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

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

September 28, 2001.

FOR FURTHER INFORMATION CONTACT:

Mark Manning or Ronald Trentham at (202) 482-3936 and (202) 482-6320, respectively, AD/CVD Enforcement, Group II, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to 19 CFR Part 351 (2000).

Final Determination

We determine that certain hot-rolled carbon steel flat products from Indonesia are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 735 of the Act. The estimated margins of sales at LTFV are shown in the Final Determination of Investigation section of this notice.

Case History

The preliminary determination in this investigation was published on May 3, 2001. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From Indonesia, 66 FR 22163 (May 3, 2001) (Preliminary Determination). Since the preliminary determination, the following events have occurred. On May 11, 2001, we received a letter from PT Krakatau Steel Corporation (Krakatau), the respondent, that requested permission to submit a revised response to the Department's April 16, 2001 supplemental questionnaire. The Department granted this request on May 23, 2001 and received Krakatau's submission on May 29, 2001. We verified Krakatau's questionnaire responses from July 23 through July 27, 2001. On August 17, 2001, we released a calculation memorandum and computer programs to interested parties for the purpose of allowing parties to comment on the margin calculation methodology that would be used in the event the Department calculated a margin for the final LTFV determination. The petitioners and respondent filed case briefs on August 24 and August 27, 2001, respectively. Both parties filed rebuttal briefs on August 31, 2001. A public hearing was held on September 6, 2001. Although the deadline for this determination was originally September 17, 2001, in light of the events of September 11, 2001 and the subsequent closure of the Federal Government for reasons of security, the time frame for issuing this determination has been extended by four days.

The Department has conducted this investigation in accordance with section 731 of the Act.

Scope of Investigation

For purposes of this investigation, 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 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 this investigation.

Specifically included within the scope of this investigation 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 this investigation, 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 this investigation unless otherwise excluded. The following products, by way of example, are outside or specifically excluded from the scope of this investigation:

• 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).
• Society of Automotive Engineers (SAE)/American Iron & Steel Institute (AISI) grades of series 2300 and higher.
• Ball bearing steels, as defined in the HTSUS.
• Tool steels, as defined in the HTSUS.
• Silico-manganese (as defined in the HTSUS) or silicon electrical steel with a silicon level exceeding 2.25 percent.
• ASTM specifications A710 and A736.
• USS abrasion-resistant steels (USS AR 400, USS AR 500).
• All products (proprietary or otherwise) based on an alloy ASTM specification (sample specifications: ASTM A506, A507).
• 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 under the following tariff classification numbers: 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 this investigation, including vacuum degassed fully stabilized; high strength low alloy; and the substrate for motor lamination steel may also enter under the following tariff classification 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 tariff classification numbers are provided for convenience and U.S. Customs Service (Customs) purposes, the written description of the merchandise under investigation is dispositive.

Period of Investigation

The period of investigation (POI) 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).

Verification

As provided in section 782(i) of the Act, we verified the information submitted by the respondent for use in our final determination. We used standard verification procedures including examination of relevant accounting and production records, and original source documents provided by the respondent. See Memorandum to the File from Mark Manning, “Sales Verification Report for PT Krakatau Steel Corporation,” dated August 10, 2001 (Sales Verification Report).

Use of Facts Available

In the preliminary determination, the Department based the dumping margin for Krakatau on facts otherwise available pursuant to section 776(a)(2)(A) of the Act. The use of facts otherwise available was warranted because Krakatau failed to adequately respond to the Department's questionnaire. The Department also found that Krakatau failed to cooperate by not acting to the best of its ability. As a result, pursuant to section 776(b) of the Act, the Department used an adverse inference in selecting from the facts available. Specifically, the Department assigned Krakatau a margin of 59.25 percent, the margin published in the Department's Notice of Initiation, which was based on information in the petition. 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).

After the preliminary determination, the Department allowed Krakatau to submit a revised questionnaire response. In this response, Krakatau corrected several of the deficiencies upon which the Department based its preliminary total adverse facts available determination. In light of the corrected information, we conducted verification and released a calculation memorandum and dumping calculations, unadjusted for verification findings, to interested parties for comment. Based upon our analysis of the comments received, we find that Krakatau has corrected enough of its deficiencies to allow the Department to calculate an dumping margin for the final determination. However, because of additional deficiencies discovered at verification, we are applying partial facts available to two aspects of Krakatau's sales response.

1. Application of Facts Available

Section 776(a)(2) of the Act provides that, if an interested party (A) withholds information requested by the Department, (B) fails to provide such information by the deadline, or in the form or manner requested, subject to sections 782(c)(1) and (e) of the Act, (C) significantly impedes a proceeding, or (D) provides information that cannot be verified, the Department shall use, subject to section 782(d) of the Act, facts otherwise available in reaching the applicable determination. Pursuant to section 782(e) of the Act, the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties.

In selecting from among the facts otherwise available, section 776(b) of the Act authorizes the Department to use an adverse inference if the Department finds that an interested party failed to cooperate by not acting to the best of its ability to comply with the request for information. See, e.g., Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997). Finally, section 776(b) of the Act states that an adverse inference may include reliance on information derived from the petition. See also Statement of Administrative Action (SAA) accompanying the URAA, H.R. Rep. No. 103-316 at 870 (1994).

For the reasons discussed below, the Department determines that, in accordance with sections 776(a)(2)(B) and 776(b) of the Act, the use of partial adverse facts available is appropriate for the final determination for Krakatau. The evidence on the record establishes that the use of partial facts available for Krakatau is warranted because Krakatau failed to provide complete sales questionnaire responses within the meaning of section 776(a)(2)(B) of the Act. In its initial and supplemental responses, Krakatau failed to provide information concerning the currency of its reported U.S. sales and its calculation of its home market and U.S. market short-term interest rates in the manner requested in the Department's initial and supplemental antidumping questionnaires.

Moreover, Krakatau does not fall within the deadline exceptions established in 782(c)(1) of the Act. At no time did Krakatau notify the Department that it was unable to submit the requested information in the requested form and manner; nor did it suggest alternative forms in which it would be able to submit the requested information. Throughout the course of this antidumping investigation, the Department gave Krakatau, a company without U.S. legal counsel, assistance and opportunities to comply with the Department's requests for information, as provided by section 782(c)(2).² Specifically, taking into consideration the fact that the respondent is a pro se company, the Department provided Krakatau detailed information and guidance on how to properly calculate and report sales and cost data and adjustments, granted Krakatau extensions to reply to requests for information, and provided an opportunity to explain and correct the deficiencies in its responses. However, at no point in the investigation did Krakatau notify the Department that it had any difficulties in submitting the information in the form and manner requested, seek guidance on alternative reporting requirements, or propose an alternate form for submitting the required data, as contemplated in section 782(c)(1) of the Act. Despite the efforts at assistance on the part of the Department, Krakatau failed to provide information reliable enough that it can serve as a basis for reaching the applicable determination.

Pursuant to section 782(e)(3) of the Act, we find that certain aspects of the sales information Krakatau provided in its initial and supplemental responses is deficient such that the Department cannot use this information in reaching the applicable determination. Specifically, our analysis of Krakatau's sales response found deficiencies with regard to the Bank of Indonesia (BOI) exchange rates used by Krakatau to convert its U.S. dollar invoice prices into the reported rupiah prices, and the calculation of its home market and U.S. market interest rates that are used in its imputed credit calculations.

We also find that pursuant to section 776(b) of the Act, the application of an adverse inference in this case is appropriate. Krakatau failed to act to the best of its ability to comply with the Department's requests for information when it failed to report its U.S. market sales in the currency of transaction (i.e., U.S. dollars) and its home market and U.S. market short-term interest rates. Despite the Department's directions in the original and supplemental questionnaires, and the extensions granted, Krakatau made no effort to provide any explanation or propose an alternate form of submitting the data.

Furthermore, the information cannot be obtained elsewhere. There is no information on the record of this investigation with which the Department could determine the correct exchange rates and short-term interest rates. Without this information, the Department cannot accurately determine the dumping margin for Krakatau. Despite the Department's directions in the questionnaires, Krakatau did not provide the information requested by the Department, made no effort to explain any difficulties it was having in supplying the information, and did not propose an alternate form of submitting the information. For these reasons, we find that Krakatau did not act to the best of its ability in responding to the Department's requests for information, see, e.g., Circular Stainless Steel Hollow Products, and that, consequently, an adverse inference is warranted under section 776(b) of the Act.

Pursuant to section 776(b) of the Act, the Department is applying partial adverse facts available to the exchange rates needed to convert Krakatau's U.S. sales from the reported rupiah values to the original U.S. dollar invoice prices and Krakatau's short-term home market and U.S. market interest rates. Section 776(b) of the Act authorizes the Department to use as adverse facts available information derived from the petition, the final determination from the LTFV investigation, a previous administrative review, or any other information placed on the record. As adverse facts available, we are applying the largest BOI exchange rate contained in the U.S. market discrepancy chart, which was obtained at verification, to all U.S. sales invoiced in time periods not covered by this chart. See Sales Verification Report, at Exhibits 3 and 4. With regard to the short-term interest rates, we are applying the largest imputed credit expense for any single U.S. sale to all of the respondent's U.S. sales, and applying the smallest imputed credit expense for any single home market sale to all of Krakatau's reported home market sales.

2. Selection and Corroboration of Facts Available

Since the Department is using as adverse facts available information submitted by the respondent in the course of this verification, or obtained at verification, there is no need to conduct a corroboration analysis.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this proceeding and to which we have responded are listed in the Appendix to this notice and addressed in the Memorandum from Bernard T. Carreau to Faryar Shirzad, “Issues Memorandum for the Final Determination of Sales at Less Than Fair Value: Antidumping Duty Investigation of Certain Hot-Rolled Steel Flat Products from Indonesia,” dated September 21, 2001 (Issues Memorandum), which is hereby adopted by this notice. Parties can find a complete discussion of the issues raised in this investigation and the corresponding recommendations in this public memorandum which is on file in the Central Records Unit, room B-099 of the main Department building. In addition, a complete version of the Issues Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov. The paper copy and electronic version of the Issues Memorandum are identical in content.

Changes Since the Preliminary Determination

On August 17, 2001, the Department released to the petitioners and Krakatau a calculation memorandum and computer programs demonstrating the methodology the Department would follow in the event we calculated a dumping margin for the final determination. The programs released at that time did not take into account our verification findings. As mentioned above, the parties had the opportunity to comment on the unadjusted programs and on the verification findings. Based upon our analysis of the comments received from the petitioners and Krakatau, we made the following revisions to the unadjusted calculations released on August 17, 2001:

A. Convert all reported U.S. prices from rupiahs to U.S. dollars using the BOI exchange rates obtained from the U.S. market discrepancy chart (Verification Exhibit 4);

B. Revise the exchange rate errors in the U.S. sales database, as listed on Verification Exhibit 4, with the correct data contained in that exhibit;

C. Revise the invoice errors in the U.S. sales database, as listed on Verification Exhibit 4, with the correct data contained in that exhibit;

D. Revise the exchange rate errors in the home market sales database, as listed on the home market discrepancy chart (Verification Exhibit 3), with the correct data contained in that exhibit;

E. Revise the invoice errors in the home market sales database, as listed on Verification Exhibit 3, with the correct data contained in that exhibit;

F. Remove home market sales of cut-to-length products with a reported thickness code #5 because such merchandise is non-foreign like product;

G. Apply the largest transaction-specific U.S. credit expense (CREDITU) for any single U.S. sale to all of the respondent's U.S. sales, and apply the smallest transaction-specific home market credit expense (CREDITH) for any single home market sale to all of Krakatau's reported home market sales;

H. Classify the reported home market and U.S. market advertising costs as indirect expenses and include these costs with Krakatau's reported indirect expenses;

I. Classify the reported home market and U.S. market technical service costs as indirect expenses and include these costs with Krakatau's reported indirect expenses;

J. Revise the reported home market and U.S. market packing costs to account for unreported packing labor and overhead;

K. Revise Krakatau's general and administrative expense ratio to account for our findings at verification;

L. Calculate Krakatau's financial expense ratio based on the financial statements of its parent company, PT Bahana Pakarya Industri Strategies;

M. Adjust the total cost of manufacture to include Krakatau's year-end accounting adjustments;

N. Revise Krakatau's depreciation of fixed assets to account for inflation that occurred prior to the POI;

O. Adjust the cost of electricity to reflect the market cost of electricity as quoted in certain newspaper articles; and

P. Calculate an average market price for natural gas using prices quoted in certain newspaper articles, Krakatau's internal books and records, and Talisman Energy Inc.'s 2000 annual report.

For a further discussion of these calculations, see Memorandum from Mark Manning to the File, “Calculation Memorandum of the Final Determination for the Antidumping Duty Investigation of PT Krakatau Steel Corporation,” September 21, 2001; and Memorandum from Laurens Van Houten to Neal Halper, “Cost of Production and Constructed Value Calculation Adjustments for the Final Determination,” September 19, 2001.

Final Determination of Investigation

We determine that the following weighted-average percentage margins exist for the period October 1, 1999 through September 30, 2000:

Continuation of Suspension of Liquidation

Pursuant to section 735(c)(1)(B) of the Act, we are instructing the U.S. Customs Service to continue to suspend liquidation of all entries of hot-rolled steel from Indonesia that are entered, or withdrawn from warehouse, for consumption on or after May 3, 2001 (the date of publication of the Preliminary Determination in the Federal Register). The Customs Service shall continue to require a cash deposit or the posting of a bond equal to the estimated amount by which the normal value exceeds the U.S. price as shown above.

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our determination. As our final determination is affirmative, the ITC will determine, within 45 days, whether these imports are causing material injury, or threat of material injury, to an industry in the United States. If the ITC determines that material injury, or threat of injury, does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping order directing Customs officials to assess antidumping duties on all imports of the subject merchandise entered or withdrawn from warehouse for consumption on or after the effective date of the suspension of liquidation.

This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Appendix—Topics in Issues Memorandum

1. Application of Facts Available to U.S. Sales Database

2. Application of Facts Available to Short-Term Interest Rate Used to Calculate Credit Expense

3. General and Administrative Expense Ratio

4. Financial Expense Ratio

5. Depreciation Expense

6. Electricity and Natural Gas Valuation

7. Year End Audit Adjustments

8. Understated Direct Material Costs

9. Calculation of Total Variable Overhead Costs

10. Inclusion of Direct Selling Expenses in the Cost Test