A-441-801 Investigation

Public Document E&C AD/CVD OIII: LRL, JD

DATE: April 9, 2018 MEMORANDUM TO: Gary Taverman Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations,

performing the non-exclusive functions and duties of the Assistant Secretary for Enforcement and Compliance

FROM: James Maeder Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations performing the duties of Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations SUBJECT: Issues and Decision Memorandum for Final Affirmative

Determination in the Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland

I. SUMMARY The Department of Commerce (Commerce) determines that certain cold-drawn mechanical tubing of carbon and alloy steel (cold-drawn mechanical tubing) from Switzerland is being, or is likely to be, sold in the United States at less than fair value (LTFV), as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The petitioners in this investigation are ArcelorMittal Tubular Products, Michigan Seamless Tube, LLC, Plymouth Tube Co. USA, PTC Alliance Corp., Webco Industries, Inc. and Zekelman Industries, Inc. (collectively, the petitioners). The two mandatory respondents in this investigation are: Benteler Rothrist AG (Benteler Rothrist) and Mubea Präzisionsstahlrohr AG (MPST) and Mubea, Inc. (collectively, Mubea). The period of investigation (POI) is April 1, 2016, through March 31, 2017. We analyzed the comments of the interested parties in this investigation. As a result of our analysis, and based on our findings at verification, we made changes to the margin calculations for Benteler Rothrist and Mubea from the Preliminary Determination and Amended Preliminary Determination.1 We recommend that you approve the positions described in the “Discussion of

                                                            1 See Cold-Drawn Mechanical Tubing from Switzerland: Preliminary Affirmative Determination of Sales at Less Than Fair Value and Postponement of Final Determination, and Extension of Provisional Measures, 82 FR 55571 (November 22, 2017) (Preliminary Determination) and accompanying memorandum, “Decision Memorandum for  

 

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the Issues” section of this memorandum. Below is the complete list of the issues in this investigation for which we received comments from interested parties: Comment 1: The Inclusion of Sample Sales in Benteler Rothrist’s Margin Calculation Comment 2: Identification of Missing Information for Certain of Benteler Rothrist’s U.S. and

Comparison Market Sales Comment 3: Use of the Average-to-Average Methodology for Benteler Rothrist’s Margin

Calculation Comment 4: Margin Offsets for Section 232 Duties Comment 5: Mubea’s Reported Date of Sale in the Third-Country Comment 6: Application of AFA to Mubea for the Cohen’s d Test Due to Inaccurate

Reporting of Customer Locations Comment 7: Commerce Should Calculate the Margin Based on Transfer Prices from MPST

in Switzerland to Mubea, Inc. in the United States Comment 8: Mubea’s Startup Adjustment for the U.S. Further Manufacturing Operations Comment 9: Calculation of Mubea, Inc.’s General and Administrative Expense for Further

Manufacturing in the United States Comment 10: Unreconciled Difference in Reconciliation Between Financial Records and the

Reported Cost Database for Mubea Comment 11: Revisions and Minor Corrections to Mubea’s Response II. BACKGROUND On November 22, 2017, Commerce published the Preliminary Determination of sales at LTFV of cold-drawn mechanical tubing from Switzerland.2 On January 3, 2018, we published an Amended Preliminary Determination.3 Commerce exercised its discretion to toll all deadlines affected by the closure of the Federal Government from January 20 through 22, 2018. If the new deadline falls on a non-business day, in accordance with Commerce’s practice, the deadline will become the next business day. The revised deadline for the final determination is now April 9, 2018.4 From November 2017 through February 2018, we conducted verification of the sales and cost of production (COP) data reported by Benteler Rothrist and Mubea, in accordance with section 782(i) of the Tariff Act of 1930, as amended (the Act).5 We invited parties to comment on the                                                             the Preliminary Determination in the Less-Than-Fair-Value Investigation of Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland” (Preliminary Decision Memorandum); and Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Amended Preliminary Determination of Sales at Less Than Fair Value, 82 FR 346 (January 3, 2018) (Amended Preliminary Determination); Memorandum, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Ministerial Error Allegations in the Preliminary Determination,” dated December 21, 2017 (Ministerial Error Memorandum); 2 See Preliminary Determination and accompanying the Preliminary Decision Memorandum. 3 See Amended Preliminary Determination and accompanying Ministerial Error Memorandum. 4 See Memorandum, “Deadlines Affected by the Shutdown of the Federal Government,” dated January 23, 2018 (Tolling Memorandum). All deadlines in this segment of the proceeding have been extended by three days. 5 See memoranda to the file, “Verification of the Cost Response of Benteler Rothrist AG in the Antidumping Duty Investigation of Cold-drawn Mechanical Tubing from Switzerland,” dated January 30, 2018 (Benteler Rothrist’s  

 

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Preliminary Determination. The petitioners,6 Benteler Rothrist and Mubea submitted case and rebuttal briefs during March 2018.7 Based on our analysis of the comments received, as well as our verification findings, we revised the weighted-average dumping margins for Benteler Rothrist and Mubea from those calculated in the Amended Preliminary Determination, as detailed below. III. SCOPE OF THE INVESTIGATION The product covered by this investigation is cold-drawn mechanical tubing from Switzerland. Commerce addressed all scope comments received in the Final Scope Decision Memorandum.8 For a complete description of the scope of this investigation, see Appendix I of the accompanying Federal Register notice.

                                                            Cost Verification Report); “Verification of the Sales Response of BENTELER Rothrist AG in the Less-Than-Fair Value Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland,” dated February 27, 2018 (Benteler Rothrist’s CH-BSTC Verification Report); “Verification of the Sales Response of BENTELER Rothrist AG in the Less-Than-Fair Value Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland,” dated February 28, 2018 (Benteler Rothrist’s BDI-BSTC Sales Verification Report); “Verification of the Cost of Production and Constructed Value Response of Mubea Präzisionsstahlrohr AG: Antidumping Duty Investigation of Cold-Drawn Mechanical Tubing from Switzerland,” dated February 6, 2018 (Mubea’s Cost Verification Report); “Verification of the Cost Response of Mubea Inc. in the Antidumping Duty Investigation of Cold Drawn Mechanical Tubing from Switzerland,” February 7, 2018 (Mubea’s Further Manufacturing Verification Report); and, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Constructed Export Price, Home Market and Third-Country Sales Verifications of Mubea Präzisionsstahlrohr AG and Mubea Inc.,” dated February 7, 2018 (Mubea’s Sales Verification Report). 6 The petitioners are ArcelorMittal Tubular Products, Michigan Seamless Tube, LLC, Plymouth Tube Co. USA, PTC Alliance Corp., Webco Industries, Inc. and Zekelman Industries, Inc. (collectively, the petitioners). 7 See the petitioners’ letter, “Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Petitioners’ Case Brief On Benteler Rothrist AG,” dated March 12, 2018 (Petitioners’ Case Brief on Benteler Rothrist); the petitioners’ letter, “Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Petitioners’ Case Brief On Mubea,” dated March 12, 2018 (Petitioners’ Case Brief on Mubea); Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Case Brief,” dated March 12, 2018 (Benteler Rothrist’s Case Brief); Mubea’s letter, “Cold-Drawn Mechanical Tubing from Switzerland: Case Brief of Mubea Präzisionsstahlrohr AG and Mubea North America, Inc.,” dated March 12, 2018 (Mubea’s Case Brief); the petitioners’ letter, “Certain Cold-Drawn Mechanical Tubing from Switzerland: Petitioners’ Rebuttal Brief Concerning Benteler Rothrist AG,” dated March 15, 2018 (Petitioners’ Rebuttal Brief on Benteler Rothrist); the petitioners’ letter, “Certain Cold-Drawn Mechanical Tubing from Switzerland: Petitioners’ Rebuttal Brief Concerning Mubea,” dated March 15, 2018 (Petitioners’ Rebuttal Brief on Mubea); Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Rebuttal Case Brief,” dated March 15, 2018 (Benteler Rothrist’s Rebuttal Brief); and, Mubea’s letter, “Cold-Drawn Mechanical Tubing from Switzerland: Rebuttal Brief of Mubea Präzisionsstahlrohr AG and Mubea North America, Inc.,” dated March 15, 2018 (Mubea’s Rebuttal Brief). 8 See Memorandum, “Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from the Federal Republic of Germany, India, Italy, the Republic of Korea, the People’s Republic of China, and Switzerland: Scope Decision Memorandum for the Final Determinations: Final Scope Decision Memorandum,” dated December 4, 2017 (Final Scope Decision Memorandum).  

 

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IV. CHANGES SINCE THE PRELIMINARY DETERMINATION Based on our analysis of the comments received from parties, and minor corrections presented at verification,9 we made certain changes to the margin calculations since the Amended Preliminary Determination10 for Benteler Rothrist and Mubea. Specifically, we made the following changes: A. Benteler Rothrist

1. We used the COP database submitted after verification where Benteler Rothrist incorporated the minor changes reported at verification and our verification findings to the databases used in the Preliminary Determination.11

2. We used the U.S. and comparison market databases submitted after verification where Benteler Rothrist incorporated the minor changes reported at verification and our verification findings to the databases used in the Preliminary Determination.12

3. We excluded the “prototype” and production part approval parts (PPAP) samples from the margin calculation.13

                                                            9 See Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Cost Verification Minor Corrections,” dated December 6, 2017 (Benteler Rothrist’s Cost Minor Corrections); Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Sales Verification Minor Corrections,” dated December 7, 2017 (Benteler Rothrist’s Sales Minor Corrections); Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: BDI Sales Verification Minor Corrections,” dated December 15, 2017. (Benteler Rothrist’s BDI Sales Minor Corrections); Benteler Rothrist’s CH-BSTC Verification Report; and Benteler Rothrist’s BDI-BSTC Sales Verification Report; See also Mubea’s letter, “Antidumping Investigation of Certain Cold-Drawn Mechanical Tubing from Switzerland: U.S. Sales Verification Minor Corrections,” dated December 4, 2017 (U.S. Sales Minor Corrections); Mubea’s letter, “Antidumping Investigation of Certain Cold-Drawn Mechanical Tubing from Switzerland: Cost Verification Minor Corrections,” dated December 5, 2017 (Cost Minor Corrections); and, Mubea’s letter, “Antidumping Investigation of Certain Cold-Drawn Mechanical Tubing from Switzerland: Comparison Market Sales Verification Minor Corrections,” dated January 10, 2018 (Mubea Third-Country Minor Corrections). 10 See Preliminary Determination, and accompanying Preliminary Decision Memorandum, and the Amended Preliminary Determination and accompanying Ministerial Error Memorandum. See also Memorandum, “Analysis Memorandum for the Final Determination of the Less Than Fair Value Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Benteler Rothrist AG” dated April 9, 2018 (Benteler Rothrist’s Final Analysis Memorandum); Memorandum, “Antidumping Duty Investigation Cold-Drawn Mechanical Tubing from Switzerland: Cost of Production and Constructed Value Calculation Adjustments for the Final Determination - Benteler Rothrist AG,” dated April 9, 2018 (Benteler Rothrist’s Final Cost Calculation Memorandum); Memorandum, “Analysis Memorandum for the Final Determination of the Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel (Cold-Drawn Mechanical Tubing) from Switzerland: Mubea Präzisionsstahlrohr AG (MPST) and Mubea Inc. (collectively, Mubea),” dated April 9, 2018 (Mubea’s Final Analysis Memorandum); and, Memorandum, “Cost of Production and Constructed Value Calculation Adjustments for the Final Determination – Mubea Präzisionsstahlrohr AG,” dated April 9, 2018 (Mubea’s Final Cost Calculation Memorandum). 11 See Benteler Rothrist’ Final Cost Calculation Memorandum, and Benteler Rothrist’s Cost Verification Report at 3. 12 See Benteler Rothrist’s Sales Minor Corrections, Benteler Rothrist’s BDI Sales Minor Corrections, Benteler Rothrist’s CH-BSTC Verification Report; Benteler Rothrist’s BDI-BSTC Sales Verification Report; and Benteler Rothrist’s Final Analysis Memorandum. 13 See Comment 1 below; see also Benteler Rothrist’s Final Analysis Memorandum for more information on any transactions excluded.  

 

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4. We treated certain reported downstream sales as Benteler Rothrist sales and assigned the highest non-aberrational net price by control number to these sales.14

5. We activated any programming language to calculate a margin based on sales made by the same producer.15

B. Mubea

1. We used the U.S., third-country, cost and further manufacturing databases submitted after verification and incorporating minor changes to the response reported at verification.16

2. We revised Mubea, Inc.’s general and administrative expense rate to reflect shared expenses from Mubea North American Shared Services.17

3. We revised Mubea, Inc.’s general and administrative per-unit calculation by multiplying the revised rate by further manufacturing costs plus cost of manufacturing of the subject merchandise.18

4. We adjusted Mubea’s consolidated financial expense rate to reflect the revised calculation in its cost verification report.19

V. DISCUSSION OF ISSUES Comment 1: The Inclusion of Sample Sales in Benteler Rothrist’s Margin Calculation The Petitioners’ Comments Commerce should continue to include Benteler Rothrist’s reported sample sales in the U.S.

and comparison-market databases for the final determination, because Benteler Rothrist negotiated with its customers for the price and quantity for these sales, received consideration for them,20 and transferred ownership for all merchandise at issue.21 In addition, the price and quantity of Benteler Rothrist’s reported sample sales and normal sales are indistinguishable.22 This process represents concrete evidence of a bargain-for-exchange and consideration so that these sales are not outside the ordinary course of trade.23

                                                            14 See Comment 2 below; see also Benteler Rothrist’s Final Analysis Memorandum for more information on the transactions affected by this change. 15 See Comment 2 below; see also Benteler Rothrist’s Final Analysis Memorandum. 16 See Mubea’s Final Analysis Memorandum at 3 and Attachments 1 and 3. 17 See Comment 9 below. See also Mubea’s Final Analysis Memorandum at 3 and Attachment 3. 18 See Mubea’s Final Cost Calculation Memorandum. See also Mubea’s Final Analysis Memorandum at 3 and Attachment 3 implementing this decision. 19 See Mubea’s Cost Verification Report at 24. See also Mubea’s Final Analysis Memorandum at 3 and Attachments 1 and 3. 20 See Petitioners’ Case Brief at 5, 15-17 (citing Benteler Rothrist’s CH-BSTC Verification Report’ at Verification Exhibits CH 6.A and CH 33). 21 See Petitioners’ Case Brief at 5-12, citing to, e.g., Benteler Rothrist’s CH-BSTC Verification Report’ at Verification Exhibits CH 6.A. and CH 33. 22 Id. at 11. 23 Id. at 5 and 15.  

 

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Commerce is not obligated to exclude any transaction from the U.S. sales database, because a respondent labels the transaction as a sample sale.24 The Court of Appeals for the Federal Circuit (CAFC) has held that in order to be considered a sale within the meaning of the antidumping law, a transaction must involve both a transfer of ownership to an unrelated party and consideration.25 In addition, Commerce has rejected the notion that sales of small quantities are indicative of sample sales, or that trial or sample sales that involve monetary consideration are outside the normal course of trade.26

Therefore, Benteler Rothrist failed to meet its burden to demonstrate that these sales should be excluded from the margin analysis.27

Benteler Rothrist’s Comments and Rebuttal Comments Benteler Rothrist does not claim that its U.S. sample sales are outside the ordinary course

of trade.28 Commerce has the discretion to exclude comparison-market sample sales from the margin

analysis because they: 1) are outside of the ordinary course of trade;29 2) are not generally sold to customers for commercial consumption;30 3) were negotiated under different circumstances than non-sample sales;31 4) were made in smaller quantities than non-sample sales;32 5) have extraordinary characteristics with respect to circumstances of sale, pricing, quantity which lead to “irrational or unrepresentative results” that are atypical of Benteler

                                                            24 See NTN Bearing Corp. v. United States, 248 F. Supp. 2d 1256 (CIT 2003) (NTN Bearings 2003). 25 See Petitioners’ Case Brief at 7-8, citing NSK Ltd. v. United States, 115 F.3d 965, 975 (Fed. Cir. 1997) (NSK Ltd. 1997). 26 Id. at 9, citing Notice of Final Determination of Sales at Less Than Fair Value: Narrow Woven Ribbons with Woven Selvedge from Taiwan, 75 FR 41804 (July 19, 2010) and accompanying Issues and Decision Memorandum (Narrow Woven Ribbons from Taiwan) (Narrow Woven Ribbons from Taiwan at Comment 10. The petitioners also cite Industrial Nitrocellulose from France: Final Results of Antidumping Duty Administrative Review, 63 FR 49085 (September 14, 1998) (Industrial Nitrocellulose from France) at Comment 4 (where Commerce refused to exclude certain trial and sample sales from the home market database because they involved monetary consideration and were not outside the ordinary course of trade), affirmed in Bergerac v. United States, 102 F. Supp. 2d 497 (CIT 2000); Cf. NSK Ltd. 1997, 115 F.3d at 975 (concluding that the sales at issue were given to potential customers free of charge and with no obligation and, therefore, lacked consideration); see also NTN Bearing Corp. v. United States, 132 F. Supp. 2d 1102 (CIT 2001) (NTN Bearings 2001) (applying NSK Ltd. 1997 analysis to affirm Commerce’s conclusion that the zero-priced sales at issue should be excluded from the dumping calculation because there was no consideration); Folding Metal Tables and Chairs from the People’s Republic of China: Final Results of Antidumping Duty Administrative Review, 71 FR 71509 (December 11, 2006) and accompanying Issues and Decision Memorandum at Comment 4 (including “sample” sales in the dumping calculation, in part because the respondent “provided ‘samples’ to the same customers to whom it was selling the same products in commercial quantities”). 27 Id. at 6, citing, e.g., NTN Bearings 2003, 248 F. Supp. 2d 1256, 1287 (CIT 2003) (“Commerce is correct in its observation that ‘it is well settled that the party in possession of information has the burden of producing that information in order to obtain a favorable adjustment or exclusion.’”)(citing NTN Bearing Corp. v. United States, 83 F. Supp. 2d 1281 (CIT 1999)(NTN Bearings 1999); Zenith Electronics Corp. v. United States, 988 F.2d 1573, 1583 (Fed. Cir. 1993) (Zenith Electronics 1993). 28 See Benteler Rothrist’s Rebuttal Brief at 4. 29 See Benteler Rothrist’s Case Brief at 6-7. 30 Id. at 7-8. 31 Id. at 8-11. 32 Id. at 11-12.  

 

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Rothrist’s comparison market sales;33 and 6) were recorded differently than non-sample sales in Benteler Rothrist’s books and records.34

Benteler Rothrist has provided extensive evidence that demonstrates its comparison-market sales are outside of the ordinary course of trade, regardless of whether they were made for consideration.35 The petitioners’ arguments with respect to these sales are based on flawed analysis of the data and evidence. Specifically, the petitioners: 1) conflate the question of whether transactions made for consideration constitute a sale with the question of whether sales were made outside the ordinary course of trade;36 2) claim that the price and quantity of samples are not distinguishable from non-samples is contrary to record evidence;37 3) incorrectly analyzed the price and quantity of sample sales by combining sales made by BRO (Benteler Rothrist’s producer) and BDI (Benteler Rothrist’s third-country reseller);38 erroneously claim that the price and quantity of sales by comparison market control number (CONNUMH) does not differ among sample and non-sample sales;39 misinterpreted and mischaracterized Benteler Rothrist’s record evidence with respect to whether the transactions at issue were made for consideration; whether samples made with respect to certification and testing requirements, or sold as service parts should be considered “normal” sales.40

The Court of International Trade (CIT) has held that Commerce may consider the impact that sales with extraordinary characteristics have on the dumping margin,41 claiming that its comparison-market sample sales are not representative of its non-sample sales, because including only a small number of comparison market sample sales would have an “irrational and unrepresentative” result. In addition, Commerce has determined that sales that constitute a small percentage of total sales are subject to a lower evidentiary threshold to demonstrated that they are outside the ordinary course of trade than sales that constitute a higher percentage of total sales.42

Commerce’s Position: As discussed below, for the final determination, we recommend treating Benteler Rothrist’s comparison market sample sales identified as “prototype” and PPAP samples as not sold in the ordinary course of trade, and to exclude these sales from the margin calculation.43 For all remaining sample sales, with the exception of zero-priced transactions, we recommend

                                                            33 Id. at 13-15. 34 Id. at 12-13. 35 See Benteler Rothrist Rebuttal Brief at 2. 36 Id. 37 Id. at 9. 38 Id. at 9-12. 39 Id. at 12-13. 40 Id. at 13-15. 41 See Benteler Rothrist’s Case Brief at 13-15, citing Maverick Tube Corp. v. United States, 107 F. Supp. 3d 1318, 1328 (CIT 2015) (citing U.S. Steel Corp. v. United States, 953 F. Supp. 2d 1332, 1345-46 (CIT 2013)). 42 Id. at 14, citing Certain Corrosion-Resistant Carbon Steel Flat Products from Japan: Final Results of Antidumping Duty Administrative Review, 65 FR 8935, 8940 (February 23, 2000) (“{A}s the percentage of sales in question rises, so should the overall evidentiary requirements supporting a finding of sales outside the ordinary course of trade be all the more rigorous.”). 43 See Benteler Rothrist’s Final Analysis Memorandum.  

 

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continuing to consider these sales as sold in the ordinary course of trade.44 For zero-priced transactions, we recommend continuing to exclude these transactions from our margin calculation for Benteler Rothrist. In determining whether subject merchandise is being, or is likely to be, sold at less than fair value in an antidumping duty determination, a comparison is made between the price of the merchandise in the United States (“export price” or “constructed export price”) and its price in a foreign market (“normal value”).45 The “normal value” is the price at which the foreign like product is first “sold” for consumption in the exporting country “in the usual commercial quantities and in the ordinary course of trade.”46 Thus, the price of the merchandise is included in the margin calculation if, among other things, the merchandise is “sold” in the “ordinary course of trade.” If it is not “sold” or not sold in the “ordinary course of trade,” the merchandise is excluded from the normal value calculation. The CAFC has held that the term “sold” requires: (1) a transfer of ownership to an unrelated party; and (2) consideration.47 Benteler Rothrist does not dispute that there was consideration for sample sales at issue here, and there was a transfer of ownership to unrelated parties. Therefore, the sample sales at issue are considered “sold” for the purposes of the “normal value” calculation under section 773(a)(1)(B)(i). The phrase “ordinary course of trade” is defined by the Act as “the conditions and practices which, for a reasonable time prior to the exportation of the subject merchandise, have been normal in the trade under consideration with respect to merchandise of the same class or kind.”48 What is to be considered “outside the ordinary course of trade” includes, “among others, . . . (A) Sales disregarded under section 773(b)(1), below cost sales of this title; (B) Transactions disregarded under section 773(f)(2), transactions between affiliated parties, of this title.”49 Determining whether a sale or transaction is outside the ordinary course of trade is a question of fact. In making this determination, Commerce considers not just “one factor taken in isolation but rather . . . all the circumstances particular to the sales in question.”50 Commerce’s methodology for making this determination is reflected in 19 CFR 351.102(b).51 Section 351.102(b) of the regulation states, in part, “The Secretary may consider sales or transactions to be outside the ordinary course of trade if the Secretary determines, based on an evaluation of all of the circumstances particular to the sales in question, that such sales or transactions have characteristics that are extraordinary for the market in question.” Examples that might be considered outside the ordinary course of trade include: (1) off-quality merchandise; (2)

                                                            44 Id. 45 See Huffy Corp. v. United States, 632 F. Supp. 50, 52 (CIT 1986). 46 See section 773(a)(1)(B)(i) of the Act. 47 See NSK Ltd. v. United States, 115 F.3d 965, 975 (Fed. Cir. 1997) (NSK). 48 See section 771(15) of the Act; see also 19 CFR 351.102(b). 49 Id. 50 See Murata Mfg. Co., Ltd. v. United States, 820 F. Supp. 603, 607 (CIT 1993) (citation omitted) (Murata v. U.S.). 51 See, e.g., Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from France, Germany, Italy, Japan, Romania, Sweden, and the United Kingdom; Final Results of Antidumping Duty Administrative Reviews, 64 FR 35590, 35620 (July 1, 1999).  

 

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merchandise produced according to unusual product specifications; (3) merchandise sold at aberrational prices or with abnormally high profits; (4) merchandise sold pursuant to unusual terms of sale; or (5) merchandise sold to an affiliated party not at an arm’s length transaction.52 The Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA) contains similar language and identifies similar types of transactions Commerce may consider to be outside the ordinary course of trade, including (1) sales disregarded as being below-cost; and (2) transactions between affiliated persons. In its section B response, Benteler Rothrist stated that samples are common in the automotive industry and that pricing for samples may vary depending on the circumstances.53 Further stating that its customers may request samples in order for their quality department to test the product and if the customer is satisfied with the technical specifications, and agrees to a price, the product may then be used for serial production.54 We requested in a supplemental questionnaire that Benteler Rothrist provide a listing of each type of sale circumstance that it considers to be a sample sale and to explain which sales were without consideration, and which were with consideration.55 Benteler Rothrist stated that it provides prototypes samples, initial samples and PPAP samples, requalification samples, bypass-order-booking samples, and service parts.56 Benteler Rothrist also reported that BDI made certain sample sales during the POI, but that its system is unable to identify electronically sample sales.57 Benteler Rothrist describes its samples as follows:

Prototype Samples: merchandise sold to Tier 1 suppliers to original equipment manufacturers (OEM).58

PPAP Samples: merchandise sold to Tier 1 suppliers as part of an OEM new product approval process, which is a standard procedure for new parts in the automotive industry and are accompanied by documents that verify the product characteristics as specified in the drawing/specification.59

Requalification Samples: merchandise supplied and invoiced to the customer upon request. Benteler Rothrist reported that requalification samples are required by the automotive industry for products that it manufactures and supplies in mass production the purpose of which is to reconfirm the product quality is in line with existing specifications.60

Bypass-Order-Booking Samples: sample sales with thousands of pieces and are atypical of sample transactions.61

                                                            52 See 19 CFR 351.102(b). 53 See Benteler Rothrist section B submission, dated August 28, 2017. 54 Id. 55 See Benteler Rothrist supplemental section B submission, dated November 6, 2107 (SBQR), at Supp. B-39. 56 Id. at Supp. B-39 – Supp. B-41. 57 Id. 58 Id. 59 Id. 60 Id. 61 Id.  

 

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Service Part Samples: service parts are small batches of products for replacement purposes for its automotive Tier 1 suppliers and OEMs. These sales are treated as samples in Benteler Rothrist’s system due to the small number of tubes produced.62

In its SBQR, as part of its response to our request for information on its sample sales, Benteler Rothrist argued that certain sample sales (i.e., samples for development projects and prototype samples) should be excluded because they were outside the ordinary course of trade and provided sales documentation (e.g., purchase orders, order confirmations, and sales invoices) to support its claim.63 Benteler Rothrist maintains that the inclusion of these sample sales in the margin program is not accurate and leads to “irrational or unrepresentative results” that are atypical of Benteler Rothrist’s comparison market sales. To justify its claim that these specific sales were unrepresentative and atypical of its comparison market sales, Benteler Rothrist argues it provided extensive evidence that its priced sample sales were sample sales outside the ordinary course of trade. Specifically, Benteler Rothrist asserts that it provided evidence that the priced sample sales: (1) were identified as a small portion of comparison market sales; (2) are not generally sold to customers for commercial consumption; (3) were negotiated under different circumstances than non-sample sales; (4) were made in smaller quantities than non-sample sales; (5) have extraordinary characteristics with respect to circumstances of sale, pricing, quantity which lead to “irrational or unrepresentative results” that are atypical of Benteler Rothrist’s comparison market sales; and (6) were recorded differently than non-sample sales in Benteler Rothrist’s books and records. We address Benteler Rothrist’s claim below.

i. Small Portion of Comparison Market Sales Benteler Rothrist asserts that its sample sales constitute a very small portion of its total comparison market sales and to support its argument, Benteler Rothrist provided a chart comparing several percentage factors including to the number of sample sales and the volume of the sales. Based on a review of Benteler Rothrist’s sales database, we agree with Benteler Rothrist that its sample sales by number of transactions and by volume are small when compared to its total number of transactions and total volume shipped for non-sample sales. However, this factor alone is not determinative of a sale outside the ordinary course of trade.

ii. Merchandise is Not Sold to Customers for Commercial Consumption Benteler Rothrist argues that the samples provided to customers were generally not sold for commercial consumption but, instead, were sold to customers for internal certification, testing, or qualification purposes. In PTFE Resin from Japan,64 which Benteler Rothrist relies on to support its argument, we found sample sales to be outside the ordinary course of trade, in part, because they were “not for consumption, but rather, for evaluation purposes.”65 However, in PTFE Resin from Japan, we did not rely on a single factor; rather, we relied on the totality of the

                                                            62 Id. 63 Id. at Exhibit B-37. 64 See Granular Polytetrafluoroethylene Resin from Japan; Final Results of Antidumping Duty Administrative Review, 58 FR 50343 (September 27, 1993) (PTFE Resin from Japan). 65 Id. at 50345.  

 

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circumstances in determining whether the sample sales should be excluded for the margin calculation, not just the “evaluation purposes” factor.66 Specifically, we relied on record evidence pertaining to quantity, price, and documentation demonstrating that the evaluation sample sales were not made to the respondent’s ordinary customers.67 A review of Benteler Rothrist’s questionnaire responses68 and verification exhibits,69 demonstrate that its prototype/developmental projects and PPAP samples sales made during the POI were not sold for commercial consumption, but rather for its customers to perform testing, conduct trial runs, or change/revise a drawing.70 This investigation is different from PTFE Resin from Japan with respect to ordinary customers because the OEM automotive industry in that case would have fewer customers than those that purchase PTFE resin and, as a result, Benteler Rothrist could potentially have repeat customers for prototype/developmental projects and PPAP samples due to the nature of its business, i.e., supplier to the automotive OEMs. Thus, we find that Benteler Rothrist’s prototype/developmental projects and PPAP sales are outside the ordinary course of trade with respect to this factor. However, there is no record evidence supporting Benteler Rothrist’s claim that its sales of service parts, by-pass booking orders, and requalification products, are not purchased for commercial consumption. First, Benteler Rothrist’s narrative description of its sales of service parts, i.e., sales are recorded as samples in its sales system only because they are produced in small batches, not because they are samples.71 In addition, because there is no record evidence as to which sales transaction in the sale data would be categorized as service parts, we cannot quantify the number of service sales erroneously identified as a sample in the sales data. Therefore, because we determine that sales of service parts are sales of non-samples, we determine that Benteler Rothrist’s sales of service parts are sales purchased for commercial consumption. Benteler Rothrist by its own admission, acknowledges that its by-pass booking orders are not samples. Specifically, it describes these sales as “atypical of sample transactions” that are for thousands of pieces.72 In addition, because there is no record evidence as to which sales transaction in the sale data would be categorized as by-pass booking orders, we cannot quantify the number of these sales that are erroneously identified as a sample in the sales data. However, while the bright-line test of 1000 pieces seems a reasonable possible demarcation, the record does not provide for such a demarcation and, therefore, it is inappropriate to use that as a measuring stick for identifying sales of by-pass booking orders. However, if we used that methodology to determine which sales are by-pass booking orders, the record shows that a significant number of the samples fall under this category.73 Therefore, because we determine that sales of by-pass booking orders are sales of non-samples, we determine that Benteler Rothrist’s sales of by-pass booking orders are sales purchased for commercial consumption.                                                             66 Id. 67 Id. 68 See Benteler Rothrist’s SBQR, at Exhibit B-37. 69 See Benteler Rothrist’s CH-BSTC Verification Report at Exhibit CH-6.A. 70 Id. See also Benteler Rothrist’s SBQR, at Exhibit B-37. 71 See Benteler Rothrist’s SBQR, at Supp. B-39–Supp. B-41. 72 Id. See also Benteler Rothrist’s comparison market data file. 73 See Benteler Rothrist’s Final Analysis Memorandum, at Attachment 1 – Home Market Output File.  

 

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Benteler Rothrist also reported that its requalification sample sales are for certifications of existing production and are sold during production.74 Based on Benteler Rothrist’s description of its sales of alleged “requalification samples,” i.e. required by the automotive industry for products that it manufactures and supplied in mass production the purpose of which is to reconfirm the product quality is in line with existing specifications,75 if the record reflected support for such a claim, we would potentially consider these as sales of samples. However, there is no record evidence as to which sales transaction in the sale data would be categorized as “requalification samples.” Therefore, we determine that Benteler Rothrist’s sales of alleged “requalification samples” are sales purchased for commercial consumption. Thus, we find that Benteler Rothrist’s sales of service parts, by-pass booking orders, and alleged “requalification samples” are within the ordinary course of trade with respect to this factor. iii. Negotiated Under Different Circumstances Than Non-Sample Sales

Benteler Rothrist argues that samples are negotiated separately from the standard price agreements used for its non-sample comparison market sales, which were subject to prices negotiated pursuant to commercial considerations. In TRBs from Japan,76 which Benteler Rothrist relies on for its argument, we found samples to be outside the ordinary course of trade because, in a prior review, we determined that the respondent’s prices of samples were negotiated separately from the prices for its standard price agreements.77 A review of Benteler Rothrist’s questionnaire responses78 and verification exhibits79 shows that prototype/ developmental projects and PPAP sample sales are negotiated separate from the prices for its standard price agreements. Thus, we find that Benteler Rothrist’s prototype/developmental projects and PPAP sales are outside the ordinary course of trade with respect to this factor. However, there is no record evidence to support that the other types of samples (i.e., service parts, by-pass booking orders, and alleged “requalification samples”) are negotiated separately from the standard price agreements. Commerce cannot exclude sales allegedly outside the ordinary course of trade from a “normal value” calculation unless there is a complete explanation of the facts which establish the extraordinary circumstances in which the particular sales are outside the ordinary course of trade.80 Thus, we find that Benteler Rothrist’s sales of service parts, by-pass booking orders, and alleged “requalification samples” are within the ordinary course of trade with respect to this factor.

                                                            74 Id. 75 Id. 76 See Tapered Roller Bearings, Finished and Unfinished, and Parts Thereof, from Japan; Final Results of Antidumping Duty Administrative Review, 57 FR 4951, 4958-59 (Feb. 11, 1992) (TRBs from Japan). 77 Id., 57 FR at 4958-59 78 See Benteler Rothrist supplemental section A questionnaire submission, dated October 16, 2017, at Exhibits A-31 and A-32 (SAQR); see also Benteler Rothrist’s SBQR at Exhibit B-37. 79 See Benteler Rothrist’s CH-BSTC Verification Report at Exhibits CH-6.A (sample documentation) and CH-24 through CH28 (comparison market sales reviewed at verification which include all pertinent sales documentation to support the sale was made in the ordinary course of trade). 80 See, e.g., NTN Bearing Corp. of Am. v. United States, 905 F. Supp. 1083, 1091 (CIT 1995).  

 

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iv. Recorded Differently Than Non-Sample Sales

Benteler Rothrist argues that its samples were consistently recorded in a different manner than sales of non-samples. In BSS from Germany,81 which Benteler Rothrist relies on for its argument, we found that the respondents’ reported sample sales were outside the ordinary course of trade because samples were provided for a lump sum price and no other separately reported price was recorded on the invoice. We can factually distinguish the sample sales in BSS from Germany from the sample sales in this investigation, because, here, Benteler Rothrist separately records the quantity, unit-price, and extended unit-price on all of the invoices on the record that relate to sample sales.82 In addition, in its supplement section A questionnaire response, Benteler Rothrist stated that it treats samples as sales in its books and records83 and, because it assigns a unique internal system identifier (working group number) for its Rothrist plant, it is able to identify samples in its SAP sales systems.84 Additionally, Benteler Rothrist reported that samples have a distinct order confirmation number.85 However, record evidence shows that this “distinct” order confirmation number is specific to PPAP sample sales, not all sample sales.86 At verification, as part of the sales reconciliation and the sales process, we reviewed the general ledger accounts that Benteler Rothrist used to record its sale, including sample sales.87 We observed that Benteler Rothrist records all of its sales by assigned working group numbers in its general ledger, which is used to identify the producer of the merchandise, this includes its sample production. This reporting methodology is no different than how other companies that want to define or manage its operations by plant or segment. Hence, we do not find that the working group number indicates that its sample sales are recorded in a different manner than its non-sample sales. Thus, we find that Benteler Rothrist’s sample sales are within the ordinary course of trade with respect to this factor. Based on the above analysis of the circumstances particular to the prototype/developmental projects and PPAP sales, we find that Benteler Rothrist’s sales of prototype/developmental projects and PPAP samples are not sold in the ordinary course of trade.88 As we explained above, we find these sales are a very small portion of its total comparison market sales, are not sold for commercial consumption, and are negotiated under different circumstances than non-                                                            81 See Brass Sheet and Strip from Germany: Amended Final Results of Antidumping Duty Administrative Review, 75 FR 66347 (October 28, 2010), and accompanying Issues and Decision Memorandum, at Comment 6 (BSS from Germany). 82 See Benteler Rothrist’s SAQR at Exhibits A-31 and A-32; see also Benteler Rothrist’s SBQR at Exhibit B-37. 83 See Benteler Rothrist SAQR, at 42. 84 Id. 85 Id. 86 Id. at Exhibits A-31 and A-32, where Benteler Rothrist provided examples of a PPAP sample and a prototype sample, respectively. The distinct order confirmation number referenced in its SAQR was only included in the PPAP order number, not the prototype order number. 87 See Benteler Rothrist’s CH-BSTC Verification Report at Exhibits CH-6.A (sample documentation) and CH-8 (sales reconciliation). 88 See Benteler Rothrist’s SBQR at Exhibit B37; see also Benteler Rothrist’s letter, “Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel from Switzerland: Sales Verification Exhibits,” dated December 22, 2017, at Exhibit CH6.A.  

 

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sample sale. Therefore, we find that the sale of a prototype and a PPAP sample is unique or unusual or otherwise outside the ordinary course of trade.89 Such evidence indicates that the sales were made outside the ordinary course of trade for purposes of calculating normal value in this investigation. Accordingly, Benteler Rothrist has met its burden of proof in demonstrating that the sales in question were outside the ordinary course of trade, and we have excluded them for use in our calculation of normal value. With respect to Benteler Rothrist’s remaining comparison market sample sales, based on the above analysis of the circumstances particular to the sales, as stated previously, in determining whether certain market sales are outside the ordinary course of trade, Commerce considers not just one factor in isolation but all the circumstances particular to the sales in question.90 Moreover, an analysis of these factors should be guided by the purpose of the ordinary course of trade provision which is to prevent dumping margins from being based on sales which are not representative of the home market. In sum, “ordinary course of trade is determined on a case-by-case basis by examining all of the relevant facts and circumstances.”91 Benteler Rothrist failed to meet its burden of proof that the sample sales it identified as samples in its data file are outside the ordinary course of trade.92 In NTN,93 the Court upheld Commerce’s finding that sample sales identified as sample or prototype sales alone does not support the sales classification as outside the ordinary course of trade for the purposes of antidumping calculations.94 Similarly here, evidence that the sales were marked as sample sales in its data file is insufficient to support Benteler Rothrist’s claim. Benteler Rothrist has had ample opportunity to provide evidence that its sample sales are outside the ordinary course of trade, and it did not do so. Benteler Rothrist only designates a sale as a sample sale in its books and records -- it does not identify the type of sample. An identifier in the data file as to the type of sample (e.g., prototypes samples, initial samples/ PPAP samples, requalification samples, bypass-order-booking samples, and service parts) would identify those sample sales that should be excluded from the margin calculation. Commerce only excludes those sales that are supported by record evidence as out of the ordinary course of trade. Therefore, these designated “sample sales” result in potential unidentified prototype/developmental projects and PPAP sales in the data files. Therefore, we find the record to be incomplete as to whether Benteler Rothrist priced its designated “sample sales” (i.e., alleged “requalification samples,” bypass-order-booking

                                                            89 See Antifriction Bearings (Other Than Tapered Roller Bearings[)] and Parts Thereof from France, Germany, Italy, Japan, Singapore, and the United Kingdom, Final Results of Antidumping Duty Administrative Reviews, 62 FR 2081 (January 15, 1997) (where, although we verified that certain sales were designated as samples in a respondent’s records, we determined this was insufficient to find them outside the ordinary course of trade since such evidence “merely proves that respondent identified sales recorded as samples in its own records”). 90 See 19 CFR 351.102(b). 91 See Cemex, S. A. v. United States, 19 CIT 587, 593 (April 24, 1995). 92 See, e.g., Nacho-Fujikoshi Corp. v. United States, 798 F. Supp. 716, 718 (CIT 1992) (citing Koyo Seiko Co. v. United States, 796 F. Supp. 1526, 1530 (CIT 1992)). 93 NTN Bearing Corp. of Am. v. United States, 924 F. Supp. 200 (CIT 1996) (NTN). 94 Id. at 207.  

 

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samples, and service parts) as made outside the ordinary course of trade, and we have retained them for use in our calculation of normal value. Finally, as discussed above, in NSK, the CAFC held “that the term ‘sold’ . . . requires both a transfer of ownership to an unrelated party and consideration.”95 Thus, a zero-priced transaction does not qualify as a “sale” and, therefore, by definition, would not be included in Commerce’s normal value calculation. The distribution of cold-drawn mechanical tubing for no consideration is not a sale and, we do not include zero-priced transactions in the normal value calculations under section 773 of the Act. Therefore, we recommend continuing to exclude zero-priced transactions in our margin calculation for Benteler Rothrist in this case. Comment 2: Identification of Missing Information for Certain of Benteler Rothrist’s U.S. and Comparison Market Sales Background: Benteler Rothrist originally reported that it was unable to provide missing information for a number of its comparison-market downstream sales. As a result, we determined that the application of facts available was warranted for the Preliminary Determination, because such information was not on the record.96 As facts available, we treated the sales of Benteler Rothrist’s comparison market sales at issue to be Benteler Rothrist-produced cold-drawn mechanical tubing.97 After the Preliminary Determination, we afforded Benteler Rothrist another opportunity to furnish the requested information with respect to the sales at issue. Our verification revealed that Benteler Rothrist was not able to resolve the missing information issues with respect to these sales.98 The Petitioners’ Comments Benteler Rothrist failed to comply with Commerce’s repeated requests to accurately report

its U.S. and comparison market sales.99 As a result, Commerce should apply partial adverse facts available (AFA) to those U.S. and comparison market sales at issue, by applying the highest gross unit price, by CONNUM, to all comparison market sales at issue.100 Alternatively, Commerce should treat all of the sales at issue as Benteler-Rothrist-produced merchandise in the final margin calculations as it did in the Preliminary Determination.101

In addition, Commerce should not activate the programming language for the home market manufacturer and U.S. Manufacturer (MFRH/MFRU) fields in the dumping calculation so

                                                            95 NSK, 115 F.3d at 975. 96 See Memorandum, “Analysis Memorandum for the Preliminary Determination of the Antidumping Duty Investigation of Certain Cold-Drawn Mechanical Tubing of Carbon and Alloy Steel (Cold-Drawn Mechanical Tubing) from Switzerland: Benteler Rothrist AG (Benteler Rothrist),” dated November 15, 2017 (Benteler Rothrist Preliminary Analysis Memorandum), at 4. 97 Id. 98 See Benteler Rothrist’s Sales Verification Report Regarding BDI’s sales at 5. 99 See Petitioners’ Case Brief on Benteler Rothrist at 19-41. 100 Id. at 38-40. 101 Id. at 40-41  

 

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that comparisons are not implemented on a manufacturer-specific basis to Benteler Rothrist’s benefit.102

Benteler Rothrist’s Rebuttal Comments Contrary to the petitioners’ arguments, there is no basis for Commerce to reject gross price

information reported by Benteler Rothrist and apply AFA to Benteler Rothrist sales at issue, because: (1) the information is on the record; (2) the information has been provided by the deadline in the form and manner requested; (3) Benteler Rothrist has not significantly impeded this proceeding; and (4) the gross price data provided by BDI has been verified.103 To the extent Commerce finds that neutral facts available are warranted to address sales for the sales at issue, Commerce may only apply facts available to the specific fields and observations where it deems the information to be missing.104

Benteler Rothrist reported the country of origin and manufacturer information at issue based on how information was recorded in its systems in the ordinary course of business.105 BDI provided supplier information as kept in its ordinary course of business and explained that it reported: 1) the supplier of the cold-drawn mechanical tubing; 2) whether the supplier was a producer, distributor, or affiliated entity; 3) the manufacturer name and other proprietary details regarding the manufacturer.106

Shandong Huarong, 30 CIT 1269, 1281 (2006), holds that when selecting an AFA rate, Commerce “must balance the statutory objectives of finding an accurate dumping margin and inducing compliance, rather than creating an overly punitive result.”107

Commerce’s Position: As discussed below, we will continue to rely on certain Benteler Rothrist downstream sales in our margin calculations for the final determination. We will apply facts available and partial AFA to certain downstream home market sales and U.S. sales with incomplete and missing information.108 Section 776(a)(1) and (2) of the Act provides that, subject to section 782(d) of the Act, Commerce shall apply “facts available” if (1) necessary information is not on the record or (2) an interested party or any other person: (A) withholds information that has been requested; (B) fails to provide such information by the deadlines established or in the form and manner requested by Commerce, subject to subsections (c)(l) and (e) of section 782 of the Act; (C) significantly impedes a proceeding; or (D) provides such information but the information cannot be verified as provided in section 782(i) of the Act. Section 776(b) of the Act provides that Commerce may use an inference that is adverse to the interests of a party in selecting from among the facts otherwise available when that party has

                                                            102 Id. at 41. 103 See Benteler Rothrist’s Rebuttal Brief at 16-36. 104 Id. at 35-40. 105 Id. at 25-26. 106 Id. 107 Id. at 39. 108 See Benteler Rothrist’s Final Analysis Memorandum at Attachment 1 and 2.  

 

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failed to cooperate by not acting to the best of its ability to comply with a request for information.109 Further, section 776(b)(2) of the Act states that an adverse inference may include reliance on information derived from the petition, the final determination in the AD investigation, a previous administrative review under section 751 of the Act or a determination under section 753 of the Act, or other information placed on the record.110 The Statement of Administrative Action (SAA) explains that Commerce 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.”111 Further, affirmative evidence of bad faith on the part of a respondent is not required before Commerce may make an adverse inference.112 Section 776(c) of the Act provides that, in general, when Commerce relies on secondary information rather than on information obtained in the course of an investigation, it shall, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal.113 Secondary information is defined as information derived from the petition that gave rise to the investigation or review, the final determination concerning the subject merchandise, or any previous review under section 751, of the Act, concerning the subject merchandise.114 Benteler Rothrist originally reported that it was unable to provide missing information for a number of its downstream home-market sales. As a result, we determined that the application of facts available was warranted for the Preliminary Determination because such information was not on the record.115 As facts available, we treated Benteler Rothrist’s home market sales at issue to be Benteler-produced cold-drawn mechanical tubing.116 After the Preliminary Determination, we afforded Benteler Rothrist another opportunity to furnish the requested information.117 For its downstream home market sales, it stated that it was unable to provide the requested information, and excluded these sales from its post-preliminary downstream database. Our verification revealed that Benteler Rothrist was not able to resolve the missing information issues with respect to these sales.118                                                             109 See TPEA, Pub. L. No. 114-27, 129 Stat. 362 (2015). On August 6, 2015, Commerce published an interpretative rule, in which it announced applicability dates for each amendment to the Act, except for amendments contained to section 771 (7) of the Act, which relate to determinations of material injury by the International Trade Commission. See Dates of Application of Amendments to the Antidumping and Countervailing Duty Laws Made by the Trade Preferences Extension Act of 2015, 80 FR 46793 (August 6, 2015) (Applicability Notice). 110 See also 19 CFR 351.308(c). 111 See SAA Accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, vol 1 (1994) at 870. 112 See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 42985 (July 12, 2000), and accompanying Issues and Decision Memorandum; Antidumping Duties, Countervailing Duties; Final Rule, 62 FR 27296, 27340 (May 19, 1997); and Nippon Steel Corp. v. United States, 337 F.3d 1373, 1382-83 (Fed. Cir. 2003) (Nippon Steel) (holding that the statute does not contain an intent element). 113 See also 19 CFR 351.308(d). 114 See SAA at 870. 115 See Preliminary Decision Memorandum. 116 Id. 117 See Benteler Rothrist’s letter, “Cold-Drawn Mechanical Tubing from Germany: Post-Preliminary Determination Supplemental Questionnaire,” dated November 27, 2017 (Benteler Rothrist Post-Preliminary Submission). 118 See Benteler Rothrist’s Sales Verification Report regarding BDI’s sales.  

 

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While Benteler Rothrist submitted its downstream sales in a supplemental response, it did not provide us with certain critical information pertaining to the cold-drawn mechanical tubing for these certain sales. Thus, while Benteler Rothrist provided information and we reviewed the information provided at verification, because of the nature of the missing information, we find that the information that was provided pertaining to these sales is not usable.119 Section 351.403(c) of Commerce’s regulations directs that:

If an exporter or producer sold the foreign like product to an affiliated party, the Secretary may calculate normal value based on that sale only if satisfied that the price is comparable to the price at which the exporter or producer sold the foreign like product to a person who is not affiliated with the seller.

Moreover, 19 CFR 351.403(d) states that:

If an exporter or producer sold the foreign like product through an affiliated party, the Secretary may calculate normal value based on the sale by such affiliated party. However, the Secretary normally will not calculate normal value based on the sale by an affiliated party if sales of the foreign like product by an exporter or producer to affiliated parties account for less than five percent of the total value (or quantity) of the exporter’s or producer’s sales of the foreign like product in the market in question or if sales to the affiliated party are comparable, as defined in paragraph (c) of this section.

In our final determination margin calculations, Benteler’s sales to BDI continue to fail the arm’s-length test.120 Therefore, pursuant to 19 CFR 351.403(c), we are not relying on these sales to calculate normal value. Furthermore, because Benteler’s sales to BDI exceed five percent of its total reported home market sales during the POI, the exemption provided in 19 CFR 351.403(d), not to include BDI’s downstream sales in our analysis, does not apply. Nonetheless, we agree with Benteler Rothrist’s assertion that we should not treat all BDI’s downstream sales as Benteler produced-cold-drawn mechanical tubing because record evidence supports, for example, that certain downstream sales were produced by other manufacturers. Therefore, for the final determination, we included the portion of each sale which Benteler Rothrist reported as produced by itself, or, as facts available, supplied by a German producer where downstream sales information is not complete.121 Similarly, we continue to exclude from our analysis the portion of Benteler Rothrist’s sales which were sourced from non-German unaffiliated third-party suppliers. Moreover, regarding the cold-drawn mechanical tubing downstream sales information that is not complete, we find that pursuant to sections 776(a) and (b) of the Act, the use of facts otherwise

                                                            119 Because our discussion involves business proprietary information, see Benteler Rothrist’s Final Analysis Memorandum. 120 See Benteler Rothrist’s Final Analysis Memorandum at Attachment 1 and 2. 121 Id.  

 

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available with an adverse inference is warranted. We asked Benteler Rothrist to provide this missing information identified in the BDI downstream sales data file and revise its reporting to include this information.122 Benteler responded that it was unable to provide the requested information.123 Considering the above, the application of facts available is appropriate pursuant to sections 776(a)(1) and (2)(A) and (B) of the Act because necessary information, i.e., the missing information at issue, is not on the record, and Benteler Rothrist withheld that information and failed to provide this information by the established deadline. As evidenced by its supplemental questionnaire response,124 Benteler Rothrist possessed the necessary information but did not provide the information that was in its possession. When selecting from the facts available, the use of an adverse inference (AFA) pursuant to section 776(b) of the Act is appropriate because Benteler Rothrist did not act to the best of its ability in attempting to provide the requested missing information for these downstream sales. In determining whether a company has cooperated to the best of its ability and whether AFA is warranted, Commerce follows the guidance set forth in Nippon Steel:

Before making an adverse inference, Commerce must examine respondent’s actions and assess the extent of respondent’s abilities, efforts, and cooperation in responding to Commerce’s requests for information. Compliance with the “best of its ability” standard is determined by assessing whether respondent has put forth its maximum effort to provide Commerce with full and complete answers to all inquiries in an investigation. While the standard does not require perfection and recognizes that mistakes sometimes occur, it does not condone inattentiveness, carelessness, or inadequate record keeping. It assumes that importers are familiar with the rules and regulations that apply to the import activities undertaken and requires that importers, to avoid a risk of an adverse inference determination in responding to Commerce’s inquiries: (a) take reasonable steps to keep and maintain full and complete records documenting the information that a reasonable importer should anticipate being called upon to produce; (b) have familiarity with all of the records it maintains in its possession, custody, or control; and (c) conduct prompt, careful, and comprehensive investigations of all relevant records that refer or relate to the imports in question to the full extent of the importers’ ability to do so.125

The information in question (i.e., the missing information pertaining to certain downstream sales of cold-drawn mechanical tubing at issue that was resold by Benteler’s affiliate, BDI) is the type of information that a large steel manufacturer such as Benteler should reasonably be able to provide. Such information would be necessary to provide its customers with the necessary

                                                            122 See Benteler Rothrist Post-Preliminary Submission, at the first page of its response. 123 Id. 124 Id. 125 Nippon Steel, 337 F.3d 1373, 1382-83 (Fed. Cir. 2003).  

 

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certifications for the cold-drawn mechanical tubing they purchase.126 Benteler’s questionnaire responses demonstrate that it was familiar with all of the records that BDI maintained, and BDI possessed the missing information at issue,127 yet reported this information for only some of its sales, but not all. Thus, we find that Benteler Rothrist would have been able to provide this information if it had made the appropriate effort when it received Commerce’s antidumping duty questionnaire and was notified that it was required to report BDI’s downstream sales.128 Benteler Rothrist had 179 days to report such information from the time of our original request to the time it filed its last supplemental response, but did not do so.129 Therefore, we find that Benteler Rothrist’s failure to report the requested missing information, accurately and in the manner requested, using the records over which it maintained control, indicates that Benteler Rothrist did not act to the best of its ability to comply with our requests for information. Consequently, in accordance with section 776(b) of the Act, we find that it is appropriate to apply partial AFA to those downstream BDI sales where Benteler Rothrist did not provide the missing information for certain producers.130 We note that, in accordance with section 782(d) of the Act, Commerce provided Benteler Rothrist with the opportunity to remedy the deficiencies in reporting the missing information for all of its downstream sales.131 Benteler Rothrist had 150 days to report such information from the time of it filed its supplemental section A questionnaire response to the time it filed its last supplemental response, but did not do so. Therefore, as adverse facts available we have determined to treat these sales as Benteler produced merchandise. However, we disagree with the petitioners’ argument that as AFA, we should apply the highest gross unit price, by CONNUM, to all home market sales at issue. Instead, as partial AFA, we determined the highest non-aberrational net price by CONNUM among Benteler Rothrist’s downstream home market sales, and we assigned that price to all of the sales at issue in our margin calculation for the final determination, by CONNUM. Regarding the U.S. sales information that is not complete, we find that, pursuant to sections 776(a) and (b) of the Act, the use of facts otherwise available with an adverse inference is warranted. We asked Benteler Rothrist to provide missing information identified in its U.S. sales database and revise its reporting to include this information.132 Benteler responded that it

                                                            126 See Benteler Rothrist’s SAQR at Exhibits A-31 and A-32 where the customer’s purchase orders are clear as to the necessary certifications for the cold-drawn mechanical tubing they purchased 127 See letter from Benteler Rothrist, “Cold-Drawn Mechanical Tubing from Switzerland: Response to Section A of the Antidumping Duty Questionnaire,” dated June 30, 2017, at A-5 (where Benteler Rothrist describes the inability for reporting certain information from its affiliated entities). 128 See Commerce Letter regarding its Antidumping Duty Questionnaire, dated June 1, 2017 (Initial Questionnaire). 129 See Initial Questionnaire; see also Benteler Rothrist’s letter, “Cold-Drawn Mechanical Tubing from Switzerland: Post-Preliminary Determination Supplemental Questionnaire Response,” dated November 27, 2017, (Benteler Rothrist Post-Preliminary Submission). 130 See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold Rolled Carbon Steel Flat Products from Germany, 67 FR 62116 (October 3, 2002), and accompanying IDM at Comment 1 (where downstream sales information reported was incomplete, Commerce determined that the respondent did not cooperate to the best of its ability and that AFA was warranted.) 131 See Benteler Rothrist Post-Preliminary Submission at the Post-Prelim QR-1; see also letter from Benteler Rothrist, “Cold-Drawn Mechanical Tubing from Switzerland: Response to Sections B of the Antidumping Duty Questionnaire,” dated September 5, 2017, at B(BDI)-5. 132 See Benteler Rothrist Post-Preliminary Submission, at Post-Prelim QR-5.  

 

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conducted an analysis of the data and updated the database with the missing information.133 However, Benteler only updated the information for certain sales transactions and deleted the remaining sales from its database, without providing documentation to support its claimed analysis. Therefore, we determine that Benteler Rothrist failed to report complete information with respect to its U.S. sales. Considering the above, the application of AFA is appropriate pursuant to sections 776(a)(1) and (2)(A) and (B) of the Act because necessary information, i.e., the missing information at issue, is not on the record, is missing, and Benteler Rothrist withheld that information and failed to provide this information in a timely manner. As evidenced by its supplemental questionnaire response,134 Benteler Rothrist possessed the necessary information but did not provide the information that was in its possession. Therefore, we find that Benteler Rothrist failed to cooperate by not acting to the best of their ability to provide the requested information and that the use of AFA pursuant to section 776(b) of the Act is appropriate. As the record does not contain the information for which to calculate a margin for these U.S. sales and, as AFA, we assigned to these sales the highest margin alleged in the petition (i.e., 52.21 percent), which is the highest rate on the record of this investigation. In order to determine the probative value of the dumping margin alleged in the petition for assigning an AFA rate, we examined the information on the record. When we compared the petition dumping margin of 52.21 percent to the transaction-specific dumping margins for Benteler Rothrist, we found transaction-specific margins at or above the petition rate135 and, as a consequence, we find that the rate alleged in the petition, as noted in the Initiation Notice, is within the range of transaction-specific margins computed for this final determination. Accordingly, we find the 52.21 percent rate to be both reliable and relevant and, thus, that it has probative value. The databases provided by Benteler Rothrist after the Preliminary Determination, contained incomplete home market and the U.S. market data files. Specifically, the sales in both data files with missing information has been removed from these files. Post verification, we asked Benteler Rothrist to apply its minor corrections and our verification findings to the home market and U.S. databases used in the Preliminary Determination, which contained all the home market and U.S. sales at issue, and to the data files submitted post-Preliminary Determination, which do not contain the sales at issue. Benteler Rothrist provided the data files with the verification corrections. However, because we are applying AFA to those sales with missing information in both the home market and the U.S. market, and only the data files used in Preliminary Determination, updated with verification corrections, contain this information, for the final determination, we will use the data files used in the Preliminary Determination that have been updated with the verification corrections.

                                                            133 Id. 134 Id. 135 See Benteler Rothrist’s Final Analysis Memorandum.  

 

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Comment 3: Use of the Average-to-Average Methodology for Benteler Rothrist’s Margin Calculation Benteler Rothrist’s Comments Commerce should calculate Benteler Rothrist’s AD margin using the average-to-average

(A-to-A) methodology as it did in the Preliminary Determination because: (1) the A-to-A method is the preferred method;136 (2) Commerce’s differential pricing analysis does not reveal a pattern of “masked” dumping;137 and (3) Commerce’s use of zeroing under the average-to-transaction (A-to-T) methodology violates U.S. obligations under the World Trade Organization (WTO) Agreements.138

The Petitioners’ Rebuttal Comments Commerce should continue to apply its differential pricing analysis in the final

determination and apply the average-to-transaction comparison method, if warranted.139 The differential pricing analysis does not violate U.S. obligations under the WTO

agreements or prior Appellate Body decisions.140

Commerce’s Position: We will continue to conduct our standard differential pricing analysis for the final determination as we did for the Preliminary Determination, and we will determine Benteler Rothrist’s margin using the A-to-A method (if warranted). Because we are using the standard A-to-A comparison methodology for the final results, which Benteler Rothrist advocates, Benteler Rothrist’s arguments concerning whether differential pricing analysis reveals a pattern of masked dumping sufficient for the application of the alternative comparison methodology and the consistency of using zeroing under alternative A-to-T comparison method with WTO allegations are moot. Accordingly, it is unnecessary to address them at this time. Comment 4: Margin Offsets for Section 232 Duties Mubea’s Comments If the President imposes 25 percent tariffs on imported steel based on Section 232 of the

Trade Expansion Act of 1962, as amended (Section 232),141 Commerce should offset Mubea’s weighted-average margin in the final determination by a comparable amount.142

                                                            136 See Benteler Rothrist’s Case Brief at 15-16. 137 Id. at 16-17. 138 Id. at 15-19. 139 See Petitioners’ Rebuttal Brief on Benteler Rothrist at 20. 140 Id. 141 See Mubea’s Case Brief at 23-25, citing to: Adjusting Imports of Steel into the United States, 83 FR 11625 (March 15, 2018) (Adjusting Steel Imports); citing Memorandum, “The Effect of Imports of Steel on the National Security: An Investigation Conducted under Section 232 of the Trade Expansion Act of 1962, as amended,” by the U.S. Department of Commerce, Bureau of Industry and Security, Office of Technology Evaluation, dated January 11, 2018 (Section 232 Report), available at: https: //www.commerce.gov/sites/commerce.gov/files/the_effect_ of_imports_of_steel_on_the_national_security_-_with_redactions_-_20180111.pdf (Section 232 Report). 142 See Mubea’s Case Brief at 23-25.  

 

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Commerce has the authority to reduce the level of estimated dumping duties that Mubea, Inc. would be required to make a deposit for Section 232 tariffs,143 having last addressed a similar issue with respect to tariffs resulting from a Section 201 escape-clause proceeding on steel,144 where Commerce “determined not to deduct 201 duties from U.S. prices under section 772(c)(2)(A) of the Act in calculating dumping margins, either as ‘United States import duties’ or as selling expenses.”145

Reducing the AD margin sufficiently to offset the Section 232 tariffs is also comparable to Commerce’s authority to reduce countervailing duty margins when programs are eliminated even if benefits were conferred in the past.146

Mubea is in a unique situation for the purposes of this investigation because: it does not sell the subject merchandise in the United States; its sales of stabilizer bars do not compete for sales with the domestic cold-drawn mechanical tubing producers; and that the Section 232 Report does not identify stabilizer bars as an affected product.147 Had Mubea imported stabilizer bars rather than established U.S. production facilities for cold-drawn mechanical tubing in the United States, Mubea would be subject to neither the AD case nor the Section 232 tariffs.148

The Petitioners’ Rebuttal Comments Commerce should not offset the respondent’s final margin with any duties imposed by the

President under Section 232 because:149 o The margins that Commerce in this investigation are based on entries that occurred

prior to the imposition of the Section 232 tariffs.150 Therefore, a CEP adjustment section 772(c)(2)(A) of the Act is moot for purposes of this final determination.151

o Mubea’s claim that Commerce’s treatment of section 201 duties in Hot-Rolled Steel from the Netherlands stands for the proposition that Commerce has the authority to offset antidumping duty deposits with either Section 201 duties or Section 232 duties is inapposite,152 because: Hot-Rolled Steel from the Netherlands was an annual review, where the

importer of record had already paid the Section 201 duties and was seeking not to have such duties deducted from U.S. price under section 772(c)(2)(A) of the Act.153

                                                            143 Id. at 24. 144 See Mubea cites, Memorandum, “Issues and Decision Memorandum for the 2001-2002 Administrative Review of Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands, Final Results of Antidumping Duty Administrative Review,” dated June 16, 2004, accompanying Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands, Final Results of Antidumping Duty Administrative Review, 69 FR 33630 (June 16, 2004). 145 See Mubea’s Case Brief at 23-25. 146 Id. 147 Id. 148 Id. 149 See Petitioners’ Rebuttal Brief on Mubea at 21-24. 150 Id. at 22. 151 Id. 152 Id. 153 Id.  

 

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Commerce did not reduce the AD duty by the Section 201 duties.154 Rather, the Section 201 duties in Hot-Rolled from the Netherlands were imposed as a safeguard measure, and Commerce found that it should not reduce the respondent’s U.S. price by the applicable section 201 duty amount because section 201 duties are ‘interchangeable with special AD duties’ and to deduct those duties from U.S. price would be a double remedy.155

o Section 735(c)(l)(B)(ii) of the Act requires Commerce to base the AD duty-deposit rate on the margin calculated by Commerce for the producers in question.156

o The margins that Commerce calculated were based on entries that occurred prior to the imposition of the Section 232 tariffs, which does not take effect until March 23, 2018.157

o Mubea’s argument that it is in a unique situation because it does not compete for sales with domestic cold-drawn mechanical tubing producers, is contrary to law and ignores record evidence.158

Unlike Commerce’s finding on Section 201 duties, Section 232 duties are not “interchangeable” with antidumping duties.159 Specifically, the presidential proclamation authorizing the Section 232 tariffs explicitly states that the tariffs are to be applied “in addition to any other duties, fees, exactions, and charges applicable to such imported steel articles.”160 Therefore, because Section 232 relief is intended to be in addition to any antidumping duties, it would be contrary to law for Commerce to deduct the Section 232 duties from required deposit of antidumping duties.161

Commerce’s Position: The effective date of the Section 232 tariffs is March 23, 2018.162 As a consequence, these tariffs were not in effect during the POI of April 1, 2016, through March 31, 2017, and Mubea made no claims that it paid these duties during the POI.163 Because the Section 232 tariffs were not in effect during the POI and, thus, had no impact on the imports of subject merchandise during the POI, this issue is not ripe for consideration at this time. Comment 5: Mubea’s Reported Date of Sale in the Third-Country The Petitioners’ Comments Commerce learned that Mubea failed to report contract amendments for the date of sale for

two of the three surprise sales examined at verification,164 and that such a failure warrants the application of AFA in accordance with section 776(a) of the Act because Mubea: (1)

                                                            154 Id. 155 Id. at 22-23. 156 Id. at 21-22. 157 Id. at 22. 158 Id. at 21. 159 Id. at 23. 160 Id. 161 Id. 162 See Adjusting Steel Imports, 83 FR 11625, 11628. 163 See Mubea’s Case Brief at 23-25. 164 See Petitioners’ Case Brief on Mubea at 8.  

 

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withheld information requested by Commerce; (2) failed to act to the best of its ability in reporting its date of sale; (3) significantly impeded the investigation by not submitting the correct universe of third country sales; (4) provided such information but the information could not be verified.165

Because Mubea misreported an unknown number of sale dates for its third-country sales, Commerce cannot presume that Mubea reported the correct universe of sales for the Section B database.166

As Mubea’s AFA rate, Commerce should apply the higher of the highest rate alleged in the petition or the highest calculated rate in the investigation.167

If Commerce determines not to apply total AFA, it should instead apply partial AFA with an adverse inference to Mubea’s third-country sales by assigning the highest net price reported for any third-country sale to all third-country sales.168

Mubea’s Rebuttal Comments The petitioners’ comments regarding Mubea’s date of sale reporting practices are

unsupported by the record evidence.169 Specifically, Mubea claims that: it provided a complete and accurate description of its sales process for third-country sales made pursuant to long term contracts and to purchase orders in its questionnaire responses Section A response, Supplemental Section A response, Section B response, and minor corrections’ filing170 and reported appropriate information in its Section B database;171 it explained the reasons for the date of sale changes presented as minor corrections at verification;172 it reconciled its Section B database to its audited financial statements;173 and Commerce confirmed the accuracy of its sales reporting at verification.174

As explained in the Preliminary Determination, Mubea based its reported date of sale on the invoice date for all third-country sales, with the exception of one unaffiliated third- customer where it reported the earlier of shipment date or the date of the long-term contract.175

                                                            165 Id. at 13. 166 Id. at 12. 167 Id. at 17. 168 Id. 169 See Mubea’s Rebuttal Brief at 8. 170 Id. at 8-9, citing Mubea’s Memorandum, “Cold-Drawn Mechanical Tubing from Switzerland: Section A Questionnaire Response of Mubea Präzisionsstahlrohr AG,” dated June 29, 2017 (AQR) at 29-30; Mubea’s Memorandum, “Antidumping Investigation of Cold-Drawn Mechanical Tubing from Switzerland: Mubea’s Response to Section Supplemental A of Commerce’s Questionnaire,” dated August 21, 2017 (SAQR) at A-8; Mubea’s Memorandum, “Antidumping Investigation of Cold-Drawn Mechanical Tubing from Switzerland: Mubea’s Response to Sections B, C, C-Transfer Price and E of Commerce’s Questionnaire,” dated August 24, 2017 (BQR, CQR, EQR) at B-30; and, Mubea’s Third-Country Minor Corrections at 1. 171 Id. at 9-14. 172 Id. 173 Id. at 13. 174 Id. at 14. 175 Id. at 11-12, citing the Preliminary Decision Memorandum at 9.  

 

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The petitioners erroneously allege that the date of sale was inaccurate for third-country sales made pursuant to purchase orders.176 Mubea explained that it reported the date of sale for these types of sales as the invoice date, because the terms of the sale often change.177

Mubea acted to the best of its ability to report its third-country sales, so that the application of facts available is unwarranted.178

Commerce’s Position: We agree that Mubea accurately reported the date of sale for all of its U.S. and third-country sales and, thus, that the application of AFA or partial AFA is unwarranted. At the beginning of verification, Mubea presented minor corrections to its response, which identified a limited number of changes to the date of sale for its third-country sales.179 It explained the reason for its error, and provided supporting documentation for the corrected information.180 It explained that all of the sales at issue were ordered and shipped during the POI, so that none of the revisions to the date of sale influenced the universe of sales applicable to the POI.181 At verification, we reconciled Mubea’s reported third-country sales to its audited financial statements.182 We tested the completeness of its reported sales,183 examined sales made prior to, and subsequent to the POI, and ensured that Mubea included appropriate sales in its third-country databas