[Federal Register Volume 62, Number 72 (Tuesday, April 15, 1997)]
[Notices]
[Pages 18390-18396]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-9113]


      

[[Page 18389]]

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Part II





Department of Commerce





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International Trade Administration



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Antidumping Duty Administrative Reviews, Final Results; Notices

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

[[Page 18390]]


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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.

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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 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 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 Huttenwerke (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

[[Page 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

[[Page 18392]]

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 non-aberrant 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.

[[Page 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 Sec. 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

[[Page 18394]]

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 Sec. 353.26(a) (1996); see Proposed 
Regulations, 61 FR at 7382 (Sec. 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 Sec. 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 Sec. 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

[[Page 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 double-counting. See Certain Corrosion-
Resistant 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 Sec. 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:

------------------------------------------------------------------------
                                                                 Margin 
           Manufacturer/exporter               Time period     (percent)
------------------------------------------------------------------------
AG der Dillinger Huttenwerke..............     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.

[[Page 18396]]

    This notice serves as a final reminder to importers of their 
responsibility under Sec. 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 Sec. 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 
Sec. 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and Sec. 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