[Federal Register Volume 77, Number 32 (Thursday, February 16, 2012)]
[Notices]
[Pages 9204-9210]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-3716]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-867]


Large Power Transformers From the Republic of Korea: Preliminary 
Determination of Sales at Less Than Fair Value and Postponement of 
Final Determination

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

DATES: Effective Date: February 16, 2012.
SUMMARY: The Department of Commerce (the Department) preliminarily 
determines that large power transformers from the Republic of Korea 
(Korea) are being, or are likely to be, sold in the United States at 
less than fair value, as provided in section 733(b) of the Tariff Act 
of 1930, as amended (the Act). The estimated dumping margins are listed 
in the ``Suspension of Liquidation'' section of this notice. Interested 
parties are invited to comment on this preliminary determination. 
Pursuant to requests from interested parties, we are postponing for 60 
days the final determination and extending provisional measures from a 
four-month period to not more than six months. Accordingly, we will 
make our final determination not later than 135 days after publication 
of the preliminary determination.

FOR FURTHER INFORMATION CONTACT: David Cordell or Brian Davis, AD/CVD 
Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-
0408 or (202) 482-7924, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On August 10, 2011, the Department initiated the antidumping duty 
investigation on large power transformers from Korea.\1\ Petitioners in 
this investigation are ABB Inc., Delta Star, Inc., and Pennsylvania 
Transformer Technology Inc. (collectively, petitioners). The Department 
set aside a period of time for parties to raise issues regarding 
product coverage and invited all parties to submit comments within 20 
calendar days of publication of the Initiation Notice.\2\ The 
Department also set aside a time for parties to comment on product 
characteristics for use in the antidumping duty questionnaire.\3\ Since 
the Initiation Notice, the following events have occurred.
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    \1\ See Large Power Transformers from the Republic of Korea: 
Initiation of Antidumping Duty Investigation, 76 FR 49439 (August 
10, 2011) (Initiation Notice).
    \2\ See Initiation Notice, 76 FR at 49440; see also Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27323 (May 
19, 1997) (Preamble).
    \3\ See Initiation Notice, 76 FR at 49440; see also Preamble, 62 
FR at 27323.
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    On August 10, 2011, the Department notified all interested parties 
of its intent to select mandatory respondents for this investigation 
based on U.S. import data obtained from U.S. Customs and Border 
Protection (CBP) and set aside a period of time for parties to comment 
on the potential respondent selection. Parties were invited to submit 
comments within five calendar days from the date of that memorandum.\4\
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    \4\ See Memorandum from Angelica Mendoza, Program Manager, to 
All Interested Parties, dated August 10, 2011.
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    On August 29, 2011, and August 30, 2011, Department officials 
visited Canonsburg, Pennsylvania to meet with officials of Pennsylvania 
Transformer Technology Inc., a petitioner in this proceeding, and their 
legal counsel, and also toured their facility.\5\
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    \5\ See Memorandum to the File, ``Antidumping Duty Investigation 
of Large Power Transformers from the Republic of Korea: Department 
Visit to Pennsylvania Transformer Technology Inc.,'' dated September 
1, 2011.

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[[Page 9205]]

    On September 2, 2011, the United States International Trade 
Commission (USITC) published its affirmative preliminary determination 
that there is a reasonable indication that an industry in the United 
States is materially injured or threatened with material injury, by 
reason of imports from Korea of large power transformers.\6\
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    \6\ See 76 FR 54790 (September 2, 2011); see also USITC 
Publication 4526 (September 2011), titled ``Large Power Transformers 
from Korea: Investigation No. 731-TA-1189 (Preliminary).''
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    On September 16, 2011, we selected Hyundai Heavy Industries Co., 
Ltd. (Hyundai) and Hyosung Corporation (Hyosung) as the mandatory 
respondents in this investigation and issued the Department's 
antidumping duty questionnaire to both respondents on September 28, 
2011.\7\
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    \7\ See Memorandum to Christian Marsh, Deputy Assistant 
Secretary, from Richard O. Weible, Director, Office 7, titled 
``Antidumping Duty Investigation of Large Power Transformers from 
the Republic of Korea (``Korea''): Respondent Selection 
Memorandum,'' dated September 16, 2011.
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    Hyundai and Hyosung submitted responses to section A of the 
Department's antidumping duty questionnaire on November 2, 2011 and on 
November 16, 2011, both respondents submitted their responses to 
sections B (i.e., the section covering comparison market sales) and C 
(i.e., the section covering U.S. sales) of the Department's antidumping 
duty questionnaire. Also on November 16, 2011, Hyosung voluntarily 
reported a response to section D of the questionnaire (i.e., the 
section covering the cost of production (COP) and constructed value 
(CV)).
    On November 23, 2011, petitioners made a timely request pursuant to 
section 733(c)(1)(A) of the Act and 19 CFR 351.205(e) for a 50-day 
postponement of the preliminary determination and on December 6, 2011, 
the Department postponed the preliminary determination of this 
investigation until February 9, 2011.\8\
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    \8\ See Large Power Transformers from the Republic of Korea: 
Postponement of Preliminary Determination of Antidumping Duty 
Investigation, 76 FR 76146 (December 6, 2011).
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Hyosung

    On November 30, 2011, the Department received an allegation from 
petitioners that home market sales made by Hyosung were made at prices 
below the cost of production and on December 9, 2011, the Department 
initiated a sales-below-cost of production investigation with respect 
to Hyosung.\9\
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    \9\ See Memorandum to Richard O. Weible, Director, Office 7, 
titled, ``Petitioners' Allegation of Sales Below the Cost of 
Production for Hyosung Corporation,'' from the Team (Hyosung Cost 
Initiation Memo), dated December 9, 2011.
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    On November 21, 2011, the Department issued a supplemental 
questionnaire concerning Hyosung's section A-C responses. On December 
12, and 19, 2011, Hyosung submitted its response to this supplemental 
questionnaire. On December 14, 2011, the Department issued a 
supplemental questionnaire regarding Hyosung's section D response.
    On December 29, 2011, the Department issued a second supplemental 
questionnaire covering Hyosung's section A-C and supplemental 
responses. On January 6, 2012, we received the supplemental cost (i.e., 
section D) response from Hyosung and on January 19, 2012, we received 
Hyosung's response to our December 29, 2011, supplemental 
questionnaire. On January 6, 2012, we issued a third sales supplemental 
questionnaire and on January 20, 2012, Hyosung submitted its response 
to this supplemental questionnaire. On February 2, 2012, we requested 
that Hyosung provide an updated U.S. sales database which includes 
actual shipment dates for all sales that have been shipped regardless 
of whether or not they have been invoiced, and on February 3, 2012, 
Hyosung submitted this revised U.S. sales database. Also on February 3, 
2012, we requested that Hyosung provide an updated home market sales 
database which includes actual shipment dates for all sales that have 
been shipped regardless of whether they have been invoiced and on 
February 6, 2012, Hyosung submitted this revised home market sales 
database.

Hyundai

    On November 21, 2011, the Department issued a supplemental 
questionnaire concerning Hyundai's section A-C responses. On December 
12, 2011, Hyundai responded to this questionnaire. Also on December 12, 
2011, Hyundai filed its response to the constructed value sections of 
the section D questionnaire.
    On December 23, 2011, the Department issued a supplemental 
questionnaire to Hyundai covering Hyundai's section B-D responses. 
Hyundai responded to this supplemental questionnaire on January 13, and 
18, 2012. On January 9, 2012, the Department issued a third sales 
supplemental questionnaire as well as a second supplemental cost 
questionnaire to which Hyundai responded on January 23, 2012.
    On December 30, 2011, the Department received an allegation from 
petitioners that home market sales made by Hyundai were made at prices 
below the cost of production and on February 9, 2012, the Department 
decided not to initiate a sales-below-cost of production 
investigation.\10\
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    \10\ See Memorandum to the File titled, ``Petitioners' 
Allegation of Sales Below the Cost of Production for Hyundai Heavy 
Industry Co., Ltd.,'' from the Team to Richard Weible dated February 
8, 2012, (Hyundai Sales Below Cost Allegation Memorandum).
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Deadline for Submission of Updated Information

    With regard to cost estimates provided by respondents thus far, the 
Department will accept updated information for actual costs through and 
including December 31, 2011, where available. Further, with regard to 
estimates in the sales database, the Department will accept the 
corresponding actual sales information only through December 31, 2011. 
The Department does not expect to request updated information on sales 
or cost estimates for dates subsequent to December 31, 2011.

Period of Investigation

    The period of investigation (POI) is July 1, 2010, to June 30, 
2011. This period corresponds to the four most recent fiscal quarters 
prior to the month of the filing of the petition. See 19 CFR 
351.204(b)(1).

Scope of Investigation

    The scope of this investigation covers large liquid dielectric 
power transformers (LPTs) having a top power handling capacity greater 
than or equal to 60,000 kilovolt amperes (60 megavolt amperes), whether 
assembled or unassembled, complete or incomplete.
    Incomplete LPTs are subassemblies consisting of the active part and 
any other parts attached to, imported with or invoiced with the active 
parts of LPTs. The ``active part'' of the transformer consists of one 
or more of the following when attached to or otherwise assembled with 
one another: The steel core or shell, the windings, electrical 
insulation between the windings, the mechanical frame for an LPT.
    The product definition encompasses all such LPTs regardless of name 
designation, including but not limited to step-up transformers, step-
down transformers, autotransformers, interconnection transformers, 
voltage regulator transformers, rectifier transformers, and power 
rectifier transformers.
    The LPTs subject to this investigation are currently classifiable 
under subheadings 8504.23.0040,

[[Page 9206]]

8504.23.0080 and 8504.90.9540 of the Harmonized Tariff Schedule of the 
United States (HTSUS). Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the scope 
of this investigation is dispositive.

Scope Comments

    In accordance with the preamble to the Department's regulations, 
see Preamble, 62 FR at 27323, in our Initiation Notice we set aside a 
period of time for parties to raise issues regarding product coverage, 
and invited all parties to submit comments within 20 calendar days of 
publication of the Initiation Notice.
    On August 23, 2011, we received comments from Hyundai and Hyosung 
concerning the scope of this investigation. In their submissions, both 
Hyundai and Hyosung request that the scope language be modified 
expressly to exclude spare parts when imported individually, or when 
imported with a complete LPT (whether assembled or unassembled) or with 
a subassembly, because they are not integral to the start-up or 
operation of an LPT.
    On September 2, 2011, petitioners filed rebuttal comments regarding 
the scope comments by Hyundai and Hyosung. In their rebuttal comments, 
petitioners state that Hyundai and Hyosung failed to demonstrate the 
necessity for any exclusionary language and that the scope language 
published in the Department's Initiation Notice is clear and does not 
require modification. Petitioners state that the scope correctly does 
not exclude spare parts as this exclusion could be used to evade or 
circumvent any antidumping duty order that may be in place.
    We preliminarily find that the language of the scope of the order 
is clear and does not require amendment.

Product Comparisons

    We have considered the comments that were submitted by the 
interested parties concerning product-comparison criteria. In 
accordance with section 771(16) of the Act, all products produced by 
the respondents covered by the description in the ``Scope of 
Investigation'' section, above, and sold in Korea during the period of 
investigation are considered to be foreign like product for purposes of 
determining appropriate product comparisons to U.S. sales. We have 
relied on the following 18 criteria to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product: (1) 
Number of phases; (2) maximum MVA rating; (3) transformer technology; 
(4) high line voltage; (5) high voltage winding basic insulation level; 
(6) number of windings in transformer; (7) type of tap changer and 
percentage regulation; (8) low line voltage; (9) impedance at maximum 
MVA rating; (10) type of core steel; (11) type of transformer; (12) low 
voltage winding basic insulation level; (13) load loss at maximum MVA 
rating; (14) no-load loss; (15) cooling class designation; (16) 
overload requirement; (17) decibel rating; and (18) frequency. We 
compared U.S. sales to sales of the next most similar foreign like 
product on the basis of the characteristics listed above, which were 
made in the ordinary course of trade. Where we were unable to find a 
home market match of such or similar merchandise, in accordance with 
section 773(a)(4) of the Act, we based NV on CV. Where appropriate, we 
made adjustments to CV in accordance with section 773(a)(8) of the Act.

Date of Sale

    19 CFR 351.401(i) states that, in identifying the date of sale of 
the merchandise under consideration or foreign like product, the 
Secretary normally will use the date of invoice, as recorded in the 
exporter or producer's records kept in the ordinary course of business. 
Additionally, the Secretary may use a date other than the date of 
invoice if the Secretary is satisfied that a different date better 
reflects the date on which the exporter or producer establishes the 
material terms of sale.\11\ The Department has explained that, ``in 
situations involving large custom-made merchandise in which the parties 
engage in formal negotiation and contracting procedures, the Department 
usually will use a date other than the date of invoice.'' Preamble, 62 
FR at 27349. The Court of International Trade (``CIT'') has stated that 
``a party seeking to establish a date of sale other than invoice date 
bears the burden of producing sufficient evidence to `satisfy' the 
Department that a different date better reflects the date on which the 
exporter or producer establishes the material terms of sale.'' \12\ 
Alternatively, the Department may exercise its discretion to rely on a 
date other than invoice date if the Department ``provides a rational 
explanation as to why the alternative date `better reflects' the date 
when `material terms' are established.'' \13\ The date of sale is 
generally the date on which the parties establish the material terms of 
the sale. This normally includes the price, quantity, delivery terms 
and payment terms.\14\
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    \11\ See 19 CFR 351.401(i); see also Allied Tube & Conduit Corp. 
v. United States, 132 F. Supp. 2d 1087, 1090 (CIT 2001) (quoting 19 
CFR 351.401(i)) (``Allied Tube'').
    \12\ See Allied Tube, 132 F. Supp. 2d at 1090-1092.
    \13\ SeAH Steel Corp. v. United States, 25 C.I.T. 133, 135 (Ct. 
Int'l Trade 2001).
    \14\ See USEC Inc. v. United States, 31 C.I.T. 1049, 1055 (Ct. 
Int'l Trade 2007).
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    In this case, Hyosung argued that the date of sale should be the 
purchase order date. See Hyosung's letter to the Department dated 
October 11, 2011. Hyosung also asked the Department to modify its 
reporting period to ``permit Hyosung to report all U.S. sales that were 
invoiced during the POI (i.e., between July 1, 2010 and June 30, 2011), 
even if the purchase order date falls before July 1, 2010.'' Hyundai 
filed a similar request on October 12, 2011. Petitioners initially 
urged the Department to have respondents report all sales based upon 
purchase order date and noted that Hyosung concedes that ``sales terms 
do not change after the purchase order is issued,'' and that ``the 
purchase order date satisfies the Department's definition of the date 
of sales because purchase orders nearly always memorialize all material 
terms,'' quoting Hyosung's October 11, 2011, letter at 3. Petitioners 
concluded that ``thus, the date of the purchase order, not the invoice 
date, is the proper date of sale in this proceeding.'' See Petitioners 
letter dated October 14, 2011, at 3. The Department issued a letter to 
all parties on October 17, 2011, noting that ``no party to this 
proceeding has placed any information on the record to call in to 
question the fact that purchase order date satisfies the Department's 
definition of the date of sale,'' and that ``based upon what is 
currently on the record, it appears that material terms of sale for 
sales of large power transformers are established at the purchase order 
date.'' See Letter to all interested parties from the Department 
entitled ``Antidumping Duty Investigation of Large Power Transformers 
from the Republic of Korea (``Korea''): Request for Modified Reporting 
Period'' dated October 17, 2011.
    Since that time, petitioners have raised concerns about the 
reported date of sale, arguing that we should ``rely on the earliest 
document in the sales process that establishes the essential elements 
of a sale'' and that in this case this ``is either the date of the 
alliance (or other relevant descriptor, e.g., `blanket,' `long-term,' 
etc.) contract, the date on which the customer transmits a blanket 
purchase order to Hyundai or Hyosung, or the date on which the customer 
transmits its production order forecast to the respondents.'' See 
Petitioners letter to the Department dated January

[[Page 9207]]

20, 2012, at 2. Petitioners claim ``the respondents have withheld 
complete documentation that would allow Commerce to establish 
accurately the date of sale,'' and that ``Commerce should find that 
record evidence indicates that the correct date of sale is established 
at a point earlier in the sales transaction process than the `purchase 
order' date identified by respondents.'' Id. at 23-24.
    For the purposes of this preliminary determination, we are using 
the purchase order date as the date of sale because record evidence 
currently demonstrates that this date best reflects the date upon which 
the material terms of sale were established. However, we are excluding 
from our analysis those sales which are known to be based on long term 
contracts executed prior to the POI because it is unclear whether the 
material terms of these sales were set during the POI. We will further 
examine whether there is other information that denotes a more 
appropriate date of sale as it is unclear from the record whether the 
material terms of these sales were set prior to the POI. We intend to 
issue one final supplemental questionnaire to each respondent regarding 
the date of sale issue.

Fair Value Comparisons

    To determine whether respondents' sales of large power transformers 
from Korea to the United States were made at LTFV, we compared the 
constructed export price (CEP) to normal value (NV) or constructed 
value, as appropriate and as described in the ``Constructed Export 
Price'' and ``Normal Value'' sections of this notice. In accordance 
with section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-
average CEPs to POI weighted-average NVs or constructed values, as 
appropriate.

Constructed Export Price

    For the price to the United States, we used CEP, in accordance with 
section 772(b) of the Act. We calculated CEP for those sales where a 
person in the United States, affiliated with the foreign exporter or 
acting for the account of the exporter, made the sale to the first 
unaffiliated purchaser in the United States of the subject merchandise. 
See section 772(b) of the Act. We based CEP on the packed prices 
charged to the first unaffiliated customer in the United States and the 
applicable terms of sale.
    In accordance with section 772(b) of the Act, we calculated CEP 
where the record established that sales made by Hyundai and Hyosung 
were made in the United States after the date of importation by or for 
the account of the producer or exporter, or by a seller affiliated with 
the producer or exporter, to a purchaser not affiliated with the 
producer or exporter.

Hyundai

    In accordance with section 772(c)(2)(A) of the Act, and where 
appropriate, we made deductions from the starting price for certain 
billing adjustments, early payment discounts, quantity discounts, and 
certain other discounts, including rebates. We also made further 
deductions to price for certain movement expenses where appropriate, 
for foreign inland freight, inland insurance, foreign brokerage, U.S. 
inland freight, certain other transportation expenses, U.S. customs 
duties and U.S. brokerage and handling expenses, pursuant to section 
772(c)(2)(A) of the Act.
    Pursuant to section 772(d)(1) of the Act, we made additional 
adjustments to CEP for commissions, credit expenses, bank charges, 
direct selling expenses associated with costs incurred in the United 
States, and other indirect selling expenses in the United States 
associated with economic activity in the United States. Pursuant to 
section 772(d)(3) of the Act, we made an adjustment for CEP profit. For 
a detailed discussion of these adjustments, see Memorandum to the file, 
through Angelica Mendoza, Program Manager, from David Cordell and Brian 
Davis, International Trade Analysts, titled ``Analysis Memorandum for 
the Preliminary Determination of the Antidumping Duty Investigation of 
Large Power Transformers from the Republic of Korea: Hyundai Heavy 
Industries Co., Ltd.,'' dated February 9, 2012 (Hyundai Preliminary 
Analysis Memorandum).

Hyosung

    In accordance with section 772(c)(2)(A) of the Act, and where 
appropriate, we made deductions from the starting price for certain 
movement expenses, foreign inland freight, foreign brokerage, foreign 
inland insurance, U.S. inland freight, international freight, marine 
insurance, and U.S. brokerage and handling expenses, pursuant to 
section 772(c)(2)(A) of the Act. Pursuant to section 772(d)(1) of the 
Act, we made additional adjustments to CEP for commissions, credit 
expenses, warranty expenses, inventory carrying costs incurred in 
Korea, direct selling expenses associated with costs incurred in the 
United States (i.e., oil and installation expenses), and indirect 
selling expenses. Pursuant to section 772(d)(3) of the Act, we made an 
adjustment for CEP profit. For a detailed discussion of these 
adjustments, see Memorandum to the file, through Angelica Mendoza, 
Program Manager, from David Cordell and Brian Davis, International 
Trade Analysts, titled ``Analysis Memorandum for the Preliminary 
Determination of the Antidumping Duty Investigation of Large Power 
Transformers from the Republic of Korea: Hyosung Corporation,'' dated 
February 9, 2012 (Hyosung Preliminary Analysis Memorandum).

Normal Value

A. Home Market Viability and Comparison-Market Selection

    To determine whether there is a sufficient volume of sales in the 
home market to serve as a viable basis for calculating NV (i.e., the 
aggregate volume of home market sales of the foreign like product is 
equal to or greater than five percent of the aggregate volume of U.S. 
sales), we compared respondents' volume of home market sales of the 
foreign like product to its volume of U.S. sales of the subject 
merchandise. See section 773(a)(1)(C) of the Act. Based on this 
comparison, we determined that both respondents had a viable home 
market during the POI. Consequently, we based NV on home market sales. 
Although Hyundai has argued that we should base NV on CV, based on the 
record of the case, the Department is following its normal methodology 
and invites parties to comment on the matches under a price-to-price 
comparison in their briefs.

B. Affiliated Party Transactions and Arm's-Length Test

    Pursuant to its regulations, the Department may use prices from 
sales made to affiliated parties if the price is comparable to the 
price at which the exporter or producer sold the foreign like product 
to a non-affiliate. See 19 CFR 351.403(c). During the POI, Hyundai sold 
foreign like product to an affiliated customer for its own use and not 
for resale. To test whether the sales made by Hyundai were made at 
arm's-length prices, and thus comparable to the prices for non-
affiliates, we compared, on a product-specific basis, the starting 
prices of sales to affiliated and unaffiliated customers, net of all 
applicable billing adjustments, discounts and rebates, movement 
charges, direct selling expenses and packing expenses. Where the price 
to the affiliated party was, on average, within a range of 98 to 102 
percent of the price of the same or comparable merchandise sold to 
unaffiliated parties, we determined that sales made to the affiliated 
party were at arm's-length. See 19 CFR 351.403(c); see also Stainless

[[Page 9208]]

Steel Sheet and Strip in Coils From Japan: Preliminary Results of 
Antidumping Duty Administrative Review, 74 FR 39615 (August 7, 2009), 
unchanged in Stainless Steel Sheet and Strip in Coils From Japan: Final 
Results of Antidumping Duty Administrative Review, 75 FR 6631 (February 
10, 2010). Sales to affiliated customers in the home market that were 
not made at arm's-length prices were excluded from our analysis because 
we considered them to be outside the ordinary course of trade and thus 
not appropriate for determining normal value. See section 771(15) of 
the Act and 19 CFR 351.102(b)(35).

C. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the export price or CEP. See also 
section 773(a)(7) of the Act. Pursuant to 19 CFR 351.412(c)(1)(iii), 
the NV LOT is based on the starting price of the sales in the 
comparison market or, when NV is based on constructed value, the 
starting price of the sales from which we derive selling, general and 
administrative expenses, and profit. For CEP sales (which constituted 
all sales by both Hyundai and Hyosung), the U.S. LOT is based on the 
starting price of the U.S. sales, as adjusted under section 772(d) of 
the Act, which is from the exporter to the importer. See 19 CFR 
351.412(c)(1)(ii).
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. See 19 CFR 351.412(c)(2). 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. 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 difference in levels between NV 
and CEP 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 Cut-to-Length 
Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 (November 
19, 1997) (applying the CEP offset analysis under section 
773(a)(7)(B)).
    In this investigation, we obtained information from Hyundai and 
Hyosung regarding the marketing stages involved by both parties making 
their reported home market and U.S. market sales, including a 
description of the selling activities performed by the respondents and/
or their affiliates for each channel of distribution. See Hyundai's AQR 
at pages A-16 through A-21 and Attachment A-12; see also Hyundai's TSQR 
dated January 23, 2012, at pages 1 through 2 and Exhibit 1 (selling 
activities chart); and Hyosung's AQR at pages A-17 through A-18; see 
also Hyosung's SQR at pages SA-11 through SA-17 and Exhibit SA-6 
(selling activities chart). We did not make an LOT adjustment under 
section 773(a)(7)(A) of the Act and 19 CFR 351.412(e) because there was 
only one home market LOT for each respondent and we were unable to 
identify a pattern of consistent price differences attributable to 
differences in LOTs. See 19 CFR 351.412(d). Under section 773(a)(7)(B) 
of the Act and 19 CFR 351.412(f), we are preliminarily granting a CEP 
offset to reduce normal value by the appropriate amount of indirect 
selling expenses for both Hyundai and Hyosung because the NV sales for 
each company are at a more advanced LOT than the LOT for their U.S. CEP 
sales.
    For a detailed description of our LOT methodology and a summary of 
the company-specific LOT findings for this preliminary determination, 
see Hyundai Preliminary Analysis Memorandum and Hyosung Preliminary 
Analysis Memorandum.

D. Cost of Production Analysis

    Based on the Department's analysis of the Petitioners' allegation, 
we initiated a sales-below-cost investigation to determine whether 
Hyosung had sales that were made at prices below their COP pursuant to 
section 773(b) of the Act. See Hyosung Cost Initiation Memo. As stated 
in the ``Background'' section of this notice, above, we declined to 
initiate such an investigation for Hyundai. See Hyundai Sales Below 
Cost Allegation Memorandum.
1. Calculation of Cost of Production
    We calculated the COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for selling, 
general, and administrative (SG&A) expenses and packing, in accordance 
with section 773(b)(3) of the Act. We relied on the COP data submitted 
by respondents except where noted below. Based on the review of record 
evidence, respondents did not appear to experience significant changes 
in the cost of manufacturing during the period of investigation. 
Therefore, we followed our normal methodology of calculating an annual 
weighted-average cost.

Hyosung

    We reclassified certain selling, G&A and other non-operating income 
and expense items that appeared not to be properly classified by 
Hyosung and revised Hyosung's calculation of the G&A expense ratio. For 
additional details, see Memorandum to Neal M. Halper from Sheikh M. 
Hannan titled ``Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Determination--Hyosung Corporation'' 
dated February 9, 2012 (Hyosung Preliminary Cost Calculation 
Memorandum).

Hyundai

    We excluded unconsolidated foreign exchange gains and losses from 
Hyundai's G&A expenses and included the corresponding consolidated 
gains and losses in the calculation of the financial expense ratio 
according to our normal practice. We disallowed the offset to Hyundai's 
G&A expense for certain miscellaneous income items. For additional 
details, see Memorandum to Neal M. Halper from Ernest Z. Gziryan titled 
``Cost of Production and Constructed Value Calculation Adjustments for 
the Preliminary Determination--Hyundai Heavy Industries Co., Ltd. and 
Hyundai Corporation, USA'' dated February 9, 2012 (Hyundai Preliminary 
Cost Calculation Memorandum).
2. Test of Comparison Market Prices
    With respect to Hyosung, on a product-specific basis, pursuant to 
section 773(a)(1)(B)(i) of the Act, we compared the adjusted weighted-
average COP to the home market sales prices of the foreign like 
product, in order to determine whether the sale prices were below the 
COP. For purposes of this comparison, we used COP exclusive of selling 
and packing expenses. The prices were net of billing adjustments, 
movement charges, discounts, direct and indirect selling expenses and 
packing expenses, where appropriate. See Hyosung Preliminary Analysis 
Memorandum.
3. Results of COP Test
    Section 773(b)(1) provides that where sales made at less than the 
COP ``have been made within an extended period of time in substantial 
quantities'' and ``were not at prices which permit recovery of all 
costs within a reasonable period of time'' the Department may disregard 
such sales when calculating

[[Page 9209]]

NV. Pursuant to section 773(b)(2)(C)(i) of the Act, we did not 
disregard below-cost sales that were not made in ``substantial 
quantities,'' i.e., where less than 20 percent of sales of a given 
product were at prices less than the COP. We disregarded below-cost 
sales when they were made in substantial quantities, i.e., where 20 
percent or more of a respondent's sales of a given product were at 
prices less than the COP and where ``the weighted average per unit 
price of the sales * * * is less than the weighted average per unit 
cost of production for such sales.'' See section 773(b)(2)(C)(ii) of 
the Act. Finally, based on our comparison of prices to the weighted-
average COPs for the POR, we considered whether the prices would permit 
the recovery of all costs within a reasonable period of time. See 
section 773(b)(2)(D) of the Act.
    Therefore, for Hyosung, we disregarded below-cost sales of a given 
product of 20 percent or more and used the remaining sales as the basis 
for determining NV, in accordance with section 773(b)(1) of the Act. 
See Hyosung Preliminary Analysis Memorandum.

E. Calculation of Normal Value Based on Comparison-Market Prices

    We calculated NV for Hyundai and Hyosung based on the reported 
packed, ex-factory or delivered prices to comparison market customers. 
We made deductions from the starting price, where appropriate, for 
billing adjustments, early payment and certain other discounts, other 
revenues received, inland freight and insurance, and warehousing 
expenses, pursuant to section 773(a)(6)(B)(ii) of the Act.
    Pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410(b), we made, where appropriate, circumstance-of-sale 
adjustments (i.e., bank charges for Hyosung). We added U.S. packing 
costs and deducted home market packing costs, in accordance with 
sections 773(a)(6)(A) and (B)(i) of the Act. Finally, we made a CEP 
offset pursuant to section 773(a)(7)(B) of the Act and 19 CFR 
351.412(f). We calculated the CEP offset as the lesser of the indirect 
selling expenses incurred on the home market sales or the indirect 
selling expenses deducted from the starting price in calculating CEP.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the variable cost of manufacturing for 
the foreign-like product and subject merchandise. See 19 CFR 
351.411(b).

F. Price-to-CV Comparison

    Where we were unable to find a home market match of such or similar 
merchandise, in accordance with section 773(a)(4) of the Act, we based 
NV on CV. Where appropriate, we made adjustments to CV in accordance 
with section 773(a)(8) of the Act.

G. Constructed Value

    In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of Hyundai's and Hyosung's respective material and 
fabrication costs, SG&A expenses, profit, and U.S. packing costs. We 
calculated the COP component of CV as described above in the ``Cost of 
Production Analysis'' section of this notice. In accordance with 
section 773(e)(2)(A) of the Act, we based SG&A expenses and profit on 
the amounts incurred and realized by the respondents in connection with 
the production and sale of the foreign like product in the ordinary 
course of trade, for consumption in the foreign country.

Currency Conversion

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

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information relied upon in making our final determination for 
Hyundai and Hyosung.

Preliminary Determination

    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                               Weighted-
                                                                average
                   Manufacturer/ Exporter                       margin
                                                               (percent)
------------------------------------------------------------------------
Hyundai Heavy Industries Co., Ltd...........................       21.79
Hyosung Corporation.........................................       38.07
All-others..................................................       29.93
------------------------------------------------------------------------

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we will direct CBP 
to suspend liquidation of all entries of large power transformers from 
Korea that are entered, or withdrawn from warehouse, for consumption on 
or after the date of publication of this notice in the Federal 
Register. We will also instruct CBP to require a cash deposit or the 
posting of a bond equal to the weighted-average dumping margins, as 
indicated in the chart below. These suspension of liquidation 
instructions will remain in effect until further notice.

All Others Rate

    Section 735(c)(5)(A) of the Act provides that the estimated ``All 
Others'' rate shall be an amount equal to the weighted average of the 
estimated weighted-average dumping margins established for exporters 
and producers individually investigated, excluding any zero or de 
minimis margins, and any margins determined entirely under section 776 
of the Act. Hyundai and Hyosung are the only respondents in this 
investigation for which the Department has calculated a company-
specific rate that is not zero or de minimis. Therefore, for purposes 
of determining the ``all others'' rate and pursuant to section 
735(c)(5)(A) of the Act, we are using the simple average of the dumping 
margins calculated for Hyundai and Hyosung for the ``all others'' rate, 
as referenced in the ``Suspension of Liquidation'' section, above. See 
Seamless Refined Copper Pipe and Tube From Mexico: Final Determination 
of Sales at Less Than Fair Value, 75 FR 60723, 60724 (October 1, 2010) 
(using a simple average to determine the ``All Others'' rate when there 
only two relevant weighted-average dumping margins because use of a 
weighted average risks disclosure of business proprietary 
information).\15\
---------------------------------------------------------------------------

    \15\ While Hyosung provided ranged data of their quantities and 
values in its public version, Hyundai provided indexed data and thus 
the Department cannot disclose a weighted-average dumping margin for 
the all other's rate.
---------------------------------------------------------------------------

Disclosure

    The Department will disclose to parties the calculations performed 
in connection with this preliminary determination within five days of 
the date of publication of this notice. See 19 CFR 351.224(b).

Postponement of Final Determination and Extension of Provisional 
Measures

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters, who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by

[[Page 9210]]

respondents for postponement of a final determination be accompanied by 
a request for extension of provisional measures from a four-month 
period to not more than six months.
    On December 22, 2011, and January 5, 2012, Hyosung and Hyundai, 
respectively, requested that in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination by 60 days (135 days after publication of the preliminary 
determination) and extend the application of the provisional measures 
prescribed under section 733(d) of the Act and 19 CFR 351.210(e)(2), 
from a four-month period to a six-month period. In accordance with 
section 735(a)(2)(A) of the Act and 19 CFR 351.210(b)(2)(ii), because 
(1) our preliminary determination is affirmative; (2) the requesting 
producers/exporters account for a significant proportion of exports of 
the subject merchandise; and (3) no compelling reasons for denial 
exist, we are granting this request and are postponing the final 
determination until no later than 135 days after the publication of 
this notice in the Federal Register. Suspension of liquidation will be 
extended accordingly. We are also granting the request to extend the 
application of the provisional measures prescribed under section 733(d) 
of the Act and 19 CFR 351.210(e)(2) from a four-month period to a six-
month period.

USITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
USITC of the Department's preliminary affirmative determination. If the 
Department's final determination is affirmative, the USITC will 
determine before the later of 120 days after the date of this 
preliminary determination or 45 days after our final determination 
whether imports of large power transformers from Korea are materially 
injuring, or threatening material injury to, the U.S. industry. See 
section 735(b)(2) of the Act. Because we are postponing the deadline 
for our final determination to 135 days from the date of the 
publication of this preliminary determination, the USITC will make its 
final determination no later than 45 days after our final 
determination.

Public Comment

    Interested parties are invited to comment on the preliminary 
determination. Interested parties may submit case briefs to the 
Department no later than seven days after the date of the issuance of 
the last verification report in this proceeding. See 19 CFR 
351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to 
the issues raised in the case briefs, must be filed within five days 
from the deadline date for the submission of case briefs. See 19 CFR 
351.309(d)(1) and 19 CFR 351.309(d)(2). A list of authorities used, a 
table of contents, and an executive summary of issues should accompany 
any briefs submitted to the Department. Executive summaries should be 
limited to five pages total, including footnotes. Interested parties, 
who wish to comment on the preliminary determination must file briefs 
electronically using Import Administration's Antidumping and 
Countervailing Duty Centralized Electronic Service System (``IA 
ACCESS''). An electronically filed document must be received 
successfully in its entirety by the Department's electronic records 
system, IA ACCESS, by 5 p.m. Eastern Standard Time.
    In accordance with section 774(1) of the Act, the Department will 
hold a public hearing, if timely requested, to afford interested 
parties an opportunity to comment on arguments raised in case or 
rebuttal briefs, provided that such a hearing is requested by an 
interested party. See also 19 CFR 351.310. 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, U.S. Department of Commerce, filed electronically using 
IA ACCESS, as noted above. An electronically filed document must be 
received successfully in its entirety by the Department's electronic 
records system, IA ACCESS, by 5 p.m. Eastern Standard Time within 30 
days after the date of publication of this notice. See 19 CFR 
351.310(c). Requests should contain the party's name, address, and 
telephone number, the number of participants, and a list of the issues 
to be discussed. If a request for a hearing is made, we will inform 
parties of the scheduled date for the hearing which will be held at the 
U.S. Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230, at a time and location to be determined. See 19 
CFR 351.310. Parties should confirm by telephone the date, time, and 
location of the hearing.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: February 9, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-3716 Filed 2-15-12; 8:45 am]
BILLING CODE 3510-DS-P