Certain Stainless Steel Butt-Weld Pipe and Tube Fittings From Japan, Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-588-702]

Certain Stainless Steel Butt-Weld Pipe and Tube Fittings From

Japan, Preliminary Results of Antidumping Duty Administrative Review

AGENCY: International Trade Administration/Import Administration/

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty

Administrative Review.

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SUMMARY: In response to a request from the petitioner, Flowline

Division of Markovitz Enterprises, Inc. (Flowline), the Department of

Commerce (the Department) has conducted an administrative review of the

antidumping duty order on certain stainless steel butt-weld pipe and

tube fittings (SSPFs) from Japan. The review covers one manufacturer/

exporter, Benkan Corporation (Benkan), and exports of the subject

merchandise to the United States during the period from March 1, 1992,

through February 28, 1993. The review indicates the existence of

dumping margins for the period.

As a result of the review, the Department has preliminarily

determined to assess antidumping duties equal to the difference between

the United States price (USP) and foreign market value (FMV).

Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: January 6, 1994.

FOR FURTHER INFORMATION CONTACT: David Genovese or Michael Heaney,

Office of Antidumping Compliance, International Trade Administration,

U.S. Department of Commerce, Washington, DC 20230; telephone (202) 482-

5254.

SUPPLEMENTARY INFORMATION:

Background

On March 12, 1993, the Department published a notice of

``Opportunity to Request an Administrative Review'' (58 FR 13583) of

the antidumping duty order on SSPFs from Japan (53 FR 9787). On March

29, 1993, Flowline requested an administrative review. The Department

initiated the review on May 6, 1993 (58 FR 26960), covering the period

March 1, 1992, through February 28, 1993. The Department has now

conducted this review in accordance with section 751 of the Tariff Act

of 1930, as amended (the Act).

Scope of the Review

The products covered by this review include certain stainless steel

butt-weld pipe and tube fittings. These fittings are used in piping

systems for chemical plants, pharmaceutical plants, food processing

facilities, waste treatment facilities, semiconductor equipment

applications, nuclear power plants, and other areas.

This merchandise is currently classifiable under the Harmonized

Tariff Schedules (HTS) item number 7307.23.0000. The HTS item number is

provided for convenience and Customs purposes. The written product

description remains dispositive.

This review covers sales and entries by Benkan of the subject

merchandise during the period March 1, 1992, through February 28, 1993.

Such or Similar Comparisons

For Benkan, pursuant to section 771(16) of the Act, the Department

established the following criteria for matching sales in the home and

U.S. markets: Type of fitting, seam condition, steel material grade,

unit product weight within 10 percent, nominal pipe size, and wall

thickness. An identical pipe is one that matches all of these criteria.

A similar pipe is one that has one or more differences in these

discrete criteria from the U.S. fitting other than the type of fitting,

seam condition, and unit product weight within 10 percent. The 10

percent variance in unit product weight reflects our prior practice in

this case which was based upon allowable deviations between Japanese

and U.S. industry standards. The Department established this hierarchy

of criteria after soliciting comments from Flowline and Benkan at the

beginning of the 1992-1993 review period. Both Flowline and Benkan

agreed on the criteria and their hierarchy.

United States Price

In calculating USP, the Department used purchase price, as defined

in section 772(b) of the Act, because the merchandise was sold to an

unrelated purchaser in the United States prior to its importation and

exporter's sales price was not indicated by other circumstances. The

Department based USP on the packed, delivered price to those unrelated

purchasers.

The Department has determined that the date of sale for this

merchandise is the invoice date because the invoice always sets forth

agreed prices and quantities and represents the first transactional

document which systematically records agreed prices. The Department

made deductions, where appropriate, for foreign inland freight, U.S.

inland freight, U.S. duties, U.S. brokerage fees, ocean freight, marine

insurance, foreign brokerage fees, and discounts.

On October 7, 1993, the United States Court of International Trade

(CIT), in Federal-Mogul Corporation and The Torrington Company v.

United States, Slip Op. 93-194 (CIT, October 7, 1993), rejected the

Department's methodology for calculating an addition to USP under

section 772(d)(1)(C) of the Act to account for taxes that the exporting

country would have assessed on the merchandise had it been sold in the

home market. The CIT held that the addition to USP under section

772(d)(1)(C) of the Act should be the result of applying the foreign

market tax rate to the price of the United States merchandise at the

same point in the chain of commerce that the foreign market tax was

applied to the foreign market sales. Federal-Mogul, Slip Op. 93-194 at

12.

The Department has changed its methodology in accordance with the

Federal-Mogul decision. The Department will add to USP the result of

multiplying the foreign market tax rate by the price of the merchandise

sold in the United States at the same point in the chain of commerce

that the foreign market tax was applied to foreign market sales. The

Department will also adjust the USP tax adjustments and the amount of

tax included in FMV. These adjustments will deduct the portions of the

foreign market tax and the USP tax adjustment that are the result of

expenses that are included in the foreign market price used to

calculate foreign market tax and are included in the United States

merchandise price used to calculate the USP tax adjustment and that are

later deducted to calculate FMV and USP. These adjustments to the

amount of the foreign market tax and the USP tax adjustment are

necessary to prevent our new methodology for calculating the USP tax

adjustment from creating antidumping duty margins where no margins

would exist if no taxes were levied upon foreign market sales.

This margin creation effect is due to the fact that the bases for

calculating both the amount of tax included in the price of the foreign

market merchandise and the amount of the USP tax adjustment include

many expenses that are later deducted when calculating USP and FMV.

After these deductions are made, the amount of tax included in FMV and

the USP tax adjustment still reflects the amounts of these expenses.

Thus, a margin may be created that is not dependent upon a difference

between USP and FMV, but is the result of the price of the United

States merchandise containing more expenses than the price of the

foreign market merchandise. The Department's policy to avoid the margin

creation effect is in accordance with the United States Court of

Appeals' holding that the application of the USP tax adjustment under

section 772(d)(1)(C) of the Act should not create an antidumping duty

margin if pre-tax FMV does not exceed USP. Zenith Electronics Corp. v.

United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the

CIT has specifically held that an adjustment should be made to mitigate

the impact of expenses that are deducted from FMV and USP upon the USP

tax adjustment and the amount of tax included in FMV. Daewoo

Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT,

1991). However, the mechanics of the Department's adjustments to the

USP tax adjustment and the foreign market tax amount as described above

are not identical to those suggested in Daewoo.

Foreign Market Value

In calculating FMV, we used home market price, as defined in

section 773(a) of the Act. Home market price was based on a packed,

delivered price to unrelated purchasers in the home market. In

accordance with section 353.45 of the Department's regulations, the

Department has excluded sales to related parties because the respondent

has failed to provide sufficient evidence to support its claim that

sales to related parties were at arm's-length. The Department made

adjustments, where applicable, for inland freight, discounts, rebates,

and for differences in packing material, packing labor, and credit.

The Department also made an adjustment to FMV for imputed

consumption taxes in accordance with the aforementioned Federal-Mogul

decision.

Additionally, where similar home market sales were used due to the

absence of an identical sale, we made a difference-in-merchandise

adjustment. The Department based the difference-in-merchandise

adjustment on differences in steel pipe materials cost between U.S. and

home market merchandise (see the Department's preliminary analysis memo

dated December 29, 1993). When there were no contemporaneous such or

similar sales, we based FMV on constructed value. Constructed value

data for specific models was provided by Benkan at the request of the

Department. Benkan did not provide constructed value information for

two models as requested by the Department. For these preliminary

results the Department has applied to applicable sales of these two

models an antidumping duty margin of 8.05967 percent which is the

weighted average margin for sales of SSPFs by Benkan for this review.

The Department will request for the final results of this review that

Benkan provide constructed value data for these two models.

Preliminary Results of Review

As a result of our comparison of USP to FMV, the Department

preliminarily determines that a margin of 8.06 percent exists for

Benkan for the period March 1, 1992, through February 28, 1993.

Interested parties may request disclosure within 5 days of the date

of publication of this notice and may request a hearing within 10 days

of publication. Any hearing, if requested, will be held 44 days after

the date of publication of this notice, or the first workday

thereafter. Case briefs and/or written comments from interested parties

may be submitted not later than 30 days after the date of publication.

Rebuttal briefs and rebuttals to written comments, limited to the

issues raised in the case briefs and comments, may be filed not later

than 37 days after the date of publication. The Department will publish

the final results of this administrative review, including the results

of its analysis of any such written comments or hearing.

The Department shall determine, and U.S. Customs shall assess,

antidumping duties on all appropriate entries. Individual differences

between USP and FMV may vary from the percentage stated above. The

Department will issue appraisement instructions directly to Customs.

Furthermore, the following deposit requirements will be effective

for all shipments of the subject merchandise, entered or withdrawn from

warehouse, for consumption on or after the publication date of the

final results of this administrative review, as provided by section

751(a)(1) of the Act: (1) The cash deposit rate for the reviewed

company will be that rate established in the final results of this

administrative review; (2) for merchandise exported by manufacturers or

exporters not covered in this review but covered in a previous review

or the original less-than-fair-value (LTFV) investigation, the cash

deposit rate will continue to be the rate published in the most recent

final results or determination for which the manufacturer or exporter

received a company-specific rate; (3) if the exporter is not a firm

covered in this review, earlier reviews, or the original investigation,

but the manufacturer is, the cash deposit rate will be that established

for the manufacturer of the merchandise in these final results of

review, earlier reviews, or the original investigation, whichever is

the most recent; and (4) the ``all others'' rate will be 49.31 percent,

as explained below.

On May 25, 1993, the CIT, in Floral Trade Council v. United States,

Slip Op. 93-79, and Federal-Mogul Corporation v. United States, Slip

Op. 93-83, decided that once an ``all others'' rate is established for

a company it can only be changed through an administrative review. The

Department has determined that in order to implement these decisions,

it is appropriate to reinstate the original ``all others'' rate from

the LTFV investigation (or that rate as amended for correction of

clerical errors or as a result of litigation) in proceedings governed

by antidumping duty orders. Accordingly, the cash deposit rate for any

future entries from all other manufacturers or exporters, who are not

covered in this or prior administrative reviews and who are unrelated

to the reviewed firms or any previously reviewed firm, will be the

``all others'' rate established in the original LTFV investigation

which is 49.31 percent.

These deposit requirements, when imposed, shall remain in effect

until publication of the final results of the next administrative

review.

This notice also serves as a preliminary reminder to importers of

their responsibility under 19 CFR 353.26 to file a certificate

regarding the reimbursement of antidumping duties prior to liquidation

of the relevant entries during this review period. Failure to comply

with this requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and the subsequent

assessment of double antidumping duties.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: December 29, 1993.

Barbara R. Stafford,

Acting Assistant Secretary for Import Administration.

[FR Doc. 94-280 Filed 1-5-94; 8:45 am]

BILLING CODE 3510-DS-P