[Federal Register Volume 70, Number 43 (Monday, March 7, 2005)]
[Notices]
[Pages 10982-10985]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-917]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-813]


Stainless Steel Butt Weld Pipe Fittings From Korea: Preliminary 
Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request by Sungkwang Bend Company Ltd., 
(SKBC), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order of certain 
stainless steel butt weld pipe fittings from Korea. The review covers 
one firm, SKBC. The period of review (POR) is February 1, 2003, through 
January 31, 2004.
    We preliminarily determine that sales of stainless steel butt weld 
pipe fittings from Korea have been made below the normal value (NV) for 
SKBC. If these preliminary results are adopted in our final results of 
administrative review, we will instruct Customs and Border Protection 
(CBP) to assess antidumping duties based on the difference between the 
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 these proceedings are requested to submit with 
the argument: (1) A statement of the issues, (2) a brief summary of the 
argument, and (3) a table of authorities.

DATES: Effective Date: March 7, 2005.

FOR FURTHER INFORMATION CONTACT: Michael J. Heaney, or Robert James, 
AD/CVD Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Room 3520, Washington, DC 20230; telephone 
(202) 482-4475 or (202) 482-0649.

SUPPLEMENTARY INFORMATION:

Background

    On February 23, 1993, the Department published the antidumping duty 
order on stainless steel butt weld pipe fittings from Korea. See 
Antidumping Duty Order: Certain Stainless Steel Butt Weld Pipe Fittings 
from Korea, 58 FR 11029. On February 27, 2004, SKBC requested an 
administrative review of the antidumping duty order on stainless steel 
butt weld pipe fittings from Korea in response to the Department's 
notice of opportunity to request a review published in the Federal 
Register. The Department initiated the review for SKBC on March 26, 
2004. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 69 FR 15788 
(March 26, 2004).
    On April 7, 2004, the Department issued sections A, B, and C of the 
antidumping questionnaire to SKBC. SKBC filed its response to section A 
of our questionnaire on May 12, 2004. On May 23, 2004, SKBC filed its 
response to sections B and C of our questionnaire.
    The Department issued an additional supplemental questionnaire to 
SKBC on August 7, 2004. SKBC filed its response to our August 7, 2004, 
questionnaire on September 2, 2004.
    On August 3, 2004, the Department extended the time limit for 
issuance of the preliminary results of the administrative review to 
February 28, 2005. See Stainless Steel Butt Weld Pipe Fittings from 
Korea; Extension of Time Limit for Preliminary Results of 
Administrative Review, 69 FR 46516 (August 3, 2004).

Scope of the Antidumping Duty Order

    The products covered by this order are certain welded stainless 
steel butt-weld pipe fittings (pipe fittings), whether finished or 
unfinished, under 14 inches in inside diameter. Pipe fittings are used 
to connect pipe sections in piping systems where conditions require 
welded connections. The subject merchandise can be 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, and the following five 
are the most basic: ``elbows,'' ``tees,'' ``reducers,'' ``stub ends,'' 
and ``caps.'' The edges of finished fittings are beveled. Threaded, 
grooved, and bolted fittings are excluded from this review. The pipe 
fittings subject to this review 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 this order is 
dispositive.

Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended 
(the Act), we verified sales information provided

[[Page 10983]]

by SKBC, using standard verification procedures such as the examination 
of relevant sales and financial records. Our verification results are 
outlined in the public and proprietary versions of our verification 
report, which is on file in the Central Records Unit (CRU) in room B-
099 of the main Department building. See SKBC Sales Verification 
Report, dated February 7, 2005 (Verification Report).

Product Comparison

    In accordance with section 771(16) of the Act, we considered all 
stainless steel butt-weld pipe fittings covered by the ``Scope of the 
Antidumping Duty Order'' section of this notice, supra, which were 
produced and sold by SKBC in the home market during the POR to be 
foreign like products for the purpose of determining appropriate 
product comparisons to U.S. sales of stainless steel butt-weld pipe 
fittings.
    We relied on five characteristics to match U.S. sales of subject 
merchandise to comparison sales of the foreign like product: type, 
grade, seam, size, and schedule. Where there were no sales of identical 
merchandise in the home market to compare to the U.S. sales, we 
compared U.S. sales to the next most similar foreign like product on 
the basis of the physical characteristics and reporting instructions 
listed in the antidumping questionnaire. We performed a difference in 
merchandise (DIFMER) test to ensure that all comparison matches had no 
more than a 20% difference in variable cost of manufacture to the 
merchandise sold in the United States.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the home market 
at the same level of trade (LOT) as EP or the CEP. The NV LOT is that 
of the starting-price sales in the home market or, when NV is based on 
constructed value (CV), that of the sales from which we derive selling, 
general and administrative (SG&A) expenses and profit. For CEP, it is 
the level of the constructed sale from the exporter to an affiliated 
importer after the deductions required under section 772(d) of the Act.
    To determine whether NV sales are at a different LOT than 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 
an 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 
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 
(November 19, 1997).
    SKBC reported one LOT in the home market, explaining that home 
market sales to distributors and end-users were made at the same level 
of trade. SKBC further submitted that it provided substantially the 
same level of customer support on its EP sales as it provided on its 
home market sales to distributors and end-users. We found that the 
selling functions (which included customer correspondence, order review 
and approval, post sale service and warranties, technical advice and 
services, advertising, freight and delivery arrangement, and 
ascertaining credit worthiness) to be virtually identical for home 
market sales to distributors and end-users. We also found that SKBC 
provided virtually the same level of customer support services on its 
U.S. EP sales as it did on its home market sales. (See Appendix S-2 of 
SKBC September 2, 2004 Response to the Department's Supplemental 
Questionnaire.) Therefore, we determine that there is only one LOT for 
SKBC's EP sales.
    In its May 26, 2004, response, SKBC indicated that its U.S. 
subsidiary (Sungkwang Bend America (SKBA)) performed many of the same 
selling functions on SKBC's CEP sales that SKBC performed on its home 
market sales. SKBC also indicated that there was one LOT for CEP and 
that the CEP LOT was different than the home market LOT. We compared 
CEP sales (after deductions made pursuant to section 772(d) of the Act) 
to home market sales. We determined there were fewer services such as 
customer correspondence, order review and approval, post sales service/
warranties, technical advice, advertising, freight delivery 
arrangement, credit services and import document clearance, performed 
by SKBC on its CEP sales than on SKBC's home market sales. See id. In 
addition, the differences in selling functions performed for home 
market and CEP transactions indicate home market sales involved a more 
advanced stage of distribution than CEP sales. See id. In the home 
market, SKBC provided marketing further down the chain of distribution 
by providing certain downstream selling functions that are normally 
performed by service centers in the U.S. market (e.g., technical 
advice, credit and collection, etc.). See id.
    Based on our analysis of the record evidence on selling functions 
performed for the CEP LOT and the home market LOT, we determined the 
CEP and the starting price of home market sales represent different 
stages in the marketing process, and are thus at different LOTs within 
the meaning of 19 CFR 351.412. Therefore, when we compared CEP sales to 
home market sales, we examined whether an LOT adjustment may be 
appropriate. In this case, SKBC sold at one LOT in the home market; 
thus, there is no basis upon which to determine whether there is a 
pattern of consistent price differences between LOTs. Further, we do 
not have the information which would allow us to examine pricing 
patterns of SKBC's sales of other similar products, and there are no 
other respondents or other record evidence on which such an analysis 
could be based.
    Because the data available do not provide an appropriate basis for 
making an LOT adjustment and the LOT of home market sales is at a more 
advanced stage than the LOT of the CEP sales, a CEP offset is 
appropriate in accordance with section 773(a)(7)(B) of the Act, as 
claimed by SKBC. We based the amount of the CEP offset on the amount of 
home market indirect selling expenses, and limited the deduction for 
home market indirect selling expenses to the amount of indirect selling 
expenses deducted from CEP in accordance with section 772(d)(1)(D) of 
the Act. We applied the CEP offset to NV, whether based on home market 
prices or CV.

Comparisons

    To determine whether sales of subject merchandise made by SKBC were 
made at less than fair value, we compared the EP or CEP, to the NV, as 
described below. Pursuant to section 777A(d)(2) of the Act, we compared 
the EP or CEP of individual U.S. transactions to the monthly weight-
averaged NV of the foreign like product.

Transactions Investigated

    Section 351.401(i) of the Department's regulations states that the 
Department normally will use date of invoice, as recorded in the 
exporter's or producer's records kept in the ordinary course of

[[Page 10984]]

business, as the date of sale, but may use a date other than the date 
of invoice if it better reflects the date on which material terms of 
sale are established. For SKBC, the Department, consistent with its 
practice, used the invoice date since the invoice date represented the 
first point at which the home market and U.S. terms of sale were set. 
(See e.g., Stainless Steel Sheet and Strip in Coils from Mexico, 
Preliminary Results of Antidumping Duty Administrative Review, August 
6, 2004 (69 FR 47905, 47908). See also Verification Report at pages 5-
6.)

Export Price and Constructed Export Price

    Section 772(a) of the Act defines EP as ``the price at which the 
subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of subject merchandise 
outside of the United States to an unaffiliated purchaser in the United 
States or to an unaffiliated purchaser for exportation to the United 
States * * *.,'' as adjusted under subsection (c). Section 772(b) of 
the Act defines CEP as ``the price at which the subject merchandise is 
first sold (or agreed to be sold) in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter * * *.,'' as adjusted under subsections (c) and (d). For 
purposes of this administrative review, SKBC classified all of the U.S. 
sales that it shipped directly from Korea to the United States as EP 
sales. SKBC reported all sales that were invoiced through its U.S. 
subsidiary SKBA as CEP transactions. For these preliminary results, we 
have accepted these classifications. The merchandise shipped directly 
to unaffiliated distributors in the U.S. market was not sold through an 
affiliated U.S. importer. We, therefore, preliminarily determine that 
these transactions were EP sales. We have classified as CEP 
transactions the merchandise invoiced through SKBA because these sales 
were ``sold in the United States'' within the meaning of the Act.

Export Price

    We calculated EP in accordance with section 772(a) of the Act. We 
based EP on packed prices to customers in the United States. We made 
deductions for billing adjustments and rebates. We also made 
adjustments for the following movement expenses: foreign inland 
freight, international freight, marine insurance, brokerage charges, 
U.S. inland freight, and U.S. Customs duties.

Constructed Export Price

    We calculated CEP in accordance with section 772(b) of the Act for 
those sales to the first unaffiliated purchaser that took place after 
importation into the United States. We based CEP on packed prices to 
unaffiliated purchasers in the United States. We also made deductions 
for movement expenses in accordance with section 772(c)(2)(A) of the 
Act; these included foreign inland freight, international freight, 
marine insurance, brokerage charges, U.S. inland freight and U.S. 
customs duties. As further directed by section 772(d)(1) of the Act, we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including direct selling expenses 
(i.e., billing adjustments, rebates, credit expenses, technical service 
expenses, and bank charges) inventory carrying costs, and other 
indirect selling expenses. We recalculated indirect selling expenses 
based upon SKBC's revised calculation of those expenses. (See 
Verification Report, at page 36.) We also made an adjustment for profit 
in accordance with section 772(d)(3) of the Act.

Normal Value

    In accordance with section 773(a)(1)(C) of the Act, to determine 
whether there was sufficient volume of sales in the home market to 
serve as a viable basis for calculating NV (i.e., the aggregate volume 
of home market sales of the foreign like product is greater than or 
equal to five percent of the aggregate volume of U.S. sales), we 
compared SKBC's volume of home market sales of the foreign like product 
to the volume of U.S. sales of the subject merchandise. Because SKBC's 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales for the 
subject merchandise, we determined that the home market was viable. We 
therefore based NV on home market sales to unaffiliated purchasers made 
in the usual commercial quantities and in the normal course of trade.
    We made adjustments, where applicable, for movement expenses 
(consisting of inland freight) in accordance with section 773(a)(6)(B) 
of the Act. In accordance with section 773(a)(6)(C)(iii) of the Act and 
19 CFR 351.410, we made circumstance-of-sale adjustment for imputed 
credit, warranty, bank charges, and technical service expenses. We made 
deductions for billing adjustments and rebates. In addition, we made 
adjustments for differences in cost attributable to differences in the 
physical characteristics of the merchandise (i.e., Difmer) pursuant to 
section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.410. We also made an 
adjustment, in accordance with 19 CFR 351.410(e), for indirect selling 
expenses incurred in the home market where commissions were granted on 
sales in the United States. As noted in the ``Level of Trade'' section 
of this notice, we also made an adjustment for the CEP offset in 
accordance with section 773(a)(7)(B) of the Act. Finally, we deducted 
home market packing costs and added U.S. packing costs in accordance 
with section 773(a)(6) of the Act. Because SKBC failed to include labor 
costs in its original packing calculation, we made additions to both 
U.S. and home market packing costs to account for the labor component 
of packing expense. See SKBC Verification Report at 37.

Currency Conversion

    We made currency conversions into U.S. dollars based on the 
exchange rates in effect on the dates of the U.S. sales as certified by 
the Federal Reserve Bank, in accordance with section 773A(a) of the 
Act.

Preliminary Results of Review

    As a result of our review, we preliminarily find the weighted-
average dumping margin for the period February 1, 2003, through January 
31, 2004, to be as follows:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/ exporter                     (percent)
------------------------------------------------------------------------
Sungkwang Bend Company Ltd.................................         1.36
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within 30 
days of publication. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
business day thereafter, unless the Department alters the date pursuant 
to 19 CFR 351.310(d). Interested parties may submit case briefs or 
written comments no later than 30 days after the date of publication of 
these preliminary results of review. Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in the case briefs and 
comments, may be filed no later than 35 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

[[Page 10985]]

the issue, (2) a brief summary of the argument, and (3) a table of 
authorities. Further, we would appreciate it if parties submitting case 
briefs, rebuttal briefs, and written comments would provide the 
Department with an additional copy of the public version of any such 
argument on diskette. The Department will issue final results of this 
administrative review, including the results of our analysis of the 
issues in any such case briefs, rebuttal briefs, and written comments 
or at a hearing, within 120 days of publication of these preliminary 
results.
    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.212(b)(1), we calculated importer-specific ad valorem assessment 
rates for the merchandise based on the ratio of the total amount of 
antidumping duties calculated for the examined sales made during the 
POR to the total customs value of the sales used to calculate those 
duties. This rate will be assessed uniformly on all entries of that 
particular importer made during the POR. The Department will issue 
appropriate appraisement instructions directly to CBP upon completion 
of the review.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of stainless steel butt weld pipe fittings from Korea 
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 review;
    (2) For any previously reviewed or investigated company not listed 
above, 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 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 previous review conducted by the Department, the cash 
deposit rate will be the ``all others'' rate from the investigation 
(21.2 percent). See Notice of Final Determination of Sales at Less Than 
Fair Value; Certain Welded Stainless Steel Butt Weld Pipe Fittings From 
Korea, 58 FR 11029 (February 23, 1993).
    This notice also 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.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: February 28, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-917 Filed 3-4-05; 8:45 am]
BILLING CODE 3510-DS-P