18390 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

DEPARTMENT OF COMMERCE

International Trade Administration

[A–428–816]

Certain Cut-To-Length Carbon Steel

Plate From Germany: Final Results of

Antidumping Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

review.

SUMMARY: On October 4, 1996, the

Department of Commerce (the

Department) published the preliminary

results of the administrative review of

the antidumping duty order on certain

cut-to-length carbon steel plate from

Germany. This review covers one

manufacturer/exporter of the subject

merchandise to the United States during

the period of review (POR), August 1,

1994, through July 31, 1995. We gave

interested parties an opportunity to

comment on our preliminary results.

Based on our analysis of the comments

received, we have changed the results

from those presented in the preliminary

results of review.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT:

Nancy Decker or Linda Ludwig,

Enforcement Group III, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone: (202) 482–1324 or (202) 482–

3833, respectively.

SUPPLEMENTARY INFORMATION:

Background

On October 4, 1996, the Department

published in the Federal Register (61

FR 51907) the preliminary results of the

administrative review (Preliminary

Results) of the antidumping duty order

on certain cut-to-length carbon steel

plate from Germany. Antidumping Duty

Order and Amendment of Final

Determination of Sales at Less Than

Fair Value: Certain Cut-To-Length

Carbon Steel Plate From Germany, 58

FR 44170 (August 19, 1993). The

Department has now completed this

administrative review in accordance

with section 751 of the Tariff Act of

1930, as amended (the Act).

Applicable Statute and Regulations

Unless otherwise stated, all citations

to the Act are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Tariff Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all citations

to the Department’s regulations are to

the current regulations, as amended by

the interim regulations published in the

Federal Register on May 11, 1995 (60

FR 25130).

Scope of this Review

The products covered by this

administrative review constitute one

‘‘class or kind’’ of merchandise: certain

cut-to-length carbon steel plate. These

products include hot-rolled carbon steel

universal mill plates (i.e., flat-rolled

products rolled on four faces or in a

closed box pass, of a width exceeding

150 millimeters but not exceeding 1,250

millimeters and of a thickness of not

less than 4 millimeters, not in coils and

without patterns in relief), of

rectangular shape, neither clad, plated

nor coated with metal, whether or not

painted, varnished, or coated with

plastics or other nonmetallic substances;

and certain hot-rolled carbon steel flatrolled products in straight lengths, of

rectangular shape, hot rolled, neither

clad, plated, nor coated with metal,

whether or not painted, varnished, or

coated with plastics or other

nonmetallic substances, 4.75

millimeters or more in thickness and of

a width which exceeds 150 millimeters

and measures at least twice the

thickness, as currently classifiable in the

Harmonized Tariff Schedule (HTS)

under item numbers 7208.40.3030,

7208.40.3060, 7208.51.0030,

7208.51.0045, 7208.51.0060,

7208.52.0000, 7208.53.0000,

7208.90.0000, 7210.70.3000,

7210.90.9000, 7211.13.0000,

7211.14.0030, 7211.14.0045,

7211.90.0000, 7212.40.1000,

7212.40.5000, and 7212.50.0000.

Included are flat-rolled products of

nonrectangular cross-section where

such cross-section is achieved

subsequent to the rolling process (i.e.,

products which have been ‘‘worked

after rolling’’)—for example, products

which have been beveled or rounded at

the edges. Excluded is grade X–70 plate.

These HTS item numbers are provided

for convenience and Customs purposes.

The written description remains

dispositive.

The POR is August 1, 1994, through

July 31, 1995. This review covers entries

of certain cut-to-length carbon steel

plate by AG der Dillinger Hu ̈ttenwerke

(Dillinger).

Analysis of Comments Received

We gave interested parties an

opportunity to comment on the

preliminary results. We received case

and rebuttal briefs from the respondent

(Dillinger) and petitioners (Bethlehem

Steel Corporation, U.S. Steel Company a

Unit of USX Corporation, Inland Steel

Industries, Inc., Geneva Steel, Gulf

States Steel Inc. of Alabama, Sharon

Steel Corporation, and Lukens Steel

Company). At the request of petitioners,

a hearing was held on November 22,

1996. Based upon our analysis of the

comments received, we have changed

the results from those presented in the

preliminary results of review.

Comment 1

The petitioners argue that the

Department should have characterized

Dillinger’s U.S. sales as constructed

export price (CEP) transactions rather

than export price transactions (EP).

Petitioners argue that despite the

Department’s prior characterization of

Dillinger’s sales as purchase price, the

equivalent of EP sales under the

amended statute, based on substantial

new information on the record of this

proceeding, these sales should be

classified as CEP.

Petitioners claim first that Francosteel

physically warehoused subject

merchandise, citing references in

Francosteel’s financial statement to

warehouse expenses. Petitioners note

that prior to verification, they had

requested that the Department tie

references in Francosteel’s financial

statements regarding inventory at

warehouses and processors in the U.S.

to specific ledger entries. Petitioners

argue that this was not done. Petitioners

also argue that in the first administrative

review the Department considered only

physical inventory, effectively

discounting other types of inventory

such as financial. Petitioners claim that

a physical inventory test limits CEP

sales only to those made after the date

of importation and is inconsistent with

PQ Corp. v. United States, 652 F. Supp.

724, 731 (CIT 1987).

Petitioners state that each U.S. sale

involves two shipments: one from

Germany to the United States and the

other from Francosteel to the

unaffiliated U.S. customer. Petitioners

allege that while subject merchandise

entered the United States on July 29,

1995, it was not shipped to the

unaffiliated customer until August 2,

1995, which they state is evidence that

the steel was warehoused by

Francosteel. With respect to financial

inventory, petitioners note several

references in Francosteel’s financial

statements. Petitioners argue that

financial inventory is relevant to the

Department’s CEP test as it is indicative
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18391

of the affiliated reseller’s role in the U.S.

sales transactions.

Petitioners next argue that Francosteel

negotiates the price of subject

merchandise sold to unaffiliated

customers. Petitioners cite the

Department’s June 13, 1996, verification

report which indicates that Francosteel

ultimately sets the price the unaffiliated

U.S. customer is charged, which

petitioners argue is proof that Dillinger’s

sales are CEP. Petitioners state that their

view is consistent with Notice of Final

Determination of Sales at Less Than

Fair Value: Large Newspaper Printing

Presses and Components Thereof,

Whether Assembled or Unassembled,

from Germany, 61 FR 38166, 38176 (July

23, 1996). Petitioners also distinguish

the present review from Independent

Radionic Workers of America v. United

States, Slip op. 95–45 (CIT Mar. 15,

1995), in which petitioners state the

Court of International Trade (CIT) held

that the affiliate’s substantial selling

functions were not necessarily

inconsistent with a finding of purchase

price treatment. Petitioners contend that

Independent Radionic Workers did not

involve the power to negotiate U.S.

price. Petitioners argue that Dillinger’s

approval of the price negotiated by

Francosteel is completely irrelevant.

Petitioners argue that Francosteel

performs numerous other functions,

which, with the role of price setting,

petitioners claim go beyond mere

document processor or communications

link. Petitioners argue that among other

functions, Francosteel takes title,

purchases subject merchandise from

Dillinger and resells it; represents itself

as the seller of the subject merchandise

to its U.S. customers; acts as importer of

record; and finances the sale. Petitioners

add that Francosteel frequently remits

payment for merchandise to Dillinger

before Francosteel receives payment

from its U.S. customers. They state that

certain documentation (e.g., pertaining

to total U.S. sales value) is only

available at Francosteel and that more

sales activity takes place in the United

States than in Germany with respect to

U.S. sales.

Dillinger responds that the

Department correctly characterized its

single U.S. sale as export price. The sale

was made before the date of importation

and Dillinger claims that direct

shipment is the customary commercial

channel for sales of plate to the U.S.

customer. Dillinger disputes petitioners’

claim that there was a four-day lapse of

time between entry and shipment to the

customer and that this alleged lapse is

evidence of warehousing. Dillinger

states that customs entry was made on

the day the vessel entered the waters of

the Port of Houston, but that actual

docking occurred several days later.

Dillinger notes that the terms of sale

were FOB on the customer’s trucks, and

that the merchandise was directly

unloaded from the vessel onto the

customer’s truck. Respondent states that

the Department verified that

Francosteel’s warehousing costs were

for non-subject merchandise.

Respondent also urges the Department

to reject petitioners’ ‘‘new theory of

‘financial inventory’ ’’ as without

support in the statute or the

Department’s regulations.

With respect to the negotiation of

price, respondent quotes the

Department’s verification report which

states that ‘‘Francosteel cannot confirm

an order, including price, to the

customer before Dillinger has approved

the order’’ and ‘‘Dillinger makes all

decisions with regard to price and

quantities offered, specifications and

delivery times * * *. Dillinger always

approves the price for all sales.’’ Thus,

consistent with Francosteel’s alleged

role as a mere document processor and

communications link, according to

respondent, even if Francosteel thinks it

can get better than Dillinger’s minimum

price guideline, the final price must still

be approved by Dillinger. In response to

a question at the hearing, Dillinger also

argued that there is no evidence in this

case that Francosteel got or attempted to

get a price better than Dillinger’s

minimum price guideline for the sale

subject to this review. See November 22,

1996, hearing transcript at 38.

Department’s Position

We agree with petitioners and have

determined that respondent’s single

U.S. sale should be characterized as a

CEP rather than an EP sale. This

determination reverses that reached in

the preliminary results of review. It also

differs from the determination reached

in the previous final results of review.

See Certain Cut-To-Length Carbon Steel

Plate From Germany: Final Results of

Antidumping Duty Administrative

Review, 61 FR 13834, 13843 (March 28,

1996) (Dillinger First Review). However,

we have reexamined the evidence on

the record in this review and, for the

following reasons, have determined that

it is more appropriate to consider this a

CEP sale.

Whenever sales are made prior to

importation through a related sales

agent in the United States, the

Department typically determines

whether to characterize the sales as EP

based upon the following criteria: (1)

Whether the merchandise was shipped

directly to the unrelated buyer, without

being introduced into the related selling

agent’s inventory; (2) whether this

procedure is the customary sales

channel between the parties; and (3)

whether the related selling agent located

in the United States acts only as a

processor of documentation and a

communication link between the foreign

producer and the unrelated buyer. See,

e.g., Newspaper Printing Presses From

Germany, 61 FR at 38175; Certain

Corrosion-Resistant Carbon Steel Flat

Products From Korea: Final Results of

Antidumping Duty Administrative

Review, 61 FR 18547, 18551 (April 26,

1996). This test has been approved by

the CIT. Independent Radionic Workers,

Slip Op. 95–45 at 2–3; PQ Corp., 652 F.

Supp. at 733–35.

Applying the first two criteria to the

present review, we agree with

respondent that the merchandise was

shipped directly to the unrelated U.S.

customer without being introduced into

the inventory of Francosteel, Dillinger’s

related U.S. selling agent. The

Department verified that the terms of

sale were FOB on the customer’s trucks,

and that the merchandise was directly

unloaded from the vessel onto the

customer’s trucks. In addition, FOB

shipment to the customer’s trucks,

without Francosteel warehousing the

subject merchandise, is the customary

channel of distribution. The Department

also verified that the warehousing costs

which Francosteel did incur were for

non-subject merchandise. There is no

evidence indicating that the subject

merchandise was warehoused as well.

Concerning the third criterion,

however, the Department has

determined that Francosteel did act as

more than a processor of sales

documents and a communications link

between the unrelated U.S. customer

and Dillinger, the producer in Germany.

We find that Francosteel played a major

role in negotiating and bringing about

the sale, from the bidding stage through

the final contract. See Newspaper

Printing Presses From Germany, 61 FR

at 38176. Pursuant to respondent’s

general practice, customers in the

United States either contact Francosteel

or Francosteel contacts them. The

Department verified that Dillinger does

not get involved in the sale until after

Francosteel makes the initial

arrangements. Customers place

purchase orders with Francosteel. Prior

to sending an order to the mill,

Francosteel does a credit check on the

customer. Moreover, even though

Dillinger sets the minimum purchase

price after considering the order

information it receives from Francosteel,

Francosteel negotiates the sale with the

customer with an aim to obtaining the

best price possible. U.S. Sales
18392 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

Verification Report, June 13, 1996, at 4–

5 (U.S. Verif. Rep.). Francosteel then

invoices the sale, takes title to the

merchandise, and acts as importer of

record.

We recognize that, despite

Francosteel’s involvement in the sales

process, ‘‘Dillinger always approves the

price for all sales,’’ as the Department

found at verification. Dillinger Sales

Verification Report, June 12, 1996, at 4–

5 (Germany Verif. Rep.). We consider

Dillinger’s role in the sales process in

the United States to be minimal,

however. Francosteel essentially

negotiates all sales in accordance with

Dillinger’s limited guidelines and the

sales take place in the United States, not

in Germany. In the first administrative

review, the Department’s determination

that Francosteel acted merely as a

processor of sales-related

documentation was based mainly upon

the finding that Francosteel lacked ‘‘the

flexibility to set the price of the steel.’’

Dillinger First Review at 13843; see also

Final Determination of Sales at Less

Than Fair Value: Certain Stainless Steel

Wire Rod From France, 58 FR 68865,

68869 (1993) (finding that U.S. affiliate

participating in negotiations lacked

flexibility to set price). We have

determined that this was not the case

during the present review.

We agree with petitioners that this

case is distinguishable from the

situation in Independent Radionic

Workers. In that case, the CIT upheld

the Department’s determination that the

sales in question were purchase price

sales (what are now export price sales)

despite the fact that the U.S. subsidiary

‘‘processed purchase orders, performed

invoicing, collected payments, arranged

U.S. transportation and was the

importer of record.’’ Slip Op. 95–45 at

3. We consider Francosteel’s extensive

involvement in negotiating respondent’s

U.S. sale during this review, along with

Francosteel’s other sales activities, to

warrant classifying this sale as CEP.

This review is also distinguishable from

this issue in E.I. DuPont de Nemours &

Co. v. United States, 841 F. Supp. 1237

(CIT 1993). In that case, in upholding

the Department’s determination that the

sales in question were purchase price,

the CIT found that the foreign producer,

not the U.S. affiliate, ‘‘negotiated price

and basic sales terms directly with each

U.S. customer for each U.S. sale.’’ Id. at

1249. The related affiliate lacked the

authority to set the U.S. customer’s

price. Id. Francosteel’s sales role was

much more significant.

For the foregoing reasons, we have

revised the determination in the

preliminary results and have

recharacterized respondent’s U.S. sale

as CEP.

Comment 2

Petitioners claim that the Department

must apply partial facts available to all

theoretical-to-actual weight conversion

factors reported by Dillinger for its

home-market sales, because of what

petitioners consider to be significant

discrepancies discovered by the

Department. Petitioners note that weight

conversion factors were used in the

calculation of multiple variables, and

have an impact throughout the

Department’s calculations. Despite these

significant and persistent irregularities

with the data, in petitioners’ words, the

Department merely corrected certain

specific conversion factors for the

preliminary results. Petitioners argue

that the Department should apply, as

partial facts available, the lowest nonaberrant actual-to-theoretical weight

conversion factor reported by Dillinger.

Petitioners argue that in Gray Portland

Cement and Clinker from Mexico:

Preliminary Results of Antidumping

Duty Administrative Review, 61 FR

51676, 51677 (October 3, 1996), the

respondent inappropriately included

long-term loans in its interest rate

calculation and the Department used

facts available and relied upon a

properly reported interest rate for one of

respondents’ affiliates. Similarly, in

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished, from

Japan, and Tapered Roller Bearings,

Four Inches or Less in Outside

Diameter, and Components Thereof,

from Japan, 61 FR 25200, 25202 (May

20, 1996), petitioners allege that the

Department used partial best

information available (BIA) rather than

rely upon or correct respondent’s

erroneous further processing cost data.

Respondent counters that the

Department acted properly in correcting

the theoretical-to-actual weight

conversion factors in the preliminary

results. Dillinger notes that with one

exception all sales with the incorrectly

reported conversion factors were of

beveled plate and that the corrected

information provided by respondent at

verification was found to be correct by

the Department. Respondent claims that

when the Department examined sales

with less extreme weight conversion

factors only one error was noted, and

that the Department should not use a

sample of ‘‘outlier sales’’ to draw

inferences about the entire database.

Department’s Position

We agree with respondent. The

mistakes found at verification were not

significant, persistent irregularities, as

claimed by petitioners. Unlike Cement

and Clinker and Tapered Roller

Bearings, the incorrect data in this

instance related to a small and discrete

group of observations and was readily

correctable. Rather, as Dillinger

explains, the mistakes found primarily

related to a small and discrete group of

home-market sales (sales of beveled

plate). The Department verified the

weight conversion factors of various

other sales, including all sales that were

potential matches to the U.S. sales, and

found no discrepancies. Consequently,

correcting the limited number of errors

was appropriate.

Comment 3

Petitioners argue that Dillinger’s

reported cost data should be revised in

light of the Department’s findings at

verification. Petitioners argue that

Dillinger failed to include in its COP

calculation 13th month adjustments

concerning certain receivables written

off for Dillinger and Rogesa (Dillinger’s

affiliated pig iron supplier). Petitioners

state that in the first administrative

review, the Department properly

determined that receivables written off

constitute bad debt expenses, and that

the write-offs for Saarstahl AG (SAG)

(Dillinger’s former sister company) and

its subsidiaries were included in the

indirect selling expense portion of

Dillinger’s COP and CV data. See

Dillinger First Review, 61 FR at 13836–

37. Petitioners argue that the receivables

written off in the present review involve

the same parties and arose under the

same circumstances as those that the

Department included in COP and CV in

the first review. Petitioners conclude

that the Department should treat these

receivables in the same manner in this

review.

Respondent states that in its

preliminary results the Department

properly rejected the adjustments to cost

data proposed by petitioners.

Respondent claims that the expenses

related to SAG’s bankruptcy settlement

are not related to subject merchandise.

Respondent agrees with the

Department’s finding in the preliminary

results that these amounts cannot be

included in COP and CV.
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18393

Department’s Position

The Department correctly did not

include these expenses in its calculation

of cost or CV in the preliminary results.

Petitioners are correct that write-offs of

receivables which are part of a

bankruptcy settlement may be

considered bad debt expenses, which

the Department considers to be ordinary

expenses. See, e.g., Dillinger First

Review, 61 FR at 13836. Contrary to

petitioners’ characterization, however,

the receivables in question did not

relate to the sale or production of

subject merchandise, unlike other

receivables written off during the

previous review. For a more detailed

discussion of these receivables, see the

Analysis Memorandum to the File,

April 2, 1997, and the Cost Verification

Report, June 25, 1996, at 9, 16–17 (Cost

Verif. Rep.). The Department did not

include amounts related to the same

accrual during the previous review in

the calculation of COP or CV. See

Dillinger First Review at 13837.

Comment 4

Petitioners argue that Dillinger’s

reported cost data must be revised in

light of the Department’s findings at

verification with respect to expenses

related to the depreciation of Rogesa’s

blast furnace. Petitioners state that the

Department’s cost verification report

indicates that only a portion of certain

Rogesa 13th month adjustments,

including an amount for depreciation of

expenses for a blast furnace, was

included in Dillinger’s COP and CV

calculations. Petitioners cite the final

results of the first review, and note that

the full amount of the expenses related

to the blast furnace should be

recognized in calculating Rogesa’s COM.

See Dillinger First Review, 61 FR at

13,836.

Dillinger responds that since half of

Rogesa’s blast furnace output is

contractually devoted to the production

of non-subject merchandise for another

company, it would be an error to

allocate all of Rogesa’s depreciation over

only Dillinger’s share of Rogesa’s

output. Dillinger argues that the

Department could include as a cost

either: (1) All of Rogesa’s depreciation

divided by Rogesa’s total production to

arrive at a per ton figure, or (2) the pro

rata share of Rogesa’s depreciation

corresponding to Dillinger’s pro rata

share of Rogesa’s output.

Department’s Position

Dillinger is correct that it would be an

error for the Department to divide the

total blast furnace depreciation by the

tonnage of Rogesa’s sales to Dillinger

(the tonnage amount used in the

respondent’s calculation), as this would

overstate Rogesa’s cost per ton of

output. To include total blast furnace

depreciation, we would have to divide

that amount by Rogesa’s total output or

multiply it by Dillinger’s pro rata

portion of Rogesa’s output. Both of these

approaches would result in a lower per

unit cost than the methodology used by

Dillinger in its submissions. We have

made no further adjustments.

Comment 5

Petitioners argue that the Department

should determine that Dillinger, through

Francosteel, has absorbed AD duties on

behalf of its U.S. customer. Petitioners

note that even if the Department

determines that it is not required to

conduct an absorption inquiry during

this review, it retains the discretion to

do so and should. Petitioners argue that

record evidence demonstrates that the

costs of AD and CVD duties, including

cash deposits, are being absorbed by the

affiliated importer and are not being

borne by the ultimate U.S. customer.

Petitioners argue that confining

absorption inquiries to the second and

fourth reviews under the URAA will

encourage respondents to manipulate

the administrative review process to

avoid duty absorption findings. For

example, petitioners note that Dillinger

claims that it did not have any imports

during the 1995/1996 review period,

precluding a duty absorption inquiry

with respect to the second review under

the URAA. Petitioners claim that

limiting duty absorption inquiries to the

second and fourth reviews will

encourage petitioners to request

administrative reviews simply for the

purpose of obtaining a duty absorption

determination, creating additional

burdens on the Department, petitioners,

and respondents. Petitioners contend

that the statute was not intended to

force petitioners into choosing between

incurring additional costs by requesting

a review, when they might not

otherwise choose to do so, or giving up

their right to an absorption

determination. Petitioners argue that

only minimal additional work would be

required for the Department to conduct

a duty absorption inquiry and that doing

so under these circumstances would be

an efficient use of resources.

Respondent supports the

Department’s decision not to conduct a

duty absorption inquiry in this review

and also notes that there is no evidence

on the record to support a finding of

duty absorption. Respondent argues that

the test of duty absorption is not

whether AD and CVD duties are being

absorbed by the affiliated importer, but

whether these duties have been

absorbed by the foreign producer or

exporter. Dillinger argues that, contrary

to petitioners’ assertions, there is no

verified evidence on the record that

demonstrates that Dillinger has

absorbed the duties through Francosteel.

Department’s Position

We disagree with petitioners. Section

751(a)(4) of the Act provides for the

Department, if requested, to determine

during an administrative review

initiated two or four years after

publication of the order whether AD

duties have been absorbed by a foreign

producer or exporter subject to the order

if the subject merchandise is sold in the

United States through an importer who

is affiliated with such foreign producer

or exporter. As stated in the preliminary

results, for transition orders as defined

in section 751(c)(6)(C) of the Act, i.e.,

orders in effect as of January 1, 1995, the

Department will make a duty absorption

determination, if requested, in any

administrative review initiated in 1996

or 1998. See Preliminary Results, 61 FR

at 51980. This policy is in accordance

with the statute as well as the approach

adopted in the Department’s proposed

regulations. See 61 FR 7308, 7366

(February 27, 1996). Contrary to

petitioners’ argument, this approach

does not impose an unnecessary burden

upon parties. If domestic interested

parties believe duty absorption is taking

place, it is reasonable for them to

request a review, during the review

periods specified, in which duty

absorption can be properly considered.

Comment 6

Petitioners claim that AD and CVD

duties have been reimbursed by

Dillinger, and must be deducted from

U.S. price under § 353.26(a) of the

Department’s regulations. Petitioners

note that the Department discovered at

verification that Dillinger established a

financial provision with respect to AD

and CVD duties. Petitioners reject

Dillinger’s explanation of this

provision—that it exists because

German law requires Dillinger to

establish such a provision even if there

is but a remote possibility of a liability.

Petitioners state that Dillinger has no

legal obligation to pay AD duties under

U.S. law, as Francosteel is the importer

of record and is liable for duties owed.

Petitioners argue that the only

explanation for Dillinger establishing

such a provision is that Dillinger

voluntarily has accepted this liability

and has reimbursed Francosteel for the

duties it has absorbed.

Petitioners allege that a comparison of

Dillinger’s and Francosteel’s chart of

accounts demonstrates that duties have
18394 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

been reimbursed. Petitioners cite

Dillinger’s Section A response which

indicates that it owed money to

affiliated companies for ‘‘taxes and

duties.’’ Petitioners claim that Dillinger

had ‘‘an agreement to reimburse

antidumping duties’’ with its affiliated

party and also that ‘‘inappropriate

financial intermingling’’ occurred,

demonstrating that duties were in fact

reimbursed under the Department’s test

in Final Results of Administrative

Review: Color Television Receivers From

the Republic of Korea. 61 FR 4408

(February 6, 1996). The petitioners also

note that the above evidence further

meets the test applied by the Court of

International Trade in Federal Mogul

Corp. v. United States, 918 F. Supp. 386,

394 (CIT 1996), which requires only the

establishment of a link between intra

corporate transfers and the

reimbursement of antidumping duties.

Petitioners cite Cold-Rolled Carbon

Steel Flat Products From the

Netherlands; Final Results of

Antidumping Duty Administrative

Review, 61 FR 48465, 48470–71

(September 13, 1996), in support of their

argument that duties need not be

assessed to make a finding of

reimbursement. The petitioners note

that the respondent in that case both

agreed to reimburse duties to be

assessed and has reimbursed for

antidumping duty cash deposits made

on entries during the POR.

Petitioners also argue that the

Department should adjust U.S. price to

reflect the full amount of duties

reimbursed. Petitioners reference

Certain Corrosion-Resistant Carbon

Steel Flat Products From Korea; Final

Results of Antidumping Duty

Administrative Review, 61 FR 18547,

18564 (April 26, 1996), in which,

petitioners claim, the Department

indicated that respondents were entitled

to an upward adjustment to U.S. price

for countervailing duties offsetting

export subsidies. The petitioners argue

that the statute requires the Department

to increase constructed export price by

the amount of ‘‘any countervailing duty

imposed on the subject merchandise

* * * to offset an export subsidy’’.

Petitioners state that the deduction of

estimated duties is not prohibited by PQ

Corp.

Respondent argues that Dillinger has

not reimbursed Francosteel for AD/CVD

duties. Respondent notes that at

verification officials at Dillinger denied

there was any agreement by Dillinger to

reimburse AD/CVD duties to

Francosteel and that officials at

Francosteel denied there was any

agreement to have Dillinger reimburse

Francosteel for AD duties (although

there may be future discussions with

Dillinger regarding CVD duties).

Respondent claims that Dillinger’s

general ledger provision relates to fees

and expenses that could be incurred in

connection with the AD proceeding.

Respondent further notes that the

Department verified that payments

against this provision in 1994 and 1995

were for legal, data collection,

consulting and translation fees, and that

there is no evidence on the record

showing that the subsequent amounts

provisioned in that accrual were of a

different nature. Respondent denies that

there was any inappropriate financial

intermingling between Dillinger, Sollac,

and Francosteel. Finally, respondent

notes that since there is no evidence on

the record of reimbursement of AD/CVD

duties, petitioners’ request that U.S.

price be adjusted to reflect the full

amount of reimbursed duties is moot.

Department’s Position

We disagree with petitioners. Section

353.26 of the Department’s regulations

requires the Department to deduct from

United States price (now EP or CEP) the

amount of any antidumping duty paid,

or reimbursed, by the producer or

exporter, thereby increasing the amount

of the duty ultimately collected. 19 CFR

§ 353.26(a) (1996); see Proposed

Regulations, 61 FR at 7382

(§ 351.402(f)). The Department has

interpreted this regulation as applying

regardless of whether the importer is

affiliated to the producer or exporter.

See Steel From Netherlands, 61 FR at

48470; Color Television Receivers From

Korea, 61 FR at 4410–11.

As the Department stated in Color

Television Receivers From Korea,

however, ‘‘[t]his does not imply that

foreign exporters automatically will be

assumed to have reimbursed related

U.S. importers for antidumping duties

by virtue of the relationship between

them.’’ 61 FR at 4411. The regulation

requires ‘‘evidence beyond mere

allegation that the foreign manufacturer

either paid the antidumping duty on

behalf of the U.S. importer, or

reimbursed the U.S. importer for its

payment of the antidumping duty.’’

Federal-Mogul Corp., 918 F. Supp. at

393 (citing Torrington Co. v. United

States, 881 F. Supp. 622, 631 (CIT

1995)).

In the present review, contrary to

petitioners’ assertions, we found no

evidence of inappropriate financial

intermingling between Dillinger and

Francosteel, or of either an agreement to

reimburse AD duties or the actual

reimbursement of AD duties between

the two affiliated parties. The

Department verified that ‘‘Francosteel is

responsible for paying all cash

deposits.’’ U.S. Verif. Rep. at 13. The

Department also found ‘‘no intention

that there will be any reimbursement of

AD duties in the future between

Dillinger and Francosteel.’’ Id.

Petitioners are correct that Dillinger had

established a general ledger provision in

its accounting records with respect to

antidumping and countervailing duties.

Dillinger explained that the provision

relates to fees and expenses incurred in

connection with the AD proceeding, and

that such a provision is required under

German law ‘‘if there is even a remote

possibility of a liability.’’ Germany

Verif. Rep. at 22. We consider this a

reasonable explanation. Moreover, we

verified that all payments against the

provision in 1994 and 1995 were for

legal, data collection, consulting and

translation fees. Cost Verif. Rep. at 10.

Because we have rejected petitioners’

arguments regarding reimbursement, it

is unnecessary to address petitioners’

additional arguments regarding the

application of § 353.26 of the

regulations to the reimbursement of

cash deposits.

For the foregoing reasons, we have not

adjusted Dillinger’s CEP as provided for

under § 353.26.

Comment 7

Petitioners argue that regardless of the

Department’s determination with

respect to reimbursement, the

Department must deduct actual AD/

CVD duties from the price used to

establish EP or CEP. Petitioners claim

that the plain language and structure of

the statute mandate that the Department

make such an adjustment. Specifically,

petitioners state that the phrase ‘‘any

* * * United States import duties,’’ as

used in section 772(c)(2)(A) of the Act,

includes AD and CVD duties, as such

duties are plainly ‘‘incident to bringing

the subject merchandise from the

original place of shipment in the

exporting country to the place of

delivery in the United States.’’ See 19

U.S.C. 1677a(c)(2)(A).

Petitioners note that the relevant

provisions of section 772(c)(2)(A) date

from the Antidumping Act of 1921.

Petitioners argue that the legislative

history of the 1921 Act is silent as to the

definition of ‘‘any * * * United States

import duties’’ and that the drafter’s

failure to provide a definition either in

the 1921 Act or its history indicates that

Congress intended no meaning other

than the ordinary one for this term. The

petitioners also note that section

772(c)(1)(C) provides that the price used

to derive EP or CEP shall be increased

by the amount of any countervailing

duty imposed to offset an export
Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices 18395

subsidy. Petitioners argue that in the

1979 Trade Agreements Act, in addition

to adding section 772(c)(1)(C), Congress

added the phrase ‘‘except as provided in

paragraph 1(C)’’ in section

1677a(c)(2)(A). This, the petitioners

assert, demonstrates that Congress

understood the subsection’s reference to

‘‘any * * * United States import

duties’’ as including AD and CVD

duties; otherwise there would be no

reason to exempt certain CVD duties

from the provision.

While petitioners admit that the CIT

has never explicitly held that the

provision now included in section

772(c)(2)(A) covers CVD or AD duties,

the Court has held so implicitly.

Petitioners cite Federal-Mogul Corp. v.

United States, 813 F. Supp. 856, 872

(CIT 1993). This case, according to

petitioners, requires the Department to

deduct any actual import duties, i.e.,

duties that can be accurately determined

at the time the Department is calculating

the current dumping margins.

Petitioners add that Federal-Mogul’s

holding that the Department was correct

not to deduct cash deposits of estimated

AD or CVD duties was premised on the

fact that estimated duties may not bear

any relationship to the actual AD or

CVD duties owed. Petitioners argue that

the clear implication of the Court’s

reasoning is that actual duties are in fact

‘‘United States import duties’’ subject to

section 772(c)(2)(A) and these duties

should be deducted from U.S. price.

Petitioners also argue that the

Department must deduct the full

amount of CVD duties paid by

Francosteel for those entries covered by

the second administrative review of the

CVD order as those duties are

determinable.

Petitioners also argue that the

Department must deduct the full

amount of the ‘‘actual’’ antidumping

duties that Francosteel will be

responsible for upon liquidation of the

entries of subject merchandise.

Petitioners note that once the final

results of review are issued, Dillinger’s

antidumping duties will be actually

determined.

Petitioners state that the Department

has erroneously refrained from

deducting AD and CVD duties from U.S.

price on the grounds that such a

deduction will result in doublecounting. See Certain CorrosionResistant Steel Flat Products From

Korea: Final Results of Antidumping

Duty Administrative Review, 61 FR

18547, 18,563–34 (April 26, 1996).

Petitioners reject this argument, stating

that the statute is not discretionary and

that the Department’s rationale is

inconsistent with its treatment of other

AD adjustments (i.e., doubling

antidumping margins to account for

reimbursement in Steel From the

Netherlands, 61 FR at 48470–71).

Respondent cites Corrosion-Resistant

Steel From Korea and Steel From the

Netherlands in response to petitioners’

arguments with respect to treating AD/

CVD duties as a cost. Respondent notes

first that the issue is moot since there

was no dumping margin. With respect

to petitioners’ argument regarding CVD

cash deposits, respondent notes that the

Department rejected a similar argument

in Corrosion-Resistant Steel From Korea

and should do so here for the same

reasons.

Department’s Position

It is the Department’s longstanding

position that AD and CVD duties are not

a cost within the meaning of section

772(d). AD and CVD duties are unique.

Unlike normal duties, which are an

assessment against value, AD and CVD

duties derive from the margin of

dumping or the rate of subsidization

found. Logically, AD and CVD duties

cannot be part of the very calculation

from which they are derived. This

logical rationale for the Department’s

interpretation of the statute is consistent

with prior decisions of the CIT. See

Federal-Mogul, supra, 813 F. Supp. at

872 (deposits of antidumping duties

should not be deducted from USP

because such deposits are not analogous

to deposits of ‘‘normal import duties’’).

In particular, petitioners have no basis

to draw a distinction between actual,

assessed duties and cash deposits in this

context, based upon Federal Mogul.

Petitioners’ reasoning is circular rather

than logical. According to petitioners, in

calculating the dumping margin, the

Department must take into account the

dumping margin. This cannot be what

the CIT intended in Federal Mogul.

Such double counting, i.e., including

the same unfair trade practice twice in

a single calculation, is unjustifiable.

Only in the limited circumstances

regarding reimbursement, as provided

for in § 353.26 of the Department’s

regulations, is it appropriate to deduct

any amount of antidumping duties.

Thus, petitioners’ reliance upon Steel

From the Netherlands, which applied

only to reimbursement, is unwarranted

as well.

Moreover, the treatment of AD and

CVD duties (already paid or to be

assessed) as a cost to be deducted from

the export price is an issue that was

arduously debated during passage of the

URAA and ultimately rejected by

Congress. See H.R. 2528, 103rd Cong.,

1st Sess. (1993). Alternatively, Congress

directed the Department to investigate,

in certain circumstances, whether AD

duties were being absorbed by affiliated

U.S. importers. 19 U.S.C. 1675(a)(4).

Thus, Congress put to rest the issue of

AD and CVD duties as a cost. SAA at

885 (‘‘The duty absorption inquiry

would not affect the calculation of

margins in administrative reviews. This

new provision of the law is not intended

to provide for the treatment of

antidumping duties as a cost.’’). See also

H. Rep. No. 103–826(I), 103rd Cong.,

2nd Sess. 60 (1994).

Final Results of Review

As a result of our review, we have

determined that the following margin

exists:

Manufacturer/

exporter Time period

Margin

(percent)

AG der Dillinger

Hu ̈ttenwerke 8/1/94–7/31/95 3.00

The Department shall determine, and

the Customs Service shall assess,

antidumping duties on all appropriate

entries. Individual differences between

United States price and foreign market

value may vary from the percentages

stated above. The Department will issue

appraisement instructions directly to

the Customs Service.

Furthermore, the following deposit

requirements will be effective upon

publication of this notice of final results

of review for all shipments of plate from

Germany entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided for by

section 751(a)(1) of the Act: (1) The cash

deposit rates for the reviewed company

will be the rate for that firm as stated

above; (2) for previously reviewed or

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, 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) if neither the

exporter nor the manufacturer is a firm

covered in this review, the cash rate will

be 36.00 percent. This is the ‘‘all others’’

rate from the LTFV investigation. See

Antidumping Duty Order and

Amendment of Final Determination of

Sales at Less Than Fair Value: Certain

Cut-To-Length Carbon Steel Plate From

Germany, 58 FR 44170 (August 19,

1993). These deposit requirements,

when imposed, shall remain in effect

until publication of the final results of

the next administrative review.
18396 Federal Register / Vol. 62, No. 72 / Tuesday, April 15, 1997 / Notices

This notice serves as a final reminder

to importers of their responsibility

under § 353.26 of the Department’s

regulations to file a certificate regarding

the reimbursement of antidumping

duties prior to liquidation of the

relevant entries during this review

period. Failure to comply with this

requirement could result in the

Secretary’s presumption that

reimbursement of antidumping duties

occurred and the subsequent assessment

of double antidumping duties.

This notice also serves as a reminder

to parties subject to administrative

protective order (APO) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with § 353.34(d) of the Department’s

regulations. Timely notification of

return/destruction of APO materials or

conversion to judicial protective order is

hereby requested. Failure to comply

with the regulations and the terms of an

APO is a sanctionable violation.

This administrative review and this

notice are in accordance with § 751(a)(1)

of the Act (19 U.S.C. 1675(a)(1)) and

§ 353.22 of the Department’s

regulations.

Dated: April 2, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–9113 Filed 4–14–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–401–805]

Certain Cut-to-Length Carbon Steel

Plate From Sweden: Final Results of

Antidumping Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of

antidumping duty administrative

review.

SUMMARY: On October 4, 1996, the

Department of Commerce (the

Department) published the preliminary

results of its administrative review of

the antidumping duty order on certain

cut-to-length carbon steel plate from

Sweden. This review covers one

manufacturer/exporter of the subject

merchandise to the United States and

the period August 1, 1994 through July

31, 1995. We gave interested parties an

opportunity to comment on our

preliminary results. We have not

changed the results from those

presented in the preliminary results of

review.

EFFECTIVE DATE: April 15, 1997.

FOR FURTHER INFORMATION CONTACT:

Elizabeth Patience or Jean Kemp, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW., Washington, DC 20230;

telephone: (202) 482–3793.

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 current regulations, as amended by

the interim regulations published in the

Federal Register on May 11, 1995 (60

FR 25130).

SUPPLEMENTARY INFORMATION:

Background

On October 4, 1996, the Department

published in the Federal Register (61

FR 51898) the preliminary results of its

administrative review of the

antidumping duty order on certain cutto-length carbon steel plate from

Sweden (58 FR 44162). We gave

interested parties an opportunity to

comment on our preliminary results and

held a public hearing on November 19,

1996. We received written comments

from SSAB Svenskt Sta ̊l AB (SSAB),

respondent, and from petitioners:

Bethlehem Steel Corporation, U.S. Steel

Group (a unit of USX Corporation),

Inland Steel Industries Inc., Gulf States

Steel Inc. of Alabama, Sharon Steel

Corporation, Geneva Steel, and Lukens

Steel Company. At the request of

respondent and petitioners, a public

hearing was held on November 19,

1996. We have now completed the

administrative review in accordance

with section 751(a) of the Act.

Scope of Review

Certain cut-to-length plate includes

hot-rolled carbon steel universal mill

plates (i.e., flat-rolled products rolled on

four faces or in a closed box pass, of a

width exceeding 150 millimeters but not

exceeding 1,250 millimeters and of a

thickness of not less than 4 millimeters,

not in coils and without patterns in

relief), of rectangular shape, neither

clad, plated nor coated with metal,

whether or not painted, varnished, or

coated with plastics or other

nonmetallic substances; and certain hotrolled carbon steel flat-rolled products

in straight lengths, of rectangular shape,

hot rolled, neither clad, plated, nor

coated with metal, whether or not

painted, varnished, or coated with

plastics or other nonmetallic substances,

4.75 millimeters or more in thickness

and of a width which exceeds 150

millimeters and measures at least twice

the thickness, as currently classifiable in

the HTS under item numbers

7208.40.3030, 7208.40.3060,

7208.51.0030, 7208.51.0045,

7208.51.0060, 7208.52.0000,

7208.53.0000, 7208.90.0000,

7210.70.3000, 7210.90.9000,

7211.13.0000, 7211.14.0030,

7211.14.0045, 7211.90.0000,

7212.40.1000, 7212.40.5000,

7212.50.0000. Included are flat-rolled

products of non-rectangular crosssection where such cross-section is

achieved subsequent to the rolling

process (i.e., products which have been

worked after rolling)—for example,

products which have been beveled or

rounded at the edges. Excluded is grade

X–70 plate. These HTS item numbers

are provided for convenience and

Customs purposes. The written

description remains dispositive.

The period of review (POR) is August

1, 1994, through July 31, 1995.

Analysis of Comments Received

Comment 1—Reconciliation of Kalkyl

System Costs

SSAB argues that it maintains two

cost accounting systems, the normal

cost accounting system and the kalkyl

system. The company’s normal cost

accounting system is used for financial

accounting purposes and records total

costs for each major cost center. The

kalkyl system, on the other hand, is a

‘‘parallel system’’ which is used to

compute budgeted costs for each order

item. Respondent contends that the

kalkyl system is an alternate cost

accounting system and not a ‘‘sales

estimating tool’’ as stated in the

Department’s preliminary results. SSAB

states that it uses the kalkyl system to

ensure profitability of orders it accepts

and that the kalkyl system has been

used historically in the normal course of

business. SSAB further notes that this

system has been accepted by the

Department in a past review.

Respondent claims that the kalkyl

system is the only costing system

maintained by its Oxelo ̈ sund facility

(SSOX) that contains the cost detail

required to meet the Department’s

demands for costs per control number

(i.e., per product).

SSAB argues that it notified the

Department of the fact that the kalkyl

system was not a formal part of SSOX’s