rate.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the following weighted-average dumping margin exists for the period June 8, 1999 through June 30, 2000:
The Department will disclose calculations performed within five days of the date of publication of this notice to the parties to this proceeding in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first working day thereafter. 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 such briefs or comments, may be filed no later than 35 days after the date of publication. Further, we would appreciate it if parties submitting written comments also provide the Department with an additional copy of those comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results.
Upon issuance of the final results of this review, the Department shall determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate on 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 the U.S. Customs Service to assess duties on all entries of subject merchandise by that importer.
The following cash deposit requirements will be effective upon publication of these final results for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of 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 product is de minimis, i.e., less than 0.5 percent, a cash deposit rate of zero 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 less than fair value (“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 12.61 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.
This notice also serves as a reminder to parties subject to administrative protective orders (APOs) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305, that continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.
This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.Start Signature
Dated: July 31, 2001.
Assistant Secretary for Import Administration.
1. Allegheny Ludlum, AK Steel Corporation (formerly Armco, Inc.), J&L Specialty Steel, Inc., North American Stainless, Butler-Armco Independent Union Zanesville Armco Independent Union, and the United Steelworkers of America, AFL-CIO/CLC.Back to Citation
2. “Arnokrome III” is a trademark of the Arnold Engineering Company.Back to Citation
3. “Gilphy 36” is a trademark of Imphy, S.A.Back to Citation
4. “Durphynox 17” is a trademark of Imphy, S.A.Back to Citation
5. This list of uses is illustrative and provided for descriptive purposes only.Back to Citation
6. “GIN4 Mo,” “GIN5” “GIN6” are the proprietary grades of Hitachi Metals America, Ltd.Back to Citation
[FR Doc. 01-19780 Filed 8-7-01; 8:45 am]
BILLING CODE 3510-DS-P