Notice of Final Determination of Sales at Less Than Fair Value: Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line and Pressure Pipe From Brazil

DEPARTMENT OF COMMERCE

[A-351-826]

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

Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line

and Pressure Pipe From Brazil

Agency: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: June 19, 1995.

FOR FURTHER INFORMATION CONTACT: Irene Darzenta or Fabian Rivelis,

Office of Antidumping Investigations, Import Administration, U.S.

Department of Commerce, 14th Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone (202) 482-6320 or 482-3853,

respectively.

Final Determination

The Department of Commerce (the Department) determines that small

diameter circular seamless carbon and alloy steel, standard, line and

pressure pipe from Brazil (seamless pipe) is being sold, or is likely

to be 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'')

(1994). The estimated margins are shown in the ``Suspension of

Liquidation'' section of this notice.

Case History

Since the notice of preliminary determination on January 27, 1995

(60 FR 5351, January 27, 1995), the following events have occurred.

On February 10, 1995, we issued a supplemental questionnaire to

respondent Mannesmann S.A. (MSA) and its affiliated Brazilian and U.S.

sales organizations, Mannesmann Comercial S.A. (MCSA) and Mannesmann

Pipe & Steel Corporation (MPS), respectively (collectively

``Mannesmann''), concerning certain items in its December 9, 1994,

response, which we deemed required further clarification and/or

information prior to verification. On February 28, and March 9, 1995,

Mannesmann submitted its responses to this questionnaire, including

revised home market and U.S. sales listings.

In response to respondent's request, we postponed the final

determination until June 12, 1995, pursuant to section 735(a)(2)(A) of

the Act (60 FR 9012, February 16, 1995).

In our notice of preliminary determination we stated that we would

solicit further information on various scope-related issues, including

class or kind of merchandise. On February 10, 1995, we issued a

questionnaire to interested parties to request further information on

whether the scope of the investigation constitutes more than one class

or kind of merchandise. Responses to this questionnaire were submitted

on March 27, 1995.

In March and April, 1995, we conducted verification of Mannesmann's

questionnaire responses. Our verification reports were issued in May,

1995.

On April 27, 1995, Koppel Steel Corporation, a U.S. producer of

subject merchandise which appeared as an interested party from the

outset of this investigation, requested co-petitioner status, which the

Department granted.

Case and rebuttal briefs were submitted on May 19, 1995, and May

25, 1995, respectively. In its rebuttal [[Page 31961]] brief,

petitioner maintained that the Department should not consider certain

information in respondent's case brief because it allegedly constituted

an ``untimely submission of factual information.'' MSA disagreed with

petitioner in a letter submitted on June 5, 1995. However, we

determined that MSA's case brief did not contain new factual

information. On June 6, 1995, the Department returned MSA's June 5,

1995, letter, because it constituted an unsolicited submission untimely

filed after the briefing period.

Because no requests were received from interested parties, we did

not hold a public hearing in this proceeding.

Scope of Investigation

The following scope language reflects certain modifications made

for purposes of the final determination, where appropriate, as

discussed in the ``Scope Issues'' section below.

The scope of this investigation includes seamless pipes produced to

the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and

meeting the physical parameters described below, regardless of

application. The scope of this investigation also includes all products

used in standard, line, or pressure pipe applications and meeting the

physical parameters below, regardless of specification.

For purposes of this investigation, seamless pipes are seamless

carbon and alloy (other than stainless) steel pipes, of circular cross-

section, not more than 114.3 mm (4.5 inches) in outside diameter,

regardless of wall thickness, manufacturing process (hot-finished or

cold-drawn), end finish (plain end, bevelled end, upset end, threaded,

or threaded and coupled), or surface finish. These pipes are commonly

known as standard pipe, line pipe or pressure pipe, depending upon the

application. They may also be used in structural applications. Pipes

produced in non-standard wall thicknesses are commonly referred to as

tubes.

The seamless pipes subject to these investigations are currently

classifiable under subheadings 7304.10.10.20, 7304.10.50.20,

7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,

7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,

7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and

7304.59.80.25 of the Harmonized Tariff Schedule of the United States

(HTSUS).

The following information further defines the scope of this

investigation, which covers pipes meeting the physical parameters

described above:

Specifications, Characteristics and Uses: Seamless pressure pipes

are intended for the conveyance of water, steam, petrochemicals,

chemicals, oil products, natural gas and other liquids and gasses in

industrial piping systems. They may carry these substances at elevated

pressures and temperatures and may be subject to the application of

external heat. Seamless carbon steel pressure pipe meeting the American

Society for Testing and Materials (ASTM) standard A-106 may be used in

temperatures of up to 1000 degrees fahrenheit, at various American

Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes

made to ASTM standard A-335 must be used if temperatures and stress

levels exceed those allowed for A-106 and the ASME codes. Seamless

pressure pipes sold in the United States are commonly produced to the

ASTM A-106 standard.

Seamless standard pipes are most commonly produced to the ASTM A-53

specification and generally are not intended for high temperature

service. They are intended for the low temperature and pressure

conveyance of water, steam, natural gas, air and other liquids and

gasses in plumbing and heating systems, air conditioning units,

automatic sprinkler systems, and other related uses. Standard pipes

(depending on type and code) may carry liquids at elevated temperatures

but must not exceed relevant ASME code requirements.

Seamless line pipes are intended for the conveyance of oil and

natural gas or other fluids in pipe lines. Seamless line pipes are

produced to the API 5L specification.

Seamless pipes are commonly produced and certified to meet ASTM A-

106, ASTM A-53 and API 5L specifications. Such triple certification of

pipes is common because all pipes meeting the stringent A-106

specification necessarily meet the API 5L and ASTM A-53 specifications.

Pipes meeting the API 5L specification necessarily meet the ASTM A-53

specification. However, pipes meeting the A-53 or API 5L specifications

do not necessarily meet the A-106 specification. To avoid maintaining

separate production runs and separate inventories, manufacturers triple

certify the pipes. Since distributors sell the vast majority of this

product, they can thereby maintain a single inventory to service all

customers.

The primary application of ASTM A-106 pressure pipes and triple

certified pipes is in pressure piping systems by refineries,

petrochemical plants and chemical plants. Other applications are in

power generation plants (electrical-fossil fuel or nuclear), and in

some oil field uses (on shore and off shore) such as for separator

lines, gathering lines and metering runs. A minor application of this

product is for use as oil and gas distribution lines for commercial

applications. These applications constitute the majority of the market

for the subject seamless pipes. However, A-106 pipes may be used in

some boiler applications.

The scope of this investigation includes all seamless pipe meeting

the physical parameters described above and produced to one of the

specifications listed above, regardless of application, and whether or

not also certified to a non-covered specification. Standard, line and

pressure applications and the above-listed specifications are defining

characteristics of the scope of this investigation. Therefore, seamless

pipes meeting the physical description above, but not produced to the

A-335, A-106, A-53, or API 5L standards shall be covered if used in a

standard, line or pressure application.

For example, there are certain other ASTM specifications of pipe

which, because of overlapping characteristics, could potentially be

used in A-106 applications. These specifications generally include A-

162, A-192, A-210, A-333, and A-524. When such pipes are used in a

standard, line or pressure pipe application, such products are covered

by the scope of this investigation.

Specifically excluded from this investigation are boiler tubing and

mechanical tubing, if such products are not produced to A-335, A-106,

A-53 or API 5l specifications and are not used in standard, line or

pressure applications. In addition, finished and unfinished OCTG are

excluded from the scope of this investigation, if covered by the scope

of another antidumping duty order from the same country. If not covered

by such an OCTG order, finished and unfinished OCTG are included in

this scope when used in standard, line or pressure applications.

Finally, also excluded from this investigation are redraw hollows for

cold-drawing when used in the production of cold-drawn pipe or tube.

Although the HTSUS subheadings are provided for convenience and

customs purposes, our written description of the scope of this

investigation is dispositive.

Scope Issues

Interested parties in these investigations have raised several

issues related to the scope. We considered these issues in our

preliminary determination and invited additional comments from the

parties. These [[Page 31962]] issues, which are discussed below, are:

(A) whether to continue to include end use as a factor in defining the

scope of these investigations; (B) whether the seamless pipe subject to

these investigations constitutes more than one class or kind of

merchandise; and (C) miscellaneous scope clarification issues and scope

exclusion requests.

A. End Use

We stated in our preliminary determination that we agreed with

petitioner that pipe products identified as potential substitutes used

in the same applications as the four standard, line, and pressure pipe

specifications listed in the scope would fall within the class or kind

of subject merchandise and, therefore, within the scope of any orders

issued in these investigations. However, we acknowledged the

difficulties involved with requiring end-use certifications,

particularly the burdens placed on the Department, the U.S. Customs

Service, and the parties, and stated that we would strive to simplify

any procedures in this regard.

For purposes of these final determinations, we have considered

carefully additional comments submitted by the parties and have

determined that it is appropriate to continue to employ end use to

define the scope of these cases with respect to non-listed

specifications. We find that the generally accepted definition of

standard, line and pressure seamless pipes is based largely on end use,

and that end use is implicit in the description of the subject

merchandise. Thus, end use must be considered a significant defining

characteristic of the subject merchandise. Given our past experience

with substitution after the imposition of antidumping orders on steel

pipe products,\1\ we agree with petitioner that if products produced to

a non-listed specification (e.g., seamless pipe produced to A-162, a

non-listed specification in the scope) were actually used as standard,

line, or pressure pipe, then such product would fall within the same

class or kind of merchandise subject to these investigations.

\1\ See Preliminary Affirmative Determination of Scope Inquiry

on Antidumping Duty Orders on Certain Welded Non-Alloy Steel Pipes

from Brazil, the Republic of Korea, Mexico and Venezuela, 59 FR

1929, January 13, 1994.

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Furthermore, we disagree with respondents' general contention that

using end use for the scope of an antidumping case is beyond the

purview of the U.S. antidumping law. The Department has interpreted

scope language in other cases as including an end-use specification.

See Ipsco Inc. v. United States, 715 F.Supp. 1104 (CIT 1989) (Ipsco).

In Ipsco, the Department had clarified the scope of certain orders, in

particular the phrase, ``intended for use in drilling for oil and

gas,'' as covering not only API specification OCTG pipe but, `` `all

other pipe with [certain specified] characteristics used in OCTG

applications * * *' '' Ipsco at 1105. In reaching this determination,

the Department also provided an additional description of the covered

merchandise, and initiated an end-use certification procedure.

Regarding implementation of the end use provision of the scope of

these investigations, and any orders which may be issued in these

investigations, 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 end-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 end-use certification until such time as

petitioner or other interested parties provide a reasonable basis to

believe or suspect that substitution is occurring.2 Second, we

will require end-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

seamless pipe produced to A-162 specification is being used as pressure

pipe, we will require end-use certifications for imports of A-162

specification. Third, normally we will require only the importer of

record to certify to the end 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.

For a complete discussion of interested party comments and the

Department's analysis on this topic, see June 12, 1995, End Use

Decision Memorandum from Deputy Assistant Secretary Barbara Stafford

(DAS) to Assistant Secretary Susan Esserman (AS).

\2\ This approach is consistent with petitioner's request.

B. Class or Kind

In the course of these investigations, certain respondents have

argued that the scope of the investigations should be divided into two

classes or kinds. Siderca S.A.I.C., the Argentine respondent, has

argued that the scope should be divided according to size: seamless

pipe with an outside diameter of 2 inches or less and pipe with an

outside diameter of greater than 2 inches constitute two classes or

kinds. Mannesmann S.A., the Brazilian respondent, and Mannesmannrohren-

Werke AG, the German respondent, argued that the scope should be

divided based upon material composition: carbon and alloy steel

seamless pipe constitute two classes or kinds.

In our preliminary determinations, we found insufficient evidence

on the record that the merchandise subject to these investigations

constitutes more than one class or kind. We also indicated that there

were a number of areas where clarification and additional comment were

needed. For purposes of the final determination, we considered a

significant amount of additional information submitted by the parties

on this issue, as well as information from other sources. This

information strongly supports a finding of one class or kind of

merchandise. As detailed in the June 12, 1995, Class or Kind Decision

Memorandum from DAS to AS, we analyzed this issue based on the criteria

set forth by the Court of International Trade in Diversified Products

v. United States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria

are as follows: (1) the general physical characteristics of the

merchandise; (2) expectations of the ultimate purchaser; (3) the

ultimate use of the merchandise; (4) the channels of trade in which the

merchandise moves; and (5) the cost of that merchandise.

In the past, the Department has divided a single class or kind in a

petition into multiple classes or kinds where analysis of the

Diversified Products criteria indicates that the subject merchandise

constitutes more than one class or kind. See, for example, Final

Determination of Sales at Less than Fair Value; Anti-Friction Bearings

(Apart from Tapered Roller Bearings) from Germany, 54 Fed. Reg. 18992,

18998 (May 3, 1989) (``AFBs from Germany''); Pure and Alloy Magnesium

from Canada: Final Affirmative Determination; Rescission of

Investigation and Partial Dismissal of Petition, 57 Fed. Reg. 30939

(July 13, 1992).

1. Physical Characteristics

We find little meaningful difference in physical characteristics

between seamless pipe above and below two inches. Both are covered by

the same technical specifications, which contains

[[Page 31963]] detailed requirements.3 While we recognize that

carbon and alloy pipe do have some important physical differences

(primarily the enhanced heat and pressure tolerances associated with

alloy grade steels), it is difficult to say where carbon steel ends and

alloy steel begins. As we have discussed in our Class or Kind Decision

Memorandum of June 12, 1995, carbon steel products themselves contain

alloys, and there is a range of percentages of alloy content present in

merchandise made of carbon steel. We find that alloy grade steels, and

pipes made therefrom, represent the upper end of a single continuum of

steel grades and associated attributes.4

\3\ The relevant ASTM specifications, as well as product

definitions from other independent sources (e.g., American Iron and

Steel Institute (AISI)), describe the sizes for standard, line, and

pressure pipe, as ranging from \1/2\ inch to 60 inches (depending on

application). None of these descriptions suggest a break point at

two inches.

\4\ The Department has had numerous cases where steel products

including carbon and alloy grades were considered to be within the

same class or kind. See, e.g., Preliminary Determination of Sales at

Less than Fair Value: Oil Country Tubular Goods from Austria, et

al., 60 Fed. Reg. 6512 (February 2, 1995); Final Determination of

Sales at Less than Fair Value: Certain Alloy and Carbon Hot-Rolled

Bars, Rods, and Semi-Finished Products of Special Bar Quality

Engineered Steel from Brazil, 58 Fed. Reg. 31496 (June 3, 1993);

Final Determination of Sales at Less than Fair Value: Forged Steel

Crankshafts from the United Kingdom, 60 Fed. Reg. 22045 (May 9,

1995).

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In those prior determinations where the Department divided a single

class or kind, the Department emphasized that differences in physical

characteristics also affected the capabilities of the merchandise

(either the mechanical capabilities, as in AFBs from Germany, 54 Fed.

Reg. at 18999, 19002-03, or the chemical capabilities, as in Pure and

Alloy Magnesium from Canada, 57 Fed. Reg. at 30939), which in turn

established the boundaries of the ultimate use and customer

expectations of the products involved.

As the Department said in AFBs from Germany,

[t]he real question is whether the physical differences are so

material as to alter the essential nature of the product, and,

therefore, rise to the level of class or kind distinctions. We

believe that the physical differences between the five classes or

kinds of the subject merchandise are fundamental and are more than

simply minor variations on a theme.

54 Fed. Reg. at 19002. In the present cases, there is insufficient

evidence to conclude that the differences between pipe over 2 inches in

outside diameter and 2 inches or less in outside diameter, rise to the

level of a class or kind distinction.

Furthermore, with regard to Siderca's allegation that a two-inch

breakpoint is widely recognized in the U.S. market for seamless pipe,

the Department has found only one technical source of U.S. market data

for seamless pipe, the Preston Pipe Report. The Preston Pipe Report,

which routinely collects and publishes U.S. market data for this

merchandise, publishes shipment data for the size ranges \1/2\ to 4\1/

2\ inches: it does not recognize a break point at 2 inches.

Accordingly, the Department does not agree with Siderca that ``the U.S.

market'' recognizes 2 inches as a physical boundary line for the

subject merchandise.

In these present cases, therefore, the Department finds that there

is insufficient evidence that any physical differences between pipe

over 2 inches in outside diameter and 2 inches or less in outside

diameter, or between carbon and alloy steel, rise to the level of class

or kind distinctions.

2. Ultimate Use and Purchaser Expectations

We find no evidence that pipe above and below two inches is used

exclusively in any specific applications. Rather, the record indicates

that there are overlapping applications. For example, pipe above and

below two inches may both be used as line and pressure pipe. The

technical definitions for line and pressure pipe provided by ASTM,

AISI, and a variety of other sources do not recognize a distinction

between pipe over and under two inches.

Likewise, despite the fact that alloy grade steels are associated

with enhanced heat and pressure tolerances, there is no evidence that

the carbon or alloy content of the subject merchandise can be

differentiated in the ultimate use or expectations of the ultimate

purchaser of seamless pipe.

3. Channels of Trade

Based on information supplied by the parties, we determine that the

vast majority of the subject merchandise is sold through the same

channel of distribution in the United States and is triple-stenciled in

order to meet the greatest number of applications.

Accordingly, the channels of trade offer no basis for dividing the

subject merchandise into multiple classes or kinds based on either the

size of the outside diameter or on pipe having a carbon or alloy

content.

4. Cost

Based on the evidence on the record, we find that cost differences

between the various products do exist. However, the parties varied

considerably in the factors which they characterized as most

significant in terms of affecting cost. There is no evidence that the

size ranges above and below two inches, and the difference between

carbon and alloy grade steels, form a break point in cost which would

support a finding of separate classes or kinds.

In conclusion, while we recognize that certain differences do exist

between the products in the proposed class or kind of merchandise, we

find that the similarities significantly outweigh any differences.

Therefore, for purposes of the final determination, we will continue to

consider the scope as constituting one class or kind of merchandise.

C. Miscellaneous Scope Clarification Issues and Exclusion Requests

The miscellaneous scope issues include: (1) Whether OCTG and

unfinished OCTG are excluded from the scope of these investigations;

(2) whether pipes produced to non-standard wall thicknesses (commonly

referred to as ``tubes'') are covered by the scope; (3) whether certain

merchandise (e.g., boiler tubing, mechanical tubing) produced to a

specification listed in the scope but used in an application excluded

from the scope is covered by the scope; and (4) whether redraw hollows

used for cold drawing are excluded from the scope. For a complete

discussion of interested party comments and the Department's analysis

on these topics, see June 12, 1995, Additional Scope Clarifications

Decision Memorandum from DAS to AS.

Regarding OCTG, petitioner requested that OCTG and unfinished OCTG

be included within the scope of these investigations if used in a

standard, line or pressure pipe application. However, OCTG and

unfinished OCTG, even when used in a standard, line or pressure pipe

application, may come within the scope of certain separate, concurrent

investigations. We intend that merchandise from a particular country

not be classified simultaneously as subject to both an OCTG order and a

seamless pipe order. Thus, to eliminate any confusion, we have revised

the scope language above to exclude finished and unfinished OCTG, if

covered by the scope of another antidumping duty order from the same

country. If not covered by such an OCTG order, finished and unfinished

OCTG are included in this scope when used in a standard, line or

pressure pipe application, and, as with other non-listed

specifications, may be subject to end-use certification if there is

evidence of substitution. [[Page 31964]]

Regarding pipe produced in non-standard wall thicknesses, we

determine that these products are clearly within the parameters of the

scope of these investigations. For clarification purposes, we note that

the physical parameters of the scope include all seamless carbon and

alloy steel pipes, of circular cross-section, not more than 4.5 inches

in outside diameter, regardless of wall thickness. Therefore, the fact

that such products may be referred to as tubes by some parties, and may

be multiple-stenciled, does not render them outside the scope.

Regarding pipe produced to a covered specification but used in a

non-covered application, we determine that these products are within

the scope. We agree with the petitioner that the scope of this

investigation includes all merchandise produced to the covered

specifications and meeting the physical parameters of the scope,

regardless of application. The end-use criteria included in the scope

is only applicable to products which can be substituted in the

applications to which the covered specifications are put i.e. standard,

line, and pressure applications.

It is apparent that at least one party in this case interpreted the

scope incorrectly. Therefore, we have clarified the scope to make it

more explicit that all products made to ASTM A-335, ASTM A-106, ASTM A-

53 and API 5L are covered, regardless of end use.

With respect to redraw hollows for cold drawing, the scope language

excludes such products specifically when used in the production of

cold-drawn pipe or tube. We understand that petitioner included this

exclusion language expressly and intentionally to ensure that hollows

imported into the United States are sold as intermediate products, not

as merchandise to be used in a covered application.

Standing

The Argentine, Brazilian, and German respondents have challenged

the standing of Gulf States Tube to file the petition with respect to

pipe and tube between 2.0 and 4.5 inches in outside diameter, arguing

that Gulf States Tube does not produce these products.

Pursuant to section 732(b)(1) of the Act, an interested party as

defined in section 771(9)(C) of the Act has standing to file a

petition. (See also 19 C.F.R. Sec. 353.12(a).) Section 771(9)(C) of the

Act defines ``interested party,'' inter alia, as a producer of the like

product. For the reasons outlined in the ``Scope Issues'' section

above, we have determined that the subject merchandise constitutes a

single class or kind of merchandise. The International Trade Commission

(ITC) has also preliminarily determined that there is a single like

product consisting of circular seamless carbon and alloy steel

standard, line, and pressure pipe, and tubes not more than 4.5 inches

in outside diameter, and including redraw hollows. (See USITC

Publication 2734, August 1994 at 18). For purposes of determining

standing, the Department has determined to accept the ITC's definition

of like product, for the reasons set forth in the ITC's preliminary

determination. Because Gulf States is a producer of the like product,

it has standing to file a petition with respect to the class or kind of

merchandise under investigation. Further, as noted in the ``Case

History'' section of this notice, on April 27, 1995, Koppel, a U.S.

producer of the product size range at issue, filed a request for co-

petitioner status, which the Department granted. As a producer of the

like product, Koppel also has standing.

The Argentine respondent argues that Koppel's request was filed too

late to confer legality on the initiation of these proceedings with

regard to the products at issue. Gulf States Tube maintains that the

Department has discretion to permit the amendment of a petition for

purposes of adding co-petitioners who produce the domestic like

product, at such time and upon such circumstances as deemed appropriate

by the Department.

The Court of International Trade (CIT) has upheld in very broad

terms the Department's ability to allow amendments to petitions. For

example, in Citrosuco Paulista, S.A. v. United States, 704 F. Supp.

1075 (Ct. Int'l Trade 1988), the Court sustained the Department's

granting of requests for co-petitioner status filed by six domestic

producers on five different dates during an investigation. The Court

held that the addition of the co-petitioners cured any defect in the

petition, and that allowing the petition to be amended was within

Commerce's discretion:

[S]ince Commerce has statutory discretion to allow amendment of

a dumping petition at any time, and since Commerce may self-initiate

a dumping petition, any defect in a petition filed by [a domestic

party is] cured when domestic producers of the like product [are]

added as co-petitioners and Commerce [is] not required to start a

new investigation.

Citrosuco, 704 F. Supp. at 1079 (emphasis added). The Court reasoned

that if Commerce were to have dismissed the petition for lack of

standing, and to have required the co-petitioners to refile at a later

date, it ``would have elevated form over substance and fruitlessly

delayed the antidumping investigation * * * when Congress clearly

intended these cases to proceed expeditiously.'' Id. at 1083-84.

Koppel has been an interested party and a participant in these

investigations from the outset. The timing of Koppel's request for co-

petitioner status and the fact that it made its request in response to

Siderca's challenge to Gulf States's Tube's standing does not render

its request invalid. See Final Affirmative Countervailing Duty

Determination; Live Swine and Fresh, Chilled, and Frozen Pork Products

from Canada, 50 FR 25097 (June 17, 1985). The Department has rejected a

request to add a co-petitioner based on the untimeliness of the request

only where the Department determined that there was not adequate time

for opposing parties to submit comments and for the Department to

consider the relevant arguments. See Final Affirmative Countervailing

Duty Determination: Certain Stainless Steel Hollow Products from

Sweden, 52 FR 5794, 5795, 5803 (February 26, 1987). In this

investigation, the respondents have had an opportunity to comment on

Koppel's request for co-petitioner status, and the Argentine respondent

has done so in its case brief. Therefore, we have determined that,

because respondents would not be prejudiced or unduly burdened,

amendment of the petition to add Koppel as co-petitioner is

appropriate.

Period of Investigation

The period of investigation (POI) is January 1, through June 30,

1994.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute and to the

Department's regulations are in reference to the provisions as they

existed on December 31, 1994.

Such or Similar Comparisons

We have determined that all the products covered by this

investigation constitute a single category of such or similar

merchandise. Where there were no sales of identical merchandise in the

home market to compare to U.S. sales, we made similar merchandise

comparisons, when verified data permitted, on the basis of the criteria

defined in Appendix V to the antidumping questionnaire, on file in Room

B-099 of the main building of the Department.

Fair Value Comparisons

To determine whether Mannesmann's sales of seamless pipe from MSA

to the United States 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 [[Page 31965]] States Price'' and ``Foreign

Market Value'' sections of this notice.

In accordance with past practice and consistent with our decision

in the preliminary determination, we considered Brazil's economy to be

hyperinflationary during the POI. Pursuant to our methodology

concerning such an economy, we made contemporaneous sales comparisons

based on the month of the U.S. sale.

In accordance with 19 CFR 353.58, we made comparisons at the same

level of trade. For those U.S. sales where there were no comparable

sales at the same level of trade in the home market, we used home

market sales at a different level of trade as the basis of our less

than fair value comparisons. Based on our analysis of Mannesmann's

questionnaire response, we have accepted its claim that MSA's sales

from its factory to unrelated customers and its sales through its

related distributor MCSA represent two distinct levels of trade.

However, because we could not determine that the difference in level of

trade affects price comparability, we made no adjustment to FMV. See

Comment 5 of the ``Company-specific Issues'' sub-section of the

``Interested Party Comments'' section of this notice.

We also made adjustments for differences-in-merchandise (difmer),

where possible, in accordance with 19 CFR 353.57. At verification, we

found that respondent's reported variable cost of manufacture data

included cost differences not attributable to physical differences in

the merchandise. Therefore, we modified the submitted cost data where

we had information on the record to eliminate cost differences

unrelated to physical differences.

For those products for which difmer cost modification was not

possible and those U.S. sales with no comparable home market products

and no cost data, we based our analysis, pursuant to section 776(C) of

the Act, on the best information available (BIA). As BIA, we used a

calculated margin that is sufficiently adverse to fulfill the statutory

purpose of the BIA rule. See June 12, 1995, Final Determination

Concurrence Memorandum. See also DOC Position to Comment 2 of the

``Company-specific Issues'' sub-section of the ``Interested Party

Comments'' section of this notice.

United States Price

We calculated USP according to the methodology described in our

preliminary determination, with the following exceptions:

1. We corrected certain clerical errors found at verification,

including: (a) The reported product codes for four products; (b) the

reported sales date and end-finish for one transaction; (c) the level

of trade reported for one customer; and (d) the reported U.S. duty

charges for certain transactions.

2. We revised the reported ocean freight, U.S. brokerage, and U.S.

inland freight amounts for certain transactions to reflect actual

expenses.

3. We recalculated credit expenses using respondent's revised U.S.

shipment dates submitted in the March 9, 1995, response. These dates

reflect the approximate date on which the merchandise left the factory.

4. We made a deduction for foreign inland freight charges that were

previously not reported in respondent's sales listing.

5. We made a deduction for bank fees paid by MSA for entering into

foreign exchange contracts, which had not been reported in respondent's

sales listing. See Comment 8 of the ``Company-specific Issues'' sub-

section of the ``Interested Party Comments'' section of this notice.

Foreign Market Value

As stated in the preliminary determination, we determined that

respondent's home market was viable with respect to sales of seamless

pipe during the POI to serve as the basis for FMV.

Based on the results of the Department's related party sales test

as set forth in Appendix II of the Final Determination of Sales at Less

Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from

Argentina, 58 FR 37062 (July 9, 1993), we excluded respondent's related

party sales from our analysis, and used only those sales made to

unrelated parties.

We calculated FMV according to the methodology described in our

preliminary determination with the following exceptions:

1. Where we had verified transaction-specific data on the record,

we excluded from our analysis those home market sales that were found

to have been returned, and incorrectly included in respondent's sales

listing.

2. For both MSA's and MCSA's sales, we revised the reported

insurance charges, where appropriate, based on the applicable, verified

insurance percentage rates prevailing during the POI.

3. We corrected clerical errors made with respect to the reported

interest revenue amounts for two transactions.

4. For MSA's sales, we reduced the reported inland freight charges

by the amount by which they exceeded the actual amounts charged by

MSA's freight supplier.

5. With respect to MCSA's sales, we corrected the surface treatment

codes for those products reported incorrectly as corrosion-resistant.

6. We made no adjustment for inflation value in addition to an

adjustment for the reported, verified credit expenses which included an

inflation factor. See Comment 4 in the ``Company-specific Issues'' sub-

section of the ``Interested Party Comments'' section of this notice.

7. Because the reported U.S. and home market packing expenses did

not verify, we used BIA for these expenses. As BIA for home market

packing expenses, we used the lowest domestic packing expense noted on

the record. As BIA for U.S. packing expenses, we used the highest

export packing expense noted on the record. See Comment 6 in the

``Company-specific Issues'' sub-section of the ``Interested Party

Comments'' section of this notice.

8. Where possible, we made difmer adjustments based on the

submitted cost data, modified to eliminate cost differences unrelated

to physical differences between the merchandise being compared. See

Comment 2 in the ``Company-specific Issues'' sub-section of the

``Interested Party Comments'' section of this notice.

Currency Conversion

No certified rates of exchange, as furnished by the Federal Reserve

Bank of New York, were available for the POI. In place of the official

certified rates, we used the daily official exchange rates for the

Brazilian currency, as well as the UFIR 5 index, published by the

Central Bank of Brazil which were provided by respondent in its

February 28, 1995, response and verified by the Department.

\5\ The UFIR is an inflationary neutral currency unit.

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

Verification

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

provided by Mannesmann 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

General Issues

Comment 1

Mannesmann argues that petitioner lacks standing to seek the

imposition of antidumping duties on products that it does not produce.

According to Mannesmann, petitioner has admitted [[Page 31966]] that it

is incapable of manufacturing seamless pipe and tube in dimensions

above two inches in outside diameter. Therefore, respondent maintains

that petitioner is not an ``interested party'' with respect to this

merchandise. Accordingly, the Department should amend the scope of the

investigation to limit it only to those dimensions and pipe types that

petitioner has a proven ability to manufacture.

Gulf States Tube contends that the antidumping statute neither

requires nor permits the Department to limit the scope of the

investigation to products that the petitioner itself produces. Gulf

States Tube also maintains that respondent's standing claim is untimely

and may not be considered by the Department at this stage of the

proceeding. Nevertheless, Gulf States Tube asserts that the issue is

rendered moot by the request of Koppel Steel Corporation, a domestic

producer of subject merchandise in sizes larger than two inches in

outside diameter, for co-petitioner status.

DOC Position

We disagree with respondent for the reasons outlined in the

``Standing'' section of this notice.

Comment 2

Mannesmann contends that including an end-use certification

requirement in the scope would be both illegal and unworkable.

Respondent maintains that petitioner is effectively seeking to

circumvent the established legal procedure by arguing for an open-ended

scope definition that encompasses products that it does not manufacture

and that petitioner has conceded are not causing present injury. In

addition, respondent states that it is clear that any end-use

certification procedure designed to implement such a scope definition

is wholly unworkable because of the manner in which the subject

products are sold. That is, in almost all cases the importer of record

does not know the ultimate use of the pipe products it sells, and in

many instances, neither do its customers. According to respondent, as a

practical matter, the effect of an end-use certification requirement

would be to ask the impossible of importers. Furthermore, respondent

states that the anticircumvention procedures of the antidumping law

provide ample remedy to petitioner in cases of order circumvention via

product substitution. Respondent emphasizes that absent the detailed

inquiry required by anti-circumvention legal provisions, the Department

cannot include within the scope of this investigation other merchandise

simply because such other products might in theory be utilized for the

same purposes as pipe meeting the listed specifications. According to

respondent, to do otherwise is contrary to the antidumping law and

deprives respondents of their right to a full and fair hearing on any

circumvention allegations that might be advanced by petitioner at some

later date.

Petitioner argues that there is no factual or legal basis for

eliminating end use as a defining element of the scope of the

investigation. Furthermore, not only is the feasibility of specific

enforcement mechanisms irrelevant to the scope determination, but it is

also untrue that any end use certification procedure would be

unworkable. According to petitioner, there is no evidence on the record

of this investigation that an end-use certification program must

require the submission of an end-use certificate by the importer at the

time of importation. Rather, petitioner proposes a program whereby the

end-use certificate travels with the pipe to the ultimate end-user, who

may then send it back up the line of distribution. When final duties

are assessed, the Department may assume that any pipe for which no

certificates can be produced was used in subject applications. Contrary

to Mannesmann's arguments, petitioner maintains that the Department and

the U.S. Customs Service are perfectly capable of administering an

order that includes end use in its scope definition. In the event that

products meeting the physical description of subject merchandise, but

which are not certified to one or more of the covered specifications,

are being substituted into one of the listed applications, the burden

would be on the petitioner, other domestic producers or interested

parties to notify Customs and the Department with some objective

evidence supporting a reasonable belief that substitution is occurring.

Accordingly, it is both unnecessary and inappropriate at this point to

engage in debate about the feasibility and desirability of specific

end-use certification procedures. According to petitioner, the facts

and policy considerations relevant to such a debate are not available

on this record, and the selection of a specific enforcement mechanism

is beyond the Department's responsibilities in this proceeding.

DOC Position

We disagree with respondent's assertion that including end-use in

the scope of the investigation would be unlawful. The Department has

interpreted scope language in other cases as including an end-use

specification. See Ipsco Inc. v. United States, 715 F. Supp. 1104 (CIT

1989). See ``Scope Issues'' section of this notice for further

discussion on end-use.

Comment 3

Mannesmann contends that the carbon and alloy pipe products subject

to investigation are distinct classes or kinds of merchandise.

Mannesmann asserts that the criteria set out in Diversified Products

support a division between carbon and alloy products. Specifically,

Mannesmann argues that carbon and alloy pipes differ in terms of

physical characteristics, uses, customer expectations and cost. With

respect to physical characteristics, alloy seamless pipes contain

higher grade steel than carbon seamless pipe, and because of their

different chemistries, these products have different performance

characteristics. With respect to end use which, according to

respondent, is inherently tied to physical characteristics, carbon pipe

is not as versatile as alloy steel pipe and is not suited for the more

sophisticated applications, such as operations in high temperature

environments. Respondent asserts that the Department has consistently

emphasized the relationship between physical characteristics and end

use in past cases (e.g., Torrington Co. v. United States, 745 F.Supp.

718, 726 (CIT 1990) (Torrington)). In addition, respondent states that

customer expectations vary depending upon the ability of specific

merchandise to perform a given task. With regard to alloy and carbon

steel pipe, the ultimate purchaser does not expect these two types of

pipe to be interchangeable, and is willing to pay more for alloy steel

pipe because it must perform under more adverse conditions than the

conditions for which carbon pipe is suited. With respect to cost,

respondent states that the cost of alloy pipe is higher than that of

carbon pipe because of the more expensive raw materials and production

costs incurred in producing alloy pipe. Finally, with respect to

channels of trade, respondent states that carbon and alloy pipe move in

similar channels, but that this factor is not determinative as to class

or kind of merchandise.

Petitioner maintains that the subject merchandise constitutes a

single class or kind. With respect to Mannesmann's proposal for a split

in class or kind on the basis of material composition, petitioner

asserts that the factual evidence does not support such a division.

Petitioner states that the application of the criteria employed by the

Department in Diversified Products [[Page 31967]] compels the

conclusion that there is a single class or kind of merchandise.

According to petitioner, the physical characteristics of carbon and

alloy pipe represent a continuum of products produced with varying

chemical compositions to meet a range of heat, pressure and tensile

requirements. According to petitioner, there is simply no bright

dividing line between the physical characteristics of the products.

Petitioner states that the customer's expectations and use of the

product are dictated by the engineering specification required by the

intended application. Because the majority of all subject seamless pipe

is triple-certified, the pipe may be put to any of the uses that apply

to each of the individual specifications to which it is certified.

Petitioner points out that the vast majority of seamless pipe is sold

through the same channel of trade--distributors. Finally, petitioner

adds that, because the majority of seamless pipe is triple-certified,

it has identical costs regardless of the customer to whom it is sold.

DOC Position

We agree with petitioner that the subject merchandise constitutes a

single class or kind for the reasons outlined in the ``Scope Issues''

section of this notice. Furthermore, respondent's reliance on

Torrington is misplaced. In Torrington, the Court of International

Trade found that the Department's division of antifriction bearings

into five classes or kinds, based in large part on the physical

characteristics of the different types of antifriction bearings, was

supported by substantial evidence on the record. In this case, as we

stated in our ``Scope Issues'' section, that there is insufficient

evidence to show that the difference between carbon and alloy steel

rises to a class or kind distinction. See ``Scope Issues'' section of

this notice for further discussion on class or kind.

Company-Specific Issues

Comment 1

Petitioner argues that BIA must be applied to Mannesmann's

responses for the following reasons:

(a) the Department was unable to verify the accuracy or

completeness of Mannesmann's sales listings;

(b) MSA's difmer data is erratic and contains serious errors; and

(c) the information for various sales charges and adjustments

reported by respondent could not be verified.

Petitioner maintains that Mannesmann's home market sales response

must be considered unreliable when viewed in the context of the

totality of problems identified at verification and the additional

opportunities Mannesmann had prior to verification to provide an

accurate response.

With respect to reason (a) above, petitioner states that the

Department's verification report confirms that Mannesmann omitted

certain sales of subject merchandise from its home market sales

listing, often characterizing these omissions as insignificant in terms

of the percentage they constitute of total reported sales. Petitioner

asserts that since only a portion of Mannesmann's total reported sales

will be matched to U.S. sales in dumping margin analysis and the

Department's standard hyperinflation methodology requires separate FMV

calculations for each month, omissions such as those observed by the

Department can have a significant impact on the ultimate margin

calculation. According to petitioner, the Department must examine each

of the errors and omissions noted in the verification report in the

context of its potential impact on monthly sales matches.

In addition to these sales omissions, petitioner notes further that

certain sales were reported incorrectly because of errors in accounting

for merchandise returns and invoice price corrections. Also, the gross

prices for numerous transactions and the surface treatment codes for

certain products were reported incorrectly.

With respect to reason (b), petitioner maintains that the cost data

submitted by respondent remains erratic and unusable even after the

Department's request for its revision in a deficiency letter issued

subsequent to the preliminary determination. Reason (b) is discussed in

detail under Comment 2 below.

With respect to reason (c), petitioner takes issue with

verification findings for certain charges and adjustments, i.e., that

MSA's home market inland freight and insurance expenses were

overstated, that foreign inland freight charges incurred by MSA on U.S.

sales were not reported, that home market and U.S. packing costs were

not verified, MPS' reporting of estimated movement charges for certain

U.S. transactions, and U.S. shipment date.

Respondent argues that the discrepancies noted by the Department in

the verification reports either do not have appreciable effects on

antidumping analysis or serve to disadvantage respondent. Therefore,

its responses should be used in the Department's final analysis. For

example, respondent asserts that a portion of the unreported sales

would be irrelevant to product comparisons in the Department's analysis

because it did not make any sales of those same products in the United

States during the POI.

With respect to the transactions which were omitted inadvertently

from MCSA's February 28, 1995, sales listing due to programming errors,

respondent points out that these sales were originally reported to the

Department in the December 9, 1994, sales listing, and considered in

the Department's preliminary analysis. Respondent states that these

omitted sales fall into two categories: (1) sales of products which

were not matched to U.S. products in the preliminary determination and

were irrelevant in the margin calculation; and (2) sales of products

which were potential matches for products sold to the United States.

However, the sales of potentially matchable products were either not

made in the same month as the corresponding U.S. products to which they

were matched, or the Department has the necessary data from the

December 9 response to utilize the sales for matching purposes. With

respect to certain sales of cold-drawn pipe which were never reported

to the Department, respondent argues that this is an insignificant

portion of total reported home market sales, and that examining these

sales within the context of the Department's preliminary determination

product concordance indicates that none of the unreported sales should

be treated as the most similar match to U.S. sales of cold drawn pipe.

With respect to another group of products that were not reported to the

Department because of a product selection error made during response

preparation, respondent argues that these products are irrelevant to

product comparisons on the basis of specification.

Furthermore, respondent notes that any other discrepancies found at

verification are minor and/or disadvantage respondent. Such

discrepancies include: the incorrect reporting of four U.S. product

codes for certain transactions; the overstatement of MSA's home market

inland freight and insurance charges; MSA's omission of foreign inland

freight charges for U.S. sales; and certain estimated U.S. movement

charges which were not updated to reflect actual charges incurred.

DOC Position

We disagree with petitioner that Mannesmann's responses cannot be

used for the final determination. While we noted several discrepancies

at verification, these discrepancies were neither pervasive nor

representative of a [[Page 31968]] pattern of misrepresentation which

would merit the rejection of the questionnaire response in total.

It is true that respondent omitted certain home market sales from

its February 28, 1995, sales listing for a variety of reasons, ranging

from incorrect product code selection to inadvertent programming errors

(see MSA/MCSA Verification Report at 49-55). However, we were able to

verify the nature and magnitude of these errors, and found that they

are not significant with respect to either the percentage of total home

market sales reported or potential home market matches. In order to

arrive at this conclusion, we conducted a comparative analysis between

the characteristics (and weighted-average prices) of the omitted home

market products originally reported in Mannesmann's December 9, 1994,

sales listing, and those of the reported home market products in

respondent's February 28, 1995, sales listings. As a result of this

exercise, we found that for some of the omitted sales, there did not

exist contemporaneous sales of identical products reported in

respondent's February 28, 1995, sales listings. We then compared the

product characteristics of the omitted sales to those of the U.S.

sales, and found that none of the omitted home market sales would be

comparable to the U.S. products sold during the POI on the basis of

grade. Regarding those sales of another group of products that were not

reported to the Department because of a product selection error, we

found that, regardless of the month in which they were sold, these

products would not be comparable to those sold to the United States on

the basis of specification. Finally, we have determined to apply BIA to

respondent's U.S. sales of cold-drawn pipe made during the POI for the

reasons outlined in Comments 2 and 9 below.

Furthermore, with respect to those home market sales affected by

merchandise returns which were verified not to be usable for margin

analysis, we found that the home market sales quantity affected was

insignificant in terms of total reported home market sales quantity.

Because these sales were incorrectly included in respondent's home

market sales listing, we excluded them from our analysis where we could

clearly identify the affected individual transactions from data

contained in verification exhibits.

In addition, regarding the gross prices of those transactions which

were found to be overreported, we included these sales in our analysis,

but did not make any adjustments to price. Our decision to make no

adjustment is based on the fact that the prices at issue represent an

overstatement of actual prices charged and any revision of such prices

would not only be burdensome given the number of affected transactions,

but would also require the revision of other sales-related data (e.g.,

taxes) which are calculated based upon price and were not examined

specifically at verification within the context of overreported gross

prices.

As for the other areas stated by petitioner in which discrepancies

were found (e.g., difmer, packing, etc.), we made appropriate

adjustments in accordance with verification findings based on

information on the record, as discussed in the ``United States Price,''

``Foreign Market Value'' and ``Interested Party Comments'' sections of

this notice.

Comment 2

Petitioner contends that Mannesmann's difmer cost data remains

erratic and unusable for the final determination and, therefore, the

Department should apply BIA to calculate the margin for any U.S. sale

for which there is no contemporaneous identical match in the home

market. According to petitioner, Mannesmann's difmers are deficient

because they are not based on replacement costs in the month of

shipment; rather Mannesmann's costs have been reported on a historical

basis. Petitioner points out that the fact that Mannesmann has recorded

its historical costs in UFIRs does not transform them into replacement

costs, and that this approach has been rejected in previous cases by

the Department (e.g., Final Determination of Sales at Less Than Fair

Value: Silicon Metal from Brazil, 59 FR 42806, August 19, 1994)

(Silicon Metal from Brazil). Even though the Department changed its

hyperinflationary methodology in 1994 by providing for indexing of

costs across different months, petitioner maintains that the costs that

are indexed still must be replacement costs during the month of

shipment, and must not represent historical costs. Petitioner argues

that UFIR indexation is no substitute for the reporting of actual

monthly replacement costs.

Petitioner also maintains that the fluctuations in cost are not

limited to the materials component of the reported costs; there are

also significant variations in the reported labor and variable overhead

costs from month to month for the same products, indicating that the

data is unreliable. According to petitioner, while the Department

verified that the reported cost data was submitted in accordance with

the exact methodology used in its normal cost accounting system, the

Department did not verify that the system accurately states

respondent's costs for purposes of this investigation. Citing Final

Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Lead

and Bismuth Carbon Steel Products from the United Kingdom (58 FR 6207,

January 27, 1993), petitioner emphasizes that the Department has

rejected the use of cost differences unrelated to physical differences

for difmer adjustment purposes in past cases.

With respect to petitioner's request for the use of BIA, respondent

asserts that petitioner ignores the facts on the record and that the

Department was able to trace the reported cost data to source

documentation, and tie them to financial statements.

Furthermore, respondent asserts that petitioner's attempt to link

the concepts of replacement costs and monetary correction in arguing

that MSA's reported costs do not account for changes in replacement

costs is confused. According to MSA, a monetary correction is merely an

adjustment to financial statements to measure the cost for holding

balances in certain accounts during periods of inflation. Such an

adjustment has nothing to do with production costs or difmer

calculations. Respondent notes that the Department has confirmed this

in past cases by treating such monetary corrections as offsets or

additions to financing expenses (e.g., Final Results of Administrative

Review: Gray Portland Cement from Mexico, 58 FR 47253 (1993)).

Respondent asserts that, contrary to petitioner's attempt to

confuse the significance of MSA's UFIR-based cost system, this system

accounts for the effects of changes in replacement costs. In addition,

respondent opposes petitioner's characterization that a UFIR-based

system is tantamount to reporting historical costs. According to

respondent, the historical method contrasts sharply with the UFIR

system, which carries costs forward on a steady currency basis and, in

effect, reaches the same result as a replacement cost system. The UFIR-

based methodology is applicable for both finished goods and inputs and

ensures that MSA's costs reflect market conditions. Because this

methodology tracks the inflation rate, material and finished goods are

constantly inflated when expressed in Brazilian currency. According to

respondent, this result is precisely the intent of the replacement cost

accounting system, i.e., to express costs in real terms. Therefore,

respondent's UFIR-based system accurately tracks cost on a replacement

basis and is not, [[Page 31969]] as petitioner suggests, on a

historical cost basis.

DOC Position

We agree in part with both petitioner and respondent. At

verification, we noted that respondent's reported UFIR-based material

and fabrication costs varied substantially for the same product

produced in different months. We were able to establish that this cost

variance was due to a combination of factors which are unrelated to

physical differences: (1) the nature of MSA's cost accounting system;

(2) the process used to produce the input bar consumed in the

production of subject merchandise (whether it was produced using ingot

or a continuous caster); and (3) whether the material was purchased

(imported) or produced in-house by the respondent.

Contrary to petitioner's contention that replacement costs must be

used when indexing costs between different months, for difmer purposes,

we consider it appropriate to have cost data submitted in UFIR, as

maintained by the company in its ordinary course of business. (See

Department Policy Bulletin No. 94.5 dated March 25, 1994.) The UFIR is

not a methodological creation of the respondent; UFIR- denominated

costs must be kept in the ordinary course of business for reporting

purposes to the ``Junta Comercial'' (the Brazilian equivalent of the

Securities and Exchange Commission). Also, we find that petitioner's

cite to Silicon Metal from Brazil as case precedence for the Department

rejecting submitted UFIR costs is misplaced. In Silicon Metal from

Brazil, unlike the instant case, there was no UFIR type indexation

scheme in effect. Rather, the ``monetary correction'' methodology

(i.e., year-end restatement of assets/liabilities) used by respondent

was deemed inappropriate.

Furthermore, we disagree with petitioner's contentions that MSA's

submitted variable fabrication costs are unreliable and that the

differences in fabrication costs cannot be explained by alleged

differences in input steel costs. As stated above, we verified that

MSA's submitted cost data was extracted directly from its normal cost

accounting system which records the actual costs incurred to

manufacture each batch of pipe produced. We thus have no reason to

believe that MSA's submitted cost data is unreliable in general.

Second, we observed at verification that steel bar produced from ingot

versus a continuous caster will affect both material and fabrication

costs.

However, notwithstanding the fact that respondent's variable costs

were reported in accordance with its normal cost accounting system, we

agree with petitioner that we must use variable costs for difmer

adjustment purposes which are not distortive in margin analysis. For

difmer purposes, it is the Department's practice to consider only those

cost differences associated with physical differences in the products

under comparison. The flaw we found in MSA's reporting methodology was

one of not neutralizing the cost differences resulting from different

production processes or supply sources for input bar, which is an

inherent result of its normal cost accounting system. Therefore, for

purposes of the final determination, we have modified respondent's

variable costs of manufacture for those products for which we had

information on the record to enable us to compute a difmer adjustment

exclusive of the cost differences unrelated to physical differences.

For the material costs of these products, we computed a POI weighted-

average bar cost for all subject merchandise using the same material

grade bar. We then determined the product-specific material costs by

multiplying product-specific POI average yield rates by the POI

weighted average bar cost. For fabrication costs, we had available a

breakout of the quantity of continuous casted versus ingot bar used in

production for specific products for each month of the POI. From this

data, we identified for similar product matches, which months used

comparably sourced bar.

However, for certain products we did not have the information

concerning the POI monthly quantity of input bar produced via the

continuous-casted versus ingot methods. Additionally, we were unable to

determine the percentage of such products produced from imported tube

versus MSA-produced tube. We note that the vast majority of the U.S.

products that are affected by this lack of information on the record

are cold-drawn pipes. See Comment 9 below. Therefore, for a small

percentage of U.S. sales quantity, we were unable to eliminate the

fabrication cost differences resulting from the different production

processes and/or sources of input bar. For those sales of U.S. products

where we did not have reliable fabrication costs, we used a margin

based on BIA. As BIA, we used a calculated margin that is sufficiently

adverse to fulfill the statutory purpose of the BIA rule (section

776(c) of the Act) and which is indicative of, and bears a rational

relationship to, the respondent's sales. See National Steel v. United

States, 870 F.Supp. 1130 (CIT 1994).

Comment 3

Petitioner argues that MSA and MCSA incorrectly reported invoice

date as the date of sale for all home market sales. It maintains that

the correct date of sale is Mannesmann's internal order date because it

is at this time that final agreement on the essential terms of sale,

including price and the manner in which it will be adjusted for

inflation, is made. Petitioner asserts that the only changes in the

essential terms of sale between Mannesmann's internal order and invoice

dates are a currency conversion and an inflation adjustment, both of

which are performed automatically by computer without negotiation with

the customer; and that this was the only variance between order and

invoice date noticed by the Department at verification. According to

petitioner, the automatic restatement of the price by computer to

account for inflation is not a substantive change in the material terms

of sale. Petitioner cites Final Determination of Sales at Less Than

Fair Value: Brass Sheet and Strip from France (52 FR 812, January 9,

1987) (Brass Sheet and Strip) to support its position that it is the

Department's established practice to use as the date of sale, the date

on which basic terms become determinable, without regard to automatic

mechanisms that might alter or establish specific terms.

For the final determination, petitioner urges the Department to use

the sales listings submitted on December 9, 1994, despite substantial

alterations made to them (i.e., in the subsequent sales listings

submitted on February 28, 1995). According to petitioner, these

listings provide internal order dates and invoice numbers that can

easily be matched to the invoice numbers reported in Mannesmann's

February 28, 1995, response. For any sales in the February 28, sales

listing which cannot be matched to an alleged ``proper'' date of sale

using the December 9, listing, petitioner maintains that the Department

should apply partial BIA by using the average time lag between order

and invoice date for other sales to place the sale in the appropriate

month. This method of partial BIA would entail deflating prices for

such months because the prices and adjustments in the February 28,

response are stated in cruzeiros valued for months later than the

actual date of sale claimed by petitioner, so that they are restated in

terms of the value of the cruzeiro during the month of sale.

Alternatively, if the currency conversion is too burdensome, the

Department should apply, as partial BIA to such sales, either the

highest [[Page 31970]] calculated margin for the company or the highest

margin alleged in the petition.

Respondent argues that invoice date is the correct date of sale in

accordance with the Department's normal methodology. It is also the

date mandated by Brazilian law and accounting practices, which do not

recognize a sale until the invoice is generated, and the date

consistent with MSA and MCSA's recordkeeping system in the ordinary

course of trade. Respondent takes issue with petitioner's assertion

that the only subsequent changes in the essential terms of sale between

MSA's internal order entry and shipment are a currency conversion and

an inflation adjustment. Respondent states that not only did the high

rate of inflation during the POI preclude any determination of the

essential terms of sale (particularly price) until the time of

invoicing, but also that there are significant fluctuations in price

and quantity that typically occur between the order date and invoice

date which the Department confirmed at verification. Citing the

Preliminary Determination of Sales at Less Than Fair Value: Canned

Pineapple Fruit from Thailand (60 FR 2734, January 11, 1995),

respondent asserts that the Department has, under appropriate

circumstances in past cases, specifically endorsed invoice date as the

date of sale. In addition, respondent states that the purchase order is

sometimes not received until after the invoice is generated by MCSA and

the order shipped. According to respondent, invoice date is the most

consistent and reliable basis for reporting comparable dates of sale in

Brazil from both MSA and MCSA.

DOC Position

We agree with respondent and have accepted its reported date of

sale. At the verification of both MSA and MCSA, respondent provided

source documentation substantiating its reasons for using invoice date

as the date of sale. These reasons included not only the effects of

inflation between purchase order date and invoice date, but also the

fact that Mannesmann's internal order is subject to numerous

fluctuations in price and quantity up until the date of invoice. (See

Verification Report at 11-12 and 47.) Our decision in this instance is

consistent with past cases. See Amended Final Determination of Sales at

Less Than Fair Value: Ferrosilicon from Brazil, 59 FR 8598, February

23, 1994).

We also note that the facts in Brass Sheet and Strip are different

from those in the instant case. In Brass Sheet and Strip, a formal

contract between the buyer and seller established a price based upon a

publicly quoted metal value source. The parties had agreed upon a time

period during which the customer could lock in the publicly quoted

rate; no further negotiations were necessary. In Brass Sheet and Strip,

the price and quantity terms were sufficiently definite and effectively

finalized as of the date of the initial contract, and the parties had

no further ability to change the price by negotiation. In the instant

case, not only are prices subject to fluctuation due to the

hyperinflationary adjustment in Brazil, but customers often negotiate a

different price or make material changes to quantity between the date

of initial order entry and invoice date. While the Brass Sheet and

Strip case involved long-term, fixed contracts where there was nothing

left for the parties to negotiate, the instant case reflects the fact

that when a purchase order to schedule production enters into MSA's

system, the negotiating continues and a price adjustment often follows

at the time of invoicing. With respect to this price adjustment, we

could find no evidence in the source documentation examined at

verification that, at the time of order, the customer had knowledge of

the index (or indices) that would be used by respondent to make the

adjustment for inflation, and that the customer therefore knew the

exact price to which it had agreed. We also noted evidence of post-

order cancellations, indicating that the customer was not bound by the

terms set in the order.

We note that our decision in this case to accept the date of

invoice as the date of sale is based upon the factual evidence on the

record. In general, issues regarding the appropriate date of sale are

examined on a case-by-case basis, and our decision in this case should

not be interpreted as a general policy preference in future cases.

Comment 4

Consistent with its contention that the appropriate date of sale is

the date of respondent's internal order, petitioner maintains that the

home market prices and other cruzeiro-denominated data reported by

Mannesmann must be restated in terms of the value of the cruzeiro

during the month of sale. Similarly, according to petitioner, an

inflation factor should not be included in any credit expense

adjustment. Petitioner argues that to some extent the inflator in the

credit expense adjustment can be expected to offset the inflator in the

price. However, since the two inflators are derived differently and

serve different purposes, they are seldom, if ever, equal. Whereas the

credit expense inflator reflects inflation from the invoice date to the

actual date of payment, the price inflator is based on the number of

days between the invoice and the expected date of payment. Furthermore,

petitioner states that the Department verified that the rates used for

the price inflator are not proportional across payment terms.

Therefore, while the credit expense inflator should reflect the actual

inflation rate, the price inflator may be higher or lower than the true

rate depending on the date of actual payment. According to petitioner,

the Department can determine the actual gross unit price in terms of

cruzeiros during the month of sale by subtracting the reported

inflation value from the reported gross unit price (invoice price). In

addition, the indexed value of the reported (inflated) gross price

should be compared to the price of the internal order, and any excess

should be treated as interest revenue attributable to that sale because

the price inflator may be higher than the true inflation rate.

Petitioner suggests that the reported inflation value be subtracted

from gross price to obtain the price in terms of cruzeiros as valued

during the month of shipment, and the resulting values can be converted

to cruzeiros as valued on the actual date of sale (i.e., the internal

order date) using the exchange rates provided in Mannesmann's response.

The indexed value of the reported (inflated) gross price should then be

compared to the price of the internal order, and any excess should be

treated as interest revenue attributable to that sale.

Respondent maintains that the Department has verified the reported

home market credit expenses and the rates for short-term loans

available in Brazil during the POI without discrepancy and, therefore,

should deduct these credit expenses as reported from FMV. Mannesmann

disputes petitioner's allegation that interest revenue affects credit

expenses and that, if a customer made a late payment, Mannesmann is not

entitled to an adjustment for credit expenses because it would

understate home market price. Respondent states that in the few

instances when a customer did not pay on the expected date, interest

revenue amounts were reported as an upward adjustment to the home

market price, as verified by the Department. Also, if a customer did

pay late, not only did Mannesmann incur the opportunity cost of not

having the customer's money from the invoice date to the expected

payment date, but it also suffered a [[Page 31971]] financial loss from

delayed payment during the period between the payment date listed on

the invoice and the actual payment date. Therefore, according to

Mannesmann, denying an adjustment for credit expenses for the time

following payment due date and actual payment is totally illogical.

DOC Position

As discussed above in Comment 3, we have determined that invoice

date is the appropriate date of sale in this case. Therefore, we

consider moot petitioner's arguments with respect to the restatement of

home market prices to reflect the value of the cruzeiro on the order

date.

In our preliminary determination, we adjusted FMV for inflation

occurring between order and invoice date, which factors in expected

payment terms, as well as credit expenses, which include an inflation

factor based on actual payment terms. Based on verification findings

and our acceptance of respondent's date of sales methodology, we have

determined that this adjustment was incorrect because it double-counted

the value of inflation. Therefore, for purposes of the final

determination, we only made an adjustment to FMV for credit expenses as

reported and verified.

Comment 5

Mannesmann argues that the Department should compare U.S. sales by

MPS with home market sales made by MSA, including sales to its related

party MCSA, and that it provided evidence that MSA's sales to MCSA are

arm's-length transactions. However, if the Department does not treat

MSA's sales to MCSA as arm's-length transactions, the Department should

make a level of trade adjustment to reflect the additional selling

expenses (i.e., indirect selling expenses and inventory carrying costs)

incurred by MCSA.

Mannesmann asserts that 19 CFR 353.58 requires that a level of

trade adjustment be made when FMV and U.S. price are not based on sales

at the same commercial level of trade. According to respondent, MSA and

MCSA operate at different levels of trade in Brazil. MCSA is a

distributor that purchases from MSA and sells to customers from

inventory, requiring MCSA to incur considerable inventory and selling

expenses. In contrast, both MSA in Brazil and MPS in the United States

are not made from inventory, but are manufactured to order. To support

its argument, respondent cites Final Determination of Sales at Less

Than Fair Value: Stainless Steel Bar from Spain (59 FR 66931, December

28, 1994) (Stainless Steel Bar) where the Department granted such an

adjustment under allegedly similar factual circumstances.

Petitioner contends that Mannesmann did not provide the evidence it

purports to have provided substantiating its claim regarding the arm's-

length nature of the transactions between MSA and MCSA. At the

preliminary determination, the Department determined that sales to MCSA

were not made at arm's length, and based FMV on MSA's and MCSA's sales

to unrelated customers. According to petitioner, nothing in the

verification report obligates the Department to change that finding.

Furthermore, petitioner argues that Mannesmann has not proven its

entitlement to a level of trade adjustment. Petitioner asserts that it

has not been clearly established that two levels of trade exist. In

addition, petitioner states that while Mannesmann argues that

differences in selling expenses exist due to inventory costs, it has

not proven that a correlation exists between both prices and selling

expenses at each level of trade.

According to petitioner, absent additional information concerning

differences in the customer bases (e.g., relative size and purchasing

power of customers), evidence that price differences correlate to level

of trade differences, a level of trade adjustment is not appropriate.

However, if the Department nonetheless decides to grant respondent the

requested adjustment, it should be based on differences in actual

expenses incurred on MCSA's sales; i.e., the adjustment should be made

on the reported indirect selling expenses only, exclusive of the

reported inventory carrying costs. Petitioner also adds that these

selling expenses must be offset by the indirect selling expenses

incurred by MSA on U.S. sales because the basic purpose of a level of

trade adjustment is to account for differences in the level of trade

between U.S. and home market sales.

DOC Position

With regard to the arm's-length nature of related party sales, we

agree with petitioner. Based on the results of our related party test

(as described in the FMV section of this notice), we found that MSA's

sales to MCSA are not at arm's length and, thus, we excluded them from

our dumping analysis for purposes of the final determination. This

result is consistent with that in our preliminary determination, and

since that time, respondent has not provided any new evidence to

justify a departure from our normal related party test.

With regard to matching by level of trade, we have accepted

respondent's level of trade classification because the record indicates

that the alleged difference in level of trade involves different

selling activities and expenses. However, with regard to the

respondent's claim for a level of trade adjustment, we have determined

that an adjustment is not warranted because we are uncertain whether

the difference in level of trade affects price comparability.

In analyzing the prices at the two levels of trade, we compared

average prices, adjusted for all direct selling expenses, by product

and month of sale for the POI. The results of this analysis indicate

that prices overlap for a significant number of sales. However, because

for each month only a small number of prices by product were available

and the monthly inflation rate was high, we have concluded that the

data does not provide a reliable indication of the pattern of prices at

the two levels of trade. Therefore, we do not have a basis to conclude

whether there is or is not a pattern of price differences attributable

to level of trade. Accordingly, we have not made a level of trade

adjustment.

Comment 6

Petitioner maintains that Mannesmann's packing expenses are

unverified and may not be relied upon for purposes of the final

determination. Petitioner also maintains that these costs appear to

have been based solely on labor and materials without any allocation of

overhead costs, and MCSA failed to report any repacking costs

associated with its sales. Therefore, petitioner advocates using BIA.

As BIA, petitioner requests that the Department either not make any

upward adjustment to U.S. price for packing or use the lower of the

amounts reported in the U.S. sales listing and the lowest export

packing amount reported on the chart on page 41 of the Department's May

11, 1995, Verification Report. Additionally, petitioner proposes that

the Department should (1) subtract the lowest of the packing amount

reported for the home market sales listing and the lowest domestic

packing amount from the verification report chart, and (2) add as an

offset to FMV the higher of the amount of the highest U.S. packing

amount reported in the sales listing and the highest amount of export

packing reported on page 41 of the verification report.

Respondent argues that the Department should apply an average per

[[Page 31972]] unit packing cost based on MSA's simulated cost data

provided at verification which tied to the cost data provided in

Exhibit 18 of the December 9, 1994, response, as this is the most

accurate and reliable data on which to calculate MSA's packing costs.

MSA provides a monthly average packing cost calculation for each of the

four products sold in each market in Exhibit 2 of its May 19, 1995,

case brief. Therefore, the Department should match the resulting

average monthly packing data to the sales listing based on the month of

shipment for home market sales, as all home market shipments occurred

between January and June 1994. For U.S. sales, many shipments of which

occurred after the POI, respondent proposes using an average POI

packing expense (also provided in Exhibit 2). For sales of products

which do not match to one of the four product codes, the average

packing expense of all four product codes should be applied.

DOC Position

We agree with petitioner that the reported packing expenses were

unverified. At verification, respondent explained that MSA's cost

accounting system cannot separately identify packing costs incurred for

export and domestic sales. Therefore, in order to derive the monthly

per unit packing amounts reported in the U.S. and home market sales

listings, MSA conducted packing simulation exercises for four

products--three hot-finished and one cold-drawn. That is, they

estimated the time it took to pack the products based on actual

experience and derived the associated materials and labor costs from

their accounting records. However, we could not tie the monthly packing

costs resulting from this exercise to the reported monthly per unit

packing amounts in respondent's home market and U.S. sales listings.

Respondent could not explain the reason for the discrepancy. Therefore,

we determine that these costs were not verified. Because the reported

costs cannot be used for purposes of our analysis, we used BIA. As BIA

for these costs, we subtracted from FMV, the lowest domestic packing

amount reported on the record, and added to FMV, the highest export

packing amount reported on the record.

Comment 7

Respondent maintains that the Department verified that no

galvanized, threaded or coupled products were sold to the United States

during the POI. Therefore, MCSA's sales of such products will not be

matched to U.S. products and are thereby irrelevant in the Department's

margin analysis. With respect to the unreported bevelling costs,

respondent states that MSA's cost for producing bevelled pipe was used

as a surrogate value for MCSA's sales of bevelled product. Mannesmann

states that it is logical that its cost of bevelling would be lower

than the bevelling costs charged by a third party. The use of the third

party bevelling cost would have resulted in higher home market variable

costs which, in turn, would have resulted in a lower difmer to be added

to FMV. According to Mannesmann, the use of MSA's bevelling costs as a

surrogate for third party expenses incurred by MCSA was therefore

conservative and reasonable.

Petitioner contends that Mannesmann often reports significantly

different costs in the same month for products that are identical

except for end finish, and that these variations do not make sense,

particularly because the differences between black plain-end pipe and

bevelled-end pipe are insignificant especially in terms of material

costs. According to petitioner, there is no consistency in the margins

by which reported materials costs differ for otherwise identical

products with different end finishes. Neither is there any evidence on

the record to suggest a reason for attributing such widely varying

costs to virtually identical products simply by reason of end finish.

Petitioner notes that, in some instances, Mannesmann has reported

identical costs for different end finishes. Petitioner maintains that

these facts cast doubt on Mannesmann's entire cost accounting system.

In addition, Mannesmann's principal contention concerning MCSA's

third party bevelling costs (i.e., that they are higher than MSA's)

constitutes non-record information upon which the Secretary may not

rely. MCSA's bevelling costs have never been separately reported on the

record and, therefore, could not have been verified. Thus, any

bevelling cost attributed to products sold by MCSA must be based on

BIA.

DOC Position

We agree with petitioner and respondent in part. We verified that

while MCSA failed to report third party galvanization, coupling and

threading costs for certain products, no such products were sold to the

United States during the POI and, therefore, were not used in product

comparisons. Thus, the omission of these costs did not affect any

difmer adjustments that were made for similar product comparisons.

However, even if such products were used in product comparisons, MCSA's

omission of these costs for difmer adjustment purposes would have the

effect of underestimating home market costs and thereby overstating the

upward difmer adjustment made to FMV. Therefore, we did not make any

adjustment for the omitted costs at issue.

With respect to bevelling costs, we note that there were U.S. sales

of bevelled pipe during the POI. We also note that for MCSA's sales of

bevelled products that were used in product comparisons, MSA's costs of

bevelling were included in the reported variable costs of manufacture.

This is consistent with the verified product coding methodology used by

MCSA. That is, for those products that were further processed by third

parties prior to sale, MCSA reported only its own internal product

code, and for those products that did not undergo further processing,

MCSA reported both MSA's product code and its own product code (see May

11, 1995, Verification Report at 8). For the transactions consisting of

the bevelled products sold by MCSA which were used in product

comparisons, respondent reported both product codes, indicating that

the bevelling was performed at MSA's mill. However, we modified these

costs for difmer adjustment purposes for the reasons stated in DOC

Position to Comment 2 above.

Comment 8

Petitioner alleges that a deduction to U.S. price should be made

for the ``bank fees'' incurred by MSA for entering into exchange

contracts in order to receive payment from MPS on its shipments to the

United States. According to petitioner, such fees are a necessary and

direct selling expense relating to U.S. sales. Since similar fees are

not incurred for home market sales, the fees must be deducted from USP

in order to obtain a proper comparison. Petitioner maintains that

Mannesmann's claims that the fees do not affect the U.S. price and that

Mannesmann invests a portion of these funds (which respondent has not

quantified) is irrelevant to the Department's analysis.

Respondent maintains that this proposal is incorrect for the

following reasons: (1) The exchange contract transaction does not

impact the U.S. customer, but is solely a mechanism whereby MSA can be

paid in local currency for foreign currency sales as required by

Brazilian law; and (2) throughout the POI, MSA chose to receive payment

in Brazilian currency under the exchange contracts in advance (when the

order was booked from the mill), a portion of which it

[[Page 31973]] invested and gained returns which exceeded any fees paid

to the bank. According to Mannesmann, the Department should treat the

exchange contracts as intercompany transfers of funds between MSA and

MPS that have no effect on the payment from the U.S. customer.

Respondent claims that any bank fees incurred pre-shipment by MSA are

administrative fees that have no bearing on U.S. price.

DOC Position

We disagree with respondent that these fees are intracompany

transfers. They are fees paid to third parties in the U.S. sales

process which we conclude are included in the ultimate price between

MPS and the U.S. customer. These types of fees are normally taken into

account in the Department's margin analysis. Therefore, we made an

adjustment to U.S. price in the amount of the fee reported in the

sample exchange contract provided in Exhibit 10 of the December 9,

1994, response.

Comment 9

Petitioner states that respondent included in its sales listing

sales of cold-drawn products finished from imported tube hollows.

According to petitioner, such products are not subject merchandise

produced in Brazil and should not have been included in the sales

listing. Petitioner urges that the Department apply BIA to all sales of

cold-drawn pipe in the final determination. In addition, petitioner

maintains that none of the difmers provided for cold-drawn products can

be used because it is not known how many are affected by the inclusion

of imported tube hollows. There is no information on the record that

would allow the Department to equate the cost of producing cold-drawn

pipe with the cost of finishing cold-drawn tube hollows.

Respondent asserts that the cold-drawn products referred to fall

within the scope of the investigation. Mannesmann reported as subject

merchandise sales of all products within the scope of the

investigation, regardless of whether those products were made from

ingots or billets, or in the case of the limited amount of cold-drawn

products, purchased hollows. Therefore, unless the petitioner contends

that pipe manufactured in Brazil from imported hollows are excluded

from the scope of the investigation, Mannesmann asserts that it

properly reported all shipments of subject merchandise, including small

diameter cold-drawn product manufactured from hollows. Moreover, the

Department verified the quantity and price of purchased hollow tubes,

and traced the reliability of those material costs reported for cold-

drawn products.

DOC Position

We agree with petitioner in part. Our verification findings

revealed that respondent had properly reported sales of cold-drawn

seamless pipe as subject merchandise in its sales listings (but for

certain omissions discussed in Comment 1 above). We also found that

respondent used imported tubes in the production of cold-drawn pipe

during the POI. However, respondent failed to inform the Department

that it used any material input other than in-house produced bar for

the production of cold-drawn pipe during the POI, despite the

Department's questions concerning the materials used in the production

of the subject merchandise in its February 10, 1995, supplemental

questionnaire. Consequently, we are unable to make a reliable difmer

adjustment for U.S. sales of cold-drawn products because the variable

costs reported include costs unassociated with physical differences.

Therefore, because we cannot use or modify the reported difmer data for

these cold-drawn products as we do not have the information on the

record to do so, we have used BIA for the affected sales. See also DOC

Position to Comment 2 above.

Comment 10

Petitioner contends that approximately two-thirds of the exchange

rates reported in MCSA's sales listing, which are necessary for the

proper calculation of difmers and should reflect the average monthly

rate for the month of shipment, are incorrect. Therefore, the

Department should cross-check each reported exchange rate against the

actual monthly rate, and make appropriate corrections for the final

determination.

Respondent maintains that petitioner's contention is incorrect.

According to respondent, the rates at issue were adjusted to ensure

that they matched the date of shipment from the factory, and this is

the reason for the 22 day adjustment reflected in Mannesmann's

response. Mannesmann reported all difmer data and the relevant exchange

rates based on the month in which the pipe was shipped from MSA's mill.

Because MSA does not maintain inventories of finished pipe, the month

of shipment from MSA is also the month in which the pipe was produced.

Similarly, in the case of U.S. sales, the Department asked MPS to

revise its reported shipment date to reflect the date on which the pipe

left the mill. Thus, in all cases involving sales by MSA or MPS, the

reported date of shipment reflects the month in which pipe was produced

and shipped.

For sales by MCSA, pipe produced by MSA and shipped to MCSA is

placed in MCSA's inventory from which it is subsequently resold to

MCSA's customers. The reported shipment date for MCSA sales, therefore,

does not reflect when the pipe was produced and shipped from MSA. In

order to ascertain when a given quantity of pipe was produced and

shipped from MSA, MCSA's average days in inventory (as reported in

Exhibit 24 of the December 9, 1994, response) was subtracted from the

reported shipment date. Therefore, all difmer data and exchange rates

for MCSA were based on MCSA's date of shipment minus the average number

of days in inventory in order to ensure that the difmer data and

exchange rate reflected the date on which the merchandise was produced

and shipped from the factory.

DOC Position

We consider this issue raised by petitioner to be moot based on our

treatment of difmer costs discussed in Comment 2 above. By using

revised UFIR costs for difmer adjustment purposes, we no longer need to

convert these costs to U.S. dollars using an average exchange rate.

However, we note that we verified the daily CR/UFIR and US$/CR exchange

rates reported by respondent in Exhibits 4 and 5 of the February 28,

1995, response against source documentation and found that they were

based on official government rates. (See May 11, 1995, Verification

Report at 37.) Therefore, for purposes of converting home market

prices, difmer costs and other adjustments to U.S. dollars on the date

of the U.S. sale, we intend to use the verified government exchange

rates that were verified. This is consistent with past practice. (See

Silicon Metal from Brazil.)

Comment 11

Petitioner maintains that Mannesmann has improperly submitted

untimely new factual information in its case brief, including: (1) an

affidavit by an MPS employee which presents evidence of differences

between carbon and alloy pipe within the context of the criteria in

Diversified Products relevant to the issue of whether the subject

merchandise should constitute more than one class or kind; (2) portions

of the record of proceedings before the International Trade Commission

concerning the issue of whether to continue to include end use as a

defining characteristic of the scope; and (3) factual information

concerning the [[Page 31974]] manner in which it calculated MCSA's

bevelling costs that had not been submitted to the Department

previously. According to petitioner, the Department must strike this

information from the record and may not consider it in the final

determination.

DOC Position

We disagree with petitioner. With respect to the portions of

Mannesmann's case brief referred to above concerning class or kind and

end use, we note that the information contained therein further

corroborates data previously submitted on the record by respondent (see

Mannesmann's submissions dated October 21, 1994, October 31, 1994, and

March 27, 1994). With respect to bevelling costs, we did not rely on

the information referred to by petitioner for purposes of the final

determination (see DOC Position to Comment 7 above).

Continuation of Suspension of Liquidation

In accordance with section 733(d)(1) of the Act 19 USC 1673b(d)(1),

we directed the Customs Service to suspend liquidation of all entries

of seamless pipe from Brazil, as defined in the ``Scope of

Investigation'' section of this notice, that are entered, or withdrawn

from warehouse, for consumption on or after January 27, 1995.

Pursuant to the results of this final determination, we will

instruct the Customs Service to require a cash deposit or posting of a

bond equal to the estimated dumping margin, as shown below, for entries

of seamless pipe from Brazil that are entered, or withdrawn from

warehouse, for consumption from the date of the publication of this

notice in the Federal Register. The suspension of liquidation will

remain in effect until further notice.

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

Manufacturer/producer/exporter Margin percent

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

Mannesmann S.A.......................................... 125.00

All Others.............................................. 125.00

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

ITC Notification

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

ITC of our determination. The ITC will make its determination whether

these imports materially injure, or threaten injury to, a U.S.

industry, within 45 days of the publication of this notice. If the ITC

determines that material injury, or threat of material injury, does not

exist, the proceeding will be terminated and all securities posted as a

result of the suspension of liquidation will be refunded or cancelled.

If the ITC determines that material injury or threat of material injury

does exist, the Department will issue an antidumping duty order.

Notification to Interested Parties

This notice serves as the only reminder to parties subject to

administrative protective order (APO) in these investigations of their

responsibility covering 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 (19 USC 1673(d)) and 19 CFR 353.20.

Dated: June 12, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-14937 Filed 6-16-95; 8:45 am]

BILLING CODE 3510-DS-P