[Federal Register Volume 61, Number 94 (Tuesday, May 14, 1996)] [Notices] [Pages 24271-24274] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 96-11940] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE International Trade Administration [A-791-803] Notice of Final Determination of Sales at Less Than Fair Value: Circular Welded Non-Alloy Steel Pipe From South Africa AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: May 14, 1996. FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or John Beck, Office of Antidumping Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue N.W., Washington, D.C. 20230; Telephone: (202) 482- 1673 or (202) 482-3464, respectively. The Applicable Statute Unless otherwise indicated, all citations to the Tariff Act of 1930 (the Act) are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Rounds Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the current regulations, as amended by the interim regulations published in the Federal Register on May 11, 1995 (60 FR 25130). Final Determination As explained in the memoranda from the Assistant Secretary for Import Administration dated November 22, 1995, and January 11, 1996, the Department of Commerce (the Department) has exercised its discretion to toll all deadlines for the duration of the partial shutdowns of the Federal Government from November 15 through November 21, 1995, and December 16, 1995, through January 6, 1996. Thus, the deadline for the final determination in this investigation has been extended by 28 days, i.e., one day for each full or partial day the Department was closed. As such, the deadline for this final [[Page 24272]] determination is no later than May 6, 1996. We determine that circular welded non-alloy steel pipe from South Africa is being, or is likely to be, sold in the United States at less than fair value, as provided in section 735 of the Act. Case History Since the preliminary determination on November 21, 1995 (60 FR 61533, November 30, 1995), the following events have occurred: On December 6, 1995, the Department provided the respondent, RIH Group, Ltd., and its operating divisions Brollo Africa and Tosa, (collectively, RIH) with a supplemental questionnaire relating to sales to affiliated parties. On January 17, 1996, the respondent submitted its response. On December 6, 1995, the respondent alleged clerical errors in the preliminary determination. We determined that there were clerical errors made; however, we did not amend the preliminary determination since the change in the margin was not significant (see the December 14, 1995, Memorandum from David L. Binder to Barbara R. Stafford). In March 1996, we conducted verification of the sales questionnaire responses of the respondent in South Africa. The respondent and the petitioners 1 submitted case briefs on April 17, 1996 and rebuttal briefs on April 22, 1996. --------------------------------------------------------------------------- \1\ Allied Tube & Conduit Corporation, Sawhill Tubular Division--Armco, Inc., LTV Steel Tubular Products Company, Sharon Tube Company, Laclede Steel Company, Wheatland Tube Company, and Century Tube Corporation. --------------------------------------------------------------------------- Scope of Investigation The following scope language reflects certain modifications from the notice of the preliminary determination. We clarified the paragraph beginning ``The scope specifically includes * * *'' for use and presumed use language. For purpose of this investigation, circular welded non-alloy steel pipes (standard pipes) are all pipes and tubes, of circular cross- section, not more than 406.4 mm (16 inches) in outside diameter, regardless of wall thickness, surface finish (black, galvanized, or painted), end finish (plain end, bevelled end, threaded, or threaded and coupled), or industry specification (ASTM, proprietary, or other) used in standard or structural pipe applications. The scope specifically includes, but is not limited to, all pipe produced to the ASTM A-53, ASTM A-135, ASTM A-795, and BS-1387 specifications, regardless of use. It also includes any pipe multiple- stencilled or multiple-certified to one of the above-listed standard or structural pipe specifications and to any other specification, if used in a standard or structural pipe application. Pipe which meets the above physical parameters and which is produced to proprietary specifications, the API-5L, the API-5L X-42, or to any other non-listed specification is included within the scope of this investigation if used in a standard or structural pipe application, regardless of the Harmonized Tariff Schedule of the United States (HTSUS) category into which it was classified. If the pipe does not meet any of the above identified ASTM or BS specifications (i.e., ASTM A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-1387) or is multiple-stencilled or multiple- certified to one of these specifications and to any other specification, although it is within the identified physical parameters described in the second paragraph of this section, our presumption is that it is not used in a standard pipe application. Standard pipe uses include the low-pressure conveyance of water, steam, natural gas, air, and other liquids and gases in plumbing and heating systems, air conditioning units, automatic sprinkler systems, and other related uses. Standard pipe may carry liquids at elevated temperatures but may not be subject to the application of external heat. Standard pipe uses also include load-bearing applications in construction and residential and industrial fence systems. Standard pipe uses also include shells for the production of finished conduit and pipe used for the production of scaffolding. Specifically excluded from this investigation are mechanical tubing, tube and pipe hollows for redrawing, and finished electrical conduit if such products are not certified to ASTM A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-1387 specifications and are not used in standard pipe applications. Additionally, pipe meeting the specifications for oil country tubular goods is not covered by the scope of this investigation, unless also certified to a listed standard pipe specification or used in a standard pipe application. The merchandise under investigation is currently classifiable under items 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 7306.30.50.90 of the HTSUS. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive. Regarding implementation of the use provision of the scope of this investigation, and any order which may be issued in this investigation, we are well aware of the difficulty and burden associated with such certifications. Therefore, in order to maintain the effectiveness of any order that may be issued in light of actual substitution in the future (which the use criterion is meant to achieve), yet administer certification procedures in the least problematic manner, we have developed an approach which simplifies these procedures to the greatest extent possible. First, we will not require use certification until such time as petitioner or other interested parties provide the Department with a reasonable basis to believe or suspect that substitution is occurring. Second, we will require use certification only for the product(s) (or specification(s)) for which evidence is provided that substitution is occurring. For example, if, based on evidence provided by petitioner, the Department finds a reasonable basis to believe or suspect that pipe produced to the API-5L specification is being used as standard pipe, we will require use certifications for imports of API-5L specification pipe. Third, normally we will require only the importer of record to certify to the use of the imported merchandise. If it later proves necessary for adequate implementation, we may also require producers who export such products to the United States to provide such certification on invoices accompanying shipments to the United States. Period of Investigation The period of investigation (POI) is April 1, 1994, through March 31, 1995. Facts Available At verification, we found the following inaccuracies in the information provided by RIH which render the response unusable for purposes of margin calculations: unreported home market and U.S. sales; errors in the quantity and value reconciliations; certain discounts and rebates reported that should not have been; certain U.S. prices reported incorrectly; and certain discrepancies found in the pre- selected and surprise sales 2. In addition, we found errors in the calculations of the following: indirect selling expenses; average stock days; and variable/total costs. The deficiencies found are outlined in detail [[Page 24273]] in the public version of our April 3, 1996, verification report. --------------------------------------------------------------------------- \2\ We chose certain sales to examine at verification in order to verify the specific sales data reported (e.g., date of sale, date of payment, quantity, unit price, etc.). --------------------------------------------------------------------------- We have determined that the questionnaire responses of the respondent are unverifiable. The misreporting and inaccuracies of the information were so material and pervasive as to make the responses unreliable within the meaning of section 782(e)(3) of the Act. Therefore, RIH's responses provide an inadequate basis for calculating dumping margins. We note that the respondent has cooperated throughout the investigation. In July and August 1995, we received questionnaire responses from RIH. In addition, RIH responded to five supplemental questionnaires; we received those responses in September-October 1994, and January-February 1996. In addition, RIH went through the entire verification process in South Africa in March 1996. Therefore, because the respondent has fully cooperated in this investigation, we are not using an adverse inference in selecting from among the facts otherwise available (see ``Interested Party Comment'' section of this notice). Section 776(a)(2)(D) states that the Department ``shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title'' if an interested party or any other person provides such information but the information cannot be verified. The statute also provides that the facts otherwise available may be based on secondary information. Section 776(c) provides that where the Department relies on ``secondary information,'' the Department shall, to the extent practicable, corroborate that information from independent sources reasonably at the Department's disposal. The Statement of Administrative Action (SAA), accompanying the URAA, clarifies that the petition is ``secondary information.''See! H. Doc. 316, 103d Cong., 2d Sess. 870 (1996). The SAA also clarifies that ``corroborate'' means to determine that the information used has probative value. Id. However, where corroboration is not practicable, the Department may use uncorroborated information. Given that the facts available margin for the respondent involves information contained in the petition, we are required to corroborate this data, to the extent practicable, pursuant to section 776(c) of the Act, because the information submitted by RIH was not verifiable. In the present case, the petition is the only information on the record which could form the basis for a dumping calculation. Accordingly, the Department has based the margin on information in the petition. In accordance with section 776(c) of the Act, we attempted to corroborate the data contained in the petition. Because the petitioners based export price and normal value on independent, public sources (U.S. import statistics and a price list from one of respondent's distributors, respectively), we find that this information has probative value. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Clad Steel Plate from Japan (61 FR 7469, 7470, February 28, 1996). Regarding the discounts used for normal value, we are not aware of any practicable means of corroborating such information. For a further discussion, see the May 6, 1996, memorandum from the Team to Gary Taverman. Accordingly, we have relied upon the information contained in the petition. We have assigned to all exporters a margin of 117.66 percent, the average margin calculated in the petition on merchandise which is within the scope of this investigation. Fair Value Comparisons This final determination has been made using the average margin calculated in the petition as the facts available. For a discussion of how export price and normal value were calculated in the petition, see the Initiation of Antidumping Duty Investigations: Circular Welded Non- Alloy Steel Pipe from Romania and South Africa (60 FR 27078, May 22, 1995). Verification As provided in section 782(i) of the Act, we attempted to verify the information submitted by the respondent. We used standard verification procedures, including examination of relevant accounting and sales records and original source documents provided by the respondent. However, as stated above, we found numerous errors at verification (see the April 3, 1996, verification report). Thus, we did not use the respondent's information for our final determination. Interested Party Comment Use of Facts Available The petitioners assert that the Department should make its final determination based on an adverse assumption of the facts available (AFA). The petitioners argue that respondent failed verification because the Department found errors in the respondent's home market and U.S. sales data such that it would not be possible to accurately determine normal value, export price or difference in merchandise adjustments. In addition, the petitioners argue that the respondent failed to accurately report certain home market sales of the foreign like product. They cite Circular Welded Non-Alloy Steel Pipes from Brazil (57 FR 42940, September 17, 1992) in which the Department based its final determination on the best information available (the statutory predecessor to facts available) in part because the respondent had not reported certain home market sales of subject pipe which it contended were not comparable to the products sold in the U.S. market. The petitioners state that the respondent has met the statutory requirement (19 U.S.C. 1677e) for the application of facts available which stipulates that the Department may rely on an adverse assumption of the facts available when ``an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information.'' They also argue that the pervasive nature of the deficiencies, despite numerous opportunities to correct the information, and unilateral decision making exhibited by the respondent, indicate a respondent who has not made its best effort to comply with the Department's information requests. The respondent argues that the Department should not use AFA in its final determination because (1) it has cooperated with the Department throughout the investigation; and (2) the errors found at verification were inadvertent and due to RIH's inexperience with the Department's antidumping laws. It argues that the Department should resort to less drastic solutions than AFA if it finds gaps in the record; the respondent states that the Department has sufficient verified information on the record to fill such gaps. It notes that the statute states that the Department should not resort to adverse inferences unless an interested party ``has failed to cooperate by not acting to the best of its ability to comply with a request for information.'' (19 U.S.C. 1677e(b)). Regarding the excluded products in the home market, the respondent argues that the costs of those products are significantly higher than the standard pipe products and that there were no sales of these products to the United States. Thus, they would not have been considered in the analysis. DOC Position We agree, in part, with the petitioners. Section 782(e)(3) of the Act states that, in reaching a determination, the [[Page 24274]] Department will not decline to consider information that is submitted by an interested party and is necessary to the determination but does not meet all the applicable requirements established by the Department if the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination. At verification, we discovered numerous errors in the respondent's reported information. For example, the vast majority of the pre- selected and surprise sales contained discrepancies. While many of these errors may be corrected, the number of errors discovered draw into question the completeness and accurateness of respondent's remaining sales (i.e., the sales not specifically reviewed at verification). Additionally, we discovered that the respondent did not report certain home market and U.S. sales and incorrectly reported the sales price for certain U.S. sales. Based on these errors and others discussed in the verification report, we find that the respondent's response is so incomplete that it cannot serve as a reliable basis for this determination. Because the information cannot be verified, section 776(a) requires us to use the facts otherwise available. As facts available, we are basing the respondent's margin on the average margin calculated in the petition. We are using the petition rates because this is the only information on the record which could form the basis for a dumping margin (see ``Facts Available'' section above). The respondent has been fully cooperative in the investigation, as noted above. Also, the errors discovered at verification do not indicate that the respondent withheld or misreported information to ``obtain a more favorable result.'' SAA at 870. Rather, some of the errors hurt the respondent while others helped it. Therefore, we have used the average margin contained in the petition, rather than the highest margin. The Department's practice has been to assign the highest margin contained in the petition only where the respondent was found to have been uncooperative. See Final Determination of Sales at Less Than Fair Value: Oil Country Tubular Goods from Italy (60 FR 33558, 33559, June 28, 1995). Because we are basing our final determination on the facts available, all other interested party comments are moot. Continuation of Suspension of Liquidation In accordance with section 735(c)(1)(B) of the Act, we are directing the Customs Service to continue to suspend liquidation of all entries of circular welded non-alloy steel pipe from South Africa, as defined in the ``Scope of Investigation'' section of this notice, that are entered, or withdrawn from warehouse for consumption, on or after November 30, 1995, 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 normal value exceeds the export price, as shown below. In accordance with section 733(d) of the Act, the suspension of liquidation based on the Department's preliminary determination may not remain in effect for more than six months (including the statutorily permissible extension). In accordance with this provision, the suspension of liquidation will remain in effect until May 28, 1996. The weighted-average dumping margin is as follows: ------------------------------------------------------------------------ Weighted- average Exporter/manufacturer margin percentage ------------------------------------------------------------------------ All exporters.............................................. 117.66 ------------------------------------------------------------------------ ITC Notification In accordance with section 735(d) of the Act, we have notified the ITC of our determination. As our final determination is affirmative, the ITC will determine, within 45 days, whether these imports are causing material injury, or threat of material injury, to an industry in the United States. If the ITC determines that material injury, or threat of material injury, does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing Customs officials to assess antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation. This determination is published pursuant to section 735(d) of the Act. Dated: May 6, 1996. Paul L. Joffe, Acting Assistant Secretary for Import Administration. [FR Doc. 96-11940 Filed 5-13-96; 8:45 am] BILLING CODE 3510-DS-P