[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Notices]
[Pages 10542-10545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4725]



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DEPARTMENT OF COMMERCE
[A-508-807]


Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Carbon Steel Butt-Weld Pipe Fittings From Israel

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

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT: Jennifer Yeske or Gary Bettger, Office 
of Countervailing Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0189 and 482-2239, respectively.

Final Determination

    We determine that certain carbon steel butt-weld pipe fittings from 
Israel are being sold in the United States at less than fair value, as 
provided in section 735 of the Tariff Act of 1930, as amended (the 
``Act''). The estimated margin is shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the publication of the preliminary determination in the 
Federal Register on October 4, 1994 (59 FR 50568), the following events 
have occurred:
    On October 5, 1994, pursuant to section 353.20(b)(1) of the 
Department's regulations (19 CFR 353.20(b)(1)(1994), Pipe Fittings 
Carmiel, Inc. (``Carmiel'') requested that the final determination in 
this case be postponed. On November 14, 1994, the Department published 
in the Federal Register a notice postponing the publication of the 
final determination in this case until not later than February 16, 1995 
(59 FR 56461).
    On October 20, 1994, Carmiel filed a second supplemental/deficiency 
response, which included a revised home market sales listing. On 
November 27, November 28, and December 4, 1994, we verified Carmiel's 
sales information at its offices in Tel Aviv, Israel. On January 23, 
1995, and on January 30, 1995, petitioner and respondent submitted case 
and rebuttal briefs to the Department.

Scope of the Investigation

    The products covered by this investigation are certain carbon steel 
butt-weld pipe fittings having an inside diameter of less than fourteen 
inches (355 millimeters), imported in either finished or unfinished 
condition. Pipe fittings are formed or forged steel products used to 
join pipe sections in piping systems where conditions require permanent 
welded connections, as distinguished from fittings based on other 
methods of fastening (e.g., threaded, grooved, or bolted fittings). 
Butt-weld fittings come in a variety of shapes which include 
``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished 
pipe fittings are beveled, so that when a fitting is placed against the 
end of a pipe (the ends of which have also been beveled), a shallow 
channel is created to accommodate the ``bead'' of the weld which joins 
the fitting to the pipe. These pipe fittings are currently classifiable 
under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the 
United States (``HTSUS''). Although the HTSUS subheading is provided 
for convenience and customs purposes, our written description of the 
scope of this investigation is dispositive.

Period of Investigation

    The period of investigation (``POI'') is September 1, 1993, through 
February 28, 1994. [[Page 10543]] 

Product Comparisons

    Carmiel sold identical products in both Israel and the United 
States during the POI. Therefore, in making our fair value comparisons, 
we compared sales of merchandise identical in all respects.

Fair Value Comparisons

    To determine whether Carmiel's sales for export to the United 
States 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. In accordance with 19 CFR 353.58, we made comparisons at 
the same level of trade.
    We made revisions to Carmiel's reported data, where appropriate, 
based on verification findings.

United States Price

    Because Carmiel's U.S. sales were made to unrelated purchasers in 
the United States prior to importation, and because the exporter's 
sales price methodology was not indicated by other circumstances, we 
based USP on the purchase price (``PP'') sales methodology in 
accordance with section 772(b) of the Act.
    We calculated Carmiel's USP based on packed C.I.F. prices to 
unrelated customers in the United States. We made deductions, where 
appropriate, for marine insurance, ocean freight, foreign inland 
freight, port fees, and customs agents fees and expenses.
    We made an adjustment to U.S. price for the value-added tax 
(``VAT'') paid on the comparison sales in Israel, in accordance with 
our practice, pursuant to the Court of International Trade (CIT) 
decision in Federal-Mogul, et al v. United States, Slip Op. 93-194 (CIT 
October 7, 1993). (See Final Determination of Sales at Less Than Fair 
Value: Calcium Aluminate Cement, Cement Clinker and Flux from France, 
59 FR 14136, March 25, 1994).

Foreign Market Value

    In order to determine whether the sales in the home market are an 
adequate basis for the FMV, the Department generally compares the 
quantity of such or similar merchandise sold in the home market during 
the POI to the quantity sold for exportation to third countries. In 
this case, Carmiel made sales only to the United States and Israel 
during the POI. Based on the substantial quantity of home market sales 
in relation to its U.S. sales, we determined that the home market was 
viable.
    In our preliminary determination, we stated that the appropriate 
date of sale is the date of the first written document which sets the 
price and quantity for the sale (see Certain Stainless Steel Butt-Weld 
Pipe and Tube Fittings From Japan; Final Results of Antidumping Duty 
Administrative Review (59 FR 12240, 12241; March 16, 1994) and 
Antifriction Bearings (Other Than Tapered Rolling Bearings) and Parts 
Thereof From France, et al., (58 FR 39729, 39783; July 26, 1993)). 
Accordingly, on October 20, 1994, respondent submitted a new home 
market sales listing using the invoice date as the date of sale. We 
confirmed at verification that the invoice date is the first written 
document setting the terms of sale in the home market and is, thus, the 
appropriate date of sale.
    We have calculated FMV using the delivered prices reported by 
Carmiel in its October 20, 1994 home market sales listing. We adjusted 
the prices for certain discounts offered to home market customers. 
Also, in light of the decision of the Court of Appeals for the Federal 
Circuit in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland 
Cement v. United States, 13#F.3d 398 (Fed. Cir., 1994), we adjusted for 
post-sale home market movement charges under the circumstances-of-sale 
provision of the Act (Section 773(a)(4)(B)). This adjustment included 
home market inland freight.
    We also made circumstance-of-sale adjustments, where appropriate, 
for differences in credit expenses, pursuant to 19 CFR 353.56(a)(2). In 
calculating U.S. credit expense, we used the interest rate paid by 
Carmiel for short-term New Israeli Shekel (``NIS'') loans linked to the 
dollar. In calculating the home market credit expense, we used 
Carmiel's borrowing rate for unlinked short-term NIS loans.
    We adjusted for VAT in accordance with our standard practice. (See 
the United States Price section of this notice, above.)

Currency Conversion

    We made currency conversions based on the official exchange rates 
in effect on the dates of the U.S. sales, as published in the 
International Monetary Fund's International Financial Statistics (see 
19 CFR 353.60).

Final Negative Determination of Critical Circumstances

    Petitioner alleged that critical circumstances exist with respect 
to imports of pipe fittings from Israel. In our preliminary 
determination, pursuant to section 733(e)(1) of the Act and 19 CFR 
353.16, we analyzed the allegation using the Department's standard 
methodology. Because the information on which our analysis was based 
has not changed, we have performed the same analysis as explained in 
the preliminary finding. Based on this analysis, the Department 
determines, in accordance with section 735(a)(3) of the Act, that 
critical circumstances do not exist with respect to imports of certain 
carbon steel butt-weld pipe fittings from Israel.

Verification

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

Interested Party Comments

Comment 1
    Carmiel argues that U.S. sales relating to the September 22, 1993, 
invoice are outside the period of investigation. The company claims 
that the terms of these sales were set in the purchase order, which is 
dated March 25, 1993. Carmiel argues that while the actual quantity 
shipped changed slightly before the shipment date, this change was very 
small and resulted from limitations imposed by the size of the shipping 
containers.
DOC Position
    We agree with respondent. Carmiel appropriately excluded these 
sales from its U.S. sales listing because the terms of the sales were 
set well before the POI. We agree that the change in quantity was minor 
and does not constitute a change in the basic terms of the sale.
Comment 2
    At verification, Carmiel officials notified the Department that 
they had not reported an additional home market discount which was 
given to customers who made prompt payments. The information pertaining 
to these discounts was submitted to the Department after the 
verification was completed, and the Department returned the information 
as untimely. Carmiel argues that the Department should accept the 
information and make an adjustment for this discount. According to 
Carmiel, these discounts were inadvertently omitted from the company's 
response because the response was prepared by an outside consultant 
using data that was not computerized. Furthermore, Carmiel argues that 
the information should be considered verified, regardless of when 
[[Page 10544]] it was submitted, because the team verified the actual 
prices paid on home market sales.
    Petitioner argues that the Department should deny Carmiel the 
adjustment because the information was submitted after the deadline for 
submission of factual information. Petitioner notes that Carmiel chose 
not to report this information on a timely basis.
DOC Position
    We agree with petitioner. Section 353.31(a)(i) of the Department's 
regulations states that the last date factual information can be 
submitted for consideration in a final determination is ``seven days 
before the scheduled date on which the verification is to commence.'' 
This information was not submitted prior to the start of verification 
and, therefore, it is untimely. It also is unclear that the information 
was ``inadvertently'' omitted as Carmiel claims. At verification, 
Carmiel officials stated that they had chosen not to report this 
discount because the value of the discount was insignificant compared 
to the amount of work involved. Thus, even if the Department were to 
consider inadvertency as an excuse, it has not been established in this 
instance. Finally, while the Department's verifiers did examine several 
home market sales, they saw no documentation regarding these discounts 
and thus, there is no basis for considering these discounts to have 
been verified.
Comment 3
    Carmiel argues that the Department should calculate the home market 
credit expense using a higher interest rate than that used for the 
preliminary determination. Carmiel points out that, at verification, 
the team saw evidence of company borrowing at a much higher interest 
rate, indicating that the company's home market credit costs were 
actually higher than reported. Using the lower rate to make the credit 
adjustment would understate the company's expenses. Therefore, the 
Department should use either the higher rate, or an average of the 
reported rate and the higher rate.
    Petitioner claims that there is no verified information indicating 
the extent of Carmiel's borrowing which is taken out at the higher 
interest rate. While officials stated that the majority of Carmiel's 
short-term financing was at the higher rate, this claim was not 
substantiated. Additionally, petitioner argues, rational economic 
behavior suggests that the majority of Carmiel's financing would be at 
the lower rates. Moreover, the Department does not possess enough 
verified information to appropriately weight the two rates in order to 
calculate an average. Finally, petitioner points out that Carmiel chose 
to report the lower, more conservative rate.
DOC Position
    Carmiel reported the lower rate in its response, and we verified 
this rate. While we also verified that Carmiel received some financing 
at the higher rate, we do not have verified information regarding the 
total amount of Carmiel's borrowings at this rate. We agree with 
petitioner that without knowing what portion of Carmiel's short-term 
financing is at the higher rate, it is not possible to calculate a 
relevant average of the two rates. Therefore, we have used the lower 
interest rate reported by respondents in making the home market credit 
adjustment.
Comment 4
    Carmiel states that the Department's adjustments for VAT in this 
case are a misapplication of the statute because Carmiel reported its 
home market sales ``net'' of VAT. Carmiel recognizes that this 
adjustment was made as a result of the CIT decision in Federal-Mogul 
Corp v. United States, 15 ITRD 1127 (CIT 1993); however, Carmiel argues 
that the court also misinterpreted the statute. According to Carmiel, 
the statute only requires the Department to adjust for VAT when it is 
included in or added to the home market prices reported. Thus, when the 
tax is not included in or added to the prices reported, the Department 
should not then add the tax to FMV. Carmiel claims that adding VAT to 
both FMV and USP, as was done in the preliminary determination, 
resulted in significant distortions to Carmiel's margin.
    Petitioner argues that the Department appropriately adjusted for 
VAT by adding the tax to both FMV and USP and that this adjustment did 
not distort Carmiel's margins. Petitioner cites Calcium Aluminate 
Coment, Cement Clinker and Flux from France, 59 FR 14136, 14138 25, 
1994) in support of the argument that the Department must include an 
adjustment for VAT in the USP to account for VAT in the home market. 
Because respondent has reported home market sales values excluding VAT, 
the Department should add VAT to the net FMV and USP.
DOC Postition
    The statute provides for dumping determinations to be made on a tax 
inclusive basis. Section 772(d)(1)(c) of the Act provides for an 
offsetting adjustment to U.S. price, based on the presumption that home 
market prices include VAT. Accordingly, the Department has insisted 
that HM prices be reported on a VAT inclusive basis (see Final 
Determination of Sales at Less than Fair Value: Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof from The Federal 
Republic of Germany, 54 FR 18992, May 3, 1989). Allowing respondents to 
choose whether to report HM prices net of taxes would allow them to 
partially determine their own dumping margins. Because respondent 
reported its home market sales net of VAT, we have added the VAT back 
onto the home market price and adjusted the USP accordingly.
Comment 5
    Petitioner argues that two companies, Keshta Ltd. (``Keshta'') and 
Keshet Steel Import/Export Company (``Keshet''), are so closely related 
to Carmiel that the three companies should be treated as one for the 
purposes of the final determination.
    Carmiel states that since it reported the sales of both Keshet and 
Keshta, the companies are essentially being treated as one company. 
Furthermore, since Carmiel is the only exporter, Keshet and Keshta 
would be subject to the all others rate (Carmiel's rate) if they did 
begin to export to the United States.
DOC Position
    We verified that neither Keshet nor Keshta made sales to the United 
States during the POI. Moreover, we verified that the sales of both 
Keshet and Keshta were included in Carmiel's home market sales 
response. Therefore, the three companies have been treated as one 
company for purposes of this determination.
Comment 6
    Petitioner argues that certain of Carmiel's movement expenses are 
most likely incurred by value and, thus, should have been allocated by 
value rather than by weight.
    Carmiel argues that the results of allocating by value versus 
allocating by weight will be virtually the same given the small amounts 
in question and the fact that the price and weight of the elbows in 
question rise proportionately. Furthermore, Carmiel states that the 
costs were allocated according to the Department's instructions. 
Therefore, the Department should continue to use the costs as allocated 
by Carmiel and as verified by the Department.
DOC Position
    We agree with petitioner that marine insurance and agents fees 
should have [[Page 10545]] been allocated by value, rather than weight. 
In response to Carmiel's assertion that it followed the Department's 
instructions, we note that the Department's August 3, 1994 deficiency 
questionnaire, at page 4, instructed respondent to allocate expenses on 
the basis that they are incurred. Since these expenses are incurred by 
value, they should be allocated on such basis. Accordingly, we have 
reallocated marine insurance and agents fees by value.
Comment 7
    Petitioner states that the payment date for one home market invoice 
should be corrected based on findings at verification.
    Carmiel notes that, while several payment dates were found to be 
incorrect at verification, the payment date problems were minor and 
resulted from the fact that its records are not computerized. 
Therefore, correcting the payment dates will not have a significant 
effect. Nonetheless, respondent states that all of the verified payment 
dates should be corrected.
DOC Position
    We agree with both petitioner and respondent. It would be 
inappropriate to use payment dates which we know to be incorrect for 
the final determination. Therefore, we have corrected the misreported 
payment dates on the verified sales. We have used these corrected 
payment dates to calculate the home market credit adjustment.

Suspension of Liquidation

    We are directing the U.S. Customs Service to continue to suspend 
liquidation of all entries of butt-weld pipe fittings from Israel, as 
defined in the ``Scope of Investigation'' section of this notice, that 
are produced and sold by Carmiel and that are entered, or withdrawn 
from warehouse, for consumption on or after October 4, 1994.
    The Customs Service shall require a cash deposit or the posting of 
a bond equal to the estimated weighted-average amount by which the 
foreign market value of the subject merchandise exceeds the United 
States price as shown below. The suspension of liquidation will remain 
in effect until further notice. The weighted-average dumping margins 
are as follows:

------------------------------------------------------------------------
                                                                Margin  
               Manufacturer/producer/exporter                 (percent) 
------------------------------------------------------------------------
Pipe Fittings Carmiel, Inc.................................         8.84
All Others.................................................         8.84
------------------------------------------------------------------------

Adjustment of Deposit Rate for Countervailing Duties

    Article VI, paragraph 5 of the General Agreement on Tariffs and 
Trade provides that ``[no] product * * * shall be subject to both 
antidumping and countervailing duties to compensate for the same 
situation for dumping or export subsidization.'' This provision is 
implemented by section 772(d)(1)(D) of the Act. Since antidumping 
duties cannot be assessed on the portion of the margin attributable to 
export subsidies, there is no basis to require a cash deposit or bond 
for that amount.
    Accordingly, the level of export subsidies as determined in the 
final affirmative determination in the concurrent countervailing duty 
investigation of certain carbon steel butt-weld pipe fittings from 
Israel, which was 2.26 percent, will be subtracted from the margin for 
cash deposit or bonding purposes. This results in a deposit rate of 
6.58 percent for Carmiel and a deposit rate of 6.58 percent for all 
others.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination.

Notice 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 353.35(d). Failure to 
comply is a violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1673(d)).

    Dated: February 16, 1995.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 95-4725 Filed 2-24-95; 8:45 am]
BILLING CODE 3510-S-P