65 FR 2116 January 13, 2000 

DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-816]

 
Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan; 
Final Results of Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Final Results of Administrative Review.

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SUMMARY: On May 15, 1997, the Department of Commerce (the Department) 
published in the Federal Register the preliminary results of the 1992-
1994 administrative review of the antidumping duty order on certain 
stainless steel butt-weld pipe fittings (pipe fittings) from Taiwan (A-
583-816). This review covers one manufacturer/exporter of the subject 
merchandise during the period December 23, 1992 through May 31, 1994.
    We gave interested parties an opportunity to comment on the 
preliminary results. Based upon our analysis of the comments received 
we have not changed the results from those presented in our preliminary 
results of review.

EFFECTIVE DATE: January 13, 2000.

FOR FURTHER INFORMATION CONTACT: Robert James at (202) 482-5222, 
Antidumping and Countervailing Duty Enforcement Group III, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue NW, Washington, DC 20230.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all 
citations to the Tariff Act of 1930, as amended (the Tariff Act) and to 
the Department's regulations are in reference to the

[[Page 2117]]

provisions as they existed on December 31, 1994.

SUPPLEMENTARY INFORMATION:

Background

    On June 16, 1993, the Department published in the Federal Register 
the antidumping duty order on pipe fittings from Taiwan (58 FR 33250). 
On June 7, 1994, the Department published the notice of ``Opportunity 
to Request Administrative Review'' for the period December 23, 1992 
through May 31, 1994 (59 FR 29411). In accordance with 19 CFR 
353.22(a)(1), respondent Ta Chen Stainless Pipe Co., Ltd. (Ta Chen) 
requested that we conduct a review of its sales for this period. On 
July 15, 1994, we published in the Federal Register a notice of 
initiation of an antidumping duty administrative review covering the 
period December 23, 1992 through May 31, 1994.
    We published the preliminary results of this review in the Federal 
Register on May 15, 1997 (Certain Stainless Steel Butt-Weld Pipe 
Fittings From Taiwan; Notice of Preliminary Results of Administrative 
Review, 62 FR 26773 (Preliminary Results)). Ta Chen filed a case brief 
on September 3, 1997; petitioner, the Flowline Division of Markovitz 
Enterprises Inc., submitted its rebuttal brief on September 11, 1997. 
The Department held a hearing on October 21, 1997.
    The Department has now completed this review in accordance with 
section 751 of the Tariff Act.

Scope of the Review

    The products subject to this antidumping duty order are certain 
stainless steel butt-weld pipe fittings, whether finished or 
unfinished, under 14 inches inside diameter.
    Certain stainless steel butt-weld pipe fittings (pipe fittings) are 
used to connect pipe sections in piping systems where conditions 
require welded connections. The subject merchandise is used where one 
or more of the following conditions is a factor: (1) Corrosion of the 
piping system will occur if material other than stainless steel is 
used; (2) Contamination of the material in the system by the system 
itself must be prevented; (3) High temperatures are present; (4) 
Extreme low temperatures are present; (5) High pressures are contained 
within the system.
    Pipe fittings come in a variety of shapes, with the following five 
shapes the most basic: ``elbows,'' ``tees,'' ``reducers,'' ``stub 
ends,'' and ``caps.'' The edges of finished pipe fittings are beveled. 
Threaded, grooved, and bolted fittings are excluded from this 
antidumping duty order. The pipe fittings subject to this order are 
classifiable under subheading 7307.23.00 of the Harmonized Tariff 
Schedule of the United States (HTS).
    Although the HTS subheading is provided for convenience and Customs 
purposes, our written description of the scope of this order remains 
dispositive.
    The period for this review is December 23, 1992 through May 31, 
1994. This review covers one manufacturer/exporter, Ta Chen, and its 
wholly-owned U.S. subsidiary, Ta Chen International (TCI) 
(collectively, Ta Chen).

Analysis of Comments Received

    Due to the number of individual and company names and the 
importance of the timing of events in this review, that history is 
summarized briefly here. Furthermore, Ta Chen filed a single case brief 
covering this review as well as the 1992-1993 and 1993-1994 
administrative reviews of certain welded stainless steel pipe 
(stainless pipe) from Taiwan. Therefore, a coherent response to Ta 
Chen's arguments in the instant review necessarily entails references 
to actions taken by petitioners in the stainless pipe case. The 
comments that follow concern our application of adverse best 
information available (BIA) as the basis for Ta Chen's margins in the 
preliminary results of this review. Our decision to resort to BIA 
resulted from Ta Chen's dealings with two US customers, referred to in 
the Preliminary Results as ``Company A'' and ``Company B'' to protect 
their identities. Ta Chen has since entered the names of these 
customers into the public record of this review and we here identify 
them by name: Company A is San Shing Hardware Works, USA (San Shing), 
and Company B is Sun Stainless, Inc. (Sun). San Shing and Sun were both 
established by current or former managers and officers of Ta Chen, were 
staffed entirely by current or former Ta Chen employees, and 
distributed only Ta Chen products in the United States. According to Ta 
Chen, prior to June 1992 (the date of the preliminary determination in 
the less-than-fair-value (LTFV) investigation of stainless pipe) Ta 
Chen had sold pipe and pipe fittings from the US inventory of its 
wholly-owned subsidiary, TCI. In June 1992 TCI and San Shing (a US 
company established in 1988 by the president of a Taiwanese firm, San 
Shing Hardware Works, Ltd.) allegedly signed an agreement whereby San 
Shing would purchase all of TCI's existing US inventory and would 
replace TCI as the principal distributor of Ta Chen pipe and pipe 
fittings in the United States. San Shing also committed itself to 
purchasing substantial dollar values of Ta Chen products from TCI over 
the next two years, and rented its business location from the president 
of Ta Chen and TCI, Robert Shieh. Ta Chen claims it took these measures 
to avoid the burden of reporting exporter's sales price (ESP) sales to 
the Department. Operating under a number of ``doing business as'' (dba) 
names including, inter alia, Sun Stainless, Inc., Anderson Alloys, and 
Wholesale Alloys, San Shing accounted for well over eighty percent of 
Ta Chen's US sales of pipe fittings during the 1992--1994 period of 
review.
    According to Ta Chen, in September 1993 a member of Ta Chen's board 
of directors, Frank McLane, incorporated a new entity, also called Sun 
Stainless, Inc. This new Sun purchased all of San Shing's assets, 
including inventory, and assumed all of San Shing's obligations 
regarding its lease of space from Ta Chen's president, purchase 
commitments, credit arrangements, etc. One month later, in October 
1993, Mr. McLane allegedly sold all of his Ta Chen stock, resigned as 
an officer of Ta Chen, and severed all ties with the firm, devoting his 
full energies from that time forward to the new Sun.
    On July 18, 1994, petitioners in the companion case on stainless 
pipe first called the Department's attention to San Shing's existence, 
and named six of an eventual eight dba parties all claimed by Ta Chen 
as unrelated US customers. Ta Chen responded on July 28, 1994, claiming 
that San Shing, as a newcomer to the US stainless steel pipe fittings 
market, had adopted the names of prior Ta Chen customers as dba names. 
This submission failed to note the two additional dba names also used 
by San Shing, but not included in the stainless pipe petitioners' July 
18 allegations. On August 3, 1994, sixteen days after petitioners in 
the stainless pipe case first called attention to its existence, the 
corporate charter of San Shing USA, Ta Chen's chosen replacement as the 
master distributor of its pipe and pipe fittings, was dissolved.
    On September 19, 1994, Ta Chen filed its initial questionnaire 
response in the 1992-1994 review. San Shing, which accounted for over 
four-fifths of Ta Chen's US sales in this review, was not mentioned 
anywhere in this 303-page response.
    The Department conducted a thorough verification of Ta Chen's home 
market submissions in the 1992-1993 review of stainless pipe in October 
1994. Department officials then traveled to TCI's headquarters in Long 
Beach, California to verify Ta Chen's US sales

[[Page 2118]]

submissions in the pipe case. Aside from minor corrections, the 
resulting verification reports noted no major discrepancies and 
repeated Ta Chen's account of San Shing's and Sun's histories without 
further comment. See Ta Chen's February 7, 1997 submission, placing the 
relevant portions of the Department's November 6, 1996 verification 
reports on the record in this review.
    On July 12, 1995, petitioners in the stainless pipe case renewed 
their allegations that Ta Chen, San Shing, and Sun were related 
parties, and appended reports by Dun & Bradstreet (D&B) and a foreign 
market researcher indicating that Sun Stainless had actually been 
founded by Frank McLane and W. Kendall (Ken) Mayes, TCI's sales 
manager, in May of 1992, not September 1993, as claimed by Ta 
Chen.<SUP>1</SUP> Ta Chen's rebuttal of August 2, 1995 included 
affidavits from Mr. Mayes and a Taiwanese employee of Ta Chen denying 
the July 12 allegations. See Letter of Ablondi, Foster, Sobin & 
Davidow, August 2, 1995 (Case A-583-815).
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    \1\ With the permission of petitioners in the stainless pipe 
case, on February 24, 1997, the Department incorporated this Dun & 
Bradstreet report and an accompanying affidavit into the record of 
this review.
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    Over a year later, on November 12, 1996, Ta Chen filed a 
supplemental response <SUP>2</SUP> in the third (1994-1995) review of 
stainless pipe which disclosed for the first time that Ta Chen (i) Had 
authority to sign checks issued by San Shing, its dbas, and Frank 
McLane's Sun, (ii) Had physical custody of these parties' check-signing 
stamps, (iii) Controlled San Shing's and Sun's assets and had pledged 
these as collateral for a loan obtained on behalf of TCI, (iv) Enjoyed 
full-time and unfettered computer access to San Shing's and Sun's 
computerized accounting records, and (v) Shared sales and clerical 
personnel with San Shing and Sun. See Preliminary Results for a further 
description of these ties. The Department elicited further details 
concerning these connections in additional questionnaires; Ta Chen 
incorporated the relevant portions of its responses into the record of 
this review on February 7, 1997. Based on the totality of evidence 
before the Department, in the Preliminary Results we concluded that Ta 
Chen was related to San Shing and Sun within the meaning of section 
771(13) of the Tariff Act. The Department also determined that Ta Chen 
had significantly impeded this review through its incomplete and 
inconsistent accounts of the events in the relevant period and that Ta 
Chen's behavior warranted application of first-tier, uncooperative BIA.
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    \2\ Ta Chen submitted relevant portions of this response into 
the record of this review on December 13, 1996 and again on January 
2, 1997.
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Comment 1: Related Party as Defined by Statute and Practice

    Ta Chen insists that San Shing USA and Sun <SUP>3</SUP> were not 
related parties as defined by the Tariff Act in force at the time of 
all of Ta Chen's sales to these customers during the first period of 
review (POR). First, Ta Chen notes that under the 1994 statute, section 
771(13) of the Tariff Act defines an ``exporter'' as including ``the 
person by whom or for whose account the merchandise is imported into 
the United States, if--
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    \3\ Although Ta Chen refers to San Shing and Sun Stainless, Inc. 
collectively as ``Sun,'' for clarity the Department has not done so.
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* * * * *
    (B) Such person owns or controls, directly or indirectly, 
through stock ownership or control or otherwise, any interest in the 
business of the exporter, manufacturer, or producer;
    (C) The exporter, manufacturer, or producer owns or controls, 
directly or indirectly, through stock ownership or control or 
otherwise, any interest in the business conducted by such person.

Ta Chen's September 3, 1997 Case Brief (Case Brief) at 7, quoting 
section 771(13) of the Tariff Act (Ta Chen's emphasis omitted).
    Under this statutory framework, Ta Chen argues, the ``exporter'' 
can only include the parties ``by whom or for whose account the 
merchandise is imported.'' According to Ta Chen, because Ta Chen first 
sold the subject merchandise to its US subsidiary TCI, which took legal 
title to the pipe fittings, incurred all seller's risks of non-payment, 
acted as the importer of record for all these transactions, and 
``entered the importation into its financial inventory,'' TCI, not San 
Shing or Sun, was ``the person by whom, or for whose account,'' the 
merchandise was imported. Case Brief at 9. Therefore, section 771(13) 
of the Tariff Act never reaches the issue of whether or not TCI 
subsequently resold the subject merchandise to a related party such as 
San Shing or Sun. Any such transactions, in Ta Chen's view, would be 
irrelevant under the statute, citing Certain Small Business Telephone 
Systems from the Republic of Korea, 54 FR 53141, 53151 (December 27, 
1989) (Small Business Telephones). In that case, Ta Chen submits, the 
Department concluded that the respondent's related US customer was 
``neither the importer nor the person for whose account the merchandise 
is imported;'' therefore, the sales transactions between the 
respondent's US subsidiary and the related US customer did not 
constitute ``related party'' transactions, as defined by the 
antidumping statute. Id. at 9, quoting Small Business Telephones. That 
the sales at issue in Small Business Telephones represented ESP 
transactions from the US affiliate's warehouse, as opposed to what Ta 
Chen characterizes as purchase price (PP) transactions ``facilitated'' 
by its US subsidiary TCI does not, Ta Chen argues, make any difference.
    Further, Ta Chen maintains that the Department's preliminary 
determination that Ta Chen is related to San Shing and to Sun because 
it controlled these entities is contrary to the plain language of the 
statute. Section 771 of the Tariff Act, Ta Chen submits, only defines 
two parties as related if one party ``owns or controls, directly or 
indirectly, through stock ownership or control or otherwise, any 
interest in the business of the other.'' Case Brief at 11, quoting 
section 771 of the Tariff Act (Ta Chen's emphasis). This ``interest,'' 
Ta Chen insists, is defined both in case law and Departmental practice 
as involving equity ownership of at least five percent of the stock of 
the related party. Ta Chen avers that the Department's Preliminary 
Results in this review have read the phrase ``any interest'' out of the 
statute. According to Ta Chen, ``[i]t is an elementary principle of 
statutory construction that a portion of a statute should not be 
rendered a nullity.'' Id., quoting Asociacion Colombiana de 
Exportadores de Flores v. United States (Asocoflores), 717 F. Supp. 
847, 851 (CIT 1989). Ta Chen interprets the Department's Preliminary 
Results as stating essentially that because Ta Chen exercised 
``control'' over San Shing and Sun, Ta Chen thereby controlled ``an 
interest in'' San Shing and Sun; such a reading, Ta Chen argues, 
renders the relevant statutory language meaningless and redundant. Case 
Brief at 12. Compounding the Department's error, Ta Chen continues, is 
that while recognizing the ``any interest'' requirement of section 
771(13)(B) and (C) of the Tariff Act, the Department nonetheless failed 
to define ``any interest'' in its Preliminary Results. In Ta Chen's 
view, this failure to define ``any interest'' as applied in this 
review, especially in light of past practice defining ``any interest'' 
as entailing five percent or more equity ownership, places the burden 
upon the respondent to divine the meaning of the undefined. Further, 
this ``abdication'' by the Department effectively precludes judicial 
review, as the reviewing court

[[Page 2119]]

would also be hobbled by this same failure to define the relevant 
terms.
    Ta Chen suggests that, had Congress intended to include a control 
test in the definition of related parties under section 771, it would 
have done so. Instead, Ta Chen maintains, Congress chose to define two 
parties as related to one another not when one controlled the other 
but, rather, when one controlled ``any interest'' in the other. This 
distinction is critical, Ta Chen asserts, because Congress did include 
a simple control test at sections 773(d) and (e) of the Tariff Act (the 
``Special Rules'' for, respectively, Certain Multinational Corporations 
and disregarding related-party transfer prices for major inputs in the 
calculation of constructed value). ``Where the Congress includes 
language in one provision of a statute, but not in another, it is 
assumed that the Congress did so for a purpose. * * * [T]he difference 
in statutory language must be recognized.'' Case Brief at 14, citing 
Rusello v. United States, 464 US 16, 23 (1983), and United States v. 
Wong Kim Bo, 472 F. 2d. 720, 722 (5th Cir. 1972). According to Ta Chen, 
Congress never intended that ``control any interest'' would be 
synonymous with ``control'' where, as here, neither entity owns or 
controls equity in the other. This reading, Ta Chen maintains, is 
supported by the legislative history underlying the relevant statutory 
provisions. Ta Chen, citing Nacco Materials Handling Group v. United 
States, Slip Op. 97-99 (CIT July 15, 1997) (Nacco Materials), notes 
that the Senate Report accompanying the Antidumping Act of 1921 (the 
1921 Act), progenitor of the Tariff Act, defined ``exporter'' as 
including the importer when ``the latter is financially interested in 
the former, or vice versa, whether through agency, stock control, 
resort to organization of subsidiary corporation, or otherwise.'' Case 
Brief at 15, quoting from S. Rep. No. 67-16, at 13 (April 28, 1921). 
One party's being ``financially interested'' in another, Ta Chen 
submits, is different from that party ``controlling'' another. Id.
    Ta Chen argues that the Preliminary Results not only ignore the 
plain statutory language but also conflict with the common dictionary 
meaning of the term ``interest'' as entailing equity ownership of a 
share, right, or title in a business or property. Id. at 16. The 
Department, Ta Chen avers, embraced this definition when it stated that 
its policy is to find parties related only where the ownership interest 
of one party in the other meets the five percent threshold. See, e.g., 
Final Determination of Sales at Less Than Fair Value; Certain Forged 
Steel Crankshafts From Japan (Crankshafts), 52 FR 36984 (October 2, 
1987).
    According to Ta Chen, that this interpretation (i.e., the reference 
to at least five-percent equity ownership) survived two major revisions 
to the antidumping law underscores Congress's approval of that 
interpretation. Ta Chen notes that both the 1984 Trade Act and the 
Omnibus Trade and Competitiveness Act of 1988 left intact the statutory 
language of section 771(13) and its reliance on equity ownership. 
``Congress's amendment or re-enactment of the statutory scheme without 
overruling or clarifying the [administering] agency's interpretation is 
considered as approval of the agency interpretation.'' Case Brief at 
20, quoting Casey v. C.I.R., 830 F. 2d 1092, 1095 (10th Cir. 1987).
    Ta Chen further argues that the Department's interpretation of 
section 771(13) of the Tariff Act in the Preliminary Results could lead 
to absurd results, asserting that under this standard, ``any control, 
no matter how inconsequential, would make the parties related,'' 
including ``any clerical assistance, any forwarding of orders to a 
customer, any attempt to insure payment, any security interest, any 
informational exchanges, any movement of an employee from one company 
to another, etc.'' Case Brief at 18. And, having created one absurdity 
by reading ``any interest'' out of the statute, Ta Chen asserts, the 
Department creates another absurdity by altering the statutory 
definition of ``controls * * * any interest'' into ``controls a 
substantial interest.'' Id., citing the Preliminary Results at 26778 
(Ta Chen's emphasis). Ta Chen argues that this attempt to rescue the 
Preliminary Results from absurdities founders on the Department's long-
established practice that a party's five percent equity interest in 
another makes them related for purposes of the statute; ``[five] 
percent is not a substantial or significant control interest.'' Id. at 
19.
    Ta Chen points to the amendments to the Tariff Act effected by the 
Uruguay Round Agreements Act (URAA) as further confirmation that 
control did not define related parties under the pre-URAA Tariff Act 
governing this administrative review. According to Ta Chen, the 
Statement of Administrative Action (SAA) accompanying the URAA supports 
Ta Chen's contention that the URAA fundamentally altered the prior 
definition of related parties by adding a control test as a means for 
finding parties affiliated. For example, the SAA states that 
``including control in the definition of `affiliated' will permit a 
more sophisticated analysis which better reflects the realities of the 
marketplace.'' Case Brief at 21 and 22 (quoting the SAA at 78). 
Further, Ta Chen argues, the Senate report notes that the URAA added 
the factor of control in determining whether two parties are 
affiliated. Id. That Congress felt compelled to amend the Tariff Act to 
include specifically the indicium of control, Ta Chen avers, 
demonstrates that such a test was lacking in the old law: ``when a 
legislative body amends statutory language, its intention is to change 
existing law.'' Ta Chen continues: ``Congress completely rewrote the 
statutory language of the affiliated parties provision * * * adding the 
control test.'' Id. at 24 and 25. If control had been a factor in the 
pre-URAA Tariff Act's definition of related parties, Ta Chen concludes, 
there would have been no need to change the statutory language within 
the context of the Uruguay Round negotiations.
    The Department, Ta Chen argues, has similarly distinguished between 
the prior definition of ``related parties'' and the expanded definition 
of ``affiliated persons,'' which, Ta Chen asserts, introduced the 
concept of control. Ta Chen notes that the Department in its Notice of 
Proposed Rulemaking (Proposed Rule) (61 FR 7308 (February 27, 1996)) 
issued in the wake of the URAA's amendments, remarked upon the 
confusion of many parties over the definition of control, and noted 
that the statute and SAA failed to provide ``sufficient guidance as to 
when the Department will consider an affiliate to exist by virtue of 
`control' * * *'' Case Brief at 28, quoting Proposed Rule. If the 
control test always existed in the law, Ta Chen asks, why is the 
Department only now beginning to define control? The answer, Ta Chen 
submits, is that the control test was added by the 1995 amendments of 
the URAA.
    To buttress its contention that the URAA added a control test to 
the related-party equation, Ta Chen notes that non-equity control 
relationships have been common--and widely known--for years prior to 
enactment of the URAA; yet, Ta Chen asserts, neither Congress nor the 
Department felt an apparent need to address these non-equity 
relationships within the context of the antidumping law. Furthermore, 
generally-accepted accounting principles (GAAP) in the United States 
have long recognized, and distinguished between, relationships 
involving control and those involving equity interest. Ta Chen 
maintains that this bifurcation is evident in the Department's 
administration of antidumping administrative reviews; since enactment

[[Page 2120]]

of the URAA the Department's antidumping questionnaires, verification 
outlines, and published determinations are replete with discussions of 
control, whereas ``[s]uch discussion does not exist under the pre-[URAA 
Tariff] Act.'' The reason, Ta Chen avers, is ``not because the world 
changed * * * [r]ather, the reason is that the law changed.'' Case 
Brief at 31.
    The Preliminary Results, Ta Chen continues, are contrary not only 
to the plain language of the statute and the common meaning of the term 
``related,'' but also fly in the face of long-standing Department 
practice. Citing Crankshafts and Disposable Pocket Lighters from 
Thailand, 60 FR 14263, 14268 (March 16, 1995) (Pocket Lighters), Ta 
Chen contends that under the pre-URAA statute, the Department has 
determined that two parties cannot be considered related absent common 
stock ownership. According to Ta Chen, in Disposable Lighters the 
Department refused to find two parties related despite closely 
intertwined operations, joint manipulation of prices and production 
decisions, and long-standing business relationships, including past 
ownership of one party by the other. The decisive factor in this 
determination, Ta Chen suggests, was the absence of any common equity 
relationship between the two entities during the period under review. 
Ta Chen maintains that the Department has hewn to this interpretation 
in litigation, as well. For example, Ta Chen continues, in Nacco 
Materials the Department concluded that the respondent and its two 
related entities satisfied the ownership requirements of section 
771(13)(C) of the Tariff Act through direct or indirect ownership by 
the respondent. See Nacco Materials, at 10 and 11. Ta Chen insists that 
in the instant review Ta Chen, San Shing, and Sun have not satisfied 
what Ta Chen views as a statutory requirement for finding parties 
related.
    Ta Chen suggests that even cases cited by petitioners in the 
stainless pipe case to support their claim that parties can be related 
through control (see, e.g., Certain Fresh Cut Flowers From Colombia, 61 
FR 42833, 42861 (August 19, 1996) (Colombian Flowers), and Roller 
Chain, Other Than Bicycle Chain, From Japan, 57 FR 43697 (September 22, 
1992)) indicate that the Department defined ``any interest'' solely in 
terms of equity ownership. Case Brief at 36 and 37. Ta Chen maintains 
that prior to the Preliminary Results the Department has never stated 
that control of a company is tantamount to controlling an interest in 
that party. Indeed, Ta Chen avers, such control is ``irrelevant to 
whether the statutory standard is met.'' Id. at 37. As an example, Ta 
Chen cites Fresh Cut Roses From Ecuador where, Ta Chen argues, the 
Department concluded that the petitioner's concerns over the 
possibility of price manipulation and control of production and sales 
were inapposite as there was no evidence that ``any of these statutory 
indicators'' of related parties had been found. See Fresh Cut Roses 
From Ecuador, 60 FR 7019, 7040 (February 6, 1995). According to Ta 
Chen, the Department likewise argued before the Court of International 
Trade (the Court) that the issue of control over prices ``is irrelevant 
to the initial determination of whether the parties are indeed 
related'' within the meaning of section 771(D) of the Tariff Act. Case 
Brief at 38, quoting Torrington Co., Inc. v. United States, Slip Op. 
97-29 (CIT March 7, 1997). In that case, Ta Chen argues, the Court 
concluded that ``requiring Commerce to look beyond the financial 
relationships of the companies would obviate the need for a statute 
setting forth specific guidelines for determining whether parties are 
indeed related.'' Id. at 40, quoting Torrington at 19. And in Zenith 
Radio Corp. v. United States (Zenith), Ta Chen maintains, the Court 
affirmed the Department's position that such financial relationships 
``go to the essence of those relationships which the law details in 19 
U.S.C. Sec. 1766(13).'' Id., quoting Zenith at 606 F. Supp 695, 699 
(CIT 1985), aff'd, 783 F.2d 185 (Fed. Cir. 1986). Ta Chen points to 
Cellular Mobile Telephones From Japan, 54 FR 48011, 48016 (November 20, 
1989) as another instance where the Department ruled that the presence 
of non-equity relationships embodied in a Japanese keiretsu was 
irrelevant to its related-party determination. Case Brief at 40.
    Ta Chen draws further support for its interpretation of the statute 
from a ``separate line of cases'' involving the collapsing of related 
parties. While conceding that home market collapsing determinations are 
not coterminous with the Department's definition of exporter for the 
purpose of determining United States price, Ta Chen nonetheless asserts 
the Department has consistently reached the statutory definition that 
two parties are related before proceeding to the ``non-statutory 
question'' of whether or not to collapse the two entities for purposes 
of antidumping margin calculation. Case Brief at 45 and 46, citing 
Pocket Lighters, 60 FR 14263, 14276, Fresh Cut Roses From Ecuador, 60 
FR 7019, 7040 (February 6, 1995), and Colombian Flowers, 61 FR 42833, 
42853 (1996). Rather, Ta Chen avers, the Department's Preliminary 
Results ``put[ ] the cart before the horse'' by, as Ta Chen frames it, 
reaching the collapsing decision first, and then using that decision to 
determine whether Ta Chen is related to San Shing and Sun within the 
meaning of section 771(13)(B) and (C) of the Tariff Act. Case Brief at 
47. Citing these ``parallel lines'' of precedent, Ta Chen argues that 
the Department has always found parties ``only related when one owns 
another and no other factors are considered relevant.'' Id. at 48 and 
49.
    Ta Chen next turns to the Department's conclusion in the 
Preliminary Results that Ta Chen and Sun were related pursuant to 
subsection 771(13)(B) of the Tariff Act by virtue of the common 
ownership interests allegedly held by Mr. Frank McLane, who at the time 
in question was still a board member of Ta Chen. Ta Chen notes that the 
Preliminary Results assert that Mr. McLane simultaneously held equity 
interest in Ta Chen and owned Sun outright, thus making Ta Chen and Sun 
related. This conclusion, Ta Chen argues, is both factually and legally 
flawed. As a threshold matter, Ta Chen asserts, subsection 771(13)(B) 
of the Tariff Act holds that the exporter includes the person ``by whom 
or for whose account'' the subject pipe is imported into the United 
States (i.e., Mr. McLane's Sun), if such person owns or controls ``any 
interest in the business of the exporter, manufacturer or producer'' 
(i.e., Ta Chen). In Ta Chen's view, the Department could at most 
conclude that Mr. McLane was related to Sun or that Mr. McLane was 
related to Ta Chen. The Department could not argue, Ta Chen maintains, 
that Sun was, therefore, related to Ta Chen. Case Brief at 97.
    Ta Chen adduces additional support for its contention that Frank 
McLane did not simultaneously own interests in Sun and Ta Chen by 
citing to corporate tax returns for San Shing for the 1992 and 1993 tax 
years. According to Ta Chen, San Shing's return for the year ended 
October 31, 1993 does not list Mr. McLane as either an officer or an 
owner. Ta Chen also argues that separate D&B reports on Ta Chen 
International, submitted by the stainless pipe petitioners, do not list 
Sun as a related concern. Furthermore, Ta Chen claims, its audited 
financial statements do not list Sun as being related to Ta Chen or 
TCI, although they do list Mr. McLane's other business interests, such 
as McLane Leisure and McLane Manufacturing, as related parties. Case 
Brief at 105. Finally, Ta Chen concludes, the Department has stated in 
verification reports in other proceedings that Mr. McLane's involvement 
with Sun commenced after he left Ta Chen. Id.,

[[Page 2121]]

citing Ta Chen's July 18, 1994 submission.
    Assuming that Ta Chen and Sun were related before November 1993, Ta 
Chen submits that it did not sell subject merchandise to Sun prior to 
that time. According to Ta Chen, until November Ta Chen sold to San 
Shing, doing business as Sun Stainless, Inc., not to Frank McLane's Sun 
Stainless, Inc. ``It would be pure conjecture,'' Ta Chen submits, for 
the Department to conclude that Ta Chen sold to Mr. McLane's Sun. Case 
Brief at 107.
    Finally, assuming that the pre-URAA law permits consideration of 
control in finding parties related, Ta Chen argues that the application 
of such a test in the instant review is unlawful absent sufficient 
agency explanation. The Preliminary Results, Ta Chen insists, represent 
a departure from the Department's practice of defining related parties 
in terms of five percent equity ownership; the failure to note and 
explain this so-called departure renders this determination unlawful. 
Case Brief at 51, citing USX Corp. v. United States, 682 F. Supp. 60, 
63 (CIT 1988). Furthermore, Ta Chen continues, the Preliminary Results 
represent an unfair retroactive application of what Ta Chen describes 
as a new control test under section 771(13) of the pre-URAA Tariff Act. 
Principles of fairness, Ta Chen submits, require the Department to 
reverse its preliminary finding that Ta Chen was related to San Shing 
and Sun, especially, Ta Chen argues, because (i) This is a case of 
first impression, (ii) The Preliminary Results represent an abrupt 
departure from past administrative practice with respect to related-
party issues, (iii) Ta Chen relied upon its understanding of the law 
then in effect when it responded to the Department's requests for 
information on related parties, (iv) The Preliminary Results would 
impose an ``enormous'' burden upon Ta Chen (by raising its margins to 
the BIA rates presented in the Preliminary Results), and (v) There is, 
in Ta Chen's view, no statutory interest in applying this new test to 
this backlog review.
    Petitioner dismisses Ta Chen's arguments as to the statutory 
definition of related parties, characterizing Ta Chen's lengthy case 
brief as ``a desperate, albeit feeble, attempt to distort and 
selectively package the facts.'' In petitioner's view the issues are, 
in fact, quite simple. First, petitioner avers, the information Ta Chen 
itself provided ``in a misleading, untimely, and unacceptable manner'' 
demonstrates amply that Ta Chen was related to San Shing and Sun. 
Petitioner's September 11, 1997 Rebuttal Brief (Rebuttal Brief) at 2. 
Second, petitioner accuses Ta Chen of intentionally mis-characterizing 
its true relationships with San Shing and Sun, and of failing to 
provide the Department with accurate and reliable U.S. sales data to 
serve as the basis for calculating Ta Chen's margin in this review.
    According to petitioner, under the plain language of the statute 
the only possible conclusion the Department could reach is that Ta Chen 
and San Shing and Sun <SUP>4</SUP> are related. Id. at 3. Petitioner 
points out that section 771(13)(C) of the Tariff Act defines the 
``exporter'' (i.e., Ta Chen) as including any person (i.e., San Shing 
and Sun) ``if the exporter manufacturer, or producer owns or controls, 
directly or indirectly, through stock ownership or control or 
otherwise, any interest in the business conducted by such person.'' 
Rebuttal Brief at 4 (original emphasis). Petitioner suggests that the 
control indicia listed by the Department in the Preliminary Results, 
such as pledging of security interests in the parties' assets, 
possession of their signature stamps, the dedicated interconnection of 
computers, the sharing of office and sales personnel, and Mr. Shieh's 
negotiation of prices with San Shing's and Sun's customers, indicate 
clearly that Ta Chen was related to San Shing and Sun. In fact, 
petitioner contends, any one of these indicia in isolation would be 
sufficient to find Ta Chen related to San Shing and Sun. ``Remarkably, 
in the case of Ta Chen, each one of these situations existed.'' Given 
the breadth and depth of these parties' interrelationships, petitioner 
insists, Ta Chen's claim that it is not related to San Shing and Sun 
``can only be interpreted as a blatant attempt to mislead the 
Department and impede this antidumping review.'' Rebuttal Brief at 4.
---------------------------------------------------------------------------

    \4\ Out of caution, petitioner's Rebuttal Brief refers to San 
Shing and Sun as ``Company X.''
---------------------------------------------------------------------------

    Contrary to Ta Chen's assertions, petitioner continues, the Tariff 
Act clearly does not limit the Department's related-party 
determinations only to those cases presenting documented evidence of 
direct equity ownership. Petitioner avers that the statute authorizes 
the Department to look beyond equity ownership to consider ``any and 
all situations where the nature of the relationship between the two 
parties allows the possibility of price and cost manipulation.'' Id. 
Thus, petitioner asserts, the pre-URAA definition of related parties 
extended beyond a simple test for equity ownership and provided 
expressly for situations wherein one party controls, through means 
other than stock ownership, any interest in the business of the other 
party. Indeed, were the Department to ignore the ``obvious and 
persuasive evidence'' that Ta Chen was related to San Shing and to Sun, 
petitioner concludes, it would be guilty of ``failing to fulfill its 
role and obligations under the statute.'' Id. at 4 and 5.

Department's Position

    Based upon our review of the evidence on the record in this review, 
we conclude that the Department cannot reasonably rely upon sales 
between Ta Chen and San Shing or Sun for the purpose of calculating Ta 
Chen's dumping margin for this review. We agree with petitioner that 
the record evidence is clear that Ta Chen was, in fact, related to San 
Shing and Sun, as defined in section 771(13) of the pre-URAA Tariff 
Act.
    First, nothing in the statute or its legislative history proscribes 
the examination of non-equity relationships in making a related-party 
determination pursuant to section 771(13) of the pre-URAA Tariff Act. 
The plain language of the Tariff Act provides the Department with the 
statutory mandate to examine, where appropriate, whether parties are 
related by means of control in defining the exporter for purposes of 
determining U.S. price. Furthermore, the Department has recognized in 
its pre-URAA administrative determinations that certain factual 
situations require it to look to non-financial factors when making its 
related-party determinations, an interpretation of the statute which 
the Court has upheld.
    We also reject Ta Chen's contention that the definition of 
``interest'' in section 771(13) (B) and (C) is limited to common stock 
ownership; nothing in the statute itself or its accompanying 
legislative history so constrains the Department in its analysis of 
related parties. Rather, the principal reason stock ownership is so 
often cited as the basis for finding an exporter related to a U.S. 
importer is simply because equity ownership is the most common 
indicator of two parties' relationship found in commercial practice. In 
fact, common equity ownership has served as prima facie evidence that 
two parties are related for purposes of the Tariff Act. See, e.g., 
Color Television Receivers, Except for Video Monitors, From Taiwan, 53 
FR 49706, 49712 (December 9, 1988). That common equity ownership 
constitutes prima facie evidence of related-party status is not, 
however, tantamount to saying it is the only evidence of such a 
relationship. Put simply, the statute does not direct

[[Page 2122]]

the Department to find parties unrelated in the absence of common stock 
ownership. Further, nothing in the statute, the legislative history, or 
the regulations defines ``interest'' as being limited solely to stock 
ownership, or fixes a bright-line figure for the requisite level of 
equity ownership at five percent or more.
    Turning first to the statutory language, the statute's explicit 
reference to parties being related ``through stock ownership or control 
or otherwise'' demonstrates clearly that Congress anticipated that 
companies could be related for the purposes of defining the 
``exporter'' through means other than through stock or equity 
ownership. Such a reading is consistent with Congressional intent, the 
legislative history, and the express purpose of section 771(13) of the 
Tariff Act, which is to determine the proper basis for United States 
price in calculating dumping margins. As Ta Chen notes, ``[i]t is an 
elementary principle of statutory construction that a portion of the 
statute should not be rendered a nullity.'' See Asocoflores. Ta Chen's 
reading of the statute, however, would render a nullity the explicit 
statutory references to parties being related ``through stock ownership 
or control or otherwise.'' Therefore, accepting the narrow reading of 
the statute posited by Ta Chen would be inconsistent with the plain 
language of the statute.
    In addition, the Senate Report accompanying the 1921 Act clarifies 
that the Department is not limited solely to consideration of equity 
interests in making its related-party determinations, nor does it limit 
``financial interests'' solely to common equity ownership. Congress 
specifically included non-equity relationships as possible bases for 
finding parties related; by noting that an interest can involve a 
financial interest or interest ``through agency, stock control, resort 
to organization of subsidiary corporation or otherwise,'' Congress 
clearly envisioned the possibility of non-equity relationships between 
an exporter and an importer such that the prices between them become 
unreliable for purposes of calculating antidumping margins. See S. Rep. 
No. 67-16, at 13 (1921). Clearly, then, Congress did not share the view 
of section 771(13) urged by Ta Chen that related parties were limited 
per se to those sharing common equity ownership. Rather, Congress's 
broader view, as expressed in the plain language of the statute, 
afforded the Department the discretion to examine non-financial 
relationships where, as here, the record evidence so demanded. Any 
other reading of the legislative history would place artificial 
restraints on the Department's analysis and would be inconsistent with 
commercial realities, which recognize a wide range of relationships 
which could affect pricing and production decisions between parties.
    Turning to the Department's interpretation of the relevant 
statutory provisions, at one time the Department focused primarily upon 
equity interests in rendering its related-party determinations under 
section 771(13) of the Tariff Act. See, e.g., Cellular Mobile 
Telephones and Subassemblies From Japan, 54 FR 48011, 48016 (November 
20, 1989), and Small Business Telephones, 54 FR 53141, 53151 (Dec. 27, 
1989). The Department concluded that an equity interest of five percent 
or more, standing alone, was sufficient evidence to demonstrate that 
the prices between the parties could be manipulated. See, e.g., Final 
Determinations of Sales at Less Than Fair Value: Certain Hot-Rolled 
Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel Flat 
Products, and Certain Corrosion-Resistant Carbon Steel Flat Products 
From Japan, 58 FR 37154, 37157 (July 9, 1993). In certain situations, 
the Department decided that the facts on record did not justify 
examining factors of control beyond five percent equity ownership when 
determining if parties were related. See, e.g., Pocket Lighters, 60 FR 
14263 (March 16, 1995). In Zenith the Court upheld our decision not to 
broaden the related party inquiry beyond an examination of equity 
relationships. 606 F. Supp. 695, 699 and 700 (CIT 1985). The court 
stated that the Department is not required by the statute to look 
beyond financial relationships.<SUP>5</SUP>
---------------------------------------------------------------------------

    \5\ Ta Chen misreads the Court's decision in Zenith. There the 
Court found that while there was no statutory requirement that the 
Department examine ``relationships which do not find expression in 
financial terms,'' nowhere did the court assert that the Department 
was statutorily barred from an examination of non-financial 
relationships. Zenith, 606 F. Supp. at 700
---------------------------------------------------------------------------

    However, the Department has recognized the possibility of parties 
being related through non-financial interests in factual situations 
where elements of control exist that raise the distinct possibility of 
price manipulation. Thus, the Department has not felt constrained to 
examine only financial relationships and, where appropriate, has 
ventured beyond a consideration of equity ownership in its 
interpretation of section 771(13) of the Tariff Act. See, e.g., 
Portable Electric Typewriters From Japan: Final Results of 
Administrative Review, 48 FR 7768, 7770 (February 24, 1983) 
(considering factors indicating control, but ultimately rejecting the 
sufficiency of these factors to prove the parties were related in this 
case); Final Determination of Sales at Less Than Fair Value: Oil 
Country Tubular Goods From Argentina, 60 FR 33539, 33544 (June 28, 
1995) (considering, in addition to equity factors, non-equity factors 
such as shared management and indirect control before concluding that 
the producer was not related to certain customers). For example, in 
Polyethylene Terephthalate Film From Korea, the Department ``confirmed 
that the three entities are related in terms of common stock ownership, 
shared directors, and common management control'' for purposes of 
determining U.S. price. See Final Determination of Sales at Less Than 
Fair Value: Polyethylene Terephthalate Film From Korea, 56 FR 16305, 
16314 (April 22, 1991) (emphasis added). Similarly, in Roller Chain 
From Japan the Department, in finding that respondent Sugiyama was 
related to its customer, stated that it ``considers shared directorship 
to be evidence of a relationship between these two organizations.'' 
Roller Chain, Other Than Bicycle Chain, From Japan, 57 FR 43697, 43701 
(Sept. 22, 1992). Again, the Department clearly examined factors of 
control, and not solely the level of equity ownership in defining 
related parties under the statute.
    The Court has affirmed the Department's interpretation that a 
related-party determination may include an examination of non-financial 
factors. In Sugiyama Chain Co. v. United States, the Court expressly 
rejected the plaintiff's argument that section 771(13)(C) of the Tariff 
Act limited the Department to an examination of financial relationship 
when determining if parties are related under that provision of the 
statute. 852 F. Supp. 1103, 1112 (CIT 1994). Instead, the Court held 
that the Department ``may properly consider `both financial and/or non-
financial connections' when assessing whether parties are related 
within the meaning of [section 771(13)(c)].'' Id. (quoting E.I. DuPont 
De Nemours & Co. v. United States, 841 F. Supp. 1237, 1248 (CIT 1993) 
(DuPont). Similarly, the court in DuPont ruled that the Department's 
examination of both financial and non-financial factors was in 
accordance with its statutory mandate. See DuPont, 841 F. Supp. at 
1248.
    As the express statutory language indicates, the purpose of the 
pre-URAA definition of ``exporter'' provided at section 771(13) is to 
``determine when an importer is `connected' to the exporter so as to 
warrant the use of

[[Page 2123]]

`exporters sales price' as the basis for U.S. price.'' Statement of 
Administrative Action at 839. Under the statute the Department may not 
rely upon prices between an exporter and a related U.S. customer in 
calculating dumping margins because of the possibility that prices 
between these parties will be manipulated to mask dumping activities of 
the foreign respondent. As stated earlier, in order to effectuate this 
statutory mandate the Department has recognized that certain non-
financial relationships between parties may give rise to the potential 
for price manipulation or control. See, e.g., Polyethylene 
Terephthalate Film From Korea, 56 FR 16305, 16314 (April 22, 1991); 
Portable Electric Typewriters From Japan, 48 FR 7768, 7770 (February 
24, 1983). The Court has held that this interpretation is reasonable 
and in accordance with the law.
    Ta Chen's exclusive focus on equity ownership in its Case Brief 
ignores the express purpose of the related-party determination made 
pursuant to section 771(13). While the Department's inquiry may begin 
with an examination of equity ownership, nothing precludes examination 
of other factors, especially where, as here, we have record evidence of 
non-financial relationships demonstrating connections between the 
parties which raise the distinct possibility of price manipulation. Our 
examination of related parties in light of non-financial relationships 
in this review is consistent with the express purposes of this 
provision. In fact, Ta Chen insists in its case brief that its prices 
to San Shing and Sun were lower than prices to its other U.S. 
customers, mistakenly viewing this as evidence that the parties could 
not be related, and that the prices between them are reliable for 
margin calculations. On the contrary, by offering preferential pricing 
for goods sold to San Shing and Sun, Ta Chen not only has demonstrated 
that its relationship with San Shing and Sun raises the possibility of 
Ta Chen affecting pricing, but has admitted that this relationship has 
resulted in preferential pricing. We also find misplaced Ta Chen's 
emphasis on revisions to the Tariff Act effected by the URAA. Contrary 
to Ta Chen's argument, new section 771(33) does not represent a 
fundamental change in the statute's intent. Rather, the URAA's 
definition of affiliated persons merely ``shifted the focus to control 
rather than equity.'' See Memorandum to Jeffrey P. Bialos in 
Engineering Process Gas Turbo-Compressor Systems From Japan, December 
4, 1996 at 2. While in the past the predominant focus was on control 
through equity ownership, the new Tariff Act highlights all means of 
control in addition to equity ownership. See Engineering Process Gas 
Turbo-Compressor Systems From Japan.
    We also do not accept Ta Chen's definition of ``any interest'' as 
being limited to a minimum five percent equity ownership. The five-
percent equity test is a mere starting point in the Department's 
inquiry, establishing prima facie evidence that two parties are 
related. The analysis urged by Ta Chen would ignore the clear evidence 
in the record of this review that Ta Chen controlled San Shing and Sun 
and, through these parties, could manipulate prices to U.S. customers. 
We conclude further that Ta Chen did, in fact, have a non-equity 
financial interest in San Shing and Sun. The totality of the facts in 
this case, including Ta Chen's control of San Shing's and then Sun's 
check signing stamps, the unfettered computer ties, the involvement of 
Mr. Shieh in negotiating the prices accepted by San Shing and Sun, the 
exclusive supplier relationships, the pledging of San Shing's and Sun's 
assets to TCI's benefit, the intermingling of personnel, the 
preferential pricing and credit terms (for more on each of these ties 
see our response to Comment 2, below), and the rise and disappearance 
at Ta Chen's behest of both San Shing and Sun as Ta Chen's sole 
distributors, all point to the inescapable conclusion that San Shing's 
and Sun's financial interests were indistinguishable from Ta Chen's.
    In fact, given the depth and breadth of these non-equity financial 
ties, one would reasonably expect to find common equity ownership. Its 
absence is the only missing element in the panoply of indicia which 
demonstrate that Ta Chen ``owned or controlled, through stock 
ownership, or control, or otherwise,'' an interest in the business of 
San Shing and Sun. Notwithstanding this absence, the Department cannot 
be obliged to find that no relationship exists where parties have no 
equity interest between them. Such a limitation would invite parties to 
evade the antidumping law by simply avoiding any common stock 
ownership.
    Finally, assuming, arguendo, that the statute and the Department's 
past practice bar a finding that Ta Chen was related to San Shing and 
Sun pursuant to section 771(13)(C) of the Tariff Act, the facts of this 
review lead us to conclude, nevertheless, that the prices between these 
parties were, at a minimum, subject to manipulation by Ta Chen. Ta Chen 
acknowledges that its prices to San Shing and Sun were lower than its 
prices to Ta Chen's other U.S. customers. This pattern of preferential 
pricing undermines the credibility of Ta Chen's assertions concerning 
its relationships with San Shing and Sun and renders prices between 
them unsuitable for margin calculation purposes, given our statutory 
mandate to calculate dumping margins based upon arm's-length prices to 
the United States.
    Our interpretation of the related-party provisions for these final 
results is consistent with the plain language of the statute when 
applied to the facts of this case. Any other conclusion would render 
this portion of the Tariff Act a nullity and would result in 
absurdities, given the evidence of record demonstrating Ta Chen's 
control over these parties. Both San Shing and Sun were established by 
current or former managers and officers of Ta Chen, were staffed 
entirely by current or former Ta Chen employees, and distributed only 
Ta Chen products in the United States. Finally, we reject Ta Chen's 
suggestion that the Department has in this case applied some extra-
statutory test based upon ``substantial'' interest. Our use of this 
adjective in the Preliminary Results was descriptive only, and in no 
way implies the use of any new basis for the examination of 
relationships based upon control.

Comment 2: Ta Chen's Control of San Shing and Sun

    Assuming, arguendo, that the statute permits finding parties 
related based upon control, Ta Chen insists that it exercised no 
control over either San Shing or Sun. Ta Chen first contends that if it 
had held any interest in San Shing or Sun it would have ``received 
something'' from Chih Chou Chang's sale of San Shing to Frank McLane, 
and the subsequent sale of Mr. McLane's Sun Stainless, Inc. to a third 
party, Picol Enterprises.<SUP>6</SUP> Ta Chen claims that it received 
nothing from either transaction, which ``alone demonstrates that Ta 
Chen had no interest in either [San Shing or] Sun.'' Case Brief at 54.
---------------------------------------------------------------------------

    \6\ This firm is identified variously as ``Picol International'' 
and ``Picol Enterprises.'' The contract covering Frank McLane's sale 
of Sun lists the purchaser as ``Picol Enterprises.''
---------------------------------------------------------------------------

    Furthermore, Ta Chen argues, even the indicia of control cited by 
the Department in the Preliminary Results do not lead to a finding that 
Ta Chen exercised control over San Shing and Sun. For example, while Ta 
Chen concedes that it had physical custody of the check signature 
stamps used first by San Shing and later by Sun, Ta Chen claims that it 
could not unilaterally execute checks drawn against San Shing's or 
Sun's accounts. Nor, Ta Chen

[[Page 2124]]

continues, could Ta Chen prevent either San Shing or Sun from writing 
checks without Ta Chen's approval and signature. This physical custody 
of the signature stamp was, Ta Chen insists, merely an avenue for 
monitoring disbursements by these companies. Ta Chen suggests that this 
was a prudent measure given both the large volume of merchandise 
involved, as well as the 210-day credit terms Ta Chen extended first to 
San Shing and then to Sun. In Ta Chen's view, under these conditions it 
was entirely reasonable to impose ``strong measures'' to permit 
``stringent credit monitoring.'' Case Brief at 57.
    In addition, Ta Chen admits that it had full access to San Shing's 
and Sun's computer systems. Because, Ta Chen claims, San Shing and Sun 
could write checks without using the signature stamps held by Ta Chen, 
this method of monitoring their disbursements ``was not perfect.'' Id. 
Hence, Ta Chen insisted upon additional computer monitoring of San 
Shing's and Sun's accounts receivable and payable. Ta Chen concludes by 
insisting that (i) It did not control disbursements of funds by San 
Shing and Sun, and (ii) Any such control over disbursements would be 
irrelevant where, as in the instant review, the only control at issue 
would be control over prices. Such stringent control, Ta Chen argues 
further, is an acceptable practice under the Uniform Commercial Code 
(UCC). According to Ta Chen, under Article 9 of the UCC, ``policing'' 
or ``dominion'' by a secured party (here, Ta Chen) over its unrelated 
debtors (referring to San Shing and Sun) ``is both permissible and 
expected.'' Case Brief at 59, citing Sec. 9-205, Comment 5 of the UCC. 
In other contexts, Ta Chen argues, courts have found it unremarkable 
that one company would provide its financial and computer records to a 
second unrelated company.
    Ta Chen also takes issue with the Preliminary Results' conclusion 
that Ta Chen shared sales department personnel with San Shing and Sun. 
According to Ta Chen, the record indicates that no individuals were 
simultaneously employed by Ta Chen and either San Shing or Sun. As to 
the activities of Ta Chen's former sales manager Ken Mayes, Ta Chen 
asserts that Mr. Mayes was an independent contractor, and not an 
employee of Ta Chen. Ta Chen maintains that Mr. Mayes only began 
working for San Shing (and later, Sun) after terminating the 
independent contractor relationship with Ta Chen. Furthermore, Ta Chen 
continues, it is not uncommon for individuals in the U.S. stainless 
steel market to move about among the limited number of players in the 
industry. While acknowledging that Ta Chen did provide some assistance 
to San Shing and Sun, Ta Chen insists that its employees remained on Ta 
Chen's payroll, acting on Ta Chen's behalf. Case Brief at 63. Even if 
Ta Chen shared employees with San Shing or Sun, Ta Chen avers, such 
commingling of personnel would not indicate that the parties are 
related. Even company officers, Ta Chen suggests, are merely corporate 
employees who do not necessarily have a share of, and therefore, an 
interest in, their employers. Ta Chen argues that the Department may 
not assume that because an individual is employed simultaneously by two 
firms, the two firms are related, or that the individual controls any 
interest in the firms. Id. at 64. Ta Chen also insists that a payment 
Ta Chen made to Mr. Mayes in 1995, or three years after he allegedly 
left Ta Chen's employ, does not indicate that Mr. Mayes was employed by 
Ta Chen in the intervening period (i.e., when he worked for San Shing 
and Sun). Rather, Ta Chen claims, this payment stemmed from a previous 
agreement between Mr. Mayes and Mr. Robert Shieh, Ta Chen's and TCI's 
president and CEO, whereby in return for Mr. Mayes's expertise and 
assistance in Ta Chen's start-up in the United States, Ta Chen would 
pay a certain amount to Mr. Mayes should it reach a pre-determined 
level of profits in any future year. Ta Chen accuses the Department of 
establishing a ``per se rule'' that because money changed hands between 
Ta Chen and Ken Mayes, Mr. Mayes was an employee of Ta Chen, and 
further, Ta Chen and Mr. Mayes were, therefore, related parties. This 
one-time profit sharing payment, Ta Chen argues, conferred no ownership 
rights or control over prices to Mr. Mayes, and is thus irrelevant to a 
related-party determination. Further, Ta Chen insists, both Ta Chen and 
San Shing (or Sun) acted freely and in their own best interests 
throughout this period. Id. at 68 and 69.
    The close business relationships which existed in the instant 
review, Ta Chen maintains, do not constitute grounds for finding Ta 
Chen related with San Shing or Sun. For instance, Ta Chen argues, in 
OCTG From Argentina the Department found close business ties between 
parties irrelevant, even in the face of a prior equity connection. 
Subsequent equity ties were likewise found irrelevant in Pocket 
Lighters, 60 FR 14263, 14267. According to Ta Chen, the parties at 
issue must be related through equity ownership at the time of the sales 
in question for the relationship to be legally relevant. Case Brief at 
65. Furthermore, Ta Chen continues, the Department has previously 
examined cases wherein a respondent provided ``clerical type 
assistance'' [sic] to customers and found such assistance irrelevant to 
the issue of relatedness. See, e.g., Polyethylene Terephthalate Film 
From Korea, 62 FR 10526, 10529 (1997). In Tapered Roller Bearings From 
Japan, 61 FR 57629 (November 7, 1996), Ta Chen maintains, even the 
provision of sales personnel, training, inventory management 
assistance, use of computer resources for inventory and ordering, 
accounting assistance, and marketing and customer service training were 
insufficient to find a U.S. subsidiary related to its customers. Ta 
Chen continues by noting that the Department's level-of-trade analysis 
performed under the post-URAA Tariff Act routinely includes examination 
of precisely these types of relationships, demonstrating, Ta Chen 
submits, that ``such services can be, and are, provided by sellers to 
their unrelated customers.'' Case Brief at 66.
    Furthermore, Ta Chen argues, in past cases the Department has 
determined that parties are not related even in the face of much 
starker evidence of the parties' consanguinity. According to Ta Chen, 
in Certain Fresh Cut Flowers From Mexico, 56 FR 1794, 1799 (January 17, 
1991) the parties shared the same address, telephone numbers, invoice 
forms, and the same individual signed all invoices. The Department not 
only found the parties unrelated, but ``did not indicate that these 
facts were even relevant to whether the parties were related.'' Case 
Brief at 67.
    Ta Chen also insists that there was nothing untoward in Ta Chen's 
practice of meeting with the customers of San Shing and Sun, and 
forwarding orders from these customers to San Shing and Sun. On the 
contrary, Ta Chen maintains, ``it is a perfectly understandable 
business practice for a mill to act in this way and to meet with it own 
previous customers and assure them that its use of a new inventory-
holding master distributor will not adversely affect service or the 
price competitiveness of its products.'' Case Brief at 70, n. 17. Ta 
Chen claims that its officials ``knew the prices'' Sun would charge for 
subject pipe fittings, and accepted customer orders on behalf of San 
Shing and Sun. As Ta Chen ``would not wish to undermine [San Shing and] 
Sun,'' Ta Chen claims, it forwarded these orders to San Shing or Sun, 
as appropriate, rather than simply filling the order and billing the 
customers directly. Case Brief at 71. According to Ta Chen's account, 
San Shing and Sun were free to accept or

[[Page 2125]]

reject any orders obtained by Ta Chen. Ta Chen likens this pattern of 
activity with a commission agent who secures an order on behalf of a 
given supplier, and then forwards that order to the supplier. In Ta 
Chen's estimation, such a transaction would not render the 
commissionaire related to the supplier.
    Furthermore, Ta Chen asserts, such practices as described in this 
review are common between unrelated parties and ``thus, are not 
probative of Ta Chen and [San Shing and] Sun being related.'' Case 
Brief at 73. Citing statements by officials of a U.S. pipe company, a 
U.S. pipe and pipe fittings distributor, and a distributors' 
association, which Ta Chen submitted for the record, Ta Chen contends 
that mill officials would not fill orders directly from their 
distributors' customers, thus undercutting the distributors; rather, Ta 
Chen claims, the mill would forward the order to the distributor. Ta 
Chen challenges the credibility of one witness put forth by the 
stainless pipe petitioners, Mr. Brent Ward, who asserted in a sworn 
affidavit that such intimate involvement of a mill with its customers' 
subsequent sales of merchandise is unheard of among unrelated parties. 
Ta Chen wonders whether ``this lone domestic mill witness can really 
speak knowledgeably about the practices of offshore mills in assuring 
[the] ultimate customers about shipment and delivery with respect to 
subject merchandise (pipe and fittings).'' Id. at 74 (original 
emphases).
    Ta Chen argues that even if it knew the prices at which San Shing 
and Sun would sell the subject merchandise they purchased from Ta Chen, 
such knowledge ``is of no moment.'' Id. Ta Chen cites the public 
testimony of Joe Avento before the International Trade Commission (the 
Commission) in an unrelated inquiry that the market for fungible 
products such as stainless pipe and pipe fittings is price-driven, and 
that these prices are ``generally well known by [ ] participants'' in 
the marketplace. Id. at 75. Ta Chen also cites to Tapered Roller 
Bearings From Japan, where a respondent provided its distributors with 
resale prices, as another case where the supplier had knowledge of its 
customers' prices. Again, Ta Chen avers, such knowledge would be 
insufficient grounds for finding two parties related for purposes of 
the Tariff Act.
    Turning next to the liens held by Ta Chen on San Shing's and Sun's 
assets, which these parties supplied voluntarily, Ta Chen argues that 
such liens do not make parties related and are, in fact, common between 
unrelated parties. Ta Chen reiterates that it sold pipe fittings and 
other stainless steel pipe products to San Shing and Sun on extended 
credit terms. As an exercise in prudence, Ta Chen allows, it obtained a 
security interest in the inventory and accounts receivable of first San 
Shing, and then Sun. Furthermore, Ta Chen submits, its assignment of 
these security interests to a third party (i.e., TCI's creditor bank) 
is irrelevant to a discussion of whether Ta Chen was related to San 
Shing and Sun. In fact, Ta Chen stresses, the UCC, at Sec. 9-318, 
Comment 4, notes that security interests in ``intangibles'' such as 
accounts receivable ``can be freely assigned.'' Case Brief at 81, 
quoting UCC section 9-318, Comment 4.
    Ta Chen states that in June 1993 TCI asked San Shing to grant a 
lien directly to TCI's bank. Ta Chen insists that this arrangement had 
the same result as TCI securing an interest in San Shing's inventory 
and accounts receivable and then assigning this interest to TCI's bank. 
Asking San Shing to grant the lien directly to TCI's bank was, Ta Chen 
avers, ``a way to simplify a still otherwise ordinary commercial 
arrangement,'' and imposed no additional burdens upon San Shing. Id. Ta 
Chen accuses the Department of creating another per se rule that 
providing UCC security interests as a condition for obtaining a loan 
makes two parties related. Rather, Ta Chen submits, failure to seek a 
lien on a borrower's assets would be a stronger indication that two 
parties are related, and that the creditor did not need to secure the 
debt. Ta Chen also claims that San Shing (and later, Sun) actually did 
receive consideration in return for granting these UCC liens, in the 
form of extended credit terms.
    In addition, Ta Chen claims that since San Shing and Sun only 
distributed Ta Chen products, any liens on their inventory and accounts 
receivable were necessarily limited to the outstanding amounts owed to 
Ta Chen. That the liens covered all of San Shing's inventory and 
accounts receivable is, Ta Chen declares again, ``of no moment.'' Ta 
Chen notes that Article 9 of the UCC permits creditors to seek a 
``blanket'' interest in both existing and ``after-acquired'' assets, 
rather than attempting to secure interests only in specific assets. 
Case Brief at 83. Nor is it unusual, Ta Chen continues, for a party 
pledging its assets as security to a creditor to pledge full 
cooperation in enforcing the lien in the event of default by the 
creditor. In the instant case, Ta Chen submits, as San Shing and Sun 
held the accounts receivable at issue, efforts to secure payment from 
San Shing's and Sun's customers would necessarily continue to rest with 
San Shing and Sun.
    Ta Chen also sees nothing unusual in San Shing and Sun, putatively 
unrelated parties, entering into these security arrangements with no 
written documentation as to their terms. Ta Chen claims that, while it 
was ``unable to find any formal writing memorializing the agreement 
that [TCI's loan with its creditor bank] would always be less than the 
accounts payable of San Shing and McLane's Sun Stainless to TCI,'' such 
agreements were, Ta Chen contends, ``referenced in various 
correspondence during the relevant period between the parties * * *'' 
Case Brief at 85. Ta Chen implies that, just as terms of sales are not 
always committed to writing, there is nothing unusual in the absence of 
written documents concerning the debt financing arrangements between Ta 
Chen and San Shing, and between Ta Chen and Sun.
    Even if the facts surrounding the debt financing arrangements 
between these parties were, in fact, unusual, Ta Chen avers, that would 
not provide a basis for finding Ta Chen related with San Shing or Sun. 
Ta Chen asserts that all parties acted freely and in their own best 
interests. Therefore, Ta Chen concludes, these security agreements do 
not indicate that Ta Chen controlled San Shing or Sun. Ta Chen points 
to the statements it submitted for the record from two individuals 
involved in the steel industry in the United States as support for its 
contention that security arrangements such as those described above are 
``reasonable given a concern of nonpayment.'' Case Brief at 88. Ta Chen 
quotes one of these statements at length, noting with approval this 
individual's opinion that such measures can and do occur between 
suppliers and their unrelated distributor customers. Not only did Ta 
Chen's witnesses find these arrangements ``perfectly normal,'' but 
TCI's audited financial statements likewise did not include San Shing 
or Sun when listing loan guarantees provided by related parties. Id. at 
89.
    As two final notes with respect to the debt financing arrangements, 
Ta Chen states that no prior Departmental precedent exists for the 
proposition that secured debts or loan guarantees are sufficient 
grounds for finding parties related under the pre-URAA Tariff Act. Even 
under what Ta Chen interprets as a broader definition of 
``affiliation'' under the post-URAA Tariff Act, to date the Department 
has yet to find that loans make parties affiliated. Case Brief at 90, 
citing to Certain Internal Combustion Industrial Forklift Trucks From 
Japan, 62 FR 5592, 5604 (February

[[Page 2126]]

6, 1997), and Large Newspaper Printing Presses From Japan, 61 FR 38139, 
38157 (July 23, 1996). Second, Ta Chen criticizes the Preliminary 
Results for failing to explain precisely how the liens at issue in this 
review could affect control over prices which, Ta Chen reiterates, is 
the only aspect of control relevant to this review.
    Ta Chen next discusses San Shing's and Sun's exclusive supplier 
relationships with Ta Chen. While conceding that, in fact, San Shing 
and Sun purchased and sold Ta Chen products exclusively, Ta Chen claims 
that San Shing and Sun were ``free to do business with others of 
[their] own choosing, as well as buy and sell others' products.'' Case 
Brief at 90. Ta Chen cites prior cases decided under the pre-URAA 
statute wherein the Department considered exclusive buy-sell 
relationships; in such cases, Ta Chen argues, the Department did not 
find such relationships indicative of the parties' being related. Id., 
citing Portable Electric Typewriters From Japan, 48 FR 7768, 7770 
(February 28, 1983), and Certain Residential Door Locks and Parts 
Thereof From Taiwan, 54 FR 53153 (December 27, 1989) (Door Locks From 
Taiwan). Even under post-URAA determinations, Ta Chen avers, the 
Department has not found exclusive buy-sell relationships sufficient to 
consider two or more parties affiliated. According to Ta Chen, the 
Department examined such relationships in Cold-Rolled and Corrosion 
Resistant Carbon Steel Flat Products From Korea, 62 FR 18404, 18441 
(April 15, 1997) and Open-End Spun Rayon Singles Yarn From Austria, 62 
FR 14399, 14401 (March 26, 1997), and concluded that because the 
parties were free to transact with others, their exclusive buy-sell 
arrangements did not render the parties affiliated. Case Brief at 91 
and 92. On a broader plane, Ta Chen continues, San Shing and Sun could 
not be considered ``reliant'' upon Ta Chen because each had interests 
beyond their dealings with Ta Chen. San Shing, Ta Chen notes, sold 
fasteners, while Mr. McLane had interests involving lawnmower parts and 
plastic patio furniture. Ken Mayes, Ta Chen asserts, had an additional 
business interest in another pipe distributor, Stainless Specialties, 
Inc.
    As further evidence that San Shing and Sun were not related to Ta 
Chen, the company states that its ``net, ex-factory price to [San Shing 
and] Sun was less than its net, ex-factory price to other U.S. 
customers.'' Case Brief at 95 (original emphasis). These pricing 
patterns, Ta Chen asserts, demonstrate that Ta Chen ``did not have 
control over'' San Shing and Sun. Id. Ta Chen allows that, had it 
exercised control over these distributors, it would have charged them 
higher prices, so as to mask any dumping of subject pipe fittings sold 
to genuinely unrelated customers. That Ta Chen's prices to San Shing 
and Sun were lower than its prices to other customers ``further 
confirm[s]'' that Ta Chen is not related to San Shing or to Sun.
    Ta Chen also assails the credibility of the D&B report cited in the 
Preliminary Results as evidence that Ta Chen and Sun were related 
through Frank McLane's common equity ownership. According to Ta Chen, 
the conclusion in the D&B report that Frank McLane and Ken Mayes had 
been active with Sun since 1992 (indicating that Mr. McLane 
simultaneously held equity in Ta Chen and owned Sun outright) is based 
upon hearsay: ``[o]ne D&B clerk apparently heard something from 
somebody. A second D&B clerk speculates from what the first D&B clerk 
said.'' Case Brief at 100. According to Ta Chen, its certification that 
Mr. McLane ``had no involvement with any Sun before the one he 
incorporated in September 1993'' should be sufficient to refute the D&B 
report. Id. Requiring Ta Chen to go beyond the certified questionnaire 
responses ``unlawfully places the burden on Ta Chen to rebut the D&B 
report.'' Id. at 108. Ta Chen also claims that the Department should 
disregard the D&B report because petitioners in the stainless pipe case 
failed to submit the September 1994 D&B report to the Department prior 
to the October 1994 verification in the first review of WSSP.
    Assuming that the D&B report constitutes evidence, Ta Chen asserts 
that it is not substantial evidence and, therefore, any reliance upon 
it is unlawful. Citing Timken Co. v. United States, 894 F. 2d 385, 388 
(Fed. Cir. 1990), Ta Chen argues that ``substantial evidence is ``such 
relevant evidence as a reasonable mind might accept as adequate to 
support a conclusion.' '' Case Brief at 101. Ta Chen notes that Dun & 
Bradstreet issues a stock disclaimer with its reports that it does not 
guarantee their accuracy. Further, Ta Chen charges, the accuracy of 
this particular report is further impeached by the apparent removal of 
the unique D&B number identifying the subject of the report. Ta Chen 
asserts that this is not a minor matter since two Suns are at issue in 
this case--San Shing's dba Sun Stainless, Inc., and Frank McLane's Sun 
Stainless, Inc. Ta Chen also hints that other alterations may have been 
made to the D&B report.
    In addition, Ta Chen maintains that the D&B report does not 
specifically cite Mr. Mayes as the source for the claim that Messrs. 
McLane and Mayes had been active in Sun Stainless since 1992. Since the 
D&B report does not indicate that Mr. McLane was president or owner of 
Sun prior to November 1993, the clear and unequivocal evidence 
indicates that Mr. McLane only became involved with Sun at the later 
date. In fact, Ta Chen submits, the contract of sale between Mr. McLane 
and Picol International, dated July 1995, states that Mr. McLane was 
president of Sun since November 5, 1993.
    In closing on this point, Ta Chen alleges that the Department 
treated it unfairly by not accepting into the record submissions by Ta 
Chen addressing the credibility of the D&B report. Ta Chen asserts that 
it first received notice of the possible ``breadth of section 
771(13)(B),'' and the importance of the D&B report, upon publication of 
the Department's Preliminary Results. Case Brief at 109. Ta Chen 
maintains that its July 2, 1997 submission on this point (rejected by 
the Department as untimely new factual information) should have been 
accepted for the record.
    Suggesting that Ta Chen's version of events is ``embarrassingly 
lacking in any degree of common sense or logic,'' petitioner contends 
that ``[b]y any reasonable standard, Ta Chen exerted control over [San 
Shing and Sun]--as evidenced by its own belated admissions to the 
record of this review.'' Rebuttal Brief at 2 and 4. Petitioner contends 
that Ta Chen's continued denial of any control over San Shing and Sun 
is ludicrous, and stresses that Ta Chen failed to demonstrate that the 
types of relationships it enjoyed with San Shing and Sun are in any 
manner common between parties dealing at arm's length. Id. at 5. Ta 
Chen, petitioner avers, is the only foreign or domestic supplier of 
pipe fittings to whom San Shing and Sun pledged their assets. Ta Chen 
is the only supplier to have dedicated, interconnected 
telecommunications and computer systems with San Shing and Sun. Ta Chen 
is the only supplier with whom San Shing and Sun shared sales and 
clerical personnel. Ta Chen is the only supplier to whom San Shing and 
Sun surrendered the signature stamps used to execute withdrawals from 
their checking accounts. Finally, Ta Chen is the only supplier whose 
president, Mr. Shieh, routinely accompanied San Shing's and Sun's 
personnel on sales calls, and discussed prices with San Shing's and 
Sun's customers. ``In fact,'' petitioner concludes, ``the `common 
sense' standard, in addition to any legal standard, permits only one 
conclusion,'' i.e., that Ta Chen and San Shing and Sun were related and 
operating under

[[Page 2127]]

common control. Rebuttal Brief at 5. Petitioner accuses Ta Chen of 
establishing San Shing and then Sun for ``purposes specifically related 
to this and other antidumping investigations and reviews.'' Id. at 6.
    Petitioner dismisses as ``laughable'' Ta Chen's use of statements 
by various individuals to support its contentions that the types of 
relationships between Ta Chen and San Shing and Sun are ordinary and 
commonplace practices for parties dealing at arm's length. If, in fact, 
the statements of any of these witnesses reflected common practices in 
the stainless steel pipe fitting markets, petitioner suggests, they 
would have supplied actual examples of other cases where unrelated 
parties: (i) Shared signature stamps, computer facilities, and sales 
department personnel, (ii) Participated in joint sales negotiations, 
and (iii) Pledged their assets to secure one another's debts. ``Neither 
Ta Chen nor its so-called experts have or ever will provide such 
examples because no such examples exist.'' Rebuttal Brief at 7 
(original emphasis). And the reason no such examples exist, petitioner 
concludes, is that such practices are not at all characteristic of 
dealings between truly unrelated parties dealing at arm's length but, 
rather, provide indisputable evidence that Ta Chen and San Shing and 
Sun were related and operating under joint control.

Department's Position

    We agree with petitioner that the factual evidence of record 
demonstrates a level of operational control exercised by Ta Chen over 
both San Shing and Sun that more than satisfies the statutory 
provisions for finding Ta Chen, San Shing, and Sun related parties.
    Ta Chen in its case brief focuses upon each indicium of control 
cited in the Preliminary Results in isolation, characterizing each of 
these connections as (i) Commonplace and unremarkable in the commercial 
world, (ii) Insufficient to demonstrate Ta Chen's control of these 
parties, and, (iii) Irrelevant to a finding that these parties are 
related for purposes of the Tariff Act. However, we have examined the 
totality of the evidence in this case as it pertains to Ta Chen's 
overarching control over not only the activities of San Shing and Sun, 
but over their existence as well.
    In placing such emphasis on a so-called five-percent equity test, 
Ta Chen ignores the true purpose of section 771(13) of the Tariff Act, 
which is to define the ``exporter'' for purposes of determining the 
correct basis for U.S. price. According to Ta Chen's repeated 
assertions, the only relevance of the present discussion is whether or 
not Ta Chen could control pricing decisions made by San Shing and Sun 
in selling subject merchandise in the United States. In fact, the 
evidence of record indicates this was so, as do Ta Chen's own 
admissions during the course of this review. As we have indicated, San 
Shing and Sun were both established by current or former managers and 
officers of Ta Chen, were staffed entirely by current or former Ta Chen 
employees, and distributed only Ta Chen pipe products in the United 
States. Throughout their involvement in these proceedings, Ta Chen had 
control of San Shing's and Sun's bank accounts, with authority to sign 
checks issued by San Shing, its dbas, and Frank McLane's Sun. Ta Chen 
also had physical custody of these parties' check-signing stamps. Ta 
Chen further controlled San Shing's and Sun's assets and these parties 
pledged their assets as collateral for a loan obtained on behalf of 
TCI. In addition, Ta Chen enjoyed full-time and unfettered computer 
access to San Shing's and Sun's computerized accounting records. Ta 
Chen's owner, Robert Shieh, owned the property housing San Shing and 
Sun, and Ta Chen shared sales and clerical personnel with the two 
companies. Finally, Robert Shieh actually negotiated the prices that 
San Shing and Sun would realize on their subsequent resales of subject 
merchandise to unrelated customers.
    Furthermore, for the Department to conclude that Ta Chen did not 
exercise effective control over San Shing and Sun would require the 
Department to ignore numerous lacunae in Ta Chen's account. The 
inconsistencies, inaccuracies, partial admissions, and lack of 
documentation in Ta Chen's version of events in this administrative 
review do not support Ta Chen's claims.
    First, as for Ta Chen's argument that had it held an interest in 
San Shing or Sun it would have received consideration for the sale of 
San Shing to Mr. McLane, and Mr. McLane's eventual sale of Sun 
Stainless, Inc. to a third party, this argument suffers from one fatal 
flaw. Ta Chen's claim that Mr. McLane purchased San Shing from Chih 
Chou Chang in the fall of 1993 is unsubstantiated. The transaction 
itself has never been documented for the record. In fact, aside from Ta 
Chen's claims on this matter, we have no evidence that any assets, or 
consideration therefor, actually changed hands in September 1993. Ta 
Chen's failure to document for the record this transaction is 
significant given Ta Chen's ability to enter into the record the most 
sensitive financial information concerning these parties, e.g., the 
individual tax returns of Frank McLane and the corporate tax returns of 
the putatively unrelated parties, San Shing and Sun. More 
fundamentally, as we discuss above, record evidence indicates that Ta 
Chen misstated the commencement of Frank McLane's (and Ken Mayes's) 
involvement with the second ``Sun Stainless, Inc.,'' incorrectly 
indicating that Mr. McLane did not simultaneously act as president of 
Sun and as a director and shareholder of Ta Chen. Because the 
underlying chronology is itself impeached, we cannot accept at face 
value Ta Chen's claim that it did not receive compensation for these 
transactions, whether in the form of cash value or other non-monetary 
consideration.
    Turning now to the indications of control enumerated in the 
Preliminary Results, we affirm our preliminary finding that Ta Chen 
controlled San Shing's and Sun's disbursements. One avenue Ta Chen used 
to exercise this control was through its possession of San Shing's and 
Sun's signature stamps. Ta Chen's assertion that it is commonplace for 
a business entity to surrender control over its disbursements to an 
unrelated party, as both San Shing and Sun did to Ta Chen, by turning 
over physical custody of their signature stamps to an unrelated 
supplier is not credible and is not supported by record evidence. Nor 
is there record support for Ta Chen's ex post facto claim that it could 
not execute checks unilaterally; having possession of both the checks 
and the signature stamp enabled Ta Chen to execute checks at will upon 
these entities' accounts. Furthermore, there is no support, either in 
the record of this review or in the Department's experience, for the 
notion that such a drastic step as demanding control over an unrelated 
customer's checking account would be required to effect ``stringent 
credit monitoring'' of the customer's expenditures, as Ta Chen claims 
here. In fact, control by one party over another party's checking 
account is usually only found between related parties.
    Similarly, we find that Ta Chen's unlimited level of computer 
access to San Shing's and Sun's proprietary data supports a finding 
that Ta Chen exercised control over these parties. Ta Chen's assertions 
with respect to this invasive computer access are unpersuasive and are 
not supported by evidence in the record. Ta Chen attempts to present 
its full-time and unrestricted ability to scrutinize San Shing's and 
Sun's proprietary business records as prudent monitoring by a

[[Page 2128]]

creditor of its unrelated debtors which is ``permissible and expected'' 
under provisions of the UCC. We note that, while a creditor is entitled 
to periodic reports from a debtor concerning, e.g., the debtor's sales 
and deliveries and the agings of accounts receivable used as 
collateral, nothing in the UCC envisions the unlimited access Ta Chen 
enjoyed here. See Nassberg, Richard T., The Lender's Handbook, American 
Law Institute, American Bar Association Committee on Continuing 
Professional Education, Philadelphia, 1986, at 32 and 33. Further, Ta 
Chen has offered no examples of any other firm allowing its unrelated 
supplier such extensive access to its payroll and accounting 
information. The reason Ta Chen did not give examples of such computer 
access is because, contrary to Ta Chen's claims, such a practice is not 
common and, to the Department's knowledge, does not exist between truly 
unrelated parties. As we noted in the final results of the 1994-1995 
administrative review of stainless pipe, ``Ta Chen officials stated at 
the Department's [June 1997] verification at TCI that [Sun] maintained 
no security system or passwords with which to limit or terminate Ta 
Chen's access to its records; Ta Chen's access to [Sun's] accounting 
system was complete.'' Certain Welded Stainless Steel Pipe From Taiwan, 
62 FR 37543, 37549 (July 14, 1997).<SUP>7</SUP>
---------------------------------------------------------------------------

    \7\ The original text identifies Sun as ``Company B.'' Although 
the verification concerned the 1994-1995 administrative review of 
WSSP, this narrative applied to prior periods as well, including the 
time covered by the instant review. See Memorandum to the File, 
Certain Welded Stainless Steel Pipe from Taiwan, June 19, 1997, at 
5, a public version of which is on file in room B-099 of the main 
Commerce building.
---------------------------------------------------------------------------

    With respect to the claimed need for the computer access and 
control over San Shing's and Sun's disbursements, this claim too is 
undermined by Ta Chen's own statements in the record. Ta Chen insists 
that it required these measures of control as a means of monitoring its 
customers in light of the substantial quantities of merchandise Ta Chen 
sold to San Shing and Sun, and in return for the 210-day credit terms 
offered by Ta Chen.<SUP>8</SUP> But as Ta Chen noted in its July 28, 
1994 submission in the first administrative review of stainless pipe, 
San Shing was an established company enjoying ``substantial resources 
including lines of credit.'' Ta Chen's July 28, 1994 submission at 9. 
Furthermore, with respect to the balances owed by San Shing and Sun, as 
Ta Chen itself concedes, Ta Chen's ``risk [of non-payment] is not 
significant, since actual bad debt has not been a problem.'' Ta Chen's 
December 13, 1996 submission at 81. If San Shing enjoyed such 
substantial resources, and never presented a risk of non-payment, Ta 
Chen's stated need to implement such extraordinary monitoring measures 
to secure payment for its sales is without support. The absence of a 
genuine credit risk would, in fact, attenuate the need for this 
relationship. The second possible reason for these ties, posited by Ta 
Chen's witnesses, is that it allows for ``just-in-time'' delivery of 
inventory. While electronic ordering is a common and growing practice 
between suppliers and their distributors, this typically entails a 
sharply delimited level of access--most commonly, a one-way 
communication between the customer's purchasing department and the 
supplier's sales department. We are aware of no circumstances where 
electronic ordering would allow a supplier to have unrestricted access 
to the accounts payable, accounts receivable, inventory, and payroll 
data of an unrelated customer. We conclude that these untrammeled on-
line computer ties existed because Ta Chen was controlling and 
directing San Shing and Sun.
---------------------------------------------------------------------------

    \8\ We note that, in addition to preferential pricing, these 
extended credit terms offered to San Shing and Sun would further 
indicate that their dealings were not at arm's length.
---------------------------------------------------------------------------

    We also conclude that the record indicates that Ta Chen shared 
personnel with San Shing and Sun. In fact, Ta Chen's December 13, 1996 
submission details a long two-way history of shared office personnel 
between Ta Chen and San Shing dating to before San Shing ever purchased 
a single pipe fitting from Ta Chen. For example, Ta Chen claims that 
``[f]rom the outset of [Ta Chen's and San Shing's] landlord-tenant 
relationship, TCI provided San Shing USA with assistance from its 
personnel and, from time to time, the use of TCI office equipment.'' 
Furthermore, San Shing ``provided necessary technical and other support 
to TCI personnel'' when TCI commenced its production of fasteners. See 
Ta Chen's December 13, 1996 submission at pages 51 through 54. In 
addition, Ta Chen's sales manager, Mr. Mayes, also acted as sales 
manager for San Shing and for Sun. For more on Mr. Mayes's role in 
these reviews, see our response to Comment 3, below. When considered 
together with the other indicia of control, this commingling of 
personnel lends additional support to the conclusion that Ta Chen was 
related to San Shing and Sun as defined in the Tariff Act.
    With respect to Ta Chen's involvement in negotiating sales prices 
to San Shing's and Sun's customers--the true focus of this inquiry--Ta 
Chen insists that this involvement does not indicate control by Ta Chen 
of San Shing and Sun, and further asserts that such practices are 
commonplace. However, we agree with petitioner that Ta Chen's claim 
that negotiating the prices of its customers' subsequent sales is 
common between unrelated parties is unsupported either by record 
evidence or the Department's experience. San Shing and Sun Stainless 
were engaged in the distribution of a fungible, commodity product, 
i.e., ASTM A312 stainless steel pipe, and pipe fittings manufactured 
from this pipe. As Ta Chen's witness Mr. Joe Avento notes, the market 
for such products is price-driven. With little margin for profit, an 
unrelated distributor, as a matter of survival, would guard the prices 
it would accept for reselling the product in order, as the stainless 
pipe petitioners phrase it, to ``maximize whatever negotiating room 
[the customer] has with [its] supplier.'' See Rebuttal Brief of 
Collier, Shannon, Rill & Scott, September 10, 1997 at 15. Ta Chen has 
argued that the only element of control relevant to an antidumping 
proceeding is control over prices; Ta Chen's admitted role in setting 
prices for San Shing's and Sun's subsequent sales of pipe fittings to 
unrelated customers in the United States is evidence of precisely this 
type of control. For Ta Chen, as the supplying mill, to liken its role 
in these transactions to that of a mere commission agent, passing 
purchase orders between end-users and its distributors San Shing and 
Sun, is not credible. Ta Chen has noted that Ta Chen officials 
(specifically, Ta Chen's president, Mr. Robert Shieh) not only met with 
customers of San Shing and Sun, but that these same customers would 
contact Ta Chen directly, bypassing altogether their putative 
suppliers, San Shing and Sun. Ta Chen claims that ``Ta Chen officials 
would not wish to undermine [San Shing or] Sun,'' and that it merely 
forwarded any purchase orders it received to San Shing or Sun for their 
independent consideration and acceptance or rejection. See Ta Chen's 
Case Brief at 71. Here again, however, there is no record evidence, 
aside from Ta Chen's unsupported claims, that it ever forwarded a 
customer's order to San Shing or Sun, nor is there evidence of either 
San Shing or Sun ever rejecting a purchase order so obtained from TCI. 
Furthermore, Ta Chen's fastidious avoidance of ``undermining'' San 
Shing and Sun was unnecessary, given its control of the transactions 
from the mill in Tainan to the delivery to the ultimate end user in the 
United States.

[[Page 2129]]

    Turning to the debt security arrangements between San Shing, Sun 
Stainless, TCI, and TCI's creditor bank, Ta Chen claims that such 
arrangements are ``irrelevant.'' Ta Chen maintains that debt security 
arrangements by themselves have proven insufficient grounds for finding 
parties related for purposes of section 771(13) of the Tariff Act. 
Nevertheless, the nature of these particular security assignments, 
including the absence of any written agreement between these putatively 
unrelated parties, further supports our finding that transactions 
between these parties were not at arm's length. Within the larger 
context of Ta Chen's relationships with these entities, we find the 
debt security arrangements provide additional evidence of the degree of 
Ta Chen's control over all aspects of San Shing's and Sun's operations. 
Here, San Shing, and then Sun, unilaterally, and without consideration, 
assigned their entire inventory and accounts receivable directly to 
TCI's bank to facilitate a loan for TCI. That San Shing and Sun would 
accept such a risk without any consideration--without even a written 
agreement memorializing the terms and duration of the agreement--is not 
consistent with the dealings between truly unrelated companies. Nor has 
Ta Chen offered convincing evidence that this arrangement is, in fact, 
commonplace. Ta Chen fails to note that the UCC financing statements 
submitted for the record ``serve only to perfect the lender's rights 
against competing creditors and that rights so perfected must be 
created under a valid security agreement.'' The Lender's Handbook, op. 
cit. at 27. In spite of numerous submissions focusing upon the 
significance of these loan guarantees and their relevance to these 
proceedings, and in spite of our specific requests that Ta Chen do so, 
Ta Chen has never submitted evidence that a valid security agreement 
was ever created. Ta Chen has stated only that it ``asked'' first San 
Shing, and then Sun, to assign their inventory and receivables as 
security for a line of credit TCI obtained from a California bank, and 
that these parties agreed freely in return for extended credit terms. 
See Case Brief at 81 and 82. However, that these putatively unrelated 
parties would accede to such a request in the absence of any written 
security agreement as to the nature of the assignments, their scope, 
their duration, etc. does not comport with the actions of unrelated 
parties dealing at arm's length. Contrary to Ta Chen's assertion, in 
fact, the existence of these UCC filings absent any valid security 
agreement serves merely to underscore the dominion Ta Chen enjoyed over 
the actions and the assets of both San Shing and Sun.
    Furthermore, Ta Chen has never documented for the record why the 
supposedly unrelated San Shing would be willing to offer its accounts 
receivable and inventory to secure a loan for TCI, or why Sun, 
supposedly unrelated to either Ta Chen or to San Shing, would assume 
these same obligations in toto when, as of the claimed date of its 
founding, it would have no outstanding balances whatever with Ta Chen. 
Two other aspects of these security agreements bear noting. First, that 
the secured amount available to TCI from its bank was always limited to 
the value of these receivables is an ipse dixit which Ta Chen, the sole 
party able to do so, has failed to document for the record. Ta Chen 
claims in its case brief that these agreements were ``referenced in 
various correspondence during the relevant periods between the 
parties,'' yet, curiously, Ta Chen elected not to submit any of this 
correspondence for the record. Our thorough review of Ta Chen's and 
TCI's correspondence files during the October 1994 verifications for 
the stainless pipe review also failed to reveal a single mention of 
these agreements. Second, Ta Chen insists that because San Shing and 
Sun only sold Ta Chen products, the value of any assets assigned by San 
Shing and Sun to TCI's bank necessarily equaled the amount owed by San 
Shing and Sun to TCI. See Case Brief at 82 and 83. However, this would 
be true only if San Shing and Sun sold this merchandise at the same 
price it originally paid to TCI. If San Shing and Sun marked up the 
price of the merchandise, which they would have to do to realize any 
profit from these transactions, then the secured amount necessarily 
exceeded the receivables San Shing and Sun owed to TCI. Furthermore, 
San Shing sold nuts and bolts for the automotive industry. Thus, its 
inventory and accounts receivable from the start of this relationship 
extended beyond the pipe and pipe fittings supplied by Ta Chen. 
Contrary to Ta Chen's assertions, the value of San Shing's inventory 
and accounts receivable clearly did exceed the amount San Shing owed to 
Ta Chen for its pipe products.
    As for the exclusive supplier relationships between Ta Chen, San 
Shing and Sun, Ta Chen concedes that it was the exclusive supplier to 
both entities, but claims that each was free to do business with 
whomever it chose. However, Ta Chen has presented no evidence of San 
Shing or Sun ever seeking to purchase pipe fittings or pipe from any 
other firm. In fact, the record clearly indicates that except for the 
fasteners manufactured by San Shing Hardware Works, Ltd., San Shing 
dealt exclusively with Ta Chen merchandise; Sun Stainless was 
established for this purpose alone. Both were entirely reliant upon Ta 
Chen for their supplies of pipe and pipe fittings. We also find that Ta 
Chen's case cites in this regard are not on point. In Portable Electric 
Typewriters, for example, respondent Tokyo Juki sold merchandise 
exclusively to EuroImport, S.A., a subsidiary of Olivetti. Petitioner, 
citing a number of factors, including assumption of start-up costs, 
Olivetti's supplying typewriter parts to Tokyo Juki, and the fact that 
Tokyo Juki sold subject typewriters exclusively to EuroImport, alleged 
that Tokyo Juki and Olivetti were related parties. We concluded that 
``Olivetti's and Tokyo Juki's relationship does not constitute control 
as contemplated by section 771(13) of the Tariff Act,'' and that 
petitioner's arguments with respect to EuroImport were ``not 
persuasive.'' Portable Electric Typewriters From Japan, 48 FR 7768, 
7771.<SUP>9</SUP> While EuroImport had an exclusive distributor 
arrangement to distribute Tokyo Juki's typewriters, there is no 
indication that the obverse was true, i.e., that Tokyo Juki was the 
sole supplier to EuroImport. In all likelihood, EuroImport also 
distributed typewriters manufactured by its parent, Olivetti, and may 
have distributed typewriters supplied by any number of manufacturers. 
Unlike the instant case, there is no evidence that EuroImport was 
dependent upon Tokyo Juki for its continued sales operations. Thus, 
Portable Electric Typewriters never reaches the issue of whether or not 
an exclusive supplier relationship is, or is not, evidence of parties' 
being related under section 771(13) of the Tariff Act by means of 
control. Furthermore, in sharp contrast to the instant case, the 
totality of evidence in Portable Electric Typewriters clearly indicated 
that Tokyo Juki could not control Olivetti or vice versa. Likewise, the 
cite to Residential Door Locks From Taiwan is inapposite. There we 
concluded that ``[t]here is no evidence on the record that Posse and 
Tong Lung operated closely together, were billed jointly, had their 
day-to-day operations directed by joint owners, or conducted 
transactions

[[Page 2130]]

between themselves.'' Residential Door Locks From Taiwan, 54 FR 53153, 
53161. We did not say, as Ta Chen asserts, that exclusive-supplier 
relationships could not be indicative of related-party status; on the 
contrary, we clearly examined the issue of exclusive supplier 
relationships within the context of a related-party determination and 
found that not only was there no exclusive supplier relationship 
between Posse and Tong Lung, there were no business transactions of any 
kind between the two.
---------------------------------------------------------------------------

    \9\ This discussion of ``control as contemplated by section 
771(13) of the Tariff Act'' would be unnecessary if, as Ta Chen 
insists, the statute only defined related parties in terms of common 
equity ownership.
---------------------------------------------------------------------------

    Furthermore, Ta Chen has presented no evidence in support of its 
contention that these indicia of control, including computer access, 
control of disbursements, and intervention by a mill in its unrelated 
customers' sales are common. Despite the claims of Ta Chen's witnesses, 
Mr. Charles Reid, Mr. Theodore Cadieu of the USX Corporation, and 
officials from a U.S. pipe producer and an association of distributors 
that such practices happen ``all the time,'' none could cite a single 
specific example of similar ties between unrelated parties. The head of 
the distributors' association, who would be expected to have 
familiarity with the practices of its membership, failed to name a 
single member firm engaging in such ``common'' practices. See Ta Chen's 
February 7, 1997 submission at 54, and Ta Chen's April 1, 1997 
submission. As a final note on the qualification of the stainless pipe 
petitioner's affiant, Mr. Brent Ward, to speak to ``the practices of 
offshore mills,'' Ta Chen has known at least since the Department's 
April 28, 1997 public hearing (in the 1994-1995 administrative review 
of stainless pipe) Mr. Ward's qualifications to address these matters. 
Mr. Ward is the president of the domestic pipe producer, Damascus-
Bishop Tube Company, and also the Specialty Tubing Group, an 
association of North American producers of welded stainless steel pipe. 
His firm also purchases and distributes ornamental steel tubing 
produced by offshore mills. See Memorandum to the File, October 30, 
1997, at 2, and Hearing Transcript (``Open Session''), In the Matter of 
Certain Welded Stainless Steel Pipe From Taiwan, May 12, 1997 at 15 
through 21 and 34 through 37, on file in room B-099 of the main 
Commerce building. It is worth quoting Mr. Ward, acting in all three 
capacities, at some length:

    [a]t most, if it is necessary, a producing mill might have the 
opportunity to meet with both a distributor and that distributor's 
customer to discuss issues of material specification and/or quality 
requirements, but not to discuss issues of prices and quantities. . 
. . [I]n reality distributors in the welded stainless steel pipe 
industry in the United States that are truly unaffiliated with their 
supplying mills jealously guard both their corporate independence 
and their commercial ties with their customers and limit any contact 
by the mills with those customers as much as possible. The logic 
behind this approach at one level, of course, is simply that the 
distributors do not want to lose control of their businesses and do 
not want their customers to buy directly from the mills and 
eliminate the distributor's role in the chain of distribution.

    See Affidavit of Mr. Brent Ward, submitted April 8, 1997, on file 
in room B-099 of the main Commerce Building.
    We find Mr. Ward's common-sense description of the business ties 
typically found between unrelated parties to be credible, especially in 
light of Ta Chen's inability to cite any evidence to the contrary.
    Finally, turning to Ta Chen's relationship with Sun through Mr. 
McLane's full ownership of Sun while holding a share of, and acting as 
a director for, Ta Chen, we find that substantial evidence of record in 
this review indicates that Mr. McLane's involvement with Sun predates 
the September 14, 1993 date claimed by Ta Chen. Rather, Mr. McLane, 
working with Mr. Mayes, established Sun and was actively engaging in 
sales of subject merchandise by 1992. The evidence of this is not, as 
Ta Chen characterizes it, hearsay. It is, in fact, the September 20, 
1994 report of a disinterested and credible organization, Dun & 
Bradstreet, whose reports are routinely relied upon by the business and 
investment communities in assessing businesses' creditworthiness. Dun & 
Bradstreet's source, in turn, was Mr. Ken Mayes who, as the putative 
vice president and director of Sun, clearly had familiarity with the 
history and operations of this firm. In a May 27, 1994 interview with 
Dun & Bradstreet's analysts, Mr. Mayes stated that ``Sun Stainless, 
Inc.'' was started in 1992.<SUP>10</SUP> Mr. Mayes noted that Mr. 
McLane was the president and he the vice president of Sun. Furthermore, 
the D&B report includes a ``fiscal statement'' covering the period from 
November 1, 1992 to October 31, 1993. This document shows that for the 
year ended October 31, 1993, Sun had millions of dollars in sales, 
accounts payable, and accounts receivable.
---------------------------------------------------------------------------

    \10\ We note this date coincides with Ta Chen's decision to 
``exit the ESP business'' and to rely on newcomers to the pipe 
industry as its sole distributors in the United States. Thus, 
contrary to Ta Chen's allusions, the D&B report has not erroneously 
stated the founding date of San Shing USA, which existed as a 
distributor of fasteners manufactured by its parent, San Shing 
Hardware Works, Ltd., in Taiwan prior to its involvement in Ta 
Chen's pipe distribution. See Case Brief at 107.
---------------------------------------------------------------------------

    If, as Ta Chen claims, Frank McLane's Sun Stainless, Inc. only 
became operational as of November 1, 1993, there should have been no 
financial activity whatever reported for the year prior to that date. 
Certainly, there would be no activity reported prior to September 1993 
when Mr. McLane allegedly founded his new Sun Stainless, Inc. Perhaps 
recognizing this inconsistency, Ta Chen suggested in an August 2, 1995 
letter originally submitted in the first review of stainless pipe:

    [t]he Dun & Bradstreets submitted by Petitioners on Frank 
McLane's Sun Stainless, Inc. obviously include the financial results 
of San Shing USA for the pre-October 31, 1993 period and the 
financial results of Frank McLane's Sun Stainless, Inc. for the 
period November 1, 1993 onward.

Ta Chen's February 7, 1997 submission at 73, n. 4 (original bracketing 
deleted).
    Ta Chen went on to speculate that ``D&B's reporting in this fashion 
may be useful, as the profitability of San Shing USA's assets during 
the pre-October 31, 1993 period may be a useful indicator of the 
financial performance of Frank McLane's Sun Stainless, Inc. during the 
post-November 1, 1993 period.'' Id. It is not at all obvious, however, 
that the D&B report for a putatively new corporate entity, Sun 
Stainless, Inc., would include the financial results for a separate 
party, San Shing. Unless Mr. Mayes incorrectly presented San Shing's 
financial results as Sun's own, Dun & Bradstreet could not have 
confused the two. Indeed, since San Shing used the name ``Sun 
Stainless, Inc.'' as a fictitious dba name only, any search for 
financial information on ``Sun Stainless, Inc.'' (as distinct from San 
Shing Hardware Works, USA), would be unavailing because, according to 
Ta Chen, Sun never really existed before September 1993, other than as 
a name on San Shing's invoice forms. Furthermore, if Sun had truly 
started as a new, independent entity in November 1993, the performance 
of San Shing in the prior year would be of little or no help in 
predicting how a new firm, with different ownership, different levels 
of financing, and different levels of business experience and 
expertise, would perform in the market.
    Mr. Mayes's May 27, 1994 statements to a disinterested person, 
i.e., Dun & Bradstreet, were made at a time when Mr. Mayes had no 
reason to foresee that the stainless pipe petitioners and, later, the 
Department, would inquire as to the dates of Sun's establishment. To 
the contrary, his later statements on Ta Chen's behalf for the record 
of the

[[Page 2131]]

fittings and pipe reviews were made at a time when he had a direct 
interest in sustaining Ta Chen's claim that it was not related to Sun. 
We conclude that the information contained in the D&B report more 
accurately reflects the history of Frank McLane's Sun Stainless, 
Inc.<SUP>11</SUP>
---------------------------------------------------------------------------

    \11\ This same chronology was corroborated by a foreign market 
researcher retained by petitioners in the stainless pipe case. See 
the July 12, 1995 submission of Collier Shannon Rill & Scott at 
Attachment 5, a public version of which is on file in Room B-099 of 
the main Commerce building. Even if the D&B analysts interpreted 
erroneously Mr. Mayes's May 27, 1994 statements, it is clear that 
Mr. McLane negotiated the purchase of San Shing USA's inventory 
sometime prior to mid-September 1993, i.e., while he was still a 
shareholder in, and director of, Ta Chen.
---------------------------------------------------------------------------

Comment 3: Use of Best Information Available

    Even if the Department had the discretion to find Ta Chen related 
to San Shing and Sun within the meaning of section 771(13) of the 
Tariff Act, Ta Chen argues, the Department nonetheless acted unlawfully 
in applying BIA to Ta Chen. According to Ta Chen, the Department never 
clearly requested from Ta Chen any information regarding control of San 
Shing or Sun by Ta Chen, and never indicated what such control might 
entail. Citing Sigma Corp. v. United States, 841 F. Supp. 1255 (CIT 
1994), Ta Chen asserts that the Department cannot `` `expect a 
respondent to be a mind-reader' * * * BIA cannot be imposed for failure 
to provide information that was not requested, or clearly requested.'' 
Case Brief at 112 (Ta Chen's emphasis omitted). Ta Chen also points to, 
inter alia, Usinor Sacilor v. United States, 907 F. Supp. 426, 427 (CIT 
1995), Creswell Trading Co., Inc. v. United States, 15 F. 3d 1054, 1062 
(Fed. Cir. 1994), Daewoo Electronic Co. v. United States, 13 CIT 253 
266, and Queen's Flowers de Colombia, et al., v. United States, Slip 
Op. 96-152 (CIT September 25, 1996) as supporting its contention that 
the Department may not penalize a respondent ``for failure to provide 
information on relationships which the respondent had no fair notice 
that the Department wanted.'' Case Brief at 112 through 114.
    The Preliminary Results are especially galling, Ta Chen charges, 
given what Ta Chen characterizes as the Department's oft-stated 
position that ``control indicia were irrelevant under the pre-[URAA] 
statute.'' Id. at 114. In cases involving financial inter-dependencies, 
interlocking and coordinated directors and officers, and de facto joint 
operation through, e.g., a Japanese keiretsu, Ta Chen claims, the 
Department has ``repeatedly and publicly'' stated that control was 
irrelevant to its analysis. Id.
    Furthermore, Ta Chen avers, Ta Chen submitted for the record the 
information relied upon by the Department as indicative of control 
prior to issuing any supplemental questionnaires in this review. With 
this information in hand, Ta Chen alleges, the Department issued 
supplemental questionnaires in this review, all covering Ta Chen's 
sales to San Shing and Sun. At no time, Ta Chen submits, did the 
Department ask Ta Chen to report the subsequent resales of Ta Chen pipe 
fittings made by San Shing and Sun Stainless. Ta Chen argues that in 
Olympic Adhesives, Inc. v. United States, 899 F. 2d 1565, 1573 (Fed. 
Cir. 1990) the Court of Appeals for the Federal Circuit (Federal 
Circuit) held that when a respondent answers fully the Department's 
questionnaire and receives a supplemental request ``pursuing a 
different inquiry,'' the respondent has reasonable grounds for 
believing that the original queries were fully answered. Case Brief at 
116. This holds a fortiori, Ta Chen continues, where the information 
concerning Ta Chen's relationships with San Shing and Sun was submitted 
prior to the Department's supplemental questionnaire. Why, Ta Chen 
asks, if the previous information ``clearly indicated'' that Ta Chen 
was related to San Shing and Sun, did the Department ask Ta Chen for 
wide-ranging information concerning Ta Chen's sales to San Shing and 
Sun, but never to report sales by San Shing and Sun? Ta Chen submits 
that it is not the Department's practice to determine that a response 
is inadequate in toto because a respondent reports the wrong body of 
U.S. sales, not to inform the respondent of the deficiency, to ask 
extensive questions about the putatively useless sales data, and only 
then to notify the respondent of what the Department now claims was 
evident all along: that the Department could not use Ta Chen's reported 
U.S. sales.
    Ta Chen concludes that the questionnaires it received did not state 
that parties could be considered related through control; therefore, Ta 
Chen declares, it would be unlawful for the Department to proceed on 
the basis of BIA because Ta Chen failed to address these control issues 
in its responses.
    If the Department continues to hold that Ta Chen's submitted U.S. 
sales data are unusable for these final results, Ta Chen nonetheless 
disputes the Preliminary Results' finding that Ta Chen failed to 
cooperate with the Department and, thus, deserves adverse (or ``first 
tier'') BIA. First, Ta Chen rejects the Department's conclusion that Ta 
Chen failed to disclose fully its relationships with San Shing and Sun. 
Rather, Ta Chen claims, it reported that Ta Chen was not related to San 
Shing and Sun as defined by the Tariff Act. Only later, Ta Chen avers, 
in the context of the 1994-1995 administrative review of stainless pipe 
did the Department phrase the question differently, asking Ta Chen to 
describe ``all relationships'' with San Shing and Sun. Ta Chen asserts 
that it answered fully this broader inquiry in its November 12, 1996 
response in that proceeding. Ta Chen dismisses petitioner's claim that 
Ta Chen was forthcoming with this new information only because of a 
separate legal proceeding as both speculative and irrelevant to these 
proceedings. Rather, Ta Chen holds, once the Department framed the 
question as it did in the 1994-1995 pipe review, Ta Chen responded 
candidly.
    Ta Chen also claims that it explained accurately the provenance of 
the dba names used by San Shing and that, in any event, the Department 
failed to explain the significance of Ta Chen's account to the decision 
to apply uncooperative BIA. Furthermore, Ta Chen submits, any sales of 
subject pipe fittings to ``Sun Stainless, Inc.'' were to Frank McLane's 
Sun, not to San Shing and its dba Sun, thus making the derivation of 
these names especially irrelevant to these later sales. Case Brief at 
121, citing the Department's verification report for the 1992-1993 
review of welded stainless steel pipe. Ta Chen challenges the 
Preliminary Results' conclusion that Ta Chen misled the Department with 
respect to the origin of the dba names. According to Ta Chen, its 
November 12, 1996 submission in the 1994-1995 review of stainless pipe 
(the relevant portions of which were submitted for the record of this 
review on December 13, 1996) never claimed that ``all of the dba names 
would appear in the Ta Chen customer list submitted in the original 
[LTFV] investigation.'' Id. Rather, Ta Chen argues, only some of these 
names would be drawn from the customer list with the remainder selected 
because they were ``American[-]sounding.'' Id. In any event, Ta Chen 
continues, the record does indicate the prior existence of six of the 
eight dba names Ta Chen claims were used by San Shing. Ta Chen claims 
that Charles Reid, with whom the Department spoke at the October 1994 
verification in the pipe review, was also owner of Wholesale Alloys, 
one of the dba names. As to the use of the name Sun, Ta Chen asserts:

    [t]he record does not establish the prior existence of the name 
Sun in the market. But

[[Page 2132]]

what the record does show is that San Shing essentially went by the 
name Sun. That is what it was known as in the market and the vast 
bulk of its sales were under the name Sun. For someone to have the 
mindset that this was a company known as Sun, but on occasion using 
other dba names, would be reasonable and reflect the reality of the 
situation.

Case Brief at 123.
    As for one customer name, Anderson Alloys (Anderson), Ta Chen 
insists that the Department in the Preliminary Results has assumed 
incorrectly that the Anderson of South Carolina is the same as San 
Shing's dba Anderson Alloys. The record, Ta Chen notes, is replete with 
references to two Andersons. The Anderson allegedly owned and operated 
by Charles Reid had a South Carolina mailing address; any sales to this 
Anderson, Ta Chen avers, can be segregated in Ta Chen's U.S. sales 
listing through use of this address. Furthermore, Ta Chen declares, all 
sales to Anderson after November 1, 1993 were to the South Carolina 
firm, as San Shing USA was no longer using the dba designation Anderson 
Alloys. ``By then, Sun was of course a sufficiently known company in 
the market that there was no reason to use dba designations for name 
recognition.'' Case Brief at 125.
    Ta Chen takes issue with the pipe petitioners' attempt to portray 
the use of dba names as part of an effort to conceal sales to San 
Shing. Citing its October 20, 1994 submission in the 1992-1993 
stainless pipe review, Ta Chen claims that it reported its U.S. sales 
to the Department using the names as appearing on the invoices TCI 
issued to the customer. For example, Ta Chen continues, a majority of 
its invoices to San Shing bore the name ``Sun Stainless, Inc.'', and 
were so reported. Other sales to San Shing under its other dba names 
were likewise reported using the applicable dba name. Furthermore, Ta 
Chen argues, its submitted sales data reflect a trend where sales to 
the various dbas were supplanted by sales exclusively to Sun Stainless, 
Inc., as ``Sun became more well-known and the use of alternative dba 
names became unnecessary.'' Case Brief at 127.
    As for the sales contracts between Ta Chen and San Shing, and 
between San Shing and Frank McLane, Ta Chen avers that these documents 
were not unusual, nor did they provide substantial grounds for adverse 
BIA. Contrary to the Preliminary Results, Ta Chen claims that the June 
1992 contract, while allowing the possibility of future negotiations, 
did, in fact, set the prices for the sale of San Shing's inventory to 
Frank McLane. According to Ta Chen, sales contracts often omit price 
terms when, e.g., ``the parties in their repeated dealings have 
customarily set the price at a later date,'' or in the face of risks of 
a ``fluctuating market, particularly where delivery is postponed a 
considerable period of time (for example, `delivery six months from 
today.')'' Case Brief at 129, quoting, respectively, Nelson, Deborah L, 
and Jennifer L. Howicz, Williston on Sales, 5th Ed. at 377, and 
Hawkland, Will D., Uniform Commercial Code Series, Sec. 2-305:01 at 301 
(1997). Under the two-year term of the contract between Ta Chen and San 
Shing, Ta Chen submits, the open-ended nature of this contract was not 
remarkable. Ta Chen also claims that the first such purchase, which 
entailed all of TCI's then-existingU.S. inventory of welded stainless 
steel pipe, was concluded prior to the preliminary LTFV determination 
in that case, thereby averting suspension of liquidation. According to 
Ta Chen, the second incremental purchase six months later was timed to 
permit TCI to sell all of its existing inventory of pipe fittings prior 
to suspension of liquidation in this investigation. See Preliminary 
Determination of Sales at Less Than Fair Value: Certain Stainless Steel 
Butt-Weld Pipe Fittings From Taiwan, 57 FR 61047 (December 23, 1992). 
Ta Chen asserts that such agreements between Ta Chen and San Shing were 
not improvident and that, in any event, these contracts are irrelevant 
for purposes of the Tariff Act. The Department, Ta Chen alleges, failed 
to explain why an ``unusual'' contract would suffice to treat the 
respondent with adverse BIA. Case Brief at 132. When confronted with 
similar contracts in other cases, Ta Chen argues, the Department 
concluded that the contracts were ``not necessary or relevant to 
calculation of the dumping margin,'' and have never been the basis for 
imposing uncooperative BIA. Id.
    With respect to Mr. Mayes's involvement with Ta Chen, San Shing, 
and Sun, Ta Chen maintains that this is also an inappropriate basis for 
resorting to adverse BIA. Mr. Mayes, Ta Chen declares, worked for Ta 
Chen, later worked for San Shing, and later still worked for Mr. 
McLane's Sun; however, ``[Mr.] Mayes never worked for Ta Chen and Sun 
at the same time.'' Ta Chen submits that an employee leaving one 
company to work for another ``happens all the time.'' Case Brief at 
133. As to Ta Chen's previous statement that Mr. Mayes was never 
``employed by San Shing,'' Ta Chen claims that it did note that Mr. 
Mayes was an ``independent contractor'' for San Shing. An independent 
contractor is not, Ta Chen declares, an employee. Case Brief at 134. As 
to monies paid by Ta Chen to Mr. Mayes after his alleged departure from 
TCI, Ta Chen insists that there was a single payment in 1995 pursuant 
to the standing agreement between Ta Chen and Mr. Mayes. According to 
Ta Chen, in return for helping Ta Chen get its start in theU.S. pipe 
market by turning over his customer lists to Ta Chen, Mr. Mayes would 
become eligible for a one-time payment should Ta Chen reach a specific 
profit level. Ta Chen suggests that ``in a cyclical steel industry, 
where, when profits are good, they are great,'' achieving this level of 
profit was ``almost an inevitability.'' Case Brief at 135. Ta Chen 
charges once again that the Department has created a per se rule that 
payment of money by one party to another is tantamount to employment by 
the former of the latter. Rather, Ta Chen concludes, this one-time 
profit-sharing payment conferred no ownership rights and is, thus, 
irrelevant to the issue of related parties.
    Ta Chen next assails the Department's characterization in the 
Preliminary Results that Ta Chen misled the Department with respect to 
the debt-financing arrangements between Ta Chen and San Shing and Ta 
Chen and Sun. According to Ta Chen, its descriptions of these 
arrangements were ``consistent'' and ``clear'' throughout this review. 
Ta Chen insists that as early as July 1994 evidence submitted in the 
stainless pipe case indicated that San Shing's accounts receivable were 
``not securing San Shing's debt to TCI but, rather, Ta Chen's debt to a 
Los Angeles bank.'' Case Brief at 137, see also the Department's 
Preliminary Results Analysis Memorandum, March 4, 1997 at 6. 
Furthermore, Ta Chen disagrees with the Preliminary Results' conclusion 
that it had misled the Department through its various characterizations 
of the debt arrangements. That Ta Chen pursued one argument to rebut 
the petitioners' submission as to the implication of the debt 
assignment, and later pursued a different argument to address 
petitioners' documentary evidence of those assignments is not, Ta Chen 
insists, a basis for concluding that Ta Chen misled the Department. 
Finally, Ta Chen avers, the relevance of Ta Chen's submissions 
addressing the security arrangements is unclear given the ``undefined'' 
nature of the Department's control test. Finally, Ta Chen claims that 
the alternating arguments cited in its Case Brief were only presented 
in the 1992-1993 review of stainless pipe; thus, they are

[[Page 2133]]

irrelevant with respect to a BIA decision in this review of pipe 
fittings.
    Ta Chen claims further that the Department's verification reports 
in the first administrative review of stainless pipe confirm that the 
company cooperated fully with the Department. Ta Chen states that it 
answered accurately every question asked, and supplied all requested 
documents. ``There is,'' Ta Chen insists, ``no record evidence 
otherwise.'' Id. at 139 and 140. Noting the free access granted to the 
Department's verifiers, Ta Chen concludes that ``[n]ever once did the 
verifiers state that, per a control standard for relatedness, they were 
now going to address common indicia of control, or ask questions 
thereon. There are no statements in any of the verification reports 
otherwise.'' Case Brief at 140. Ta Chen dismisses the Preliminary 
Results' claim that Ta Chen withheld relevant information from the 
verifiers ``[d]espite repeated probing by [the] verifiers,'' claiming 
that the Preliminary Results failed to explain what this ``repeated 
probing'' involved. Id, quoting the Department's Preliminary Results 
Analysis Memorandum at 7. Ta Chen claims that the concern expressed by 
the Department during verification was whether one party owned the 
other, not whether one party controlled another. ``Nothing was said or 
asked by the verifiers to suggest otherwise.'' Id. The Department 
cannot, Ta Chen insists, resort to BIA where it ``does not have the 
information it wants because it did not ask the right questions.'' Id. 
at 141. Furthermore, even if an alleged failure to be forthcoming in 
the October 1994 verification of stainless pipe could be cited as 
grounds for adverse BIA in the 1992--1993 review of that case, Ta Chen 
continues, such is not the case for the 1992--1994 administrative 
review of pipe fittings. Conceding that it has, in fact, entered the 
relevant portions of the 1994 pipe verification reports into the record 
of this review of butt-weld pipe fittings (and in the 1993--1994 review 
of stainless pipe), Ta Chen nevertheless insists that it ``did not use 
the verification in the first pipe review to conceal its relationship 
with [San Shing and] Sun in these other reviews.'' Case Brief at 142.
    Comparing its treatment at the hands of the Department in the 
instant review to that of respondents in other proceedings, Ta Chen 
suggests that the Department has elsewhere allowed far more egregious 
conduct to pass without resort to first-tier BIA. For example, Ta Chen 
cites a review of Antifriction Bearings (except Tapered Roller 
Bearings) From France, et al., 57 FR 28360 (June 24, 1992), where the 
Department applied uncooperative BIA only to those companies that 
failed to respond to the questionnaire altogether. There, Ta Chen 
submits, the Department applied second-tier BIA to other firms despite 
``extensive misrepresentations and omission in [the firms'] 
questionnaire responses.'' Id. Likewise, Ta Chen cites Emerson Power 
Transmission Corp. v. United States, 903 F. Supp. 48 (CIT 1995) 
(Emerson), and NSK, Ltd. v. United States, 910 F.Supp. 663 (CIT 1995) 
(NSK) for the proposition that second-tier BIA is ``proper and 
consistent with'' Departmental practice where a respondent has tried 
but failed to cooperate. Id. at 144, quoting NSK, Ltd. v. United 
States. In addition, Ta Chen avers, a Binational Panel Review convened 
pursuant to Article 1904 of the North American Free Trade Act concluded 
that the Department must impose second-tier BIA in light of the 
respondents' ``repeated efforts to provide answers to the Department's 
numerous questionnaires.'' Id.
    Ta Chen notes that the Department applied second-tier BIA in 
Certain Small Business Telephones From Taiwan, 59 FR 66912 (December 
28, 1994), and Certain Fresh Cut Flowers From Colombia, 59 FR 15159 
(March 31, 1994), even though respondents in these proceedings 
improperly reported U.S. sales to related parties, improperly 
classified ESP sales as PP sales, and misreported data which were 
crucial to the dumping calculations. In Sugiyama Chain Co., Ltd. v. 
United States, 852 F. Supp. 1003 (CIT 1994), a case spanning seven 
review periods, Ta Chen points out that the Department relied upon 
second-tier cooperative BIA despite Sugiyama's failure to report its 
sixty percent equity relationship with its ``dominant'' home market 
customer. In addition, Ta Chen claims, the Department found that 
Sugiyama failed to provide its financial statements, had significant 
unrecorded transactions, and could not reconcile its U.S. and home 
market sales listings. Yet, Ta Chen asserts, the Department applied 
cooperative BIA in all but one of the seven reviews at bar. Ta Chen 
argues that because it disclosed the information upon which the 
Department based its related-party determination (as distinct from the 
Sugiyama case, where the Department discovered this information on its 
own), Ta Chen should not be a candidate for first-tier uncooperative 
BIA.
    As for the choice of a BIA margin, Ta Chen takes issue with the 
Department's use of the highest margin from the petition as BIA in the 
Preliminary Results. In Certain Welded Carbon Steel Pipes and Tubes 
From Thailand, 62 FR 17590 (April 10, 1997), Ta Chen maintains, the 
Department used an average of the petition margins as BIA even though 
(i) The Department discovered purchases from and sales to affiliated 
parties and (ii) The parties' affiliation was evident on the basis of 
common stock ownership and, thus, the respondent should have known to 
report the affiliated-party transactions. Similarly, according to Ta 
Chen, in Brass Sheet and Strip From Sweden, 57 FR 29278 (July 1, 1992), 
the Department rejected a respondent's questionnaire response in toto, 
applying first-tier BIA; yet, Ta Chen notes, despite what it 
characterizes as the more egregious failings of the company's 
questionnaire response, the Department assigned as adverse BIA the 
respondent's own margin from the LTFV investigation. Selection of a BIA 
margin, Ta Chen asserts, should be based upon an objective reading of 
the respondent's cooperation, rather than any subjective and 
speculative standard of intent. Id. at 148 and 151.
    Ta Chen urges the Department to use as BIA Ta Chen's cash deposit 
rate from the LTFV investigation, claiming this would be sufficient to 
``motivate cooperation'' on the part of Ta Chen. Id. at 153. Ta Chen 
reasons that it requested the three pending administrative reviews in 
order to reduce its antidumping liabilities; if the Department 
reinstated the prior cash deposit rate of 3.27 percent, ``Ta Chen's 
purpose in participating in these reviews will have been completely 
undermined.'' Case Brief at 153. Ta Chen draws a distinction between 
the pending review of pipe fittings and other cases wherein a 
respondent is required to participate in an administrative review 
sought by a petitioner; in the latter case, Ta Chen argues, the threat 
of a higher margin suggested by petitioner serves to induce 
respondents' cooperation. This is especially so, Ta Chen argues, where 
the possible revocation of the antidumping duty order with respect to 
the respondent hangs in the balance. Ta Chen suggests that it requested 
the first reviews of pipe fittings and stainless pipe with the 
expectation that it would receive zero or de minimis margins in all 
three and, thereby, be eligible for revocation. In fact, Ta Chen notes, 
it requested revocation of the welded stainless steel pipe order during 
the 1994-1995 review of that case. Failure to cooperate in the instant 
reviews, Ta Chen concludes, would defeat Ta

[[Page 2134]]

Chen's purpose in requesting these reviews in the first place.
    Ta Chen distinguishes these reviews from the issue before the Court 
in Industria de Fundicao Tupy and American Iron & Alloys Corp. v. 
United States (Industria de Fundicao), 936 F. Supp. 1009, 1019 (CIT 
1989). In contrast to this review, Ta Chen submits, the review at issue 
in Industria de Fundicao was requested by the petitioners. In light of 
the respondent's failure to cooperate, Ta Chen notes, petitioners in 
that case presented evidence that this firm's existing dumping margin 
would be insufficient to induce cooperation. There, Ta Chen concludes, 
the Department also used an average of the margins alleged in the 
antidumping petition in establishing a margin based on BIA.
    Ta Chen also faults the 76.20 percent BIA margin presented in the 
Preliminary Results as unlawfully punitive, contending that it is not 
probative of current conditions. Consistent with the holdings of the 
Federal Circuit in D&L Supply Co, Inc. v. United States, (D&L Supply) 
1997 WL 230117 at 2 (Fed. Cir. May 8, 1997), Ta Chen asserts that there 
is an ``interest in selecting a rate that has some relationship to 
commercial practices in the particular industry.'' Case Brief at 155, 
quoting D&L Supply. Rather, Ta Chen argues, the Department has already 
verified that Ta Chen's margins should be 3.27 percent for the 
stainless pipe case and 0.67 percent for the pipe fittings case. These 
past margins, Ta Chen submits, are ``substantial evidence'' as to Ta 
Chen's expected future dumping of subject merchandise. Id. at 156. Ta 
Chen urges the Department to disregard the margins suggested in the 
petition in favor of the verified dumping margins from the appropriate 
LTFV determination.
    Ta Chen also suggests that the failure of the petitioner in this 
case to request a review of Ta Chen for the first three PORs is 
indicative of petitioner's belief that Ta Chen is not dumping pipe 
fittings into the U.S. market. In administrative reviews requested 
solely by a respondent who then fails to cooperate, Ta Chen argues, the 
Department's practice is to impose second-tier BIA. The Department's 
treatment of Ta Chen in the instant reviews, Ta Chen asserts, 
constitutes another per se rule (i.e., that it is irrelevant whether 
respondents or petitioners requested the review when selecting BIA), 
which is contrary to the Department's practice of deciding BIA issues 
on a case-by-case basis.
    In addition, Ta Chen notes what it sees as significant changes in 
the U.S. market since publication of the antidumping duty order. Ta 
Chen claims that it is no longer forced to compete against other 
Taiwanese producers of stainless steel products who, according to Ta 
Chen, largely withdrew from the U.S. market after the imposition of 
antidumping duties. In support of this contention, Ta Chen quotes from 
a 1996 determination by the Canadian International Trade Tribunal which 
concludes that ``Taiwanese producers other than Ta Chen have been 
excluded from the U.S. market.'' Ta Chen's Case Brief at 166 and 167. 
Ta Chen also insists that the health of the U.S. industry has improved 
markedly since the original investigation in this case. Id. at 162 and 
163, citing Welded Stainless Steel Pipe From Malaysia, ITC Pub. No. 
2744 (March 1994).
    According to Ta Chen, petitioner's inaction is especially relevant 
in light of statements made by representatives of the US industry in 
other antidumping proceedings. For instance, Ta Chen claims that the US 
industry testified before the Commission in the investigation of welded 
stainless steel pipe from Malaysia that the imposition of antidumping 
duties on stainless pipe from Taiwan had effectively eliminated dumping 
by Taiwanese producers. See ITC Pub. No. 2744 at I-10. Ta Chen cites a 
telephone conversation purportedly held between the president of a US 
pipe producer and Robert Shieh wherein this individual stated that he 
did not think a review of Ta Chen was necessary. Case Brief at 158. In 
a similar vein, Ta Chen cites the testimony of Mr. Avento, president of 
the US pipe producer Bristol Metals, insisting that ``Taiwan imports 
have been checked by the antidumping laws.'' Ta Chen's Case Brief at 
162, quoting Economic Effects of Antidumping and Countervailing Duty 
Orders and Suspension Agreements, ITC Pub. No. 2900 (June 1995). Ta 
Chen argues that these statements ``support a [zero] percent dumping 
finding for Ta Chen.'' Id. at 163. Furthermore, Ta Chen suggests that 
these statements, coming after the original petition in this case, are 
more indicative of present market conditions. Ta Chen also cites to 
statements submitted by Ta Chen into the record of this review from the 
pipe company president and another purchaser of Ta Chen's pipe and pipe 
fittings, both claiming that ``Ta Chen could not have been dumping at a 
significant rate during this period'' through San Shing and Sun. Case 
Brief at 164. Taken together, Ta Chen submits that petitioner's failure 
to request a review, and the subsequent statements as to the state of 
the U.S. market for stainless steel pipe products after imposition of 
antidumping duties, indicate that petitioner has ``repudiated [the 
76.20 percent margin] as inapplicable to more recent time periods, 
including the period of [this review].'' Id. at 165. Furthermore, Ta 
Chen argues, the BIA rate from the LTFV investigation applied to 
producers other than Ta Chen and is, thus, ``irrelevant and unlawful.''
    Petitioner assails Ta Chen's attempts ``to unfairly undermine and 
manipulate the antidumping process to its own advantage,'' claiming 
that Ta Chen's comportment in this review warrants nothing less than 
first-tier, uncooperative BIA. Rebuttal Brief at 2. By standing firm in 
asserting that Ta Chen is not related to San Shing and Sun, petitioner 
charges, Ta Chen makes ``a complete mockery of both law and reason.'' 
Id. at 6. Rather, petitioner continues, Ta Chen's behavior underscores 
its persistent unwillingness to cooperate with the Department in this 
review. Additional evidence of Ta Chen's uncooperative stance, 
petitioner suggests, is its insistence on treating the identities of 
certain of its so-called expert witnesses as business proprietary 
information, thus preventing public disclosure of these individuals' 
names. Petitioner hints that the true reason for requesting proprietary 
treatment of these individuals' identities is that their testimony does 
not reflect accurately common practices in the industry and, therefore, 
the individuals are loathe to have the stainless steel community at 
large know of their role in ``such deception.'' Id. at 7.
    According to petitioner, the timing and quality of Ta Chen's 
revelations in this review make clear that Ta Chen ``deliberately 
ignored and/or refused to cooperate'' with the Department's requests 
for factual information. Id. Further, Ta Chen's continued obstinacy is 
made manifest in Ta Chen's Case Brief, providing vivid testimony that 
Ta Chen still refuses to cooperate and is actively impeding this 
review. Id. Ta Chen's insistence on reporting its sales to San Shing 
and Sun, rather than its first sales to truly unrelated parties, 
petitioner maintains, has deprived the Department of the necessary 
sales database for calculating Ta Chen's margin in this review. That Ta 
Chen has ``clearly and deliberately withheld factual information 
explicitly requested by the Department,'' petitioner argues, dictates 
that the Department base Ta Chen's margin on total first-tier BIA. Id. 
at 8.
    Petitioner insists that there was, in fact, no ambiguity with 
respect to the Department's definition of related

[[Page 2135]]

parties and the specific sales data the Department requested in this 
review. Rather than being a cooperative respondent, petitioner avers 
that Ta Chen deliberately misled the Department and only revealed the 
true nature of its ties to San Shing and Sun when the Department opted 
to verify Ta Chen's responses in the 1994-1995 review of welded 
stainless steel pipe. Id. Ta Chen's protestations that it did not 
apprehend that the Department might possibly find it related to San 
Shing, petitioner asserts, are ``laughable.''
    Citing Ta Chen's behavior in other proceedings before the 
Department, petitioner points to what it characterizes as a pattern of 
deception in ``its overall track record in the U.S. antidumping 
arena.'' Rebuttal Brief at 8. For example, petitioner continues, in an 
investigation of stainless steel flanges from Taiwan, Ta Chen insisted 
on participating as a voluntary respondent, even though, petitioner 
alleges, Ta Chen was not a producer of the subject merchandise and had 
not up to that time supplied stainless steel flanges to the U.S. 
market. Only when the Department was preparing to verify Ta Chen's 
sales and cost-of-production responses, petitioner maintains, did Ta 
Chen abruptly withdraw from the investigation and accept the ``all 
others'' margin of 48 percent. See Final Determination of Sales at Less 
Than Fair Value: Certain Forged Stainless Steel Flanges From Taiwan, 58 
FR 68859 (December 29, 1993) (Flanges From Taiwan). When considered 
with Ta Chen's behavior in the reviews of stainless pipe and pipe 
fittings, petitioner argues, this pattern of behavior indicates Ta 
Chen's ``strategy of manipulating U.S. dumping law to its advantage.'' 
Id. at 10.
    Because Ta Chen ``repeatedly and deliberately lied to the 
Department'' concerning its U.S. sales in this review, petitioner 
contends, Ta Chen deserves to be treated as an uncooperative 
respondent, and to receive total, first-tier BIA as the basis for its 
margin. Id. Petitioner suggests that U.S. antidumping law is 
essentially fair ``when all parties cooperate by providing timely, 
factual, reliable information'' to the Department. However, petitioner 
continues, a respondent debases this fairness through submission of 
``untimely, inaccurate, unreliable, misleading information'' at the 
expense of those parties who do cooperate. Id. In such cases, 
petitioner argues, the Department must take fair and decisive action to 
protect the integrity of the administrative review process for all 
interested parties, both respondents and petitioners. In light of Ta 
Chen's behavior in the instant proceeding, petitioner concludes, the 
Department must continue to base Ta Chen's margin upon the 76.20 
percent BIA rate.

Department's Position

    As is clear from our responses to Comments One and Two, we believe 
that Ta Chen submitted the improper body of U.S. sales to the 
Department. We believe that the U.S. sales data submitted by Ta Chen in 
the 1992-1994 administrative review cannot be relied upon in 
calculating Ta Chen's dumping margin. These flaws affect such a vast 
majority of Ta Chen's U.S. sales in this review as to render its 
questionnaire responses unuseable in toto.
    We also agree with petitioner that, through its persistent refusal 
to disclose fully its relationships with San Shing and Sun, despite our 
manifest interest in these relationships, Ta Chen impeded the conduct 
of this administrative review and did not act to the best of its 
ability by providing complete, accurate and verifiable responses to the 
Department's questionnaires.
    As a factual matter, we reject Ta Chen's claims that the Department 
never clearly requested information from Ta Chen concerning its sales 
to unrelated customers in the United States, or that the Department was 
in some way remiss in failing to seek data on San Shing's or Sun's 
downstream sales. In fact, the only reason we did not insist 
immediately that Ta Chen report San Shing's and Sun's sales as its 
first sales to unrelated customers in the United States is because the 
full extent of these extraordinary relationships was not known until 
two-and-a-half years after we had received Ta Chen's original response. 
In our original antidumping questionnaire, issued July 20, 1994, we 
asked Ta Chen to report its first U.S. sales to unrelated customers, 
and provided the statutory definition of related parties, including the 
references to parties being related ``through stock ownership or 
control or otherwise,'' at Appendix II. Ta Chen instead reported sales 
to numerous customers, representing each of these as Ta Chen's separate 
and unrelated customers. Despite the fact that well over eighty percent 
of Ta Chen's U.S. sales in the instant review were to San Shing, Ta 
Chen never acknowledged this company's existence in its initial 
questionnaire response. When petitioners in the stainless pipe case 
first obtained business and real estate records indicating that Ta Chen 
might be related to these parties, Ta Chen admitted the existence of 
San Shing, and presented the wholly unconvincing story of San Shing's 
entrance into the United States market (see below for more on this 
point).
    As the pipe petitioners adduced additional evidence pointing to Ta 
Chen's concealment of relevant information, Ta Chen proffered arguments 
why the Department should not inquire further into these relationships. 
Due to petitioners' related party allegations, the Department sent a 
team of five verifiers to Tainan and three to Long Beach in October 
1994 to verify Ta Chen's questionnaire responses in the 1992-1993 
review of welded stainless steel pipe. Ta Chen argues now that the 
results of these verifications, as outlined in the Department's reports 
for the record, prove conclusively that Ta Chen cooperated fully in 
this review. To the contrary, the results of these verifications do not 
support Ta Chen's repeated claims that it cooperated with the 
Department. Despite an extensive verification of related-party issues, 
Ta Chen withheld all of the information concerning its extensive ties 
to San Shing and Sun. We were able to verify only those aspects of the 
control indicia for which the stainless pipe petitioners had already 
produced documentary evidence for the record: Ta Chen provided 
information concerning (i) The dates Mr. McLane allegedly sold his 
stock in Ta Chen, and (ii) Mr. Shieh's ownership of the real property 
allegedly rented first to San Shing and then to Sun, including the 
arm's-length nature of the monthly rents charged by Mr. Shieh. Despite 
having free access to any employee, and despite reviewing TCI's 
correspondence files with relevant customers, including San Shing and 
Sun, and Ta Chen's correspondence files with TCI, we did not find a 
single memorandum, letter, facsimile message, phone message, or any 
other communication concerning the check-signing ability, the computer 
access, the debt-financing arrangements, the shared employees, etc. 
And, Ta Chen's protestations notwithstanding, the verifiers did indeed 
ask questions about, inter alia, the facts of, and reasons for, Mr. 
McLane's establishment of the second ``Sun Stainless, Inc.,'' Mr. 
Shieh's rental of property to San Shing and Sun, and other questions 
about their dealings. The Department went so far as to poll other 
offices within the International Trade Administration for information 
on Ta Chen, and to interview third parties, such as the president of 
San Shing Hardware Works, Ltd. in Tainan and several of Ta Chen's 
putative U.S. agents (including

[[Page 2136]]

Mr. Reid) in Long Beach.<SUP>12</SUP> See Memoranda, Holly A. Kuga to 
Robert Chu, Ian Davis, Dan Duvall, and to Charles Bell, dated October 
5, 1994. Clearly, all of these efforts were to determine if the 
transactions between these parties were at arm's length. And all were 
equally unavailing.
---------------------------------------------------------------------------

    \12\ It should be noted that none of these individuals provided 
any information about Ta Chen's and TCI's extraordinary ties to San 
Shing and Sun.
---------------------------------------------------------------------------

    Therefore, contrary to the claims in Ta Chen's Case Brief, after 
two sales and two cost questionnaire responses, and full home market, 
U.S., and cost-of-production verifications in the 1992-1993 review of 
stainless pipe, Ta Chen disclosed nothing about the nature of its ties 
to San Shing and Sun. Finally, in November and December 1996, Ta Chen 
made further partial disclosures of the facts surrounding its 
relationships with San Shing and Sun in the context of the 1994-1995 
review of stainless pipe. The incomplete nature of these disclosures 
was made clear when Ta Chen, in its September 3, 1997 Case Brief, 
disclosed additional salient information for the first time: Ta Chen 
identified two additional dba names used by San Shing during this 
period. Ta Chen's partial and belated disclosure of relevant factual 
information casts further doubt on the reliability of its reported 
sales data as a whole.
    Had Ta Chen been laboring under any misapprehension of the 
statutory definition of related parties, it could have contacted the 
Department's officials, as instructed in the questionnaire. Further, 
the allegations filed by petitioners in the stainless pipe case in July 
1994, October 1994, and July 1995 concerning San Shing and Sun 
Stainless, and the Department's attendant focus upon this issue, put Ta 
Chen on notice that its relationships with San Shing and Sun were a 
major issue in this review. Instead, Ta Chen released information 
piecemeal and incompletely.
    Ta Chen's explanations for its behavior during these reviews are in 
themselves problematic. As a preliminary matter, they make little sense 
from a business standpoint when one looks beyond the text of the legal 
arguments. Ta Chen claimed that in 1992 it elected to forsake the ESP 
business, essentially because reporting ESP sales in the wake of the 
antidumping duty order would be too burdensome. Ta Chen, relying on the 
Department's verification reports in the 1992-1993 review of welded 
stainless steel pipe, continues:

    [a]fter the imposition of the antidumping duty order on 
[stainless pipe], Ta Chen turned to San Shing Hardware Works, USA 
(San Shing USA). San Shing USA was established by the president of 
San Shing Hardware Works Co., Ltd. (San Shing Taiwan) to sell pipe 
products and fasteners in the United States out of a U.S. warehouse.

    Ta Chen officials stated that San Shing USA contacted Ta Chen's 
former sales representatives in the United States and established an 
arrangement whereby San Shing USA, an unknown in the U.S. pipe 
market, could sell Ta Chen pipe using these representatives' names 
on a [dba] basis.

Ta Chen's February 7, 1997 submission at 47 (emphasis added; Ta Chen's 
bracketing omitted).
    Ta Chen, therefore, elected to rely upon San Shing, a company with 
no prior experience in the stainless steel or tubular products 
industries, to replace TCI as its sole distributor of stainless steel 
pipe fittings and stainless pipe in the United States. Having made this 
decision, San Shing then purportedly on its own struck deals with known 
pipe dealers in the United States who had been prior TCI customers, 
whereby San Shing would use these dealers' names as dbas. The customers 
would then turn over their customer lists to San Shing and stand aside, 
allowing San Shing effectively to replace them in the distribution 
chain. However, having gone to such lengths to secure the names of 
known players in the U.S. market, San Shing then funneled the majority 
of its sales through the one previously unknown dba, ``Sun Stainless, 
Inc.''
    However, as petitioners in the stainless pipe case pointed out, 
this arrangement makes neither commercial nor logical sense. See the 
October 12, 1994 submission of Collier Shannon Rill & Scott at 7. 
According to Ta Chen's narrative account, San Shing ``was not a well-
known name in the U.S. pipe business.'' Ta Chen's December 13, 1996 
submission at 54. Therefore, San Shing, operating under its various dba 
names, e.g., Sun and Anderson Alloys, sold Ta Chen pipe and pipe 
fittings to the same customers who formerly purchased pipe from TCI's 
customers, e.g., Sun and Anderson Alloys. The stated reason for this 
arrangement is that downstream purchasers who did not know San Shing 
would be put at ease by allowing them to deal with a name they knew. 
But clearly Sun's and Anderson's former customers knew with whom they 
were dealing. If San Shing replaced these dealers, their customers 
would not ``feel more comfortable'' because they were buying pipe from 
``San Shing, dba Sun Stainless,'' or ``San Shing, dba Anderson 
Alloys.'' On a more elementary level, this narrative would have us 
believe that established pipe distributors in the United States, who 
earned their income by purchasing pipe fittings from TCI and reselling 
them after a markup to various end users, simply stepped aside and 
allowed San Shing to use their businesses' names to sell to their 
former customers. Such a step is inconsistent with commercial reality, 
and yet Ta Chen claims to have found not one, but eight stainless pipe 
products distributors amenable to this arrangement.
    Ta Chen also misstated the origins of the dba names themselves. In 
a December 20, 1996 submission in the 1994-1995 review of stainless 
pipe Ta Chen, again quoting the Department's verification reports, 
explained that:

    [Ta Chen] officials stated that San Shing USA contacted Ta 
Chen's former representatives in the United States and established 
an arrangement whereby San Shing USA, an unknown in the U.S. pipe 
market, could sell Ta Chen pipe using the representative's names on 
a [dba] basis. According to TCI, its sales representatives readily 
agreed.

Ta Chen's February 7, 1997 submission at 62, quoting the Department's 
November 6, 1996 verification reports.
    To verify this claim the Department introduced into the record of 
this review Ta Chen's U.S. customer list from the LTFV investigation of 
stainless pipe. See Memorandum for the File, February 24, 1997. The 
most significant dba name, ``Sun Stainless, Inc.,'' is not found on 
this list. In fact, only three of the admitted eight dbas were prior Ta 
Chen customers. In explaining the need for San Shing to use dbas and 
how San Shing came to select the names it used, Ta Chen misstated the 
origins of these names, and never explained for the record where the 
dba names, most significantly ``Sun Stainless, Inc.,'' originated. Ta 
Chen explains its earlier misstatements by arguing in its case brief 
that its November 12, 1996 submission in the 1994-1995 pipe review did 
not claim that ``all'' the dba names were those of prior TCI customers. 
While this is true, Ta Chen did so claim when first confronted with the 
pipe petitioners' knowledge of San Shing's and Sun's existence. Given 
the absence of evidence on the record that any sale of assets to Frank 
McLane ever took place (aside from Ta Chen's undocumented claims), 
given the lack of clarity surrounding Sun's 1992 founding, and given Ta 
Chen's failure to document for the record precisely how and why San 
Shing came to use dba names in the first place, Ta Chen's version of 
events is neither credible nor supported by evidence.

[[Page 2137]]

    Other factual aspects of the record are also troubling. For 
example, we continue to believe that the sales contract involving Chih 
Chou Chang and Robert Shieh was, in fact, highly unusual. Ta Chen 
argues that sales contracts with no prices are commonplace when such 
transactions are customary between the parties, or where the date of 
delivery is in doubt. That was certainly not the case here. These 
transactions were not a ``customary practice'' between Ta Chen and San 
Shing, they were one-time deals involving the transfer of Ta Chen's 
entire existing inventory of stainless steel pipe and stainless steel 
pipe fittings to San Shing. Delayed delivery was also not at issue, as 
delivery was immediate, with Robert Shieh arranging to move the 
merchandise from one of his properties (TCI's warehouse) to another of 
his properties nearby, rented to San Shing. The relevance of the 
contract in the present discussion is that its commercially-unrealistic 
terms further indicate that San Shing was crafted by, and related to, 
Ta Chen. We stand by our preliminary conclusion that ``[t]he terms of 
this contract do not comport with Ta Chen's repeated assertions that 
San Shing was new to the pipe trade, and so lacked familiarity with the 
U.S. pipe market that it was compelled to use `dba' names which 
`sounded more American.' '' Preliminary Analysis Memorandum, March 4, 
1997, at 7 and 8 (original bracketing omitted).
    We also disagree with Ta Chen's description of the activities of W. 
Kendall Mayes. The record clearly indicates that Mr. Mayes, working 
with TCI since its inception, took over the day-to-day management of 
first San Shing and then Sun Stainless at the insistence of Ta Chen, 
and not as a free agent who coincidentally migrated between these three 
firms as a normal result of normal relocations within a tightly 
restricted industry environment. As to the ``independent contractor'' 
relationship with Ta Chen, the record evidence indicates that Mr. Mayes 
worked exclusively on behalf of Ta Chen, used Ta Chen office space and 
equipment, was paid monthly by Ta Chen, was covered under Ta Chen's 
group health insurance policy (even after he putatively ended his 
employment with Ta Chen), and continued to enjoy substantial financial 
benefits from his relationships with Ta Chen and Mr. Shieh long after 
this relationship allegedly ended. Furthermore, in return for this 
``independent contractor'' relationship, Mr. Mayes had to provide to Ta 
Chen his own list of customers, thus effectively selling his business 
to Ta Chen. We also disagree with Ta Chen's conclusion that the one-
time payment to Mr. Mayes conferred no control over pricing. Rather, 
given Mr. Mayes's successive roles as sales manager for TCI, San Shing, 
and Sun Stainless, together with Ta Chen's admitted role in negotiating 
the final prices between San Shing and Sun and their unrelated 
customers, the record indicates that Mr. Mayes enjoyed a knowledge and 
control of prices unknown between unrelated parties. Finally, with a 
sizeable payment to Mr. Mayes from Ta Chen dependent upon Ta Chen's 
profitability, Mr. Mayes's own self-interest lay not in negotiating 
truly arm's-length prices between San Shing and Sun and Ta Chen, but in 
maximizing Ta Chen's profits in these transactions. This relationship 
further buttresses the Department's Preliminary Results determination 
that these transactions were not, in fact, at arm's-length. Rather than 
enforcing a ``per se'' rule concerning the exchange of money between Ta 
Chen and Mr. Mayes, we have drawn the only reasonable conclusion 
possible in light of the record evidence.
    As for sales made to Anderson Alloys, Ta Chen mistakenly argues 
that the Department can sort these sales by customer address to 
segregate sales made to the ``real'' Anderson Alloys in South Carolina 
from those made to the dba Anderson Alloys. However, we have no idea 
which sales are to which entity, as Ta Chen used the same address and 
customer code for both Andersons. More to the point, the ability to 
segregate sales to Charles Reid's Anderson and sales to San Shing's dba 
Anderson would have no bearing on our decision to resort to total 
first-tier BIA. Rather, we cannot ``use only portions of a response 
that were verifiable since this `would allow respondents to selectively 
submit data that would be to their benefit in the analysis of their 
selling practices.' '' Chinsung Industries Co., Ltd. et al. v. United 
States, 705 F. Supp 598, 601 (CIT 1989) (citations omitted). As the 
Court noted in Persico Pizzamiglio, S.A. v. United States, by allowing 
the Department ``to reject a submission in toto, the court encourages 
full disclosure by the respondent, because only full disclosure will 
lead to a dumping margin lower than that established by employing 
BIA.'' Persico Pizzamiglio, S.A. v. United States, 18 CIT 299 (CIT 
1994).
    Finally, with respect to Ta Chen's reliance upon the statements of 
Messrs. Avento and Reid to support its arguments, we note Bristol 
Metal's and Mr. Avento's longstanding affiliation with Ta Chen. Bristol 
Metals was one of Mr. Shieh's original partners in founding Ta Chen, 
and Joseph Avento himself was at one time on Ta Chen's board of 
directors. See, e.g., Ta Chen's September 19, 1994 questionnaire 
response at Exhibit 2, and Ta Chen's December 13, 1996 submission at 
50. Mr. Avento later joined the petitioners in the stainless pipe case 
in initiating that investigation. He now appears before the Department 
as Ta Chen's witness and advocate. Neither in its case brief nor in its 
original filing of Mr. Avento's statement has Ta Chen elected to reveal 
the current relationships between Ta Chen, Bristol Metals, and Mr. 
Avento, such as whether Ta Chen and Bristol make purchases from each 
other, or whether either holds stock in the other. Given Mr. Avento's 
ongoing ties to Mr. Shieh and Ta Chen, the unsubstantiated nature of 
his testimony, and Ta Chen's unwillingness to disclose for the record 
Mr. Avento's current dealings with Mr. Shieh and Ta Chen, we are unable 
to establish his credibility as a witness about the U.S. stainless 
steel pipe and pipe fittings industries as a whole.
    As for Charles Reid, Ta Chen acknowledges for the public record 
that Mr. Reid, using at least three trade names, was a customer of Ta 
Chen during the investigation and first period of administrative 
review. See Case Brief at 122.
    We conclude, therefore, that the use of total, adverse BIA is 
appropriate in this case. The statute's provision for use of BIA is, as 
the Federal Circuit has held, ``an investigative tool, which the 
[Department] may wield as an informal club over recalcitrant 
respondents whose failure to cooperate may work against their best 
interest.'' Atlantic Sugar Ltd. v. United States, 744 F.2d 1556, 1560 
(Fed. Cir. 1984). In the absence of subpoena power, the Department 
``cannot be left merely to the largesse of the parties at their 
discretion to supply the [Department] with information. * * * 
Otherwise, alleged unfair traders would be able to control the amount 
of antidumping duties by selectively providing the ITA with 
information.'' Olympic Adhesives, Inc. v. United States, 899 F.2d 1565, 
1571 (Fed. Cir. 1990). The decision to resort to BIA in an 
administrative review is made on a case-by-case basis after evaluating 
all evidence in the administrative record. With respect to the 
selection of BIA, the Department is granted considerable deference in 
deciding what constitutes the ``best'' information available. See 
Allied-Signal Aerospace Corp. v. United States, 966

[[Page 2138]]

F.2d 1185, 1191 (Fed. Cir. 1993). The courts have long held that ``it 
is for Commerce, not the respondent, to determine what is the best 
information'' available. Yamaha Motor Co. v. United States, 910 F. 
Supp. 679, 688 (CIT, 1995).
    As discussed, we believe Ta Chen has impeded this administrative 
review through the submission of inaccurate and incomplete information, 
and through its lack of cooperation in bringing forth factual 
information known by Ta Chen to be of immediate relevance to these 
proceedings. We also agree with petitioner that Ta Chen's conduct in 
this review warrants use of first-tier BIA.
    We also find that Ta Chen's citations to past Departmental 
determinations in support of using cooperative, second-tier BIA are not 
on point. In Fresh Cut Flowers From Colombia, for example, the 
respondent's related entities had either gone out of business entirely, 
or were in the process of liquidation, and thus the firms were unable 
to provide sales data to the Department. Similarly, in Certain Small 
Business Telephones From Taiwan, the affiliated U.S. customer of 
respondent Bitronics was out of business. We concluded that ``[s]ince 
Bitronics made substantial attempts to submit information to the 
Department,'' second-tier, or cooperative, BIA would be most 
appropriate. See Certain Small Business Telephones From Taiwan; 
Preliminary Results of Administrative Review, 59 FR 66912, 66913 
(December 28, 1994). In the instant case, despite the 1995 sale of Sun 
to Picol Enterprises, Ta Chen has never indicated any such difficulty 
in accessing San Shing's and Sun's records, and has even submitted 
these companies' federal income tax returns in the record of this 
review.
    Emerson and NSK, cited by Ta Chen as grounds for use of second-tier 
BIA, are likewise not on point. Emerson involved a review of 
antifriction bearings from Japan where the Department, in two 
significant departures from standard practice, determined it would (i) 
use a sampling of home market sales, and (ii) use annual average home 
market prices as the basis for FMV, both to reduce the complexity and 
reporting burden of the review. Respondent Nippon Pillow Block Sales 
made good faith efforts to respond to the Department's questionnaire, 
but misinterpreted the instructions concerning which home market sales 
it would be required to report for purposes of sampling.<SUP>13</SUP> 
In addition, the Department discovered other unreported sales at 
verification. The Department determined that, while Nippon had 
attempted to cooperate, it had failed to provide the home market sales 
data necessary to calculate annual weighted-average prices; therefore, 
Nippon's margin was based on second-tier BIA. In NSK, involving a 
review of tapered roller bearings (TRBs) from Japan, plaintiff NSK 
submitted complete, verifiable, and timely U.S. and home market sales 
responses. However, NSK balked when directed to submit cost of 
production data on TRB parts acquired from related suppliers, arguing 
that the Department had no legal authority to request these data absent 
``a specific and objective basis'' for suspecting that NSK's prices for 
the parts had been less than the suppliers' cost of production. NSK, 
910 F. Supp. at 666. The Court held that we properly rejected NSK's 
arguments, and that we correctly resorted to partial second-tier BIA 
for the missing cost data.<SUP>14</SUP> In each of the cited cases, 
while the responses were found to be deficient, the respondents 
attempted to cooperate with the Department's review. We contrast the 
behavior of these respondents with that of Ta Chen, and find that Ta 
Chen not only failed to submit the proper body of U.S. sales, but 
impeded the review. We conclude, therefore, that it would be 
inappropriate to base Ta Chen's margin for this review on second-tier, 
or cooperative, BIA.
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    \13\ Thus, while it is true that Nippon ``failed to report 
approximately 80% of its home market sales,'' it is only fair to 
note that Nippon was required to report only a portion of its home 
market sales for sampling purposes to begin with. Emerson, 903 F. 
Supp. at 52.
    \14\ The Court did remand NSK, ordering the Department to 
correct its application of second-tier BIA; the decision to use BIA 
was, however, upheld.
---------------------------------------------------------------------------

    Similarly, we cannot accede to Ta Chen's suggestion that we apply 
its margin from the LTFV investigation as first-tier BIA, as this would 
amount to rewarding Ta Chen for its failure to disclose essential facts 
to the Department and to report the proper body of its U.S. sales. Were 
we to consider Ta Chen's margin, which was calculated in a segment of 
these proceedings wherein Ta Chen was deemed cooperative and its 
responses fully verified, as first-tier BIA, we would effectively cede 
control of this review to Ta Chen. The respondent would be free to 
submit selective, misleading, or inaccurate information, secure in its 
knowledge that the worst fate it could expect would be to receive its 
prior cash deposit rate as BIA. See Olympic Adhesives, Inc. v. United 
States, 899 F.2d 1565, 1572 (Fed. Cir. 1990). We find the Court's 
holdings in Industria de Fundicao to be directly on point: ``the Court 
will not allow respondent to cap its antidumping rate by refusing to 
provide updated information to [the Department].'' Industria de 
Fundicao, 936 F. Supp 1009, 1011. Contrary to Ta Chen's suggested 
approach, our aim in selecting BIA for non-cooperating respondents is 
to choose a margin which is sufficiently adverse ``to induce 
respondents to provide [the Department] with complete and accurate 
information in a timely fashion.'' National Steel Corp. v. United 
States, 913 F. Supp 593 (CIT 1996). Likewise, we find that the 
antidumping proceedings of other countries, such as Canada, are 
irrelevant to our selection of BIA in this review which is being 
conducted pursuant to U.S. antidumping law. Furthermore, aside from its 
irrelevance, information concerning antidumping proceedings before 
Canadian authorities is not in the administrative record of this 
review.
    We also reject Ta Chen's assertion that the 76.20 percent BIA 
margin is inappropriate because it was drawn from an earlier segment of 
these proceedings. In Mitsuboshi Belting Corp. Ltd. v. United States, 
the Court, relying upon the findings in Rhone Poulenc, found that the 
Department's use of a margin drawn from a LTFV investigation was 
reasonable and, further, that ``best information'' doesn't necessarily 
mean ``most recent information.'' The Court also rejected plaintiff's 
claim that the Department's choice of BIA was unreasonably harsh:

    to be properly characterized as ``punitive,'' the agency would 
have had to reject low margin information in favor of high margin 
information that was demonstrably less probative of current 
conditions. Here, the agency only presumed that the highest prior 
margin was the best information of current margins. * * * We believe 
a permissible interpretation of the statute allows the agency to 
make such a presumption and that the presumption is not 
``punitive.'' Rather, it reflects a common sense inference that the 
highest prior margin is the most probative evidence of current 
margins because, if it were not so, the importer, knowing of the 
rule, would have produced current information showing the margin to 
be less.

Mitsuboshi Belting Ltd. and MBL (USA) Corp. v. United States., Court 
No. 93-09-00640, Slip Op. 97-28 (CIT March 12, 1997).
    Likewise, in Sugiyama Chain Co., Ltd. et al., v. United States, the 
plaintiff contested our selection of best information available as 
having no probative value concerning Sugiyama's current margins because 
the rate taken from the LTFV investigation had ``only a tenuous link to 
Sugiyama Chain's margins in the instant review.'' The Court approved of 
our use of the highest prior margin as BIA, noting that the

[[Page 2139]]

Department ``can make a common sense inference--indeed, there is a 
rebuttable presumption--that the highest prior margin is the most 
probative evidence indicative of the current margin.'' Sugiyama Chain 
Co., Ltd., et al. v. United States, 880 F. Supp. 869, 873 (CIT 1995); 
see also Rhone Poulenc, Inc., v. United States, 710 F. Supp. 341, 346 
(CIT 1989) (``There is no mention in the statute or regulations that 
the best information available is the most recent information 
available.''); aff'd 899 F.2d 1185 (Fed. Cir. 1990). Furthermore, we 
reject Ta Chen's suggestion that the 76.20 percent margin has been 
``verified as wrong.'' Our use of a margin drawn from data supplied by 
the petitioner comports fully with section 776(b) of the Tariff Act. It 
is not necessary, as Ta Chen appears to argue, for the Department to 
conduct an economic analysis of the stainless steel fittings industry 
before using a margin based on petitioner's data to determine the 
validity of these data. See Tai Ying Metal Industries Co. v. United 
States, 712 F. Supp 973, 978 (CIT 1989) (``it is reasonable for 
Commerce to rely upon the published margin from the LTFV investigation 
as the best information available without reassessing the record 
therefrom''). Furthermore, as petitioner points out, Ta Chen fails to 
note a prior investigation involving Ta Chen where the Department acted 
precisely as we have acted here, i.e., using the highest margin from 
the petition as first-tier BIA. In Certain Forged Stainless Steel 
Flanges From Taiwan Ta Chen was deemed an uncooperative respondent 
because it ``withdrew'' from the investigation immediately prior to 
verification. As first-tier, uncooperative BIA the Department chose the 
highest margin alleged in the petition, 48 percent, applying this rate 
to Ta Chen and to two other uncooperative respondents. See Certain 
Forged Stainless Steel Flanges From Taiwan, 58 FR 68859 (December 29, 
1993).
    The 76.20 percent margin has stood unchallenged for over six years 
as the first-tier BIA margin and, in fact, still applies to one other 
Taiwan manufacturer of subject merchandise. See Amended Final 
Determination and Antidumping Duty Order, 58 FR 33250, 33251 (June 16, 
1993). We conclude that use of this margin from the LTFV investigation 
is entirely consistent with the statute, the Department's regulations, 
and our past precedent.
    We also find inapposite Ta Chen's argument that, since petitioner 
did not request this review, petitioner is satisfied with Ta Chen's 
existing cash deposit rate. Whether or not petitioner requested this 
review is, at this point, irrelevant, and cannot be construed in any 
way as evidence of Ta Chen's dumping activities, or lack thereof, 
during the first period of review. Ta Chen's reference to our 
determination concerning Yamaha in Antifriction Bearings From France, 
et al. (57 FR 28360) is entirely inapposite. There, the Department was 
merely summarizing the extent of Yamaha's cooperation in the review, 
noting that ``Yamaha requested the review, provided the Department with 
questionnaire responses, and submitted to verification of its response 
* * *'' Ta Chen posits this one sentence as evidence of a per se rule 
that if a respondent requests a review, it is immune from first-tier 
BIA. Not only is this contention historically wrong, it ignores Ta 
Chen's failure to cooperate in this review. As the Court noted in 
Industria de Fundicao, a respondent may not cap its antidumping margins 
by refusing to cooperate in an administrative review.

Final Results of Review

    Based on our review of the arguments presented above, for these 
final results we have made no changes in the margin for Ta Chen. We 
have determined that Ta Chen's weighted-average margin for the period 
December 23, 1992 through May 31, 1994 is 76.20 percent.
    The Department shall determine, and the US Customs Service shall 
assess, antidumping duties on all appropriate entries. The Department 
will issue appraisement instructions directly to Customs.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of certain stainless steel butt-weld pipe fittings from 
Taiwan entered, or withdrawn from warehouse, for consumption on or 
after the publication of the final results of this administrative 
review, as provided in section 751(a)(1) of the Tariff Act:
    (1) The cash deposit rate for Ta Chen will be 76.20 percent, the 
rate established in this administrative review;
    (2) For previously reviewed or investigated companies other than Ta 
Chen, the cash deposit rate will continue to be the company-specific 
rate published for the most recent period;
    (3) If the exporter is not a firm covered in this review, a prior 
review, or the LTFV investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent period 
for the manufacturer of the merchandise; and
    (4) If neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be 51.01 percent. See Amended Final Determination and 
Antidumping Duty Order, 58 FR 33250, 33251 (June 16, 1993).
    This notice also serves as a final reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
the return or destruction of APO materials, or conversion to judicial 
protective order, is hereby requested. Failure to comply with the 
regulations and the terms of an APO is a sanctionable violation.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act (19 U.S.C. 
1675(a)(1) and 1677f(i)(1)).

    Dated: January 4, 2000.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 00-872 Filed 1-12-00; 8:45 am]
BILLING CODE 3510-DS-P