Stainless Steel Bar From India; Final Results of Antidumping Duty New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results of antidumping duty new shipper review of stainless steel bar from India.

SUMMARY:

On August 25, 1999, the Department of Commerce published the preliminary results of the new shipper review of the antidumping duty order on stainless steel bar from India. We gave interested parties an opportunity to comment on the preliminary results. Based on our analysis of the comments received, we have made certain changes for the final results.

This review covers three producers/exporters of stainless steel bar to the United States during the period February 1, 1998, through July 31, 1998.

EFFECTIVE DATE:

January 24, 2000.

FOR FURTHER INFORMATION CONTACT:

James Breeden or Melani Miller, Import Administration, AD/CVD Enforcement Group I, Office 1, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C. 20230; telephone (202) 482-1174 or 482-0116, respectively.

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, all references to the Department of Commerce's (“the Department's”) regulations are to 19 CFR Part 351 (April 1998).

SUPPLEMENTARY INFORMATION:

Background

On August 25, 1999, the Department published the preliminary results of the new shipper review of the antidumping duty order on stainless steel bar from India (64 FR 46350) (“Preliminary Results”). The manufacturers/exporters in this new shipper review are Jyoti Steel Industries (“Jyoti”), Parekh Bright Bars Pvt. Ltd. (“Parekh”), and Shah Alloys Ltd. (“Shah”). We verified information provided by Jyoti as discussed in the Verification section, below. We received a case brief from the petitioners on December 22, 1999. We received rebuttal briefs from Jyoti and Shah on January 7, 2000.

Scope of the Review

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 this review is currently classifiable under subheadings 7222.10.0005, 7222.10.0050, 7222.20.0005, 7222.20.0045, 7222.20.0075, and 7222.30.0000 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.

Verification

As provided in section 782(i) of the Act, we verified information provided by Jyoti using standard verification procedures, including on-site inspection of the manufacturer's facilities, the examination of relevant cost data and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in the public and business proprietary versions of the verification report, dated December 13, 1999.

Comparisons

We calculated export price and normal value based on the same methodology used in the Preliminary Results, with the following exceptions:

With respect to Shah, we used facts available as discussed in the Use of Facts Otherwise Available section, below.

For Jyoti, we adjusted its direct material costs, internal taxes on direct material purchases, direct labor costs, variable overhead costs, general and administrative costs, interest expenses, and international freight expense based on information gathered at verification. See Memorandum to Susan H. Kuhbach: “Jyoti Steel Industries Verification Report” dated December 13, 1999 (“Verification Report”) and “Company-specific Calculation Notes for Final Results: Jyoti Steel Industries” dated January 15, 2000.

Use of Facts Otherwise Available

Section 776(a)(2)(A) of the Act provides for the use of facts available when an interested party withholds information that has been requested by the Department. As described in more detail below, Shah failed to provide information explicitly requested by the Department; therefore, we have used facts otherwise available in determining Shah's dumping margin.

However, pursuant to section 782(e) of the Act, in using the facts otherwise available we must determine whether information Shah already submitted for the record of this review may be used in calculating a dumping margin. Section 782(e) of the Act 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 which 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.

While Shah did respond to our original questionnaire and supplemental questionnaires, it refused our request to revise its constructed value (“CV”) using cost data relevant to the POR, or in the alternative, explain or document why the cost data it did submit was representative of the costs incurred during the POR. Because of Shah's refusal to respond to our requests for additional information, we did not verify the company as planned. Thus, pursuant to section 782(e)(3), we found the information on the record so incomplete for the POR being examined that we determined that it could not serve as a reliable basis for calculating a dumping margin. Also, pursuant to section 782(e)(4), Shah failed to act to the best of its ability in providing the requested information. Consequently, we are not using any of the information submitted by Shah for our final results and are relying instead on facts available.

In selecting from among the facts otherwise available, section 776(b) of the Act provides that the Department may use an inference that is adverse to the interests of a party if it determines that party has failed to cooperate to the best of its ability. On August 19, 1999, we issued a supplemental questionnaire to Shah, which instructed the company to either revise its CV database based on costs incurred during the POR or to submit supporting documentation as to why its fiscal year cost information accurately reflected the costs incurred by the company during the POR. In its supplemental questionnaire response, Shah failed to address either issue. We issued Shah another supplemental questionnaire on September 29, 1999, requesting that it submit CV data based on actual costs incurred during the POR. Shah responded in its October 16, 1999, supplemental questionnaire response that it was not revising its CV database and that it was continuing to provide CV information based on fiscal year 1998-1999 data.

We find that by not providing necessary information specifically requested by the Department, Shah failed to cooperate to the best of its ability. Therefore, in selecting facts available, we have determined that an adverse inference is warranted. As adverse facts available, we have assigned a margin of 21.02 percent to Shah's sales of the subject merchandise.

This margin, calculated for sales by Mukand Limited during the original less than fair value (“LTFV”) investigation, represents the highest weighted-average margin determined for any firm during any segment of this proceeding. Information from prior segments of the proceeding constitutes secondary information and section 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate that secondary information from independent sources reasonably at its disposal. The Statement of Administrative Action (“SAA”) provides that “corroborate” means simply that the Department will satisfy itself that the secondary information to be used has probative value (see, H.R. Doc. 103-316, Vol. 1, 870 (1994)).

To corroborate secondary information, the Department will, to the extent practicable, examine the reliability and relevance of the information to be used. However, unlike other types of information, such as input costs or selling expenses, there are no independent sources for calculated dumping margins. Thus, in an administrative review, if the Department chooses as adverse facts available a calculated dumping margin from a prior segment of the proceeding, it is not necessary to question the reliability of the margin for that time period. 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)).

As discussed above, it is not necessary to question the reliability of a calculated margin from a prior segment of the proceeding. Further, there are no circumstances indicating that this margin is inappropriate as facts available. Therefore, we find that the 21.02 percent rate is corroborated.

In our Preliminary Results, we applied a total adverse facts available margin for Parekh. We have not changed this finding for these final results. For a detailed explanation of our reasons for applying adverse facts available, please see our Preliminary Results and the Department's response to Comment 1 below.

Interested Party Comments

In accordance with 19 CFR 351.309, we invited interested parties to comment on our Preliminary Results. We received written comments from the petitioners and rebuttal comments from Jyoti and Shah.

Comment 1: Use of Facts Available for Parekh and Shah

The petitioners argue that the Department should rely on facts available for Parekh and Shah for purposes of the final results because each company failed to report critical information required for the calculation of dumping margins. With respect to Parekh, the petitioners note that the company failed to respond to the Department's supplemental request for information. Therefore, the petitioners argue that the Department should continue to rely on facts available when calculating Parekh's margin, as it did in the Preliminary Results. With respect to Shah, the petitioners argue that the Department has no choice but to apply the facts otherwise available because the company failed to report costs of production in a manner consistent with Department requirements and provided no explanation for its failure to do so. In support of their argument, the petitioners cite to the Department's December 17, 1999, memorandum which states that Shah's failure to comply with Department requests warrants the use of adverse facts available. See December 17, 1999, Memorandum from Team to Richard Moreland, “Failure by Shah Alloys to Respond to Requests for Information.”

Shah argues that the CV information it provided to the Department was the only cost data that it had available when it received the Department's requests. Therefore, Shah contends that it has cooperated to the best of its ability with the Department requests for information.

Department's Position

We agree with the petitioners and have applied the facts otherwise available to both Shah and Parekh for the final results. As discussed in the Preliminary Results, we did not have the data necessary to calculate a dumping margin for Parekh, because Parekh failed to respond to the Department's supplemental questionnaire and request for cost information, and discontinued all communication with the Department. In light of this withholding of necessary information, pursuant to section 776(a)(2)(A) of the Act, we found it necessary to apply the facts available. Furthermore, not only did Parekh fail to provide necessary information specifically requested by the Department and to discontinue its participation in this review, Parekh provided the Department with no explanation or reasons for its failure to participate. Based on these facts, pursuant to section 776(b) of the Act, we determined that Parekh failed to cooperate to the best of its ability; therefore, we used an adverse inference when selecting among the facts otherwise available.

Moreover, we corroborated the facts available rate applied to Parekh as explained in the Preliminary Results. We have received no information that would call into question our corroboration of that rate and, therefore, continue to use it for our final results.

As noted above in the Facts Otherwise Available section, Shah did not submit information requested by the Department and failed to cooperate by not acting to the best of its ability to comply with a request for information. As was stated in the Department's December 17, 1999, memorandum, although Shah did submit cost information, that information was based on a time period that included eight months that were not included in the POR. We gave Shah numerous opportunities to explain why this data was representative of the costs incurred during the POR or to revise its data, opportunities that were declined by Shah. At the time the Department requested the cost information, Shah offered no explanation as to why it chose not to take advantage of the opportunities provided by the Department. It is only now, in its rebuttal brief, that Shah informs the Department that the cost data it had provided was the only cost data that it had available when it received the Department's requests. However, we find that this explanation is belated.

Section 776(a)(2)(A) of the Act provides for the use of facts available when an interested party withholds information that has been requested by the Department. As explained in the Facts Otherwise Available section above and in our Preliminary Results, because we found that both Shah and Parekh withheld critical information that was requested by the Department, the use of facts otherwise available is appropriate.

Furthermore, as is also noted above, in accordance with section 776(b) of the Act, if the Department finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information, the Department may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available. Because we found that neither Shah nor Parekh cooperated to the best of its ability, the use of an adverse inference is also appropriate for the final results for both Shah and Parekh.

Comment 2: The Department Should Apply Facts Available to Jyoti

The petitioners argue that Jyoti has significantly impeded the proceeding by failing to report its sales to third country markets and, therefore, the Department should rely on facts available for Jyoti. Moreover, contrary to Jyoti's explanation at verification that it misunderstood the Department's reporting instructions, the petitioners allege that record evidence indicates Jyoti clearly understood the Department's instructions. Given that Jyoti has intentionally withheld information requested, the Department should disregard the constructed value information submitted by Jyoti as the basis for the calculation of normal value and assign an adverse facts available rate to Jyoti for the final results. In support of their argument, the petitioners cite Stainless Steel Sheet and Strip in Coils From Taiwan, Notice of Final Determination of Sales at Less than Fair Value, 64 FR 30592 (June 8, 1999) (“Sheet and Strip from Taiwan”), in which the Department applied adverse facts available to a respondent company that failed to report all of its home market sales.

Jyoti argues that it reported the sales that are identical to its U.S. sales. The company states that the merchandise it sold to third country markets is different in physical and chemical properties. Thus, according to Jyoti, those sales should not have been reported.

Department's Position

As discussed in the Preliminary Results, Jyoti reported that it had a viable home market and no third-country market sales of the foreign like product. We agreed with Jyoti that it had a viable home market, but preliminarily determined that a “particular market situation” existed making it inappropriate to use home market sales as a basis for normal value. Therefore, based upon our understanding at the time that Jyoti had no third country sales, we requested and received CV information from Jyoti and used it as the basis for normal value for the preliminary results. At verification, we discovered that Jyoti did make third-country sales of the foreign like product during the POR. However, as discussed in the verification report, we believe that the misreporting was based on a misunderstanding and that information was not intentionally withheld from the Department. See page 3 of the Verification Report.

We do not agree that applying adverse facts available is appropriate in this situation. Unlike the situation in Sheet and Strip from Taiwan, in this instance we find that Jyoti has had difficulty understanding our reporting instructions. This situation is complicated by the fact that it is the first time the company is involved with an antidumping proceeding. Jyoti's misunderstanding was substantiated at verification when company officials expressed their confusion regarding the reporting of third-country sales. Jyoti's rebuttal comments also illustrate its continued misunderstanding. While we have not found that Jyoti fully complied with this request for information, we have not found that this error in reporting demonstrates Jyoti's failure to cooperate to the best of its ability. Rather, Jyoti's subsequent responses to our supplemental questions and its cooperation at verification are indicative of a cooperative respondent. In addition, the CV information was verified by the Department and can be used without difficulties. Moreover, the information is complete and can serve as a reliable basis for calculating an antidumping duty margin.

Comment 3: Jyoti's CV Reporting Methodology

The petitioners contend that the information obtained by the Department at verification demonstrates that Jyoti's reporting methodology is flawed. Specifically, the petitioners argue that Jyoti's use of a single, average cost for all of its products fails to measure accurately the direct labor and overhead expenses allocable to the different bar sizes produced by Jyoti. The petitioners contend that Jyoti's failure to revise its allocation methodology, despite the requests made by the Department, warrants the use of facts available.

Jyoti contends that the size and simplicity of its operations does not necessitate allocating labor and overhead costs differently across the various bar sizes it produces. Jyoti further argues that any deviations from the single, average cost it reported are marginal and do not have an impact on the calculation of CV.

Department's Position

Although we found at verification that the allocation methodology used in Jyoti's questionnaire response contained certain errors, we agree with Jyoti that none of these errors was so significant as to warrant the rejection of Jyoti's data. In general, when we deem a respondent's data to be acceptable, our practice is to correct it for errors found at verification. Accordingly, we have reallocated Jyoti's direct labor and variable overhead expenses based on the information collected at verification for purposes of the final results.

Comment 4: Jyoti's Calculation of U.S. Credit Expense Is Incorrect

The petitioners argue that Jyoti's calculation of U.S. credit expense does not take into account the correct number of days between the shipment of the merchandise and the receipt of payment from the customer. According to the petitioners, the Department should adjust this expense to reflect the correct number of days outstanding between shipment and customer payment.

Jyoti argues that it has correctly used the number of days between the issuance of the invoice and receipt of payment from its bank.

Department's Position

We disagree with the petitioners that the calculation of credit expense is incorrect. The Department's preference is to use actual credit cost information. As discussed in the Verification Report, Jyoti finances its exports accounts receivable by entering into a discount arrangement with its bank. See page 4 of the Verification Report. Jyoti has submitted on the official record bank documentation detailing the credit costs incurred in connection with its U.S. sale. This information was also reviewed at verification. Because the reported amount represents the actual credit expenses incurred by Jyoti, we have continued to use it for our final results.

Comment 5: The Department Should Reject Jyoti's Offsets to Constructed Value

The petitioners argue that the Department should not allow an adjustment to constructed value for internal taxes on raw material purchases because Jyoti failed to provide evidence of rebates from the government. The petitioners note that it is the Department's practice to allow an adjustment for tax rebates only if a respondent can demonstrate a link between claimed rebates and its cost of manufacture. See Canned Pineapple Fruit From Thailand, Final Results and Partial Recession of Antidumping Duty Administrative Review, 64 FR 69481, 69485 (December 13, 1999). According to the petitioners, Jyoti failed to provide such a link and, thus, the Department should not allow this cost adjustment.

Jyoti contends that there is a direct link between the sales tax rebate and the cost of manufacture. However, Jyoti argues that this tax rebate is difficult to document because reimbursement occurs through the reduction of taxes payable to the government.

Department's Position

We agree with the petitioners, in part. At verification, company officials were unable to provide supporting documentation with respect to the rebates received in connection with sales taxes paid on raw material purchases. Accordingly, we have not made an adjustment to Jyoti's CV data for these tax rebates. However, company officials were able to document the refund of excise duties paid on the raw materials used to produce subject merchandise. Therefore, we have offset Jyoti's CV data by the amount of excise duties refunded in connection with the purchase of the raw materials used in the production of the subject merchandise.

Final Results of Review

As a result of this review, we find that the following margins exist for the period February 1, 1998, through July 31, 1998:

The Department will disclose to a party to the proceeding calculations performed in connection with these final results within five days after the date of announcement or, if there is no public announcement, within five days after the date of publication of this notice. See 19 CFR 351.224. The result of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the review and for future deposits of estimated duties for the manufacturers/exporters subject to this review. We have calculated an importer-specific duty assessment rate based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total value of those sales examined. The Department will issue appraisement instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of this new shipper review, as provided by section 751(a)(1) of the Act: (1) the cash deposit rate for the reviewed companies will be the rates indicated above; (2) for companies not covered in this review, but covered in previous reviews or the LTFV investigation (59 FR 66915, December 28, 1994), 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 investigation, but the manufacturer is, the cash deposit rate will be the most recent rate established for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this review or any previous review or the original investigation, the cash deposit rate will be the “all others” rate of 12.45 percent established in the LTFV investigation.

These deposit requirements will remain in effect until publication of the final results of the next administrative review.

This notice also serves as a final 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.

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(a)(3). 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 new shipper review and notice are in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Act.