Notice of Final Determination of Sales at Less Than Fair Value: Class 150 Stainless Steel Threaded Pipe Fittings From Taiwan

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-822]

Notice of Final Determination of Sales at Less Than Fair Value:

Class 150 Stainless Steel Threaded Pipe Fittings From Taiwan

AGENCY: Import Administration, International Trade Administration,

Department of Commerce

EFFECTIVE DATE: July 28, 1994.

FOR FURTHER INFORMATION CONTACT: Michelle Frederick or Karla Whalen,

Office of Antidumping Investigations, Import Administration,

International Trade Administration, U.S. Department of Commerce, 14th

Street and Constitution Avenue, NW., Washington, DC 20230; telephone:

(202) 482-0186 or (202) 482-6309, respectively.

FINAL DETERMINATION: We determine that imports of Class 150 stainless

steel threaded (SST) pipe fittings from Taiwan are being, or are likely

to be, sold in the United States at less than fair value (LTFV), as

provided in section 735 of the Tariff Act of 1930, as amended (the

Act). The estimated weighted-average margins are shown in the

``Continuation of Suspension of Liquidation'' section of this notice.

Case History

Since our preliminary determination on March, 1, 1994 (59 FR 10784,

March 8, 1994), the following events have occurred: In March 1994, Yih

Tai Industries Co., Ltd. (Yih Tai) and Enlin Steel Corporation (Enlin)

requested a public hearing. Enlin, Ta Chen Stainless Pipe Co., Ltd. (Ta

Chen) and Yih Tai submitted cost of production and constructed value

questionnaire responses in March, 1994. The Department issued

supplemental cost of production and constructed value questionnaires in

April 1994. Responses to these supplemental questionnaires were

submitted by Enlin, Ta Chen and Yih Tai in April and May, 1994.

We conducted verifications of Enlin, Ta Chen, and Yih Tai's sales

and cost questionnaire responses in Taiwan, and in Long Beach, CA as

well for Ta Chen, in April and May, 1994.

Enlin, Ta Chen, and Yih Tai submitted case briefs in June.

Petitioner did not submit a case brief. No rebuttal briefs were filed.

The requests for a public hearing were withdrawn.

Scope of the Investigation

The products covered by this investigation are Class 150 SST pipe

fittings, defined as cast or forged stainless steel products used to

connect pipe sections with an ability to withstand normal pressure

service (150 pounds per square inch (psi) at 350 degrees Fahrenheit and

300 psi at -20 to 150 degrees Fahrenheit) as well as resistance to

corrosion or extreme temperatures, or prevention of metallic

contamination to materials in the system. Included in the scope of this

investigation are both finished and unfinished Class 150 SST pipe

fittings of any size. Unfinished Class 150 SST pipe fittings are

defined as those products that have been advanced after casting or

forging, but which require threading and machining to finish the

fittings; finished Class 150 SST pipe fittings are defined as those

products that have been formed in the shape of elbows, tees, reducers,

etc. and have been further advanced after casting or forging, and

require no further processing to be acceptable as a finished product to

the end user. Class 150 SST pipe fittings are composed of alloys

including, but not limited to, 304 and 316, and are manufactured in the

shape of 90-degree elbows, 45-degree elbows, street elbows, tees,

crosses, couplings, reducing couplings, half-couplings, caps, square

head plugs, hex head plugs, hex bushings, unions, locknuts, and welding

spuds. Excluded from the scope of investigation are SST pipe fittings

manufactured in the shape of nipples.

The products under investigation are currently classifiable under

subheadings 7307.19.9030, 7307.19.9060, 7307.19.9080, 7307.22.1000,

7307.22.5000, and 7307.29.0090 of the Harmonized Tariff Schedule of the

United States (HTSUS). Although the HTSUS subheadings are provided for

convenience and customs purposes, our written description of the scope

of these investigations is dispositive.

Period of Investigation

The period of investigation (POI) is January 1, 1993, through June

30, 1993.

Such or Similar Comparisons

We have determined that the products covered by this investigation

constitute a single category of such or similar merchandise. All three

respondents reported that they sold merchandise in the home market or

third-country market identical to that sold in the United States.

Accordingly, none provided difference in merchandise (difmer)

information in their sales listings. (See Preliminary Determination of

Sales at Less Than Fair Value and Postponement of Final Determination:

Class 150 Stainless Steel Threaded Pipe Fittings from Taiwan, 59 FR

10784, March 8, 1994) for further discussion.

Fair Value Comparisons

To determine whether sales to the United States of Class 150 SST

pipe fittings were made at less than fair value, we compared the United

States price (USP) to the foreign market value (FMV), as specified in

the ``United States Price'' and ``Foreign Market Value'' sections of

this notice.

Enlin did not report cost of production data for a small number of

third country products. This information was required in order for the

Department to determine whether Enlin's third country sales were made

below the cost of production, as discussed below. Therefore, for the

small number of Enlin's U.S. sales that would have been compared to

sales of these products, we calculated margins based on best

information available (BIA) in accordance with 19 U.S.C. Sec. 1677e(c).

As BIA, we used the highest, non-aberrational margin calculated for any

of Enlin's reported U.S. sales of the subject merchandise in accordance

with Final Determinations of Sales at Less Than Fair Value: Calcium

Aluminate Cement, Cement Clinker and Flux from France 59 FR 14136,

(March 25, 1994).

United States Price

For Enlin, we calculated USP according to the methodology described

in our preliminary determination, with the following exceptions:

1. We revised inland freight, ocean freight and packing case cost

to incorporate the average weight of cross pipe fittings as determined

during verification because Enlin did not do so as requested by the

Department. (See Comment 1.)

2. We disregarded cancelled sales which were included in the sales

listing.

3. For those sales with updated payment and/or shipment dates which

were not incorporated into the final computer tape submission, we

recalculated the imputed credit expenses based on the weighted-average

difference between payment and shipment dates for those sales which

were both shipped and paid for during the POI. For the associated

expenses, we calculated a product specific weighted average.

For Ta Chen, we calculated USP according to the methodology

described in our preliminary determination, with the following

exceptions:

1. We estimated the appropriate shipment date for U.S. purchase

price sales which had an incorrect shipment date reported. (See Comment

3.)

2. We recalculated imputed credit for purchase price sales based on

amended shipment dates that were improperly reported and by using the

lower of two U.S. interest rates available to Ta Chen. (See Comment 3

and 4 below.)

3. We recalculated U.S. inventory carrying costs on a warehouse-

specific basis taking into account the amended interest rate noted in

item 2.

4. For ESP sales made from all U.S. warehouses, we recalculated the

movement expenses and bank charges based on expenses incurred on

shipments that were made during the POI rather than on expenses

incurred on shipments made twelve months prior to the POI.

For Yih Tai, we calculated USP according to the methodology

described in our preliminary determination, with the following

exceptions:

1. We recalculated packing based on revisions to packing labor as

determined at the cost verifications.

Foreign Market Value

As stated in our preliminary determination, we determined that the

home market was not viable for sales of SST pipe fittings made by

either Enlin and Yih Tai. We selected Canada as the third-country

market basis for FMV for both Enlin and Yih Tai. We found the home

market viable for sales of SST pipe fittings made by Ta Chen. We

calculated FMV as noted in the ``Price-to-Price Comparisons'' and

``Price to Constructed Value (CV)'' sections of this notice.

Cost of Production

As stated in our preliminary determination, the Department

initiated a cost investigation based on reasonable grounds to believe

or suspect that Enlin, Ta Chen, and Yih Tai's home market/third country

sales were made at prices below their respective cost of production

(COP). We received responses to our cost questionnaires and verified

the submitted data.

A. Calculation of COP

We calculated COP based on the sum of the individual respondent's

reported cost of materials, fabrication, general expenses, and home

market packing. For each company, we derived selling expenses from its

respective home market or third country sales listing, as appropriate.

We added home market packing expenses derived from the respective sales

listing.

For Enlin, we relied on the submitted COP.

For Ta Chen, we relied on the submitted COP information, except in

the following instances where the costs were not appropriately

quantified or valued:

1. We recalculated cost of manufacturing (COM) by reducing Ta

Chen's submitted conversion costs for packing materials and labor as

presented and verified during the cost verification.

2. We recalculated Ta Chen's COM by reducing the reported materials

costs for scrap revenues received during the POI as presented and

verified during the cost verification.

3. As a result of reducing COM for packing material, packing labor,

and material scrap revenue, we recalculated Ta Chen's general and

administrative expense using the revised COM figure in the calculation.

4. We reclassified a percentage of Ta Chen's president's salary

from general and administrative expenses to indirect selling expenses

because a portion of the president's time was devoted solely to sales.

For Yih Tai, we relied on the submitted COP information, except in

the following instances where the costs were not appropriately

quantified or valued:

1. We adjusted the packing labor expense, which was understated in

the submission, to reflect the verified amount.

2. We adjusted the allocation basis to include all products for the

machine revenue received from the machining subcontractor.

B. Test of Home Market/Third Country Sale Prices

After calculating COP, we tested whether home market or third

country sales of SST pipe fittings were at prices below COP over an

extended period of time, in accordance with section 773(b) of the Act.

We compared model-specific COP to reported prices that were net of

movement charges, and where appropriate, discounts, and rebates. If

over 90 percent of a respondent's sales of a given product were at

prices above the COP, we did not disregard any below-cost sales because

we determined that the respondent's below-cost sales were not made in

substantial quantities. If between ten and 90 percent of a respondent's

sales of a given product were at prices above the COP, we discarded

only the below-cost sales if made over an extended period of time.

Where we found that more than 90 percent of respondent's sales of a

given product were at prices below the COP, we disregarded all sales

for that model and calculated FMV based on constructed value (CV).

In order to determine whether below-cost sales were made over an

extended period of time, we performed the following analysis on a

product-specific basis: (1) if a respondent sold a product in only one

month of the POI and there were sales in that month below the COP, or

(2) if a respondent sold a product during two months or more of the POI

and there were sales below the COP during two or more of those months,

then below-cost sales were considered to have been made over an

extended period of time.

C. Results of COP Test

For Ta Chen and Yih Tai, we did not find any sales below cost.

For Enlin, we determined that there were sales below cost, and

disregarded those sales. Where more than 90 percent of the sales of a

particular model were below cost we based FMV for that model on CV.

Price-to-Price Comparisons

For those products for which we had an adequate number of sales at

prices equal to or greater than the COP, we based FMV on home market or

third country prices, as appropriate.

For Enlin, we calculated FMV according to the methodology described

in our preliminary determination, with the following exceptions:

1. We treated duty drawback as it was reported after verifying that

Enlin only received duty drawback on its sales to the U.S. and not on

its sales to Canada.

2. We disregarded cancelled sales which were included in the sales

listing.

3. We revised inland freight, ocean freight and packing case cost

to incorporate the average weight of cross pipe fittings as determined

during verification because Enlin did not do so as requested by the

Department. (See Comment 1.)

4. For those sales with updated payment and/or shipment dates which

were not incorporated into the final computer tape submission, we

recalculated the imputed credit expenses based on the weighted-average

difference between payment and shipment dates for those sales which

were both shipped and paid for during the POI. For the associated

expenses, we calculated a product specific weighted average.

For Ta Chen, we calculated FMV according to the methodology

described in our preliminary determination, with the following

exceptions:

1. We treated home market freight as a circumstance of sale

adjustment in light of the Court of Appeals of the Federal Circuit's

(CAFC) decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray

Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January

5, 1994), which held that the Department may no longer deduct home

market movement charges from FMV pursuant to its inherent power to fill

in gaps in the antidumping statute. We instead adjusted for those

expenses under the circumstance-of-sale provision of 19 CFR 353.56 and

the exporter's sales price offset provision of 19 CFR 353.56(b)(1) and

(2), as appropriate.

2. We made a circumstance of sale adjustment for certain mailing

charges brought to the Department's attention prior to verification.

For Yih Tai, we calculated FMV according to the methodology

described in our preliminary determination, with the following

exceptions:

1. We recalculated packing based on revisions to packing labor

found at the cost verifications.

Price to CV Comparisons

For Enlin's products without an adequate number of sales at prices

above the COP, we based FMV on CV. We calculated CV based on the sum of

the cost of materials, fabrication, general expenses, and U.S. packing

cost. In accordance with section 773(e)(1)(B)(i) and (ii) of the Act

we: (1) included the higher of the respondent's reported general

expenses or the statutory minimum of ten percent of the COM, as

appropriate and; (2) for profit, we used the higher of the statutory

minimum of eight percent of the sum of COM and general expenses or the

actual profit incurred as calculated on a market specific basis.

We calculated CV based on the information submitted by Enlin,

except in the following instances where the costs were not

appropriately quantified or valued:

1. For CV, we recalculated profit based on revised general

administrative and interest expense rates provided at verification.

In instances where we compared Enlin's U.S. prices to CV, we made

deductions, where appropriate, for the weighted-average home market or

third country direct selling expenses as appropriate.

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.

Verification

As provided in section 776(b) of the Act, we verified information

provided by Enlin, Ta Chen and Yih Tai by using standard verification

procedures, including the examination of relevant sales and financial

records, and selection of original source documentation containing

relevant information.

Interested Party Comments

Comment 1: Enlin contends that certain corrections requested by the

Department, to revise certain expenses affected by a change in the

reporting of weight of cross-shaped fittings, should be disregarded as

insignificant under 19 CFR 353.59.

DOC Position: We disagree with Enlin. The Department has discretion

under 19 CFR 353.59(a) to disregard insignificant adjustments. However,

in this case we have sufficient verified information to revise these

related expenses and have done so for the final determination.

Comment 2: Enlin contends that its profit calculation, which was

provided in its April 21, 1994, response to the Department's Section D

deficiency letter, should be updated to reflect changes made to COP

based on the use of 1993 audited financial statement information in the

calculation of general and administrative and interest expense.

DOC Position: We agree with Enlin. At verification, Enlin updated

its general expense figure to reflect the audited 1993 figures, as

opposed to the 1992 figures used in the original calculation.

Therefore, the Department adjusted Enlin's submitted profit percentage

to reflect the changes made to Enlin's general expenses.

Comment 3: At verification, the Department noted that Ta Chen

incorrectly reported the date of shipment for its U.S. purchase price

sales. Ta Chen reported the date the SST pipe fittings were exported

rather than the date the SST pipe fittings were shipped from the

factory. Ta Chen requests that, when the Department makes an adjustment

to its reported date of shipment, based on the average time between

shipment and export of specific sales examined at verification, it

should not take into account one shipment in particular because it was

shipped in an atypical manner.

DOC Position: We disagree with respondent. At verification, the

Department selected a number of U.S. purchase price sales and noted the

period between shipment and export for most of the sales examined. The

Department's observations were made on Ta Chen's actual experience. We

found no indication that the shipment in question was unusual or

distortive. Accordingly, we have included this shipment in calculating

the average lag time between factory shipment and export in order to

estimate shipment dates for Ta Chen's U.S. purchase price sales. For

those sales specifically examined at verification, we used the actual

lag time noted.

Comment 4: Ta Chen claims that the Department should not use the

interest rate available to its U.S. subsidiary, TCI, to calculate

imputed credit for its purchase price sales because Ta Chen receives

lower U.S. denominated financing specifically for these sales. Ta Chen

further argues that to use TCI's interest rate for purchase price sales

would be inconsistent with Final Determination of Sales at Less Than

Fair Value, Certain Forged Steel Crankshafts from the United Kingdom,

(52 FR 32951 (September 1, 1987) (Crankshafts).

At verification, the Department noted that TCI receives payment

from the U.S. customer for purchase price sales and reimburses Ta Chen

for the price of the merchandise. Ta Chen argues that it bears the

burden of TCI's costs for purchase price sales and thus it is

appropriate to use the Taiwan interest rate for U.S. dollar borrowing.

DOC Position: We agree with respondent that the U.S. dollar

interest rate at which Ta Chen borrowed in the home market is the most

appropriate for U.S. purchase price sales, but for a reason other than

that expressed in Crankshafts. In Crankshafts, the Department stated

that its policy at that time was to use the home market interest rate

to compute credit for U.S. purchase price sales where respondent did

not receive U.S. dollar denominated financing. However, in accordance

with, United Engineering and Forging v. United States 779 F. Supp.

1375, 1386-7 (CIT 1991) and LMI La Metalli Industriale, S.p.A. v.

United States 912 F.2d 455 (Fed. Cir. 1990), the Department is required

to use the lowest rate at which the respondent has borrowed or to which

the respondent has access. See Final Determinations of Sales at Less

Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain

Cold-Rolled Carbon Steel Flat Products, Certain Corrosion-Resistant

Carbon Steel Flat Products, and Certain Cut-to-Length Carbon Steel

Plate from Canada, 59 Fed. Reg. 37099, 37113 (1993). Ta Chen, as a

whole, had access to U.S. dollar funding at two interest rates.

Accordingly, it is reasonable to assume that Ta Chen would have been

able to borrow at the lower rate. Therefore, we used the lower U.S.

dollar borrowing rate for both ESP and PP sales, in this case Ta Chen's

home market borrowing rate for U.S. dollars.

Comment 5: Ta Chen contends that conversion costs used in its

calculation of COM included the labor and material cost of packing,

which was recorded separately in Ta Chen's submitted costs. Ta Chen

claims that these packing labor and material costs are double counted,

as both packing and COM, and thus should be removed from COM.

DOC Position: We agree with Ta Chen. At verification, the

Department verified that the packing labor and material costs had been

included in Ta Chen's reported conversion costs used in the calculation

of COM. In order to avoid double counting these costs as both packing

and COM, we reduced COM by the packing labor and material amounts

reported.

Comment 6: Ta Chen states that it allocated total material input

costs over good product produced, without adjusting for revenue

received from the sale of scrap generated in production. Ta Chen claims

that the Department should thus reduce reported material costs to

account for revenue from the sale of scrap.

DOC Position: We agree with Ta Chen. At verification, the

Department was able to confirm the amount of scrap sales during the POI

and the fact that they had not been included as a reduction of Ta

Chen's material costs when calculating COM.

Continuation of Suspension of Liquidation

We are directing the Customs Service to continue to suspend

liquidation of all entries of Class 150 Stainless Steel Pipe Fittings

from Taiwan, except for those of Ta Chen and Yih Tai, that are entered,

or withdrawn from warehouse, for consumption on or after March 8, 1994,

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 FMV of the

merchandise subject to this investigation exceeds the U.S. price, as

shown below. This suspension of liquidation will remain in effect until

further notice. The weighted-average dumping margins are as follows:

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

Weighted-

average

Producer/manufacturer exporter margin

(percent)

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

Enlin Steel Corporation.................................... 7.47

Ta Chen Stainless Pipe Co., Ltd............................ 0.003

Yih Tai Industries Co., Ltd................................ 0.08

All Others................................................. 7.47

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

ITC Notification

In accordance with section 735(d) of the Act, we have notified the

U.S. International Trade Commission of our determination.

Notification 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 353.34(d). Failure to

comply is a violation of the APO. This determination is published

pursuant to section 735(d) of the Act and 19 CFR 353.20(a)(4).

Dated: July 21, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-18445 Filed 7-27-94; 8:45 am]

BILLING CODE 3510-DS-P