[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)] [Notices] [Pages 30710-30714] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 98-15041] ----------------------------------------------------------------------- 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 antidumping duty administrative review. ----------------------------------------------------------------------- SUMMARY: In response to a request from 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 from Taiwan. This review covers one manufacturer and exporter of the subject merchandise. The period of review (POR) is June 1, 1996, through May 31, 1997. We preliminarily determine that sales have been made below normal value (NV). If these preliminary results are adopted in our final results of administrative review, we will instruct the U.S. Customs Service to assess [[Page 30711]] antidumping duties based on the difference between export price (EP) or constructed export price (CEP) and NV. Interested parties are invited to comment on these preliminary results. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue; and (2) a brief summary of the argument. EFFECTIVE DATE: June 5, 1998. FOR FURTHER INFORMATION CONTACT: Robert James or John Kugelman, Enforcement Group III--Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482- 5222 and (202) 482-0649, respectively. SUPPLEMENTARY INFORMATION: Applicable Statute Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act), as amended by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department) regulations are to the provisions codified at 19 CFR part 353 (April 1997). Where appropriate, references may be made to the Department's new regulations (62 FR 27296), not in effect for this review, as a statement of current departmental practice. Background The Department published in the Federal Register the antidumping duty order on certain stainless steel butt-weld pipe fittings from Taiwan on June 16, 1993 (58 FR 33250). On June 11, 1997, we published in the Federal Register (62 FR 31786) a notice of opportunity to request an administrative review of the antidumping duty order on certain stainless steel butt-weld pipe fittings from Taiwan covering the period June 1, 1996, through May 31, 1997. On June 30, 1997, in accordance with 19 CFR 353.22(a)(2), Ta Chen requested that we conduct an administrative review for the aforementioned period. On August 1, 1997, the Department published a notice of ``Initiation of Antidumping Review'' (62 FR 41339). The Department issued an antidumping questionnaire and supplemental questionnaire to Ta Chen, which responded. No parties submitted comments to the Department regarding questionnaire responses. Under section 751(a)(3)(A) of the Act, the Department may extend the deadline for completion of an administrative review if it determines that it is not practicable to complete the review within the statutory time limit of 245 days. On February 25, 1998, the Department extended the time limits for these preliminary results to May 31, 1998 in accordance with the Act. See Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan; Extension of Time Limits for Antidumping Duty Administrative Review (63 FR 13031, March 17, 1998). The Department is conducting this administrative review in accordance with section 751 of the Act. Scope of the Review The products subject to this investigation 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 in designing the piping system: (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 these investigations. The pipe fittings subject to these investigations are classifiable under subheading 7307.23.00 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 these investigations is dispositive. Pipe fittings manufactured to American Society of Testing and Materials specification A774 are included in the scope of this order. The POR is June 1, 1996 through May 31, 1997. This review covers sales of certain stainless steel butt-weld pipe fittings from Taiwan by Ta Chen. Verification As provided in section 782(i) of the Act, we verified information provided by the respondent using standard verification procedures, including on-site inspection of the manufacturer's facilities, the examination of relevant sales and financial records, and selection of original documentation containing relevant information. Our verification results are outlined in public versions of the verification reports, available to the public in Room B-099 of the main Commerce Building. Fair Value Comparisons To determine whether sales of subject merchandise by respondent to the United States were made at below NV, we compared, where appropriate, the EP and CEP to the NV, as described below. Pursuant to section 777A(d)(2), we compared the EPs or CEPs of individual U.S. transactions to the monthly weighted-average NV of the foreign like product where there were sales at prices above the cost of production (COP), as discussed in the Cost of Production Analysis section, below. Export Price We calculated the price of certain of Ta Chen's United States sales based on EP, in accordance with section 772(a) of the Act, when the subject merchandise was sold to unaffiliated purchasers in the United States prior to the date of importation and CEP was not otherwise warranted based on the facts of the record. We calculated EP based on packed FOB or delivered prices to unaffiliated customers in the United States. Where appropriate, we made deductions from the starting price for movement expenses, which included foreign inland freight, foreign brokerage and handling, international freight, marine insurance, U.S. inland freight, U.S. brokerage and handling, and U.S. Customs duties. We also made deductions for discounts. See Preliminary Analysis Memorandum (Analysis Memo), June 1, 1998, at 6-7 and 8-9. Constructed Export Price We calculated the price of Ta Chen's remaining United States sales based on CEP, in accordance with section 772(b) of the Act, when the subject merchandise was sold in the United States to unaffiliated customers. In this review all of Ta Chen's CEP sales were made after importation (i.e., the sales were made from TCI's warehouse locations in California and Texas). We calculated CEP based on FOB or delivered prices to unaffiliated purchasers in the United States. Where appropriate, we deducted discounts. Also where appropriate, in accordance [[Page 30712]] with section 772(d)(1), the Department deducted commissions and direct selling expenses from the starting price. We deducted those indirect selling expenses, including inventory carrying costs, which related to commercial activity in the United States. We also made deductions for movement expenses, which include foreign inland freight, foreign brokerage and handling, international freight, marine insurance, U.S. inland freight, U.S. brokerage and handling, and U.S. Customs duties. Finally, pursuant to section 772(d)(3) of the Act, we made an adjustment for CEP profit. See Analysis Memo at 7-8 and 9-11. Normal Value Based on a comparison of the aggregate quantity of home-market and U.S. sales, we determined that the home market is viable as a basis for calculating NV. We determined that the quantity of the foreign like product sold in the exporting country was sufficient to permit a proper comparison with the sales of the subject merchandise to the United States, pursuant to section 773(a)(1) of the Act because Ta Chen had sales in Taiwan which were greater than five percent of its sales in the U.S. market. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the home market, in the usual commercial quantities, in the ordinary course of trade, and, to the extent practicable, at the same level of trade. We calculated NV based on packed, FOB or delivered prices to unaffiliated purchasers in Taiwan. We made adjustments for differences in packing in accordance with section 773(a)(6)(A) of the Act. We also made adjustments, where appropriate, for movement expenses consistent with section 773(a)(6)(B) of the Act; these included inland freight from plant to customer. In addition, we made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act, as well as for differences in circumstances of sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 353.56. We made COS adjustments by deducting direct selling expenses incurred for home market sales (i.e. credit expenses) and adding U.S. direct selling expenses (i.e. credit expenses and bank charges). Cost of Production Analysis In the original less-than-fair-value (LTFV) investigation of Ta Chen (the most recently-completed segment of this proceeding at the time of our initiation of this administrative review) we disregarded sales found to be below the COP. Therefore, in accordance with section 773(b)(2)(A)(i) of the Act, the Department has reasonable grounds to believe or suspect that sales below the COP may have occurred during this review period. Thus, pursuant to section 773(b) of the Act, we initiated a COP investigation of Ta Chen in the instant review. Before making any fair value comparisons, we conducted the COP analysis described below. A. Calculation of COP We calculated COP on a product specific basis, based on the sum of the respondent's cost of materials and fabrication for the foreign like product, plus amounts for home-market selling, general, and administrative expenses (SG&A), and packing costs in accordance with section 773(b)(3) of the Act. B. Test of Home-Market Prices We used the respondent's weighted-average COP for the period June 1996 to May 1997. We compared the weighted-average COP figures to home- market prices of the foreign like product as required under section 773(b) of the Act. In determining whether to disregard home-market sales made at prices below the COP, we examined whether such sales had been made at prices below the COP within an extended period of time in substantial quantities, and such sales were made at prices which permitted the recovery of all costs within a reasonable period of time. On a product-specific basis, we compared the COP to the home-market prices (not including VAT), less any applicable movement charges and discounts. C. Results of COP Test Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of the respondent's sales of a given product were at prices below the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in substantial quantities. Where 20 percent or more of the respondent's sales of a given product were at prices below the COP, we disregarded the below-cost sales of that model because such sales were found to be made within an extended period of time in substantial quantities, in accordance with sections 773(b)(2)(B) and (C) of the Act, and because the below cost sales of the product were at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Where all contemporaneous sales of comparable products were made at prices below the COP, we calculated NV based on CV, in accordance with section 773(a)(4) of the Act. The results of our cost test for Ta Chen indicated that for certain home market models less than twenty percent of the sales of the model were at prices below COP. We therefore retained all sales of these models in our analysis and used them as the basis for determining NV. Our cost test for Ta Chen also indicated that for certain other home market models more than twenty percent of the home market sales within an extended period of time were at prices below COP and would not permit the full recovery of all costs within a reasonable period of time. In accordance with section 773(b)(1) of the Act, we therefore excluded the below-cost sales of these models from our analysis and used the remaining above-cost sales as the basis for determining NV. Constructed Value For Ta Chen's products for which we could not determine the NV based on comparison market sales because there were no contemporaneous sales of a comparable product, we compared U.S. prices to constructed value (CV), in accordance with Cemex v. United States, 133 F.3d 897 (Fed. Cir. 1998) (Cemex), as discussed below. On January 8, 1998, the Court of Appeals for the Federal Circuit (the Court) issued its decision in Cemex. In that case, which involved a determination by the Department under pre-URAA law, the Court discussed the appropriateness of using CV as the basis for foreign market value when the Department finds home market sales to be outside the ordinary course of trade. However, the URAA amended the definition of sales outside the ordinary course of trade to include sales below cost. See section 771(15) of the Act. Consequently, the Department has reconsidered its practice in light of this court decision and has determined that it would be inappropriate to resort directly to CV, in lieu of foreign market sales, as the basis for NV when the Department finds foreign market sales of merchandise identical or most similar to that sold in the United States to be outside the ordinary course of trade. Instead, the Department will use sales of similar merchandise, if such sales exist. The Department will use CV as the basis for NV only when there are no above-cost sales that are otherwise suitable for comparison. Therefore, in this [[Page 30713]] proceeding, when making comparisons we considered all products sold in the home market, in accordance with section 771(16) of the Act that were in the ordinary course of trade for purposes of determining appropriate product comparisons to U.S. sales. Where there were no sales of identical merchandise in the home market made in the ordinary course of trade to compare to U.S. sales, we compared U.S. sales to sales of the most similar foreign like product made in the ordinary course of trade, based on the model-matching characteristics listed in Sections B and C of our antidumping questionnaire. Therefore, we have implemented the Court's decision in this case, to the extent that the data on the record permitted. In accordance with section 773(e)(1) of the Act, we calculated CV based on the sum of the COM of the product sold in the United States, plus amounts for home market SG&A expenses, and profit and U.S. packing costs. We calculated CV based on the methodology described in the ``Calculation of COP'' section of this notice, above, plus an amount for profit. In accordance with section 773(e)(2)(A), we used the actual amounts incurred and realized by Ta Chen in connection with the production and sale of the foreign like product, in the ordinary course of trade, for consumption in the foreign country to calculate SG&A expenses and profit. For price-to-CV comparisons, we made adjustments to CV in accordance with section 773(a)(8) of the Act and 19 CFR 353.56 for COS differences. For comparisons to EP, we made COS adjustments by deducting direct selling expenses incurred on home market sales and adding U.S. direct selling expenses. For comparisons to CEP, we made deductions for direct selling expenses incurred on home market sales. Differences in Level of Trade In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as the EP or CEP transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on constructed value, that of the sales from which we derive selling, general and administrative expenses and profit. For EP, the LOT is also the level of the starting-price sale, which is usually from exporter to importer. For CEP, it is the level of the constructed sale from the exporter to the importer. To determine whether NV sales are at a different LOT than EP or CEP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in the levels between NV and CEP affects price comparability, we adjust NV under section 773(a)(7)(B) of the Act (the CEP offset provision). See, Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997). In its questionnaire responses Ta Chen stated that there were no differences in its selling functions by channels of marketing within each market. In order to confirm independently the absence of separate levels of trade within or between the U.S. and home markets, we examined Ta Chen's questionnaire responses for indications that its functions as a seller differed qualitatively and quantitatively among customer categories. See commentary to section 351.412 of the Department's new regulations (62 FR 27371). Ta Chen reported two channels of distribution in the home market (to distributors and to end-users) and a single channel of distribution in the United States (to distributors). Upon review, we have determined preliminarily that Ta Chen performed the same selling functions for its home market and U.S. customers, irrespective of distribution channel. Pursuant to section 773(a)(1)(B)(i) of the Act, we consider the selling functions reflected in the starting price of home-market and EP sales, and those reflected in the CEP after the deductions pursuant to section 772(d) of the Act. Our analysis of the questionnaire responses leads us to conclude that sales within or between each market are not made at different levels of trade. Accordingly, we preliminarily find that all sales in the home market and the U.S. market were made at the same level of trade. Therefore, all price comparisons are at the same level of trade and an adjustment pursuant to section 773(a)(7)(A) of the Act is not warranted. Currency Conversion For purposes of the preliminary results, we made currency conversions based on the official exchange rates in effect on the dates of the U.S. sales as published by the Federal Reserve Bank of New York. Section 773A(a) of the Act directs the Department to use a daily exchange rate in effect on the date of sale of subject merchandise in order to convert foreign currencies into U.S. dollars, unless the daily rate involves a ``fluctuation.'' In accordance with the Department's practice, we have determined, as a general matter, that a fluctuation exists when the daily exchange rate differs from a benchmark by 2.25 percent. See, e.g., Certain Stainless Steel Wire Rods from France: Preliminary Results of Antidumping Duty Administrative Review (61 FR 8915, 8918, March 6, 1996) and Policy Bulletin 96-1: Currency Conversions, 61 FR 9434, March 8, 1996. The benchmark is defined as the rolling average of rates for the past 40 business days. When we determined a fluctuation existed, we substituted the benchmark for the daily rate. Preliminary Results of the Review As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period June 1, 1996, through May 30, 1997: Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan ------------------------------------------------------------------------ Weighted- average Producer/manufacturer/exporter margin (percent) ------------------------------------------------------------------------ Ta Chen.................................................... 1.19 ------------------------------------------------------------------------ Parties to this proceeding may request disclosure within five days of publication of this notice and any interested party may request a hearing within 10 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 and/or written comments no later than 30 days after the date of publication. Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than 37 days after the date of publication of this notice. Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. [[Page 30714]] The Department will publish a notice of the final results of the administrative review, including its analysis of issues raised in any such written briefs or at a hearing, if held, not later than 120 days after the date of publication of this notice. The Department shall determine and the Customs Service shall assess antidumping duties on all appropriate entries. The Department will issue appropriate appraisement instructions directly to the Customs Service upon completion of this review. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by this review and for future deposits of estimated duties. For duty assessment purposes, we calculated an importer-specific assessment rate by aggregating the dumping margins calculated for all U.S. sales to each importer and dividing this amount by the total entered value of subject merchandise entered during the POR for each importer. The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(1) of the Act: (1) The cash deposit rate for Ta Chen will be the rate established in the final results of this administrative review; (2) for merchandise exported by manufacturers or exporters not covered in these reviews but covered in a previous segment of this proceeding, the cash deposit rate will be the company- specific rate published for the most recent segment; (3) if the exporter is not a firm covered in this review, a prior 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 prior review, the cash deposit rate will be 51.01 percent, the ``all others'' rate established in the LTFV investigation. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 353.26 to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this 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 determination is issued and published in accordance with section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22(c)(5). Dated: June 1, 1998. Robert S. LaRussa, Assistant Secretary for Import Administration. [FR Doc. 98-15041 Filed 6-4-98; 8:45 am] BILLING CODE 3510-DS-P