[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Notices]
[Pages 51178-51182]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19984]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-549-807]


Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand: 
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.

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SUMMARY: In response to a timely request by Tube Forgings of America, 
Inc., (the petitioner), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
certain carbon steel butt-weld pipe fittings (pipe fittings) from 
Thailand. This review covers Thai Benkan Corporation, Ltd. (TBC), a 
manufacturer/exporter of this merchandise to the United States, during 
the period July 1, 2000, through June 30, 2001. We have preliminarily 
determined that sales of the subject merchandise 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 antidumping duties based on the difference 
between the NV and the export price (EP) or constructed export price 
(CEP). Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments in this proceeding are requested 
to submit with the arguments: (1) a statement of the issues; and (2) a 
brief summary of the arguments.

EFFECTIVE DATE: August 7, 2002.

[[Page 51179]]


FOR FURTHER INFORMATION CONTACT: Zev Primor or Tom Futtner, 
Antidumping/Countervailing Duty Enforcement, Office 4, Group II, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 
20230; telephone: (202) 482-4114 or 482-3814, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute And Regulations:

    Unless otherwise indicated, all citations to the statute are 
references to the provisions as of 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's regulations 
refer to the regulations codified at 19 CFR Part 351 (2001).

Background

    On July 6, 1992, the Department published in the Federal Register 
an antidumping duty order on pipe fittings from Thailand (57 FR 29702). 
On July 31, 2001, the petitioner requested, in accordance with section 
351.213(b) of the Department's regulations, an administrative review of 
the antidumping duty order on pipe fittings from Thailand covering the 
period, July 1, 2001, through June 30, 2001. We published a notice of 
initiation of the review on August 20, 2001(66 FR 43570). On September 
13, 2001, the Department sent an antidumping questionnaire to TBC.\1\ 
The Department received questionnaire responses in October and November 
of 2001. On February 12, 2002, we issued a supplemental questionnaire 
and received a response to that questionnaire on April 30, 2002. The 
Department is conducting this review in accordance with section 751 of 
the Act.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales, or, if the 
home market is not viable, of sales in the most appropriate third-
country market (this section is not applicable to respondents in 
non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the cost of 
production (COP) of the foreign like product and the constructed 
value (CV) of the merchandise under investigation. Section E 
requests information on further manufacturing.
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Extension of Deadlines

    Under section 751(a)(3)(A) of the Act, the Department may extend 
the deadline for completion of preliminary review results if it 
determines that it is not practicable to complete the review within the 
statutory time limit. On March 12, 2002, the Department extended the 
time limit for the preliminary results of this case (see Notice of 
Extension of Time Limits for Preliminary Results of Antidumping Duty 
Administrative Review, 67 FR 11092).

Scope of the Review

    The product covered by this order is certain carbon steel butt-weld 
pipe fittings, having an inside diameter of less than 14 inches, 
imported in either finished or unfinished form. These formed or forged 
pipe fittings are used to join sections in piping systems where 
conditions require permanent, welded connections, as distinguished from 
fittings based on other fastening methods (e.g., threaded, grooved, or 
bolted fittings). Carbon steel pipe fittings are currently classified 
under subheading 7307.93.30 of the Harmonized Tariff Schedule (HTS). 
Although the HTS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this proceeding is 
dispositive. The review covers TBC and the period of review (POR) July 
1, 2000, through June 30, 2001.

TBC's Financial Status

    TBC informed the Department that it is currently in receivership 
under Thai bankruptcy law. TBC stated that while it continues its 
production activities as the debtor-in-possession, it had to lay off a 
large number of its production and office employees, including 
managers. According to TBC, these lay-offs have seriously affected 
TBC's ability to handle its day-to-day bookkeeping and administrative 
functions. TBC claims that the employees who possessed the experience 
relevant to the Department's antidumping reviews either left the 
company or were furloughed indefinitely. The minimal remaining staff is 
preoccupied with the bankruptcy proceedings, evaluating the company's 
assets, collecting receivables, negotiating loans and responding to 
creditors' inquiries. TBC maintains that under these circumstances, it 
has a limited ability to provide the necessary information to the 
Department. On numerous occasions, TBC requested extensions of time in 
order to collect the requested information and respond to the 
Department's antidumping questionnaires. The Department granted all 
extension requests and, in order to accommodate TBC, postponed the 
issuance of the preliminary results in this administrative review. See 
section ``Extension of Deadlines'' above, and letters from Perkins 
Coie, LLP to the Department, dated October 4, 2001, October 9, 2001, 
October 26, 2001, and February 13, 2002. The Department also postponed 
the verification until after the publication of the preliminary 
results.

Partial Facts Available

    Sections 776(a)(2)(A) and 776(a)(2)(B) of the Act, provide for the 
use of facts available when an interested party withholds information 
that has been requested by the Department, or when an interested party 
fails to provide the information requested in a timely manner and in 
the form required. While the Department granted TBC's requests for 
additional time to respond to the questionnaires, and TBC did appear to 
cooperate to the best of its ability, TBC did not submit all the 
information necessary for the Department to accurately conduct its 
review. For example, TBC did not, as requested by the Department, 
submit down-stream home market sales by its affiliated parties to whom 
TBC sold subject merchandise. See the Affiliation section of this 
notice below for a further discussion of TBC's downstream sales in the 
home market. Similarly, TBC did not provide reliable differences-in-
merchandise (DIFMER) or CV data. As a result, the Department's analysis 
was limited to those U.S. sales by TBC which could be compared to sales 
of identical merchandise in the home market. See Questionnaire Response 
to Section B, p. 42, dated Nov. 30, 2001, Questionnaire Response to 
Section C, p. 47, dated Nov. 30, 2001, and Supplemental Questionnaire 
Response, p. C-11, dated April 30, 2002. As long recognized by the CIT, 
the burden is on the respondent, not the Department, to create a 
complete and accurate record. See Pistachio Group of Association Food 
Industries v. United States, 641 F. Supp. 31, 39-40 (CIT 1987). 
Therefore, in accordance with section 776(a)(2) of the Act, we are 
applying partial facts otherwise available in calculating TBC's dumping 
margins. However, since TBC did cooperate to the best of its ability, 
we are not making any adverse assumptions. Therefore, in the absence of 
downstream sales, as facts available, we have conducted our analysis 
using sales to unaffiliated home market customers and sales to 
affiliated parties that passed the arm's-length test. Further, for 
those U.S. transactions that would have required the use of DIFMER 
(U.S. sales compared to similar merchandise if the home market) or CV 
(where there were neither identical nor similar products sold in the 
home

[[Page 51180]]

market) to make NV comparisons, we have applied as facts available to 
those U.S. transactions the weighted-average dumping margin found on 
the U.S transactions that were compared to sales of identical 
merchandise in the home market.

Product Comparisons

    In accordance with section 771(16) of the Act, all merchandise 
produced by the respondent, and covered by the description in the Scope 
of Investigation section above, that were sold in Thailand during the 
POR, are considered to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. To 
appropriately match U.S. sales of subject merchandise to sales of the 
foreign like product in the comparison market, we used the following 
product characteristics: industry standard, type of fitting, degree of 
processing, size, thickness, and type of material. As stated above, TBC 
did not provide the Department with reliable DIFMER figures. 
Consequently, as discussed above, where there were no sales of 
identical merchandise in the home market to compare to U.S. sales, we 
applied facts available.

Normal Value Comparisons

    With respect to TBC, in determining whether this respondent's sales 
of pipe fittings to customers in the United States were made at less 
than NV, we compared CEP to NV, as described in the Constructed Export 
Price, and Normal Value sections of this notice. In accordance with 
section 777A(d)(2) of the Act, we calculated monthly weighted-average 
prices for NV and compared these to the prices of individual U.S. 
transactions.

Constructed Export Price

    We treated U.S. transactions as CEP in accordance with section 
772(b) of the Act because all U.S. sales were made first to TBC's U.S.-
based subsidiary and only after importation were they resold to the 
first unaffiliated purchaser. We based CEP on the packed FOB or 
delivered prices to unaffiliated purchasers in the United States. Where 
appropriate, we made deductions for foreign inland freight from the 
plant to the port, foreign inland insurance, foreign brokerage and 
handling, international freight, marine insurance, U.S. customs 
brokerage and duties, and U.S. inland freight because these expenses 
were incident to bringing the subject merchandise from the original 
place of shipment in the exporting country to the place of delivery. In 
addition, we deducted U.S. indirect selling expenses and inventory 
carrying costs in accordance with section 772(d)(1) of the Act, and 
made an adjustment for profit in accordance with section 772(d)(3) of 
the Act. We also increased CEP by the reported amount of duty drawback.

Normal Value

A. Viability

    In accordance with section 773(a)(1)(C)(ii) of the Act, we 
preliminarily determine that the home market for the respondent serves 
as a viable basis for calculating NV because the aggregate volume of 
the respondent's home market sales of the foreign like product was 
greater than five percent of the aggregate volume of its U.S. sales of 
the subject merchandise.

B. Affiliated-Party Transactions and Arm's-Length Test

1. Affiliation
    As stated above, a portion of TBC's merchandise was sold during the 
POR through the reseller, Marubeni Thailand Co., Inc., (Marubeni 
Thailand). In its October 24, 2001, questionnaire response, TBC states 
that Marubeni Thailand and TBC are ``affiliated'' because of TBC's 
substantial ``dependence'' on Marubeni Thailand for its home market 
sales. TBC further stated that it intended to report to the Department 
the downstream sales by Marubeni Thailand to the first unaffiliated 
customer in the home market. See Antidumping Questionnaire Response, 
Section A, p. A-9, dated October 24, 2001. On October 26, 2001, 
however, TBC notified the Department that due to the financial 
difficulties stemming from its bankruptcy proceedings, it was not able 
to obtain the cooperation of Marubeni Thailand in reporting downstream 
sales from Marubeni Thailand to the first unrelated home market 
customer. TBC asked the Department for additional time to collect this 
information. See Letter to the Department from Yoshihiro Saito, counsel 
to TBC. The Department granted TBC's request.
    On November 30, 2001, TBC submitted its questionnaire response for 
home market sales (Section B) stating that it was unable to obtain down 
stream sales from Marubeni Thailand. See TBC's Questionnaire Response 
(Section B), at 7. On February 13, 2002, the Department issued a 
supplemental questionnaire again requesting downstream sales from 
Marubeni Thailand. On April 30, 2002, TBC stated that it was unable to 
obtain such information and urged the Department to reconsider the 
``affiliation'' between Marubeni Thailand and itself. TBC reasoned that 
the affiliation no longer applied in the current administrative review 
because: (1) There is no direct stock ownership between TBC and 
Marubeni Thailand; (2) although Marubeni Japan owns stock in both TBC 
and Marubeni Thailand, the two Thai-based companies are not under 
``common control'' of Marubeni Japan; (3) unlike in the prior review, 
TBC no longer depends heavily on Marubeni Thailand's home market 
network of customers; and (4) TBC uses Marubeni Thailand as a reseller 
primarily to protect itself against bad debts, i.e., as a ``credit 
hedge.'' See TBC's Supplemental Questionnaire Response, at B5-B8.
    The Department preliminarily disagrees with TBC's conclusion that 
it is no longer affiliated with Marubeni Thailand. This is consistent 
with the prior review of the antidumping duty order, in which TBC 
reported Marubeni Thailand as an affiliated party and provided 
downstream sales from Marubeni Thailand to the first unrelated 
customer. See Certain Carbon Steel Butt-Weld Pipe Fittings from 
Thailand; Final Results of Antidumping Duty Administrative Review, 64 
FR 68487 (Dec. 13, 1999). In the instant review, there were no changes 
in stock ownership or business relations among all relevant parties. 
The fact that TBC's was unable to obtain downstream sales does not 
change its status as a party affiliated with Marubeni Thailand. 
Consequently, for these preliminary results, we will continue to treat 
TBC and Marubeni Thailand as affiliated parties.
2. Arm's-Length Test
    TBC reported that it made home market sales to both affiliated and 
unaffiliated companies. See Questionnaire Response to Section B, p. 7, 
dated Nov. 30, 2001. We applied the arm's-length test by comparing 
sales made to TBC's home market affiliate to sales of identical 
merchandise from TBC to unaffiliated home market customers. To test 
whether these sales were made at arm's-length prices, we compared 
model-specific prices to affiliated and unaffiliated customers net of 
all discounts and rebates, movement charges, direct selling expenses, 
and home market packing. Where, for the tested models of subject 
merchandise, prices to the affiliated party were on average 99.5 
percent or more of the price to the unaffiliated parties, we determined 
that sales made to the affiliated party were at arm's-length. See 19 
CFR 351.403(c) and Preamble - Department's Final Antidumping 
Regulations 62 FR 27296, 27355 (May

[[Page 51181]]

19, 1997). If the sales to the affiliated customer satisfied the arm's-
length test, we used them in our analysis. If the sales to the 
affiliated customer in the home market did not satisfy the arm's-length 
test, sales to that customer were excluded from our analysis because we 
considered them to be outside the ordinary course of trade. See 19 CFR 
351.102 (defining ``ordinary course of trade'').

Level of Trade/CEP Offset

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (LOT) as the EP or CEP transaction. Sales are made 
at different LOTs if they are made at different marketing stages (or 
their equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate From South Africa (CTL Plate from 
South Africa), 62 FR 61731, 61732 (November 19, 1997). To determine 
whether the comparison sales were at different stages in the marketing 
process than the U.S. sales, we reviewed the distribution system in 
each market (i.e., the chain of distribution), including selling 
functions, class of customer (customer category), and the level of 
selling expenses for each type of sale. Also, pursuant to 19 CFR 
351.412 (c), in identifying the LOT for CEP sales, we considered only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F3d 1301, 1314-1315 (Fed. Cir. 
2001).
    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales at 
a different LOT in the comparison market, where available data make it 
practicable, we make an LOT adjustment under section 773(a)(7)(A) of 
the Act. Finally, for CEP sales only, if a NV LOT is more remote from 
the factory than the CEP LOT and we are unable to make an LOT 
adjustment, the Department grants a CEP offset, as provided in section 
773(a)(7)(B) of the Act. See CTL Plate from South Africa.
    We obtained information from TBC regarding the marketing stages 
involved in making the reported home market and U.S. sales, including a 
description of the selling activities performed by TBC for each channel 
of distribution. While TBC did not request an LOT adjustment, it did 
request a CEP offset.
    TBC reported home market sales to three customer categories through 
three distribution channels. In each of the distribution channels, TBC 
offered to its customers the same type of services such as booking 
orders, arranging freight, inventory maintenance, technical assistance 
and general customer service. Based on an analysis of the level and 
nature of the selling functions performed in each home market channel 
of distribution, we find that TBC's home market sales comprise a single 
LOT. For details, see the July 31, 2002, Memorandum to the File 
regarding TBC: Level of Trade Analysis.
    For its U.S. sales, TBC reported CEP sales made to a single 
customer category through one channel of distribution. After deducting 
the CEP selling expenses incurred by its U.S. affiliate, Benkan 
America, Inc. (BAI) and reviewing the U.S. market selling functions 
reported by TBC, we found that TBC's United States sales also comprise 
a single LOT. Id. at 3.
    In determining whether different LOTs existed in the home and U.S. 
markets, we examined whether TBC's sales in the two markets involved 
different marketing stages (or their equivalent) based on the channel 
of distribution, customer categories and selling functions reported. In 
analyzing TBC's selling activities for CEP sales, we noted, 
preliminarily, that the home market LOT is different from, and 
constitutes a more advanced stage of distribution, than the CEP LOT 
because after making the CEP deductions under section 772(d) of the 
Act, the home market LOT includes significantly more selling functions 
than the CEP LOTs. While in the home market TBC performs selling 
functions such as booking orders, price negotiation, arranging freight, 
inventory maintenance, etc., it does not offer similar selling 
functions in the U.S. market. Therefore, because of the nature and 
level of selling functions offered by TBC in the home market, we find 
that the home market LOT is at a different, more advanced marketing 
stage than the CEP LOT. Consequently, since NV is established at a LOT 
which constitutes a more advanced LOT than the CEP LOT, and the data do 
not provide an appropriate basis upon which to determine a LOT 
adjustment (TBC has only one level of trade in the home market), we 
conclude that TBC is entitled to a CEP offset to NV. Id. at 4.

Price-to-Price Comparisons

    As stated above, TBC did not report product-specific CV data. See 
TBC's Supplemental Questionnaire Response, at B15-B21. Consequently, we 
preliminarily determined NV for all U.S. sales based on contemporaneous 
home market sales for identical merchandise or facts available. 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 exporting country in the usual commercial quantities and in the 
ordinary course of trade and at the same LOT as the CEP sale. In 
accordance with section 773(a)(6) of the Act, where applicable, we made 
adjustments to home market prices for movement expenses (inland 
freight) and credit expenses. To adjust for differences in packing 
between the two markets, we deducted home market packing costs and 
added U.S. packing costs.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act based on exchange rates in effect on the dates 
of the U.S. sales, as obtained from the Federal Reserve Bank, the 
Department's preferred source for exchange rates.

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 July 1, 
2000, through June 30, 2001:

------------------------------------------------------------------------
                                                        Weighted-Average
                Manufacturer/Exporter                   Margin (percent)
------------------------------------------------------------------------
Thai Benkan Corporation, Ltd.........................               3.15
------------------------------------------------------------------------

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within 5 days of the date of publication of 
this notice. Any interested party may request a hearing within 30 days 
of the date of publication of this notice. Parties who submit arguments 
in this proceeding are requested to submit with each argument: (1) a 
statement of the issue; and (2) a brief summary of the argument. The 
schedule for submitting case briefs will be established after 
publication of this notice. Rebuttal briefs, which are limited to 
issues raised in the case briefs, may be filed not later than seven 
days after the case briefs are filed.

[[Page 51182]]

    The Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of the issues raised in any written comments or at the hearing, within 
120 days from the publication of these preliminary results.

Assessment Rate

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Upon completion of this 
review, the Department will issue appraisement instructions directly to 
Customs. The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the determination and for future deposits of estimated duties. For 
assessment of CEP sales, we have calculated a per-unit 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 quantity of those sales. Where the importer-specific assessment 
rate is above de minimis, the Department will instruct Customs to 
assess antidumping duties on all entries of subject merchandise by that 
importer during the POR.

Cash Deposit Requirements

    Furthermore, the following cash deposit requirements will be 
effective upon completion of the final results of this administrative 
review for all shipments of pipe fittings from Thailand entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Act: (1) the cash deposit rate for the 
reviewed company will be the rate established in the final results of 
this administrative review, except if the rate is less than 0.5 percent 
ad valorem and, therefore, de minimis, no cash deposit will be 
required; (2) for exporters not covered in this review, but covered in 
the original less than fair value (LTFV) investigation or a previous 
review, the cash deposit rate will continue to be the company-specific 
rate published in the most recent period; (3) if the exporter is not a 
firm covered in this review, a previous review, or the original 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 previous reviews or the original LTFV 
investigation, the cash deposit rate will be 39.10 percent, the ``All 
Others'' rate which is based on the LTFV investigation (57 FR 29702, 
July 6, 1992). These requirements, when imposed, shall remain in effect 
until publication of the final results of the next administrative 
review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under
    19 CFR 351.402(f) 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 administrative review and notice are issued and published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 
1675(a)(1) and 1677f(i)(1)).

    DATED: July 31, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-19984 Filed 8-6-02; 8:45 am]
BILLING CODE 3510-DS-S