[Federal Register Volume 61, Number 94 (Tuesday, May 14, 1996)]
[Notices]
[Pages 24271-24274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-11940]



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DEPARTMENT OF COMMERCE
International Trade Administration
[A-791-803]


Notice of Final Determination of Sales at Less Than Fair Value: 
Circular Welded Non-Alloy Steel Pipe From South Africa

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

EFFECTIVE DATE: May 14, 1996.

FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or John Beck, Office 
of Antidumping Investigations, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue N.W., Washington, D.C. 20230; Telephone: (202) 482-
1673 or (202) 482-3464, respectively.

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 1930 
(the Act) are references to the provisions effective January 1, 1995, 
the effective date of the amendments made to the Act by the Uruguay 
Rounds Agreements Act (URAA). In addition, unless otherwise indicated, 
all citations to the Department's regulations are to the current 
regulations, as amended by the interim regulations published in the 
Federal Register on May 11, 1995 (60 FR 25130).

Final Determination

    As explained in the memoranda from the Assistant Secretary for 
Import Administration dated November 22, 1995, and January 11, 1996, 
the Department of Commerce (the Department) has exercised its 
discretion to toll all deadlines for the duration of the partial 
shutdowns of the Federal Government from November 15 through November 
21, 1995, and December 16, 1995, through January 6, 1996. Thus, the 
deadline for the final determination in this investigation has been 
extended by 28 days, i.e., one day for each full or partial day the 
Department was closed. As such, the deadline for this final

[[Page 24272]]

determination is no later than May 6, 1996.
    We determine that circular welded non-alloy steel pipe from South 
Africa is being, or is likely to be, sold in the United States at less 
than fair value, as provided in section 735 of the Act.

Case History

    Since the preliminary determination on November 21, 1995 (60 FR 
61533, November 30, 1995), the following events have occurred:
    On December 6, 1995, the Department provided the respondent, RIH 
Group, Ltd., and its operating divisions Brollo Africa and Tosa, 
(collectively, RIH) with a supplemental questionnaire relating to sales 
to affiliated parties. On January 17, 1996, the respondent submitted 
its response.
    On December 6, 1995, the respondent alleged clerical errors in the 
preliminary determination. We determined that there were clerical 
errors made; however, we did not amend the preliminary determination 
since the change in the margin was not significant (see the December 
14, 1995, Memorandum from David L. Binder to Barbara R. Stafford).
    In March 1996, we conducted verification of the sales questionnaire 
responses of the respondent in South Africa.
    The respondent and the petitioners <SUP>1 submitted case briefs on 
April 17, 1996 and rebuttal briefs on April 22, 1996.
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    \1\ Allied Tube & Conduit Corporation, Sawhill Tubular 
Division--Armco, Inc., LTV Steel Tubular Products Company, Sharon 
Tube Company, Laclede Steel Company, Wheatland Tube Company, and 
Century Tube Corporation.
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Scope of Investigation

    The following scope language reflects certain modifications from 
the notice of the preliminary determination. We clarified the paragraph 
beginning ``The scope specifically includes *  *  *'' for use and 
presumed use language.
    For purpose of this investigation, circular welded non-alloy steel 
pipes (standard pipes) are all pipes and tubes, of circular cross-
section, not more than 406.4 mm (16 inches) in outside diameter, 
regardless of wall thickness, surface finish (black, galvanized, or 
painted), end finish (plain end, bevelled end, threaded, or threaded 
and coupled), or industry specification (ASTM, proprietary, or other) 
used in standard or structural pipe applications.
    The scope specifically includes, but is not limited to, all pipe 
produced to the ASTM A-53, ASTM A-135, ASTM A-795, and BS-1387 
specifications, regardless of use. It also includes any pipe multiple-
stencilled or multiple-certified to one of the above-listed standard or 
structural pipe specifications and to any other specification, if used 
in a standard or structural pipe application. Pipe which meets the 
above physical parameters and which is produced to proprietary 
specifications, the API-5L, the API-5L X-42, or to any other non-listed 
specification is included within the scope of this investigation if 
used in a standard or structural pipe application, regardless of the 
Harmonized Tariff Schedule of the United States (HTSUS) category into 
which it was classified. If the pipe does not meet any of the above 
identified ASTM or BS specifications (i.e., ASTM A-53, ASTM A-120, ASTM 
A-135, ASTM A-795, and BS-1387) or is multiple-stencilled or multiple-
certified to one of these specifications and to any other 
specification, although it is within the identified physical parameters 
described in the second paragraph of this section, our presumption is 
that it is not used in a standard pipe application.
    Standard pipe uses include the low-pressure conveyance of water, 
steam, natural gas, air, and other liquids and gases in plumbing and 
heating systems, air conditioning units, automatic sprinkler systems, 
and other related uses. Standard pipe may carry liquids at elevated 
temperatures but may not be subject to the application of external 
heat. Standard pipe uses also include load-bearing applications in 
construction and residential and industrial fence systems. Standard 
pipe uses also include shells for the production of finished conduit 
and pipe used for the production of scaffolding.
    Specifically excluded from this investigation are mechanical 
tubing, tube and pipe hollows for redrawing, and finished electrical 
conduit if such products are not certified to
ASTM A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-1387 
specifications and are not used in standard pipe applications. 
Additionally, pipe meeting the specifications for oil country tubular 
goods is not covered by the scope of this investigation, unless also 
certified to a listed standard pipe specification or used in a standard 
pipe application.
    The merchandise under investigation is currently classifiable under 
items 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 
7306.30.50.55, 7306.30.50.85, and 7306.30.50.90 of the HTSUS. Although 
the HTSUS subheadings are provided for convenience and customs 
purposes, our written description of the scope of this investigation is 
dispositive.
    Regarding implementation of the use provision of the scope of this 
investigation, and any order which may be issued in this investigation, 
we are well aware of the difficulty and burden associated with such 
certifications. Therefore, in order to maintain the effectiveness of 
any order that may be issued in light of actual substitution in the 
future (which the use criterion is meant to achieve), yet administer 
certification procedures in the least problematic manner, we have 
developed an approach which simplifies these procedures to the greatest 
extent possible.
    First, we will not require use certification until such time as 
petitioner or other interested parties provide the Department with a 
reasonable basis to believe or suspect that substitution is occurring. 
Second, we will require use certification only for the product(s) (or 
specification(s)) for which evidence is provided that substitution is 
occurring. For example, if, based on evidence provided by petitioner, 
the Department finds a reasonable basis to believe or suspect that pipe 
produced to the API-5L specification is being used as standard pipe, we 
will require use certifications for imports of API-5L specification 
pipe. Third, normally we will require only the importer of record to 
certify to the use of the imported merchandise. If it later proves 
necessary for adequate implementation, we may also require producers 
who export such products to the United States to provide such 
certification on invoices accompanying shipments to the United States.

Period of Investigation

    The period of investigation (POI) is April 1, 1994, through March 
31, 1995.

Facts Available

    At verification, we found the following inaccuracies in the 
information provided by RIH which render the response unusable for 
purposes of margin calculations: unreported home market and U.S. sales; 
errors in the quantity and value reconciliations; certain discounts and 
rebates reported that should not have been; certain U.S. prices 
reported incorrectly; and certain discrepancies found in the pre-
selected and surprise sales <SUP>2. In addition, we found errors in the 
calculations of the following: indirect selling expenses; average stock 
days; and variable/total costs. The deficiencies found are outlined in 
detail

[[Page 24273]]

in the public version of our April 3, 1996, verification report.
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    \2\ We chose certain sales to examine at verification in order 
to verify the specific sales data reported (e.g., date of sale, date 
of payment, quantity, unit price, etc.).
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    We have determined that the questionnaire responses of the 
respondent are unverifiable. The misreporting and inaccuracies of the 
information were so material and pervasive as to make the responses 
unreliable within the meaning of section 782(e)(3) of the Act. 
Therefore, RIH's responses provide an inadequate basis for calculating 
dumping margins.
    We note that the respondent has cooperated throughout the 
investigation. In July and August 1995, we received questionnaire 
responses from RIH. In addition, RIH responded to five supplemental 
questionnaires; we received those responses in September-October 1994, 
and January-February 1996. In addition, RIH went through the entire 
verification process in South Africa in March 1996. Therefore, because 
the respondent has fully cooperated in this investigation, we are not 
using an adverse inference in selecting from among the facts otherwise 
available (see ``Interested Party Comment'' section of this notice).
    Section 776(a)(2)(D) states that the Department ``shall, subject to 
section 782(d), use the facts otherwise available in reaching the 
applicable determination under this title'' if an interested party or 
any other person provides such information but the information cannot 
be verified. The statute also provides that the facts otherwise 
available may be based on secondary information.
    Section 776(c) provides that where the Department relies on 
``secondary information,'' the Department shall, to the extent 
practicable, corroborate that information from independent sources 
reasonably at the Department's disposal. The Statement of 
Administrative Action (SAA), accompanying the URAA, clarifies that the 
petition is ``secondary information.'' <greek-i>See! H. Doc. 316, 103d 
Cong., 2d Sess. 870 (1996). The SAA also clarifies that ``corroborate'' 
means to determine that the information used has probative value. Id. 
However, where corroboration is not practicable, the Department may use 
uncorroborated information. Given that the facts available margin for 
the respondent involves information contained in the petition, we are 
required to corroborate this data, to the extent practicable, pursuant 
to section 776(c) of the Act, because the information submitted by RIH 
was not verifiable.
    In the present case, the petition is the only information on the 
record which could form the basis for a dumping calculation. 
Accordingly, the Department has based the margin on information in the 
petition. In accordance with section 776(c) of the Act, we attempted to 
corroborate the data contained in the petition. Because the petitioners 
based export price and normal value on independent, public sources 
(U.S. import statistics and a price list from one of respondent's 
distributors, respectively), we find that this information has 
probative value. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value: Clad Steel Plate from Japan (61 FR 7469, 7470, 
February 28, 1996). Regarding the discounts used for normal value, we 
are not aware of any practicable means of corroborating such 
information. For a further discussion, see the May 6, 1996, memorandum 
from the Team to Gary Taverman.
    Accordingly, we have relied upon the information contained in the 
petition. We have assigned to all exporters a margin of 117.66 percent, 
the average margin calculated in the petition on merchandise which is 
within the scope of this investigation.

Fair Value Comparisons

    This final determination has been made using the average margin 
calculated in the petition as the facts available. For a discussion of 
how export price and normal value were calculated in the petition, see 
the Initiation of Antidumping Duty Investigations: Circular Welded Non-
Alloy Steel Pipe from Romania and South Africa (60 FR 27078, May 22, 
1995).

Verification

    As provided in section 782(i) of the Act, we attempted to verify 
the information submitted by the respondent. We used standard 
verification procedures, including examination of relevant accounting 
and sales records and original source documents provided by the 
respondent. However, as stated above, we found numerous errors at 
verification (see the April 3, 1996, verification report). Thus, we did 
not use the respondent's information for our final determination.

Interested Party Comment

Use of Facts Available

    The petitioners assert that the Department should make its final 
determination based on an adverse assumption of the facts available 
(AFA). The petitioners argue that respondent failed verification 
because the Department found errors in the respondent's home market and 
U.S. sales data such that it would not be possible to accurately 
determine normal value, export price or difference in merchandise 
adjustments.
    In addition, the petitioners argue that the respondent failed to 
accurately report certain home market sales of the foreign like 
product. They cite Circular Welded Non-Alloy Steel Pipes from Brazil 
(57 FR 42940, September 17, 1992) in which the Department based its 
final determination on the best information available (the statutory 
predecessor to facts available) in part because the respondent had not 
reported certain home market sales of subject pipe which it contended 
were not comparable to the products sold in the U.S. market.
    The petitioners state that the respondent has met the statutory 
requirement (19 U.S.C. 1677e) for the application of facts available 
which stipulates that the Department may rely on an adverse assumption 
of the facts available when ``an interested party has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information.'' They also argue that the pervasive nature of 
the deficiencies, despite numerous opportunities to correct the 
information, and unilateral decision making exhibited by the 
respondent, indicate a respondent who has not made its best effort to 
comply with the Department's information requests.
    The respondent argues that the Department should not use AFA in its 
final determination because (1) it has cooperated with the Department 
throughout the investigation; and (2) the errors found at verification 
were inadvertent and due to RIH's inexperience with the Department's 
antidumping laws. It argues that the Department should resort to less 
drastic solutions than AFA if it finds gaps in the record; the 
respondent states that the Department has sufficient verified 
information on the record to fill such gaps. It notes that the statute 
states that the Department should not resort to adverse inferences 
unless an interested party ``has failed to cooperate by not acting to 
the best of its ability to comply with a request for information.'' (19 
U.S.C. 1677e(b)).
    Regarding the excluded products in the home market, the respondent 
argues that the costs of those products are significantly higher than 
the standard pipe products and that there were no sales of these 
products to the United States. Thus, they would not have been 
considered in the analysis.

DOC Position

    We agree, in part, with the petitioners. Section 782(e)(3) of the 
Act states that, in reaching a determination, the

[[Page 24274]]

Department will not decline to consider information that is submitted 
by an interested party and is necessary to the determination but does 
not meet all the applicable requirements established by the Department 
if the information is not so incomplete that it cannot serve as a 
reliable basis for reaching the applicable determination.
    At verification, we discovered numerous errors in the respondent's 
reported information. For example, the vast majority of the pre-
selected and surprise sales contained discrepancies. While many of 
these errors may be corrected, the number of errors discovered draw 
into question the completeness and accurateness of respondent's 
remaining sales (i.e., the sales not specifically reviewed at 
verification). Additionally, we discovered that the respondent did not 
report certain home market and U.S. sales and incorrectly reported the 
sales price for certain U.S. sales. Based on these errors and others 
discussed in the verification report, we find that the respondent's 
response is so incomplete that it cannot serve as a reliable basis for 
this determination. Because the information cannot be verified, section 
776(a) requires us to use the facts otherwise available.
    As facts available, we are basing the respondent's margin on the 
average margin calculated in the petition. We are using the petition 
rates because this is the only information on the record which could 
form the basis for a dumping margin (see ``Facts Available'' section 
above).
    The respondent has been fully cooperative in the investigation, as 
noted above. Also, the errors discovered at verification do not 
indicate that the respondent withheld or misreported information to 
``obtain a more favorable result.'' SAA at 870. Rather, some of the 
errors hurt the respondent while others helped it. Therefore, we have 
used the average margin contained in the petition, rather than the 
highest margin. The Department's practice has been to assign the 
highest margin contained in the petition only where the respondent was 
found to have been uncooperative. See Final Determination of Sales at 
Less Than Fair Value: Oil Country Tubular Goods from Italy (60 FR 
33558, 33559, June 28, 1995).
    Because we are basing our final determination on the facts 
available, all other interested party comments are moot.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing the Customs Service to continue to suspend liquidation of all 
entries of circular welded non-alloy steel pipe from South Africa, as 
defined in the ``Scope of Investigation'' section of this notice, that 
are entered, or withdrawn from warehouse for consumption, on or after 
November 30, 1995, the date of publication of our preliminary 
determination in the Federal Register. The Customs Service shall 
require a cash deposit or posting of a bond equal to the estimated 
amount by which the normal value exceeds the export price, as shown 
below. In accordance with section 733(d) of the Act, the suspension of 
liquidation based on the Department's preliminary determination may not 
remain in effect for more than six months (including the statutorily 
permissible extension). In accordance with this provision, the 
suspension of liquidation will remain in effect until May 28, 1996.
    The weighted-average dumping margin is as follows:

------------------------------------------------------------------------
                                                              Weighted- 
                                                               average  
                   Exporter/manufacturer                        margin  
                                                              percentage
------------------------------------------------------------------------
All exporters..............................................       117.66
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. As our final determination is affirmative, 
the ITC will determine, within 45 days, whether these imports are 
causing material injury, or threat of material injury, to an industry 
in the United States. If the ITC determines that material injury, or 
threat of material injury, does not exist, the proceeding will be 
terminated and all securities posted will be refunded or canceled. If 
the ITC determines that such injury does exist, the Department will 
issue an antidumping duty order directing Customs officials to assess 
antidumping duties on all imports of the subject merchandise entered, 
or withdrawn from warehouse, for consumption on or after the effective 
date of the suspension of liquidation.
    This determination is published pursuant to section 735(d) of the 
Act.

    Dated: May 6, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-11940 Filed 5-13-96; 8:45 am]
BILLING CODE 3510-DS-P