47446 Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices

Producer/manufacturer/exporter

Weightedaverage

margin (percent)

CBCC ........................................ 18.71

Minasligas ................................. 0.00

Eletrosilex ................................. 25.46

RIMA ......................................... 31.60

The Department shall determine, and

the U. S. Customs Service shall assess,

antidumping duties on all appropriate

entries. The Department shall issue

appraisement instructions directly to

the Customs Service.

Furthermore, the following deposit

requirements shall be effective upon

publication of this notice of amended

final results of review for all shipments

of silicon metal from Brazil entered, or

withdrawn from warehouse, for

consumption on or after the publication

date, as provided for by section

751(a)(1) of the Act: (1) the cash deposit

rates for the reviewed companies named

above will be the rates published in the

final results of review for the

antidumping duty order on silicon

metal from Brazil for the period July 1,

1994 through June 30, 1995 (see Silicon

Metal from Brazil; Final Results of

Antidumping Duty Administrative

Review and Determination Not to

Revoke in Part 62 FR 1970 (January 14,

1997) (Fourth Review Final Results); (2)

for previously investigated or reviewed

companies not listed above, 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 these reviews, or

the original less-than-fair-value (LTFV)

investigations, 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 these reviews, the cash

deposit rate will continue to be 91.06

percent, the ‘‘all others’’ rate established

in the LTFV investigation. See Final

Determination of Sales at Less Than

Fair Value: Silicon Metal from Brazil, 56

FR 26977 (June 12, 1991).

This notice 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 antidumping

duties occurred and the subsequent

assessment of double antidumping

duties.

This notice also serves as a reminder

to parties subject to administrative

protective order (‘‘APO’’) of their

responsibility concerning the

disposition of proprietary information

disclosed under APO in accordance

with section 353.34(d) of the

Department’s regulations. Timely

notification of return/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.

These amended final results of review

and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C.

§ 1675(a)(1)) and section 353.28(c) of the

Department’s regulations.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–23853 Filed 9–8–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–428–820]

Small Diameter Circular Seamless

Carbon and Alloy Steel Standard, Line

and Pressure Pipe From Germany:

Preliminary Results of Antidumping

Duty Administrative Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

antidumping duty administrative

review.

SUMMARY: In response to a request from

the respondent, MannesmannroehrenWerke AG (‘‘MRW’’) and Mannesmann

Pipe & Steel Corporation (‘‘MPS’’)

(collectively, ‘‘Mannesmann’’), the

Department of Commerce (the

Department) is conducting an

administrative review of the

antidumping duty order on small

diameter circular seamless carbon and

alloy steel standard, line and pressure

pipe from Germany. This review covers

the above manufacturer/exporter of the

subject merchandise to the United

States. The period of review (POR) is

January 27, 1995, through July 31, 1996.

We preliminarily determine the

dumping margin for Mannesmann to be

28.69 percent during the POR.

Interested parties are invited to

comment on these preliminary results.

Parties who submit arguments in this

proceeding should also submit with

their arguments (1) a statement of the

issues, and (2) a brief summary of the

arguments.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT:

Nancy Decker or Linda Ludwig,

Enforcement Group III, Import

Administration, International Trade

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, NW, Washington, DC 20230;

telephone: (202) 482–1324 or (202) 482–

3833, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all

citations to the Tariff Act of 1930, as

amended (the Act) are references to the

provisions effective January 1, 1995, the

effective date of the amendments made

to the Act by the Uruguay Round

Agreements Act (URAA). In addition,

unless otherwise indicated, all

references to the Department’s

regulations are to 19 CFR part 353, as

amended by the Department’s interim

regulations (April 1, 1997). Where

appropriate, we have cited the

Department’s new regulations, codified

at 19 CFR part 351 (May 19, 1997—62

FR 27296). While not binding on this

review, the new regulations serve as a

restatement of the Department’s

policies.

Background

On June 19, 1995, the Department

published in the Federal Register (60

Fed. Reg. 31974) the final affirmative

antidumping duty determination on

small diameter circular seamless carbon

and alloy steel standard, line and

pressure pipe from Germany. We

published an antidumping duty order

and amended final determination on

August 3, 1995 (60 FR 39704). On

August 12, 1996, the Department

published the Opportunity to Request

an Administrative Review of this order

for the period January 27, 1995 through

July 31, 1996 (61 FR 41768). The

Department received a request for an

administrative review of Mannesmann’s

exports from Mannesmann itself, a

producer/exporter of the subject

merchandise. We published a notice of

initiation of the review on September

17, 1996 (61 FR 48882).

Under section 751(a)(3)(A) of the Act,

the Department may extend the

deadline for completion of an

administrative review if it determines

that it is not practicable to complete the

review within the statutory time limit of

365 days. On March 5, 1997, the

Department published a notice of

extension of the time limit for the

preliminary results in this case. See
Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices 47447

Extension of Time Limit for

Antidumping Duty Administrative

Review, 62 FR 10025 (March 5, 1997).

The Department is conducting this

review in accordance with section

751(a) of the Act.

Scope of the Review

The scope of this review includes

small diameter seamless carbon and

alloy standard, line and pressure pipes

(seamless pipes) produced to the

American Society for Testing and

Materials (ASTM) standards A–335, A–

106, A–53 and American Petroleum

Institute (API) standard API 5L

specifications and meeting the physical

parameters described below, regardless

of application. The scope of this review

also includes all products used in

standard, line, or pressure pipe

applications and meeting the physical

parameters below, regardless of

specification.

For purposes of this review, seamless

pipes are seamless carbon and alloy

(other than stainless) steel pipes, of

circular cross-section, not more than

114.3 mm (4.5 inches) in outside

diameter, regardless of wall thickness,

manufacturing process (hot-finished or

cold-drawn), end finish (plain end,

beveled end, upset end, threaded, or

threaded and coupled), or surface finish.

These pipes are commonly known as

standard pipe, line pipe or pressure

pipe, depending upon the application.

They may also be used in structural

applications. Pipes produced in nonstandard wall thicknesses are commonly

referred to as tubes.

The seamless pipes subject to this

review are currently classifiable under

subheadings 7304.10.10.20,

7304.10.50.20, 7304.31.60.50,

7304.39.00.16, 7304.39.00.20,

7304.39.00.24, 7304.39.00.28,

7304.39.00.32, 7304.51.50.05,

7304.51.50.60, 7304.59.60.00,

7304.59.80.10, 7304.59.80.15,

7304.59.80.20, and 7304.59.80.25 of the

Harmonized Tariff Schedule of the

United States (HTSUS).

The following information further

defines the scope of this review, which

covers pipes meeting the physical

parameters described above:

Specifications, Characteristics and

Uses: Seamless pressure pipes are

intended for the conveyance of water,

steam, petrochemicals, chemicals, oil

products, natural gas and other liquids

and gasses in industrial piping systems.

They may carry these substances at

elevated pressures and temperatures

and may be subject to the application of

external heat. Seamless carbon steel

pressure pipe meeting the ASTM

standard A–106 may be used in

temperatures of up to 1000 degrees

Fahrenheit, at various American Society

of Mechanical Engineers (ASME) code

stress levels. Alloy pipes made to ASTM

standard A–335 must be used if

temperatures and stress levels exceed

those allowed for A–106 and the ASME

codes. Seamless pressure pipes sold in

the United States are commonly

produced to the ASTM A–106 standard.

Seamless standard pipes are most

commonly produced to the ASTM A–53

specification and generally are not

intended for high temperature service.

They are intended for the low

temperature and pressure conveyance of

water, steam, natural gas, air and other

liquids and gasses in plumbing and

heating systems, air conditioning units,

automatic sprinkler systems, and other

related uses. Standard pipes (depending

on type and code) may carry liquids at

elevated temperatures but must not

exceed relevant ASME code

requirements.

Seamless line pipes are intended for

the conveyance of oil and natural gas or

other fluids in pipe lines. Seamless line

pipes are produced to the API 5L

specification.

Seamless pipes are commonly

produced and certified to meet ASTM

A–106, ASTM A–53 and API 5L

specifications. Such triple certification

of pipes is common because all pipes

meeting the stringent ASTM A–106

specification necessarily meet the API

5L and ASTM A–53 specifications.

Pipes meeting the API 5L specification

necessarily meet the ASTM A–53

specification. However, pipes meeting

the A–53 or API 5L specifications do not

necessarily meet the A–106

specification. To avoid maintaining

separate production runs and separate

inventories, manufacturers triple-certify

the pipes. Since distributors sell the vast

majority of this product, they can

thereby maintain a single inventory to

service all customers.

The primary application of ASTM

A–106 pressure pipes and triplecertified pipes is in pressure piping

systems by refineries, petrochemical

plants and chemical plants. Other

applications are in power generation

plants (electrical-fossil fuel or nuclear),

and in some oil field uses (on shore and

off shore) such as for separator lines,

gathering lines and metering runs. A

minor application of this product is for

use as oil and gas distribution lines for

commercial applications. These

applications constitute the majority of

the market for the subject seamless

pipes. However,

A–106 pipes may be used in some boiler

applications.

The scope of this review includes all

seamless pipe meeting the physical

parameters described above and

produced to one of the specifications

listed above, regardless of application,

and whether or not also certified to a

non-covered specification. Standard,

line and pressure applications and the

above-listed specifications are defining

characteristics of the scope of this

review. Therefore, seamless pipes

meeting the physical description above,

but not produced to the ASTM A–335,

ASTM A–106, ASTM A–53, or API 5L

standards shall be covered if used in a

standard, line or pressure application.

For example, there are certain other

ASTM specifications of pipe which,

because of overlapping characteristics,

could potentially be used in A–106

applications. These specifications

generally include A–162, A–192, A–210,

A–333, and A–524. When such pipes

are used in a standard, line or pressure

pipe application, such products are

covered by the scope of this review.

Specifically excluded from this

review are boiler tubing and mechanical

tubing, if such products are not

produced to ASTM A–335, ASTM A–

106, ASTM A–53 or API 5L

specifications and are not used in

standard, line or pressure applications.

In addition, finished and unfinished oil

country tubular goods (OCTG) are

excluded from the scope of this review,

if covered by the scope of another

antidumping duty order from the same

country. If not covered by such an

OCTG order, finished and unfinished

OCTG are included in this scope when

used in standard, line or pressure

applications. Finally, also excluded

from this review are redraw hollows for

cold-drawing when used in the

production of cold-drawn pipe or tube.

Although the HTSUS subheadings are

provided for convenience and customs

purposes, our written description of the

scope of this review is dispositive.

Verification

As provided in section 782(i) of the

Act, we verified information provided

by the respondent by using standard

verification procedures, including onsite inspection of the manufacturer’s

facilities, the examination of relevant

sales and financial records, and

selection of original documentation

containing relevant information. Our

verification results are outlined in the

verification reports, the public versions

of which are available at the Department

of Commerce, in Central Records Unit

(CRU), Room B099.
47448 Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices

Transactions Reviewed

The Department determined the

normal value (NV) and constructed

export price (CEP) of each sale to the

first unaffiliated customer in the United

States during the POR.

Product Comparisons

In accordance with section 771(16) of

the Act, we considered all products

produced by the respondent, covered by

the description in the ‘‘Scope of the

Review’’ section, above, and sold in the

home market during the POR, to be

foreign like products for purposes of

determining appropriate product

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

most similar foreign like product on the

basis of the characteristics listed in

Appendix V of the Department’s

antidumping questionnaire.

Fair Value Comparisons

To determine whether sales of small

diameter circular seamless carbon and

alloy steel standard, line and pressure

pipe by Mannesmann to the United

States were made at less than fair value,

we compared the CEP to the NV, as

described in the ‘‘Constructed Export

Price’’ and ‘‘Normal Value’’ sections of

this notice. In accordance with section

777A(d)(2) of the Act, we calculated

monthly weighted-average prices for NV

and compared these to individual U.S.

transactions.

Date of Sale

The Department’s current policy is

normally to use the date of invoice as

recorded in the exporter or producer’s

records kept in the ordinary course of

business as the date of sale. However,

we may use a date other than the date

of invoice where appropriate.

For Mannesmann’s home-market

sales, the company reported and we

used invoice date (which is also

shipment date) as the date of sale. For

Mannesmann’s U.S. sales, the company

reported the date of order confirmation

as the date of sale. In the Department’s

September 18, 1996 questionnaire to

Mannesmann at Appendix I, the

Department stated that in no case could

the date of sale be later than the date of

shipment. Because the date of shipment

for Mannesmann’s U.S. sales was in all

cases earlier than the date of invoice

(and thus not reported as date of sale),

we have used the shipment date of U.S.

sales as date of sale. Since there can be

several months between order

confirmation and shipment, using

shipment date in both markets puts

home market and U.S. sales on the same

basis for date of sale.

Constructed Export Price

We have preliminarily determined

that Mannesmann’s U.S. sales reported

as export price (EP) sales were CEP

sales. Our determination is based on the

evidence in the record of this review

establishing that U.S. sales were made

through Mannesmann’s affiliated sales

agent, MPS, who, as shown below, was

more than a mere conduit, performing

only clerical functions, for the

producer/exporter.

The Department determines U.S. sales

through affiliated sales agents to be EP

only if: (1) The merchandise was

shipped directly to the unaffiliated

buyer, without being introduced into

the affiliated selling agent’s inventory;

(2) this procedure is the customary sales

channel between the parties; and (3) the

affiliated selling agent located in the

United States acts only as a processor of

documentation and a communication

link between the foreign producer and

the unaffiliated buyer. See, e.g., Certain

Cut-to-Length Carbon Steel Plate from

Germany: Final Results of Antidumping

Duty Administrative Review, 62 FR

18390, 18389–18391 (April 15, 1997);

Notice of Final Determination of Sales

at Less than Fair Value: Large

Newspaper Printing Presses and

Components Thereof, Whether

Assembled or Unassembled, From

Germany, 61 FR 38166, 38174–5 (July

23, 1996); Certain Corrosion-Resistant

Carbon Steel Flat Products From Korea:

Final Results of Antidumping Duty

Administrative Review, 61 FR 18547,

18551 (April 26, 1996). This test has

been approved by the CIT. Independent

Radionic Workers of America v. United

States, Slip Op. 95–45 at 2–3 (CIT 1995);

PQ Corp. v. United States, 652 F. Supp.

724, 733–35 (CIT 1987).

In applying the first two criteria to the

present review, we found that for the

majority of sales, the merchandise was

shipped directly to the unaffiliated U.S.

customer without being introduced into

MPS’s inventory. We found that MPS

occasionally buys for its own inventory,

but we did not find any subject

merchandise purchased for inventory

during the POR. In addition, several

sales were warehoused upon arrival in

the U.S. when the original customer

canceled its order. MPS could not find

a new customer and subsequently sold

the merchandise to the original

customer. The Department verified that

the terms of sale during the POR were

CIF, duty paid to a port of entry near the

customer’s plant, and that MPS did not

take physical possession of the

shipment, except in the unusual

instance described above.

Concerning the third criterion,

however, the Department has

determined that MPS did act as more

than a processor of sales documents and

a communications link between the

unaffiliated U.S. customer and MRW,

the producer in Germany. Although the

MRW participates with MPS in

meetings with U.S. customers once or

twice a year and claims to reserve the

right to approve all orders, MPS

negotiates each of the sales with the

customers, aiming to get the best price

the market will allow. MPS admitted it

had a small say in the price negotiated

but claimed that it is very limited. The

Department determined that MPS

essentially negotiates all sales. We

found no evidence to support

Mannesmann’s claim that MRW

approved of or knew of the final prices

on individual sales to U.S. customers.

To the contrary, regardless of whether

MRW has final approval rights, the

record indicated that MPS has

significant involvement in the sales

process. Further, while MPS admitted

that it is allowed to make a small profit

on the U.S. sales, we found the price

differential between the price from the

German sales agent (Mannesmann

Handel, a go-between for MRW and

MPS) to MPS and the price from MPS

to the customer to be unexplained by

the small commissions or profits

referenced by MPS at verification, nor

by the U.S. duties and cash deposits on

antidumping duties, which MPS pays as

importer of record (see Sales

Verification Report). Therefore, based

on an analysis of all the facts, we find

that the selling activities of MPS extend

beyond those of a processor of

documents or a communications link.

We calculated CEP based on packed

prices to unaffiliated customers in the

United States. Where appropriate, we

made deductions from the starting price

for discounts, foreign inland freight,

international freight, marine insurance,

other transportation expenses, U.S.

Customs duties, warranties, credit

expense, and other selling expenses that

were associated with economic

activities occurring in the United States.

Finally, we made an adjustment for CEP

profit in accordance with section

772(d)(3) of the Act.

Based on our verification of

Mannesmann’s sales responses, we

made adjustments to credit, quantity,

gross unit price, shipment date, and

sales date on certain sales, and we also

increased other transportation expenses

on certain sales to account for

unreported unloading expenses. We also

rejected as unverifiable reported U.S.
Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices 47449

duty, foreign inland freight and

international freight. Accordingly,

pursuant to section 776(a) of the Act, we

used partial facts available. For U.S.

duty and foreign inland freight, we used

the highest reported U.S. duty and

foreign inland freight, respectively, on

any individual U.S. sale. For

international freight, we added the

highest differential between the actual

and the reported international freight

(from the sales examined at verification)

to reported international freight on

every U.S. sale.

Mannesmann’s response indicated

that U.S. credit expense was calculated

using the U.S. sales agent’s interest rate

on inter-company loans from its parent.

We compared this to the U.S. prime

rate. Since the company did not indicate

that it has external borrowings and the

prime rate was always higher than the

inter-company rate, we recalculated

credit expense using the U.S. prime rate.

At verification, the respondent

indicated that it had not reported any

U.S. sales of ASTM A–333 (although it

had reported home market sales of this

specification) to the Department because

it believed the scope definitively

excluded this specification (as low

temperature service steels). We note that

the scope discussion indicates A–333

(along with several other specifications)

is covered by the scope of this review

if it is used in a standard, line, or

pressure pipe application. The

respondent did not address the

applications of the A–333 sales during

verification. Therefore, as facts

available, we are assuming all

unreported low temperature steel sales

(sourced from the German producer) by

MPS to be A–333 and, therefore, subject

merchandise. We summed the total

quantity of these sales from verification

documents and applied Mannesmann’s

rate from the original investigation as

facts otherwise available (see ‘‘Use of

Facts Otherwise Available’’ section

below).

Normal Value

Based on a comparison of the

aggregate quantity of home market and

U.S. sales, we determined that the

quantity of the foreign like product sold

in the exporting country was sufficient

to permit a ‘‘fair’’ comparison with the

sales of the subject merchandise to the

United States, pursuant to section 773(a)

of the Act. Therefore, in accordance

with section 773(a)(1)(B)(i) of the Act,

we based NV on the price at which the

foreign like product was first sold for

consumption in the home market, in the

usual commercial quantities and in the

ordinary course of trade, at the same

level of trade as the export price. See

‘‘Level of Trade’’ section below.

We excluded from our analysis

negative quantity observations reported

in the database, while leaving in the

database the positive quantity

observations on the same orders with

the negative quantity observations. We

found that the products in question

would not likely be used in matching to

U.S. sales. We also excluded from our

analysis NV sales to affiliated home

market customers where the weightedaverage sales prices to the affiliated

parties were less than 99.5 percent of

the weighted-average sales prices to

unaffiliated parties. See Usinor Sacilor

v. United States, 872 F. Supp. 1000,

1004 (CIT 1994).

On May 5, 1997, Mannesmann

requested to be excused from reporting

all ‘‘downstream sales’’ (sales by

affiliated resellers to unaffiliated

customers). It based its request on the

fact that the sales to the affiliated

resellers would pass the arm’s-length

test or would not be used in the

Department’s analysis. On May 14,

1997, the Department informed

Mannesmann that, based on

Mannesmann’s portrayal of the

information submitted, it did not have

to report downstream sales at that time.

We preliminarily find that sales to one

affiliated reseller pass the arm’s-length

test, while sales to the other affiliated

resellers do not pass the arm’s-length

test but would not be used for matching

purposes.

Where appropriate, we deducted

credit expenses, warranties, packing,

and certain discounts, and we added

interest revenue. We rejected as

unverifiable inland freight, ‘‘other

adjustments,’’ and certain rebates and

discounts (see Sales Verification

Report). We denied deductions from the

reported price for each of these items.

The respondent reported credit

expense based on a POR-average days

outstanding for receivables (all

customers) on all sales (including nonsubject merchandise), since it indicated

that it could only manually provide

payment date information on all sales.

We compared this overall average days

of outstanding payment to the actual

days payment was outstanding on the

sales examined at verification. We

found the actual days between shipment

and payment to be consistently lower

than the average days used. Therefore,

we calculated a simple average days

outstanding using actual shipment and

payment dates from the sales examined

at verification, and we recalculated

credit expense using this average figure.

We found that respondent paid

commissions in the home market on the

foreign like product to affiliated parties.

Since there is no benchmark which can

be used to determine whether affiliated

party commissions are arm’s-length

values (i.e., the producer does not use

an unaffiliated selling agent for sales of

the foreign like product), we have

assumed that affiliated party

commissions were not paid on an arm’slength basis. As a result, we did not

make a circumstance-of-sale adjustment

for affiliated party commissions in the

home market.

For comparison to CEP, we increased

NV by U.S. packing costs in accordance

with section 773(a)(6)(A) of the Act. We

made adjustments to NV for differences

in cost attributable to differences in

physical characteristics of the

merchandise, pursuant to section

773(a)(6)(C)(ii) of the Act.

Level of Trade

In accordance with section

773(a)(1)(B)(i) of the Act and the

Statement of Administrative Action

(SAA) accompanying the URAA, to the

extent practicable, the Department will

calculate normal values based on sales

at the same level of trade as the U.S.

sales (either EP or CEP). When the

Department is unable to find sales in the

comparison market at the same level of

trade as the U.S. sales, the Department

may compare sales in the U.S. and

foreign markets at different levels of

trade, and adjust NV if appropriate. The

NV level of trade is that of the startingprice sales in the home market. When

NV is based on CV, the level of trade is

that of the sales from which we derive

selling, general and administrative

expenses, and profit.

As the Department explained in Gray

Portland Cement and Clinker From

Mexico: Final Results of Antidumping

Duty Administrative Review, 62 FR

17148, 17156 (April 9, 1997) (‘‘Cement

From Mexico’’), for both EP and CEP,

the relevant transaction for the level of

trade analysis is the sale from the

exporter to the importer. While the

starting price for CEP is that of a

subsequent resale to an unaffiliated

buyer, the construction of the EP results

in a price that would have been charged

if the importer had not been affiliated.

We calculate the CEP by removing from

the first resale to an independent U.S.

customer the expenses specified in

section 772(d) of the Act and the profit

associated with these expenses. These

expenses represent activities undertaken

by, or on behalf of, the affiliated

importer. Because the expenses

deducted under section 772(d) represent

selling activities in the United States,

the deduction of these expenses

normally yields a different level of trade
47450 Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices

for the CEP than for the later resale

(which we use for the starting price).

To determine whether home market

sales are at a different level of trade than

U.S. sales, we examine whether the

home market sales are at different stages

in the marketing process than the U.S.

sales. The marketing process in both

markets begins with the good being sold

by the producer and extends to the sale

to the final user. The chain of

distribution between the producer and

the final user may have many or few

links, and each respondent’s sales are

generally to an importer, whether

independent or affiliated. We review

and compare the distribution systems in

the home market and the United States,

including selling functions, class of

customer, and the extent and level of

selling expenses for each claimed level

of trade. Customer categories such as

distributor, retailer or end-user are

commonly used by respondents to

describe level of trade, but without

substantiation, they are insufficient to

establish that a claimed level of trade is

valid. An analysis of the chain of

distribution and of the selling functions

substantiates or invalidates the claimed

customer categorization levels. Different

levels of trade necessarily involve

differences in selling functions, but

differences in selling functions, even

substantial ones, are not alone sufficient

to establish a difference in the level of

trade. Differences in levels of trade are

characterized by purchasers at different

stages in the chain of distribution and

sellers performing qualitatively or

quantitatively different functions in

selling to them.

When we compare U.S. sales to home

market sales at a different level of trade,

we make a level-of-trade adjustment

only if the difference in level of trade

affects price comparability. We

determine any effect on price

comparability by examining sales at

different levels of trade in a single

market, the home market. Any price

effect must be manifested in a pattern of

consistent price differences between

home market sales used for comparison

and sales at the equivalent level of trade

of the export transaction. See Granular

Polytetrafluorethylene Resin from Italy;

Preliminary Results of Antidumping

Duty Administrative Review, 62 FR

26283, 26285 (May 13, 1997); Cement

From Mexico at 17156. To quantify the

price differences, we calculate the

difference in the average of the net

prices of the same models sold at

different levels of trade. We use the

average percentage difference between

these net prices to adjust NV when the

level of trade of NV is different from

that of the export sale. If there is a

pattern of no price differences, then the

difference in level of trade does not

have a price effect and, therefore, no

adjustment is necessary.

Mannesmann sold to end-users and

distributors in the U.S. market and in

the home market. Mannesmann claimed

that sales to end-users and distributors

were at separate levels of trade. While

Mannesmann’s questionnaire response

indicated that it provided higher levels

of support to end-users than to

distributors, Mannesmann did not

explain what distinguished high from

low support or support these claims at

verification. At verification, when asked

about levels of trade, Mannesmann

merely provided an MWR organization

chart, which showed that there was a

different sales group for sales to endusers than for sales to distributors. This

chart did not indicate a separate

subdivision for U.S. sales. The

respondent provided no support or

information, as requested in the sales

verification outline, regarding

differences in selling functions for sales

to end-users versus distributors and

between sales to its home market

customers and the CEP level of trade.

Thus, our analysis of the information in

this case leads us to conclude that sales

within each market and between

markets are not made at different levels

of trade. Accordingly, we preliminarily

find that all sales in the home market

and the U.S. market are made at the

same level of trade. Therefore, all price

comparisons are at the same level of

trade and no adjustment pursuant to

section 773(a)(7) is warranted.

Use of Facts Otherwise Available

We preliminarily determine, in

accordance with section 776(a) of the

Act, that the use of facts available is

appropriate for certain aspects of

Mannesmann’s response as described in

the ‘‘Constructed Export Price’’ and

‘‘Normal Value’’ sections above. We find

that we were unable to verify certain

information and that the respondent did

not provide the information necessary to

make a decision on whether certain

unreported U.S. sales should have been

reported under the scope of this review.

Furthermore, we determine that,

pursuant to section 776(b) of the Act, it

is appropriate to make an inference

adverse to the interests of this company

because it failed to cooperate by not

acting to the best of its ability in

providing the Department with

information. We found that

Mannesmann did not act to the best of

its ability by not providing information

on the uses of certain U.S. sales (A–333

sales). Also, Mannesmann did not

provide us with the majority of sales

trace verification packages until late on

the final day of the home market

verification. These packages did not

include any supporting documentation

for numerous adjustments (as discussed

under the ‘‘Normal Value’’ section

above). Section 776(b) of the Act also

authorizes the Department to use as

adverse facts available information

derived from the petition, the final

determination, a previous

administrative review, or other

information placed on the record. In this

case, as described above, we have used

as facts available Mannesmann’s rate

from the original investigation, which

was based on information from the

petition. Although we have not fully

corroborated this information in

accordance with section 776 (c) of the

Act, we will do so for the final results.

Cost of Production Analysis

Petitioners alleged, on December 20,

1996, that Mannesmann sold small

diameter circular seamless carbon and

alloy steel standard, line and pressure

pipe in the home market at prices below

cost of production (COP). Based on this

allegation, in accordance with Section

773(b) of the Act, the Department

determined, on January 31, 1997, that it

had reasonable grounds to believe or

suspect that Mannesmann had sold the

subject merchandise in the home market

at prices below COP. See Letter to

Mannesmann and Decision

Memorandum (January 31, 1997). We

therefore initiated a cost investigation

with regard to Mannesmann in order to

determine whether the respondent made

home-market sales at prices below its

COP within the meaning of section

773(b) of the Act. Before making any fair

value comparisons, we conducted the

COP analysis described below.

A. Calculation of COP

We calculated the COP based on the

sum of respondent’s cost of materials

and fabrication for the foreign like

product, plus amounts for home market

selling, general, and administrative

expenses (SG&A) and packing costs in

accordance with section 773(b)(3) of the

Act. Based on our verification of

Mannesmann’s cost response, we

adjusted Mannesmann’s reported COP

to reflect certain adjustments to cost of

manufacturing and interest expense as

described below. We also have denied a

claimed start-up adjustment (as

described below) and used reported

costs without the start-up adjustment.

1. Major Inputs

Mannesmann purchased the majority

of its major inputs, billet rounds, for

seamless pipe, from an affiliated party.
Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices 47451

Sections 773(f)(2) and (3) of the Act

specify the treatment of transactions

between affiliated parties for purposes

of reporting cost data (for use in

determining both COP and CV) to the

Department. Section 773(f)(2) indicates

that the Department may disregard such

transactions if the amount representing

that element (the transfer price) does not

fairly reflect the amount usually

reflected (typically the market price) in

the market under consideration (where

the production takes place). Under these

circumstances, the Department may rely

on the market price to value inputs

purchased from affiliated parties.

Section 773(f)(3) indicates that, if

transactions between affiliated parties

involve a major input, then the

Department may value the major input

based on the COP if the cost is greater

than the amount (higher of transfer price

or market price) that would be

determined under 773(f)(2). Section

773(f)(3) applies if the Department ‘‘has

reasonable grounds to believe or suspect

that an amount represented as the value

of such input is less than the COP of

such input.’’ The Department generally

finds that such ‘‘reasonable grounds’’

exist where it has initiated a COP

investigation of the subject

merchandise.

Because a COP investigation is being

conducted in this case, the Department

requested in its supplemental Section D

questionnaire that Mannesmann provide

cost of production information for the

billet rounds. That cost information was

provided by the affiliated party and was

verified. In accordance with sections

773(f) (2) and (3), we used the highest

of transfer price, cost of production or

market value to value the billets. To

determine the market value, we

compared information on one grade of

billets which was obtained from both

affiliated and unaffiliated parties during

the POR. We applied the percentage

price increase paid to unaffiliated

parties to affiliated party purchases to

reflect market value (see Department’s

September 2, 1997 Analysis

Memorandum).

2. Financial (Interest) Expense

In calculating net financial expense in

its response, respondent subtracted

what it claimed to be financial income

from short-term sources. At verification,

however, respondent failed to provide

support that the income was, in fact,

short term in nature (see Cost

Verification Report). The Department

considers financial income from longterm investments as not being related to

the production activities of the company

and, therefore, does not allow financial

income from long-term investments as

offsets to financial expense in

calculating COP and CV. The

Department only allows financial

expense to be offset by interest income

from short-term sources (i.e., working

capital). We have therefore disallowed

respondent’s claimed offsets.

3. Start-Up Costs

Respondent claimed a start-up

adjustment for operations at the

Zeithain plant during the first half of

1996. Specifically, these start-up

operations were associated with the

complete rebuilding and modernization

of certain production equipment.

Respondent claims that it is eligible for

this adjustment because the project

represented a major change in the

production process and because output

was adversely affected by the start-up

operations in a manner unrelated to the

pressures of market demand and

seasonal factors.

Under section 773(f)(1)(C)(ii) of the

Act, Commerce may make an

adjustment for start-up costs only if the

following two conditions are satisfied:

(1) A company is using new production

facilities or producing a new product

that requires substantial additional

investment, and (2) production levels

are limited by technical factors

associated with the initial phase of

commercial production.

The SAA at 166 states that ‘‘new

production facilities’’ includes the

substantially complete retooling of an

existing plant. Substantially complete

retooling involves the replacement of

nearly all production machinery or the

equivalent rebuilding of existing

machinery. The production machinery

which was replaced represents only one

process in multiple processes according

to Mannesmann’s internal

documentation describing the

production process (see Department’s

September 2, 1997 Analysis

Memorandum). Thus, it does not meet

the requirement that nearly all

production machinery be replaced, and

does not represent a substantial portion

of the overall assets in the facility.

Furthermore, Mannesmann did not

demonstrate that production levels were

limited by technical factors associated

with the initial phase of commercial

production. Company records indicate

that production and manufacturing

activity levels were substantially the

same during the January to June 1995

time period as during the alleged startup period of January to June 1996.

Accordingly, we reject Mannesmann’s

claim for a start-up adjustment because

it did not demonstrate that they were

using new production facilities,

including substantially complete

retooling; nor did they demonstrate that

production levels were limited by

technical factors associated with the

initial phase of commercial production.

B. Test of Home Market Prices

We used the respondent’s weightedaverage COP, as adjusted (see above), for

the period January 1, 1995 to July 31,

1996. We compared the weightedaverage COP figures to home market

sales of the foreign like product as

required under section 773(b) of the Act.

In determining whether to disregard

home-market sales made at prices below

the COP, we examined whether (1)

Within an extended period of time, such

sales were made in substantial

quantities, and (2) such sales were made

at prices which permitted the recovery

of all costs within a reasonable period

of time. On a product-specific basis, we

compared the COP to the home market

prices, less any applicable movement

charges, rebates, and discounts.

C. Results of COP Test

Pursuant to section 773(b)(2)(C),

where less than 20 percent of

Mannesmann’s sales of a given product

were at prices less than the COP, we did

not disregard any below-cost sales of

that product because we determined

that the below-cost sales were not made

in ‘‘substantial quantities.’’ Where 20

percent or more of respondent’s sales of

a given product during the POR were at

prices less than the COP, we determined

such sales to have been made in

‘‘substantial quantities’’ within an

extended period of time in accordance

with section 773(b)(2)(B) of the Act. We

also determined that such sales were

also not made at prices which would

permit recovery of all costs within a

reasonable period of time, in accordance

with section 773(b)(2)(D) of the Act, and

therefore, we disregarded the below-cost

sales. Where all contemporaneous sales

of a specific comparison product were at

prices below the COP, we calculated NV

based on CV.

D. Calculation of CV

In accordance with section 773(e) of

the Act, we calculated CV based on the

sum of Mannesmann’s cost of materials,

fabrication, SG&A, U.S. packing costs,

and interest expenses as reported and a

calculated profit. As noted above, we

recalculated Mannesmann’s cost of

manufacturing, SG&A, and interest

expense based on our verification

results. In accordance with section

773(e)(2)(A) of the Act, we based SG&A

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
47452 Federal Register / Vol. 62, No. 174 / Tuesday, September 9, 1997 / Notices

ordinary course of trade, for

consumption in the foreign country. For

selling expenses, we used the weightedaverage home market selling expenses.

Currency Conversion

For purposes of the preliminary

results, we made currency conversions

based on the official exchange rates in

effect on the dates of the U.S. sales as

certified by the Federal Reserve Bank of

New York. Section 773A(a) of the Act

directs the Department to use a daily

exchange rate in order to convert foreign

currencies into U.S. dollars, unless the

daily rate involves a ‘‘fluctuation.’’ In

accordance with the Department’s

practice, we have determined as a

general matter that a fluctuation exists

when the daily exchange rate differs

from a benchmark by 2.25 percent. The

benchmark is defined as the rolling

average of rates for the past 40 business

days. When we determine a fluctuation

exists, we substitute the benchmark for

the daily rate.

Preliminary Results of the Review

As a result of this review, we

preliminarily determine that the

following weighted-average dumping

margin exists:

Manufacturer/exporter Period Margin

(percent)

Mannesmannroehren-Werke AG .............................................................................................................................. 1/27/95–7/31/96 28.69

Parties to the proceeding may request

disclosure within five days of the date

of publication of this notice. Any

interested party may request a hearing

within 10 days of publication. Any

hearing, if requested, will be held 44

days after the date of publication or the

first business day thereafter. Case briefs

from interested parties may be

submitted not later than 30 days after

the date of publication. Rebuttal briefs,

limited to issues raised in those briefs,

may be filed not later than 37 days after

the date of publication of this notice.

The Department will publish the final

results of this administrative review,

including its analysis of issues raised in

the case and rebuttal briefs, not later

than 120 days after the date of

publication of this notice.

The following deposit requirements

will be effective upon publication of the

final results of this antidumping duty

review for all shipments of small

diameter circular seamless carbon and

alloy steel standard, line and pressure

pipe, entered, or withdrawn from

warehouse, for consumption on or after

the publication date, as provided by

section 751(a) of the Tariff Act: (1) The

cash deposit rate for the reviewed

company will be that established in the

final results of review; (2) for exporters

not covered in this review, but covered

in the LTFV investigation or previous

review, the cash deposit rate will

continue to be the company-specific rate

from the LTFV investigation; (3) if the

exporter is not a firm covered in this

review, a previous review, or the

original 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; (4) the cash deposit

rate for all other manufacturers or

exporters will continue to be 57.72

percent, the ‘‘All Others’’ rate made

effective by the LTFV investigation.

These requirements, when imposed,

shall remain in effect until publication

of the final results of the next

administrative review.

This notice serves as a preliminary

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

antidumping duties occurred and the

subsequent assessment of double

antidumping duties.

This administrative review and notice

are published in accordance with

section 751(a)(1) of the Act and 19 CFR

353.22.

Dated: September 2, 1997.

Robert S. LaRussa,

Assistant Secretary for Import

Administration.

[FR Doc. 97–23856 Filed 9–8–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[A–588–054, A–588–604]

Tapered Roller Bearings and Parts

Thereof, Finished and Unfinished,

From Japan, and Tapered Roller

Bearings, Four Inches or Less in

Outside Diameter, and Components

Thereof, From Japan; Preliminary

Results of Antidumping Duty

Administrative Reviews

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of

Antidumping Duty Administrative

Reviews.

SUMMARY: In response to requests by the

petitioner and one respondent, the

Department of Commerce (the

Department) is conducting

administrative reviews of the

antidumping duty order on tapered

roller bearings (TRBs) and parts thereof,

finished and unfinished, from Japan (A–

588–604), and of the antidumping

finding on TRBs, four inches or less in

outside diameter, and components

thereof, from Japan (A–588–054). The

review of the A–588–054 finding covers

two manufacturers/exporters and two

resellers/exporters of the subject

merchandise to the United States during

the period October 1, 1995 through

September 30, 1996. The review of the

A–588–604 order covers three

manufacturers/exporters and two

resellers/exporters, and the period

October 1, 1995 through September 30,

1996.

We preliminarily determine that sales

of TRBs have been made below the

normal value (NV). If these preliminary

results are adopted in our final results

of administrative reviews, we will

instruct the U.S. Customs Service to

assess antidumping duties based on the

difference between United States price

and the NV. Interested parties are

invited to comment on these

preliminary results. Parties who submit

argument in these proceedings are

requested to submit with the argument

(1) a statement of the issues and (2) A

brief summary of the argument.

EFFECTIVE DATE: September 9, 1997.

FOR FURTHER INFORMATION CONTACT:

Charles Ranado, Stephanie Arthur, or

Valerie Owenby, AD/CVD Enforcement,

Group III, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW.,

Washington, DC 20230, telephone: (202)

482–3518, 6312, or 0145, respectively.

APPLICABLE STATUTE AND REGULATIONS:

Unless otherwise indicated, all citations

to the Tariff Act of 1930, as amended

(the Act), are references to the

provisions effective January 1, 1995, the