Stainless Steel Wire Rods From India: Preliminary Results of Antidumping Duty Administrative Review, Intent To Revoke Order In Part, and Extension of Time for the Final Results of Review, 1413-1423 [E5-33]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 5 (Friday, January 7, 2005)]
[Notices]
[Pages 1413-1423]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-33]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-808]


Stainless Steel Wire Rods From India: Preliminary Results of 
Antidumping Duty Administrative Review, Intent To Revoke Order In Part, 
and Extension of Time for the Final Results of Review

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

SUMMARY: In response to requests from interested parties, the 
Department of Commerce is conducting an administrative review of the 
antidumping duty order on stainless steel wire rods from India. The 
period of review is December 1, 2002, through November 30, 2003. This 
review covers three companies.

[[Page 1414]]

    We have preliminarily determined that Chandan Steel, Ltd., and 
Isibars Steel, Ltd., sold subject merchandise at less than normal value 
during the period of review and that the Viraj Group has made sales in 
the United States at prices not below normal value.\1\ We have also 
preliminarily determined to revoke the order with respect to subject 
merchandise produced and exported by Viraj Alloys, Ltd., and VSL Wires, 
Ltd.
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    \1\ The Viraj Group consists of Viraj Alloys Limited (VAL) and 
VSL Wires Limited (VSL).
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    We invite interested parties to comment on these preliminary 
results. Parties who submit arguments in this segment of the proceeding 
are requested to submit with each argument a statement of the issue, 
and a brief summary of the argument.

EFFECTIVE DATE: January 7, 2005.

FOR FURTHER INFORMATION CONTACT: Hermes Pinilla or Minoo Hatten, AD/CVD 
Operations 5, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
3477 or (202) 482-1690 respectively.

Background

    On October 20, 1993, the Department of Commerce (the Department) 
published the final determination in the Federal Register that resulted 
in the antidumping duty order on certain stainless steel wire rods 
(SSWR) from India. See Final Determination of Sales at Less Than Fair 
Value: Certain Stainless Steel Wire Rods From India, 58 FR 54110 
(October 20, 1993) and Antidumping Duty Order: Certain Stainless Steel 
Wire Rods from India, 58 FR 63335 (December 1, 1993). On December 2, 
2003, the Department published in the Federal Register a notice of 
opportunity to request an administrative review of this antidumping 
duty order. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation: Opportunity To Request Administrative Review, 
68 FR 67401 (December 2, 2003).
    On December 24, 2003, Isibars Steel, Ltd. (Isibars) requested that 
the Department initiate an administrative review of the antidumping 
duty order on SSWR from India. On December 31, 2003, the Viraj Group 
(Viraj) requested that the Department initiate an administrative review 
of the antidumping duty order on SSWR from India. On January 22, 2004, 
we published in the Federal Register the Notice of Initiation of 
Antidumping and Countervailing Duty Administrative Reviews (69 FR 3117) 
in which we initiated the administrative review of the antidumping duty 
order on SSWR from India with respect to Isibars and Viraj. The 
Department did not include Chandan Steel, Ltd. (Chandan) in the 
initiation notice for December cases because on December 30, 2003, the 
company requested a review as a new shipper. The Department denied this 
request after publication of the January 22, 2004, initiation notice 
for December cases. This request was denied because the certifications 
provided by Chandan in conjunction with its request under section 
351.214(b)(2) of the Department's regulations did not satisfy several 
requirements of the Department's regulations. However, Chandan's 
December 30, 2003, letter requesting a new shipper review also included 
a request for an administrative review, which was timely filed in 
accordance with section 351.213(b) of the Department's regulations. 
Therefore, the Department included Chandan in the 2002-2003 
administrative review. Accordingly, all deadlines applicable to the 
companies included in the January 2004 initiation notice are applicable 
to Chandan.
    On July 15, 2004, the Department extended the due date for the 
preliminary results. See Stainless Steel Wire Rod from India: Extension 
of Time Limit for the Preliminary Results of the Antidumping Duty 
Administrative Review, 68 FR 42421 (July 15, 2004). In accordance with 
section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), 
the Department extended the due date for the notice of preliminary 
results by 100 days, from the original date of September 1, 2004, to 
December 10, 2004.
    On November 26, 2004, in accordance with section 751(a)(3)(A) of 
the Act, the Department extended the due date for the notice of 
preliminary results by an additional 20 days from the revised due date 
of December 10, 2004, to December 30, 2004. See Stainless Steel Wire 
Rods from India: Extension of Time Limit for the Preliminary Results of 
the Antidumping Duty Administrative Review, 69 FR 68882 (November 26, 
2004).

Period of Review

    The period of review (POR) is December 1, 2002, through November 
30, 2003.

Scope of the Antidumping Duty Order

    The products covered by this order are certain SSWR, which are hot-
rolled or hot-rolled annealed and/or pickled rounds, squares, octagons, 
hexagons or other shapes, in coils. SSWR are made of alloy steels 
containing, by weight, 1.2 percent or less of carbon and 10.5 percent 
or more of chromium, with or without other elements. These products are 
only manufactured by hot-rolling, are normally sold in coiled form, and 
are of solid cross section. The majority of SSWR sold in the United 
States are round in cross-section shape, annealed and pickled. The most 
common size is 5.5 millimeters in diameter.
    The products are currently classifiable under subheadings 
7221.00.0005, 7221.00.0015, 7221.00.0030, 7221.00.0045, and 
7221.00.0075 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes our written description of the scope of this 
proceeding remains dispositive.

Verification

    As provided in section 782(i)(3) of the Act, we verified sales and 
cost information provided by Chandan from October 25, 2004, through 
October 29, 2004, the sales information provided by Isibars from 
November 1, 2004, through November 5, 2004, and sales and cost 
information provided by Viraj from December 5, 2004, through December 
16, 2004, using standard verification procedures, including an 
examination of relevant sales, cost, financial records, and selection 
of original documentation containing relevant information. For Chandan 
and Isibars, our verification results are outlined in the public 
versions of the verification reports and are on file in the 
Department's Central Records Unit located in Room B-099 of the main 
Department of Commerce Building, 14th Street and Constitution Avenue, 
NW., Washington, DC. The verification results for Viraj will be 
released subsequent to these preliminary results of review. 
Verification findings for Viraj and Chandan are reflected in these 
preliminary results.

Intent to Revoke

    On December 31, 2003, Viraj requested the revocation of the order 
covering SSWR from India as it pertains to its sales.
    Under section 751(d)(1) of the Act the Department ``may revoke, in 
whole or in part'' an antidumping duty order upon completion of a 
review. Although Congress has not specified the procedures that the 
Department must follow in revoking an order, the Department has 
developed a procedure for revocation that is set forth in 19 CFR 
351.222. Pursuant to subsection 351.222(b), the Department may revoke

[[Page 1415]]

an antidumping duty order, in part, if it concludes that (i) An 
exporter or producer has sold the merchandise at not less than normal 
value for a period of at least three consecutive years, (ii) the 
exporter or producer has agreed in writing to its immediate 
reinstatement in the order if the Secretary concludes that the exporter 
or producer, subsequent to the revocation, sold the subject merchandise 
at less than normal value, and (iii) the continued application of the 
antidumping duty order is no longer necessary to offset dumping. 
Subsection 351.222(b)(3) states that, in the case of an exporter that 
is not the producer of subject merchandise, the Department normally 
will revoke an order in part under subsection 351.222(b)(2) only with 
respect to subject merchandise produced or supplied by those companies 
that supplied the exporter during the time period that formed the basis 
for revocation.
    A request for revocation of an order in part must address three 
elements. The company requesting the revocation must do so in writing 
and submit the following statements with the request: (1) The company's 
certification that it sold the subject merchandise at not less than 
normal value during the current review period and that, in the future, 
it will not sell at less than normal value; (2) the company's 
certification that, during each of the consecutive years forming the 
basis of the request, it sold the subject merchandise to the United 
States in commercial quantities; (3) the agreement to reinstatement in 
the order if the Department concludes that the company, subsequent to 
revocation, has sold the subject merchandise at less than normal value. 
See 19 CFR 351.222(e)(1).
    We preliminarily determine that the request from Viraj meets all of 
the criteria of 19 CFR 351.222(e)(1). With regard to the criteria of 
subsection 351.222(b)(2), our preliminary margin calculations show that 
Viraj sold SSWR at not less than normal value during the current review 
period. See Preliminary Results of Review section below. In addition, 
it sold SSWR at not less than normal value in the two previous 
administrative reviews in which it was involved. See Stainless Steel 
Wire Rods From India: Notice of Amended Final Results and Partial 
Rescission of Antidumping Duty Administrative Review, 68 FR 38301 (June 
27, 2003), covering the period December 1, 2000, through November 30, 
2001, and Stainless Steel Wire Rods From India: Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 69 FR 
29923 (May 26, 2004), covering the period December 1, 2001, through 
November 30, 2002 (01-02 SSWR Final Results).
    Based on our examination of the sales data submitted by Viraj, we 
preliminarily determine that Viraj sold the subject merchandise in the 
United States in commercial quantities in each of the consecutive years 
cited by Viraj to support its request for revocation. See Analysis 
Memorandum for Viraj Alloys Limited and VSL Wires Limited for the 
Preliminary Results of the Administrative Review of Stainless Steel 
Wire Rods from India, dated December 30, 2004. (Viraj Preliminary 
Analysis Memo), which is in the Department's CRU, Room B-099. Thus, we 
preliminarily find that Viraj had zero or de minimis dumping margins 
for the last three consecutive administrative reviews and sold in 
commercial quantities in all three years. Also, we preliminarily 
determine that application of the antidumping order to Viraj is no 
longer warranted for the following reasons: (1) The company had zero or 
de minimis margins for a period of at least three consecutive years; 
(2) the company has agreed to immediate reinstatement of the order if 
the Department finds that it has resumed making sales at less than fair 
value; and (3) the continued application of the order is not otherwise 
necessary to offset dumping.
    Therefore, we preliminarily determine that Viraj qualifies for 
revocation of the order on SSWR from India pursuant to 19 CFR 
351.222(b)(2) and that the order with respect to merchandise produced 
and exported by Viraj Alloys, Ltd. and VSL Wires, Ltd. should be 
revoked.
    If these preliminary findings are affirmed in our final results, we 
will revoke the order in part with respect to SSWR from India produced 
and exported by Viraj Alloys, Ltd., (VAL) and VSL Wires, Ltd., (VSL). 
In accordance with 19 CFR 351.222(f)(3), we will terminate the 
suspension of liquidation for SSWR produced and exported by VAL and VSL 
that were entered, or withdrawn from warehouse, for consumption on or 
after December 1, 2003, and will instruct U.S. Customs and Border 
Protection (CBP) to refund any cash deposits for such entries.

Affiliation/Collapsing

Viraj

    In the previous administrative review, the Department collapsed VAL 
and VSL because VAL and VSL were affiliated, would not need to engage 
in major retooling to shift production of SSWR from one company to the 
other, and were capable, through their sales and production operations, 
of manipulating prices or affecting production decisions. See Stainless 
Steel Wire Rods From India: Preliminary Results and Partial Rescission 
of Antidumping Duty Administrative Review, 68 FR 70765 (December 19, 
2003), and, for detailed analysis, see the Memorandum to Edward C. Yang 
from Robert Bolling (``Collapsing Memorandum'') (December 12, 2003), 
regarding the collapsing of VAL and VSL.
    The production and sales structure of the sales currently under 
review is similar to that of the 2001-2002 administrative review. The 
record shows that VAL and VSL produce subject merchandise that is sold 
in the home and U.S. markets by VSL. The record also indicates, as in 
earlier reviews, that the various companies which make up the Viraj 
group are connected by a series of familial relationships between 
directors and significant shareholders.
    Section 771(33)(A) of the Act states that the Department considers 
affiliated persons as ``members of a family, including brothers and 
sisters (whether by the whole or half blood), spouse, ancestors, and 
lineal descendants.'' Section 771(33)(E) states that an affiliation 
exists when any person directly or indirectly owns, controls, or holds 
with power to vote, five percent or more of the outstanding voting 
stock or shares of two organizations. Section 771(33)(F) of the Act 
also states that, ``two or more persons directly or indirectly 
controlling, controlled by, or under common control with, any person,'' 
shall be considered to be affiliated. A ``person'' may be an 
individual, corporation, or group. Further, section 771(33) of the Act 
states ``a person shall be considered to control another person if the 
person is legally or operationally in a position to exercise restraint 
or direction over the other person.'' The Department has analyzed the 
information regarding affiliation on the record in this administrative 
review, and preliminarily determines that VAL and VSL should be 
considered affiliated under sections 771(33)(A), (E), and (F) of the 
Act. For a detailed discussion, see memorandum to Barbara Tillman, 
Acting Deputy Assistant Secretary, titled ``Antidumping Duty 
Administrative Review of Stainless Steel Wire Rods from India: 
Collapsing of Viraj Alloys, Ltd. and VSL Wires, Ltd.'' dated November 
30, 2004, at pages 3 through 5 (02-03 Viraj Collapsing Memo).
    Further, the Department preliminarily determines that VAL and VSL 
should be collapsed. As explained in the 02-03 Viraj Collapsing Memo, 
VAL and VSL

[[Page 1416]]

have production facilities to produce similar or identical merchandise 
without substantial retooling and should be treated as a single entity 
in accordance with 19 CFR 351.401(f)(1). Additionally, in determining 
whether there is a significant potential for manipulation, as 
contemplated by 19 CFR 351.401(f)(2), the Department considers the 
totality of the circumstances of the situation and may place more 
reliance on some factors than others. The totality of the circumstances 
here shows that there is a significant potential for the manipulation 
of price or production. See 02-03 Viraj Collapsing Memo.
    Based on our analyses of the relationship between VAL and VSL, we 
conclude that they warrant treatment as a single entity. Applying the 
criteria of our collapsing inquiry as set forth at pages 5 through 9 of 
the 02-03 Viraj Collapsing Memo, we find that: (1) VAL and VSL are 
affiliated under subsections 771(33)(A), (E), and (F) of the Act; (2) a 
shift in production would not require substantial retooling of the 
facilities of either company; and (3) there is a significant potential 
for price and production manipulation due to the significant degree of 
common ownership and the intertwining of operations between the two 
companies. Therefore, the Department determines that VAL and VSL are 
affiliated and should be collapsed for the purposes of this 
administrative review.

Isibars

    Isibars is a respondent that requested an administrative review in 
this segment of the proceeding. As discussed in detail in the Use of 
Facts Available section below, we have preliminarily determined to 
apply an adverse-facts-available rate to all sales of Isibars subject 
to this review.
    For these preliminary results, we have evaluated the information on 
the record with respect to Isibars and its affiliates (Zenstar Impex 
and Shaktiman Steel Casting Pvt. Ltd.). Based on this information, the 
Department has preliminarily determined to treat Isibars and its 
affiliates as a single entity and calculate a single dumping margin as 
discussed below.
    Section 771(33)(F) of the Act provides that two or more persons 
directly or indirectly controlling, controlled by, or under common 
control with, any person, are affiliated. The Act goes on to state that 
a person shall be considered to control another person if that person 
is legally or operationally in a position to exercise restraint or 
direction over the other person. Evidence of actual control is not 
required; it is the ability to control that is at issue. See section 
771(33)(G) of the Act; Antidumping Duties; Countervailing Duties; Final 
Rule, 62 FR 27296, 27297-27298 (May 19, 1997). Moreover, the Department 
may consider control to arise from the potential for manipulation of 
price and production. See Certain Welded Carbon Standard Steel Pipe and 
Tubes From India; Final Results of New Shippers Antidumping Duty 
Administrative Review, 62 FR 47632, 47638 (September 10, 1997).
    During the POR, all sales of Isibars' SSWR to the United States 
were made by Zenstar Impex (Zenstar). Zenstar also accounted for most 
of the home-market sales of Isibars' SSWR. During the last three months 
of the POR, Shaktiman Steel Casting Pvt. Ltd. (Shaktiman), made sales 
of Isibars' SSWR in the home market but not to the United States. 
Isibars claims that it is affiliated with Zenstar and Shaktiman. As 
explained below, based on the record, there is no cross ownership among 
Isibars, Zenstar, and Shaktiman.
    Zenstar is a financing company and does not own any production 
facilities. It was founded in 1995 but was a dormant firm, not engaged 
in any activities, until its relationship with Isibars began in 2001. 
Since then, Zenstar's only activity is to sell Isibars' products. 
Zenstar provides the capital for the raw materials and other expenses 
incurred in production. Zenstar is the owner of the raw materials and 
finished products and those expenses are reflected in its financial 
statements. However, Isibars performs the actual transformation of 
Zenstar's raw materials and makes all the necessary arrangements for 
purchasing raw materials. A fee is paid for this transformation. 
Zenstar only sold Isibars' SSWR. See memorandum from the case analyst 
to the file titled, ``Verification Report of Home-Market and U.S. Sales 
by Isibars Limited,'' dated December 30, 2004 (Isibars Verification 
Report), and Memorandum to File From Analyst titled ``Communications 
with Isibars Limited,'' dated December 30, 2004 (December 30, 2004 
Memo).
    Usually, Zenstar pays a job work charge to Isibars after production 
is complete. In some cases, Zenstar paid in advance. Zenstar did not 
provide any loans to Isibars. Glance, a financing company that owns 80 
percent of Zenstar, arranges for loan syndication for Isibars, and a 
director at Glance is a former employee of Isibars. See Isibars 
Verification Report at pages 2-6 and December 30, 2004, Memo.
    Isibars' personnel handle almost all aspects of sales made by 
Zenstar. Isibars obtains and deals with the customers, negotiates the 
price and terms of sale of SSWR, issues the order confirmations, makes 
arrangements for delivery of SSWR directly from the factory to the 
customer, collects payment for sales, and gives the payments to Zenstar 
to deposit in Zenstar's bank account. Zenstar only prints the invoice 
which is sent to the customer. Zenstar does not provide any warranties, 
technical or customer service, or registration services to the 
customers and cannot approve or reject a particular sale. See Isibars 
Verification Report at pages 2-6 and the December 30, 2004, Memo. We 
preliminarily conclude that Isibars and Zenstar are affiliated pursuant 
to section 771(33)(F) and (G) of the Act. As described above, Zenstar 
controls Isibars' production by providing the financing (capital for 
raw material and other expenses) and Isibars controls Zenstar's sales 
activities. The sales and production activities between these two 
companies are intertwined.
    Prior to August 1, 2003, Zenstar bought the raw materials for 
Isibars' billets and was reimbursed at a charge per unit as described 
above. On August 1, 2003, Isibars contracted its entire billet-making 
capacity to Shaktiman under an exclusive agreement in which Shaktiman 
buys all the scrap and ferro alloys and Isibars uses its machinery, 
labor, consumables, etc. to produce billets from Shaktiman's raw 
materials. Shaktiman paid Isibars upon completion of the work and did 
not provide any loans or advances to Isibars during the POR. Unlike 
Zenstar, Shaktiman actually makes the arrangements for purchases of raw 
materials. Also, unlike Zenstar, Shaktiman is more involved in the 
production process. Shaktiman has its own staff at Isibars' mill for 
general supervision, and they consequently influence the production 
schedule and accordingly the production costs of Isibars. See Isibars 
Verification Report at pages 2-6 and the December 30, 2004 Memo.
    Shaktiman sold a major part of Isibars' billets to Zenstar at a 
negotiated price, and Isibars converted those billets into SSWR for 
Zenstar for a charge. The remainder of the billets were either sold as 
billets by Shaktiman or converted into SSWR by Isibars for sale in the 
home market by Shaktiman. Shaktiman does not have any production 
facilities of its own. All foreign-like product sold by Shaktiman was 
processed by Isibars. Shaktiman's only business activity is its 
arrangement with Isibars. See Isibars Verification Report at pages 2-6 
and December 30, 2004, Memo.
    Isibars' personnel handle almost all aspects of sales made by 
Shaktiman.

[[Page 1417]]

Isibars obtains and deals with the customers, negotiates the price and 
terms of sale of SSWR, issues the order confirmations, makes 
arrangements for delivery of SSWR directly from the factory to the 
customer, collects payment for sales, and deposits it in Shaktiman's 
bank account. Shaktiman only prints the invoice which is sent to the 
customer. Shaktiman does not provide any warranties, technical or 
customer service, or registration services to the customers and cannot 
approve or reject a particular sale. See Isibars Verification Report at 
pages 2-6 and December 30, 2004, Memo. The reasons that Isibars' 
transactions are structured in such a non-traditional manner are 
proprietary in nature and are discussed in Isibars Verification Report 
at pages 2-4. We preliminarily find that Isibars and Shaktiman are 
affiliated, pursuant to section 771(33)(F) and (G). As described above, 
Shaktiman controls Isibars' production by providing the financing 
(capital for raw material and other expenses) and Isibars controls 
Shaktiman's sales activities. The sales and production activities 
between these two companies are intertwined.
    Section 351.401(f) of our regulations states that the Department 
will treat two or more affiliated producers as a single entity where:
    (1) Those producers have production facilities for similar or 
identical products that would not require substantial retooling of 
either facility in order to restructure manufacturing priorities; and
    (2) where there is a significant potential for the manipulation of 
price or production.
    In identifying a significant potential for the manipulation of 
price or production, the Department may consider ``whether operations 
are intertwined, such as through the sharing of sales information, 
involvement in production and pricing decisions, the sharing of 
facilities or employees, or significant transactions between affiliated 
producers.''
    The Department has long recognized that it is appropriate to treat 
certain groups of companies as a single entity, and to determine a 
single weighted-average margin for that entity, in order to determine 
margins accurately and to prevent manipulation that would undermine the 
effectiveness of the antidumping law. The Department ``collapsed'' 
entities prior to the promulgation of section 351.401(f) of its 
regulations. In Queen's Flowers, the CIT upheld the Department's 
practice of collapsing two entities that were sufficiently related to 
present the possibility of price manipulation. Queen's Flowers de Colon 
v. United States, 981 F. Supp 617, 628 (CIT 1997). More recently the 
CIT found that collapsing exporters, rather than producers, is 
consistent with a ``reasonable interpretation of the antidumping duty 
statute.'' See Hontex Enterprises Inc. d/b/a Louisiana Packing Company 
v. United States of America, 248 F. Supp. 2d. 1323 (CIT 2003) (Hontex).
    While 19 CFR 351.401(f) applies only to producers, the Department 
has found it to be instructive in determining whether non-producers 
should be collapsed and used the criteria outlined in the regulation in 
its analysis. See Freshwater Crawfish Tail Meat From the People's 
Republic of China: Final Results of Administrative Antidumping Duty and 
New Shipper Reviews, and Final Rescission of New Shipper Review, 65 FR 
20948 (April 19, 2000) and accompanying Issues and Decision Memorandum 
at section C (the administrative determination under review in Hontex) 
and Certain Preserved Mushrooms From the People's Republic of China: 
Final Results of Sixth Antidumping Duty New Shipper Review and Final 
Results and Partial Rescission of the Fourth Antidumping Duty 
Administrative Review, 69 FR 54635 (September 9, 2004) (where the 
Department collapsed a producer and its exporters).
    Section 351.401(f)(2)(iii) specifically calls on the Department to 
examine whether ``operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated {parties{time} .'' The evidence on 
the record, from Isibars' submissions and from verification, 
demonstrate that Isibars has significant control over the sales of 
Shaktiman and Zenstar. Moreover, the operations of Zenstar and 
Shaktiman demonstrate that Shaktiman and Zenstar have significant 
control over Isibars' production. While Zenstar and Shaktiman hold 
title to the goods and they provide complete financing to Isibars, 
these three companies' operations are so intertwined that there is a 
significant potential for the manipulation of price and production. 
Therefore, we find that these entities should be collapsed and assigned 
a single dumping margin and that the actual costs incurred by each 
company in producing the merchandise under consideration must be used 
for purposes of calculating constructed value and cost of production.

Use of Facts Available

    In the instant review, despite numerous requests and clarifications 
from the Department, Isibars failed to adequately provide the 
information necessary for the margin analysis. As explained in detail 
below, the Department received deficient, misleading, and incomplete 
responses to the questionnaire and supplemental questionnaire from 
Isibars for section D. Moreover, the Department was unable to determine 
the accuracy of the information that Isibars did provide, which is 
necessary for the margin analysis.
    On August 18, 2004, we sent the section D questionnaire to Isibars. 
On September 21, 2004, the Department received Isibars' section D 
response one day late. Isibars' section D response did not answer 
question II.A.7, which requested a list of major inputs purchased from 
affiliated parties and various information about those inputs such as 
the transfer price, the market price, and the affiliates cost of 
production. See 19 CFR 351.407(b). Further, Isibars' answers to 
questions III.A.1 and III.A.2.a, c, d, and e were insufficient and did 
not explain how the cost information contained in Isibars' constructed-
value and cost-of-production databases was derived. For example, when 
asked to describe the method it used to compute the cost of direct 
materials and to describe how it used its financial accounting records 
to compute the cost of direct materials, Isibars responded, ``We have 
arrived at the direct material cost based on the input output norms 
multiplied by the inefficiency factor multiplied by the yields during 
the hot rolled and cold finished products. See Isibars' section D 
Response, dated September 21, 2004, page 26. For direct labor, Isibars 
responded, ``Direct labor includes labor charges paid by Isibars and 
wages including benefits thereon.'' See Isibars' section D Response, 
dated September 21, 2004, page 27. Isibars' response did not describe 
the method it used, or how it used its financial accounting records, to 
compute those expenses used to determine the constructed value and the 
cost of production reported in section D. Nor did Isibars explain 
whether it reported the actual expenses incurred by Zenstar and 
Shaktiman for raw materials or the actual expenses incurred by Isibars 
to produce the SSWR.
    On October 20, 2004, the Department received Isibars' section D 
supplemental response two days late. Notwithstanding the delay, Isibars 
did not provide the requested explanation on the fixed and

[[Page 1418]]

variable overhead expenses. Although it provided more information on 
how the direct materials and direct labor costs were determined, for 
the first time, Isibars explained that it did not report the actual 
costs incurred by Isibars for producing the subject merchandise but 
instead reported the amount that Zenstar paid Isibars for production. 
This explanation is materially different than Isibars' September 21, 
2004, response where it stated that ``direct labor includes labor 
charges paid by Isibars'' (emphasis added). Further, while Isibars 
listed some major inputs purchased from affiliates, it did not list the 
most significant major input, the job work charges of Isibars, and did 
not provide the requested information with respect to those charges. 
Isibars' incomprehensible explanations make it impossible for the 
Department to confirm the accuracy of the reported material and labor 
costs.
    Section 782(c)(1) of the Act provides that if an interested party 
``promptly after receiving a request from {the Department{time}  for 
information, notifies {the Department{time}  that such party is unable 
to submit the information requested in the requested form and manner, 
together with a full explanation and suggested alternative form in 
which such party is able to submit the information,'' the Department 
may modify the requirements to avoid imposing an unreasonable burden on 
that party. Likewise, the August 18, 2004, questionnaire advised 
Isibars to contact the Department if it needed clarification. At no 
point before submitting its response did Isibars seek clarification or 
express confusion with regard to any of these questions.
    Section 782(d) of the Act provides that, if the Department 
determines that a response to a request for information does not comply 
with the request, the Department will inform the person submitting the 
response of the nature of the deficiency and shall, to the extent 
practicable, provide that person the opportunity to remedy or explain 
the deficiency. If that person submits further information that 
continues to be unsatisfactory, or this information is not submitted 
within the applicable time limits, the Department may, subject to 
section 782(e), disregard all or part of the original and subsequent 
responses, as appropriate. Consistent with section 782(d), on October 
6, 2004, we issued a supplemental questionnaire to Isibars requesting 
it to clarify how it calculated the direct materials, direct labor, 
variable overhead, and fixed overhead used in the cost-of-production 
and constructed-value databases. We also requested that Isibars answer 
question II.A.7 concerning its major inputs.
    In reviews such as this where the Department is conducting a sales-
below-cost investigation, it is necessary to have the cost-of-
production information. Without this information the Department cannot 
determine the reliability of sales prices in the home market and, 
whether they form an appropriate basis for determining normal value. 
Given Isibars' failure to report its actual cost of production for the 
foreign-like product and subject merchandise, the Department is unable 
to calculate a dumping margin.
    Section 776(a)(2) of the Act provides that, if necessary 
information is not available on the record because an interested party 
(A) withholds information that has been requested by the Department, 
(B) fails to provide such information in a timely manner or in the form 
or manner requested, (C) significantly impedes a proceeding under the 
antidumping statute, or (D) provides such information but the 
information cannot be verified, then the Department shall, subject to 
section 782(d) of the Act, use the facts otherwise available in 
reaching the applicable determination.
    Because Isibars did not report its job-work charges as a major 
input purchased by affiliates Zenstar and Shaktiman, did not report its 
actual cost of production for this work, and did not provide complete 
and adequate responses as to how it computed the amounts for fixed and 
variable overhead, we preliminarily find that information specifically 
requested by the Department has been withheld. Finally, in the last 
review, the Department had similar difficulties obtaining major input 
information from Isibars. Given Isibars' familiarity with the requisite 
information, we must preliminary conclude that it significantly impeded 
this proceeding. Therefore, we preliminarily determine that the use of 
facts otherwise available is warranted to determine a margin for 
Isibars' sales of merchandise subject to this review.
    Section 776(b) of the Act provides that, if the Department finds 
that an interested party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information, the 
Department may use an inference that is adverse to the interests of 
that party in selecting from among the facts otherwise available. In 
addition, the Statement of Administrative Action accompanying the 
Uruguay Round Agreements Act, H. Doc. 316, Vol. 1, 103d Cong. (1994) 
(SAA), establishes that the Department may employ an adverse inference 
``* * * to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
SAA at 870. It also instructs the Department, in employing adverse 
inferences, to consider ``* * * the extent to which a party may benefit 
from its own lack of cooperation.'' Id.
    In this case, we find that Isibars did not act to the best of its 
ability. Despite repeated requests and absent any indication of 
confusion or inability to provide the requisite information, Isibars 
provided incomplete, unusable responses to section D of our 
questionnaire. Although Isibars is appearing in this proceeding pro se, 
it has extensive experience with the Department's procedures and 
requirements, having participated in several stainless steel bar and 
SSWR reviews. In fact, one of the reasons we applied adverse facts 
available in the last review of SSWR was because Isibars failed to 
provide the requested information on its major inputs supplied by an 
affiliate. See Stainless Steel Wire Rods from India: Preliminary 
Results and Partial Recision of Antidumping Duty Administrative Review, 
68 FR 70765, 70768 (December 19, 2003). Thus, Isibars was aware of the 
importance of providing the requested information on major inputs. 
Notwithstanding its previous experience, Isibars' responses were not 
clear and even misleading as to how it derived its reported cost-of-
production information. Therefore, pursuant to sections 776(a)(2)(A) 
and (C) and section 776(b) of the Act, we have preliminarily determined 
to use adverse facts available in reaching the preliminary results of 
review.
    As adverse facts available, we have preliminarily assigned Isibars 
a rate of 48.80 percent, which is the highest rate determined in any 
segment of the proceeding and the rate currently applicable to Isibars. 
See Antidumping Duty Order: Stainless Steel Wire Rods from India, 58 FR 
63335 (December 1, 1993) and 01-02 SSWR Final Results. This rate is 
based on information provided in the petition.
    Section 776(b) of the Act states that an adverse inference may 
include reliance on information derived from the petition. See also 19 
CFR 351.308(c); Uruguay Round Agreement Act, Statement of 
Administrative Action (``SAA'') at 829-831. Section 776(c) of the Act 
provides that, when the Department relies on secondary information 
(such as the petition rates) as facts available, it must, to the extent 
practicable, corroborate that information from independent sources that 
are

[[Page 1419]]

reasonably at its disposal. The SAA clarifies that ``corroborate'' 
means that the Department will satisfy itself that the secondary 
information to be used has probative value. See SAA at 870. To 
corroborate secondary information, the Department will, to the extent 
practicable, examine the reliability and relevance of the information 
used. See Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, from Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, from Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews, 61 FR 57391, 57392 
(November 6, 1996); Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Barium 
Carbonate From the People's Republic of China, 68 FR 12664 (March 17, 
2003). The Department's regulations state that independent sources used 
to corroborate may include, but are not limited to, published price 
lists, official import statistics and customs data, and information 
obtained from interested parties during the particular review. See 19 
CFR 351.308(d); SAA at 870. Further, in accordance with F. LII De Cecco 
Di Filippo Fara S. Martino S.p.A. v. United States, 216 F.3d 1027, 1034 
(Fed. Cir. 2000), we examine whether information on the record 
supporting the selected adverse facts available is reasonable and has 
some basis in reality.
    The Department first assigned this rate to Isibars in the preceding 
review and, at that time, also corroborated the rate, to the extent 
practicable. As to corroborating the rate for the current review, 
nothing on the record of this review calls into question the 
reliability of the rate. Further, the rate has not been judicially 
invalidated. There is no reason to believe that the rate we have 
selected is inappropriate for use as the total adverse facts-available 
rate with respect to Isibars. This rate is Isibars' current rate and, 
therefore, applying a lesser rate would reward Isibars for not 
cooperating fully. The Department assumes that if an uncooperative 
respondent could have demonstrated that its dumping margin is lower 
than the highest prior margin it would have provided information 
showing the margin to be less. See Rhone Poulenc, Inc. v. United 
States, 899 F.2d 1185, 1190-91 (Fed. Cir. 1990). We have preliminarily 
selected this rate because it is sufficiently high as to reasonably 
assure that Isibars does not obtain a more favorable result by failing 
to cooperate than if it had cooperated fully. Therefore, we consider 
the selected rate to have probative value and to reflect the 
appropriate adverse inferences. Thus, we consider the rate of 48.80 
percent as the most appropriate information on the record upon which to 
base adverse facts available with respect to Isibars in the instant 
review.
    The implementing regulation for section 776 of the Act, codified at 
19 CFR 351.308(d), states, ``(t)he fact that corroboration may not be 
practicable in a given circumstance will not prevent the Secretary from 
applying an adverse inference as appropriate and using the secondary 
information in question.'' Additionally, the SAA at 870 states 
specifically that, where ``corroboration may not be practicable in a 
given circumstance,'' the Department may nevertheless apply an adverse 
inference. The SAA at 869 emphasizes that the Department need not prove 
that the facts available are the best alternative information. 
Therefore, in accordance with 776(c) of the Act, we consider the rate 
selected to be corroborated to the extent practicable for purposes of 
these preliminary results. See CTL Plate from Mexico, where although 
the Department was provided no useful information by the parties and 
was unaware of other independent sources of information that would 
permit further corroboration of the margin calculated in the petition, 
the Department found that its efforts corroborated information 
contained in the petition to the extent practicable.
    Although the Department has already given Isibars a second chance 
to correct its response deficiencies, we have decided to issue a second 
section D supplemental questionnaire to Isibars to allow it the 
opportunity to correct its responses before a final decision is 
rendered. We will analyze the sufficiency of the second supplemental 
response and, if appropriate, issue our preliminary analysis of that 
response prior to the deadline for the case briefs in this review.

Extension of Time for Final Results

    Section 751(a)(3)(A) of the Act, requires the Department to issue 
the final results of an antidumping duty administrative review within 
120 days of the date on which the preliminary results are published. 
The Act also provides that the Department may extend the 120-day period 
to 180 days, if it determines that it is not practicable to complete 
the review within the foregoing time period.
    Because of the Department's decision to afford Isibars another 
opportunity to correct the deficiencies in its responses, the 
Department needs the additional time to analyze Isibars' responses and 
conduct a cost verification. For this reason, the Department has 
determined that it is not practicable to complete the final results 
within the time limit mandated by section 751(a)(3)(A) of the Act. 
Therefore, in accordance with that section, the Department is extending 
the time limit for completion of the final results by 60 days.
    The final results of review are now due no later than 180 days of 
the date on which the preliminary results are published. This extension 
of the time limit is in accordance with section 751(a)(3)(A) of the 
Act.

Normal Value Comparisons

    To determine whether sales of subject merchandise from to the 
United States by Viraj were made at less than normal value, we compared 
the constructed export price (CEP), as appropriate, to the normal 
value, as described in the ``Export Price and Constructed Export 
Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(2) of the Act, we calculated monthly 
weighted-average prices for normal value and compared these to 
individual CEP transactions.
    As discussed below, Chandan had no home-market or third-country 
sales of subject merchandise during the POR. Therefore, in accordance 
with section 773(a)(4) of the Act, we used constructed value as the 
basis for normal value when making comparisons.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products described by the Scope of the Antidumping Duty Order section 
above, which were produced and sold by Viraj in the home market during 
the POR, to be foreign like products for purposes of determining 
appropriate comparisons to U.S. sales. 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 and reporting instructions listed in 
the Department's questionnaire. Where there were no sales of identical 
or similar merchandise in the home market to compare to U.S. sales, we 
compared U.S. sales to the constructed value of the product.
    For Chandan, we compared U.S. sales to the constructed value of the 
product because Chandan did not have any home-market or third-country 
sales of SSWR during the POR. See the Normal Value section below for 
further discussion.

[[Page 1420]]

Export Price and Constructed Export Price

    In accordance with section 772(a) of the Act, Export Price (EP) is 
the price at which the subject merchandise is first sold (or agreed to 
be sold) before the date of importation by the producer or exporter of 
the subject merchandise outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States. In accordance with section 772(b) of 
the Act, CEP is the price at which the subject merchandise is first 
sold (or agreed to be sold) in the United States before or after the 
date of importation by or for the account of the producer or exporter 
of such merchandise or by a seller affiliated with the producer or 
exporter, to a purchaser not affiliated with the producer or exporter, 
as adjusted under subsections (c) and (d).

Chandan

    For purposes of this review, Chandan has classified all sales as EP 
sales. Based on the information on the record, the Department 
determines that Chandan's U.S. sales were made ``outside of the United 
States'' within the meaning of section 772(a) of the Act and, thus, 
have been appropriately classified by Chandan as EP transactions.
    The Department calculated EP, in accordance with section 772(a) of 
the Act, based on the packed price to the first unaffiliated customer 
in the United States. In accordance with section 772(c)(2)(A) of the 
Act, the Department made deductions for movement expenses.

Viraj

    For purposes of this review, Viraj has classified all of its sales 
as CEP sales. Based on the information on the record, we are using CEP 
as defined in section 772(b) of the Act.
    Viraj has classified those sales made by VSL through Viraj USA Inc. 
(``VUI''), an affiliated reseller in the United States, as CEP sales. 
VUI sells the goods to the unaffiliated U.S. customer, who makes 
payment to VUI.
    Based on the record evidence, the Department preliminarily 
determines that VSL's U.S. sales through VUI were made ``in the United 
States'' within the meaning of section 772(b) of the Act and, thus, 
have been appropriately classified by Viraj as CEP transactions.
    The Department calculated CEP, in accordance with section 772(b) of 
the Act, based on the packed ex-dock duty paid prices to the first 
unaffiliated customer in the United States. The Department made 
deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act; these included, where appropriate, brokerage 
and handling, inland freight, international freight, U.S. customs 
duties, marine insurance, and customs clearance and delivery 
arrangements. In accordance with section 772(d)(1) of the Act, we 
deducted those selling expense associated with economic activities 
occurring in the United States, including direct selling expenses (bank 
charges and credit expenses) and indirect selling expenses.
    We deducted the profit allocated to expenses deducted under 
sections 772(d)(1) in accordance with sections 772(d)(3) and 772(f) of 
the Act. In accordance with section 772(f) of the Act, we computed 
profit based on total revenues realized on sales in both the U.S. and 
home markets, less all expenses associated with those sales. We then 
allocated profit to expenses incurred with respect to U.S. economic 
activity, based on the ratio of total U.S. expenses to total expenses 
for both the U.S. and home market.

Duty Drawback

Viraj

    In the previous two administrative reviews, the Department denied 
Viraj's request for an upward adjustment to the U.S. starting price 
based on duty drawback pursuant to section 772(c)(1)(B) of the Act. See 
Stainless Steel Wire Rods from India: Final Results of Antidumping Duty 
Administrative Review, 67 FR 37391 (May 29, 2002) and 01-02 SSWR Final 
Results and accompanying Issues and Decision memorandum at Comment 14. 
The Department denied the duty drawback adjustment because the reported 
duty drawback was not directly linked to the amount of duty paid on 
imports used in the production of merchandise for export as required by 
the Department's two-part test, which states there must be: (1) A 
sufficient link between the import duty and the rebate, and (2) a 
sufficient amount of raw materials imported and used in the production 
of the final exported product. See Rajinder Pipes Ltd. v. United 
States, 70 F. Supp. 2d 1350, 1358 (CIT September 17, 1999). The Court 
of International Trade has upheld the Department's past decisions to 
deny respondent an adjustment for duty drawback because there was not 
substantial evidence on the record to establish that part one of the 
Department's test had been met. See Viraj Group, Ltd. v. United States, 
162 F.Supp. 2d 656 (CIT August 15, 2001).
    Similarly, in the current review, the Department finds that Viraj 
has not provided substantial evidence on the record to establish the 
necessary link between the import duty and the reported rebate for duty 
drawback. Viraj has reported that it received duty drawback in the form 
of duty entitlement certificates which are issued by the Government of 
India to neutralize the incidence of basic custom duty on the import of 
raw materials used in the production of subject merchandise, but has 
failed to establish the necessary link between the import duty paid and 
the rebate given by the Government of India. See Viraj's April 12, 
2004, response at C-24. As in the previous review, Viraj was not able 
to demonstrate that the import duty paid and the duty drawback rebate 
were directly linked. Therefore, the Department is denying a duty 
drawback credit for the preliminary results of this review.

Normal Value

    After testing home market viability, we calculated normal value as 
stated in the ``Price-to-CV Comparisons'' and ``Price-to-Price 
Comparisons'' sections of this notice.

 1. Home-Market Viability

    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was a sufficient volume of sales in the home market to 
serve as a viable basis for calculating normal value (i.e., the 
aggregate volume of home-market sales of the foreign like product is 
greater than or equal to five percent of the aggregate volume of U.S. 
sales), we compared the volume of home-market sales of the foreign like 
product by Viraj to the volume of its U.S. sales of subject 
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act, 
because the aggregate volume of home-market sales of the foreign like 
product by Viraj was greater than five percent of the aggregate volume 
of U.S. sales for the subject merchandise, we determined that sales in 
the home market provide a viable basis for calculating normal value. We 
therefore based normal value on home-market sales to unaffiliated 
purchasers made in the usual commercial quantities and in the ordinary 
course of trade for Viraj.
    For normal value, we used the prices at which the foreign like 
product was first sold for consumption in India, in the usual 
commercial quantities, in the ordinary course of trade, and, to the 
extent possible, at the same level of trade as the CEP as appropriate. 
After testing home-market viability and whether home-market sales were 
at

[[Page 1421]]

below-cost prices for Viraj, we calculated normal value as stated in 
the ``Price-to-Price Comparisons'' and ``Price-to-CV'' sections of this 
notice.
    Because we determined that Chandan had neither home-market nor 
third-country sales of subject merchandise during the POR, in 
accordance with section 773(a)(4) of the Act, we used constructed value 
as the basis for calculating normal value.

2. Cost-of-Production Analysis

    Because the Department disregarded certain Viraj Group sales made 
in the home market at prices below the cost of producing the subject 
merchandise in the most recently completed segment of this proceeding 
and excluded such sales from normal value, the Department determined 
that there are reasonable grounds to believe or suspect that Viraj made 
sales in the home market at prices below the cost of producing the 
merchandise in this review. See 01-02 SSWR Final Results; section 
773(b)(2)(A)(ii) of the Act. As a result, Viraj submitted its section D 
questionnaire response to the Department on April 12, 2004.

3. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated cost 
of production (``COP'') based on the sum of Viraj's costs of materials 
and fabrication for the foreign like product, plus amounts for home 
market selling, general and administrative expenses (``SG&A''), 
including interest expenses, and packing costs. The Department relied 
on the COP data submitted by Viraj in its original and supplemental 
cost questionnaire responses for this calculation.

4. Test of Home-Market Prices

    We compared the weighted-average COP for Viraj's 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. In determining whether to disregard home-market sales 
made at prices less than the COP, we examined whether such sales were 
made: (1) In substantial quantities within an extended period of time; 
and (2) at prices which permitted the recovery of all costs within a 
reasonable period of time, in accordance with sections 773(b)(1)(A) and 
(B) of the Act. We compared the COP to home market-prices, less any 
applicable billing adjustments, movement charges, discounts, and 
selling expenses.

5. Results of the COP Test

    Pursuant to section 773(b)(2)(C) of the Act, when 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 the below-cost sales were not made in substantial quantities 
within an extended period of time. When 20 percent or more of a 
respondent's sales of a given product during the POR were at prices 
less than the COP, we disregarded the below-cost sales because they 
were made in substantial quantities within an extended period of time 
pursuant to sections 773(b)(2)(B) and (C) of the Act and, based on 
comparisons of prices to weighted-average COPs for the POR, we 
determined that these sales were at prices which would not permit 
recovery of all costs within a reasonable period of time in accordance 
with section 773(b)(2)(D) of the Act. See Viraj Preliminary Analysis 
Memo. Based on this test, we disregarded below-cost sales with respect 
to Viraj.

Price-to-Price Comparisons

Viraj

    For those product comparisons for which there were sales at or 
above the COP, we based normal value on the packed, ex-factory, or 
delivered prices to affiliated or unaffiliated purchasers. When 
applicable, we made adjustments for differences in packing and for 
movement expenses in accordance with sections 773(a)(6)(A) and (B) of 
the Act. We also made adjustments for differences in cost attributable 
to differences in physical characteristics of the merchandise pursuant 
to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411 and for 
differences in circumstances of sale in accordance with section 
773(a)(6)(C)(iii) of the Act and 19 CFR 351.410.
    In accordance with the Department's practice, where all 
contemporaneous matches to a U.S. sale observation resulted in 
difference-in-merchandise adjustments exceeding 20 percent of the cost 
of manufacturing (``COM'') of the U.S. product, we based normal value 
on CV.

Price-to-CV Comparisons

Viraj

    In accordance with section 773(a)(4) of the Act, we based normal 
value on CV if we were unable to find a home-market match of identical 
or similar merchandise. We calculated CV based on the sum of the cost 
of materials, fabrication employed by Viraj in producing the subject 
merchandise, and SG&A, including interest expenses, and profit. We 
calculated the COP included in the calculation of CV as stated above in 
the Calculation of COP section of this notice. In accordance with 
section 773(e)(2)(A) of the Act, we based SG&A expense and profit on 
the amounts incurred and realized by the respondent in connection with 
the production and sale of the foreign like product in the ordinary 
course of trade for consumption in India. For selling expenses, we used 
the actual weighted-average home-market direct and indirect selling 
expenses. For CV, we made the same adjustments described in the 
Calculation of COP section above.
    Our price comparisons reflect adjustments to reported costs and 
expenses as a result of findings at verification. For details regarding 
these findings and our calculations, see Viraj Preliminary Analysis 
Memo.

Chandan

    Chandan had neither home-market sales nor third-country sales of 
SSWR. Accordingly, pursuant to section 773(a)(4) of the Act, we based 
normal value on constructed value. In accordance with section 773(e) of 
the Act, we calculated CV based on the sum of Chandan's cost of 
materials and fabrication for the subject merchandise, plus amounts for 
profit, SG&A, interest, and U.S. packing costs. For further details of 
our calculations, see Analysis Memorandum for Chandan Steel Ltd. for 
the Preliminary Results of the Administrative Review of Stainless Steel 
Wire Rods from India, dated December 30, 2004 (Chandan's Preliminary 
Analysis Memo).
    Because Chandan does not have a viable comparison market, the 
Department cannot determine profit under section 773(e)(2)(A) of the 
Act, which requires sales by the respondent in question in the ordinary 
course of trade in a comparison market. Likewise, because Chandan does 
not have any sales in the same general category of products as the 
subject merchandise, we are unable to apply the alternative (i) of 
section 773(e)(2)(B) of the Act. Further, the Department cannot 
calculate profit based on alternative (ii) of this section without 
violating our responsibility to protect respondents' business 
proprietary information because Viraj is the only other respondent with 
viable home-market sales (19 CFR 351.405(b) requires that a profit 
ratio under this alternative be based solely on home-market sales) for 
which we have calculated a margin. If we were to use Viraj's profit 
ratio exclusively under this alternative, Chandan would be able to 
determine Viraj's proprietary profit rate.

[[Page 1422]]

Therefore, we have calculated Chandan's CV profit based on the third 
alternative, any other reasonable method, in accordance with section 
773(e)(2)(B)(iii) of the Act. As a result, as a reasonable method, we 
calculated Chandan's CV profit based on the publicly available 
financial information of another Indian steel producer who is not a 
respondent in this administrative review. For a detailed discussion of 
our calculation see Chandan's Preliminary Analysis Memo.
    Except for our calculation of surrogate CV profit, we have relied 
on submitted CV information. However, because we determined that 
Chandan had calculated its G&A ratio incorrectly, we recalculated 
Chandan's G&A ratio based on Chandan's fiscal year data. For a detailed 
description of our recalculation, see Chandan's Preliminary Analysis 
Memo.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine normal value based on sales in the comparison 
market at the same level of trade as the EP or CEP transaction. See 
also 19 CFR 351.412. The normal value level of trade is that of the 
starting-price sales in the comparison market or, when normal value is 
based on CV, that of the sales from which we derive SG&A expenses and 
profit. See 19 CFR 351.412(2)(iii). For EP, the level of trade is also 
the level of the starting-price sale, which is usually from the 
exporter to the importer. See 19 CFR 351.412(2)(i). For CEP, it is the 
level of the constructed sale from the exporter to the affiliated 
importer. See 19 CFR 351.412(c)(ii).
    To determine the level of trade of a sale, we examine stages in the 
marketing process and selling functions along the chain of distribution 
between the producer and the unaffiliated customer. Substantial 
differences in selling activities are a necessary, but not sufficient 
condition for determining that there is a difference in the stage of 
marketing. See 19 CFR 351.412(c)(2). If the comparison market sales are 
at a different level of trade, and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison-market sales at the level of trade of the export 
transaction, we make a level-of-trade adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the normal value 
level is more remote from the factory than the CEP level and there is 
no basis for determining whether the differences in the levels between 
normal value and CEP sales affect price comparability, we adjust normal 
value under section 773(A)(7)(B) of the Act (the CEP offset provision). 
See Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 
(November 19, 1997).
    In implementing these principles in this review, we obtained 
information from Viraj about the marketing stages involved in its U.S. 
and home-market sales, including a description of the selling 
activities for each channel of distribution. In identifying levels of 
trade for CEP, we considered only the selling activities reflected in 
the price after the deduction of expenses and profit under section 
772(d) of the Act. See Micron Technology, Inc. v. United States, 243 
F.3d 1301, 1314-1315 (Fed. Cir. 2001). Generally, if the reported 
levels of trade are the same in the home and U.S. markets, the 
functions and activities of the seller should be similar. Conversely, 
if a party reports differences in levels of trade the functions and 
activities should be dissimilar.
    In the present review, we performed a level-of-trade analysis for 
Viraj. To determine whether an adjustment was necessary, in accordance 
with the principles discussed above, we examined information regarding 
the distribution systems in both the United States and home markets, 
including the selling functions, classes of customer, and selling 
expenses.
    Viraj claimed three levels of trade in the home market. See Viraj 
sections B, C, and D Questionnaire Response, dated April 12, 2004 
(``Viraj Sections B-D Response'') at B-17. Additionally, Viraj reported 
that it sold through one channel of distribution in the home market: 
directly to unaffiliated customers (``actual user'', ``trading 
company'', and ``distributors''). See Viraj Sections B-D Response at B-
9. For sales in the home market, Viraj reported that all of its sales 
are sold ex-works. See Viraj Sections B-D Response at B-12. Viraj 
repor