67 FR 40914, June 14, 2002 A-583-830 Administrative Review 5/1/00-4/30/01 Public Document IA/III/IX: SMB MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary AD/CVD Enforcement Group III SUBJECT: Issues and Decision Memorandum for the Final Results of Antidumping Administrative Review of Stainless Steel Plate in Coils from Taiwan SUMMARY: We have analyzed the case brief of petitioners (1) in the preliminary determination on the Administrative Review of Stainless Steel Plate in Coils ("SSPC") from Taiwan. As a result of our analysis, we have made no changes from the Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review of Stainless Steel Plate in Coils from Taiwan, 67 FR 5789 (February 7, 2002) ("Preliminary Determination"). Respondents in this case, Yieh United Steel Corporation ("YUSCO"), and Ta Chen Stainless Pipe Co., Ltd. ("Ta Chen"), did not submit case or rebuttal briefs. Below is a complete list of the issues in this administrative review for which we have received comment. We recommend that you approve the positions we have developed in the "Discussion of the Issues" section of this Issues and Decision Memorandum. Below is the complete list of the issues in this review: GENERAL COMMENTS Adverse Facts Available for YUSCO and YUSCO's Subject Merchandise Total Adverse Facts Available Rate of 10.20 percent Ad Valorem to Ta Chen's Subject Merchandise BACKGROUND On February 7, 2002, the Department of Commerce ("the Department") published the preliminary results of its administrative review in the antidumping duty order on stainless steel plate in coils from Taiwan. See Preliminary Determination. The merchandise covered by this order is SSPC as described in the "Scope of Review" section of the Federal Register notice. The period of review ("POR") is May 1, 2000 through April 30, 2001. We invited parties to comment on our preliminary results. We received written comments from petitioners on March 11, 2002. Respondents in this case have not responded. DISCUSSION OF THE ISSUES Comment 1: Request of Total Adverse Facts Available Rate for YUSCO's Subject Merchandise of 10.20 Percent Ad Valorem Petitioners contend that they have requested this review for the purpose of determining, as accurately as possible, the extent to which YUSCO's subject merchandise was dumped by both YUSCO and Ta Chen. Petitioners argue that the objective of the antidumping law is to determine current dumping margins as accurately as possible. See D&L Supply Co., v. United States, 113 F.3d 1220, 1223 (Fed. Cir. 1997); See also Rhone Poulenc, Inc., v. United States, 899 F.2d 1185, 1191 (Fed. Cir. 1990), ("Rhone Poulenc"). Petitioners, therefore, argue that based on the facts available finding in the Preliminary Determination, YUSCO and YUSCO's subject merchandise should be assigned a total adverse facts available rate of 10.20 percent ad valorem. Petitioners contend that in assigning the current 8.02 percent ad valorem rate, the Department wrongly failed to consider Ta Chen's 2.18 percent dumping margin as determined in the original less than fair value investigation. See Notification of Final Determination of Sales at Less Than Fair Value: Stainless Steel Plate in Coils From Taiwan, 64 Fed. Reg. 15493, 15494, 15507 (March 31, 1999) ("SSPC LTFV Final"). Petitioners argue that, because middleman dumping by Ta Chen was determined during the original investigation, the Department has no reason to exclude Ta Chen's margin from YUSCO's rate. See SSPC LTFV Final. Thus, petitioners argue, Ta Chen's decision not to participate in this review, along with the fact that YUSCO has continued to allegedly dump subject merchandise during the second POR, allows the Department to make an adverse inference, presuming the existence of middleman dumping on the part of Ta Chen. See DeCecco DeFilippo Fara S. Martino v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 2000) ("DeCecco"). Petitioners further argue that to make an adverse inference of middleman dumping by Ta Chen and assign a 10.20 percent ad valorem rate would achieve the intent established by Congress of determining the most current and accurate dumping margin possible based on the available facts. Furthermore, petitioners contend that a 10.20 percent ad valorem rate would not be an undue burden or a penalty on YUSCO, as the focus of the antidumping law is to remedy the full measure of dumping. In the instant case, petitioners assert that YUSCO's subject merchandise benefitted from the combined dumping of both Respondents. Petitioners maintain that applying the 8.02% rate would understate YUSCO's dumping of the subject merchandise. Therefore, petitioners argue, the 10.20 percent ad valorem rate would remedy the full measure of dumping without punishing YUSCO. Department's Position: We disagree with petitioners. There is no information on the record that a middleman made entries of subject merchandise from Taiwan during the POR, and no evidence that YUSCO, in particular, made sales of subject merchandise destined for the United States through Ta Chen. Ta Chen informed the Department that re-sales it made in the United States during the POR were of stainless steel plate in coils which entered the United States prior to the POR. See letter from Ta Chen to the Department, dated August 20, 2001. The Department subsequently contacted Customs, had Customs do an inquiry into Ta Chen's exports to the United States during the POR, and reviewed Customs data. All of the evidence on the record appears to support Ta Chen's claim of no exports of subject merchandise during the POR to the United States. The middleman rate calculated during the less than fair value investigation measured dumping from both the producer and middleman. As adverse facts available ("AFA"), it would be reasonable to use an adverse number which, from the record, reflected YUSCO's exports directly to the United States, but illogical to calculate a margin which combined the dumping behavior of two unaffiliated parties. It would therefore be unreasonable for us to calculate a margin for YUSCO, a company which we believe to have only exported directly to the United States during the POR without the use of a middleman, using a number derived from the measurement of dumping by both YUSCO and Ta Chen. We disagree with petitioners' claims regarding a presumption of middleman dumping by Ta Chen. A finding of middleman dumping in a previous segment of the proceeding does not constitute sufficient grounds to presume middleman dumping is occurring with respect to entries for which there is no evidence of middleman involvement. Neither the Act nor the legislative history instructs the Department to presume middleman dumping in light of no entries of subject merchandise during the POR from the middleman. As noted above, record evidence in this proceeding leads the Department to conclude that no middleman dumping took place during the POR. Record evidence indicates that Ta Chen had no entries of subject merchandise during the POR, regardless of the fact that Department found middleman dumping during the LTFV investigation. It is the Department's normal practice in an administrative review to only review a producer/exporter if that producer/exporter had entries during the POR. See Notice of Rescission of Antidumping Duty Administrative Review, Carbon Steel Wire Rope from Mexico, 65 FR 58261 (September 28, 2000) ("Rope from Mexico"). Indeed such an approach is logical, given that the Department generally will only instruct Customs to assess dumping duties on entries during the POR. See Preamble to Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27314 ( ".. based on the results of each review, the Department will generally assess duties on entries made during the review period and will use assessment rates to effect those assessments) ("Preamble"); 19 CFR 351.212(b)(1). Furthermore, we disagree with petitioners that it would not be an "undue burden" on YUSCO to apply a middleman dumping margin rate as AFA. As we discussed in the Department's Remand Redetermination from the investigation, it would be an "undue burden" on a producer to apply a middleman dumping margin to a producer's direct exports to the United States, when that producer had no reason to know or suspect that the middleman was dumping its merchandise in the United States. See Final Results of Redetermination Pursuant to Court Remand, Allegheny Ludlum Corp. v. United States, dated November 28, 2001 ("Remand Determination") at 25. In the Remand Determination, we applied combination rates to all of YUSCO's direct exports to the United States because it had no reason to know or suspect that Ta Chen was dumping its merchandise. See id. Thus, for all subject merchandise sold directly to the United States by YUSCO, we used a calculated figure which did not include the middleman dumping margin. See id. at 26. In this review, we have found that YUSCO sold its merchandise directly to the United States. Therefore, we find it unreasonable to apply the middleman margin to YUSCO as AFA. In the instant case, we have found that Ta Chen has not participated in the commercial transactions for subject merchandise exported to the United States during the POR. Accordingly, we continue to conclude that it is neither appropriate, nor reasonable, to use the margin which was calculated using Ta Chen's contributed dumping as facts available. Therefore, we will not make a finding of middleman dumping in this review with respect to YUSCO's sales, and, as adverse facts available, we have applied the rate of 8.02 percent. Comment 2: The Department should impose a 10.20 percent ad valorem rate on Ta Chen's sales and resales of subject merchandise rather than rescind this review Petitioners argue that because Ta Chen has decided not to participate in this review, it has not met an affirmative burden of linking its U.S. resales during the POR to entries made prior to suspension of liquidation which occurred on November 4, 1998. Therefore, petitioners contend that Ta Chen should receive a 10.20 percent ad valorem rate for their U.S. sales and resales of subject merchandise. In the alternative, petitioners argue that even if Ta Chen can link its U.S. resales made during the POR to entries made prior to the suspension of liquidation, the Department should not rescind this review because Ta Chen has failed to link its U.S. resales during the second POR to entries made prior to the date of suspension of liquidation. Petitioners assert that it is Ta Chen's burden, not the Department's, to support its certification with affirmative evidence of the non-existence of exports. Petitioners argue that Ta Chen has the detailed information necessary to demonstrate a link between its resales and pre-suspension entries and by failing to provide this information to the Department, Ta Chen has failed to certify the existence of any linkage. Petitioners claim that absent any further information, the Department must presume that Ta Chen has continued to dump YUSCO's subject merchandise. Petitioners also question the Department's Customs inquiry as insufficient. Petitioners state that any spot-checking of Custom Service documents by the Department to discover Ta Chen sales fails to support Ta Chen's certification, because such spot-checking cannot provide the necessary detailed information to make a calculation. Therefore, petitioners argue that Ta Chen should receive a total AFA rate of 10.20 percent ad valorem on its subject merchandise. In the alternative, petitioners argue that this review should not be rescinded even if Ta Chen can link its U.S. resales during the POR to prior entries, because the Department's interpretation of the statutory term "subject merchandise" is incorrect and unreasonable. Under that interpretation, resales of subject merchandise linked to pre-suspension entries are not considered subject merchandise. Petitioners claim the Department may review these resales absent any entries in the POR, and that absent such POR entries it can still calculate a cash deposit rate, applicable to future entries. Petitioners argue that section 752(a)(1) of the Act, which requires the Commission to determine whether the revocation or suspension of an order would likely lead to the continuation or recurrence of material injury, does not expressly prevent the Department from carrying out a review if there are no entries during the specified POR. In addition, petitioners argue that section 771(25) of the Act, which defines the term subject merchandise as the class of kind of merchandise covered by the scope of the review, does not provide that imported goods are not subject merchandise if resold during the POR. Petitioners contend that it is the objective of the antidumping law that the dumping margin be calculated as accurately as possible. See Rhone Poulenc, 899 F.2d at 1191. To this end, petitioners argue, Congress provided for annual reviews in order to update dumping margins and to prevent subject merchandise from entering the United States without a cash deposit of the estimated dumping duties. Petitioners contend, therefore, that the Department's policy of rescission fails to uphold Congress' intent of calculating current dumping margins as accurately as possible. Thus, petitioners contend that because they have requested this review to update YUSCO and Ta Chen's dumping margin and, because there were U.S. resales by Ta Chen during the second POR upon which a new, more accurate margin could be calculated, petitioners are entitled to a second annual administrative review, even if there were no new entries by Ta Chen during this POR. Department's Position: We disagree with petitioners. We have determined that Ta Chen had no entries of subject merchandise during the POR; therefore, rescission as to Ta Chen in the present case is warranted. Under the Department's regulations, "the Department may rescind an administrative review, in whole or only with respect to a particular exporter or producer, if the Secretary concludes, that during the period covered by the review, there were no entries, exports, or sales of subject merchandise." See section 351.213(d)(3) of the Department's regulations. The Department has interpreted this provision through its practice to permit the rescission of the review if there were no entries during the POR as discussed above. See Rope from Mexico, 65 FR 58261; see also See Stainless Steel Sheet and Strip From the Republic of Korea; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 66 FR 64950 (December 17, 2001). As explained thoroughly in the Department's Position to Comment 1, Ta Chen has certified that of its resales by its U.S. affiliate, Ta Chen International ("TCI"), during the POR, all resold merchandise entered the United States before the POR. See Letter from Ta Chen to the Department dated August 20, 2001. In addition, the Department's inquiry of Customs information indicates that such merchandise did not enter the United States during the POR. Accordingly, in the current review, the Department is satisfied that the evidence on the record indicates that there were no entries of subject merchandise by Ta Chen during the POR. Therefore, consistent with our regulations, practice and the evidence on the record, we have rescinded this review for Ta Chen. Petitioners argue that the Department's efforts to determine the existence or nonexistence of Ta Chen's entries during the POR were insufficient. Petitioners argue that the Department must require Ta Chen to affirmatively link its resales during the POR with its entries of subject merchandise. The Department presumes from its findings in the first administrative review that Ta Chen's merchandise must have entered the United States prior to suspension of liquidation. See Stainless Steel Plate in Coils From Taiwan: Final Rescission of Antidumping Duty Administrative Review, 66 FR 18610, 18612 (April 10, 2001) ("SSPC 1st Rescission") (finding Ta Chen had no exports of subject merchandise during the first POR). Nowhere in the statute or regulations is the Department instructed to always require a respondent to affirmatively demonstrate proof of entry of its resales in order to obtain a rescission, when the substantial evidence on the record indicates no entries of the subject merchandise entered during the POR. However, the Department has affirmatively required respondents to link entries outside the POR with sales during the POR when it was uncertain on the record if sales in question involved entries made prior to suspension of liquidation or during the POR. See Certain Stainless Wire Rods From France: Final Results of Antidumping Duty Administrative Review, 61 FR 47874, 47875 (September 11, 1996) ("Wire Rod from France"); Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom, 63 FR 33320, (June 18, 1998) (AFBs); Preamble at 27314. For example, in AFBs, there were multiple entries of merchandise by the respondents both prior to and during the POR, and the Department was uncertain if any entries that came into the United States were specifically subject to the order under review. Thus, it required an affirmative linkage by the respondents of sales in the POR to entries outside of the POR. See id. Unlike the circumstances in Wire Rod from France and AFBs, there was little uncertainty as to the lack of entries of subject merchandise by Ta Chen during the POR. As described above, the Department has reviewed the record and conducted a Customs inquiry. Based on the information on the record we are satisfied that Ta Chen had no entries of subject merchandise during the POR and, in keeping with Department practice, we are rescinding this administrative review with respect to Ta Chen. With respect to petitioners' argument concerning the definition of "subject merchandise" under the Act, the Department has previously addressed this issue in the first administrative review. See SSPC 1st Rescission, 66 FR18612. In short, pursuant to the statutory definition of subject merchandise, if merchandise is not within the scope of the order (or, as the case may be, the investigation, review, or suspension agreement), it is not subject merchandise. See section 771(25) of the Act. While we do not disagree with petitioners that the sales in question are of merchandise physically meeting the scope of the order, we believe that the statute's reference to "an investigation, a review, a suspension agreement, an order" necessarily limits the definition to merchandise which entered the United States after suspension of liquidation. If the merchandise resold by Ta Chen during this POR entered the United States before November 4, 1998, the date of suspension of liquidation, it is not subject to the order and therefore is not subject merchandise under this administrative review. While we do not believe petitioners are arguing that YUSCO's merchandise resold by Ta Chen during the POR may be assessed absent evidence of entries during the POR, it appears they are arguing that we may calculate a new cash deposit rate based on such sales information. Again, as we discussed in SSPC 1st Rescission, as well as in Comment 30 of the first administrative review of stainless steel sheet and strip from Taiwan, it would be inappropriate to calculate a cash deposit rate based upon sales of non-subject merchandise. See Stainless Steel Sheet and Strip From Taiwan; Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 FR 6682 (February 13, 2002) ("SSSS Rescission") and accompanying Issues and Decision Memorandum at Comment 30 ("SSSS Issues and Decision Memo"). Indeed, as we noted in SSSS Rescission, in this review, it would be "doubly inappropriate" to make such a calculation based upon sales of non-subject merchandise, in light of the fact that in the investigation, we already calculated a cash deposit rate base upon sales of actual subject merchandise during the investigation. See SSSS Issues and Decision Memorandum at Comment 30. As the Department stated in French Wire Rod: "(s)ales of non-subject merchandise are not an appropriate basis for the Department to estimate the duties that will be due on future entries of subject merchandise." See Wire Rod from France, 61 FR at 47878. To the extent petitioners question the validity of a Customs' inquiry, the Department has relied on Customs' findings of no entries of subject merchandise and a certified statement by respondent that there were no entries of subject merchandise to be sufficient to warrant a rescission of a review in past administrative reviews. See Certain Fresh Cut Flowers from Columbia: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 62 FR 53287, 53288 (October 14, 1997) (noting that the Department rescinded its review of 40 firms based on a U.S. Customs query by the Department, confirming that there were no shipments of subject merchandise by those firms); Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 63 FR 35190, 35191 (June 29, 1998) (noting that the Department allowed rescission for two companies based on a U.S. Customs query by the Department, confirming that there were no shipments of subject merchandise by those firms); SSPC 1st Rescission, 66 FR18612 (noting that the Department found that a certified statement by the respondent that its resales of subject merchandise entered before the POR and a subsequent Customs query finding no entries during the POR satisfied the requirement for rescinding the review). It is reasonable to rely on Customs' finding in this case as well. In the instant case, the rescission of the administrative review with respect to Ta Chen is warranted. Ta Chen provided a certified statement that it had no shipments of subject merchandise during the POR and a subsequent Customs query confirmed that Ta Chen had no entries during the POR. Based on these facts, a rescission is warranted of this administrative review with respect to Ta Chen. RECOMMENDATION: Based on our analysis of the comments received, we recommend adopting all of the above positions. If accepted, we will publish the final results of the review and the final weighted-average dumping margin in the Federal Register. AGREE___________ DISAGREE___________ ________________________ Faryar Shirzad Assistant Secretary for Import Administration _________________________ Date __________________________________________________________________________ footnote: 1. Petitioners in this case are Allegheny Ludlum, AK Steel Corporation, Butler Armco Independent Union, J&L Specialty Steel, Inc., North American Stainless, United Steelworkers of America, AFL-CIO/CLC, and Zanesville Armco Independent Organization.