Structural Steel Beams From the Republic of Korea: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review of structural steel beams from the republic of korea.

SUMMARY:

The Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on structural steel beams (“SSBs”) from the Republic of Korea in response to a request from respondent INI Steel Company (“INI”) (formerly Inchon Iron & Steel Co. Ltd.). This review covers imports of subject merchandise from INI. The period of review (“POR”) is February 11, 2000, through July 31, 2001.

Our preliminary results of review indicate that INI has sold the subject merchandise at less than normal value (“NV”) during the POR. If these preliminary results are adopted in our final results of review, we will instruct the U.S. Customs Service to assess antidumping duties on entries of INI's subject merchandise during the POR, in accordance with sections 19 CFR 351.106 and 351.212(b) of the Department's regulations.

We invite interested parties to comment on these preliminary results. Parties who submit arguments in this segment of the proceeding should also submit with each argument (1) a statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE:

September 11, 2002.

FOR FURTHER INFORMATION CONTACT:

Brandon Farlander or Robert Bolling, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-0182 and (202) 482-3434, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (“the Act”), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (2001).

Background

On August 1, 2001, the Department published in the Federal Register a notice of “Opportunity to Request Administrative Review” of the antidumping duty order on structural steel beams from the Republic of Korea. See Notice of Opportunity to Request Administrative Review of Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 66 FR 39729 (August 1, 2001). On August 30, 2001, respondent INI requested a review in accordance with 19 CFR 351.213(b)(1). On October 1, 2001, the Department published in the Federal Register a notice of initiation of administrative review of this order. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 66 FR 49924 (October 1, 2001).

On October 4, 2001, the Department issued a questionnaire for this review to INI. INI submitted Section A questionnaire responses on November 8, 2001. On December 7, 2001, INI submitted its Sections B through D questionnaire responses. INI submitted its cost reconciliation on December 7, 2001, in the context of the Section D response.

On October 9, 2001, Nucor Corp., Nucor-Yamato Steel Co., TXI-Chaparral Steel Co. (“Petitioners”) made an entry of appearance.

On October 12, 2001, the Department granted INI's request that it be allowed to report its cost based on fiscal year 2000, and the first half of the fiscal year 2001, which is a cost period of January 1, 2000, through June 30, 2001, fiscal year rather than for the period of review, February 11, 2000, through July 31, 2001.

On February 13, 2002, the Department issued a supplemental questionnaire covering INI's Section A though E responses. INI provided its supplemental questionnaire response on March 15, 2002.

Under section 751(a)(3)(A) of the Act, the Department may extend the deadline for completion of an administrative review if it determines that it is not practicable to complete the review within the statutory time limit. On May 1, 2002, the Department extended the time limit for the preliminary results in this review to August 31, 2002. However, due to a Federal holiday, the signature date will be Tuesday, September 3, 2002. See Structural Steel Beams from Korea: Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 67 FR 21638 (May 1, 2002).

The Department issued its second supplemental questionnaire on May 17, 2002. INI responded on June 14, 2002. On June 26, 2002, INI submitted its sales reconciliation. The Department issued its third supplemental questionnaire on June 28, 2002. INI responded on July 9, 2002.

The Department is conducting this administrative review in accordance with section 751 of the Act.

Scope of the Review

The products covered by this investigation are doubly-symmetric shapes, whether hot-or cold-rolled, drawn, extruded, formed or finished, having at least one dimension of at least 80 mm (3.2 inches or more), whether of carbon or alloy (other than stainless) steel, and whether or not drilled, punched, notched, painted, coated or clad. These products include, but are not limited to, wide-flange beams (“W” shapes), bearing piles (“HP” shapes), standard beams (“S” or “I” shapes), and M-shapes.

All products that meet the physical and metallurgical descriptions provided above are within the scope of this investigation unless otherwise excluded. The following products are outside and/or specifically excluded from the scope of this investigation: structural steel beams greater than 400 pounds per linear foot or with a web or section height (also known as depth) over 40 inches.

The merchandise subject to this investigation is classified in the Harmonized Tariff Schedule of the United States (“HTSUS”) at subheadings: 7216.32.0000, 7216.33.0030, 7216.33.0060, 7216.33.0090, 7216.50.0000, 7216.61.0000, 7216.69.0000, 7216.91.0000, 7216.99.0000, 7228.70.3040, 7228.70.6000. Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise is dispositive.

Verification

As provided in section 782(i) of the Act, we verified sales and cost information provided by INI from July 15, 2002, to July 26, 2002, in Inchon, Korea. We verified the CEP sales response of INI's U.S. affiliate, Hyundai U.S.A., from August 12, 2002, to August 13, 2002, in Englewood Cliffs, New Jersey. We used standard verification procedures, including an examination of relevant sales, cost, and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in the public version of the verification reports and are on file in the Central Records Unit (“CRU”) located in room B-099 of the main Department of Commerce Building, 14th Street and Constitution Avenue, NW., Washington, DC.

Affiliation

In order to complete the dumping calculation, the Department must determine whether respondents sold subject merchandise through affiliated companies within the United States. In this review, INI reported that it was affiliated with one of the companies to which it sold subject merchandise, Hyundai USA, for some portion of the POR. As discussed below, the Department preliminarily determines that INI was affiliated with Hyundai USA for the entire POR.

The Hyundai Group chaebol was formed by the late C.Y. Jung, father of Mong Koo (“M.K.”) Jung and Mong Hun (“M.H.”) Jung. During the POR, 10 members of the Hyundai Group chaebol, including INI and Hyundai Motors Company, filed for separation from the Hyundai Group chaebol with the Korean Fair Trade Commission. See INI Steel Company Home Market Sales, United States Sales, and Cost of Production Verification Report; Antidumping Duty Administrative Review on Structural Steel Beams from Korea (September 3, 2002) (“INI Sales and Cost Verification Report”). Eight of the 10 companies filed for separation on August 23, 2000, and two companies, INI and Sampyo Manufacturing Company, filed for separation prior to August 23, 2000. On August 31, 2000, the Korean Fair Trade Commission granted separation for the 10 companies after meeting certain conditions under the Korean antitrust and fair trade laws. See INI Sales and Cost Verification Report. After separation, the 10 aforementioned companies (including INI) formed another chaebol, i.e., the Hyundai Motors Group chaebol, and filed for chaebol status with the Korean government. INI claims that the Hyundai Motors Group chaebol was founded as of August 31, 2000 but because the Korean Fair Trade Commission only formally classifies enterprise groups (chaebols) once a year, in April, the Korean Government formally recognized the Hyundai Motors Group chaebol on April 2, 2001. See INI's March 15, 2002, supplemental questionnaire response, at 5.

In order to determine whether INI and Hyundai USA are affiliated, we first examined INI. Specifically, we examined whether M.K. Jung exercises any control over INI. At verification, we found that M.K. Jung is the chairman of both the lead company in the Hyundai Motors Group chaebol, i.e., the Hyundai Motors Company, and the chairman of the Hyundai Motors Group chaebol, of which INI is a part. See INI Sales and Cost Verification Report. In addition, we have additional record evidence that M.K. Jung controls INI. See Analysis for the preliminary results of review for structural steel beams from Korea—INI Steel Company (“INI”) (September 3, 2002) (“INI Preliminary Analysis Memo”). Therefore, the Department preliminarily determines that M.K. Jung exercises control over INI. (See 19 CFR 102(b) (definition of affiliated persons).) However, the Department intends to seek additional information related to INI and its affiliation with Hyundai USA in order to, inter alia, understand M.K. Jung's control over INI. The Department will allow interested parties to comment on this new information before making a final determination.

Next the Department examined Hyundai USA. After the Hyundai Motors Group separated from the Hyundai Group chaebol, the Hyundai Group chaebol consists of several member companies, including Hyundai Corporation, which wholly owns Hyundai USA, and Hyundai Engineering and Construction Company, Ltd. At verification, we found that M.H. Jung is the chairman of both the Hyundai Group chaebol and Hyundai Engineering and Construction Company, Ltd., the principal company in the Hyundai Group chaebol. Therefore, the Department preliminarily finds that M.H. Jung controls Hyundai Corp. and its wholly-owned subsidiary Hyundai USA. (See 19 CFR 102(b).) However, the Department intends to seek additional information related to INI and its affiliation with Hyundai USA in order to, inter alia, understand M.H. Jung's control over Hyundai USA. The Department will allow interested parties to comment on this new information before making a final determination.

As discussed above, M.K. Jung and M.H. Jung have the same father. Under section 771(33)(A) of the Act, the Jung brothers, as half brothers, are considered affiliated persons. Additionally, because the Department has preliminarily determined that the Jung brothers control INI and Hyundai USA, respectively, these companies are also affiliated. That is to say, INI and Hyundai USA are under the common control of one entity, the Jung brothers. See section 771(33)(F) of the Act. See also Allied Tube and Conduit Corp. v. United States, et al 127 F. Supp. 207, 222 (C.I.T. 2000). Accordingly, we are re-classifying all of INI's sales through Hyundai USA as CEP sales, even those originally classified by INI as EP sales (i.e., post-August 30, 2000 sales), because INI and Hyundai USA were affiliated during the entire POR.

Normal Value Comparisons

To determine whether INI's sales of subject merchandise from Korea to the United States were made at less than normal value, we compared the export price (“EP”) or constructed export price (“CEP”) to the NV, as described in the “Export Price and Constructed Export Price” and “Normal Value” sections of this notice, below. Pursuant to section 777A(d)(2), we compared the export prices of individual U.S. transactions to the monthly weighted-average normal value of the foreign like product where there were sales made in the ordinary course of trade at prices above the cost of production (“COP”) as discussed in the “Cost of Production Analysis” section below.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products covered by the description in the “Scope of the Review” section of this notice supra, which were produced and sold by INI in the home market during the POR, to be foreign like products for purposes of determining appropriate product comparisons to SSB products sold in the United States. We have relied on four product characteristics to match U.S. sales of subject merchandise to comparison sales of the foreign like product: hot formed or cold formed, shape/size (section depth), strength/grade, whether or not coated. Where there were no sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics and reporting instructions listed in the October 4, 2001, antidumping duty questionnaire and instructions, or to constructed value (“CV”), as appropriate.

Export Price and Constructed Export Price

In accordance with section 772(a) of the Act, export price is the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c). In accordance with section 772(b) of the Act, CEP is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d). For purposes of this administrative review, INI has classified its sales as both EP and CEP.

INI identified three channels of distribution for U.S. sales. For U.S. sales channel one (i.e., INI sales through Hyundai Corporation, INI's affiliated trading company in South Korea, to Hyundai USA, a wholly-owned subsidiary of Hyundai Corporation located in the United States and an affiliate (INI claims affiliation only prior to August 30, 2000) of INI, and finally, to an unaffiliated customer), INI has reported these sales as CEP sales because the first sale to an unaffiliated party occurred in the United States. At the time, INI was still a member of the Hyundai Group chaebol and clearly affiliated with Hyundai USA. Therefore, for these channel one sales, we based our calculation on CEP, in accordance with subsections 772(b), (c), and (d) of the Act.

For U.S. sales channel two (i.e., INI sales to Hyundai USA after INI disassociated itself from the Hyundai Group), INI classified these sales as EP sales; however, as explained in our “Affiliation” section above, we have found INI affiliated with the Hyundai Corporation and its wholly-owned subsidiary Hyundai USA for the entire POR and have preliminarily classified these sales as CEP sales. For channel three (i.e., INI sales to unaffiliated U.S. customers), we based our calculation on EP, in accordance with section 772(a) of the Act, because the subject merchandise was sold by the producer or exporter directly to the first unaffiliated purchaser in the United States or for export to the United States prior to importation, and CEP methodology was not otherwise indicated.

We calculated EP on the packed, delivered, tax and duty paid price to unaffiliated purchasers in the United States. We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act; these included, where appropriate, foreign inland freight from the plant to the warehouse, foreign warehousing expenses, foreign inland freight from the warehouse to the port of export, foreign wharfage and lashing expenses, international freight, marine insurance, other U.S. transportation expenses (i.e., U.S. wharfage, brokerage, and other charges), and U.S. customs duty. Additionally, we added to the U.S. price an amount for duty drawback pursuant to section 772(c)(1)(B) of the Act. Where applicable, we made a deduction to gross unit price for other discounts. For a further discussion of this issue, see INI Preliminary Analysis Memo.

We calculated CEP based on packed prices to unaffiliated purchasers in the United States. We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Act; these included, where appropriate, foreign inland freight from the plant to the warehouse, foreign warehousing expenses, foreign inland freight from the warehouse to the port of export, foreign wharfage and lashing expenses, international freight, marine insurance, other U.S. transportation expenses (i.e., U.S. wharfage, brokerage, and other charges), and U.S. customs duty. Additionally, we added to the U.S. price an amount for duty drawback pursuant to section 772(c)(1)(B) of the Act. Where applicable, we made a deduction to gross unit price for other discounts. Also, in accordance with section 772(c)(2)(A) of the Act, we deducted packing expenses because packing expenses are included in the CEP. In accordance with section 772(d)(1) of the Act, we deducted those selling expenses associated with economic activities occurring in the United States, including direct selling expenses (i.e., imputed credit expenses, commissions, and bank expenses) and indirect selling expenses. In order to eliminate any double-counting, the Department has only included those actual interest expenses attributable to subject merchandise that exceed imputed credit expense as an indirect selling expense. In the instant review because Hyundai USA's actual interest expense was greater than the imputed credit expense, we reduced actual interest expense by the amount of the imputed credit expenses reported on INI's U.S. sales database.

For CEP sales, we also made an adjustment for profit in accordance with section 772(d)(3) of the Act. We deducted the profit allocated to expenses deducted under sections 772(d)(1) and 772(d)(2) in accordance with sections 772(d)(3) and 772(f) of the Act. In accordance with section 772(f) of the Act, we computed profit based on total revenue realized on sales in both the U.S. and home markets, less all expenses associated with those sales. We then allocated profit to 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.

We made changes to INI's reported EP and CEP sales database as a result of verification. See INI Sales and Cost Verification Report; INI Preliminary Analysis Memo and Report on the Verification of U.S. Sales by Hyundai U.S.A. in the Antidumping Administrative Review of Structural Steel Beams from South Korea (September 3, 2002)(“Hyundai U.S.A. Sales Verification Report”).

Normal Value

1. Home Market Viability

We compared the aggregate volume of home market sales of the foreign like product and U.S. sales of the subject merchandise to determine whether the volume of the foreign like product sold in Korea was sufficient, pursuant to section 773(a)(1)(C) of the Act, to form a basis for NV. Because the volume of home market sales of the foreign like product was greater than five percent of the U.S. sales of subject merchandise for both companies, in accordance with section 773(a)(1)(B)(i) of the Act, we have based the determination of NV upon the home market sales of the foreign like product. Thus, we used as NV the prices at which the foreign like product was first sold for consumption in Korea, in the usual commercial quantities, in the ordinary course of trade, and, to the extent possible, at the same level of trade (“LOT”) as the EP or CEP or NV sales, as appropriate.

After testing home market viability and whether home market sales were at below-cost prices, we calculated NV as noted in the “Price-to-Price Comparisons” and “Price-to-Constructed Value (“CV”) Comparisons” sections of this notice.

2. Arm's-Length Test

INI reported that it made sales in the home market to affiliated and unaffiliated end users and unaffiliated distributors. Sales to affiliated customers in the home market not made at arm's length were excluded from our analysis. To test whether these sales were made at arm's length, we compared the starting prices of sales to affiliated and unaffiliated customers net of all billing adjustments, movement charges, direct selling expenses, discounts and packing. Where prices to the affiliated party were on average 99.5 percent or more of the price to the unaffiliated party, we determined that sales made to the affiliated party were made at arm's length. See 19 CFR 351.403(c). Where no affiliated customer ratio could be calculated because identical merchandise was not sold to unaffiliated customers, we were unable to determine that these sales were made at arm's length and, therefore, excluded them from our analysis. See, e.g., Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina, 58 FR 37062, 37077 (July 9, 1993). Where the exclusion of such sales eliminated all sales of the most appropriate comparison product, we made comparisons to the next most similar model. Certain of INI's affiliated home market customers did not pass the arm's length test. We did not consider the downstream sales from these customers to the first unaffiliated customer because INI's affiliated home market customers further manufactured the subject merchandise into merchandise outside of the scope of the order.

3. Cost of Production (“COP”) Analysis

Because the Department determined that INI made sales in the home market at prices below the cost of producing the subject merchandise in the SSB investigation and, therefore, excluded such sales from normal value, the Department determined that there are reasonable grounds to believe or suspect that INI made sales in the home market at prices below the cost of producing the merchandise in this administrative review. See section 773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a cost of production inquiry to determine whether INI made home market sales during the POR at prices below their respective COP within the meaning of section 773(b) of the Act.

We conducted the COP analysis described below.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP based on the sum of INI's cost of materials and fabrication for the foreign like product, plus amounts for home market selling, general and administrative expenses (“SG&A”), including interest expenses, and packing costs. We relied on the COP data submitted by INI in their original and supplemental cost questionnaire responses. For the preliminary results of review, we revised INI's COP information based on our verification finding that it had erroneously excluded donations from its total general and administrative (“GNA”) ratio. See INI Sales and Cost Verification Report.

B. Test of Home Market Prices

On a product-specific basis, we compared the weighted-average COP for INI, adjusted where appropriate, to their home market sales of the foreign like product as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP. In determining whether to disregard home market sales made at prices less than the COP, we examined 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 all costs within a reasonable period of time in accordance with section 773(b)(1)(A) and (B) of the Act. We compared the COP to home market prices (plus interest revenue), less any applicable billing adjustments, movement charges, and direct and indirect selling expenses.

C. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of a respondent's sales of a given product within an extended period of time are at prices less than the COP, we 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 a respondent's sales of a given product during the extended period were at prices less than the COP, we determined such sales to have been made in “substantial quantities” pursuant to section 773(b)(2)(C)(i) within an extended period of time, in accordance with section 773(b)(2)(B) of the Act. In such cases, because we used POR average costs, we also determined that such sales were not made at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. As a result, we disregarded such below-cost sales. Where all sales of a specific product were at prices below the COP, we disregarded all sales of that product. Based on this test, we disregarded below-cost sales from our analysis for INI. For those sales of subject merchandise for which there were no comparable home market sales in the ordinary course of trade, we compared EP or CEP to CV, in accordance with section 773(a)(4) of the Act.

D. Calculation of CV

In accordance with section 773(e)(1) of the Act, we calculated INI's constructed value (“CV”) based on the sum of their cost of materials, fabrication, SG&A, including interest expenses, and profit. We calculated the COPs included in the calculation of CV as noted above in the “Calculation of COP” section of this notice. In accordance with section 773(e)(2)(A) of the Act, we based SG&A and profit on the amounts incurred and realized by INI in connection with the production and sale of the foreign like product in the ordinary course of trade for consumption in the foreign country. For selling expenses, we used the actual weighted-average home market direct and indirect selling expenses. For CV, we instructed INI to make this same adjustment described in the COP section above.

Price-to-Price Comparisons

For those product comparisons for which there were sales at prices above the COP, we based NV on the home market prices to unaffiliated purchasers and those affiliated customer sales which passed the arm's length test. We made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act.

We made adjustments, where applicable, for movement expenses (i.e., inland freight from plant to distribution warehouse, warehousing expenses, and inland freight from plant/distribution warehouse to customer) in accordance with section 773(a)(6)(B) of the Act. We made circumstance-of-sale adjustments for credit, warranty expense and interest revenue, where appropriate in accordance with section 773(a)(6)(C). In accordance with section 773(a)(6), we deducted home market packing costs and added U.S. packing costs. Where applicable, we modified the gross unit price based on billing adjustments. Finally, in accordance with section 773(a)(4) of the Act, where the Department was unable to determine NV on the basis of contemporaneous matches in accordance with 773(a)(1)(B)(i), we based NV on CV.

We did not make any adjustments to INI's reported home market sales data in the calculation of NV.

Price-to-CV Comparisons

In accordance with section 773(a)(4) of the Act, we base NV on CV if we are unable to find a home market match of identical or similar merchandise. For selling expenses, we used the actual weighted-average home market direct and indirect selling expenses. Where applicable, we make adjustments to CV in accordance with section 773(a)(8) of the Act.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (“LOT”) as the CEP transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general and administrative (“SG&A”) expenses and profit. For EP, the LOT is also the level of the starting price sale, which is usually from the exporter to the importer. For CEP, it is the level of the constructed sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or CEP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the customer. If the comparison market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the differences in the levels between NV and CEP sales affects price comparability, we adjust NV under section 773(A)(7)(B) of the Act (the CEP offset provision). See Notice of Final Determination of Sales at Less Than Fair Value: Certain Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

In implementing these principles in this administrative review, we obtained information from INI about the marketing stages involved in its reported U.S. and home market sales, including a description of the selling activities performed for each channel of distribution. In identifying levels of trade for CEP, we considered only the selling activities 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). Generally, if the reported levels of trade are the same in the home and U.S. markets, the functions and activities of the seller should be similar. Conversely, if a party reports levels of trade that are different for different categories of sales, the functions and activities should be dissimilar.

In the present review, INI did not request a LOT adjustment for any channels but did request a CEP offset on its sales in channel one prior to August 30, 2000, the date INI claims to become unaffiliated with members of the Hyundai Group chaebol (i.e., Hyundai Corporation and Hyundai U.S.A. and other Hyundai Group members). To determine whether an adjustment was necessary, in accordance with the principles discussed above, we examined information regarding the distribution systems in both the United States and home markets, including the selling functions, classes of customer, and selling expenses.

In both the U.S. and home markets, INI reported one level of trade. See INI's December 7, 2001, Sections B-D response, at B-16 and C-16. INI sold through two channels of distribution in the home market: (1) Unaffiliated distributors; and (2) affiliated and unaffiliated end-users. INI claims to have sold through three channels of distribution in the U.S. market: (1) INI sales through Hyundai Corporation, INI's affiliated trading company in South Korea, to Hyundai U.S.A., a wholly owned subsidiary of Hyundai Corporation located in the United States and an affiliate of INI (prior to August 30, 2000), and finally, to an unaffiliated customer; (2) INI sales to Hyundai U.S.A.; and (3) INI sales to unaffiliated U.S. customers. However, because we have preliminarily determined that INI is affiliated with Hyundai Corporation and Hyundai U.S.A., we have combined channels one and two into channel one. Also, we have reclassified channel three as channel two.

For sales in home market channels one and two, INI performed all sales-related activities, including arranging for freight and delivery; warranty; after-sales service; and extending credit. INI's home market sales in channels one and two were made from inventory. Because these selling functions are similar for both sales channels, we preliminarily determine that there is one LOT in the home market.

For sales in U.S. channel one (the selling activities of INI and Hyundai Corporation combined), the following selling activities are performed: (1) After sales services; (2) warranties; (3) arrangement for freight and delivery; and (4) credit risk. For sales in U.S. channel two (INI's selling activities), the following selling activities are performed: (1) After sales service; (2) warranties; (3) arrangement for freight and delivery; and (4) credit risk. Because these selling functions are the same for both sales channels, we preliminarily determine that there is one LOT in the U.S. market.

In comparing INI's home market and U.S. market sales, it appears that INI offered many of the same selling functions in both markets, including: Arranging for freight and delivery; warranty; after-sales service; and extending credit. Accordingly, we determine that there is not a significant difference in the selling functions performed in the home market and U.S. market and that these sales are made at the same LOT. Consequently, we preliminarily determine that a LOT adjustment or CEP offset is not warranted in this case.

Currency Conversion

For purposes of the preliminary results, we made currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank in accordance section 773A(a) of the Act.

Preliminary Results of Review

As a result of our administrative review, we preliminarily determine that the following weighted-average dumping margin exists for the period February 11, 2000, through July 31, 2001:

The Department will disclose calculations performed within five days of the date of publication of this notice to the parties to this proceeding in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. See 19 CFR 351.309(c)(ii). Rebuttal briefs must be limited to issues raised in case briefs and may be filed no later than 35 days after the date of publication. See 19 CFR 351.309(d). Parties submitting arguments in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs and comments must be served on interested parties in accordance with 19 CFR 351.303(f). Further, we would appreciate it if parties submitting written comments also provide the Department with an additional copy of those comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

Upon completion of this administrative review, the Department will determine, and the U.S. Customs Service shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an exporter/importer (or customer)-specific assessment rate for merchandise subject to this review. The Department will issue appropriate assessment instructions directly to the U.S. Customs Service within 15 days of publication of the final results of review. If these preliminary results are adopted in the final results of review, we will direct the U.S. Customs Service to assess the resulting assessment rates against the entered customs values for the subject merchandise on each of the importer's/customer's entries during the review period.

Cash Deposit

The following cash deposit requirements will be effective upon publication of these final results for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for each of the reviewed companies will be the rate listed in the final results of review (except that if the rate for a particular product is de minimis, i.e., less than 0.5 percent, no cash deposit will be required for that company) see 19 CFR 106(c)(1); (2) for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less than fair value (“LTFV”) investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the “all others” rate of 37.21 percent, which is the all others rate established in the LTFV investigation. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to administrative protective orders (“APOs”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305, that continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This determination is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.