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[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Notices]
[Pages 10545-10550]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4723]

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DEPARTMENT OF COMMERCE
[A-533-811]

Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Carbon Steel Butt-Weld Pipe Fittings From India

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

EFFECTIVE DATE: February 27, 1995.

FOR FURTHER INFORMATION CONTACT: Sue Strumbel, Office of Countervailing 
Investigations, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-
1442.

Final Determination

    We determine that certain carbon steel butt-weld pipe fittings from 
India are being sold in the United States at less than fair value, as 
provided in section 735 of the Tariff Act of 1930, as amended (the 
``Act''). The estimated margins shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the publication of the preliminary determination in the 
Federal Register on October 4, 1994 (59 FR 50562), the following events 
have occurred:
    On October 5, 1994, Sivanandha Pipe Fittings Ltd. (Sivanandha) and 
Karmen Steels of India (Karmen), requested that the final determination 
in this case be postponed. On November 14, 1994, the Department 
published in the Federal Register a notice postponing the publication 
of the final determination in this case until February 16, 1995 (59 FR 
56461).
    From October 31 to November 5, 1994, we verified Sivanandha's and 
Karmen's sales information in Madras, India.
    We received case and rebuttal briefs on January 23 and January 30, 
1995, respectively, from petitioner and respondents.

Scope of the Investigation

    The products covered by this investigation are certain carbon steel 
butt-weld pipe fittings having an inside diameter of less than fourteen 
inches (355 millimeters), imported in either finished or unfinished 
condition. Pipe fittings are formed or forged steel products used to 
join pipe sections in piping systems where conditions require permanent 
welded connections, as distinguished from fittings based on other 
methods of fastening (e.g., threaded, grooved, or bolted fittings). 
Butt-weld fittings come in a variety of shapes which include 
``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished 
pipe fittings are beveled, so that when a fitting is placed against the 
end of a pipe (the ends of which have also been beveled), a shallow 
channel is created to accommodate the ``bead'' of the weld which joins 
the fitting to the pipe. These pipe fittings are currently classifiable 
under subheading 7307.93.3000 of the Harmonized Tariff Schedule of the 
United States (HTSUS). Although the HTSUS subheading is 
[[Page 10546]] provided for convenience and customs purposes, our 
written description of the scope of this investigation is dispositive.
Karmen's Exports of Refurbished Pipe Fittings

    Karmen reported that it has an arrangement with a Singaporean 
company, under which the Singaporean company supplies Karmen with rusty 
pipe fittings. Karmen reconditions and refurbishes these pipe fittings 
and sends them to the Singaporean company's U.S. customer. Petitioner 
and Karmen agree with the Department's preliminary determination that 
these ``sales'' of refurbished pipe fittings are not subject to this 
investigation.
    For purposes of this final determination, we are continuing to 
treat these ``sales'' as outside the scope of our investigation and, 
hence, not subject to any potential antidumping order on butt-weld pipe 
fittings from India. Karmen essentially performs a tolling service for 
its Singaporean customer. Moreover, Karmen does not ``substantially 
transform'' these pipe fittings.
    Substantial transformation generally refers to a degree of 
processing or manufacturing resulting in a new and different article. 
Through that transformation, the new article becomes a product of the 
country in which it was processed or manufactured. See Cold-Rolled 
Steel from Argentina, 58 FR 37062, 37065 (1993) (Appendix I). Commerce 
makes these determinations on a case-by-case-basis. See, e.g., Certain 
Fresh Cut Flowers from Colombia, 55 FR 20291, 20299 (1990); Limousines 
from Canada, 55 FR 11036, 11040 (1990).
    In determining whether Karmen substantially transformed these pipe 
fittings, we examined whether the degree of processing or manufacturing 
resulted in a new and different article. Karmen receives rusty pipe 
fittings from Singapore, it removes the rust, paints the fitting, and 
forwards it to the Singaporean company's customer. We do not consider 
this refurbishing process as substantially transforming the subject 
merchandise because it remains a pipe fitting after refurbishment. 
Therefore, because Karmen does not substantially transform the 
merchandise, we do not consider it as falling within the scope of this 
proceeding.

Period of Investigation

    The period of investigation (POI) is September 1, 1993 through 
February 28, 1994, for Sivanandha and August 1, 1993 through February 
28, 1994, for Karmen. The preliminary determination in this 
investigation provides an explanation regarding the different POIs for 
each company.

Such or Similar Comparisons

    For Sivanandha, in making our fair value comparisons, we first 
compared merchandise identical in all respects in accordance with the 
Department's standard methodology. If no identical merchandise was 
sold, we compared the most similar merchandise, as determined by the 
model-matching criteria contained in Appendix V of the questionnaire 
(Appendix V) (on file in Room B-099 of the main building of the 
Department of Commerce (Public File)). For the U.S. sales compared to 
sales of similar merchandise, we made an adjustment, pursuant to 19 CFR 
353.57, for physical differences in merchandise.
    Karmen did not make home market or third country sales of the 
subject merchandise. Therefore, we based foreign market value (FMV) on 
constructed value (CV), in accordance with section 773(a)(2) of the 
Act.

Fair Value Comparisons

    To determine whether Sivanandha's and Karmen's sales for export to 
the United States were made at less than fair value, we compared the 
United States price (USP) to the FMV, as specified in the ``United 
States Price'' and ``Foreign Market Value'' sections of this notice.
    We made revisions to Sivanandha's and Karmen's reported data, where 
appropriate, based on verification findings.

United States Price

    Because Sivanandha's and Karmen's U.S. sales of subject merchandise 
were made to unrelated purchasers prior to importation into the United 
States, and exporter's sales price methodology was not indicated by 
other circumstances, we based USP on the purchase price (PP) sales 
methodology in accordance with section 772(b) of the Act.
    We calculated Sivanandha's USP based on packed, CIF prices to 
unrelated customers in the United States. We made deductions, where 
appropriate, for foreign inland freight, containerization, ocean 
freight, and marine insurance.
    We recalculated Sivanandha's marine insurance expense, so it is 
allocated on a value basis instead of a weight basis.
    For Sivanandha, in accordance with Section 772(d)(1)(B) of the Act, 
we added the amount of import duties imposed on inputs which were 
subsequently rebated upon exportation of the finished merchandise to 
the United States.
    We also made an adjustment for taxes paid on the comparison sales 
in India, in accordance with our practice, pursuant to the Court of 
International Trade (CIT) decision in Federal-Mogul, et al v. United 
States, 834 F. Supp. 1993. See, Color Negative Photographic Paper and 
Chemical Components Thereof from Japan, 59 FR 16177, 16179, April 6, 
1994 for an explanation of this tax methodology.
    We calculated Karmen's USP based on packed, CIF prices to unrelated 
customers in the United States. We made deductions, where appropriate, 
for foreign inland freight, containerization, ocean freight, and marine 
insurance. We recalculated Karmen's marine insurance expense, so it is 
allocated on a value basis instead of a weight basis.

Foreign Market Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating 
Sivanandha's FMV, we compared the volume of home market sales of 
subject merchandise to the volume of third country sales of subject 
merchandise, in accordance with section 773(a)(1)(B) of the Act. Based 
on this comparison, we determined that Sivanandha's home market was 
viable.
    For Sivanandha, we calculated FMV based on delivered prices, 
inclusive of packing to home market customers. From these prices, we 
deducted commission, where appropriate.
    In light of the Court of Appeals for the Federal Circuit's decision 
in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v. 
United States, 13 F. 3d 398 (Fed. Cir., January 5, 1994), the 
Department no longer can deduct home market movement charges from FMV 
pursuant to its inherent power to fill in gaps in the antidumping 
statute. Instead, we adjust for those expenses under the circumstance-
of-sale (COS) provision of 19 CFR 353.56(a). Accordingly, in the 
present case, we adjusted for post-sale home market movement charges 
under the COS provision of 19 CFR 353.56(a). This adjustment included 
home market inland freight.
    For Sivanandha, we also made COS adjustments for differences in 
quality inspection charges, and credit. In accordance with 19 CFR 
353.56(b)(1), we added U.S. indirect selling expenses as an offset to 
the home market commission, but capped this addition by the amount of 
the home market commission. Finally, we deducted home market packing 
expenses and added U.S. packing expenses to Sivanandha's 
[[Page 10547]] FMV, in accordance with section 773(a)(1) of the Act.
    For Karmen, because it sells the subject merchandise only in the 
United States, we used CV, pursuant to section 773(e) of the Act. We 
calculated CV as the sum of the cost of materials, fabrication, general 
expenses, U.S. packing costs, and profit. We relied upon the submitted 
CV data but made the following changes where we determined costs were 
not appropriately quantified or valued: (1) We adjusted the cost of 
manufacturing to include the cost of excluded electricity expenses; (2) 
we recalculated finance expense on an annual basis as a percentage of 
cost of goods sold; (3) we increased SG&A expenses for excluded 
partner's salary, audit fees and bank charges and recalculated SG&A 
expense on an annual basis as a percentage of fabrication cost of goods 
sold; (4) we reduced the manufactured fittings per unit of fabrication 
cost for amounts that relate to the refurbished fittings; and (5) we 
reduced the submitted indirect selling expense for the verified 
overstated amounts. In accordance with section 773(e)(1)(B)(i) and (ii) 
of the Act, we: (1) Included the greater of either Karmen's reported 
general expenses or the statutory minimum of ten percent of the cost of 
manufacture (COM), as appropriate; and (2) used the statutory minimum 
of eight percent of the sum of COM and general expenses for profit 
because actual profit was less than eight percent.
    In our preliminary determination, we were unable to properly 
allocate labor and variable manufacturing overhead costs between 
refurbished pipe fittings and new pipe fittings. However, based on 
verified information, we are now able to allocate the labor and 
variable manufacturing overhead costs between refurbished and new pipe 
fittings. Therefore, for purposes of this final determination, Karmen's 
CV includes only those costs allocable to new pipe fittings.

Currency Conversion

    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. See 19 CFR 353.60.
Verification

    As provided in section 776(b) of the Act, we verified information 
provided by the respondent using standard verification procedures, 
including the examination of relevant sales, cost and financial 
records, and selection of original source documentation.

Interested Party Comments

    Comment 1: Karmen and Sivanandha argue that they are not related 
parties for purposes of this antidumping duty investigation. They 
contend that, although one individual has a common interest in both 
companies, in all other respects the two companies are separate.
    Petitioner disagrees with respondents' argument. It states that, 
although the Department verified that Karmen and Sivanandha are 
separate legal entities, the relationship between the two companies 
satisfies many of the criteria considered by the Department when 
deciding whether to ``collapse'' companies.
    DOC's Position: We agree with respondents. In general, Commerce 
will not consider parties related where the ownership interest is less 
than five percent. See, e.g., Certain Forged Steel Crankshafts from 
Japan, 52 FR 36984 (1987). This is consistent with Commerce's ``general 
practice not to collapse related parties except in certain relatively 
unusual situations, where the type and degree of relationship is so 
significant that we find there is a strong possibility of price 
manipulation.'' Antifriction Bearings (Other Than Tapered Roller 
Bearings: and Parts Thereof from Germany, 54 FR 18992, 19089 (1989). 
Based on Karmen's supplemental response and our analysis at 
verification, we confirmed that the ownership between Karmen and 
Sivanandha is insignificant and that no other factors suggested a 
strong possibility of price manipulation. (See the February 16, 1995, 
Memorandum from Team to Barbara Stafford for a full discussion of our 
analysis of this subject.)
    Comment 2: Karmen argues that it should be allowed to reduce its 
cost of manufacturing for the POI to account for the advance import 
license it purchased from the Indian government. Karmen notes that it 
originally purchased the license in order to import steel pipe for pipe 
fittings at duty-free prices. Karmen maintains that it did not use the 
import license but, instead, produced and exported the subject 
merchandise using higher-priced domestic pipe inputs. Because it can 
still import duty-free pipe under the license, Karmen argues that it 
should be allowed to reduce its production costs by an amount 
representing the estimated future savings on imported pipe used to 
manufacture pipe fittings.
    Petitioner argues that we should not reduce Karmen's production 
costs by the potential savings on future duty free imports. Petitioner 
states that in calculating constructed value, the Department uses the 
cost of materials incurred at a time preceding the date of exportation 
of the subject merchandise. Also, the Department's CV questionnaire 
clearly states that the respondent is to report costs incurred during 
the POI for purposes of constructed value. Petitioner further claims 
that the advance license held by Karmen was not used during the POI 
and, therefore, the future potential savings, if they are realized, 
will affect costs after the date of exportation of the subject 
merchandise. Finally, petitioner argues that if the license is used in 
the future, the effect of the license on Karmen's costs of 
manufacturing would be taken into account in a future administrative 
review.
    DOC's Position: We believe that the advance import license provides 
a benefit to Karmen which accrued to the company during the POI due to 
the fact that it met its export commitment under the license through 
the use of domestically-purchased pipe inputs. In this case, the 
benefit from the license relates directly to production and sale of the 
subject fittings during the POI. Thus, in order to achieve an 
appropriate matching of production costs and sales revenues for the 
subject merchandise, we have offset material costs by an amount 
representing the benefit obtained from the unused import license.
    Comment 3: Petitioner argues that the Department should not adjust 
Karmen's material costs by the income generated by sales of scrap, 
because subcontractors to Karmen retain the scrap and presumably lower 
their prices to Karmen to reflect the value of the scrap.
    DOC's Position: The Department verified that Karmen permits its 
subcontractors to keep all scrap generated from the production 
processes they perform. Hence, Karmen did not sell any scrap during the 
POI and is not entitled to the scrap adjustment it claimed. We agree 
with petitioner that the value of the scrap is likely accounted for in 
the price the subcontractors charge Karmen. Therefore, allowing the 
adjustment claimed by Karmen would double count the value of scrap.
    Comment 4: Regarding the salary of its director, Karmen argues that 
since the director is an owner, his income is a partner's draw and 
should not be included in Karmen's total salary expense. Respondent 
also contends that if the Department determines that the draw must be 
included in SG&A costs, the Department should only include the amount 
of the draw that would be comparable to a reasonable salary for 
management. [[Page 10548]] 
    Petitioner argues that the director's entire salary should be 
included as a cost because it is treated as a cost by Karmen in its 
financial statements and in calculating taxable income. Also, 
petitioner contends that there is no factual basis by which the 
Department can establish an amount that would be reasonable salary for 
management.
    DOC's Position: We agree with petitioner. During verification, we 
discovered that Karmen did not include its director's salary in its 
reported costs. Karmen's director is not a passive investor; he takes 
an active role in the company's management. Moreover, the payments made 
to him during the POI were classified as salary in Karmen's books and 
records. There is no evidence on the record to indicate that these 
payments were for anything other than salary. Accordingly, we included 
the full amount paid to the director in SG&A costs for purposes of the 
final determination.
    Comment 5: Karmen argues that the Department should use verified 
information to allocate Karmen's labor and variable overhead costs 
between the pipe fittings it refurbishes and the pipe fittings it 
manufactures. Respondent further contends that the Department should 
allocate certain other costs, such as grinding and painting, to both 
types of fittings since these costs were incurred on both types of pipe 
fittings.
    Petitioner agrees that allocation of a portion of verified costs to 
refurbished fittings may be appropriate. However, petitioner disagrees 
that the Department should allocate any expenses for grinding to 
refurbished pipe fittings because Karmen has not previously indicated 
that any grinding is involved in the refurbishing process. Petitioner 
contends that grinding is associated with the beveling process, which 
is a production step performed before Karmen acquires the rusty pipe 
fittings.
    DOC's Position: The Department verified that shotblasting, 
punching, painting and grinding costs were incurred by Karmen to 
refurbish certain of its pipe fittings. Therefore, the Department has 
allocated a portion of these expenses to the cost of the refurbished 
fittings.
    Comment 6: Karmen argues that SG&A should be allocated to 
refurbished and manufactured pipe fittings on the basis of weight. 
Since there are no material costs associated with the refurbished pipe, 
an allocation based on cost of goods sold would assign too great an 
amount to manufactured pipe fittings.
    Petitioner argues that the Department should deny Karmen's request 
to allocate SG&A costs by weight instead of cost. Petitioner contends 
that it is the Department's practice to calculate SG&A costs as a 
percentage of cost of sales. Petitioner further contends that with 
respect to the refurbished fittings, Karmen does not manufacture or 
``sell'' these fittings. Because Karmen contributes so little value to 
the refurbished fittings, using product weight to allocate SG&A is 
plainly distorting.
    DOC's Position: We have determined that SG&A expenses should be 
allocated based on cost of sales rather than on the weight of finished 
pipe fittings. However, since there are no material costs associated 
with the refurbished fittings and hence, no material costs were 
reflected in these ``sales'', we removed material costs related to the 
manufactured fittings from cost of sales in order to establish an 
equitable allocation.
    Comment 7: Karmen claims that, although not mentioned in the CV 
verification report, company officials demonstrated at verification 
that certain indirect selling expenses had been overstated in the CV 
calculations. Correct amounts were provided and verified.
    Petitioner claims that there is no evidence of this on record, and 
that the original amount should be used.
    DOC's Position: Although we did not address this issue in our 
verification report, respondent is correct in stating that we verified 
Karmen's actual amount of indirect selling expenses for the POI. 
Additionally, there is information on the record of this investigation 
which supports Karmen's verified indirect selling expenses. The source 
document supporting this expense is in Exhibit 10 of the CV 
verification report.
    Comment 8: Petitioner argues that the Department should use the 
verified packing cost information for Karmen instead of the reported 
amount for the final determination. Petitioner also argues that the 
Department should use the best information available (BIA) for Karmen's 
foreign inland freight expenses, since Karmen did not provide the 
supporting documentation requested by the Department.
    Karmen argues that although it did not produce supporting 
documentation for its foreign inland freight expense, the Department 
should not resort to BIA. Respondent contends that, because the general 
accuracy of Karmen's responses was established at verification, the 
Department should use the data ascertained at verification.
    DOC's Position: As stated in the Fair Value Comparisons section of 
this notice, we made revisions to Karmen's data, where appropriate, 
based on verification findings. Therefore, we have adjusted Karmen's 
data for packing costs based on verification.
    Because Karmen did not provide source documentation for its foreign 
inland freight expense, we have used as BIA, the highest Indian truck 
freight rates as provided in a cable from the U.S. embassy in Bombay 
dated August 3, 1993.
    Comment 9: Petitioner claims that we should apply total BIA to 
Sivanandha because the Department's verification revealed numerous 
discrepancies in Sivanandha's responses. (The specific discrepancies 
raised by petitioner are addressed in comments 10 through 17, below.)
    Sivanandha refutes each of the discrepancies listed by petitioner 
and argues that total BIA is inappropriate. (See, comments 10 through 
17 for Sivanandha's counter arguments.)
    DOC's Position: We have determined to accept Sivanandha's verified 
information because the discrepancies discovered were minor in nature. 
Overall, Sivanandha's responses were accurate and presented a true 
picture of its manufacturing and selling processes.
    Comment 10: Petitioner argues that certain home market sales 
reported by Sivanandha as subject merchandise (i.e., seamless carbon 
steel butt-weld pipe fittings), were sales of welded pipe fittings, 
which are outside of the scope of this investigation. Petitioner 
contends that sales of welded pipe fittings that were actually filled 
with pipe fittings made of seamless pipe cannot be considered as 
occurring in the ordinary course of trade.
    Sivanandha argues that these sales were within the ordinary course 
of trade and that it correctly reported all sales of the subject 
merchandise.
    DOC's Position: We verified that all of Sivanandha's home market 
sales were produced using seamless carbon steel. Therefore, we agree 
with Sivanandha that these sales are properly included in the home 
market database. Although customers requested welded pipe, the orders 
were filled with seamless pipe. Since we are investigating sales of 
seamless pipe to the United States, the home market sales in question 
should be included for comparison purposes. While we are authorized to 
exclude sales not in the ordinary course of trade (e.g., trial sales or 
sales of samples), there is no basis for treating Sivanandha's seamless 
pipe sales as outside the ordinary course of trade.
    Comment 11: Petitioner claims that the product weights were not 
verified because Sivanandha used standard weights instead of actual 
weights. Petitioner argues that the standard [[Page 10549]] weights 
were not acceptable because the correlation between standard and actual 
weights was no better than 93 percent.
    Sivanandha argues that it was appropriate to use standard weights 
because most invoices did not list actual weights. According to 
Sivanandha the 93 percent correlation between actual and standard 
weights derived at verification supports, rather than undermines, the 
use of standard weights.
    DOC's Position: We disagree with petitioner that Sivanandha's use 
of standard weights was unreasonable. The 93 percent correlation 
between actual and standard weights demonstrates the reasonableness. 
Moreover, even if we were to adjust for the seven percent 
``discrepancy'' it would have no effect on the amounts allocated to 
each size of pipe fitting because Sivanandha used the same methodology 
for both its home market and U.S. sales.
    Comment 12: Petitioner states that Sivanandha did not provide 
documentation for the cost of gunny bags. Therefore, petitioner argues 
that packing was not verified. Petitioner also states that Sivanandha 
did not report any labor costs for packing pipe fittings sold in the 
home market.
    Sivanandha claims that the cost of gunny bags was verified. It also 
contends that the failure to report the cost of labor for packing home 
market sales is to its detriment. As a practical matter, Sivanandha 
points out that there is virtually no labor cost for home market 
packing since there is no crating on home market sales.
    DOC's Position: Normally, the Department applies BIA whenever 
respondents are unable to support at verification the information 
provided in their responses. Although Sivanandha failed to provide at 
verification documentation supporting the cost of gunny bags, the 
Department is not compelled to apply BIA because the company's overall 
responses were accurate and verified, and the plausible cost of such 
bags is very low. Absent alternative publicly available information 
with respect to the cost of gunny bags, the Department has used the 
price reported by Sivanandha.
    Comment 13: Petitioner lists the following problems with the 
difference in merchandise adjustment submitted by Sivanandha: incorrect 
product codes, standard versus actual weight of steel, average price 
for steel versus price for specific grades of steel, discrepancies in 
the manner in which Sivanandha reported its labor and variable overhead 
expenses. Petitioner argues that these problems led the Department to 
request that Sivanandha resubmit its home market and U.S. sales 
databases.
    Sivanandha admits that it originally did not understand the 
Department's methodology regarding this adjustment. However, Sivanandha 
argues that the information was corrected at verification. Therefore, 
Sivanandha argues that the Department should accept these new verified 
databases.
    DOC's Position: At verification, we discovered that the Sivanandha 
had not understood the Department's adjustment for differences in 
merchandise. However, the information required to correct Sivanandha's 
adjustment was readily available and we verified it. Sivanandha 
submitted new section B and C databases after verification, and we 
confirmed that they were identical to the information verified. 
Therefore, we are accepting Sivanandha's corrected databases.
    Comment 14: Petitioner describes other discrepancies pertaining to 
adjustments for inland freight, credit, bank guarantees, ocean freight, 
marine insurance, foreign inland freight, and containerization.
    Sivanandha claims that many of the costs were estimated because 
Sivanandha had not yet exported the merchandise to the United States. 
Also, certain of the discrepancies listed by petitioner were minute 
fractions of a cent, due to rounding errors. Sivanandha argues that 
company officials made every effort to supply the verification team 
with accurate information.
    DOC's Position: We view the discrepancies described by petitioner 
as minor and are using the verified information. We agree with 
Sivanandha that the company cooperated fully with the Department's 
investigation and verification.
    Comment 15: Petitioner claims that the sum of material, labor, and 
variable overhead is incorrect in Sivanandha's database, and is 
concerned that there are additional problems with the November 29, 1994 
databases. Therefore, petitioner argues that these databases should not 
be used and that the Department should use BIA.
    DOC's Position: The Department noted that the data was correct, but 
the program was missing one formula. The Department entered the correct 
formula, and the spreadsheet is accurate. The Department is accepting 
these databases for the final determination because we have checked 
that they match the data we verified.
    Comment 16: The petitioner claims that by using the new submission 
the difference in merchandise adjustment for several sales exceed the 
20 percent rule. Hence, for these sales, constructed value should be 
used.
    Sivanandha believes that the petitioner's claim is incorrect. 
Moreover, according to Sivanandha, petitioner's allegation that the 
Department should use CV in these sales is untimely.
    DOC's Position: Using the November 29, 1994 databases, we have 
determined that no difference in merchandise adjustments exceeded 20 
percent. This issue is therefore moot.
    Comment 17: Petitioner claims that the circumstance of sale 
adjustment for advertising in the home market should not be allowed 
because the advertising is aimed at Sivanandha's customers, not the 
customers' customer. Petitioner also argues that the adjustment for 
quality inspections should not be allowed because, even though the 
charge appears on the invoice, it is separate from the cost of the 
merchandise and, therefore, not embedded in the price.
    Sivanandha claims that it would be inappropriate to ignore these 
adjustments because these costs were incurred solely on the home market 
sales and, therefore, increased the price of the home market sales. 
Additionally, Sivanandha claims that the quality inspections are 
performed only if the customer requests the services. The price charged 
is higher because the cost of the inspection is included in the price 
reported by Sivanandha.
    DOC's Position: We agree with the petitioner that we should not 
adjust Sivanandha's home market sales for advertising expenses because 
the costs were not directed to the customers' customer. However, we 
agree with Sivanandha that we should make an adjustment to its home 
market prices for technical services when the inspection was performed 
by a third party because we verified that these costs were included in 
Sivanandha's price.

Continuation of Suspension of Liquidation

    We are directing the U.S. Customs Service to continue to suspend 
liquidation of all entries of butt-weld pipe fittings from India, as 
defined in the ``Scope of Investigation'' section of this notice, that 
are entered, or withdrawn from warehouse, for consumption on or after 
October 4, 1994.
    The Customs Service shall require a cash deposit or the posting of 
a bond equal to the estimated weighted-average amounts by which the 
foreign market values of the subject merchandise exceed the United 
States prices as shown below. The suspension of liquidation will remain 
in effect until [[Page 10550]] further notice. The weighted-average 
dumping margins are as follows:

------------------------------------------------------------------------
                                                   Margin      Deposit  
        Manufacturer/producer/exporter           (percent)    (percent) 
------------------------------------------------------------------------
Karmen Steels of India........................         1.69         1.69
Sivanandha Pipe Fittings, Ltd.................        13.99        10.83
All Other.....................................         7.84         6.26
------------------------------------------------------------------------

Adjustment of Deposit Rate for Countervailing Duties

    Article VI, paragraph 5 of the General Agreement on Tariffs and 
Trade provides that ``[no] product * * * shall be subject to both 
antidumping and countervailing duties to compensate for the same 
situation for dumping or export subsidization.'' This provision is 
implemented by section 772(d)(1)(D) of the Act. Since antidumping 
duties cannot be assessed on the portion of the margin attributable to 
export subsidies, there is no basis to require a cash deposit or bond 
for that amount.
    Accordingly in this investigation, because Sivanandha's FMV is 
based on home market sales, the antidumping margin must be adjusted. In 
the concurrent Final Affirmative Countervailing Duty Determination: 
Certain Carbon Steel Butt-Weld Pipe Fittings from India, we determined 
that Sivanandha's export subsidy was 3.16 percent ad valorem, which 
will be subtracted from the margins for cash deposit or bonding 
purposes. This results in a deposit rate of 10.83 percent for 
Sivanandha. Since Karmen only has U.S. sales, its FMV is based on CV 
which reflects export subsidies. Because the export subsidies were 
reflected in both USP and FMV, the subsidies did not affect the margin 
calculations using CV.
    The Customs Service shall require a cash deposit or the posting of 
a bond equal to the estimated preliminary dumping margins, as shown 
above. The suspension of liquidation will remain in effect until 
further notice.

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination.

Notice to Interested Parties

    This notice also serves as the only reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 353.35(d). Failure to 
comply is a violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 U.S.C. 1671(d)).

    Dated: February 16, 1995.
Barbara R. Stafford,
Deputy Assistant Secretary for Investigations.
[FR Doc. 95-4723 Filed 2-24-95; 8:45 am]
BILLING CODE 3510-DS-P
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