[Federal Register Volume 66, Number 86 (Thursday, May 3, 2001)]
[Notices]
[Pages 22157-22163]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10848]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-820]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Postponement of Final Determination: Certain Hot-Rolled 
Carbon Steel Flat Products From India

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

EFFECTIVE DATE: May 3, 2001.

FOR FURTHER INFORMATION CONTACT: Nithya Nagarajan, Timothy Finn, or 
John Conniff at (202) 482-5253, (202) 482-0065, and (202) 482-1009, 
respectively; AD/CVD Enforcement, Office 4, Group II, Import 
Administration, Room 1870, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (the Department) 
regulations refer to the regulations codified at 19 CFR part 351 
(2000).

Preliminary Determination

    We preliminarily determine that certain hot-rolled carbon steel 
flat products (HRS) from India are being sold, or are likely to be 
sold, in the United States at less than fair value (LTFV), as provided 
in section 733 of the Act. The estimated margins of sales at LTFV are 
shown in the Suspension of Liquidation section of this notice.

Case History

    This investigation was initiated on December 4, 2000. See Notice of 
Initiation of Antidumping Duty Investigations: Certain Hot-Rolled 
Carbon Steel Flat Products from Argentina, India, Indonesia, 
Kazakhstan, the Netherlands, the People's Republic of China, Romania, 
South Africa, Taiwan, Thailand, and Ukraine, 65 FR 77568 (December 12, 
2000) (Initiation Notice).\1\ Since the initiation of these 
investigations, the following events have occurred.
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    \1\ The petitioners in these investigations are Bethlehem Steel 
Corporation, Gallatin Steel Company, IPSCO Steel Inc., LTV Steel 
Company, Inc., National Steel Corporation, Nucor Corporation, Steel 
Dynamics Inc., U.S. Steel Group (a unit of USX Corporation), Weirton 
Steel Corporation, the Independent Steelworkers Union, and the 
United Steelmakers of America (collectively the petitioners). 
However, Weirton Steel Corporation is not a petitioner in the 
investigation involving the Netherlands.
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    The Department set aside a period for all interested parties to 
raise issues regarding product coverage. See Initiation Notice, at 
77569. We received no comments from any parties in this investigation. 
The Department did, however, receive comments regarding product 
coverage in the investigation of HRS from the Netherlands. In that 
investigation we received comments from Duracell Global Business 
Management Group on December 11, 2000; from Energizer on December 15, 
2000; from Bouffard Metal Goods, Inc.; and Truelove & Maclean, Inc., on 
December 18, 2000; and from Corus Staal BV and Corus Steel U.S.A., Inc. 
(collectively referred to as Corus); and Thomas Steel Strip Corporation 
on December 26, 2000, and from Rayovac Corporation on March 12, 2001.
    On December 22, 2000, the Department issued a letter to all 
interested parties in each of the concurrent certain hot-rolled carbon 
steel flat products antidumping investigations,\2\ providing an 
opportunity to comment on the Department's proposed model matching 
characteristics and hierarchy. Comments were submitted by: petitioners 
(January 5, 2001); Corus, a respondent in the concurrent Netherlands 
HRS investigation (January 3, 2001); Iscor Limited, a respondent in

[[Page 22158]]

the concurrent South Africa HRS investigation (January 3, 2001); and 
Zaporizhstal, a respondent in the concurrent Ukraine HRS investigation 
(January 3, 2001). No other interested party submitted comments. 
Petitioners agreed with the Department's proposed characteristics and 
hierarchy of characteristics. Corus suggested adding a product 
characteristic to distinguish prime merchandise from non-prime 
merchandise. Neither Iscor nor Zaporizhstal proposed any changes to 
either the list of product characteristics proposed by the Department 
or the hierarchy of those product characteristics but, rather, provided 
information relating to its own products that were not relevant in the 
context of determining what information to include in the Department's 
questionnaires. For purposes of the questionnaires subsequently issued 
by the Department to the respondents, no changes were made to the 
product characteristics or the hierarchy of those characteristics from 
those originally proposed by the Department in its December 22, 2000, 
letter. With respect to Corus' request, the additional product 
characteristic suggested by Corus, to distinguish prime merchandise 
from non-prime merchandise, is unnecessary. The Department already asks 
respondents to distinguish prime from non-prime merchandise in field 
number 2.2. ``Prime vs. Secondary Merchandise.'' See the Department's 
Antidumping Duty Questionnaire, at B-7 and C-7. These fields are used 
in the model match program to prevent matches of prime merchandise to 
non-prime merchandise.
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    \2\ See Initiation Notice for a complete list of all the 
countries being investigated concurrently.
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    On December 28, 2000, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of the products subject to this investigation 
from Argentina, China, India, Indonesia, Kazakhstan, the Netherlands, 
Romania, South Africa, Taiwan, Thailand, and Ukraine, are materially 
injuring an industry in the United States producing the domestic like 
product. See Hot-Rolled Steel Products from Argentina, China, India, 
Indonesia, Kazakhstan, Netherlands, Romania, South Africa, Taiwan, 
Thailand, and Ukraine, 66 FR 805 (January 4, 2001).
    The Department issued antidumping questionnaires to the two 
mandatory respondents in India on January 11, 2001.\3\ See Selection of 
Respondents section below. We received responses to our questionnaire 
from both mandatory respondents, Ispat Industries Ltd. (Ispat) and 
Essar Steel Ltd. (Essar). We issued supplemental questionnaires, 
pertaining to sections A, B, C, and D of the antidumping questionnaire, 
to Ispat and Essar in March 2001. Ispat and Essar responded to these 
supplemental questionnaires in April 2001.
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    \3\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales, or, if the 
home market is not viable, of sales in the most appropriate third-
country market (this section is not applicable to respondents in 
non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the cost of 
production (COP) of the foreign like product and the constructed 
value (CV) of the merchandise under investigation. Section E 
requests information on further manufacturing.
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    Ispat requested that it not be required to report certain 
information requested in the questionnaires. Specifically Ispat 
requested that it be permitted to exclude sales of HRS by its cold-
rolling division. These sales were the result of internal transfers 
between Ispat's HRS facility and its cold-rolling production facility. 
On February 1, 2001, Ispat reported that its hot-rolling division 
transferred a small quantity of HRS to its cold-rolling division which 
primarily further processed the HRS into non-subject merchandise. 
However, the cold-rolling division sold a small percentage of HRS to 
unaffiliated home market customers during the period of investigation 
(POI). Also, Ispat reported that its cold-rolling division purchased 
HRS on the open market during the POI and does not maintain information 
that would enable it to track whether it sold HRS produced by Ispat's 
hot-rolling division or HRS purchased from unaffiliated suppliers. 
Therefore, according to Ispat, it would be extremely difficult for 
Ispat to identify and report the sales of HRS, by its cold-rolling 
division. In addition, Ispat claimed that the sales at issue involve 
products with characteristics unique to the home market, and thus it is 
unlikely that these sales would match its U.S. sales. As a result, 
Ispat requested that it be allowed to exclude these sales from its 
overall home market sales database.
    On March 16, 2001, the Department issued a supplemental 
questionnaire to Ispat concerning this exclusion request. We received 
Ispat's response on March 22, 2001. The information contained in this 
response, in addition to information contained in Ispat's responses to 
the antidumping questionnaire, indicate that the sales covered by these 
exclusion requests are not representative of normal selling behavior, 
were made in such small volumes that they would have an insignificant 
effect on our analysis, and, if not excluded, would unduly complicate 
the Department's analysis. Therefore, we granted the exclusion request 
discussed above. See Letter from Thomas F. Futtner, Acting Office 
Director, to Ispat, dated April 16, 2001.

Postponement of the Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On April 13, 2001, Ispat and Essar requested that, in the event of 
an affirmative preliminary determination in this investigation, the 
Department postpone its final determination until 135 days after the 
publication of the preliminary determination. Ispat and Essar also 
included a request to extend the provisional measures to not more than 
135 days after the publication of the preliminary determination. 
Accordingly, since we have made an affirmative preliminary 
determination, and the requesting parties account for a significant 
proportion of exports of the subject merchandise, we have postponed the 
final determination until not later than 135 days after the date of the 
publication of the preliminary determination.

Period of Investigation

    The period of investigation (POI) for this investigation is October 
1, 1999, through September 30, 2000. This period corresponds to the 
four most recent fiscal quarters prior to the month of the filing of 
the petition (i.e., November 2000).

Scope of Investigation

    For purposes of these investigations, the products covered are 
certain hot-rolled carbon steel flat products of a rectangular shape, 
of a width of 0.5 inch or greater, neither clad, plated, nor coated 
with metal and whether or not

[[Page 22159]]

painted, varnished, or coated with plastics or other non-metallic 
substances, in coils (whether or not in successively superimposed 
layers), regardless of thickness, and in straight lengths of a 
thickness of less than 4.75 mm and of a width measuring at least 10 
times the thickness. Universal mill plate (i.e., flat-rolled products 
rolled on four faces or in a closed box pass, of a width exceeding 150 
mm, but not exceeding 1250 mm, and of a thickness of not less than 4.0 
mm, not in coils and without patterns in relief) of a thickness not 
less than 4.0 mm is not included within the scope of these 
investigations.
    Specifically included within the scope of these investigations are 
vacuum degassed, fully stabilized (commonly referred to as 
interstitial-free (IF)) steels, high strength low alloy (HSLA) steels, 
and the substrate for motor lamination steels. IF steels are recognized 
as low carbon steels with micro-alloying levels of elements such as 
titanium or niobium (also commonly referred to as columbium), or both, 
added to stabilize carbon and nitrogen elements. HSLA steels are 
recognized as steels with micro-alloying levels of elements such as 
chromium, copper, niobium, vanadium, and molybdenum. The substrate for 
motor lamination steels contains micro-alloying levels of elements such 
as silicon and aluminum.
    Steel products to be included in the scope of these investigations, 
regardless of definitions in the Harmonized Tariff Schedule of the 
United States (HTSUS), are products in which: (i) Iron predominates, by 
weight, over each of the other contained elements; (ii) the carbon 
content is 2 percent or less, by weight; and (iii) none of the elements 
listed below exceeds the quantity, by weight, respectively indicated:

    1.80 percent of manganese, or
    2.25 percent of silicon, or
    1.00 percent of copper, or
    0.50 percent of aluminum, or
    1.25 percent of chromium, or
    0.30 percent of cobalt, or
    0.40 percent of lead, or
    1.25 percent of nickel, or
    0.30 percent of tungsten, or
    0.10 percent of molybdenum, or
    0.10 percent of niobium, or
    0.15 percent of vanadium, or
    0.15 percent of zirconium.

    All products that meet the physical and chemical description 
provided above are within the scope of these investigations unless 
otherwise excluded. The following products, by way of example, are 
outside or specifically excluded from the scope of these 
investigations:
    <bullet> Alloy hot-rolled steel products in which at least one of 
the chemical elements exceeds those listed above (including, e.g., 
American Society for Testing and Materials (ASTM) specifications A543, 
A387, A514, A517, A506).
    <bullet> Society of Automotive Engineers (SAE)/American Iron & 
Steel Institute (AISI) grades of series 2300 and higher.
    <bullet> Ball bearing steels, as defined in the HTSUS.
    <bullet> Tool steels, as defined in the HTSUS.
    <bullet> Silico-manganese (as defined in the HTSUS) or silicon 
electrical steel with a silicon level exceeding 2.25 percent.
    <bullet> ASTM specifications A710 and A736.
    <bullet> USS abrasion-resistant steels (USS AR 400, USS AR 500).
    <bullet> All products (proprietary or otherwise) based on an alloy 
ASTM specification (sample specifications: ASTM A506, A507).
    <bullet> Non-rectangular shapes, not in coils, which are the result 
of having been processed by cutting or stamping and which have assumed 
the character of articles or products classified outside chapter 72 of 
the HTSUS.
    The merchandise subject to these investigations is classified in 
the HTSUS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90, 
7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 
7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 
7211.19.75.60, and 7211.19.75.90. Certain hot-rolled carbon steel flat 
products covered by these investigations, including: vacuum degassed 
fully stabilized; high strength low alloy; and the substrate for motor 
lamination steel may also enter under the following tariff numbers: 
7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 
7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 
7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 
7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise 
may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTSUS 
subheadings are provided for convenience and U.S. Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. Where it is not practicable to examine all known 
producers/exporters of subject merchandise, section 777A(c)(2) of the 
Act permits the Department to investigate either (1) a sample of 
exporters, producers, or types of products that is statistically valid 
based on the information available at the time of selection, or (2) 
exporters and producers accounting for the largest volume of the 
subject merchandise that can reasonably be examined. Using company-
specific export data for the POI, which we obtained from the American 
Embassy in New Delhi, India, we found that four Indian exporters 
shipped HRS to the United States during the POI. Due to limited 
resources we determined that we could investigate only the two largest 
producers/exporters, accounting for more than 60 percent of total 
exports to the United States. See Memorandum from Timothy Finn to Holly 
A. Kuga, Selection of Respondents, dated January 10, 2001. Therefore, 
we designated Ispat and Essar as mandatory respondents and sent them 
the antidumping questionnaire.

Product Comparisons

    In accordance with section 771(16) of the Act, all products 
produced by the respondents covered by the description in the Scope of 
Investigation section, above, and sold in India during the POI are 
considered to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We have relied upon the 
following product characteristics to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product or 
CV: painted or not painted; quality; carbon content; yield strength; 
thickness; width; cut-to-length or coil; tempered or not tempered; 
pickled or not pickled; edge trim; and with or without patterns in 
relief. Where there were no sales of identical merchandise in the home 
market to compare to U.S. sales, we compared U.S. sales to the next 
most similar foreign like product on the basis of the characteristics 
listed above.

Fair Value Comparisons

    To determine whether sales of HRS from India were made in the 
United States at LTFV, we compared the export

[[Page 22160]]

price (EP) to the normal value (NV), as described in the Export Price 
and Normal Value sections of this notice. In accordance with section 
777A(d)(1)(A)(i) of the Act, we calculated weighted-average EPs. We 
compared these to weighted-average home market prices.

Date of Sale

    For home market and U.S. sales, Ispat and Essar both reported the 
date of invoice/shipment, as the most appropriate date of sale. Essar 
and Ispat both stated that the invoice/shipment date best reflects the 
date on which the material terms of sale are established and that price 
and/or quantity can and do change between order confirmation date and 
invoice/shipment date. Petitioners, however, have alleged that the 
sales documentation provided by respondents indicates that the order 
confirmation date appears to be the date when the material terms of 
sale are set for a majority of these respondents' sales of HRS. On 
March 2, 2001, the Department requested respondents to provide 
additional information concerning the choice of date of invoice/
shipment as the date of sale. On March 16, 2001, Ispat and Essar 
reiterated that invoice/shipment date is the most appropriate date of 
sale and requested that they not have to report sales based on any 
alternative date of sale.
    The Department is preliminarily using the dates of sale reported by 
each respondent (i.e., date of invoice/shipment), as this is our 
preferred methodology. The Department uses invoice date under section 
351.401(i) unless there is sufficient evidence that material terms of 
sale initially set at some earlier date were not subject to change. 
This methodology has recently been affirmed by the Court of 
International Trade. See SEAH Steel Corp. Ltd. v. United States, Slip. 
Op. 01-20 (Ct. Int'l. Trade) (February 23, 2001) (ruling that the 
Department's choice of date of invoice as the date of sale was 
appropriate and in accordance with the Department's practice). However, 
we intend to fully examine establishment of material terms of sale at 
verification, and we will incorporate our findings, as appropriate, in 
our analysis for the final determination. Due to the complexity of this 
issue, we invite all interested parties to submit comments on this 
issue in accordance with the schedule for comments set forth in this 
notice.

Export Price

    For the price to the United States, we used EP, in accordance with 
section 772(a) of the Act, because Ispat and Essar sold the merchandise 
directly to unaffiliated U.S. customers or sold the merchandise to 
unaffiliated trading companies, with knowledge that these companies in 
turn sold the merchandise to U.S. customers, and constructed export 
price was not otherwise warranted. For both Ispat and Essar, we 
calculated EP using the packed prices charged to the first unaffiliated 
customer in the United States (the starting price).
    We deducted from the starting price, where applicable, amounts for 
discounts and rebates, and movement expenses in accordance with section 
772(c)(2)(A) of the Act. In this case, movement expenses include 
foreign inland freight, international freight, foreign and U.S. 
brokerage and handling charges, insurance, U.S. duties and U.S. inland 
freight.

Duty Drawback

    In the instant investigation, Ispat and Essar have claimed a duty 
drawback adjustment for the Government of India's Duty Entitlement 
Passbook Scheme (``DEPB''). Under the DEPB program, exporters are 
granted a credit which is equivalent to 14 percent of the FOB value of 
exports. The exporters then use this credit to offset the customs duty 
payment on imported inputs used to manufacture exported products.
    In addition, Essar has claimed a duty drawback adjustment for the 
Advance License program. The Advance License program allows exporters 
to import specified inputs duty-free to utilize in production of a 
finished product. According to the information on the record, there is 
a quantitative limit on the duty-free imports for each of the specified 
input materials. These limited inputs are exempt from customs duties, 
and upon exportation of the finished merchandise, the duties collected 
on imported inputs are refunded to the exporter.
    The petitioners, in their comments for our preliminary 
determination, filed on April 11, 2001, argue that neither Ispat nor 
Essar qualify for a duty drawback adjustment for the DEPB program; and 
in addition, that Essar does not qualify for the Advance License 
program, because the respondents have failed to show that the duty 
drawback received conformed to the Department's requirements for 
granting the adjustment.
    The Department applies a two-pronged test to determine whether a 
respondent has fulfilled the statutory requirements for a duty drawback 
adjustment pursuant to section 772(c)(1)(B) of the Act. Specifically, 
the Department grants a duty drawback adjustment if it finds that: (1) 
Import duties and rebates are directly linked to and are dependent upon 
one another, and (2) the company claiming the adjustment can 
demonstrate that there are sufficient imports of raw materials to 
account for the duty drawback received on exports of the manufactured 
product. See Steel Wire Rope from the Republic of Korea; Final Results 
of Antidumping Duty Administrative Review, 61 FR 55965, 55968 (October 
30, 1996).
    The Department has repeatedly rejected the claim for duty drawback 
under the DEPB, based on the fact that the applicants received a 
drawback for the full amount of dutiable imports although there is no 
direct linkage between the material actually imported and the refunded 
amount. See Final Determination: Stainless Steel Round Wire from India, 
64 FR 17319, 17320 (April 9, 1999). The record evidence in this 
investigation demonstrates that neither Essar nor Ispat was able to 
``link'' the import duties paid on the input, and then rebated upon 
exportation. Rather the evidence on the record demonstrates that the 
DEPB program is a refund of duties calculated on an aggregated basis 
rather than on a input-specific basis. See Essar: Supplemental 
Questionnaire Response, dated April 6, 2001, at 48-50; see also Ispat: 
Supplemental Questionnaire Response, dated April 6, 2001, at SC-18-19. 
After a review of the documentation on the record, we found that 
neither Ispat nor Essar was able to (1) demonstrate that import duties 
and rebates for the DEPB program are directly linked to and dependent 
upon one another; or (2) demonstrate that there were sufficient imports 
of raw materials to account for the duty drawback received on exports 
of the finished product. See Final Results of Administrative Review: 
Silicon Metal from Brazil, 64 F.R. 6305, 6318 (February 9, 1999) 
(denying a duty drawback adjustment when the respondent had not met the 
burden of demonstrating that it was entitled to the adjustment). Based 
on this information, we preliminarily find that Ispat and Essar have 
failed to meet both prongs of the Department's test with regard to the 
DEPB duty drawback adjustment. As a result, we have not made an 
adjustment to U.S. price for DEPB duty drawback in the preliminary 
determination.
    With regard to the Advance License program, we further find that 
Essar has not met its burden. Essar failed demonstrated that in order 
to obtain a refund from the Government of India under the Advance 
License Program, that it was able to link the value of

[[Page 22161]]

imports eligible for refund to the actual quantity of inputs imported 
and then used in the production and export of subject merchandise. 
Essar states that it provides the following information to the 
Government of India: (1) The quantity of exports; (2) the quantity of 
imports; and (3) ``whether the company imported inputs in proportion to 
the quantitative norms set by the government.'' See Essar: Supplemental 
Questionnaire Response, at 49-50. However, based upon an examination of 
the information on the record, the Department is unable to find that 
Essar's records indicate that the calculated amount of exempted import 
duties were applied to the import quantities of input materials 
actually utilized (as opposed to the total aggregate quantity of 
imports eligible), and then reconciled to the quantity of merchandise 
exported to derive the reported per unit duty drawback amount. See id. 
at 50. Therefore, we preliminarily find that Essar was unable to (1) 
demonstrate that import duties and rebates for the Advance License 
program are directly linked to and dependent upon one another; and (2) 
demonstrate that there were sufficient imports of raw materials to 
account for the duty drawback received on exports of the finished 
product. Therefore, we preliminarily find that Essar has not met both 
prongs of the Department's test with regard to the Advance Licence duty 
drawback adjustment. As a result, we have not made an adjustment to 
Essar's U.S. price for Advance License duty drawback in the preliminary 
determination.

Normal Value

A. Selection of Comparison Market
    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or has 
sufficient aggregate value, if quantity is inappropriate) and that 
there is no particular market situation in the home market that 
prevents a proper comparison with the EP transaction. The statute 
contemplates that quantities (or value) will normally be considered 
insufficient if they are less than five percent of the aggregate 
quantity (or value) of sales of the subject merchandise to the United 
States.
    For this investigation, we found that Ispat and Essar each had a 
viable home market for HRS. Thus, the home market is the appropriate 
comparison market in this investigation, and we used the respondents' 
submitted home market sales data for purposes of calculating NV.
    In deriving NV, we made adjustments as detailed in the Calculation 
of NV Based on Home Market Prices and Calculation of NV Based on CV, 
sections below.
B. Affiliated-Party Transactions and Arm's-Length Test
    Essar reported that it only sold HRS in the home market to 
unaffiliated customers. Therefore, the Department's arm's-length test 
is inapplicable with regard to Essar's home market sales.
    Ispat reported that it made home market sales to other affiliated 
companies. We applied the arm's-length test to sales from Ispat to 
these affiliated companies by comparing them to sales of identical 
merchandise from Ispat to unaffiliated home market customers. If these 
affiliated party sales satisfied the arm's-length test, we used them in 
our analysis. Sales to affiliated customers in the home market which 
were not made at arm's-length prices were excluded from our analysis 
because we considered them to be outside the ordinary course of trade. 
See 19 CFR 351.102.
    To test whether these sales were made at arm's-length prices, we 
compared on a model-specific basis the starting prices of sales to 
affiliated and unaffiliated customers net of all discounts and rebates, 
movement charges, direct selling expenses, and home market packing. 
Where, for the tested models of subject merchandise, prices to the 
affiliated party were on average 99.5 percent or more of the price to 
the unaffiliated parties, we determined that sales made to the 
affiliated party were at arm's-length. See 19 CFR 351.403(c) and 62 FR 
at 27355, Preamble--Department's Final Antidumping Regulations (May 19, 
1997).
A. COP Analysis
    Concurrent with the filing of the original petition, the 
petitioners alleged that sales of HRS in the home market of India were 
made at prices below the fully absorbed COP, and accordingly, requested 
that the Department conduct a country-wide sales-below-COP 
investigation. Based upon the comparison of the adjusted prices from 
the petition for the foreign like product to its COP, and in accordance 
with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to 
believe or suspect that sales of HRS manufactured in India were made at 
prices below the COP. See Initiation Notice at 77572. As a result, the 
Department has conducted an investigation to determine whether Ispat 
and Essar made sales in the home market at prices below their 
respective COPs during the POI within the meaning of section 773(b) of 
the Act. We conducted the COP analysis described below.
    1. Calculation of COP. In accordance with section 773(b)(3) of the 
Act, we calculated a weighted-average COP for each respondent based on 
the sum of the cost of materials and fabrication for the foreign like 
product, plus amounts for the home market general and administrative 
(G&A) expenses and interest expenses.
    We relied on the COP data submitted by Ispat and Essar in their 
cost questionnaire responses, except, as noted below, in specific 
instances where Ispat's submitted costs were not appropriately 
quantified or valued.
    a. Changes to Ispat's Cost of Production. Based on the information 
on the record, it appears that Ispat reached commercial levels of 
production prior to the POI. Therefore, we disallowed the start-up 
adjustment claimed by Ispat. We adjusted the reported costs to include 
depreciation expenses and certain raw material costs that were omitted. 
We recalculated Ispat's G&A expense ratio using its company-wide G&A 
costs from its fiscal year 2000 audited financial statements. We 
adjusted Ispat's financial expense ratio to include the net exchange 
rate difference and loss on cancellation of forward contract per its 
audited financial statements.
    See Calculation Memorandum from Michael P. Harrison to Neal Halper, 
dated April 23, 2001, for a discussion of the above-referenced 
adjustments.
    2. Test of Home Market Sales Prices. On a model-specific basis, we 
compared the revised COP to the home market prices, less any applicable 
discounts and rebates, movement charges, selling expenses, commissions, 
and packing. We then compared the adjusted weighted-average COP to the 
home market sales of the foreign like product, as required under 
section 773(b) of the Act, in order to determine whether these sales 
had been made at prices below the COP within an extended period of time 
(i.e., a period of one year) in substantial quantities and whether such 
prices were sufficient to permit the recovery of all costs within a 
reasonable period of time.
    3. Results of the COP Test. Pursuant to section 773(b)(2)(C) of the 
Act, where less than 20 percent of a respondent's sales of a given 
product were at prices less than the COP, we did not disregard any 
below-cost sales of that product because we determined that the below-
cost sales were not made in ``substantial quantities.'' Where 20 
percent or more of a respondent's sales of a given product during the 
POI were at prices less than the COP, we determined such

[[Page 22162]]

sales to have been made in ``substantial quantities'' within an 
extended period of time in accordance with section 773(b)(2)(B) or the 
Act. In such cases, because we compared prices to POI average costs, we 
also determined that such sales were not made at prices that would 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act. Therefore, we 
disregarded the below-cost sales.
    We found that, for certain models of HRS, more than 20 percent of 
the home market sales by Ispat and Essar were made within an extended 
period of time at prices less than the COP. Further, the prices did not 
provide for the recovery of costs within a reasonable period of time. 
We therefore disregarded these below-cost sales and used the remaining 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.
D. Calculation of NV Based on Home Market Prices
    We based home market prices on the packed prices to unaffiliated 
purchasers in India. We adjusted, where applicable, the starting price 
for discounts and rebates. We made adjustments for any differences in 
packing, in accordance with section 773(a)(6)(A) and 773(a)(6)(B)(i) of 
the Act, and we deducted movement expenses and domestic brokerage and 
handling, pursuant to section 773(a)(6)(B)(ii) of the Act. In addition, 
where applicable, we made adjustments for differences in circumstances 
of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Act movement 
expenses (foreign inland freight and warehousing). We also made COS 
adjustments, where applicable, by deducting direct selling expenses 
incurred for home market sales (credit expense and warranty) and adding 
U.S. direct selling expenses. We also made adjustments, pursuant to 19 
CFR 351.410(e), for indirect selling expenses incurred on comparison-
market or U.S. sales where commissions were granted on sales in one 
market but not in the other (the commission offset). No other 
adjustments to NV were claimed or allowed.
E. Calculation of NV Based on CV
    Section 773(a)(4) of the Act provides that, where NV cannot be 
based on comparison-market sales, NV may be based on CV. Accordingly, 
for those models of HRS for which we could not determine the NV based 
on comparison-market sales, either because there were no sales of a 
comparable product or all sales of the comparison products failed the 
COP test, we based NV on CV.
F. Level of Trade (LOT)/CEP Offset
    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same LOT as the U.S. transaction (in this case EP transactions). 
The NV LOT is that of the starting-price sales in the comparison market 
or, when NV is based on CV, that of the sales from which we derive 
selling, general, and administrative (SG&A) expenses and profit. For EP 
sales, the U.S. LOT is also the level of the starting-price sale, which 
is usually from exporter to importer.
    To determine whether NV sales are at a different LOT than EP 
transactions, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison market sales are at a 
different LOT and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act.
    In implementing these principles in this investigation, we obtained 
information from the respondents about the marketing stages involved in 
the reported U.S. and home market sales, including a description of the 
selling activities performed by the respondents for each channel of 
distribution. In identifying LOTs for EP and home market sales, we 
considered the selling functions reflected in the starting price before 
any adjustments. In this investigation, neither Ispat nor Essar 
requested a LOT adjustment.
    Ispat. Ispat reported that it sold subject merchandise to three 
different types of customers (end users, service centers, and trading 
companies through three separate channels of distribution) in the home 
market. Further, Ispat indicated that, for each of the reported 
channels of distribution, it provided the same types of selling 
functions (market research, sales calls, interactions with customers, 
inventory maintenance, freight, and technical advice) at the same 
levels of intensity. Since all three types of Ispat's customers 
received the same selling functions, at the same levels of intensity, 
we determine that there is a single LOT in the home market with respect 
to Ispat.
    Ispat also reported that it made EP sales of subject merchandise to 
a single type of customer (trading companies) through a single channel 
of distribution in the U.S. market. Further, Ispat indicated that it 
performed certain types of selling functions (pre- and post-sale 
customer visits, order processing, inventory maintenance, technical 
advice, freight arrangements, warranty services, and advertising) for 
the U.S. customers. As a result, we preliminary determine that there is 
a single level of trade with respect to Ispat's EP sales. We then 
compared the LOT for Ispat's EP sales to the home market LOT and found 
that its EP sales are provided at the same LOT as its home market 
sales. Thus, no LOT adjustment is warranted, and we have not made a LOT 
adjustment for Ispat's sales.
    Essar. Essar reported that it sold subject merchandise to two 
different types of customers (end users and service centers through two 
separate channels of distribution) in the home market. Further, it 
indicated that, for each of the reported channels of distribution, it 
provided the same types of selling functions (price negotiation, sales 
calls, interactions with customers, inventory maintenance, freight, and 
warranty services) at the same levels of intensity. Since both types of 
Essar's customers received the same selling functions, at the same 
levels of intensity, we determine that there is a single LOT in the 
home market with respect to Essar.
    Essar further reported that it made EP sales of subject merchandise 
to a single type of customer (trading companies) through a single 
channel of distribution in the U.S. market. Further, Essar indicated 
that it provided certain types of selling functions (price negotiation, 
processing orders, freight and delivery arrangements, inventory 
maintenance, sales calls and visits, credit and payment collection, and 
warranty services) for the U.S. customers. As a result, we preliminary 
determine that there is a single level of trade for U.S. EP sales. We 
then compared the LOT for EP sales to the home market LOT and found 
that Essar's EP sales are provided at the same LOT as its home market 
sales. Thus, no LOT adjustment is warranted, and we have not made a LOT 
adjustment for Essar's sales.

Currency Conversions

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on exchange rates in effect on the dates 
of the U.S. sales, as obtained from the Federal Reserve Bank (the 
Department's preferred source for exchange rates).

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
all

[[Page 22163]]

information relied upon in making our final determination.

All Others Rate

    Recognizing the impracticality of examining all producers and 
exporters in all cases, section 735(c)(5)(A) of the Act provides for 
the use of an ``all others'' rate, which is applied to non-investigated 
firms. See SAA at 873. This section states that the all others rate 
shall generally be an amount equal to the weighted average of the 
weighted-average dumping margins established for exporters and 
producers individually investigated, excluding any zero and de minimis 
margins, and any margins based entirely upon the facts available. 
Therefore, we have preliminarily assigned to all other exporters of 
Indian HRS, an ``all others'' margin that is the weighted average of 
the margins calculated for Ispat and Essar.

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we are directing the 
U.S. Customs Service (Customs Service) to suspend liquidation of all 
entries of HRS from India that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. We will instruct the Customs Service to 
require a cash deposit or the posting of a bond equal to the weighted-
average amount by which NV exceeds EP, as indicated in the chart below. 
We will adjust the deposit requirements to account for any export 
subsidies found in the companion countervailing duty investigation. 
These suspension-of-liquidation instructions will remain in effect 
until further notice. The weighted-average dumping margins are as 
follows:

------------------------------------------------------------------------
                                                                Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Ispat Industries Ltd........................................       39.36
Essar Steel Ltd.............................................       34.55
All Others..................................................       34.75
------------------------------------------------------------------------

Disclosure

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of the 
proceedings in these investigations in accordance with 19 CFR 
351.224(b).

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our sales at LTFV determination. If our final antidumping 
determination is affirmative, the ITC will determine whether the 
imports covered by that determination are materially injuring, or 
threaten material injury to, the U.S. industry. The deadline for that 
ITC determination would be the later of 120 days after the date of this 
preliminary determination or 45 days after the date of our final 
determination.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes. Further, we would appreciate it if parties 
submitting written comments would provide the Department with an 
additional copy of the public version of any such comments on diskette.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to more than one HRS case, 
the Department may schedule a single hearing to encompass all those 
cases. Parties should confirm by telephone the time, date, and place of 
the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request within 30 days of 
the publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs.
    As noted above, the final determination will be issued within 135 
days after the date of the publication of the preliminary 
determination.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act. Effective January 20, 2001, Bernard T. 
Carreau is fulfilling the duties of Assistant Secretary for Import 
Administration.

    Dated: April 23, 2001.
Bernard T. Carreau,
 Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10848 Filed 5-2-01; 8:45 am]
BILLING CODE 3510-DS-P