[Federal Register Volume 62, Number 94 (Thursday, May 15, 1997)]
[Notices]
[Pages 26773-26775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12799]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-816]


Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan; 
Preliminary Results of Antidumping Duty Administrative Review

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

ACTION: Notice of preliminary results of administrative review.

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SUMMARY: In response to a request by respondent Ta Chen Stainless Pipe 
Co., Ltd. (Ta Chen), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
certain stainless steel butt-weld pipe fittings (pipe fittings) from 
Taiwan. This review covers one manufacturer/exporter of the subject 
merchandise to the United States during the period December 23, 1992 
through May 31, 1994.
    We preliminarily determine that Ta Chen made sales of pipe fittings 
below the foreign market value (FMV) for this period of review (POR). 
If these preliminary results are adopted in our final results of 
administrative review, we will instruct the U.S. Customs Service to 
assess antidumping duties equal to the difference between United States 
price (USP) and the FMV.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments are requested to submit with the 
argument (1) a statement of the issues and (2) a brief summary of the 
argument.

EFFECTIVE DATE: May 15, 1997.

FOR FURTHER INFORMATION CONTACT: Robert James at (202) 482-5222 or John 
Kugelman at (202) 483-0649, Antidumping and Countervailing Duty 
Enforcement Group III, Import Administration, International Trade 
Administration, U.S. Department of

[[Page 26774]]

Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the Tariff Act of 1930, as amended (the Tariff Act) and to 
the Department's regulations are in reference to the provisions as they 
existed on December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

    On June 16, 1993, the Department published in the Federal Register 
the antidumping duty order on pipe fittings from Taiwan (58 FR 33250). 
On June 7, 1994, the Department published the notice of ``Opportunity 
to Request Administrative Review'' for the period December 23, 1992 
through May 31, 1994 (59 FR 29411). In accordance with 19 CFR 
353.22(a)(1), Ta Chen requested that we conduct a review of its sales 
for this period. On July 15, 1994, we published in the Federal Register 
a notice of initiation of an antidumping duty administrative review 
covering the period December 23, 1992 through May 31, 1994 (59 FR 
36160). The Department is now conducting this administrative review in 
accordance with section 751 of the Tariff Act.

Scope of the Review

    The products subject to this antidumping duty order are certain 
stainless steel butt-weld pipe fittings, whether finished or 
unfinished, under 14 inches inside diameter.
    Certain welded stainless steel butt-weld pipe fittings (pipe 
fittings) are used to connect pipe sections in piping systems where 
conditions require welded connections. The subject merchandise is used 
where one or more of the following conditions is a factor: (1) 
corrosion of the piping system will occur if material other than 
stainless steel is used; (2) contamination of the material in the 
system by the system itself must be prevented; (3) high temperatures 
are present; (4) extreme low temperatures are present; (5) high 
pressures are contained within the system.
    Pipe fittings come in a variety of shapes, with the following five 
shapes the most basic: ``elbows,'' ``tees,'' ``reducers,'' ``stub 
ends,'' and ``caps.'' The edges of finished pipe fittings are beveled. 
Threaded, grooved, and bolted fittings are excluded from this 
antidumping duty order. The pipe fittings subject to this order are 
classifiable under subheading 7307.23.00 of the Harmonized Tariff 
Schedule of the United States (HTS).
    Although the HTS subheading is provided for convenience and Customs 
purposes, our written description of the scope of this order remains 
dispositive.

Use of Best Information Available

    We preliminarily determine that the use of best information 
otherwise available (BIA), in accordance with section 776(c) of the 
Tariff Act, is appropriate for Ta Chen for the period December 23, 1992 
through May 31, 1994. We find that in this review Ta Chen 
mischaracterized and failed to fully disclose its relationships with 
certain U.S. customers and, as a result, did not report its first U.S. 
sale to an unrelated party. Therefore, Ta Chen failed to provide the 
Department with the U.S. sales data necessary to calculate margins in 
this review. Although the bases for this determination are discussed 
below, much of the relevant information is proprietary in nature and 
cannot be discussed in this public notice. A more detailed analysis is 
found in the Department's proprietary Analysis Memorandum, on file in 
Room B-099 of the Main Commerce Building.
    The Department's definition of related parties is found at section 
771(13) of the Tariff Act. Section 771(13) states, inter alia, that:

for purposes of determining United States price, the term 
``exporter'' includes the person by whom or for whose account the 
merchandise is imported into the United States if--
* * * * *
    (B) Such person owns or controls, directly or indirectly, 
through stock ownership or control or otherwise, any interest in the 
business of the exporter, manufacturer, or producer;
    (C) The exporter, manufacturer, or producer owns or controls, 
directly or indirectly, through stock ownership or control or 
otherwise, any interest in the business conducted by such person * * 
*

See Section 771(13) of the Tariff Act (emphasis added).
    Throughout this administrative review Ta Chen insisted that it was 
not related to any U.S. customer. However, in a supplemental 
questionnaire response submitted in a companion case 1 
(relevant portions of which have been incorporated into the record of 
this review), Ta Chen for the first time disclosed considerable new 
information concerning the instant review period which indicates that 
Ta Chen was related to two U.S. customers within the meaning of section 
771(13) of the Tariff Act. Section 771(13)(C) holds that the term 
``exporter'' includes the person by whom or for whose account the 
merchandise is imported into the United States if the exporter 
``controls, directly or indirectly, through stock ownership or control 
or otherwise, any interest in the business conducted by such person.'' 
The record evidence leads us to conclude that Ta Chen exercised de 
facto operational control over these U.S. customers.
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    \1\ This document is Ta Chen's November 12, 1996 supplemental 
questionnaire response submitted in the 1994--1995 administrative 
review of welded stainless steel pipe from Taiwan, case number A-
583-815.
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    Our discussion below focuses on two parties, referred to here as 
Company A and Company B, which Ta Chen reported as unrelated customers. 
Prior to June, 1992 Ta Chen had sold pipe from the U.S. inventory of 
its wholly-owned subsidiary, Ta Chen International (TCI). In June 1992, 
after Ta Chen decided to stop selling its products from TCI's 
inventory, TCI and Company A (a U.S. company established in 1988 by the 
president of a Taiwanese firm), signed an agreement whereby Company A 
would purchase all of TCI's considerable U.S. inventory and would 
effectively replace TCI as the principal distributor of Ta Chen pipe 
products in the United States. In a separate June 1992 agreement 
between Ta Chen and Company A, Company A also committed itself to 
purchasing very substantial, and rapidly increasing, dollar values of 
Ta Chen products over the following two years. In September 1993, a 
member of Ta Chen's board of directors sold all of his stock in Ta 
Chen, allegedly severed all ties with Ta Chen, and incorporated a new 
entity, Company B. This new Company B purchased all of Company A's 
assets, including inventory, and assumed all of Company A's obligations 
regarding its lease of space from Ta Chen's president, purchase 
commitments, credit arrangements, etc.
    During the instant period of review Ta Chen controlled both Company 
A's and then Company B's disbursements through physical custody of 
their signature stamps, whereby officials of TCI were authorized to 
execute checks and other instruments on behalf of Company A and Company 
B. Ta Chen also shared common sales department personnel and office 
equipment with Company A and Company B. Furthermore, Ta Chen's sales 
manager also served as sales manager for both Company A and Company B. 
Ta Chen also had full and unrestricted access, via a dedicated 
telephone connection, to Company A's and Company B's computer 
accounting systems, including their accounts receivable, accounts 
payable, payroll, and other company books. Ta Chen indicated that it 
was the sole supplier of stainless steel pipe and

[[Page 26775]]

pipe fittings to Company A and Company B and, further, that its 
president participated directly in negotiating the terms of certain 
sales Company A and Company B made to subsequent purchasers of pipe 
fittings in the United States. Finally, first Company A and, later, 
Company B, pledged their accounts receivable and inventory as security 
for a sizable line of credit obtained from a local bank by TCI. These 
companies also pledged their full cooperation in enforcing this lien in 
the event Ta Chen defaulted on its debt.
    In addition, we note that for the instant period of review, record 
evidence strongly indicates that Ta Chen and Company B were related 
parties as defined by section 771(13)(B) of the Tariff Act. At least 
for some portion of 1992 until the end of September 1993 (i.e., during 
the first POR), Ta Chen's board member simultaneously owned Company B 
and held equity interest in Ta Chen. Petitioners in the stainless steel 
pipe case have supplied a Dun & Bradstreet report on Company B and a 
supporting affidavit which indicates that while Company B was 
incorporated in 1993, the board member actually founded the company and 
made sales in 1992.
    Based on this evidence of Ta Chen's connections with Company A and 
Company B, in particular its control over operational functions such as 
disbursements, sales personnel, and Ta Chen's involvement in Company 
A's and Company B's sales activities, we preliminarily determine that 
Ta Chen had a substantial interest in Company A and Company B during 
the 1992-1994 POR. Therefore, Ta Chen was related to Company A and 
Company B within the meaning of section 771(13) of the Tariff Act. 
Because Ta Chen reported U.S. sales to Company A and Company B instead 
of the first sale to an unrelated party, the use of best information 
otherwise available is warranted.
    In selecting BIA, the Department has established a ``two-tier'' 
hierarchy:
    1. When a company refuses to cooperate with the Department or 
otherwise significantly impedes the proceedings we use as BIA the 
higher of (a) the highest of the rates found for any firm for the same 
class or kind of merchandise in the same country of origin in the LTFV 
investigation or a prior administrative review, or (b) the highest rate 
found in this review for any firm for the same class or kind of 
merchandise in the same country of origin.
    2. When a company substantially cooperated with our requests for 
information, but failed to provide the information in a timely manner 
or in the form required, we use as BIA the higher of (a) the highest 
rate (including the ``all others'' rate) ever applicable to the firm 
for the same class or kind of merchandise from either the LTFV 
investigation or a prior administrative review, or (b) the highest rate 
calculated in this review for any firm for the class or kind of 
merchandise in the same country of origin. See Antifriction Bearings 
(Other Than Tapered Roller Bearings) and Parts Thereof From France, et 
al.; Final Results of Antidumping Duty Administrative Reviews 57 FR 
28360, 28379 (June 24, 1992); see also Allied Signal v. United States, 
996 F.2d 1195 (Fed. Cir. 1993).
    We find that because Ta Chen failed to provide accurate information 
on its relationships to other companies and misreported its sales in 
this administrative review, Ta Chen failed to cooperate with the 
Department and has significantly impeded these proceedings. 
Accordingly, we are assigning Ta Chen a margin based on ``first-tier,'' 
or uncooperative, BIA.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the weighted-
average margin for Ta Chen for the period December 23, 1992 through May 
31, 1994 to be 76.20 percent, i.e., the highest margin found for any 
respondent in the LTFV investigation. See Amended Final Determination 
and Antidumping Duty Order; Certain Welded Stainless Steel Butt-Weld 
Pipe Fittings From Taiwan, 58 FR 33250 (June 16, 1993).
    Parties to these proceedings may request disclosure within five 
days of publication of this notice and may request a hearing within ten 
days of publication. Any hearing, if requested, will be held 44 days 
after the date of publication, or the first business day thereafter. 
Interested parties may submit case briefs or written comments, or both, 
no later than 30 days after the date of publication. Rebuttal briefs 
and rebuttals to written comments, limited to issues raised in the case 
briefs and comments, may be submitted no later than 37 days after the 
date of publication of this notice. Parties who submit arguments in 
these proceedings are requested to submit with the argument (1) a 
statement of the issues and (2) a brief summary of the argument. The 
Department will issue final results of these administrative reviews, 
including the results of our analysis of the issues in any such written 
comments or at a hearing.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and FMV may vary from the percentage 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of welded stainless steel pipe fittings from Taiwan 
entered, or withdrawn from warehouse, for consumption on or after the 
publication of the final results of this administrative review, as 
provided in section 751(a)(1) of the Tariff Act:
    (1) The cash deposit rate for Ta Chen will be the rate established 
in the final results of this administrative review;
    (2) For previously reviewed or investigated companies other than Ta 
Chen, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period;
    (3) If the exporter is not a firm covered in this review, or the 
LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established for the most recent period for the manufacturer 
of the merchandise; and
    (4) If neither the exporter nor the manufacturer is a firm covered 
in this or any other review conducted by the Department, the cash 
deposit rate will be 51.01 percent. See Amended Final Determination and 
Antidumping Duty Order; Certain Welded Stainless Steel Butt-Weld Pipe 
Fittings From Taiwan, 58 FR 33250 (June 16, 1993).
    This notice serves as a preliminary reminder to importers of their 
responsibility to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
each review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties occurred and the subsequent assessment of double antidumping 
duties.
    This administrative review and this notice are in accordance with 
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR 
353.22.

    Dated: May 8, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12799 Filed 5-14-97; 8:45 am]
BILLING CODE 3510-DS-P