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

DEPARTMENT OF COMMERCE

[A-533-811]

Preliminary 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: October 4, 1994.

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.

PRELIMINARY DETERMINATION: We preliminarily 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 733 of

the Tariff Act of 1930, as amended (the ``Act''). The estimated margins

of sales at less than fair value are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the initiation of this investigation on March 21, 1994, (59

FR 14148) the following events have occurred.

On April 14, 1994, the United States International Trade Commission

(``ITC'') issued an affirmative preliminary injury determination (see

ITC Investigation No. 731-TA-689).

In accordance with 19 CFR 353.42(b)(1994), antidumping duty

questionnaires were presented to two Indian producers which account for

over 60 percent of all Indian exports of certain carbon steel butt-weld

pipe fittings to the United States during the POI. These companies are

Karmen Steels of India (Karmen) and Sivanandha Pipe Fittings Limited

(Sivanandha).

The petitioner requested a 50-day postponement of the preliminary

determination on June 30, 1994. The request was granted by the

Department of Commerce on July 19, 1994 (59 FR 37961, July 26, 1994).

Scope of the Investigation

The products covered by these investigations 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 form 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 provided

for convenience and customs purposes, our written description of the

scope of this investigation is dispositive.

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. Although we originally established the same POI

for both companies, Karmen was not able to provide foreign market

values (FMV) for sales during that period because it had no home market

or third country sales and its U.S. sale(s) involved merchandise which

had not yet been produced. Therefore, in accordance with section

353.42(b)(1) of our regulations, we extended Karmen's POI by one month

in order to capture sales of merchandise that had been produced.

Product Comparisons

For Sivanandha, we first compared merchandise identical in all

respects. 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 FMV on constructed value (CV),

in accordance with section 773(a)(2) of the Act.

Additionally, 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 exports them to the Singaporean company's U.S.

customer. Karmen claims that since the Singaporean company only pays

Karmen for the refurbishing, and Karmen does not take title to this

merchandise, these sales should not be treated as Karmen sales. For

purposes of the preliminary determination, we are not treating these

refurbished pipe fittings as sales subject to this investigation. We

will further examine this issue for purposes of the final

determination.

Fair Value Comparisons

To determine whether Sivanandha's or 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.

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 the exporter's sales price methodology was not indicated by

other circumstances, in accordance with section 772(b) of the Act, we

based USP on the purchase price (``PP'') sales methodology.

We calculated Sivanandha's PP sales based on packed, CIF prices to

unrelated customers in the United States. We made deductions to the

USP, where appropriate, for foreign inland freight, containerization,

ocean freight, and marine insurance.

In accordance with Section 772(d)(1)(B) of the Act, we added to

Sivanandha's USP the amount of import duties imposed on inputs which

were subsequently rebated upon exportation of the finished merchandise

to the United States.

We made an adjustment to U.S. price for excise and sales 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 Preliminary

Antidumping Duty Determination and Postponement of Final Determination;

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 PP sales based on packed, CIF prices to

unrelated customers in the United States. We made deductions to the

USP, where appropriate, for foreign inland freight, containerization,

ocean freight and marine insurance. In calculating U.S. credit expense,

we used the borrowing rate in the United States on short-term dollar-

denominated loans. For a further discussion of the Department's

treatment of credit in this investigation, please see Memorandum from

Barbara R. Stafford to Susan G. Esserman (September 26, 1994) on file

in room B-099 of the U.S. Department of Commerce.

Foreign Market Value

For Sivanandha, in order to determine whether there was a

sufficient volume of sales in the home market to serve as a viable

basis for calculating 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. As a

result, we determined that Sivanandha's home market was viable.

We adjusted for a excise and sales tax collected in the Indian home

market. (See the United States Price section of this notice, above.)

For Karmen, because it sells the subject merchandise only in the

U.S. market, we used CV, pursuant to section 773(e) of the Act. We

calculated CV based on the sum of the cost of materials, fabrication,

general expenses, U.S. imputed credit costs, U.S. packing costs and

profit. 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. In

reporting its CVs, Karmen allocated labor costs and variable

manufacturing overhead in such a way as to assign equal amounts for new

pipe fittings and refurbished pipe fittings. We believe that the

allocation method Karmen used to report CVs results in understating the

costs of producing new fittings, because based on our experience in

past cases, we would expect that costs incurred in the early production

stages would not be incurred in refurbishing fittings. Therefore, we

have recalculated these costs by assigning all labor and variable

manufacturing overhead costs to the production of new pipe fittings. We

will seek additional information on the actual costs for purposes of

the final determination.

Pursuant to section 773(a)(4)(B) of the Act and 19 CFR

353.56(a)(2), we made circumstance-of-sale (COS) adjustments for

differences in movement charges between shipments to the United States

and shipments to India. For Sivanandha, we also made COS adjustments

for differences in quality inspection charges, credit and advertising

expenses. 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 FMV, in accordance with section

773(a)(1) of the Act.

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.

Verification

As provided in section 776(b) of the Act, we will verify

information used in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(1) of the Act, we are directing

the Customs Service to suspend liquidation of all entries of certain

carbon steel 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 the date of

publication of this notice in the Federal Register. The Customs Service

shall require a cash deposit or posting of a bond equal to the

estimated dumping margins, as shown below. This suspension of

liquidation will remain in effect until further notice. The weighted-

average dumping margins are as follows:

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

Margin

Manufacturers/producers/exporters percent

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

Sivanandha................................................... 10.16

Karmen....................................................... 37.04

All others................................................... 15.85

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

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, Sivanandha's FMV is based on

home market sales and hence, the antidumping margin must be adjusted.

In the Preliminary Affirmative Countervailing Duty Determination:

Certain Carbon Steel Butt-Weld Pipe Fittings from India, (59 FR 28337,

published June 1, 1994), Sivanandha's export subsidy was 3.53 percent

ad valorem, which will be subtracted from the margins for cash deposit

or bonding purposes. The rate listed above reflects this adjustment.

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 733(f) of the Act, we have notified the

ITC of our determination. If our final determination is affirmative,

the ITC will determine whether these imports are materially injuring,

or threaten material injury to, the U.S. industry within 75 days after

our final determination.

Public Comment

Interested parties who wish to request a hearing must submit a

written request to the Assistant Secretary for Import Administration,

U.S. Department of Commerce, Room B-099, within ten days of the

publication of this notice. Requests should contain: (1) The party's

name, address, and telephone number; (2) the number of participants;

and (3) a list of the issues to be discussed.

In accordance with 19 CFR 353.38, case briefs or other written

comments in at least ten copies must be submitted to the Assistant

Secretary no later than November 16, 1994, and rebuttal briefs no later

than November 23, 1994. A hearing, if requested, will be held on

November 28, 1994, at 1 p.m. at the U.S. Department of Commerce in Room

1414. Parties should confirm by telephone the time, date, and place of

the hearing 48 hours prior to the scheduled time. In accordance with 19

CFR 353.38(b), oral presentations will be limited to issues raised in

the briefs.

We will make our final determination not later than 75 days after

the date of this preliminary determination.

This determination is published pursuant to section 733(f) of the

Act and 19 CFR 353.15(a)(4).

Dated: September 26, 1994.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 94-24537 Filed 10-3-94; 8:45 am]

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