[Federal Register Volume 70, Number 148 (Wednesday, August 3, 2005)]
[Notices]
[Pages 44560-44563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4128]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

A-533-809


Certain Forged Stainless Steel Flanges From India; Preliminary 
Results of New Shipper Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting a 
new shipper review of the antidumping duty order on certain forged 
stainless steel flanges (stainless steel flanges) from India 
manufactured by Hilton Forge (Hilton). The period of review (POR) 
covers February 1, 2004, through July 31, 2004. We preliminarily 
determine that Hilton made sales of subject merchandise at less than 
normal value (NV) in the United States during the POR.
    If these preliminary results are adopted in the final results of 
this new shipper review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on entries of the subject 
merchandise for which the importer-specific assessment rates are above 
de minimis.
    We invite interested parties 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 and 2) a brief 
summary of the argument.

EFFECTIVE DATE:  August 3, 2005.

FOR FURTHER INFORMATION CONTACT: Fred Baker or Robert James, AD/CVD 
Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230, telephone : (202) 482-
2924 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On February 9, 1994, the Department published the antidumping duty 
order on stainless steel flanges from India. See Amended Final 
Determination and

[[Page 44561]]

Antidumping Duty Order; Certain Forged Stainless Steel Flanges from 
India, 59 FR 5994, (February 9, 1994). On August 31, 2004, Hilton 
requested that the Department initiate a new shipper review for the 
period February 1, 2004, through July 31, 2004. We initiated the review 
on October 6, 2004. See Stainless Steel Flanges from India: Notice of 
Initiation of Antidumping Duty New Shipper Review.
    On March 28, 2005, we extended the time limit for the preliminary 
results of this new shipper review to no later than July 27, 2005. See 
Forged Stainless Steel Flanges From India: Extension of Time Limit for 
Preliminary Results of Antidumping Duty New Shipper Review, 70 FR 15615 
(March 28, 2005).
    For our analysis of the bona fides of Hilton's sales, see 
Memorandum to Richard Weible, Re: Bona Fide Nature of the Sale in the 
New Shipper Review of Hilton Forge, dated July 27, 2005, which is on 
file in the Central Records Unit (CRU), room B-099 of the main Commerce 
Building.

Scope of the Order

    The products covered by this order are certain forged stainless 
steel flanges, both finished and not finished, generally manufactured 
to specification ASTM A-182, and made in alloys such as 304, 304L, 316, 
and 316L. The scope includes five general types of flanges. They are 
weld-neck, used for butt-weld line connection; threaded, used for 
threaded line connections; slip-on and lap joint, used with stub-ends/
butt-weld line connections; socket weld, used to fit pipe into a 
machined recession; and blind, used to seal off a line. The sizes of 
the flanges within the scope range generally from one to six inches; 
however, all sizes of the above-described merchandise are included in 
the scope. Specifically excluded from the scope of this order are cast 
stainless steel flanges. Cast stainless steel flanges generally are 
manufactured to specification ASTM A-351. The flanges subject to this 
order are currently classifiable under subheadings 7307.21.1000 and 
7307.21.5000 of the Harmonized Tariff Schedule (HTS). Although the HTS 
subheading is provided for convenience and customs purposes, the 
written description of the merchandise under review is dispositive of 
whether or not the merchandise is covered by the scope of the order.

Verification

    As provided in section 782(i)(3) of the Tariff Act of 1930, as 
amended (the Tariff Act), we verified information provided by Hilton 
from June 6, 2005, through June 10, 2005, using standard verification 
procedures, the examination of relevant sales, cost, and financial 
records, and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
version of the verification report, on file in the CRU located in room 
B-099 in the main Department of Commerce building.

Comparisons to Normal Value

    To determine whether sales of subject merchandise to the United 
States by Hilton were made at less than NV, we compared the U.S. export 
price (EP) to the NV, as described in the ``Export Price'' and ``Normal 
Value'' sections of this notice, below. In accordance with section 
777A(d)(2) of the Tariff Act, we calculated monthly weighted-average 
prices for NV and compared these to the prices of individual EP 
transactions.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, we considered 
all products described by the Scope of the Order section, above, which 
were produced and sold by Hilton in the home market, to be foreign like 
products for purposes of determining appropriate comparisons to U.S. 
sales. We determined that Hilton had sufficient sales of identical 
product in the home market; therefore, we did not need to resort to 
comparisons based on either sales of similar merchandise or constructed 
value. We made comparisons using the following five model match 
characteristics: (1) Grade; (2) Type; (3) Size; (4) Pressure rating; 
(5) Finish.

Export Price and Constructed Export Price

    In accordance with section 772(a) of the Tariff Act, EP is defined 
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 the 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. In accordance with 
section 772(b) of the Tariff Act, constructed export price (CEP) is 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 Hilton's sales to the United States, we 
used EP in accordance with section 772(a) of the Tariff Act because its 
merchandise was sold directly to the first unaffiliated purchaser prior 
to importation, and CEP was not otherwise warranted based on the facts 
of record.
    We calculated EP based on the prices charged to the first 
unaffiliated customer in the United States. We used the date of invoice 
as the date of sale. We based EP on the packed CIF prices to the first 
unaffiliated purchasers in the United States. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Tariff 
Act, including foreign inland freight, foreign brokerage and handling, 
international freight, marine insurance, and export inspection fees.
    We denied Hilton's claimed adjustment for duty drawback. Section 
772(c)(1)(B) of the Tariff Act provides that EP or CEP shall be 
increased by ``the amount of any import duties imposed by the country 
of exportation which have been rebated, or which have not been 
collected, by reason of the exportation of the subject merchandise to 
the United States.'' The Department determines that an adjustment to 
U.S. price for claimed duty drawback is appropriate when a company can 
demonstrate that there is (i) a sufficient link between the import duty 
and the rebate, and (ii) sufficient imports of the imported material 
inputs to account for the duty drawback received for the export of the 
manufactured product (the so-called ``two-prong test''). See Rajinder 
Pipes, Ltd. v. United States, 70 F. Supp. 2d 1350, 1358 (Ct. Int'l 
Trade 1999); see also Viraj Group, Ltd. v. United States, 162 F. Supp. 
2d 656 (Ct. Int'l Trade 2001) (Commerce's rejection of claimed 
adjustments to either price or cost for Indian duty drawback sustained; 
remanded on other grounds).
    In a supplemental questionnaire the Department requested that 
Hilton establish its entitlement to the duty drawback adjustment by 
providing evidence that its duty drawback claim met the two-pronged 
test described above. See April 5, 2005 Supplemental Questionnaire at 
4. Hilton's response in its April 21, 2005, submission failed to 
provide evidence of either point. Furthermore, the Department presented 
Hilton with another opportunity to establish its entitlement to this 
claim at the verification in June 2005, and Hilton again failed to do 
so. Therefore, we have denied the duty drawback adjustment in these 
preliminary results.

Normal Value

A. Viability
    In order to determine whether there is sufficient volume of sales 
in the home market to serve as a viable basis for

[[Page 44562]]

calculating NV (i.e., the aggregate volume of home market sales of the 
foreign like product during the POR is equal to or greater than five 
percent of the aggregate volume of U.S. sales of subject merchandise 
during the POR), we compared Hilton's volume of home market sales of 
the foreign like product to the volume of U.S. sales of the subject 
merchandise. (We found no reason to determine that quantity was not the 
appropriate basis for these comparisons, so value was not used. See 
section 773(a)(1)(C) of the Tariff Act and 19 CFR 351.404(b)(2).) Based 
on Hilton's reported home market and U.S. sales quantities, we 
determine that Hilton had a viable home market. Therefore, we based NV 
on home market sales to unaffiliated purchasers made in the usual 
quantities and in the ordinary course of trade.
    We based our comparisons of the volume of U.S. sales to the volume 
of home market sales on reported stainless steel flange weight, rather 
than on number of pieces. The record demonstrates that there can be 
large differences between the weight (and corresponding cost and price) 
of stainless steel flanges based on relative sizes, so comparisons of 
aggregate data would be distorted for these products if volume 
comparisons were based on the number of pieces.
B. Price-to-Price Comparisons
    As indicated above, we compared U.S. sales with contemporaneous 
sales of the foreign like product in India. As noted, we considered 
stainless steel flanges identical based on the following five criteria: 
grade, type, size, pressure rating, and finish. We made adjustments for 
differences in packing costs between the two markets and for movement 
expenses in accordance with sections 773(a)(6)(A) and (B) of the Tariff 
Act. Finally, we adjusted for differences in the circumstances of sale 
(COS) pursuant to section 773(a)(6)(C)(iii) of the Tariff Act and 19 
CFR 351.410. We made COS adjustments by deducting home market direct 
selling expenses and adding U.S. direct selling expenses.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Tariff 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 CEP. The NV LOT is 
that of the starting-price sales in the home market or, when NV is 
based on CV, that of the sales from which we derive 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 Tariff Act.
    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 Tariff 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 Tariff 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).
    In implementing these principles in this review, we obtained 
information from Hilton about the marketing stages involved in its U.S. 
and home market sales, including a description of its selling 
activities in the respective markets. Generally, if the reported levels 
of trade are the same in the home and U.S. markets, the functions and 
activities of the seller should be similar. Conversely, if a party 
reports differences in levels of trade the functions and activities 
should be dissimilar.
    Hilton reported one channel of distribution and one LOT in the home 
market contending that all home market sales were to trading companies 
on a door-delivered basis. See Hilton's November 22, 2004, submission, 
pp. B-10 and B-19, and its April 21, 2005, submission, p. 7. After 
examining the record evidence provided by Hilton, we preliminarily 
determine that a single LOT exists in the home market.
    Hilton further contends it provided substantially the same level of 
customer support on its U.S. EP sales to trading companies/importers as 
it provided on its home market sales to trading companies. This support 
included manufacturing to order, and making arrangements for freight 
and insurance. See Hilton's April 21, 2005 submission at 2. The 
Department has determined that we will find sales to be at the same LOT 
when the selling functions performed for each customer class are 
sufficiently similar. See 19 CFR 351.412 (c)(2). We find Hilton 
performed virtually the same level of customer support services on its 
U.S. EP sales as it did on its home market sales.
    The record evidence supports a finding that in both markets and in 
all channels of distribution Hilton performs essentially the same level 
of services. Therefore, based on our analysis of the selling functions 
performed on EP sales in the United States, and its sales in the home 
market, we determine that the EP and the starting price of home market 
sales represent the same stage in the marketing process, and are thus 
at the same LOT. Accordingly, we preliminarily find that no level of 
trade adjustment is appropriate for Hilton.

Currency Conversions

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

Preliminary Results of Review

    As a result of our review we preliminarily find that a weighted-
average dumping margin of 0.89 percent exists for Hilton for the period 
February 1, 2004, through July 31, 2004.
    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 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 per 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 new shipper 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 argument in these proceedings are requested 
to submit with the argument 1) a statement of the issue, 2) a brief 
summary of the argument, and 3) a table of authorities. Further, 
parties submitting written comments should provide the Department with 
an additional copy of the public version of any such comments on 
diskette. The Department will issue final results of this 
administrative review, including the results of our analysis of the 
issues raised in any such written comments or at a hearing, within 120 
days of publication of these preliminary results.

[[Page 44563]]

Assessment Rates

    Upon issuance of the final results of this review, the Department 
shall determine, and the CBP shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have 
calculated importer-specific assessment rates based on the total amount 
of antidumping duties calculated for the examined sales made during the 
POR divided by the total quantity (in kilograms), of the examined 
sales. Upon completion of this review, where the assessment rate is 
above de minimis, we shall instruct CBP to assess duties on all entries 
of subject merchandise by that importer.

Cash Deposit Requirements

    The following cash deposit rate will be effective upon publication 
of the final results of this new shipper review for shipments of 
stainless steel flanges from India entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(2)(C) of the Tariff Act. For subject 
merchandise produced and exported by Hilton, the cash deposit rate will 
be the rate established in the final results of this review, except if 
the rate is less than 0.5 percent and, therefore, de minimis, the cash 
deposit rate will be zero. This cash deposit requirement, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.

Notification to Interested Parties

    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 Tariff Act.

    Dated: July 27, 2005.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. E5-4128 Filed 8-2-03; 8:45 am]
BILLING CODE 3510-DS-S