[Federal Register Volume 63, Number 108 (Friday, June 5, 1998)]
[Notices]
[Pages 30710-30714]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-15041]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-583-816]


Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan: 
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.

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SUMMARY: In response to a request from respondent Ta Chen Stainless 
Pipe Co., Ltd. (Ta Chen), the Department of Commerce (the Department) 
is conducting an administrative review of the antidumping duty order on 
certain stainless steel butt-weld pipe fittings from Taiwan. This 
review covers one manufacturer and exporter of the subject merchandise. 
The period of review (POR) is June 1, 1996, through May 31, 1997.
    We preliminarily determine that sales have been made below normal 
value (NV). If these preliminary results are adopted in our final 
results of administrative review, we will instruct the U.S. Customs 
Service to assess

[[Page 30711]]

antidumping duties based on the difference between export price (EP) or 
constructed export price (CEP) and NV.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit argument in this proceeding are requested 
to submit with the argument: (1) A statement of the issue; and (2) a 
brief summary of the argument.

EFFECTIVE DATE: June 5, 1998.

FOR FURTHER INFORMATION CONTACT: Robert James or John Kugelman, 
Enforcement Group III--Office 8, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
5222 and (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act), as 
amended by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department of Commerce's (the 
Department) regulations are to the provisions codified at 19 CFR part 
353 (April 1997). Where appropriate, references may be made to the 
Department's new regulations (62 FR 27296), not in effect for this 
review, as a statement of current departmental practice.

Background

    The Department published in the Federal Register the antidumping 
duty order on certain stainless steel butt-weld pipe fittings from 
Taiwan on June 16, 1993 (58 FR 33250). On June 11, 1997, we published 
in the Federal Register (62 FR 31786) a notice of opportunity to 
request an administrative review of the antidumping duty order on 
certain stainless steel butt-weld pipe fittings from Taiwan covering 
the period June 1, 1996, through May 31, 1997.
    On June 30, 1997, in accordance with 19 CFR 353.22(a)(2), Ta Chen 
requested that we conduct an administrative review for the 
aforementioned period. On August 1, 1997, the Department published a 
notice of ``Initiation of Antidumping Review'' (62 FR 41339). The 
Department issued an antidumping questionnaire and supplemental 
questionnaire to Ta Chen, which responded. No parties submitted 
comments to the Department regarding questionnaire responses.
    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 245 days. On February 25, 1998, the Department 
extended the time limits for these preliminary results to May 31, 1998 
in accordance with the Act. See Certain Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan; Extension of Time Limits for Antidumping Duty 
Administrative Review (63 FR 13031, March 17, 1998).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    The products subject to this investigation are certain stainless 
steel butt-weld pipe fittings, whether finished or unfinished, under 14 
inches inside diameter.
    Certain welded stainless steel butt-weld pipe fittings (pipe 
fittings) are used to connect pipe sections in piping systems where 
conditions require welded connections. The subject merchandise is used 
where one or more of the following conditions is a factor in designing 
the piping system: (1) Corrosion of the piping system will occur if 
material other than stainless steel is used; (2) contamination of the 
material in the system by the system itself must be prevented; (3) high 
temperatures are present; (4) extreme low temperatures are present; (5) 
high pressures are contained within the system.
    Pipe fittings come in a variety of shapes, with the following five 
shapes the most basic: ``elbows'', ``tees'', ``reducers'', ``stub 
ends'', and ``caps''. The edges of finished pipe fittings are beveled. 
Threaded, grooved, and bolted fittings are excluded from these 
investigations. The pipe fittings subject to these investigations are 
classifiable under subheading 7307.23.00 of the Harmonized Tariff 
Schedule of the United States (HTSUS).
    Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of these 
investigations is dispositive.
    Pipe fittings manufactured to American Society of Testing and 
Materials specification A774 are included in the scope of this order.
    The POR is June 1, 1996 through May 31, 1997. This review covers 
sales of certain stainless steel butt-weld pipe fittings from Taiwan by 
Ta Chen.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by the respondent using standard verification procedures, 
including on-site 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 public versions of the 
verification reports, available to the public in Room B-099 of the main 
Commerce Building.

Fair Value Comparisons

    To determine whether sales of subject merchandise by respondent to 
the United States were made at below NV, we compared, where 
appropriate, the EP and CEP to the NV, as described below.
    Pursuant to section 777A(d)(2), we compared the EPs or CEPs of 
individual U.S. transactions to the monthly weighted-average NV of the 
foreign like product where there were sales at prices above the cost of 
production (COP), as discussed in the Cost of Production Analysis 
section, below.

Export Price

    We calculated the price of certain of Ta Chen's United States sales 
based on EP, in accordance with section 772(a) of the Act, when the 
subject merchandise was sold to unaffiliated purchasers in the United 
States prior to the date of importation and CEP was not otherwise 
warranted based on the facts of the record.
    We calculated EP based on packed FOB or delivered prices to 
unaffiliated customers in the United States. Where appropriate, we made 
deductions from the starting price for movement expenses, which 
included foreign inland freight, foreign brokerage and handling, 
international freight, marine insurance, U.S. inland freight, U.S. 
brokerage and handling, and U.S. Customs duties. We also made 
deductions for discounts. See Preliminary Analysis Memorandum (Analysis 
Memo), June 1, 1998, at 6-7 and 8-9.

Constructed Export Price

    We calculated the price of Ta Chen's remaining United States sales 
based on CEP, in accordance with section 772(b) of the Act, when the 
subject merchandise was sold in the United States to unaffiliated 
customers. In this review all of Ta Chen's CEP sales were made after 
importation (i.e., the sales were made from TCI's warehouse locations 
in California and Texas).
    We calculated CEP based on FOB or delivered prices to unaffiliated 
purchasers in the United States. Where appropriate, we deducted 
discounts. Also where appropriate, in accordance

[[Page 30712]]

with section 772(d)(1), the Department deducted commissions and direct 
selling expenses from the starting price. We deducted those indirect 
selling expenses, including inventory carrying costs, which related to 
commercial activity in the United States. We also made deductions for 
movement expenses, which include foreign inland freight, foreign 
brokerage and handling, international freight, marine insurance, U.S. 
inland freight, U.S. brokerage and handling, and U.S. Customs duties. 
Finally, pursuant to section 772(d)(3) of the Act, we made an 
adjustment for CEP profit. See Analysis Memo at 7-8 and 9-11.

Normal Value

    Based on a comparison of the aggregate quantity of home-market and 
U.S. sales, we determined that the home market is viable as a basis for 
calculating NV. We determined that the quantity of the foreign like 
product sold in the exporting country was sufficient to permit a proper 
comparison with the sales of the subject merchandise to the United 
States, pursuant to section 773(a)(1) of the Act because Ta Chen had 
sales in Taiwan which were greater than five percent of its sales in 
the U.S. market. 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, in the ordinary course of trade, and, to the 
extent practicable, at the same level of trade.
    We calculated NV based on packed, FOB or delivered prices to 
unaffiliated purchasers in Taiwan. We made adjustments for differences 
in packing in accordance with section 773(a)(6)(A) of the Act. We also 
made adjustments, where appropriate, for movement expenses consistent 
with section 773(a)(6)(B) of the Act; these included inland freight 
from plant to customer. In addition, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act, as well as for differences in circumstances of sale (COS) 
in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
353.56. We made COS adjustments by deducting direct selling expenses 
incurred for home market sales (i.e. credit expenses) and adding U.S. 
direct selling expenses (i.e. credit expenses and bank charges).

Cost of Production Analysis

    In the original less-than-fair-value (LTFV) investigation of Ta 
Chen (the most recently-completed segment of this proceeding at the 
time of our initiation of this administrative review) we disregarded 
sales found to be below the COP. Therefore, in accordance with section 
773(b)(2)(A)(i) of the Act, the Department has reasonable grounds to 
believe or suspect that sales below the COP may have occurred during 
this review period. Thus, pursuant to section 773(b) of the Act, we 
initiated a COP investigation of Ta Chen in the instant review.
    Before making any fair value comparisons, we conducted the COP 
analysis described below.

A. Calculation of COP

    We calculated COP on a product specific basis, based on the sum of 
the 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.

B. Test of Home-Market Prices

    We used the respondent's weighted-average COP for the period June 
1996 to May 1997. We compared the weighted-average COP figures to home-
market prices 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 such sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and 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 (not including VAT), less any applicable movement charges and 
discounts.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the respondent's sales of a given product were at prices 
below 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 the respondent's 
sales of a given product were at prices below the COP, we disregarded 
the below-cost sales of that model because such sales were found to be 
made within an extended period of time in substantial quantities, in 
accordance with sections 773(b)(2)(B) and (C) of the Act, and because 
the below cost sales of the product were at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act. Where all 
contemporaneous sales of comparable products were made at prices below 
the COP, we calculated NV based on CV, in accordance with section 
773(a)(4) of the Act.
    The results of our cost test for Ta Chen indicated that for certain 
home market models less than twenty percent of the sales of the model 
were at prices below COP. We therefore retained all sales of these 
models in our analysis and used them as the basis for determining NV. 
Our cost test for Ta Chen also indicated that for certain other home 
market models more than twenty percent of the home market sales within 
an extended period of time were at prices below COP and would not 
permit the full recovery of all costs within a reasonable period of 
time. In accordance with section 773(b)(1) of the Act, we therefore 
excluded the below-cost sales of these models from our analysis and 
used the remaining above-cost sales as the basis for determining NV.

Constructed Value

    For Ta Chen's products for which we could not determine the NV 
based on comparison market sales because there were no contemporaneous 
sales of a comparable product, we compared U.S. prices to constructed 
value (CV), in accordance with Cemex v. United States, 133 F.3d 897 
(Fed. Cir. 1998) (Cemex), as discussed below.
    On January 8, 1998, the Court of Appeals for the Federal Circuit 
(the Court) issued its decision in Cemex. In that case, which involved 
a determination by the Department under pre-URAA law, the Court 
discussed the appropriateness of using CV as the basis for foreign 
market value when the Department finds home market sales to be outside 
the ordinary course of trade. However, the URAA amended the definition 
of sales outside the ordinary course of trade to include sales below 
cost. See section 771(15) of the Act. Consequently, the Department has 
reconsidered its practice in light of this court decision and has 
determined that it would be inappropriate to resort directly to CV, in 
lieu of foreign market sales, as the basis for NV when the Department 
finds foreign market sales of merchandise identical or most similar to 
that sold in the United States to be outside the ordinary course of 
trade. Instead, the Department will use sales of similar merchandise, 
if such sales exist. The Department will use CV as the basis for NV 
only when there are no above-cost sales that are otherwise suitable for 
comparison. Therefore, in this

[[Page 30713]]

proceeding, when making comparisons we considered all products sold in 
the home market, in accordance with section 771(16) of the Act that 
were in the ordinary course of trade for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to 
sales of the most similar foreign like product made in the ordinary 
course of trade, based on the model-matching characteristics listed in 
Sections B and C of our antidumping questionnaire. Therefore, we have 
implemented the Court's decision in this case, to the extent that the 
data on the record permitted.
    In accordance with section 773(e)(1) of the Act, we calculated CV 
based on the sum of the COM of the product sold in the United States, 
plus amounts for home market SG&A expenses, and profit and U.S. packing 
costs. We calculated CV based on the methodology described in the 
``Calculation of COP'' section of this notice, above, plus an amount 
for profit. In accordance with section 773(e)(2)(A), we used the actual 
amounts incurred and realized by Ta Chen in connection with the 
production and sale of the foreign like product, in the ordinary course 
of trade, for consumption in the foreign country to calculate SG&A 
expenses and profit.
    For price-to-CV comparisons, we made adjustments to CV in 
accordance with section 773(a)(8) of the Act and 19 CFR 353.56 for COS 
differences. For comparisons to EP, we made COS adjustments by 
deducting direct selling expenses incurred on home market sales and 
adding U.S. direct selling expenses. For comparisons to CEP, we made 
deductions for direct selling expenses incurred on home market sales.

Differences in Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT 
is that of the starting-price sales in the comparison market or, when 
NV is based on constructed value, that of the sales from which we 
derive selling, general and administrative expenses and profit. For EP, 
the LOT is also the level of the starting-price sale, which is usually 
from exporter to importer. For CEP, it is the level of the constructed 
sale from the exporter to the importer.
    To determine whether NV sales are at a different LOT than EP or 
CEP, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the 
unaffiliated customer. If the comparison-market sales are at a 
different LOT, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is 
more remote from the factory than the CEP level and there is no basis 
for determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Act (the CEP offset provision). See, Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).
    In its questionnaire responses Ta Chen stated that there were no 
differences in its selling functions by channels of marketing within 
each market. In order to confirm independently the absence of separate 
levels of trade within or between the U.S. and home markets, we 
examined Ta Chen's questionnaire responses for indications that its 
functions as a seller differed qualitatively and quantitatively among 
customer categories. See commentary to section 351.412 of the 
Department's new regulations (62 FR 27371).
    Ta Chen reported two channels of distribution in the home market 
(to distributors and to end-users) and a single channel of distribution 
in the United States (to distributors). Upon review, we have determined 
preliminarily that Ta Chen performed the same selling functions for its 
home market and U.S. customers, irrespective of distribution channel. 
Pursuant to section 773(a)(1)(B)(i) of the Act, we consider the selling 
functions reflected in the starting price of home-market and EP sales, 
and those reflected in the CEP after the deductions pursuant to section 
772(d) of the Act. Our analysis of the questionnaire responses leads us 
to conclude that sales within or between each market are not made at 
different levels of trade. Accordingly, we preliminarily find that all 
sales in the home market and the U.S. market were made at the same 
level of trade. Therefore, all price comparisons are at the same level 
of trade and an adjustment pursuant to section 773(a)(7)(A) of the Act 
is not warranted.

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 published by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in effect on the date of sale of subject merchandise 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. See, e.g., Certain Stainless Steel Wire Rods from France: 
Preliminary Results of Antidumping Duty Administrative Review (61 FR 
8915, 8918, March 6, 1996) and Policy Bulletin 96-1: Currency 
Conversions, 61 FR 9434, March 8, 1996. The benchmark is defined as the 
rolling average of rates for the past 40 business days. When we 
determined a fluctuation existed, we substituted 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 for the period June 1, 
1996, through May 30, 1997:

       Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan      
------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
               Producer/manufacturer/exporter                   margin  
                                                              (percent) 
------------------------------------------------------------------------
Ta Chen....................................................         1.19
------------------------------------------------------------------------

    Parties to this proceeding may request disclosure within five days 
of publication of this notice and 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. Interested parties may submit case briefs and/or 
written comments no later than 30 days after the date of publication. 
Rebuttal briefs and rebuttals to written comments, limited to issues 
raised in such briefs or comments, may be filed no later than 37 days 
after the date of publication of this notice. Parties who submit case 
briefs or rebuttal briefs in this proceeding are requested to submit 
with each argument (1) a statement of the issue and (2) a brief summary 
of the argument.

[[Page 30714]]

    The Department will publish a notice of the final results of the 
administrative review, including its analysis of issues raised in any 
such written briefs or at a hearing, if held, not later than 120 days 
after the date of publication of this notice.
    The Department shall determine and the Customs Service shall assess 
antidumping duties on all appropriate entries. The Department will 
issue appropriate appraisement instructions directly to the Customs 
Service upon completion of this review. The final results of this 
review shall be the basis for the assessment of antidumping duties on 
entries of merchandise covered by this review and for future deposits 
of estimated duties. For duty assessment purposes, we calculated an 
importer-specific assessment rate by aggregating the dumping margins 
calculated for all U.S. sales to each importer and dividing this amount 
by the total entered value of subject merchandise entered during the 
POR for each importer.
    The following cash deposit requirements will be effective upon 
publication 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, as 
provided for by section 751(a)(1) of the Act: (1) The cash deposit rate 
for Ta Chen will be the rate established in the final results of this 
administrative review; (2) for merchandise exported by manufacturers or 
exporters not covered in these reviews but covered in a previous 
segment of this proceeding, the cash deposit rate will be the company-
specific rate published for the most recent segment; (3) if the 
exporter is not a firm covered in this review, a prior review, or the 
LTFV investigation, but the manufacturer is, the cash deposit rate will 
be the rate established for the most recent period for the manufacturer 
of the merchandise; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this or any prior review, the cash 
deposit rate will be 51.01 percent, the ``all others'' rate established 
in the LTFV investigation. These deposit requirements, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.
    This notice also 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 determination is issued 
and published in accordance with section 751(a)(1) of the Act (19 
U.S.C. 1675(a)(1)) and 19 CFR 353.22(c)(5).

    Dated: June 1, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-15041 Filed 6-4-98; 8:45 am]
BILLING CODE 3510-DS-P