Notice of Preliminary Results of Antidumping Duty Administrative Review: Stainless Steel Bar From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results.

SUMMARY:

In response to requests from interested parties, the Department of Commerce is conducting an administrative review of the antidumping duty order on stainless steel bar from India with respect to Isibars Limited; Mukand, Ltd.; Venus Wire Industries Limited; and the Viraj Group, Ltd. (Viraj Alloys, Ltd.; Viraj Forgings, Ltd.; and Viraj Impoexpo, Ltd.). This review covers sales of stainless steel bar to the United States during the period February 1, 2001, through January 31, 2002.

We preliminarily find that, during the period of review, sales of stainless steel bar from India were made below normal value. If the preliminary results are adopted in the final results of this administrative review, we will instruct the Customs Service to assess antidumping duties on all appropriate entries. Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

March 7, 2003.

FOR FURTHER INFORMATION CONTACT:

Cole Kyle or Ryan Langan, Office 1, AD/CVD Enforcement, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington DC 20230; telephone (202) 482-1503 or (202) 482-2613 respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 1, 2002, the Department published a notice in the Federal Register (67 FR 4945) of the opportunity for interested parties to request an administrative review of the antidumping duty order on stainless steel bar from India. In February 2001, the Department received timely requests for an administrative review from Carpenter Technology Corp., Crucible Specialty Metals Division of Crucible Materials Corp., Electralloy Corp., Slater Steels Corp., Empire Specialty Steel and the United Steelworkers of America (AFL-CIO/CLC) (collectively, “petitioners”) and Viraj Group Ltd., an Indian producer of the subject merchandise. On March 11, 2002, the Department received a review request from Ferro Alloys Corp. Ltd. (“Facor”), an Indian exporter/producer of the subject merchandise. However, since Facor's review request was not timely filed in accordance with 19 CFR 351.213(b)(2) (April 2001), we did not consider it when initiating this administrative review.

In accordance with 19 CFR 351.221(b)(1), we published a notice of initiation of this antidumping duty administrative review on March 27, 2002 (67 FR 14696) with respect to the following exporter/producers of the subject merchandise: Isibars Limited (“Isibars”); Mukand, Ltd. (“Mukand”); Venus Wire Industries Limited (“Venus”); and the Viraj Group, Ltd. (“Viraj”). The period of review (“POR”) is February 1, 2001 through January 31, 2002.

On March 27, 2002, the petitioners requested the Department to conduct verification in this review. On May 22, 2002, the Department issued antidumping duty questionnaires to Isibars, Venus, Viraj and Mukand. We received timely responses from Isibars, Venus and Viraj (collectively, “respondents”). Mukand did not file a timely response to our questionnaire (see “Facts Available” section below for further details). We issued supplemental questionnaires to the respondents and received responses from September 2002 to February 2003.

On October 11, 2002, the petitioners submitted a timely allegation that Viraj made sales below the cost of production (“COP”). We found that the petitioners’ allegation provided a reasonable basis to believe or suspect that sales in the home market by Viraj had been made at prices below the COP. On November 6, 2002, pursuant to section 773(b) of the Tariff Act of 1930, as amended effective January 1, 1995 (“the Act”) by the Uruguay Round Agreements Act (“URAA”), we initiated an investigation to determine whether Viraj made home market sales during the POR at prices below the COP, within the meaning of section 773(b) of the Act (see Memorandum from Team to Susan Kuhbach, Director, AD/CVD Enforcement Office 1, “Allegation of Sales Below the Cost of Production for Viraj Impoexpo Ltd.,” dated November 6, 2002). Accordingly, we notified Viraj that it must respond to Section D of the antidumping duty questionnaire.

On October 16, 2002, the Department found that because several of the respondents in this proceeding had outstanding supplemental questionnaires and the Department required time to review and analyze the responses once they were received, it was not practicable to complete this review within the time allotted. Accordingly, we published an extension of time limit for the completion of the preliminary results of this review to no later than February 28, 2003, in accordance with section 751(a)(3)(A) of the Act and 19 CFR 351.213(h)(2). See Stainless Steel Bar from India; Extension of Time Limit for the Preliminary Results of the Antidumping Duty Administrative Review, 67 FR 64870 (October 22, 2002).

Scope of the Order

Imports covered by this review are shipments of stainless steel bar (“SSB”). SSB means articles of stainless steel in straight lengths that have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-finished, or ground, having a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles, hexagons, octagons, or other convex polygons. SSB includes cold-finished SSBs that are turned or ground in straight lengths, whether produced from hot-rolled bar or from straightened and cut rod or wire, and reinforcing bars that have indentations, ribs, grooves, or other deformations produced during the rolling process.

Except as specified above, the term does not include stainless steel semi-finished products, cut length flat-rolled products (i.e., cut length rolled products which if less than 4.75 mm in thickness have a width measuring at least 10 times the thickness, or if 4.75 mm or more in thickness having a width which exceeds 150 mm and measures at least twice the thickness), wire (i.e., cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products), and angles, shapes, and sections.

The SSB subject to these reviews is currently classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this review is dispositive.

Facts Otherwise Available

Section 776(a)(2) of the Act provides that the Department shall apply “facts otherwise available” if, inter alia, a respondent (A) withholds information that has been requested; (B) fails to provide information within the deadlines established, or in the form or manner requested by the Department, subject to subsections (c)(1) and (e) of Section 782; (C) significantly impedes a proceeding; or (D) provides information that cannot be verified.

Section 782(e) of the Act further provides that the Department shall not decline to consider information that is submitted by an interested party and that is necessary to the determination but does not meet all the applicable requirements established by the Department if (1) the information is submitted by the deadline established for its submission; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability in providing the information and meeting the requirements established by the Department with respect to the information; and (5) the information can be used without undue difficulties.

On May 22, 2002, the Department issued the antidumping duty questionnaire to Mukand. The first page of the questionnaire established a due date of June 28, 2002, for Mukand's response. In addition, the cover letter to the questionnaire instructed Mukand to formally request an extension of time in writing before the due date if it was unable to respond to the questionnaire within the specified time limit. On August 2, 2002, Mukand submitted a letter to the Department stating that it did not believe it was required to respond to the Department's questionnaire. Mukand's letter also stated that Mukand had made no shipments of the subject merchandise to the United States during the POR. However, the Department examined shipment data furnished by the Customs Service and found that there were U.S. shipments of subject merchandise from Mukand during the POR.

Mukand's August 2, 2002 letter was the first and only communication the Department received from Mukand relating to this administrative review. Mukand did not request an extension of time to respond to the Department's questionnaires prior to the June 28, 2002 response deadline nor did Mukand, at any time, inform the Department that it was having difficulties submitting the requested information. (See section 782(c) of the Act.) Lastly, Mukand's statement that it had no shipments of subject merchandise to the United States during the POR appears inconsistent with U.S. customs data; in addition, Mukand's letter was submitted well after the June 28, 2002 questionnaire response due date. Therefore, on August 21, 2002, the Department sent Mukand a letter explaining that its August 2, 2002 submission was being returned, that all other copies had been destroyed in accordance with 19 CFR 351.302(d)(2), and that none of the information in the August 2, 2002 submission would be considered in this administrative review (see Letter to Mukand Ltd., “Administrative Review of Stainless Steel Bar from India,” which is available in the Department's Central Records Unit, Room B-099).

Because Mukand did not respond to the Department's antidumping duty questionnaire within the deadline for submission of such information, the use of facts otherwise available is appropriate and in accordance with section 776(a)(2)(B) of the Act. The Department applies adverse facts available “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” Uruguay Round Agreements Act, Statement of Administrative Action, H.R. Doc No. 103-316, vol. 1, at 870 (1994) (“SAA”). In determining the appropriate facts available to apply to Mukand, we preliminarily find that an adverse inference is warranted because Mukand failed to cooperate by not acting to the best of its ability to reply to a request for information from the Department under section 776(b) of the Act.

As adverse facts available, we have assigned Mukand a margin of 21.02 percent, the highest margin alleged in the petition, in accordance with section 776(b)(1). (This margin was also assigned to Mukand in the Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar from India, 59 FR 66915 (December 28, 1994) (“LTFV Final”) as adverse facts available because it failed to respond to the Department's questionnaire.) Section 776(b) of the Act notes that an adverse facts available rate may include reliance on information derived from: (1) The petition; (2) a final determination in the investigation; (3) any previous review; or (4) any other information placed on the record. Thus, the statute does not limit the specific sources from which the Department may obtain information for use as facts available. The SAA recognizes the importance of facts available as an investigative tool in antidumping proceedings. The Department's potential use of facts available provides the only incentive to foreign exporters and producers to respond to the Department's questionnaires. See SAA at 868.

Section 776(c) of the Act mandates that the Department, to the extent practicable, shall corroborate secondary information (such as petition data) using independent sources reasonably at its disposal. In accordance with the law, the Department, to the extent practicable, will examine the reliability and relevance of the information used.

To corroborate the selected margin, we compared it to individual transaction margins for companies in this administrative review with weighted-average margins above de minimis. We found that the selected margin falls within the range of individual transaction margins and that there was a significant number of sales, made in the ordinary course of trade, in commercial quantities, with margins near or exceeding 21.02 percent. This evidence supports the reliability of this margin and an inference that the selected rate might reflect Mukand's actual dumping margin.

With respect to the relevance aspect of corroboration, however, the Department will consider information reasonably at its disposal as to whether there are circumstances that would render a margin inappropriate. Where circumstances indicate that the selected margin is not appropriate as adverse facts available, the Department will disregard the margin and determine an appropriate margin (see, e.g., Fresh Cut Flowers from Mexico; Final Results of Antidumping Duty Administrative Review, 61 FR 6812, 6814 (Feb. 22, 1996) (where the Department disregarded the highest margin as adverse facts available because the margin was based on another company's uncharacteristic business expense resulting in an unusually high margin)). Therefore, we also examined whether any information on the record would discredit the selected rate as reasonable facts available for Mukand. No such information exists. In particular, there is no information, such as reliable evidence of Mukand's export prices, that might lead to a conclusion that a different rate would be more appropriate.

Accordingly, we have assigned Mukand, in this administrative review, the rate of 21.02 percent as total adverse facts available. This is consistent with section 776(b) of the Act which states that adverse inferences may include reliance on information derived from the petition.

Finally, we note that Mukand, Parek Bright Bars Pvt. Ltd. (“Parek”) and Shah Alloys, Ltd. (“Shah”), are currently subject to the 21.02 percent rate because they failed to respond to the Department's request for information in the LTFV Final or in prior administrative reviews. See LTFV Final, Stainless Steel Bar from India; Final Results of Antidumping Duty New Shipper Review, 65 FR 3662 (January 24, 2000) and Stainless Steel Bar from India; Final Results of Antidumping Duty Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 2000).

Collapsing

Viraj

In this administrative review, in past administrative reviews of stainless steel bar from India, and in other antidumping proceedings before the Department, the Viraj Group Ltd. has responded to the Department's questionnaires on behalf of the affiliated companies comprising the Viraj Group, Ltd. (i.e., VAL, VIL, and VFL). See Stainless Steel Bar from India; Final Results of Antidumping Duty Administrative Review, 67 FR 45956 (July 11, 2002) (“2001 AR Final”). See also Stainless Steel Wire Rod From India; Final Results of Antidumping Duty Administrative Review, 67 FR 37391 (May 29, 2002); Stainless Steel Wire Rod From India; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 68 FR 1040 (January 8, 2003); and Certain Forged Stainless Steel Flanges From India; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 67 FR 10358 (March 7, 2002), affirmed in Certain Stainless Steel Flanges From India; Final Results of Antidumping Duty Administrative Review, 67 FR 62439 (October 7, 2002). In the 2001 AR Final, the Department collapsed VAL, VIL and VFL because the record evidence demonstrated that VAL and VIL were able to produce similar or identical merchandise (i.e., the merchandise under review) during the POR and could continue to do so, independently or under existing agreements, without substantial retooling of their production facilities. The Department also found that there was a significant potential for the manipulation of price and production among VAL, VIL and VFL. Because the record evidence in this review is consistent with the facts upon which the Department relied in past administrative reviews, we continue to find that VAL, VIL and VLF are affiliated and should be treated as one entity for the purposes of this administrative review (i.e., collapsed) pursuant to section 771(33) of the Act and 19 CFR 351.401(f).

Isibars

Isibars Limited responded to the Department's questionnaire in this administrative review on behalf of Isibars Limited and its affiliates, Zenstar Impex (“Zenstar”) and Isinox Steel, Ltd. (“Isinox”) (collectively, “Isibars”). In the LTFV Final and in Stainless Steel Bar from India; Final Results of Antidumping Duty Administrative Review and New Shipper Review and Partial Rescission of Administrative Review, 65 FR 48965 (August 10, 2000), the Department determined that Isibars Limited, Zenstar, and Isinox were affiliated, and should be collapsed and considered one entity pursuant to section 771(33) of the Act and 19 CFR 351.401(f). Because Isibars and Zenstar share a common director and are dependent upon each other for procurement, production and sales purposes, we find that Isibars and Zenstar are affiliated persons in accordance with 771(33)(F) & (G) of the Act. The record evidence in this administrative review demonstrates that Isibars and Isinox were able to produce similar or identical merchandise (i.e., the merchandise under review) during the POR and could continue to do so without substantial retooling of their production facilities. In addition, record indicates that there was a significant potential for the manipulation of price and production among Isibars, Isinox and Zenstar during the POR. Therefore, we find that Isibars, Isinox and Zenstar are affiliated and should be treated as one entity for the purposes of this administrative review (i.e., collapsed) pursuant to section 771(33) of the Act and 19 CFR 351.401(f).

Fair Value Comparisons

To determine whether sales of SSB from India to the United States were made at less than normal value, we compared export price (“EP”) or constructed export price (“CEP”) to the normal value (“NV”), as described in the “Export Price and Constructed Export Price” and “Normal Value” sections of this notice. In accordance with 19 CFR 351.414(c)(2), we compared individual EPs and CEPs to weighted-average NVs, which were calculated in accordance with section 777A(d)(2) of the Act.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced and sold by the respondents in the home market during the POR that fit the description in the “Scope of the Order” section of this notice to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We compared U.S. sales to sales of identical merchandise in the home market made in the ordinary course of trade, where possible. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade. To determine the appropriate product comparisons, we considered the following physical characteristics of the products in order of importance: type, grade, remelting, type of final finishing operation, shape, and size.

Export Price and Constructed Export Price

We calculated EP in accordance with Section 772(a) of the Act for those sales where the merchandise was sold to the first unaffiliated purchaser in the United States prior to importation by the exporter or producer outside the United States and the constructed export price methodology was not otherwise indicated. We based EP on packed ex-factory, CIF, and delivered prices to unaffiliated purchasers in the United States. We identified the correct starting price by adjusting the reported gross unit price, where applicable, for interest revenue, taxes, and billing adjustments (see below). We made deductions from the starting price for movement expenses in accordance with section 772(c)(2)(A) of the Act. These deductions included, where appropriate, domestic inland freight, brokerage and handling, international freight, marine insurance, U.S. customs duties, U.S. inland freight, and other U.S. transportation expenses.

In accordance with Section 772(b) of the Act, we calculated CEP for those sales to the first unaffiliated purchaser that took place after importation into the United States. We based CEP on packed CIF and C&F duty-paid prices to unaffiliated purchasers in the United States. We identified the starting price and made deductions for movement expenses, including domestic inland freight, international freight, marine insurance, brokerage and handling, U.S. customs duties, and other transportation expenses, where appropriate, in accordance with section 772(c)(2)(A) of the Act. 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 and indirect selling expenses. Lastly, we made an adjustment for profit in accordance with section 772(d)(3) of the Act.

To calculate the EP and CEP, we relied upon the data submitted by the respondents, except where noted below:

Isibars

Isibars reported that it paid, upon shipment, excise taxes on subject merchandise exported to the United States. Isibars has not reported these taxes separately, as it claims they are subsequently rebated upon demonstration that the merchandise was exported. However, Isibars has failed to provide sufficient documentation showing that the tax was refunded upon export. Based on a review of Isibars, U.S. sales invoices provided in its October 28, 2002 submission, it appears that Isibars' reported gross unit prices include the excise tax. Therefore, pursuant to section 772(c)(2)(B), we used the tax rate reported by Isibars to calculate the transaction-specific tax and have deducted that amount from the starting price. See Memorandum to File “Isibars Limited Preliminary Results Calculation Memorandum” dated February 28, 2003 (“Isibars Calculation Memorandum”).

Venus

Venus reported discounts in its sales databases. However, the information on the record indicates that the discounts are actually billing adjustments (i.e., adjustments to price). Therefore, for the preliminary results, we have treated Venus' reported discounts as billing adjustments. See Memorandum to File “Venus Wire Industries Limited Preliminary Results Calculation Memorandum” dated February 28, 2003 (“Venus Calculation Memorandum”).

Viraj

For two sales, we revised Viraj's control numbers to reflect the reported model matching characteristics. See Memorandum to File “Viraj Group, Ltd. Preliminary Results Calculation Memorandum” dated February 28, 2003 (“Viraj Calculation Memorandum”).

Duty Drawback

Isibars, Venus and Viraj claimed a duty drawback adjustment based on their participation in the Indian government's Duty Entitlement Passbook Program. Such adjustments are permitted under section 772(c)(1)(B) of the Act.

The Department will grant a respondent's claim for a duty drawback adjustment where the respondent has demonstrated that there is (1) a sufficient link between the import duty and the rebate, and (2) a sufficient amount of raw materials imported and used in the production of the final exported product. See Rajinder Pipe Ltd. v. U.S. (“Rajinder Pipes”), 70 F. Supp. 2d 1350, 1358 (Ct. Int'l Trade 1999). In Rajinder Pipes, the Court of International Trade upheld the Department's decision to deny a respondent's claim for duty drawback adjustments because there was not substantial evidence on the record to establish that part one of the Department's test had been met. See also Viraj Group, Ltd. v. United States of America and Carpenter Technology, Corp., et al., Slip Op. 01-104 (CIT August 15, 2001).

In this administrative review, Isibars, Venus and Viraj have failed to demonstrate that there is a link between the import duty paid and the rebate received, and that imported raw materials are used in the production of the final exported product. Because they have failed to meet the Department's requirements, we are denying the respondents' requests for a duty drawback adjustment. See, Isibars Calculation Memorandum, Viraj Calculation Memorandum, and Venus Calculation Memorandum for further details.

Normal Value

A. Home Market Viability

In order 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., whether the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared each 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 19 CFR 404(b)(2). Because each 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.

B. Cost of Production

1. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for general and administrative expenses (“G&A”), and interest expenses, and home market packing costs, where appropriate (see the “Test of Comparison Market Sales Prices” section below for treatment of home market selling expenses).

For each respondent, we have implemented a change in practice regarding the treatment of foreign exchange gains and losses. The Department's previous practice was to have respondents identify the source of all foreign exchange gains and losses (e.g., debt, accounts receivable, accounts payable, cash deposits) at both a consolidated and unconsolidated corporate level. At the consolidated level, the current portion of foreign exchange gains and losses generated by debt or cash deposits was included in the interest expense rate computation. At the unconsolidated producer level, foreign exchange gains and losses on accounts payable were either included in the G&A rate computation, or under certain circumstances, in the cost of manufacturing. Gains and losses on accounts receivable at both the consolidated and unconsolidated producer levels were excluded from the COP and CV calculations.

Instead of splitting apart the foreign exchange gains and losses as reported in an entity's financial statements, we will normally include in the interest expense computation all foreign exchange gains and losses. In doing so, we will no longer include a portion of foreign exchange gains and losses from two different financial statements (i.e., consolidated and unconsolidated producer). Instead, we will only include the foreign exchange gains and losses reported in the financial statement of the same entity used to compute each respondent's net interest expense rate. This approach recognizes that the key measure is not necessarily what generated the exchange gain or loss as opposed to how well the entity as a whole was able to manage its foreign currency exposure in any one currency. As such, for the preliminary results, we included all foreign exchange gains or losses in the interest expense rate computation. We note, however, that there may be unusual circumstances which may cause the Department to deviate from this general practice.

We relied on the COP data submitted by the respondents, except where noted below:

Isibars

Isibars claimed a startup adjustment for its new bar and rod mill.

Section 773(f)(1)(C)(ii) of the Act authorizes adjustments for startup operations “only where (I) a producer is using new production facilities or producing a new product that requires substantial additional investment, and (II) production levels are limited by technical factors associated with the initial phase of commercial production. For purposes of subclause (II), the initial phase of commercial production ends at the end of the startup period. In determining whether commercial production levels have been achieved, the administering authority shall consider factors unrelated to startup operations that might affect the volume of production processed, such as demand, seasonality, or business cycles.” Moreover, the SAA at 836 directs that attainment of peak production levels will not be the standard for identifying the end of the startup period because the startup period may end well before a company achieves optimum capacity utilization. In addition, the SAA notes that Commerce will not extend the startup period so as to cover improvements and cost reductions that may occur over the entire life cycle of the product. The SAA further instructs that a producer's projections of future volume or cost will be accorded little weight, as actual data regarding production are much more reliable than a producer's expectations. The SAA also notes that the burden is on the respondent to demonstrate its entitlement to a startup adjustment; specifically, the respondent must demonstrate that production levels were limited by technical factors associated with the initial phase of commercial production and not by factors unrelated to startup, such as marketing difficulties or chronic production problems.

In this administrative review, Isibars stated that its new bar and rod mill started trial runs in June 1998. Isibars claims that it began initial commercial production on April 1, 2001, because it was required to do so by its lenders. Isibars notes that it complied with its lenders' requirement even though the plant had not been fully stabilized and it was not able to produce merchandise in commercially feasible quantities. Isibars submitted a startup adjustment based on the theoretical production capacity of the mill based on a 24-hour operation period. As noted above, the SAA directs that attainment of peak production levels will not be the standard for identifying the end of the startup period because the startup period may end well before a company achieves optimum capacity utilization. Based on the information submitted by Isibars, it appears that Isibars reached commercial levels of production prior to the start of the POR. For a more detailed discussion, see Memorandum from Nancy Decker through Michael Martin to Neal Halper, “Isibars Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results'' memorandum dated February 28, 2003.

In addition, we find that the problems reported by Isibars do not demonstrate that production levels were limited by technical factors associated with the initial phase of commercial production. Rather, we find that these problems primarily appear to be chronic production problems rather than technical factors associated with startup. For a more detailed discussion, see Memorandum from Nancy Decker through Michael Martin to Neal Halper, “Isibars Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results' memorandum dated February 28, 2003. Because section 773(f)(1)(C)(ii) of the Act establishes that both prongs of the start-up test must be met before a startup adjustment is warranted, these findings demonstrate that Isibars has failed to meet the second prong of the test, which is sufficient to deny Isibars' claim for a startup adjustment.

As discussed above, we adjusted Isibars”, Isinox's and Zenstar's interest expense, G&A expenses, and cost of manufacturing (COM), where applicable, to account for our change in the treatment of foreign exchange gains and losses. We also revised Isibars' interest expense calculation methodology. We adjusted COM for Isibars to include certain lease and hire charges that were not included in reported costs. We adjusted G&A for Isinox to deduct certain selling expenses. We also adjusted COM for Zenstar to adjust for differences from the submitted reconciliation. As Isibars did not provide COP data for one product control number, we assigned that product control number the costs of a similar product. For a detailed discussion of the above-mentioned adjustments, see Memorandum from Nancy Decker through Michael Martin to Neal Halper, “Isibars Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results' memorandum dated February 28, 2003.

Venus

We made the following adjustments to Venus' reported costs: (1) We adjusted Venus' fixed overhead to account for the incorrect reporting period used for depreciation; (2) we adjusted direct material cost to eliminate the scrap realization amount because Venus could not explain the methodology behind the percentage used for the process loss calculation; (3) we adjusted Venus' interest expense ratio to include interest attributed to export invoices and our change in the treatment of foreign exchange gains and losses (as discussed above); (4) we adjusted G&A for Venus to include donations, prior year adjustments, and loss on sale of assets; and (5) we adjusted G&A for Venus to include all G&A costs after deduction of selling expenses. For a detailed discussion of the above-mentioned adjustments, see Memorandum from Margaret Pusey through Michael Martin to Neal Halper “Venus Wire Industries Limited Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results' dated February 28, 2003.

Viraj

We made the following adjustments to Viraj's reported costs: (1) VIL calculated its yield losses based on the quantity of scrap and wastage produced as a percentage of the quantity of bright bar output produced. We revised VIL's yield losses calculation to reflect the input quantity of raw material instead of the quantity of bright bar produced; (2) VAL excluded certain depreciation expense from the cost of sales (“COS”) which is used as denominator of the G&A expense rate calculation. We revised VAL's COS to include the depreciation expense. We then divided VAL's reported G&A expenses by the revised COS to calculate the revised G&A expense rate; (3) VIL excluded certain interest and bank charges from the reported financial expense rate calculation which it claims are reflective of the imputed finance charges used to adjust price. We revised VIL's financial expense to include the interest charges and bank charges. We then divided VIL's revised interest expense by the cost of sales to calculate the revised financial expense rate; (4) VAL calculated its financial expense rate to include all of the interest expenses and the COS of Viraj group companies. Because Viraj group companies do not prepare consolidated financial statements, we revised VAL's financial expense rate calculation to reflect only VAL's interest expense and the COS. In addition we revised VAL's interest expense to include waived interest expense. We then divided VIL's revised interest expense by the VAL's cost of sales to calculate the revised financial expense rate. For a detailed discussion of the above-mentioned adjustments, see Memorandum from Ji Young Oh through Michael Martin to Neal Halper, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results' dated February 28, 2003. We also created temporary control numbers which include ranged sizes for cost matching purposes (see Viraj Calculation Memorandum).

1. Test of Home Market Prices

On a product-specific basis, we compared the adjusted weighted-average COP to the home market sales of the foreign like product during the POR, as required under section 773(b) of the Act, in order to determine whether sales had been made at prices below the COP. The prices were exclusive of any applicable movement charges, billing adjustments, commissions, discounts and indirect selling expenses. 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 such sales were made (1) within an extended period of time in substantial quantities and (2) at prices which did not permit the recovery of costs within a reasonable period of time.

2. Results of the COP Test

Pursuant to section 773(b)(1) of the Act, where less than 20 percent of a respondent's sales of a given product during the POR were at prices less than the COP, we do not disregard any below-cost sales of that product because we determine that in such instances the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product are at prices less than the COP, we disregard those sales of that product because we determine that in such instances the below-cost sales represent “substantial quantities” within an extended period of time in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determine whether such sales were made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act.

We found that, for each of the respondents, for certain specific products, more than 20 percent of the comparison market sales were at prices less than the COP and, thus, the below-cost sales were made within an extended period of time in substantial quantities. In addition, these sales were made at prices that did not provide for the recovery of costs within a reasonable period of time. We therefore excluded these sales and used the remaining sales, if any, as the basis for determining NV, in accordance with section 773(b)(1).

For U.S. sales of subject merchandise for which there were no comparable home market sales in the ordinary course of trade (e.g., sales that passed the cost test), we compared those sales to constructed value (“CV”), in accordance with section 773(a)(4) of the Act.

C. Calculation of Constructed Value

Section 773(a)(4) of the Act provides that where NV cannot be based on comparison-market sales, NV may be based on CV. Accordingly, when sales of comparison products could not be found, either because there were no sales of a comparable product or all sales of the comparable products failed the COP test, we based NV on CV.

In accordance with section 773(e)(1) and (e)(2)(A) of the Act, we calculated CV based on the sum of the cost of materials and fabrication for the subject merchandise, plus amounts for selling expenses, G&A, including interest, profit and U.S. packing costs. We made the same adjustments to the CV costs as described in the “Calculation of COP” section of this notice. In accordance with section 773(e)(2)(A) of the Act, we based selling expenses, G&A 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.

D. Level of Trade

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (“LOT”) as the EP or CEP. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. Id.; see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997). In order to determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”), including selling functions, class of customer (“customer category”), and the level of selling expenses for each type of sale.

Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying levels of trade for EP and comparison market sales, (i.e., NV based on either home market or third country prices ³) we consider the starting prices before any adjustments. For CEP sales, we consider only the selling expenses reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 2001).

When the Department is unable to match U.S. sales to sales of the foreign like product in the comparison market at the same LOT as the EP or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if a NV LOT is more remote from the factory than the CEP LOT and we are unable to make a level of trade adjustment, the Department shall grant a CEP offset, as provided in section 773(a))(7)(B) of the Act. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

Viraj reported that it sells to manufacturers and trading companies in the home market, and to distributors in the United States. Viraj reported a single level of trade and a single channel of distribution in the home market and has not requested a LOT adjustment. We examined the information reported by Viraj and found that home market sales to both customer categories were identical with respect to sales process, freight services, warehouse/inventory maintenance, advertising activities, technical service, and warranty service. Accordingly, we preliminarily find that Viraj had only one level of trade for its home market sales.

For CEP sales, Viraj reported the same single level of trade and channel of distribution reported for home market sales. The CEP selling activities differ from the home market selling activities only with respect to freight and delivery. Therefore, we find that the CEP level of trade is similar to the home market LOT and a level-of-trade adjustment is not necessary. See section 773(a)(7)(A) of the Act.

Isibars reported that it sells to end-users and trading companies in the home market, and to distributors in the United States. Venus reported that it sells to trading companies and end-users in the home market, and to distributors and end-users in the United States. Isibars and Venus reported the same level of trade and the same channel of distribution for sales in the United States and the home market, and neither company has requested a LOT adjustment.

We examined the information reported by Isibars and Venus, and found that home market sales to both customer categories were identical with respect to sales process, freight services, warehouse/inventory maintenance, advertising activities, technical service, and warranty service. Accordingly, we preliminarily find that each company had only one level of trade for its home market sales. Isibars' and Venus' EP selling activities differ from the home market selling activities only with respect to freight and delivery. Therefore, we find that the EP level of trade is similar to the home market LOT and a level-of-trade adjustment is not necessary. See section 773(a)(7)(A) of the Act.

E. Calculation of Normal Value Based on Home Market Prices

We calculated NV based on ex-factory or delivered prices to unaffiliated customers in the home market. We identified the starting price and made adjustments for billing adjustments, where appropriate (see below). We also made deductions for early payment discounts. In accordance with section 773(a)(6)(B)(ii) of the Act, we made deductions for inland freight. In addition, we made adjustments under section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 for differences in circumstances of sale for imputed credit expenses and commissions, where appropriate. We also made adjustments, where appropriate, in accordance with 19 CFR 351.410(e), for indirect selling expenses incurred in the home market or United States where commissions were granted on sales in one market but not in the other (the commission offset).

Furthermore, we made adjustments for differences in costs attributable to differences in the physical characteristics of the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We also deducted home market packing costs and added U.S. packing costs in accordance with section 773(a)(6)(A) and (B) of the Act.

To calculate NV, we relied upon the data submitted by the respondents. However, for Isibars, we adjusted the quantities reported for several sales to account for returned merchandise (see Isibars Calculation Memorandum). For Venus, we used the date of the preliminary results as the payment date in the credit calculation for those sales for which payment dates were not reported. Venus also reported discounts in its sales databases. However, the information on the record indicates that the discounts are actually billing adjustments (i.e., adjustments to price). Therefore, for the preliminary results, we have treated Venus' reported discounts as billing adjustments. See, Venus Calculation Memorandum for further details.

F. Calculation of Normal Value Based on Constructed Value

For price-to-CV comparisons, we made adjustments to CV in accordance with section 773(a)(8) of the Act. We made adjustments to CV for differences in circumstances of sale in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. In addition, we added U.S. packing costs.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A(a) of the Act based on the exchange rates in effect on the dates of the U.S. sales as reported by the Federal Reserve Bank.

Preliminary Results of Review

We preliminarily find the following weighted-average dumping margins:

Assessment Rates

Pursuant to 19 CFR 351.212(b), the Department calculates an assessment rate for each importer of the subject merchandise for each respondent. Upon issuance of the final results of this administrative review, if any importer-specific assessment rates calculated in the final results are above de minimis (i.e., at or above 0.5 percent), the Department will issue appraisement instructions directly to the Customs Service to assess antidumping duties on appropriate entries. To determine whether the duty assessment rates covering the period were de minimis, in accordance with the requirement set forth in 19 CFR 351.106(c)(2), for each respondent we calculate importer (or customer)-specific ad valorem rates by aggregating the dumping margins calculated for all U.S. sales to that importer (or customer) and dividing this amount by the total value of the sales to that importer (or customer). Where an importer (or customer)-specific ad valorem rate is greater than de minimis, we calculate a per unit assessment rate by aggregating the dumping margins calculated for all U.S. sales to that importer (or customer) and dividing this amount by the total quantity sold to that importer (or customer). We have calculated a per unit assessment rate for CEP sales because we did not have reliable entered values to calculate an assessment rate. See, Viraj Calculation Memorandum for further details.

All other entries of the subject merchandise during the POR will be liquidated at the antidumping duty rate in place at the time of entry.

The Department will issue appropriate assessment instructions directly to the Customs Service within 15 days of publication of the final results of this review.

Cash Deposit Rates

The following deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of SSB from India entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) The cash deposit rates for the reviewed companies will be the rate established in the final results of this review, except if the rate is less than 0.50 percent, and therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) if the exporter is not a firm covered in this review, but was covered in a previous review or the original LTFV investigation, the cash deposit rate will continue to be the company-specific rate published for the most recent period; and (3) the cash deposit rate for all other manufacturers and/or exporters of this merchandise, shall be 12.45 percent, the “all others” rate established in the LTFV investigation (see 59 FR 66915, December 28, 1994).

These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Public Comment

Any interested party may request a hearing within 30 days of publication of this notice. A hearing, if requested, will be held 37 days after the publication of this notice, or the first business day thereafter. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice. 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 the preliminary results.

Notification to Importers

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.

Notification Regarding APOs

This notice also serves as a reminder to parties subject to administrative protective orders (“APO”) 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 administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.