Stainless Steel Sheet and Strip in Coils From Taiwan: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on stainless steel sheet and strip in coils (SSSSC) from Taiwan with respect to 20 companies. The Department selected Chia Far Industrial Factory Co., Ltd. (Chia Far), as the mandatory respondent in this review. The respondents which were not selected for individual examination are listed in the “Preliminary Results of Review” section of this notice. The period of review (POR) is July 1, 2008, through June 30, 2009.

We preliminarily determine that sales were not made below normal value (NV). We are also rescinding this review with respect to Emerdex Group, Emerdex Stainless Flat-Rolled Products, Inc., and Emerdex Stainless Steel, Inc. (collectively, the “Emerdex Companies”).

If the preliminary results are adopted in our final results of this administrative review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. Interested parties are invited to comment on the preliminary results.

DATES:

Effective Date: August 13, 2010.

FOR FURTHER INFORMATION CONTACT:

Henry Almond, AD/CVD Operations, Office 2, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0049.

SUPPLEMENTARY INFORMATION:

Background

On July 27, 1999, the Department published in the Federal Register the antidumping duty order on SSSSC from Taiwan. See Notice of Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils From United Kingdom, Taiwan, and South Korea, 64 FR 40555 (July 27, 1999) (SSSSC Order). On July 1, 2009, the Department published in the Federal Register a notice of opportunity to request administrative review of this order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 74 FR 31406 (July 1, 2009).

On July 28, 2009, Chia Far submitted a timely request for the Department to conduct an administrative review of its shipments of SSSSC made during the POR, in accordance with section 751(a) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.213(b)(2). On July 31, 2009, the peti tioners submitted a timely request for the Department to conduct an administrative review of the sales of SSSSC made during the POR by the following 23 companies: Chain Chon Industrial Co., Ltd.; Chia Far; Chien Shing Stainess Co.; China Steel Corporation; Dah Shi Metal Industrial Co., Ltd.; Emerdex Group; Emerdex Stainless Flat-Rolled Products, Inc.; Emerdex Stainless Steel, Inc.; Goang Jau Shing Enterprise Co., Ltd.; KNS Enterprise Co., Ltd.; Lih Chan Steel Co., Ltd.; Maytun International Corp.; PFP Taiwan Co., Ltd.; Shih Yuan Stainess Steel Enterprise Co., Ltd.; Ta Chen Stainless Pipe Co., Ltd. (Ta Chen); Tang Eng Iron Works; Tibest International Inc.; Tung Mung Development Co., Ltd. (Tung Mung)/Ta Chen; Waterson Corp.; Yieh Loong Enterprise Co., Ltd. (aka Chung Hung Steel Co., Ltd.); Yieh Mau Corp.;Yieh Trading Corp.; and Yieh United Steel Corporation, also pursuant to section 751(a) of the Act, and in accordance with 19 CFR 351.213(b)(1).

In August 2009, the Department published a notice of initiation of administrative review covering each of these 23 companies. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 74 FR 42873, 42875 (Aug. 25, 2009) (Initiation Notice). In our initiation notice we indicated that, in the event we limited the number of respondents for individual examination, we would select mandatory respondents for review based upon CBP entry data. See Initiation Notice, 74 FR at 42874. In this month we released relevant CBP data to interested parties. Also in this month we received a statement from China Steel Corporation indicating that it had no shipments of subject merchandise to the United States during the POR.

In September 2009, we received comments on the issue of respondent selection from the petitioners and Chia Far.

In October 2009, after considering the resources available to the Department, we determined that it was not practicable to examine all exporters/producers of subject merchandise for which a review was requested. See Memorandum to James Maeder, Director, Office 2, AD/CVD Operations, from Henry Almond, Analyst, Office 2, AD/CVD Operations, entitled: “2008-2009 Antidumping Duty Administrative Review of SSSSC from Taiwan: Selection of Respondents for Individual Review,” dated October 6, 2009 (Respondent Selection Memo). As a result, we selected the largest exporter of subject merchandise during the POR, Chia Far, for individual examination in this segment of the proceeding. Accordingly, we issued the antidumping duty questionnaire to Chia Far on October 6, 2009.

In December 2009, we received Chia Far's responses to sections A through D of the questionnaire.

In February 2010, the Department exercised its discretion to toll deadlines for the duration of the closure of the Federal Government from February 5, through February 12, 2010. For further discussion, see Memorandum to the Record from Ronald Lorentzen, DAS for Import Administration, regarding “Tolling of Administrative Deadlines As a Result of the Government Closure During the Recent Snowstorm,” dated February 12, 2010.

In March 2010, we issued supplemental questionnaires covering sections A (i.e., the section related to general information), B and C (i.e., the sections covering comparison market and U.S. sales, respectively), and D (i.e., the section covering cost of production (COP)) of the questionnaire. Chia Far responded to these supplemental questionnaires in March and April 2010.

In April 2010, we published a notice extending the time limit for completion of the preliminary results. See Stainless Steel Sheet and Strip in Coils from Taiwan: Notice of Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 75 FR 17378 (Apr. 6, 2010).

In May 2010, the Department verified the sales data submitted by Chia Far. We have incorporated our sales verification findings in these preliminary results. Also in this month we issued an additional questionnaire regarding section D of the questionnaire.

In July 2010, the Department verified the cost data submitted by Chia Far.

Period of Review

The POR is July 1, 2008, through June 30, 2009.

Scope of the Order

The products covered by the order 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 the order is classified in the Harmonized Tariff Schedule of the United States (HTSUS) 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, 7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise under the order is dispositive.

Excluded from the scope of the 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 HTSUS, “Additional U.S. Note” 1(d).

Also excluded from the scope of the order are certain specialty stainless steel products 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 the 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 the order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials 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 the order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System 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 processing, and is supplied as, for example, GIN6.

Partial Rescission of Review

The Department finds that it is appropriate to rescind the instant review with respect to the Emerdex Companies named by the petitioners in their review request because the Department found in the 2003-2004 administrative review of this order that the Emerdex companies are U.S. entities. See Stainless Steel Sheet and Strip in Coils from Taiwan: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 71 FR 45521, 45524-45525 (Aug. 9, 2006) unchanged in Stainless Steel Sheet and Strip in Coils From Taiwan; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 71 FR 75504 (Dec. 15, 2006). We note that the petitioners in the instant review have not provided any additional information demonstrating that the Emerdex companies for which they have requested a review are located in Taiwan. Consequently, we are rescinding this review with regard to the Emerdex companies. This treatment is consistent with the Department's treatment of these companies in the most recent administrative review of the antidumping order on SSSSC from Taiwan involving the Emerdex Companies. See Stainless Steel Sheet and Strip in Coils from Taiwan: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 72 FR 43236, 43239 (Aug. 3, 2007) unchanged in Stainless Steel Sheet and Strip in Coils From Taiwan: Final Results and Rescission in Part of Antidumping Duty Administrative Review, 73 FR 6932, (Feb. 6, 2008).

Preliminary No Shipment Determination

As noted in the “Background” section above, China Steel Corporation certified to the Department that it had no shipments/entries of subject merchandise into the United States during the POR. The Department subsequently confirmed with CBP the no-shipment claim made by China Steel Corporation. Because the evidence on the record indicates that China Steel Corporation did not export subject merchandise to the United States during the POR, we preliminarily determine that China Steel Corporation had no reviewable transactions during the POR.

Since the implementation of the 1997 regulations, our practice concerning no-shipment respondents has been to rescind the administrative review if the respondent certifies that it had no shipments and we have confirmed through our examination of CBP data that there were no shipments of subject merchandise during the POR. See Antidumping Duties; Countervailing Duties, 62 FR 27296, 27393 (May 19, 1997). As a result, in such circumstances, we normally instruct CBP to liquidate any entries from the no-shipment company at the deposit rate in effect on the date of entry.

In our May 6, 2003, “automatic assessment” clarification, we explained that, where respondents in an administrative review demonstrate that they had no knowledge of sales through resellers to the United States, we would instruct CBP to liquidate such entries at the all-others rate applicable to the proceeding. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (Assessment Policy Notice).

Because “as entered” liquidation instructions do not alleviate the concerns which the May 2003 clarification was intended to address, we find it appropriate in this case to instruct CBP to liquidate any existing entries of merchandise produced by China Steel Corporation and exported by other parties at the all-others rate, should we continue to find that China Steel Corporation had no shipments of subject merchandise in the POR in our final results. See, e.g., Magnesium Metal From the Russian Federation: Preliminary Results of Antidumping Duty Administrative Review, 75 FR 26922 (May 13, 2010). In addition, the Department finds that it is more consistent with the May 2003 clarification not to rescind the review in part in these circumstances but, rather, to complete the review with respect to China Steel Corporation and issue appropriate instructions to CBP based on the final results of the review. See the “Assessment Rates” section of this notice below.

Affiliation

In the 2007-2008 administrative review, the most recently completed segment of this proceeding, we found Chia Far and Lucky Medsup Inc. (Lucky Medsup), one of Chia Far's U.S. reseller customers, to be affiliated under section 771(33) of the Act, which states that, for purposes of affiliation, “a person shall be considered to control another person if the person is legally or operationally in a position to exercise restraint or direction over that person.” The Department's regulations further provide that “{t}he Secretary will not find that control exists on the basis of these factors unless the relationship has the potential to impact decisions concerning the production, pricing, or cost of the subject merchandise or foreign like product.” See 19 CFR 351.102(b)(3). This affiliation determination was based on the fact that “Chia Far is in a position to exercise restraint or direction over Lucky Medsup and has the potential to have an impact on Lucky Medsup's decisions regarding sales and pricing.” See Stainless Steel Sheet and Strip in Coils From Taiwan: Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 74 FR 39055, 39058 (Aug. 5, 2009) (2007-2008 Preliminary Results), unchanged in Stainless Steel Sheet and Strip in Coils From Taiwan: Final Results and Rescission in Part of Antidumping Duty Administrative Review, 75 FR 5947, 5949 (Feb. 5, 2010) (2007-2008 Final Results).

Moreover, this affiliation determination in the 2007-2008 administrative review is consistent with the Department's finding in prior administrative reviews. See, e.g., Stainless Steel Sheet and Strip in Coils From Taiwan: Preliminary Results and Preliminary Rescission in Part of Antidumping Duty Administrative Review, 73 FR 45393, 45395-45396 (Aug. 5, 2008) unchanged in Stainless Steel Sheet and Strip in Coils From Taiwan: Final Results and Rescission in Part of Antidumping Duty Administrative Review, 73 FR 74704, 74706 (Dec. 9, 2008) (2006-2007 Final Results); Stainless Steel Sheet and Strip From Taiwan; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 FR 6682 (Feb. 13, 2002), and accompanying Issues and Decision Memorandum at Comment 23 (upheld by the Court of International Trade (CIT) in Chia Far Indus. Factory Co., Ltd. v. United States, et al., 343 F. Supp. 2d 1344, 1356-57 (CIT 2004)). See also the August 9, 2010, Memorandum to the File from Henry Almond, Analyst, entitled, “Placing Information Regarding the Principal-Agent Relationship between Lucky Medsup Inc. and Chia Far Industrial Factory Co., Ltd. on the Record of the 2008-2009 Antidumping Duty Administrative Review on Stainless Steel Sheet and Strip in Coils from Taiwan.”

In the present review, Lucky Medsup continues to act as a “go-through” without maintaining inventory, and Chia Far supplied all of the subject merchandise sold by Lucky Medsup during the POR. Further, Chia Far has submitted no evidence on the record to demonstrate that Chia Far is less involved in the transactions between Lucky Medsup and its customers as found in prior reviews. Therefore, we continue to find for purposes of these preliminary results that Chia Far is affiliated with Lucky Medsup because Chia Far is in a position to exercise restraint or direction over Lucky Medsup and has the potential to have an impact on Lucky Medsup's decisions regarding sales and pricing.

Identifying Home Market Sales

Section 773(a)(1)(B) of the Act defines NV as the price at which the foreign like product is first sold (or, in the absence of a sale, offered for sale) for consumption in the exporting country (home market), in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade (LOT) as the export price (EP) or constructed export price (CEP). In implementing this provision, the CIT has found that sales should be reported as home market sales if the producer “knew or should have known that the merchandise {it sold} was for home consumption based upon the particular facts and circumstances surrounding the sales.” See Tung Mung De v. Co v. United States, 25 CIT 752, 783 (2001) (quoting INA Walzlager Schaeffler KG v. United States, 957 F. Supp. 251 (CIT 1997)). Where a respondent has no knowledge as to the destination of subject merchandise, except that it is for export, the Department will classify such sales as export sales and exclude them from the home market sales database. See 2007-2008 Preliminary Results, 74 FR at 39058, unchanged in 2007-2008 Final Results, and Final Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel Plate From Korea, 58 FR 37176, 37182-37183 (July 9, 1993).

In its December 4, 2009, questionnaire response, Chia Far stated that it shipped some of the SSSSC it sold to home market customers during the POR to a container yard or it placed the SSSSC in an ocean shipping container at the home market customer's request. The Department has preliminarily determined that, based on the fact that these sales were sent to a container yard or placed in a container by Chia Far at the request of the home market customer, Chia Far should have known that the SSSSC in question was not for consumption in the home market. Therefore, consistent with this determination, the Department has preliminarily excluded these sales from Chia Far's home market sales database. This treatment is consistent with our practice in prior administrative reviews of this order. See, e.g., 2007-2008 Preliminary Results, 74 FR at 39059, unchanged in 2007-2008 Final Results.

Comparisons to Normal Value

In order to determine whether Chia Far sold SSSSC to the United States at prices less than NV, we compared the EP and CEP of individual U.S. sales to the monthly weighted-average NV of sales of the foreign like product made in the ordinary course of trade. See sections 777A(d)(2) and 773(a)(1)(B)(i) of the Act. Section 771(16) of the Act defines foreign like product as merchandise that is identical or similar to subject merchandise and produced by the same person and in the same country as the subject merchandise. Thus, we considered all products covered by the scope of the order that were produced by the same person and in the same country as the subject merchandise, and sold by Chia Far in the comparison market during the POR, to be foreign like products for the purpose of determining appropriate product comparisons to SSSSC sold in the United States.

During the POR, Chia Far sold subject merchandise and foreign like product that it made from hot- and cold-rolled stainless steel coils (products covered by the scope of the order) purchased from unaffiliated parties. Chia Far further processed the hot- and cold-rolled stainless steel coils by performing one or more of the following procedures: cold-rolling, bright annealing, surface finishing/shaping, and slitting. We did not consider Chia Far to be the producer of the merchandise under review if it performed only insignificant processing on the coils (e.g., annealing, slitting, surface finishing). See Stainless Steel Plate in Coils from Belgium: Final Results of Antidumping Duty Administrative Review, 69 FR 74495 (Dec. 14, 2004), and accompanying Issues and Decision Memorandum at Comment 4 (listing painting, slitting, finishing, pickling, oiling, and annealing as minor processing for flat-rolled products). Furthermore, we did not consider Chia Far to be the producer of the cold-rolled products that it sold if it was not the first party to cold-roll the coils. The cold-rolling process changes the surface quality and mechanical properties of the product and produces useful combinations of hardness, strength, stiffness, and ductility. Stainless steel cold-rolled coils are distinguished from hot-rolled coils by their reduced thickness, tighter tolerances, better surface quality, and increased hardness which are achieved through cold-rolling. Chia Far's subsequent cold-rolling of the cold-rolled coils that it purchased may have modified these characteristics to suit the needs of particular customers; however, it did not impart these defining characteristics to the finished coils. Thus, we considered the original party that cold-rolled the product to be its producer.

Product Comparisons

As described in the “Normal Value” section below, we are using a quarterly costing approach. Therefore, we have not made price-to-price comparisons outside of a quarter to lessen the distortive effect of comparing non-contemporaneous sales prices during a period of significantly changing costs. Where there were no sales of identical merchandise made in the comparison market in the ordinary course of trade within the same quarter, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade within the same quarter. In making product comparisons, we selected identical and most similar foreign like products based on the physical characteristics reported by Chia Far in the following order of importance: grade, hot- or cold-rolled, gauge, surface finish, metallic coating, non-metallic coating, width, temper, and edge.

Export Price and Constructed Export Price

The Department based the price of Chia Far's U.S. sales of subject merchandise on EP or CEP, as appropriate. Specifically, when Chia Far sold subject merchandise to unaffiliated purchasers in the United States prior to importation and CEP was not otherwise warranted based on the facts of the record, we based the price of the sale on EP, in accordance with section 772(a) of the Act. When Chia Far sold subject merchandise to unaffiliated purchasers in the United States through its U.S. affiliate, Lucky Medsup, we based the price of the sale on CEP, in accordance with section 772(b) of the Act.

We revised Chia Far's reported U.S. sales data to take in account our findings at verification. For further discussion, see the August 9, 2010, memorandum to the file from Henry Almond entitled, “Sales Calculation Adjustments for Chia Far for the Preliminary Results” (Sales Calculation Memo).

We based EP on packed prices to the first unaffiliated purchaser in the United States. We made deductions from the starting price for foreign inland freight expenses, foreign brokerage and handling expenses, international freight expenses, marine insurance expenses, container handling charges, foreign harbor construction expenses, and certificate-of-origin fees, in accordance with section 772(c)(2)(A) of the Act.

We based CEP on packed prices sold to the first unaffiliated purchaser in the United States. We made deductions for foreign inland freight expenses, foreign brokerage and handling expenses, container handling charges, foreign harbor construction expenses, international freight expenses, marine insurance expenses, U.S. duty expenses, U.S. brokerage and handling expenses, and other U.S. transportation expenses, in accordance with section 772(c)(2)(A) of the Act.

In accordance with section 772(d)(1) of the Act and 19 CFR 351.402(b), we deducted from CEP those selling expenses associated with economic activities occurring in the United States, including direct selling expenses (i.e., imputed credit expenses and bank fees) and indirect selling expenses.

In addition, we deducted from the CEP starting price an amount for CEP profit (i.e., profit allocated to expenses deducted under sections 772(d)(1) and (d)(2) of the Act), in accordance with sections 772(d)(3) and 772(f) of the Act. We computed profit by deducting from the total revenue realized on sales in both the U.S. and home markets all expenses associated with those sales. We then allocated profit to the expenses incurred with respect to U.S. economic activity, based on the ratio of total U.S. expenses to total expenses for both the U.S. and home markets.

Normal Value

A. Home Market Viability

In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared the volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act. Because the aggregate volume of Chia Far's home market sales of the foreign like product is more than five percent of the aggregate volume of its U.S. sales of subject merchandise, we based NV on sales of the foreign like product in the respondent's home market.

B. 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 (Nov. 19, 1997) (Plate from South Africa). In order to determine whether the comparison market 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 LOTs for EP and comparison market sales (i.e., NV based on either home market or third country prices), we consider the starting prices before any adjustments. For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Tech., Inc. v. United States, 243 F.3d 1301, 1313-14 (Fed. Cir. 2001).

When the Department is unable to match U.S. 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 an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if the NV LOT is at more advanced stage of distribution than the CEP LOT and there is no basis for determining whether the difference in LOTs between NV and CEP affects price comparability (i.e., no LOT adjustment was practicable), the Department shall grant a CEP offset, as provided in section 773(a)(7)(B) of the Act. See Plate from South Africa, 62 FR at 61732-33.

In this administrative review, we obtained information from Chia Far regarding the marketing stages involved in making the reported home market and U.S. sales, including a description of the selling activities performed by Chia Far for each channel of distribution. Chia Far reported that it made EP sales in the U.S. market to distributors, as well as CEP sales to its affiliate, Lucky Medsup. Chia Far reported identical selling activities in selling to its unaffiliated U.S. customers as it did in selling to Lucky Medsup. We examined the selling activities performed for both channels and found that Chia Far performed the following types of selling activities equally in selling to its unaffiliated U.S. customers and to Lucky Medsup: (1) Price negotiation and communication with the customer (i.e., either its unaffiliated customers for EP sales, or Lucky Medsup for its CEP sales); (2) arranging for freight and the provision of customs clearance/brokerage services (where necessary); and (3) provision of general technical advice (where necessary) and quality assurance-related activities. These selling activities can be generally grouped into four selling function categories for analysis: (1) Sales and marketing; (2) freight and delivery; and (3) inventory maintenance and warehousing; and (4) warranty and technical support. Accordingly, we find that Chia Far performed sales and marketing, freight and delivery services, and technical support services for U.S. sales. Because the level of Chia Far's selling activities did not vary by distribution channel, we preliminarily determine that there is one LOT in the U.S. market.

With respect to the home market, Chia Far reported that it made sales to distributors and end users. We examined the selling activities performed for home market sales and found that Chia Far performed the following types of selling activities equally for sales to distributors and end users: (1) Price negotiation and communication with the customer; (2) arranging for freight (where necessary); (3) provision of general technical advice (where necessary) and quality assurance-related activities, including providing warranty services and rebates; and (4) post-sale warehousing/processing on request. Accordingly, based on the selling functions analysis described above, we find that Chia Far performed sales and marketing, freight and delivery services, warranty and technical support services, and inventory maintenance and warehousing for home market sales. Consequently, we preliminarily determine that there is one LOT in the home market for Chia Far.

Finally, we compared the U.S. LOT to the home market LOT and found that the selling functions performed for U.S. and home market customers do not differ significantly. Specifically, although Chia Far performed occasional warehousing and post-sale processing functions, as well as offering warranty services in the home market that it did not perform on sales to the United States, we do not find these differences to be material selling function distinctions sufficient to warrant a separate LOT for purposes of these preliminary results. Thus, we determine that the NV LOT is the same as the U.S. LOT.

Regarding the CEP-offset provision, as described above, it is appropriate only if the NV LOT is at more advanced stage of distribution than the CEP LOT and there is no basis for determining whether the difference in LOTs between NV and CEP affects price comparability. Because we find that no difference exists between the NV and CEP LOTs, we do not find that a CEP offset is warranted.

C. Cost of Production Analysis

In the 2006-2007 administrative review, the most recently completed segment of this proceeding as of the date of initiation of this review, the Department determined that Chia Far sold the foreign like product at prices below the cost of producing the product and excluded such sales from the calculation of NV. See 2006-2007 Final Results, 73 FR at 74706. As a result, the Department initiated an investigation to determine whether Chia Far made home market sales during the POR at prices below their COPs. See section 773(b)(2)(A)(ii) of the Act.

1. Cost-Averaging Methodology

The Department's normal practice is to calculate an annual weighted-average cost for the POR. See, e.g., Certain Pasta From Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 77852 (Dec. 13, 2000), and accompanying Issues and Decision Memorandum at Comment 18, and Notice of Final Results of Antidumping Duty Administrative Review: Carbon and Certain Alloy Steel Wire Rod from Canada, 71 FR 3822 (Jan. 24, 2006), and accompanying Issues and Decision Memorandum at Comment 5 (explaining the Department's practice of computing a single weighted-average cost for the entire period).

We recognize that distortions may result if we use our normal annual-average cost method during a period of significant cost changes. In determining whether to deviate from our normal methodology of calculating an annual weighted-average cost, we evaluate the case-specific record evidence using two primary factors: (1) The change in the cost of manufacture (COM) recognized by the respondent during the POR must be significant; (2) sales during the shorter averaging periods could be reasonably linked with the COP or CV during the same shorter averaging periods. See, e.g., Stainless Steel Sheet and Strip in Coils From Mexico; Final Results of Antidumping Duty Administrative Review, 75 FR 6627 (Feb. 10, 2010) (SSSSC from Mexico), and accompanying Issues and Decision Memorandum at Comment 6 and Stainless Steel Plate in Coils From Belgium: Final Results of Antidumping Duty Administrative Review, 73 FR 75398 (Dec. 11, 2008), and accompanying Issues and Decision Memorandum at Comment 4 (SSPC from Belgium).

We requested that Chia Far provide pertinent information for the products with the five highest volumes sold in the home market and the United States over the twelve months of the POR. Chia Far provided this information in its June 2, 2010, response.

2. Significance of Cost Changes

In prior cases, we established 25 percent as the threshold (between the high- and low-quarter COM) for determining that the changes in COM are significant enough to warrant a departure from our standard annual-cost approach. See SSPC from Belgium at Comment 4. In the instant case, record evidence shows that Chia Far experienced significant changes (i.e., changes that exceeded 25 percent) between the high and low quarterly COM during the POR and that the change in COM is primarily attributable to the price volatility of hot-rolled steel, the major input for SSSSC. For further discussion, see the memorandum from James Balog, Accountant, to Neal M. Halper, Director, Office of Accounting, entitled, “Cost of Production and Constructed Value Calculations for the Preliminary Results—Chia Far,” dated August 9, 2010 (Cost Memo). As a result, we have preliminarily determined that the changes in COM for Chia Far are significant enough to warrant a departure from our annual costing approach.

3. Linkage Between Cost and Sales Information

The Department's definition of “linkage” does not require direct traceability between specific sales and their specific production costs but, rather, relies on whether there are elements that would indicate a reasonable correlation between the underlying costs and the final sales prices levied by the company. See SSPC from Belgium at Comment 4. These correlative elements may be measured and defined in a number of ways depending on the associated industry and the overall production and sales processes. To determine whether a reasonable correlation existed between the sales prices and their underlying costs during the POR, we compared weighted-average quarterly prices to the corresponding quarterly COM for the five highest volume products sold in each of the home and U.S. markets. After reviewing this information and determining that there is a consistent trend of sales and costs throughout the POR, we preliminarily determine that there is linkage between Chia Far's changing costs and sales prices during the POR. See the Cost Memo.

Because we have found significant cost changes in COM as well as reasonable linkage between costs and sales prices, we have preliminarily determined that a quarterly costing approach leads to more appropriate comparisons in our antidumping duty calculation for Chia Far.

4. Calculation of COP

In accordance with section 773(b)(3) of the Act, for each foreign like product sold by Chia Far during the POR, we calculated a weighted-average quarterly COP based on the sum of Chia Far's materials and fabrication costs, G&A expenses, and financial expenses to determine if Chia Far's home market sales were made at prices below the COP.

For the cost of SSSSC sold by Chia Far in its home market during the POR, but not produced by Chia Far during the POR, we used, as facts available, Chia Far's quarterly costs to produce merchandise with characteristics similar to the merchandise not produced by Chia Far.

The Department relied on the COP data submitted by Chia Far in its most recently submitted cost database for the COP calculation, except in the following instances:

a. Chia Far sold certain models of SSSSC in its home market during the POR, which it did not produce during the period. As the costs for these models, we used, as facts available, Chia Far's quarterly costs reported for the most similar models produced during the POR. For further discussion, see the Cost Memo and the Sales Calculation Memo.

b. We disallowed Chia Far's reported negative financial expenses. For further discussion, see the Cost Memo.

5. Test of Comparison-Market Sales Prices

In order to determine whether sales were made at prices below the COP on a product-specific basis, we compared Chia Far's weighted-average quarterly COP to the prices of its home market sales of foreign like product, as required under section 773(b) of the Act. In accordance with sections 773(b)(1)(A) and (B) of the Act, in determining whether to disregard home market sales made at prices less than the COP, we examined whether such sales were made: (1) In substantial quantities within an extended period of time; and (2) at prices which permitted the recovery of all costs within a reasonable period of time. We compared the COP to home market sales prices, less any applicable movement charges and direct and indirect selling expenses.

6. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of Chia Far's sales of a given product were made at prices less than the COP, we did not disregard any below-cost sales of that product because the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of Chia Far's sales of a given product were made at prices less than the COP during the POR, we determined such sales to have been made in “substantial quantities” within an extended period of time (i.e., one year) pursuant to sections 773(b)(2)(B) and (C) of the Act. Based on our comparison of indexed POR average costs to reported prices, we also determined, in accordance with section 773(b)(2)(D) of the Act, that these sales were not made at prices which would permit recovery of all costs within a reasonable period of time. As a result, we disregarded the below-cost sales of that product.

D. Calculation of Normal Value Based on Comparison Market Prices

We have preliminarily excluded from our calculation of normal value all of Chia Far's sales to certain of its home market customers on the basis that these sales were not made in the ordinary course of trade, in accordance with sections 773(a)(1)(B) and 771(15) of the Act. Specifically, these customers exclusively purchased small, left over coils resulting from the process of slitting larger coils into specific lengths and widths for re-sale as scrap, at prices which were similar to Chia Far's reported per-unit scrap values. When faced with similar fact patterns, the Department has treated such sales as outside the ordinary course of trade. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products From Japan, 64 FR 24329, 24341 (May 6, 1999) (where the Department classified overrun sales as outside the ordinary course of trade where they were made in small quantities overall, at lower prices than normal merchandise, and to a small number of customers). For further discussion, see the June 16, 2010, memorandum from Henry Almond to the File, entitled “Verification of the Sales Response of Chia Far” at pages 2 and 9-10 and the Sales Calculation Memo.

We based NV for Chia Far on prices to unaffiliated customers in the home market. We revised Chia Far's reported home market sales data to take into account our findings at verification. For further discussion, see the Sales Calculation Memo. We made deductions from the starting price, where appropriate, for billing adjustments, discounts, and rebates. We also made deductions from the starting price for foreign inland freight expenses under section 773(a)(6)(B)(ii) of the Act.

For comparisons to EP sales, 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 direct selling expenses (including imputed credit expenses, warranties, and other direct selling expenses).

For comparisons to CEP sales, in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410, we deducted from NV direct selling expenses (i.e., including imputed credit expenses, warranties, and other direct selling expenses), and indirect selling expenses (including inventory carrying costs and other indirect selling expenses).

For all price-to-price comparisons we also deducted home market packing costs and added U.S. packing costs, in accordance with sections 773(a)(6)(A) and (B) of the Act. Finally, 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.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A of the Act and 19 CFR 351.415, based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank.

Preliminary Results of the Review

We preliminarily determine that the following weighted-average dumping margin exists for Chia Far for the period July 1, 2008, through June 30, 2009:

Where the Department exercises its discretion to limit the number of respondents for individual examination pursuant to section 777A(c)(2) of the Act, it is the Department's normal practice to calculate a review-specific rate for the companies for which the Department received review requests, but did not individually examine, based upon the rates calculated for the individually examined companies, excluding any zero or de minimis margins or any margins based on total facts available. Where, as here, the only calculated margins are zero or de mimimis, it is the Department's practice to base the review-specific rate on calculated rates from prior segments of the proceeding. See Certain Frozen Warmwater Shrimp From the Socialist Republic of Vietnam: Final Results and Final Partial Rescission of Antidumping Duty Administrative Review, 73 FR 52273 (Sept. 9, 2008), and accompanying Issues and Decision Memorandum at Comment 6.

Accordingly, we have preliminarily based the review-specific rate on the 4.30 percent in the 2007-2008 administrative review, which is the most recently completed segment of this proceeding. See 2007-2008 Final Results 75 FR at 5949. This rate is applicable to the following companies:

Disclosure and Public Hearing

The Department will disclose to parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice. See 19 CFR 351.224(b). Pursuant to 19 CFR 351.309(c)(ii), interested parties may submit cases briefs not later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice. See 19 CFR 351.309(d)(1). Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities. See 19 CFR 351.309(c)(2).

Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address and telephone number; (2) the number of participants; and, (3) a list of issues to be discussed. Id. Issues raised in the hearing will be limited to those raised in the respective case briefs. The Department will issue the final results of this administrative review, including the results of its analysis of the issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

Upon completion of the administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries, in accordance with 19 CFR 351.212. The Department will issue appropriate appraisement instructions for the companies subject to this review directly to CBP 15 days after the date of publication of the final results of this review.

For Chia Far, we will calculate importer-specific ad valorem duty assessment rates based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of those sales. Consistent with the Department's practice, for the companies which were not selected for individual review, we will use the cash deposit rate as the assessment rate for these companies. See, e.g., Certain Frozen Warmwater Shrimp From India: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 74 FR 33409, (July 13, 2009), and accompanying Issues and Decision Memorandum at Comment 3.

We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis (i.e., less than 0.50 percent). Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP to liquidate without regard to antidumping duties any entries for which the assessment rate is de minimis. See 19 CFR 351.106(c)(1). The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties, where applicable.

As noted above, the Department clarified its “automatic assessment” regulation on May 6, 2003. See Assessment Policy Notice, 68 FR 23954. This clarification will apply to entries of subject merchandise during the POR produced by companies included in these final results of review for which the reviewed companies did not know that the merchandise they sold to the intermediary (e.g., a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all others rate if there is no rate for the intermediary involved in the transaction. See Assessment Policy Notice for a full discussion of this clarification.

Cash Deposit Requirements

The following cash 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 the final results of this administrative review, as provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate for each specific company listed above will be that 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) for previously reviewed or investigated companies not participating in this review, 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, or the 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 12.61 percent, the all others rate made effective by the LTFV investigation. See SSSSC Order, 64 FR at 40557. These deposit requirements, when imposed, shall remain in effect until further notice.

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.

These preliminary results of administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.