[Federal Register Volume 59, Number 144 (Thursday, July 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-18445]


[Federal Register: July 28, 1994]


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DEPARTMENT OF COMMERCE
International Trade Administration
[A-583-822]


Notice of Final Determination of Sales at Less Than Fair Value: 
Class 150 Stainless Steel Threaded Pipe Fittings From Taiwan

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

EFFECTIVE DATE: July 28, 1994.

FOR FURTHER INFORMATION CONTACT: Michelle Frederick or Karla Whalen, 
Office of Antidumping Investigations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-0186 or (202) 482-6309, respectively.

FINAL DETERMINATION: We determine that imports of Class 150 stainless 
steel threaded (SST) pipe fittings from Taiwan are being, or are 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 estimated weighted-average margins are shown in the 
``Continuation of Suspension of Liquidation'' section of this notice.

Case History

    Since our preliminary determination on March, 1, 1994 (59 FR 10784, 
March 8, 1994), the following events have occurred: In March 1994, Yih 
Tai Industries Co., Ltd. (Yih Tai) and Enlin Steel Corporation (Enlin) 
requested a public hearing. Enlin, Ta Chen Stainless Pipe Co., Ltd. (Ta 
Chen) and Yih Tai submitted cost of production and constructed value 
questionnaire responses in March, 1994. The Department issued 
supplemental cost of production and constructed value questionnaires in 
April 1994. Responses to these supplemental questionnaires were 
submitted by Enlin, Ta Chen and Yih Tai in April and May, 1994.
    We conducted verifications of Enlin, Ta Chen, and Yih Tai's sales 
and cost questionnaire responses in Taiwan, and in Long Beach, CA as 
well for Ta Chen, in April and May, 1994.
    Enlin, Ta Chen, and Yih Tai submitted case briefs in June. 
Petitioner did not submit a case brief. No rebuttal briefs were filed. 
The requests for a public hearing were withdrawn.

Scope of the Investigation

    The products covered by this investigation are Class 150 SST pipe 
fittings, defined as cast or forged stainless steel products used to 
connect pipe sections with an ability to withstand normal pressure 
service (150 pounds per square inch (psi) at 350 degrees Fahrenheit and 
300 psi at -20 to 150 degrees Fahrenheit) as well as resistance to 
corrosion or extreme temperatures, or prevention of metallic 
contamination to materials in the system. Included in the scope of this 
investigation are both finished and unfinished Class 150 SST pipe 
fittings of any size. Unfinished Class 150 SST pipe fittings are 
defined as those products that have been advanced after casting or 
forging, but which require threading and machining to finish the 
fittings; finished Class 150 SST pipe fittings are defined as those 
products that have been formed in the shape of elbows, tees, reducers, 
etc. and have been further advanced after casting or forging, and 
require no further processing to be acceptable as a finished product to 
the end user. Class 150 SST pipe fittings are composed of alloys 
including, but not limited to, 304 and 316, and are manufactured in the 
shape of 90-degree elbows, 45-degree elbows, street elbows, tees, 
crosses, couplings, reducing couplings, half-couplings, caps, square 
head plugs, hex head plugs, hex bushings, unions, locknuts, and welding 
spuds. Excluded from the scope of investigation are SST pipe fittings 
manufactured in the shape of nipples.
    The products under investigation are currently classifiable under 
subheadings 7307.19.9030, 7307.19.9060, 7307.19.9080, 7307.22.1000, 
7307.22.5000, and 7307.29.0090 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 these investigations is dispositive.

Period of Investigation

    The period of investigation (POI) is January 1, 1993, through June 
30, 1993.

Such or Similar Comparisons

    We have determined that the products covered by this investigation 
constitute a single category of such or similar merchandise. All three 
respondents reported that they sold merchandise in the home market or 
third-country market identical to that sold in the United States. 
Accordingly, none provided difference in merchandise (difmer) 
information in their sales listings. (See Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Class 150 Stainless Steel Threaded Pipe Fittings from Taiwan, 59 FR 
10784, March 8, 1994) for further discussion.

Fair Value Comparisons

    To determine whether sales to the United States of Class 150 SST 
pipe fittings were made at less than fair value, we compared the United 
States price (USP) to the foreign market value (FMV), as specified in 
the ``United States Price'' and ``Foreign Market Value'' sections of 
this notice.
    Enlin did not report cost of production data for a small number of 
third country products. This information was required in order for the 
Department to determine whether Enlin's third country sales were made 
below the cost of production, as discussed below. Therefore, for the 
small number of Enlin's U.S. sales that would have been compared to 
sales of these products, we calculated margins based on best 
information available (BIA) in accordance with 19 U.S.C. Sec. 1677e(c). 
As BIA, we used the highest, non-aberrational margin calculated for any 
of Enlin's reported U.S. sales of the subject merchandise in accordance 
with Final Determinations of Sales at Less Than Fair Value: Calcium 
Aluminate Cement, Cement Clinker and Flux from France 59 FR 14136, 
(March 25, 1994).

United States Price

    For Enlin, we calculated USP according to the methodology described 
in our preliminary determination, with the following exceptions:
    1. We revised inland freight, ocean freight and packing case cost 
to incorporate the average weight of cross pipe fittings as determined 
during verification because Enlin did not do so as requested by the 
Department. (See Comment 1.)
    2. We disregarded cancelled sales which were included in the sales 
listing.
    3. For those sales with updated payment and/or shipment dates which 
were not incorporated into the final computer tape submission, we 
recalculated the imputed credit expenses based on the weighted-average 
difference between payment and shipment dates for those sales which 
were both shipped and paid for during the POI. For the associated 
expenses, we calculated a product specific weighted average.
    For Ta Chen, we calculated USP according to the methodology 
described in our preliminary determination, with the following 
exceptions:
    1. We estimated the appropriate shipment date for U.S. purchase 
price sales which had an incorrect shipment date reported. (See Comment 
3.)
    2. We recalculated imputed credit for purchase price sales based on 
amended shipment dates that were improperly reported and by using the 
lower of two U.S. interest rates available to Ta Chen. (See Comment 3 
and 4 below.)
    3. We recalculated U.S. inventory carrying costs on a warehouse-
specific basis taking into account the amended interest rate noted in 
item 2.
    4. For ESP sales made from all U.S. warehouses, we recalculated the 
movement expenses and bank charges based on expenses incurred on 
shipments that were made during the POI rather than on expenses 
incurred on shipments made twelve months prior to the POI.
    For Yih Tai, we calculated USP according to the methodology 
described in our preliminary determination, with the following 
exceptions:
    1. We recalculated packing based on revisions to packing labor as 
determined at the cost verifications.

Foreign Market Value

    As stated in our preliminary determination, we determined that the 
home market was not viable for sales of SST pipe fittings made by 
either Enlin and Yih Tai. We selected Canada as the third-country 
market basis for FMV for both Enlin and Yih Tai. We found the home 
market viable for sales of SST pipe fittings made by Ta Chen. We 
calculated FMV as noted in the ``Price-to-Price Comparisons'' and 
``Price to Constructed Value (CV)'' sections of this notice.

Cost of Production

    As stated in our preliminary determination, the Department 
initiated a cost investigation based on reasonable grounds to believe 
or suspect that Enlin, Ta Chen, and Yih Tai's home market/third country 
sales were made at prices below their respective cost of production 
(COP). We received responses to our cost questionnaires and verified 
the submitted data.

A. Calculation of COP

    We calculated COP based on the sum of the individual respondent's 
reported cost of materials, fabrication, general expenses, and home 
market packing. For each company, we derived selling expenses from its 
respective home market or third country sales listing, as appropriate. 
We added home market packing expenses derived from the respective sales 
listing.
    For Enlin, we relied on the submitted COP.
    For Ta Chen, we relied on the submitted COP information, except in 
the following instances where the costs were not appropriately 
quantified or valued:
    1. We recalculated cost of manufacturing (COM) by reducing Ta 
Chen's submitted conversion costs for packing materials and labor as 
presented and verified during the cost verification.
    2. We recalculated Ta Chen's COM by reducing the reported materials 
costs for scrap revenues received during the POI as presented and 
verified during the cost verification.
    3. As a result of reducing COM for packing material, packing labor, 
and material scrap revenue, we recalculated Ta Chen's general and 
administrative expense using the revised COM figure in the calculation.
    4. We reclassified a percentage of Ta Chen's president's salary 
from general and administrative expenses to indirect selling expenses 
because a portion of the president's time was devoted solely to sales.
    For Yih Tai, we relied on the submitted COP information, except in 
the following instances where the costs were not appropriately 
quantified or valued:
    1. We adjusted the packing labor expense, which was understated in 
the submission, to reflect the verified amount.
    2. We adjusted the allocation basis to include all products for the 
machine revenue received from the machining subcontractor.

B. Test of Home Market/Third Country Sale Prices

    After calculating COP, we tested whether home market or third 
country sales of SST pipe fittings were at prices below COP over an 
extended period of time, in accordance with section 773(b) of the Act.
    We compared model-specific COP to reported prices that were net of 
movement charges, and where appropriate, discounts, and rebates. If 
over 90 percent of a respondent's sales of a given product were at 
prices above the COP, we did not disregard any below-cost sales because 
we determined that the respondent's below-cost sales were not made in 
substantial quantities. If between ten and 90 percent of a respondent's 
sales of a given product were at prices above the COP, we discarded 
only the below-cost sales if made over an extended period of time. 
Where we found that more than 90 percent of respondent's sales of a 
given product were at prices below the COP, we disregarded all sales 
for that model and calculated FMV based on constructed value (CV).
    In order to determine whether below-cost sales were made over an 
extended period of time, we performed the following analysis on a 
product-specific basis: (1) if a respondent sold a product in only one 
month of the POI and there were sales in that month below the COP, or 
(2) if a respondent sold a product during two months or more of the POI 
and there were sales below the COP during two or more of those months, 
then below-cost sales were considered to have been made over an 
extended period of time.

C. Results of COP Test

    For Ta Chen and Yih Tai, we did not find any sales below cost.
    For Enlin, we determined that there were sales below cost, and 
disregarded those sales. Where more than 90 percent of the sales of a 
particular model were below cost we based FMV for that model on CV.

Price-to-Price Comparisons

    For those products for which we had an adequate number of sales at 
prices equal to or greater than the COP, we based FMV on home market or 
third country prices, as appropriate.
    For Enlin, we calculated FMV according to the methodology described 
in our preliminary determination, with the following exceptions:
    1. We treated duty drawback as it was reported after verifying that 
Enlin only received duty drawback on its sales to the U.S. and not on 
its sales to Canada.
    2. We disregarded cancelled sales which were included in the sales 
listing.
    3. We revised inland freight, ocean freight and packing case cost 
to incorporate the average weight of cross pipe fittings as determined 
during verification because Enlin did not do so as requested by the 
Department. (See Comment 1.)
    4. For those sales with updated payment and/or shipment dates which 
were not incorporated into the final computer tape submission, we 
recalculated the imputed credit expenses based on the weighted-average 
difference between payment and shipment dates for those sales which 
were both shipped and paid for during the POI. For the associated 
expenses, we calculated a product specific weighted average.
    For Ta Chen, we calculated FMV according to the methodology 
described in our preliminary determination, with the following 
exceptions:
    1. We treated home market freight as a circumstance of sale 
adjustment in light of the Court of Appeals of the Federal Circuit's 
(CAFC) decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray 
Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January 
5, 1994), which held that the Department may no longer deduct home 
market movement charges from FMV pursuant to its inherent power to fill 
in gaps in the antidumping statute. We instead adjusted for those 
expenses under the circumstance-of-sale provision of 19 CFR 353.56 and 
the exporter's sales price offset provision of 19 CFR 353.56(b)(1) and 
(2), as appropriate.
    2. We made a circumstance of sale adjustment for certain mailing 
charges brought to the Department's attention prior to verification.
    For Yih Tai, we calculated FMV according to the methodology 
described in our preliminary determination, with the following 
exceptions:
    1. We recalculated packing based on revisions to packing labor 
found at the cost verifications.

Price to CV Comparisons

    For Enlin's products without an adequate number of sales at prices 
above the COP, we based FMV on CV. We calculated CV based on the sum of 
the cost of materials, fabrication, general expenses, and U.S. packing 
cost. In accordance with section 773(e)(1)(B)(i) and (ii) of the Act 
we: (1) included the higher of the respondent's reported general 
expenses or the statutory minimum of ten percent of the COM, as 
appropriate and; (2) for profit, we used the higher of the statutory 
minimum of eight percent of the sum of COM and general expenses or the 
actual profit incurred as calculated on a market specific basis.
    We calculated CV based on the information submitted by Enlin, 
except in the following instances where the costs were not 
appropriately quantified or valued:
    1. For CV, we recalculated profit based on revised general 
administrative and interest expense rates provided at verification.
    In instances where we compared Enlin's U.S. prices to CV, we made 
deductions, where appropriate, for the weighted-average home market or 
third country direct selling expenses as appropriate.

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales as certified by the Federal 
Reserve Bank of New York.

Verification

    As provided in section 776(b) of the Act, we verified information 
provided by Enlin, Ta Chen and Yih Tai by using standard verification 
procedures, including the examination of relevant sales and financial 
records, and selection of original source documentation containing 
relevant information.

Interested Party Comments

    Comment 1: Enlin contends that certain corrections requested by the 
Department, to revise certain expenses affected by a change in the 
reporting of weight of cross-shaped fittings, should be disregarded as 
insignificant under 19 CFR 353.59.
    DOC Position: We disagree with Enlin. The Department has discretion 
under 19 CFR 353.59(a) to disregard insignificant adjustments. However, 
in this case we have sufficient verified information to revise these 
related expenses and have done so for the final determination.
    Comment 2: Enlin contends that its profit calculation, which was 
provided in its April 21, 1994, response to the Department's Section D 
deficiency letter, should be updated to reflect changes made to COP 
based on the use of 1993 audited financial statement information in the 
calculation of general and administrative and interest expense.
    DOC Position: We agree with Enlin. At verification, Enlin updated 
its general expense figure to reflect the audited 1993 figures, as 
opposed to the 1992 figures used in the original calculation. 
Therefore, the Department adjusted Enlin's submitted profit percentage 
to reflect the changes made to Enlin's general expenses.
    Comment 3: At verification, the Department noted that Ta Chen 
incorrectly reported the date of shipment for its U.S. purchase price 
sales. Ta Chen reported the date the SST pipe fittings were exported 
rather than the date the SST pipe fittings were shipped from the 
factory. Ta Chen requests that, when the Department makes an adjustment 
to its reported date of shipment, based on the average time between 
shipment and export of specific sales examined at verification, it 
should not take into account one shipment in particular because it was 
shipped in an atypical manner.
    DOC Position: We disagree with respondent. At verification, the 
Department selected a number of U.S. purchase price sales and noted the 
period between shipment and export for most of the sales examined. The 
Department's observations were made on Ta Chen's actual experience. We 
found no indication that the shipment in question was unusual or 
distortive. Accordingly, we have included this shipment in calculating 
the average lag time between factory shipment and export in order to 
estimate shipment dates for Ta Chen's U.S. purchase price sales. For 
those sales specifically examined at verification, we used the actual 
lag time noted.
    Comment 4: Ta Chen claims that the Department should not use the 
interest rate available to its U.S. subsidiary, TCI, to calculate 
imputed credit for its purchase price sales because Ta Chen receives 
lower U.S. denominated financing specifically for these sales. Ta Chen 
further argues that to use TCI's interest rate for purchase price sales 
would be inconsistent with Final Determination of Sales at Less Than 
Fair Value, Certain Forged Steel Crankshafts from the United Kingdom, 
(52 FR 32951 (September 1, 1987) (Crankshafts).
    At verification, the Department noted that TCI receives payment 
from the U.S. customer for purchase price sales and reimburses Ta Chen 
for the price of the merchandise. Ta Chen argues that it bears the 
burden of TCI's costs for purchase price sales and thus it is 
appropriate to use the Taiwan interest rate for U.S. dollar borrowing.
    DOC Position: We agree with respondent that the U.S. dollar 
interest rate at which Ta Chen borrowed in the home market is the most 
appropriate for U.S. purchase price sales, but for a reason other than 
that expressed in Crankshafts. In Crankshafts, the Department stated 
that its policy at that time was to use the home market interest rate 
to compute credit for U.S. purchase price sales where respondent did 
not receive U.S. dollar denominated financing. However, in accordance 
with, United Engineering and Forging v. United States 779 F. Supp. 
1375, 1386-7 (CIT 1991) and LMI La Metalli Industriale, S.p.A. v. 
United States 912 F.2d 455 (Fed. Cir. 1990), the Department is required 
to use the lowest rate at which the respondent has borrowed or to which 
the respondent has access. See Final Determinations of Sales at Less 
Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain 
Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant 
Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel 
Plate from Canada, 59 Fed. Reg. 37099, 37113 (1993). Ta Chen, as a 
whole, had access to U.S. dollar funding at two interest rates. 
Accordingly, it is reasonable to assume that Ta Chen would have been 
able to borrow at the lower rate. Therefore, we used the lower U.S. 
dollar borrowing rate for both ESP and PP sales, in this case Ta Chen's 
home market borrowing rate for U.S. dollars.
    Comment 5: Ta Chen contends that conversion costs used in its 
calculation of COM included the labor and material cost of packing, 
which was recorded separately in Ta Chen's submitted costs. Ta Chen 
claims that these packing labor and material costs are double counted, 
as both packing and COM, and thus should be removed from COM.
    DOC Position: We agree with Ta Chen. At verification, the 
Department verified that the packing labor and material costs had been 
included in Ta Chen's reported conversion costs used in the calculation 
of COM. In order to avoid double counting these costs as both packing 
and COM, we reduced COM by the packing labor and material amounts 
reported.
    Comment 6: Ta Chen states that it allocated total material input 
costs over good product produced, without adjusting for revenue 
received from the sale of scrap generated in production. Ta Chen claims 
that the Department should thus reduce reported material costs to 
account for revenue from the sale of scrap.
    DOC Position: We agree with Ta Chen. At verification, the 
Department was able to confirm the amount of scrap sales during the POI 
and the fact that they had not been included as a reduction of Ta 
Chen's material costs when calculating COM.

Continuation of Suspension of Liquidation

    We are directing the Customs Service to continue to suspend 
liquidation of all entries of Class 150 Stainless Steel Pipe Fittings 
from Taiwan, except for those of Ta Chen and Yih Tai, that are entered, 
or withdrawn from warehouse, for consumption on or after March 8, 1994, 
the date of publication of our preliminary determination in the Federal 
Register. The Customs Service shall require a cash deposit or posting 
of a bond equal to the estimated amount by which the FMV of the 
merchandise subject to this investigation exceeds the U.S. price, as 
shown below. This suspension of liquidation will remain in effect until 
further notice. The weighted-average dumping margins are as follows: 

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
              Producer/manufacturer exporter                    margin  
                                                              (percent) 
------------------------------------------------------------------------
Enlin Steel Corporation....................................        7.47 
Ta Chen Stainless Pipe Co., Ltd............................        0.003
Yih Tai Industries Co., Ltd................................        0.08 
All Others.................................................        7.47 
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
U.S. International Trade Commission of our determination.

Notification to Interested Parties

    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 353.34(d). Failure to 
comply is a violation of the APO. This determination is published 
pursuant to section 735(d) of the Act and 19 CFR 353.20(a)(4).

    Dated: July 21, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-18445 Filed 7-27-94; 8:45 am]
BILLING CODE 3510-DS-P