[Federal Register Volume 71, Number 44 (Tuesday, March 7, 2006)]
[Notices]
[Pages 11379-11386]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-3173]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-533-809


Certain Forged Stainless Steel Flanges From India; Preliminary 
Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain forged 
stainless steel flanges (stainless steel flanges) from India 
manufactured by Echjay Forgings Ltd. (Echjay) and Paramount Forge 
(Paramount). The period of review (POR) covers February 1, 2004, 
through January 31, 2005. We preliminarily determine that Echjay did 
not sell subject merchandise at less than normal value (NV) in the 
United States during the POR. In addition, we preliminarily determine 
to apply an adverse facts available (AFA) rate to Paramount's sale.
    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.

[[Page 11380]]


EFFECTIVE DATE: March 7, 2006.

FOR FURTHER INFORMATION CONTACT: David Cordell (Echjay), Mark Flessner 
(Paramount), 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) 482-0408, (202) 482-6312, 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 Antidumping Duty Order; Certain Forged Stainless 
Steel Flanges from India, 59 FR 5994 (February 9, 1994) (Amended Final 
Determination). On February 1, 2005, the Department published the 
Notice of Opportunity to Request Administrative Review for this order 
covering the POR. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 70 FR 5136 (February 1, 2005). In accordance 
with 19 CFR 351.213 (b)(2), Echjay, Hilton Forge, Paramount, and Viraj 
Group Ltd. (Viraj) requested that we conduct this administrative 
review. On March 23, 2005, the Department published in the Federal 
Register a notice of initiation of this antidumping duty administrative 
review covering the POR. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Requests for Revocation 
in Part, 70 FR 14643 (March 23, 2005).
    On October 13, 2005, we extended the time limit for the preliminary 
results of this administrative review to February 28, 2006. See Notice 
of Extension of Time Limit for Preliminary Results of Antidumping Duty 
Administrative Review and Notice of Partial Rescission: Certain Forged 
Stainless Steel Flanges from India, 70 FR 59719 (October 13, 2005).

Echjay

    On March 31, 2005, the Department issued its initial questionnaire 
to Echjay. Echjay submitted its section A response on May 2, 2005, and 
its section B and C responses on May 12, 2005. The Department issued a 
supplemental questionnaire on August 5, 2005, to which Echjay responded 
on August 30, 2005. A second supplemental questionnaire was issued on 
October 27, 2005, and the Department received the response on November 
18, 2005. The Department issued a third supplemental on November 10, 
2005, to which Echjay responded (in two parts) on November 30, 2005, 
and December 1, 2005. A final supplemental was issued on December 19, 
2005, and the response was received on January 4, 2006.

Paramount

    The Department sent its questionnaires to Paramount on March 31, 
2005. Paramount's response to the section A questionnaire was submitted 
May 4, 2005. Paramount's responses to sections B and C were submitted 
on May 18, 2005. A supplemental section A, B, and C questionnaire was 
sent to Paramount on August 5, 2005. Paramount submitted its response 
to the first supplemental section A, B, and C questionnaire on 
September 7, 2005. The Department issued on November 8, 2005, a second 
supplemental section A, B, and C questionnaire. Paramount submitted its 
response on November 29, 2005.

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.

Rescission of the Administrative Review

    On April 18, 2005, respondents Viraj and Hilton Forge withdrew 
their requests for an administrative review. Pursuant to section 
351.213(d)(1) of the Department's regulations, the Secretary will 
rescind an administrative review, in whole or in part, if a party who 
requested the review withdraws the request within 90 days of the date 
of publication of notice of initiation of the requested review. Section 
351.213(d)(1) of the Department's regulations also states that the 
Secretary may extend this time limit if the Secretary decides it is 
reasonable to do so. The initiation notice for this review was 
published on March 23, 2005. Viraj and Hilton Forge withdrew their 
requests for review on April 18, 2005, which was within 90 days of the 
date of publication of the initiation notice of the review. No other 
party has requested a review of Viraj or Hilton Forge in the POR. Since 
the two parties which had requested administrative reviews have 
withdrawn their requests in a timely manner, we are rescinding the 
administrative reviews of Viraj and Hilton Forge. With respect to 
Hilton Forge, the Department will issue appropriate assessment 
instructions to U.S. Customs and Border Protection (CBP) within 15 days 
of publication of this notice. With respect to Viraj, the Department 
has already issued liquidation instructions for this period as the 
order for Viraj was revoked on July 12, 2005. See Stainless Steel 
Flanges From India: Notice of Final Results of Antidumping Duty 
Administrative Review and Revocation in Part, 70 FR 39997 (July 12, 
2005) and CBP message number 5227209.

Paramount

Use of Adverse Facts Available

    In accordance with section 776(a)(2) of the Tariff Act of 1930, as 
amended (the Tariff Act), the Department has determined that the use of 
adverse facts available is appropriate for purposes of determining the 
preliminary dumping margin for the subject merchandise sold by 
Paramount. Pursuant to section 776(a)(2) of the Tariff Act the 
Department shall (with certain exceptions not applicable here) use the 
facts otherwise available in reaching applicable determinations under 
this subtitle if an interested party (A) withholds information that has 
been requested by the administrating authority; (B) fails to provide 
such information by the deadlines for submission of the information or 
in the form and manner requested, subject to subsections (c)(1) and (e) 
of section 782 of the Tariff Act; (C) significantly impedes a 
proceeding under this subtitle; or (D) provides such information but 
the information cannot be verified as provided in section 782(i). See 
Tariff Act section 776(a)(2). Moreover, section 776(b) of the Tariff 
Act provides, in relevant part, that:

[[Page 11381]]

    If the administering authority finds that an interested party has 
failed to cooperate by not acting to the best of its ability to comply 
with a request for information from the administering authority or the 
Commission, the administering authority or the Commission (as the case 
may be), in reaching the applicable determination under this subtitle, 
may use an inference that is adverse to the interests of the party in 
selecting from among the facts otherwise available.
Id.
    The Department sent standard section A, B, and C questionnaires to 
Paramount on March 31, 2005. Paramount's response to the section A 
questionnaire was submitted May 4, 2005. Paramount's responses to 
sections B and C were submitted on May 18, 2005. The Department 
discovered dozens of serious deficiencies in all three of these 
responses. Therefore the Department sent a supplemental section A, B, 
and C questionnaire to Paramount on August 5, 2005. Paramount submitted 
its response to the first supplemental section A, B, and C 
questionnaire on September 7, 2005. More than half of the questions 
were unanswered. Of those questions to which Paramount did make some 
response, the Department again found that the majority were deficient. 
The Department accordingly issued on November 8, 2005, a second 
supplemental section A, B, and C questionnaire. Paramount submitted its 
response on November 29, 2005; this response was deficient as well.
    Each of the questionnaires sent by the Department contained a 
warning that determinations on the basis of adverse facts available 
would be made if Paramount failed to comply. See ``Preliminary Results 
in the Antidumping Duty Administrative Review of Stainless Steel 
Flanges from India: Total Adverse Facts Available and Corroboration 
Memorandum for Company Rate,'' February 28, 2006 (Corroboration 
Memorandum) at pages 1 and 2.
    Paramount made one sale of subject flanges to the United States 
during the POR. Paramount reported that there were sales in the home 
market in its original response to the section A and B questionnaires. 
In reporting the sales quantity and value of its home market sales (see 
pages A-2 and A-19) Paramount reported a figure which was widely 
divergent from what was reported in its databases accompanying the 
supplemental section B questionnaire responses of September 7, 2005, 
and November 29, 2005. After extensive questioning by the Department 
directed specifically at this discrepancy between the reported quantity 
and value figures in the original and supplemental section A responses 
and the sales reported in the databases for the original and 
supplemental section B responses, it became clear that Paramount had 
reported in its section B databases less than one percent of its home 
market sales. In its response, Paramount admitted it was reporting ``on 
a sample basis to give insight of our working.'' See Paramount's 
November 29, 2005, response to second supplemental section A, B, and C 
questionnaire at page 2. Paramount also stated: ``We had provided you 
two bills consisting of eight transactions as samples. This does not 
reflect our total sales of the year.'' See Paramount's November 29, 
2005, response to the Department's second supplemental section A, B, 
and C questionnaire at page 13.
    It appears that Paramount has selectively reported certain 
transactions instead of reporting all of its sales in the home market 
as it was repeatedly instructed to do. Hence Paramount has withheld 
information requested by the Department, has failed to provide such 
information by the deadlines for submission of the information, has 
failed to provide such information in form and manner requested, and 
has significantly impeded this proceeding. With regard to the limited 
remainder of the information conveyed in Paramount's three sets of 
responses, the deficiencies are so prevalent and on such a scale that 
very little of the submitted data can be trusted as reliable. (For 
examples, see Corroboration Memorandum at pages 3 to 4.) We find that 
Paramount has failed to cooperate by not acting to the best of its 
ability to comply with this request for information from the 
Department. (For discussion of the ``acting to the best of its 
ability'' standard under section 776(b) of the Tariff Act, please see 
Corroboration Memorandum at pages 5-6.)
    The Department preliminarily determines that Paramount's 
questionnaire responses cannot serve as the basis for the calculation 
of Paramount's margin. In the instant review, Paramount did not contend 
that it did not have pertinent records; rather, it admitted to 
furnishing only ``samples.'' By declining to provide the requested 
information, Paramount failed to cooperate to the best of its ability 
in that it did not put forth its maximum efforts to obtain the 
requested information from its records. Consequently, the Department 
finds that an adverse inference is warranted in determining an 
antidumping duty margin for Paramount. As a result, we are basing 
Paramount's margin on the facts otherwise available, in accordance with 
sections 776(a)(2)(A) - (C) and section 776(b) of the Tariff Act. See, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value 
and Affirmative Final Determination of Critical Circumstances: Certain 
Orange Juice From Brazil, 71 FR 2183 (January 13, 2006). See also 
Notice of Final Determination of Sales of Less Than Fair Value and 
Final Negative Critical Circumstances: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 55792, 55794-96 (Aug. 30, 2002); Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Cold-
Rolled Flat-Rolled Carbon Quality Steel Products From Brazil, 65 FR 
5554, 5567 (Feb. 4, 2000); Static Random Access Memory Semiconductors 
from Taiwan: Final Determination of Sales at Less than Fair Value, 63 
FR 8909 (Feb. 23, 1998).
    If the Department finds that an interested party ``has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information,'' the Department may use information that is 
adverse to the interests of the party as the facts otherwise available. 
See section 776(b) of the Tariff Act. Adverse inferences are 
appropriate ``to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreement Act, H.R. Doc. No. 103-316 (1994), at 870. Under the 
statutory scheme, such adverse inferences may include reliance on: 
information derived from (1) the petition; (2) a final determination in 
the investigation; (3) any previous review or determination; or (4) any 
other information placed on the record. See section 776(b) of the 
Tariff Act. The SAA authorizes the Department to consider the extent to 
which a party may benefit from its own lack of cooperation. Id. The 
Department's practice when selecting an adverse rate from among the 
possible sources of information is to ensure that the margin is 
sufficiently adverse to induce the respondents to provide the 
Department with complete and accurate information in a timely manner. 
See Notice of Final Determination of Sales of Less Than Fair Value and 
Final Negative Critical Circumstances: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 55792, 55796 (Aug. 30, 2002). Because 
Paramount currently has the ``All Others'' cash deposit rate of 162.14

[[Page 11382]]

percent, the Department determines that assigning the highest margin 
from the original petition and investigation in this case, 210.00 
percent, will prevent Paramount from benefitting from its failure to 
cooperate with the Department's requests for information. See Amended 
Final Determination. Furthermore, a lower rate would effectively reward 
Paramount for not cooperating by not acting to the best of its ability.
    To assess the reliability of the petition margin in accordance with 
section 776(c) of the Tariff Act, to the extent practicable, we 
examined the key elements of the calculations of export price and 
normal value upon which the margins in the petition were based. (For 
discussion of ``reliance on secondary information,'' standard under 
section 776(c) of the Tariff Act, please see Corroboration Memorandum 
at pages 7-8.) The U.S. prices in the petition were based upon quotes 
to U.S. customers, most of which were obtained through market research. 
See Petition for the Imposition of Antidumping Duties, December 29, 
1993. The Department was able to corroborate the U.S. prices in the 
petition, which were used as the basis of the 210.00 percent rate 
(based on the highest rate in the original petition and antidumping 
duty order) by comparing these prices to publicly available information 
based on IM-145 import statistics from the U.S. International Trade 
Commission's Web site via Dataweb for HTS numbers 7307215000 and 
7307211000. The weighted average reported CBP unit value for these 
products in calendar year 2004, which overlaps eleven months of the 
POR, was $4.83/kg. This value approximates those cited in the petition, 
which ranged from $4.77 to $47.32, thus corroborating the petition's 
U.S. price. The NVs in the petition were based on actual price 
quotations obtained through market research. At present, the Department 
is not aware of other independent sources of information at its 
disposal which would enable it to corroborate the margin calculations 
in the petition further.
    With respect to the relevance aspect of corroboration, the 
Department will consider information reasonably at its disposal as to 
whether there are circumstances which would render a margin not 
relevant. Where circumstances indicate that the selected margin is not 
appropriate as adverse facts available, the Department will disregard 
the margin and determine an appropriate margin. See Fresh Cut Flowers 
from Mexico; Final Results of Antidumping Duty Administrative Review, 
61 FR 6812 (February 22, 1996) (the Department disregarded the highest 
dumping margin as best information available because the margin was 
based on another company's uncharacteristic business expense resulting 
in an unusually high margin). Further, in accordance with F. LII De 
Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F. 3d 
1027 (Fed. Cir. June 16, 2000), we also examine whether information on 
the record would support the selected rates as reasonable facts 
available.
    The Department finds the 210 percent rate used in these preliminary 
results has probative value. (Note: The consideration of the probative 
value relies upon information which is business proprietary and covered 
by an Administrative Protection Order; for a full discussion, see 
Corroboration Memorandum under the heading ``Specifics on Corroboration 
of Rate from Investigation.'') The Department is not aware of any 
circumstances which would render this rate inappropriate. In fact, 
other Indian manufacturers currently have a 210 percent margin under 
this order.
    The implementing regulation for section 776 of the Tariff Act, 
codified at 19 CFR 351.308(d), states, ``[lsqb]t[rsqb]he fact that 
corroboration may not be practicable in a given circumstance will not 
prevent the Secretary from applying an adverse inference as appropriate 
and using the secondary information in question.'' Additionally, the 
SAA at 870 states specifically that, where ``corroboration may not be 
practicable in a given circumstance,'' the Department may nevertheless 
apply an adverse inference. The SAA at 869 emphasizes that the 
Department need not prove that the facts available are the best 
alternative information. Therefore, based on the Department's efforts 
described above to corroborate information contained in the petition, 
and in accordance with 776(c) of the Tariff Act which discusses facts 
available and corroboration, the Department considers the margins in 
the petition to be corroborated to the extent practicable for purposes 
of this preliminary determination. See Certain Cut-to-Length Carbon 
Steel Plate from Mexico: Final Results of Antidumping Duty 
Administrative Review, 64 FR 76, 84 (January 4, 1999).

Echjay

Affiliation

    Pursuant to section 771(33)(A) of the Tariff Act, the following 
persons, among others, are affiliated: ``members of a family, including 
brothers and sisters (whether by the whole or half blood), spouse, 
ancestors, and lineal descendants. . . .'' See section 771(33)(A) of 
the Tariff Act). The record shows the board members (and managers) of 
Echjay Industries and Echjay are descendants of a common progenitor, 
the late Harilal Jechand Doshi. They are related as the uncle and 
nephews (and as first cousins). Accordingly, consistent with the 
definition of ``family'' under section 771(33)(A) of the Tariff Act, 
the Department's prior practice, and the controlling precedent, (see 
Ferro Union Inc. v. Wheatland Tube Co., 44 F. Supp. 2d 1310, 1324 (Ct. 
Int'l Trade 1999) (Ferro Union Inc.)), the Department preliminarily 
determines that the board members and managers of Echjay Industries and 
those of Echjay constitute the Doshi family. See Memorandum on 
Relationship of Echjay Forgings (Echjay) and Echjay Industries in the 
2004-2005 Administrative Review of AD Order on Certain Forged Stainless 
Steel Flanges From India, dated February 28, 2006, which accompanies 
this notice (Affiliation Memorandum).
    Section 771(33)(F) of the Tariff Act defines affiliates as 
``[lsqb]t[rsqb]wo or more persons directly or indirectly controlling, 
controlled by, or under common control with, any person.'' The 
statutory definition states that ``control'' exists where one person 
``is legally or operationally in a position to exercise restraint or 
direction over the other person.'' The record shows the Doshi family 
controls the boards of directors of Echjay and Echjay Industries 
because these boards comprise the members of the Doshi family. 
Accordingly, the Doshi family is legally and operationally in a 
position to exercise restraint or direction over both Echjay and Echjay 
Industries. Based on the particular facts of this case, we 
preliminarily find there is sufficient evidence of the record to find 
Echjay and Echjay Industries affiliated by virtue of common control of 
the Doshi family. See sections 771(33)(A) and (F) of the Tariff Act. 
See also Affiliation Memorandum.

Collapsing

    Section 351.401(f)(1) of the Department's regulations states that 
in an antidumping proceeding the Department ``will treat two or more 
affiliated producers as a single entity where those producers have 
production facilities for similar or identical products that would not 
require substantial retooling of either facility in order to 
restructure manufacturing priorities and the Secretary concludes that 
there is a significant potential for the manipulation of price or 
production.''

[[Page 11383]]

    Section 351.401(f)(2) of the Department's regulations identifies 
factors to be considered to determine whether there is a significant 
potential for manipulation. These include: (i) the level of common 
ownership; (ii) the extent to which managerial employees or board 
members of one firm sit on the board of directors of an affiliated 
firm; and (iii) whether operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between the affiliated producers.
    As discussed above and in the accompanying Affiliation Memorandum, 
based on the evidence on the record in this review, we have 
preliminarily determined that Echjay is affiliated with Echjay 
Industries by virtue of common control by the Doshi family. See 
sections 771(33)(A) and (F) of the Tariff Act. Accordingly, the 
Department preliminarily determines that the first of the three 
requirements for collapsing the companies has been met.
    Having determined that the two companies are affiliated, the 
Department examines whether the producers have production facilities 
for similar or identical products that would not require ``substantial 
retooling ... in order to restructure manufacturing priorities.'' See 
Notice of Preliminary Results of New Shipper Review of the Antidumping 
Duty Order on Certain Pasta From Italy, 69 FR 319 (January 5, 2004). 
Based on Echjay's questionnaire responses, the Department has 
preliminarily determined that the two companies' production facilities 
would require substantial retooling to restructure manufacturing 
priorities. See Affiliation Memorandum.
    Further, based on the record of this proceeding, the Department 
preliminarily determines that significant potential for manipulation 
does not exist. The third factor of the Department's collapsing 
analysis, i.e., the significant potential for manipulation, requires 
consideration of three sub-factors: (1) the level of common ownership; 
(2) the extent to which managerial employees or directors of one firm 
also sit on the board of the other firm; and (3) whether operations are 
intertwined. See 19 C.F.R. 351.401(f)(2). The Department preliminarily 
determines that none of these factors have been satisfied in this 
segment of the proceeding. See Affiliation Memorandum for a full 
discussion of the issues.
    Because two of the three factors in the collapsing analysis have 
not been satisfied, the Department has preliminarily determined not to 
collapse Echjay and Echjay Industries in this segment of the proceeding 
pursuant to section 351.401(f)(1)(2) of the Department's regulations. 
See Affiliation Memorandum.

Universe of Sales

    The universe of U.S. sales reported to the Department includes 
constructed export price (CEP) sales with entry dates outside of the 
POR. Consistent with the Department's practice and the antidumping duty 
questionnaire, the Department bases its analysis on ``each U.S. sale of 
merchandise entered for consumption during the POR, except ... for CEP 
sales made after importation'' where the Department will base its 
analysis on ``each transaction that has a date of sale within the 
POR.'' See Department's questionnaire issued to Echjay, dated March 31, 
2005, at C-1; see also Certain Hot-Rolled Carbon Steel Flat Products 
from the Netherlands and the accompanying unpublished Issues and 
Decisions Memorandum at comment 10, 69 FR 33630 (June 16, 2004); see 
also Circular Welded Non-Alloy Steel Pipe from the Republic of Korea, 
63 FR 39071 (July 21, 1998). Because all sales made by Echjay to the 
United States are back-to-back CEP sales (i.e., the sales were made 
prior to importation and the merchandise was shipped directly to 
unaffiliated customers in the United States), the Department will only 
use entries of subject merchandise made during the POR. Because a small 
number of these sales were examined last year, the Department has 
excluded those sales which were entered in this POR but reviewed in the 
last POR. See Analysis Memorandum, dated February 28, 2006, which 
accompanies this notice for more details (Analysis Memorandum).

Date of Sale

    In determining the appropriate date of sale, the Department 
normally uses the date of invoice as the date of sale. See 19 CFR 
351.401(i); see also Allied Tube and Conduit Corp. v. United States, 
132 F. Supp. 2d 1087 (CIT 2001). Moreover, the preamble to the 
Department's regulations expresses a strong preference for the 
Department to choose a single date of sale across the full period of 
review. See Antidumping Duties; Countervailing Duties: Final Rule, 62 
FR 27296, 27349 (May 19, 1997). For these preliminary results, the 
Department will use the invoice date as the appropriate date of sale 
for the POR, because this date best represents the date upon which the 
material terms of sale are set.

Normal Value Comparisons

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

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, the 
Department considered all products described by the Scope of the Order 
section, above, produced and sold by Echjay in the home market to be 
foreign like products for purposes of determining appropriate 
comparisons to U.S. sales. Where there were no sales of identical 
merchandise in the home market to compare to U.S. sales, we compared 
U.S. sales to the next most similar foreign like product on the basis 
of the characteristics and reporting instructions listed in the 
Department's questionnaire. Where there were no sales of identical or 
similar merchandise in the home market suitable for comparing to U.S. 
sales, the Department compared these sales to constructed value (CV), 
pursuant to section 773(a)(4) and 773(e) of the Tariff Act.

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, as adjusted under 
section 772(c) of the Tariff Act. In accordance with section 772(b) of 
the Tariff Act, 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).
    Based on the record evidence, the Department preliminarily 
determines

[[Page 11384]]

that Echjay's U.S. sales, all of which were through its U.S. affiliate 
Echjay U.S.A., Inc., were made in the United States within the meaning 
of section 772(b) of the Tariff Act and thus are properly classified as 
CEP sales.
    The Department calculated CEP based on the prices charged to the 
first unaffiliated customer in the United States. The Department based 
CEP on the packed C&F, CIF duty paid, FOB, or ex-dock duty paid prices 
to the first unaffiliated purchasers in the United States. The 
Department 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, ocean freight, and marine 
insurance as required. The Department also deducted those selling 
expenses incurred in selling the subject merchandise in the United 
States, including direct selling expenses (e.g., bank commissions and 
charges, documentation fees, etc.), and imputed credit. In accordance 
with section 772(d)(3) of the Tariff Act, the Department deducted an 
amount for profit allocated to the expenses deducted pursuant to 
sections 772(d)(1) and (2) of the Tariff Act. See Analysis Memorandum 
for more details.

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).
    Echjay claimed it received Duty Entitlement Pass Book (DEPB) 
certificates from the Indian government which it books in an ``Export 
Incentives Ledger.'' See Echjay's Section C Response at Annexure H. 
According to Echjay, these DEPB certificates, awarded based on the FOB 
value of the shipment, are intended to offset import duties on raw 
materials ``and also to nullify the incidence of interest rates higher 
than international rates, high indigenous cost of electricity and 
fuels, and local taxes which are built into the cost of locally 
produced and sold steel.'' Id. Echjay contends it ``sold'' all of its 
DEPB certificates for which it was claiming a duty drawback adjustment. 
See Echjay's August 30, 2005, Supplemental Response at page 23. Echjay 
did not provide the Department with any documents supporting its 
contention.
    The Department finds that Echjay has not provided substantial 
evidence on the record to meet the requirement of the first prong of 
the two-prong test, to wit, to establish the necessary link between the 
import duty and the reported rebate for duty drawback. Even if Echjay 
provided evidence demonstrating that it received duty drawback in the 
form of certificates issued by the Government of India, Echjay has 
failed to establish the necessary direct link between the import duty 
paid and the rebate given by the Government of India. Echjay's response 
suggests that much of the DEPB certificate program has no bearing on 
home market import duties of any kind. Finally, the Department notes 
the value of the DEPB certificates is normally calculated based upon 
the FOB prices of the finished goods, as exported. All of these factors 
demonstrate that there is no direct link between these certificates, 
the company's own imports of inputs, and the eventual production of 
finished goods for export. Therefore, the Department is denying a duty 
drawback credit for the preliminary results of this review.

Normal Value

    In determining NV, the statute requires the Department to determine 
the price at which the foreign like product is first sold (or, in the 
absence of a sale, offered for sale) for consumption in the exporting 
country in the usual commercial quantities and in the ordinary course 
of trade and, to the extent practicable, at the same level of trade as 
the export price or constructed export price. In order to determine 
whether there is 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 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), the Department compared the 
volume of home market sales of the foreign like product to the volume 
of U.S. sales of the subject merchandise. The Department 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; see also 19 CFR 351.404(b)(2). Therefore, the 
Department based NV on home market sales to unaffiliated purchasers 
made in the usual quantities and in the ordinary course of trade.
    The Department based its comparisons of the volume of U.S. sales to 
the volume of home market and third country 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.

Price-to-Price Comparisons

    The statue requires the Department to determine whether subject 
merchandise is being, or is likely to be, sold at less than fair value 
by making a fair comparison between the EP or CEP and NV. For Echjay, 
the Department compared U.S. sales with contemporaneous sales of the 
foreign like product in India. As noted, the Department considered 
stainless steel flanges identical based on the following five criteria: 
grade; type; size; pressure rating; and finish. The Department used a 
20 percent difference-in-merchandise (difmer) cost deviation cap as the 
maximum difference in cost allowable for similar merchandise, which we 
calculated as the absolute value of the difference between the U.S. and 
comparison market variable costs of manufacturing divided by the total 
cost of manufacturing of the U.S. product. The Department 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. The Department 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. Finally, the Department made 
adjustments in accordance with 19 CFR 351.410(e) for indirect selling 
expenses incurred in the home market or United States where commissions 
were granted on sales in one market but not in the other (the 
``commission offset'').

Constructed Value

    In accordance with section 773(a)(4) of the Tariff Act, the 
Department based NV on CV if the Department was unable to find a 
contemporaneous comparison market match for the U.S. sale. The 
Department calculated CV based on the cost of materials and fabrication 
employed in producing the subject

[[Page 11385]]

merchandise, SG&A, and profit. In accordance with 772(e)(2)(A) of the 
Tariff Act, the Department based SG&A expenses and profit on the 
amounts incurred and realized by the respondent in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade for consumption in the foreign country. For selling expenses, 
the Department used the weighted-average comparison market selling 
expenses. Where appropriate, the Department made COS adjustments to CV 
in accordance with section 773(a)(8) of the Tariff Act and 19 CFR 
351.410. For comparisons to EP, the Department 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, the Department determines 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 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, the Department examines 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, the Department makes 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, the Department adjusts 
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, the Department 
obtained information from Echjay about the marketing stages involved in 
its U.S. and home market sales, including a description of the selling 
activities in the respective markets. In identifying levels of trade 
for CEP, the Department considered only the selling activities 
reflected in the price after the deduction of expenses and profit under 
section 772(d) of the Tariff Act. See Micron Technology v. United 
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001). 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.
    Echjay reported one channel of distribution and one LOT in the home 
market, contending that home market sales to distributors and 
wholesalers were made at the same level of trade and involved the same 
selling activities. See Echjay's Section A Response at 13-15. In fact, 
all merchandise was sold in the home market on ex works terms. See, 
e.g., Echjay's Section B Response at 7. After examining the record 
evidence provided, the Department preliminarily determines that for 
Echjay, a single LOT exists in the home market.
    As to CEP sales, in Echjay's Section A Response it indicated that 
its U.S. subsidiary, Echjay USA, Inc., performed no selling activities 
or services beyond notifying the final customer of the merchandise's 
arrival at the U.S. port; customers were responsible for arranging 
shipment and CBP clearance at their own expense. See Echjay's Section A 
Response at 7. Echjay further asserts that selling activities remain 
the same regardless of customer or geographical location. See Echjay's 
Section A Response at 17.
    The record evidence supports a finding that in both markets and in 
all channels of distribution, Echjay performs essentially the same 
level of services. These include order processing, packing, shipping 
and invoicing of sales, and processing of payments. Based on our 
analysis of the selling functions performed on CEP sales in the United 
States and of sales in the home market, the Department determines that 
the CEP and the starting price of home market sales represent the same 
stage in the marketing process and are thus at the same LOT. 
Accordingly, the Department preliminarily finds that no level of trade 
adjustment or CEP offset is appropriate for Echjay.

Currency Conversions

    The Department 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 of the United States.

Preliminary Results of Review

    As a result of our review the Department preliminarily finds the 
following weighted-average dumping margins exist for the period 
February 1, 2004, through January 31, 2005:

------------------------------------------------------------------------
                Manufacturer / Exporter                 Margin (percent)
------------------------------------------------------------------------
Echjay Forgings, Ltd..................................              0.38
Paramount Forge.......................................            210.00
------------------------------------------------------------------------

    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 of the preliminary results. 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 review. Pursuant to 19 CFR 309(d), rebuttal briefs and 
rebuttals to written comments, limited to issues raised in the case 
briefs and comments, may be filed no later than 5 days after the time 
limit for filing the case briefs. 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, the Department requests parties submitting 
written comments to 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.

Assessment Rates

    Upon issuance of the final results of this review, the Department 
shall determine, and CBP shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), the 
Department has calculated importer-specific ad valorem assessment rates 
based on the total amount of antidumping duties calculated for the 
examined sales made during the POR divided by the total entered value, 
or quantity (in kilograms), as appropriate, of the

[[Page 11386]]

examined sales. Upon completion of this review, where the assessment 
rate is above de minimis (i.e., at or above 0.50 percent) the 
Department will instruct CBP to assess duties on all entries of subject 
merchandise by that importer. See 19 CFR 351.106(c)(1).

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of flanges from India 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 
Tariff Act: (1) the cash deposit rates for the reviewed companies will 
be the rates established in the final results of administrative review; 
if the rate for a particular company is zero or de minimis (i.e., less 
than 0.50 percent), no cash deposit will be required for that company; 
(2) for manufacturers or exporters not covered in this review, but 
covered in the original less-than-fair-value investigation or a 
previous review, the cash deposit will continue to be the most recent 
rate published in the final determination or final results for which 
the manufacturer or exporter received a company-specific rate; (3) if 
the exporter is not a firm covered in this review, a prior review or 
the original investigation, but the manufacturer is, the cash deposit 
rate will be that established for the most recent period for that 
manufacturer of the merchandise; and (4) if neither the exporter nor 
the manufacturer is a firm covered in this or any previous reviews, the 
cash deposit rate will be 162.14 percent, the ``all others'' rate 
established in the LTFV investigation. See Amended Final Determination. 
These deposit requirements, 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 and 19 CFR 
351.221(b)(4).

    Dated: February 28, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-3173 Filed 3-6-06; 8:45 am]
BILLING CODE 3510-DS-S