[Federal Register Volume 72, Number 44 (Wednesday, March 7, 2007)]
[Notices]
[Pages 10142-10148]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-4072]


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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-809]


Certain Forged Stainless Steel Flanges From India; Preliminary 
Results of Antidumping Duty Administrative Review, Partial Rescission 
and Intent To Rescind

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

SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain forged 
stainless steel flanges (stainless steel flanges) from India 
manufactured by Echjay Forgings Ltd. (Echjay), Rollwell Forge, Ltd. 
(Rollwell), and Shree Ganesh Forgings, Ltd. (Shree Ganesh). The period 
of review (POR) covers February 1, 2005, through January 31, 2006. We 
preliminarily determine that Echjay did not sell subject merchandise in 
the United States at less than normal value (NV) during the POR. In 
addition, we preliminarily determine to apply an adverse facts 
available (AFA) rate to Rollwell's sales. We also preliminarily 
determine that Shree Ganesh had no entries of subject merchandise 
during the POR.
    We invite interested parties to comment on these preliminary 
results. Parties who submit argument in these proceedings are requested 
to submit with the argument (1) a statement of the issues and (2) a 
brief summary of the argument.

EFFECTIVE DATE: March 7, 2007.

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

SUPPLEMENTARY INFORMATION:

Background

    On February 9, 1994, the Department published the antidumping duty 
order on stainless steel flanges from India. See Amended Final 
Determination and Antidumping Duty Order; Certain Forged Stainless 
Steel Flanges from India, 59 FR 5994 (February 9, 1994) (Amended Final 
Determination). On February 1, 2006, the Department published the 
Notice of Opportunity to Request Administrative Review for this order 
covering the POR. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 71 FR 5239 (February 1, 2006). On February 28, 
2006, we received requests for an administrative review for the period 
February 1, 2005, through January 31, 2006, from Echjay and Shree 
Ganesh. We also received requests for a new shipper review and, failing 
that, an administrative review,\1\ from Kunj Forgings Pvt. Ltd. (Kunj), 
Micro Forge (India) Ltd. (Micro), Pradeep Metals Limited (Pradeep), and 
Rollwell Forge, Ltd. (Rollwell). On April 5, 2006, we initiated 
administrative reviews of the six companies. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Deferral 
of Administrative Reviews, 71 FR 17077 (April 5, 2006).
---------------------------------------------------------------------------

    \1\ On April 6, 2006, the Department published a notice 
initiating new shipper reviews of Kunj, Micro, Pradeep, and 
Rollwell. See Stainless Steel Flanges from India: Notice of of 
Initiation of Antidumping Duty New Shipper Reviews, 71 FR 17439 
(April 6, 2006). On September 29, 2006, we rescinded the new shipper 
reviews with respect to Micro, Pradeep, and Rollwell. See Certain 
Forged Stainless Steel Flanges from India: Notice of Partial 
Rescission of New Shipper Reviews, 71 FR 57468 (September 29, 2006).
---------------------------------------------------------------------------

    On November 1, 2006, we extended the time limit for the preliminary 
results of this administrative review to February 28, 2007. See Notice 
of Extension of Time Limit for Preliminary Results of Antidumping Duty 
Administrative Review: Certain Forged Stainless Steel Flanges from 
India, 71 FR 64245 (November 1, 2006).

Echjay

    On April 5, 2006, the Department issued its initial questionnaire 
to Echjay. Echjay submitted its section A response on May 8, 2006, and 
its section B and C responses on May 30, 2006. The Department issued a 
supplemental questionnaire on November 1, 2006, to which Echjay 
responded on November 15, 2006. On December 27, 2006, Echjay submitted 
audited financial statements, revised section B and C data and 
calculations for fields that changed as a result of changes in the 
financial statement. On February 27, 2007, Echjay submitted a sales 
reconciliation.
    On December 21, 2006, Echjay requested revocation on the basis it 
had three years of zero or de minimis margins. Echjay also submitted 
the required certifications pursuant to 19 CFR 351.222. However, this 
request was filed nearly ten months after the deadline for filing such 
requests under 19 CFR 351.222(e)(1). This delay prevented the 
Department from timely notifying interested parties of Echjay's 
possible revocation, as well as planning and conducting verification, 
both of which are required by 19 CFR 351.222(f). The Department will 
not therefore entertain this request in this review.

Rollwell

    The Department sent its questionnaires to Rollwell on April 5, 
2006. Rollwell submitted its response to the section A questionnaire on 
May 8, 2006. It submitted its responses to sections B and C on May 31, 
2006. The Department issued a supplemental section A, B, and C 
questionnaire to Rollwell on November 1, 2006. Rollwell submitted its 
response to that supplemental questionnaire on

[[Page 10143]]

November 21, 2006. Rollwell also submitted a revised sales listings on 
December 14, 2006. On February 2, 2007, the Department issued a second 
supplemental questionnaire to Rollwell to which Rollwell submitted its 
response on February 12, 2007.

Scope of the Order

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

Intent To Rescind and Partial Rescission of the Administrative Review

    As previously stated, in their requests for review Kunj, Micro, 
Pradeep, and Rollwell requested a new shipper review, and failing that, 
an administrative review. Subsequent to initiating the new shipper 
reviews the Department conducted a data query of entry information from 
U.S. Customs and Border Protection (CBP). We determined, based on our 
review of those data, that Micro and Pradeep \2\ had no entries during 
the POR, and therefore do not qualify for an administrative review for 
the period February 1, 2005, through January 31, 2006. See Memorandum 
to the File dated August 23, 2006. We gave interested parties an 
opportunity to comment on this determination and received no comments. 
We are therefore rescinding the administrative review with respect to 
Micro and Pradeep.\3\
---------------------------------------------------------------------------

    \2\ Micro and Pradeep are the subjects of a semi-annual new 
shipper review for the period February 1, 2006, through July 31, 
2006. See Stainless Steel Flanges from India: Notice of Initiation 
of Antidumping Duty New Shipper Reviews, 71 FR 59081 (October 6, 
2006).
    \3\ As previously indicated, we rescinded the new shipper 
reviews with respect to Micro, Pradeep, and Rollwell for the period 
February 1, 2005, through July 31, 2006. See Certain Forged 
Stainless Steel Flanges from India: Notice of Partial Rescission of 
New Shipper Reviews, 71 FR 57468 (September 29, 2006).
---------------------------------------------------------------------------

    With respect to Kunj, we determined that Kunj qualifies for a new 
shipper review for the period February 1, 2005, through January 31, 
2006. See id. Therefore, since we are conducting a new shipper review 
of Kunj for the period covered by this administrative review, we are 
rescinding the administrative review for Kunj pursuant to 19 CFR 
351.214(j).
    With respect to Rollwell, we determined that Rollwell does not 
qualify for a new shipper review for the period February 1, 2005, 
through January 31, 2006, but does qualify for an administrative review 
for the same period. See id.
    With respect to Shree Ganesh, this company submitted a section C 
response in which it claimed it had shipments to the United States 
during the POR. However, our data query showed no entries from this 
company during the POR. See Memorandum to the File dated June 30, 2006, 
titled ``U.S. Entry Documents--Stainless Steel Flanges from India.'' We 
are therefore issuing this notice as an intent to rescind the 
administrative review of Shree Ganesh based on the fact that the 
company had no entries during the POR of subject merchandise. We invite 
comments from interested parties on this intent to rescind.

Rollwell

Use of Adverse Facts Available

    In accordance with sections 776(a)(1) and (2) of the Tariff Act of 
1930, as amended (the Tariff Act), the Department has determined that 
the use of AFA is appropriate for purposes of determining the 
preliminary dumping margin for the subject merchandise sold by 
Rollwell. Pursuant to sections 776(a)(1) and (2) of the Tariff Act the 
Department shall (with certain exceptions not applicable here) use the 
facts otherwise available in reaching applicable determinations under 
this subtitle if an interested party (A) withholds information that has 
been requested by the administrating authority; (B) fails to provide 
such information by the deadlines for submission of the information or 
in the form and manner requested, subject to subsections (c)(1) and (e) 
of section 782 of the Tariff Act; (C) significantly impedes a 
proceeding under this subtitle; or (D) provides such information but 
the information cannot be verified as provided in section 782(i). See 
Tariff Act section 776(a)(2). Moreover, section 776(b) of the Tariff 
Act provides, in relevant part, that:
    If the administering authority finds that an interested party 
has failed to cooperate by not acting to the best of its ability to 
comply with a request for information from the administering 
authority or the Commission, the administering authority or the 
Commission (as the case may be), in reaching the applicable 
determination under this subtitle, may use an inference that is 
adverse to the interests of the party in selecting from among the 
facts otherwise available. Id.

    As described below, we find that Rollwell has significantly impeded 
this proceeding by failing to provide usable data upon which we can 
calculate an antidumping margin. Moveover, we find that Rollwell has 
failed to cooperate to the best of its ability. We therefore determine 
that the use of AFA is appropriate for these preliminary results. 
However, because of the unusual circumstances of this review with 
respect to Rollwell (notably the length of time it took to ascertain 
the appropriate U.S. sales to analyze), we have also determined to 
issue Rollwell another supplemental questionnaire to provide it with 
yet another opportunity to correct numerous deficiences in its 
responses. Based on its response to this supplemental questionnaire, we 
will consider calculating a margin for Rollwell for the final results 
of review.
    As previously stated, the Department sent standard section A, B, 
and C questionnaires to Rollwell on April 5, 2006. Rollwell submitted 
its response to the section A questionnaire on May 8, 2006. Rollwell 
submitted its responses to sections B and C on May 30, 2006. However, 
the Department found serious deficiencies in all three of these 
responses, and also found reason to question whether Rollwell had 
reported all of its U.S. sales, and whether any of those it did report 
were actual consumption entries during the POR. Therefore the 
Department sent a supplemental section A, B, and C questionnaire to 
Rollwell on November 1, 2006. Rollwell submitted its response to this 
supplemental questionnaire on November 21, 2006. However, upon 
examining Rollwell's response, the Department again found that there 
were grounds to question whether Rollwell had consumption entries 
during the POR that would qualify Rollwell for an administrative 
review. The Department accordingly made a telephonic inquiry

[[Page 10144]]

to Rollwell's counsel to discuss the likelihood of any additional U.S. 
sales. In response, Rollwell submitted a revised U.S. sales listing on 
December 14, 2006. The Department found there were reviewable U.S. 
sales in this listing which Rollwell had not reported earlier, but also 
found substantial discrepancies in the submission with respect to 
reported cost data. The Department issued a supplemental questionnaire 
on February 2, 2007, including a request that Rollwell respond to 
section D of the April 5, 2006, questionnaire. Rollwell submitted its 
response on February 12, 2007.
    Upon reviewing the various submissions Rollwell has made during the 
POR, the Department has determined that the deficiencies in Rollwell's 
submitted data (described below) are so pervasive that the Department 
cannot rely upon Rollwell's data to calculate a margin. Furthermore, by 
repeatedly providing deficient responses Rollwell has failed to act to 
the best of its ability in responding to the Department's requests for 
information.
    Rollwell had two shipments of subject flanges that entered the 
United States during the POR. Rollwell sold both of these shipments 
prior to the POR, but the shipments entered U.S. Customs territory 
during the POR. However, Rollwell did not report these U.S. sales until 
it made its December 14, 2006, submission, after the Department had 
prompted it a second time to search among its records for any U.S. 
shipments it may have had that would qualify for review. Furthermore, 
Rollwell did not report the home market sales contemporaneous with the 
U.S. sales until it responded to the Department's second supplemental 
questionnaire issued February 2, 2007. The Department had previously 
stated the need to report any contemporaneous home market sales in its 
original April 5, 2006, questionnaire and again in its November 1, 
2006, supplemental questionnaire. Furthermore, the Department found 
Rollwell's allocation method for the costs it reported on its home 
market and U.S. sales listings to be inadequate because it was 
dependent upon estimated data rather than actual data. This inadequacy 
made it impossible for us to rely upon these costs in performing the 
twenty percent difference-in-merchandise test for purposes of 
determining the most suitable home market match for U.S. sales. 
Furthermore, when Rollwell submitted its section D response we found 
its reported raw material costs to be aberrational. Moreover, Rollwell 
did not submit a home market sales reconciliation, as requested in the 
April 5, 2006, questionnaire and again in the February 2, 2007, 
supplemental questionnaire. Thus, it has withheld information requested 
by the Department. See section 776(a)(2)(A) of the Tariff Act. For 
further examples and more specific information about the deficiencies, 
see Corroboration Memorandum, February 28, 2007.
    In light of the foregoing deficiencies, the Department 
preliminarily determines that necessary information is not available on 
the record to serve as the basis for the calculation of Rollwell's 
margin. See section 776(a)(1) of the Tariff Act. We also determine that 
Rollwell withheld requested information and has significantly impeded 
this proceeding. See section 776(a)(2)(A) and (C) of the Tariff Act. As 
a result, we are basing Rollwell's margin on the facts otherwise 
available, in accordance with sections 776(a)(1) and (2)(A) and (C) of 
the Tariff Act. See, e.g., Notice of Final Determination of Sales at 
Less Than Fair Value and Affirmative Final Determination of Critical 
Circumstances: Certain Orange Juice From Brazil, 71 FR 2183 (January 
13, 2006). See also Notice of Final Determination of Sales of Less Than 
Fair Value and Final Negative Critical Circumstances: Carbon and 
Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (Aug. 
30, 2002); Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products 
From Brazil, 65 FR 5554, 5567 (Feb. 4, 2000); Static Random Access 
Memory Semiconductors from Taiwan: Final Determination of Sales at Less 
than Fair Value, 63 FR 8909 (Feb. 23, 1998).
    If the Department finds that an interested party ``has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information,'' the Department may use information that is 
adverse to the interests of the party as the facts otherwise available. 
See section 776(b) of the Tariff Act. Adverse inferences are 
appropriate ``to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
Statement of Administrative Action (SAA) accompanying the Uruguay Round 
Agreement Act, H. Doc. No. 316, 103d Cong., 2nd Session, Vol. 1 (1994) 
at 870. In determining whether a respondent has failed to cooperate to 
the best of its ability, the Department need not make a determination 
regarding the willfulness of a respondent's conduct. See Nippon Steel 
Corp. v. United States, 337 F.3d 1373, 1379-1384 (Fed. Cir. 2003). 
Furthermore, ``affirmative evidence of bad faith on the part of a 
respondent is not required before the Department may make an adverse 
inference.'' Antidumping Duties; Countervailing Duties: Final Rule, 62 
FR 27296, 27340 (May 19, 1997).
    In determining whether a party failed to cooperate to the best of 
its ability, the Department considers whether a party could comply with 
the request for information, and whether a party paid insufficient 
attention to its statutory duties. See Pacific Giant Inc. v. United 
States, 223 F. Supp 2d 1336, 1342-43 (CIT 2002). Furthermore, the 
Department also considers the accuracy and completeness of submitted 
information, and whether the respondent has hindered the calculation of 
accurate dumping margins. See Certain Welded Carbon Steel Pipes and 
Tubes from Thailand: Final Results of Antidumping Duty Administrative 
Review, 62 FR 53808, 53819-53820 (October 16, 1997). The Department 
determines that Rollwell could comply with its requests for information 
but failed to do so, thereby failing to act to the best of its ability. 
Here, the Department finds that Rollwell has failed to provide relevant 
U.S. and home market sales until after it was prompted twice to do so 
following issuance of the original questionnaire, and has hindered the 
calculation of accurate dumping margins by failing to provide usable 
cost data in its sales listings and section D response.
    Under the statutory scheme, adverse inferences may include reliance 
on: Information derived from (1) the petition; (2) a final 
determination in the investigation; (3) any previous review or 
determination; or (4) any other information placed on the record. See 
section 776(b) of the Tariff Act. The SAA authorizes the Department to 
consider the extent to which a party may benefit from its own lack of 
cooperation. Id. The Department's practice when selecting an adverse 
rate from among the possible sources of information is to ensure that 
the margin is sufficiently adverse to induce the respondents to provide 
the Department with complete and accurate information in a timely 
manner. See Notice of Final Determination of Sales of Less Than Fair 
Value and Final Negative Critical Circumstances: Carbon and Certain 
Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55796 (Aug. 30, 2002). 
Because entries into the United States by Rollwell are currently 
subject to the ``All Others'' cash deposit rate of 162.14 percent, the 
Department determines that assigning the highest margin from the 
original petition and investigation in

[[Page 10145]]

this case, 210.00 percent, as AFA will prevent Rollwell from 
benefitting from its failure to cooperate with the Department's 
requests for information. See Amended Final Determination. Furthermore, 
a lower rate would effectively reward Rollwell for not cooperating by 
not acting to the best of its ability.
    Section 776(c) of the Tariff Act provides that when the Department 
relies on the facts otherwise available and relies on ``secondary 
information,'' the Department shall, to the extent practicable, 
corroborate that information from independent sources reasonably at the 
Department's disposal. The SAA states that ``corroborate'' means to 
determine that the information used has probative value. See SAA at 
870. To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information to be used.
    To assess the reliability of the petition margin in accordance with 
section 776(c) of the Tariff Act, to the extent practicable, we 
examined the key elements of the calculations of export price and 
normal value upon which the margins in the petition were based. (For 
discussion of ``reliance on secondary information,'' standard under 
section 776(c) of the Tariff Act, please see Corroboration Memorandum.) 
The U.S. prices in the petition were based upon quotes to U.S. 
customers, most of which were obtained through market research. See 
Petition for the Imposition of Antidumping Duties, December 29, 1993. 
The Department was able to corroborate the U.S. price in the petition 
which was used as the basis of the 210.00 percent rate by comparing 
this price to publicly available information based on IM-145 import 
statistics from the U.S. International Trade Commission's Web site via 
Dataweb for HTS numbers 7307215000 and 7307211000. The NVs in the 
petition were based on actual price quotations obtained through market 
research. At present, the Department is not aware of other independent 
sources of information at its disposal which would enable it to 
corroborate the margin calculations in the petition further.
    With respect to the relevance aspect of corroboration, the 
Department will consider information reasonably at its disposal as to 
whether there are circumstances which would render a margin not 
relevant. The implementing regulation for section 776 of the Tariff 
Act, codified at 19 CFR 351.308(d), states, ``{t{time} he fact that 
corroboration may not be practicable in a given circumstance will not 
prevent the Secretary from applying an adverse inference as appropriate 
and using the secondary information in question.'' Additionally, the 
SAA at 870 states specifically that, where ``corroboration may not be 
practicable in a given circumstance,'' the Department may nevertheless 
apply an adverse inference. The SAA at 869 emphasizes that the 
Department need not prove that the facts available are the best 
alternative information.
    Where circumstances indicate that the selected margin is not 
appropriate as AFA the Department will disregard the margin and 
determine an appropriate margin. See Fresh Cut Flowers from Mexico; 
Final Results of Antidumping Duty Administrative Review, 61 FR 6812 
(February 22, 1996) (the Department disregarded the highest dumping 
margin as best information available because the margin was based on 
another company's uncharacteristic business expense resulting in an 
unusually high margin).
    The rate to which Rollwell's entries are currently subject is 
162.14 percent. The Department's practice when selecting an adverse 
rate from among the possible sources of information is to ensure that 
the margin is sufficiently adverse ``as to effectuate the purpose of 
the facts available role to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See Notice of Final Determination of Sales at Less Than Fair Value and 
Final Negative Critical Circumstances: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 55792, 55796 (August 30, 2002). 
Accordingly, the Department will apply a 210 percent AFA rate, a rate 
which the Department finds is sufficiently adverse to encourage 
Rollwell to provide the Department with complete and accurate 
information. Furthermore, the Department is not aware of any 
circumstances which would render this rate inappropriate. In fact, 
other Indian manufacturers currently have a 210 percent margin under 
this order. See e.g., Certain Forged Stainless Steel Flanges from 
India: Notice of Final Results of Antidumping Duty Administrative 
Review, 71 FR 29314, (May 22, 2006).
    Therefore, based on the Department's efforts described above to 
corroborate information contained in the petition, and in accordance 
with section 776(c) of the Tariff Act which discusses facts available 
and corroboration, the Department considers the margins in the petition 
to be corroborated to the extent practicable for purposes of this 
preliminary determination. See Certain Cut-to-Length Carbon Steel Plate 
from Mexico: Final Results of Antidumping Duty Administrative Review, 
64 FR 76, 84 (January 4, 1999).

Date of Sale

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

Normal Value Comparisons

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

Product Comparisons

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

Export Price and Constructed Export Price

    In accordance with section 772(a) of the Tariff Act, EP is defined 
as the price at which the subject merchandise is first sold (or agreed 
to be sold) before the date of importation by the producer or

[[Page 10146]]

exporter of the subject merchandise outside of the United States to an 
unaffiliated purchaser in the United States, or to an unaffiliated 
purchaser for exportation to the United States, as adjusted under 
section 772(c) of the Tariff Act. In accordance with section 772(b) of 
the Tariff Act, CEP is the price at which the subject merchandise is 
first sold (or agreed to be sold) in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter, as adjusted under subsections (c) and (d).
    Based on the record evidence, the Department preliminarily 
determines that Echjay's U.S. sales, all of which were through its U.S. 
affiliate Echjay U.S.A., Inc., to unaffiliated customers in the United 
States were made in the United States within the meaning of section 
772(b) of the Tariff Act and thus are properly classified as CEP sales.
    The Department calculated CEP based on the prices charged to the 
first unaffiliated customer in the United States. The Department based 
CEP on the packed CIF duty paid prices to the first unaffiliated 
purchasers in the United States. The Department made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Tariff 
Act, including foreign inland freight, foreign brokerage and handling, 
ocean freight, and marine insurance. The Department also deducted those 
selling expenses incurred in selling the subject merchandise in the 
United States, including direct selling expenses (e.g., bank 
commissions and charges, documentation fees) and imputed credit. In 
accordance with section 772(d)(3) of the Tariff Act, the Department 
deducted an amount for profit allocated to the expenses deducted 
pursuant to sections 772(d)(1) and (2) of the Tariff Act. See Analysis 
Memorandum for more details.

Duty Drawback

    Section 772(c)(1)(B) of the Tariff Act provides that EP or CEP 
shall be increased by among other things, ``the amount of any import 
duties imposed by the country of exportation which have been rebated, 
or which have not been collected, by reason of the exportation of the 
subject merchandise to the United States.'' The Department determines 
that an adjustment to U.S. price for claimed duty drawback is 
appropriate when a company can demonstrate that there is (i) a 
sufficient link between the import duty and the rebate, and (ii) 
sufficient imports of the imported material inputs to account for the 
duty drawback received for the export of the manufactured product (the 
so-called ``two-prong test''). See Rajinder Pipes, Ltd. v. United 
States, 70 F. Supp. 2d 1350, 1358 (Ct. Int'l Trade 1999).
    Echjay claimed it received duty drawback from the Indian government 
which it books in an ``Export Incentives Ledger.'' See Echjay's Section 
C Response at Annexure I. The Department finds that Echjay has not 
provided substantial evidence on the record to meet the requirement of 
the first prong of the two-prong test, to wit, to establish the 
necessary link between the import duty and the reported rebate for duty 
drawback. Even if Echjay provided evidence demonstrating that it 
received duty drawback in the form of certificates issued by the 
Government of India and recorded them in a particular category of the 
ledger, Echjay has failed to establish the sufficient link between the 
import duty paid and the rebate given by the Government of India. 
Echjay's response suggests that much of the duty drawback certificate 
program has no bearing on home market import duties of any kind. 
Therefore, the Department is denying a duty drawback credit for the 
preliminary results of this review.

Normal Value

    In determining NV, the statute requires the Department to determine 
the price at which the foreign like product is first sold (or, in the 
absence of a sale, offered for sale) for consumption in the exporting 
country in the usual commercial quantities and in the ordinary course 
of trade and, to the extent practicable, at the same level of trade as 
the export price or constructed export price. In order to determine 
whether there is sufficient volume of sales in the home market to serve 
as a viable basis for calculating NV (i.e., the aggregate volume of 
home market sales of the foreign like product during the POR is equal 
to or greater than five percent of the aggregate volume of U.S. sales 
of subject merchandise during the POR), the Department compared the 
volume of home market sales of the foreign like product to the volume 
of U.S. sales of the subject merchandise. The Department found no 
reason to determine that quantity was not the appropriate basis for 
these comparisons, so value was not used. See section 773(a)(1)(C) of 
the Tariff Act; see also 19 CFR 351.404(b)(2). Therefore, the 
Department based NV for Echjay on home market sales to unaffiliated 
purchasers made in the usual quantities and in the ordinary course of 
trade.
    The Department based its comparisons of the volume of U.S. sales to 
the volume of home market and third country sales on reported stainless 
steel flange weight, rather than on number of pieces. The record 
demonstrates that there can be large differences between the weight 
(and corresponding cost and price) of stainless steel flanges based on 
relative sizes, so comparisons of aggregate data would be distorted for 
these products if volume comparisons were based on the number of 
pieces.

Price-to-Price Comparisons

    The statue requires the Department to determine whether subject 
merchandise is being, or is likely to be, sold at less than fair value 
by making a fair comparison between the EP or CEP and NV under section 
773 of the Tariff Act. For Echjay, the Department compared its U.S. 
sales with contemporaneous sales of the foreign like product in India. 
As noted, the Department considered stainless steel flanges identical 
based on the following five criteria: Grade; type; size; pressure 
rating; and finish. The Department used a 20 percent difference-in-
merchandise (difmer) cost deviation cap as the maximum difference in 
cost allowable for similar merchandise, which we calculated as the 
absolute value of the difference between the U.S. and comparison market 
variable costs of manufacturing divided by the total cost of 
manufacturing of the U.S. product. The Department made adjustments for 
differences in packing costs between the two markets and for movement 
expenses in accordance with sections 773(a)(6)(A) and (B) of the Tariff 
Act. The Department adjusted for differences in the circumstances of 
sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Tariff Act and 
19 CFR 351.410. Finally, for Echjay the Department made adjustments in 
accordance with 19 CFR 351.410(e) for indirect selling expenses 
incurred in the home market or United States where commissions were 
granted on sales in one market but not in the other (the ``commission 
offset'').

Constructed Value

    In accordance with section 773(a)(4) of the Tariff Act, the 
Department bases NV on CV if it is unable to find a contemporaneous 
comparison market match for the U.S. sale. Where the Department based 
NV on CV, CV is calculated based on the cost of materials and 
fabrication employed in producing the subject merchandise, SG&A, and 
profit. In accordance with section 772(e)(2)(A) of the Tariff Act, the

[[Page 10147]]

Department bases SG&A expenses and profit on the amounts incurred and 
realized by the respondent in connection with the production and sale 
of the foreign like product in the ordinary course of trade for 
consumption in the foreign country. For selling expenses, the 
Department uses the weighted-average comparison market selling 
expenses. Where appropriate, the Department has made COS adjustments to 
CV in accordance with section 773(a)(8) of the Tariff Act and 19 CFR 
351.410. For comparisons to EP, the Department has made COS adjustments 
by deducting home market direct selling expenses and adding U.S. direct 
selling expenses.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to 
the extent practicable, the Department determines NV based on sales in 
the home market at the same level of trade (LOT) as EP or the CEP. The 
NV LOT is that of the starting-price sales in the home market or, when 
NV is based on CV, that of the sales from which we derive SG&A expenses 
and profit. For CEP, it is the level of the constructed sale from the 
exporter to an affiliated importer after the deductions required under 
section 772(d) of the Tariff Act.
    To determine whether NV sales are at a different LOT than EP or 
CEP, the Department examines stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer, for example channels of distribution 
processing, packing and shipping. If the comparison-market sales are at 
a different LOT and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, the Department makes a LOT adjustment under 
section 773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the 
NV level is more remote from the factory than the CEP level and there 
is no basis for determining whether the difference in the levels 
between NV and CEP affects price comparability, the Department adjusts 
NV under section 773(a)(7)(B) of the Tariff Act (the CEP-offset 
provision). See Final Determination of Sales at Less Than Fair Value: 
Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 
61731, 61732-33 (November 19, 1997).
    In implementing these principles in this review, the Department 
obtained information from Echjay about the marketing stages involved in 
its U.S. and home market sales, including a description of the selling 
activities in the respective markets. In identifying levels of trade 
for CEP, the Department considered only the selling activities 
reflected in the price after the deduction of expenses and profit under 
section 772(d) of the Tariff Act. See Micron Technology v. United 
States, 243 F.3d 1301, 1314 (Fed. Cir. 2001). Generally, if the 
reported levels of trade are the same in the home and U.S. markets, the 
functions and activities of the seller should be similar. Conversely, 
if a party reports differences in levels of trade, the functions and 
activities should be dissimilar.
    Echjay reported one channel of distribution and one LOT in the home 
market, contending that home market sales to distributors and 
wholesalers were made at the same level of trade and involved the same 
selling activities. See Echjay's Section A Response at 13-15. In fact, 
all merchandise for both Echjay was sold in the home market on ex works 
terms. See, e.g., Echjay's Section B Response at 7. After examining the 
record evidence provided, the Department preliminarily determines that 
a single LOT exists for Echjay in the home market.
    The record evidence supports a finding that in both markets and in 
all channels of distribution, Echjay performs essentially the same 
level of selling activities such as order processing, shipping and 
invoicing of sales, and processing of payments. Thus, with respect to 
selling functions for sales, marketing support, freight, and delivery, 
we find them to be similar. Based on our analysis of the selling 
functions performed on CEP sales in the United States and of sales in 
the home market, the Department determines that the CEP and the 
starting price of home market sales represent the same stage in the 
marketing process and are thus at the same LOT. Accordingly, the 
Department preliminarily finds that no level of trade adjustment or CEP 
offset is appropriate for Echjay.

Currency Conversions

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

Preliminary Results of Review

    As a result of our review the Department preliminarily finds the 
following weighted-average dumping margins exist for the period 
February 1, 2005, through January 31, 2006:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Echjay Forgings, Pvt. Ltd...............................            0.06
Rollwell Forge, Ltd.....................................          210.00
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within 30 
days of publication of the preliminary results. See CFR 351.310(c). Any 
hearing, if requested, will be held 37 days after the date of 
publication, or the first business day thereafter, unless the 
Department alters the date per 19 CFR 351.310(d).
    Interested parties may submit case briefs or written comments no 
later than 30 days after the date of publication of these preliminary 
results of review. Pursuant to 19 CFR 309(d), rebuttal briefs and 
rebuttals to written comments, limited to issues raised in the case 
briefs and comments, may be filed no later than 5 days after the time 
limit for filing the case briefs. Parties who submit argument in these 
proceedings are requested to submit with the argument: (1) A statement 
of the issue; (2) a brief summary of the argument; and (3) a table of 
authorities. Further, the Department requests parties submitting 
written comments to provide the Department with an additional copy of 
the public version of any such comments on diskette. The Department 
will issue final results of this administrative review, including the 
results of our analysis of the issues raised in any such written 
comments or at a hearing, within 120 days of publication of these 
preliminary results.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. The Department intends to issue assessment instructions to CBP 
15 days after the date of publication of the final results of review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Notice of Policy Concerning Assessment of Antidumping 
Duties, 68 FR 23954 (May 6, 2003) (Assessment-Policy Notice). This 
clarification will apply to entries of subject merchandise during the 
POR produced by Echjay and Rollwell for which Echjay and Rollwell, 
respectively, did not know that the merchandise it sold to an 
intermediary (e.g., a reseller, trading company, or exporter) was 
destined for the United States. In such instances, we will

[[Page 10148]]

instruct CBP to liquidate unreviewed entries at the 162.14 percent all-
others rate established in the original less than fair value (LTFV) 
investigation, if there is no rate for the intermediary involved in the 
transaction. See the Assessment-Policy Notice for a full discussion of 
this clarification.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be the rate established in the final results of the 
administrative review (except that no deposit will be required if the 
rate is zero or de minimis, i.e., less than 0.5 percent); (2) if the 
exporter is not a firm covered in this review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
that established for the most recent period for the manufacturer of the 
merchandise; and (3) if neither the exporter nor the manufacturer is a 
firm covered in this review, any previous reviews, or the LTFV 
investigation, the cash deposit rate will be 162.14 percent, the ``all 
others'' rate established in the LTFV investigation. See Amended Final 
Determination and Antidumping Duty Order; Certain Forged Stainless 
Steel Flanges from India, 59 FR 5994 (February 9, 1994) (Amended Final 
Determination).

Notification to Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Tariff Act and 19 CFR 
351.221(b)(4).

    Dated: February 28, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
 [FR Doc. E7-4072 Filed 3-6-07; 8:45 am]
BILLING CODE 3510-DS-P