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

DEPARTMENT OF COMMERCE

International Trade Administration

[A-791-803]

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

Circular Welded Non-Alloy Steel Pipe From South Africa

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 14, 1996.

FOR FURTHER INFORMATION CONTACT: Jennifer Stagner or John Beck, Office

of Antidumping Investigations, Import Administration, International

Trade Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue N.W., Washington, D.C. 20230; Telephone: (202) 482-

1673 or (202) 482-3464, respectively.

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of 1930

(the Act) are references to the provisions effective January 1, 1995,

the effective date of the amendments made to the Act by the Uruguay

Rounds Agreements Act (URAA). In addition, unless otherwise indicated,

all citations to the Department's regulations are to the current

regulations, as amended by the interim regulations published in the

Federal Register on May 11, 1995 (60 FR 25130).

Final Determination

As explained in the memoranda from the Assistant Secretary for

Import Administration dated November 22, 1995, and January 11, 1996,

the Department of Commerce (the Department) has exercised its

discretion to toll all deadlines for the duration of the partial

shutdowns of the Federal Government from November 15 through November

21, 1995, and December 16, 1995, through January 6, 1996. Thus, the

deadline for the final determination in this investigation has been

extended by 28 days, i.e., one day for each full or partial day the

Department was closed. As such, the deadline for this final

[[Page 24272]]

determination is no later than May 6, 1996.

We determine that circular welded non-alloy steel pipe from South

Africa is being, or is likely to be, sold in the United States at less

than fair value, as provided in section 735 of the Act.

Case History

Since the preliminary determination on November 21, 1995 (60 FR

61533, November 30, 1995), the following events have occurred:

On December 6, 1995, the Department provided the respondent, RIH

Group, Ltd., and its operating divisions Brollo Africa and Tosa,

(collectively, RIH) with a supplemental questionnaire relating to sales

to affiliated parties. On January 17, 1996, the respondent submitted

its response.

On December 6, 1995, the respondent alleged clerical errors in the

preliminary determination. We determined that there were clerical

errors made; however, we did not amend the preliminary determination

since the change in the margin was not significant (see the December

14, 1995, Memorandum from David L. Binder to Barbara R. Stafford).

In March 1996, we conducted verification of the sales questionnaire

responses of the respondent in South Africa.

The respondent and the petitioners 1 submitted case briefs on

April 17, 1996 and rebuttal briefs on April 22, 1996.

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

\1\ Allied Tube & Conduit Corporation, Sawhill Tubular

Division--Armco, Inc., LTV Steel Tubular Products Company, Sharon

Tube Company, Laclede Steel Company, Wheatland Tube Company, and

Century Tube Corporation.

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

Scope of Investigation

The following scope language reflects certain modifications from

the notice of the preliminary determination. We clarified the paragraph

beginning ``The scope specifically includes * * *'' for use and

presumed use language.

For purpose of this investigation, circular welded non-alloy steel

pipes (standard pipes) are all pipes and tubes, of circular cross-

section, not more than 406.4 mm (16 inches) in outside diameter,

regardless of wall thickness, surface finish (black, galvanized, or

painted), end finish (plain end, bevelled end, threaded, or threaded

and coupled), or industry specification (ASTM, proprietary, or other)

used in standard or structural pipe applications.

The scope specifically includes, but is not limited to, all pipe

produced to the ASTM A-53, ASTM A-135, ASTM A-795, and BS-1387

specifications, regardless of use. It also includes any pipe multiple-

stencilled or multiple-certified to one of the above-listed standard or

structural pipe specifications and to any other specification, if used

in a standard or structural pipe application. Pipe which meets the

above physical parameters and which is produced to proprietary

specifications, the API-5L, the API-5L X-42, or to any other non-listed

specification is included within the scope of this investigation if

used in a standard or structural pipe application, regardless of the

Harmonized Tariff Schedule of the United States (HTSUS) category into

which it was classified. If the pipe does not meet any of the above

identified ASTM or BS specifications (i.e., ASTM A-53, ASTM A-120, ASTM

A-135, ASTM A-795, and BS-1387) or is multiple-stencilled or multiple-

certified to one of these specifications and to any other

specification, although it is within the identified physical parameters

described in the second paragraph of this section, our presumption is

that it is not used in a standard pipe application.

Standard pipe uses include the low-pressure conveyance of water,

steam, natural gas, air, and other liquids and gases in plumbing and

heating systems, air conditioning units, automatic sprinkler systems,

and other related uses. Standard pipe may carry liquids at elevated

temperatures but may not be subject to the application of external

heat. Standard pipe uses also include load-bearing applications in

construction and residential and industrial fence systems. Standard

pipe uses also include shells for the production of finished conduit

and pipe used for the production of scaffolding.

Specifically excluded from this investigation are mechanical

tubing, tube and pipe hollows for redrawing, and finished electrical

conduit if such products are not certified to

ASTM A-53, ASTM A-120, ASTM A-135, ASTM A-795, and BS-1387

specifications and are not used in standard pipe applications.

Additionally, pipe meeting the specifications for oil country tubular

goods is not covered by the scope of this investigation, unless also

certified to a listed standard pipe specification or used in a standard

pipe application.

The merchandise under investigation is currently classifiable under

items 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40,

7306.30.50.55, 7306.30.50.85, and 7306.30.50.90 of the HTSUS. Although

the HTSUS subheadings are provided for convenience and customs

purposes, our written description of the scope of this investigation is

dispositive.

Regarding implementation of the use provision of the scope of this

investigation, and any order which may be issued in this investigation,

we are well aware of the difficulty and burden associated with such

certifications. Therefore, in order to maintain the effectiveness of

any order that may be issued in light of actual substitution in the

future (which the use criterion is meant to achieve), yet administer

certification procedures in the least problematic manner, we have

developed an approach which simplifies these procedures to the greatest

extent possible.

First, we will not require use certification until such time as

petitioner or other interested parties provide the Department with a

reasonable basis to believe or suspect that substitution is occurring.

Second, we will require use certification only for the product(s) (or

specification(s)) for which evidence is provided that substitution is

occurring. For example, if, based on evidence provided by petitioner,

the Department finds a reasonable basis to believe or suspect that pipe

produced to the API-5L specification is being used as standard pipe, we

will require use certifications for imports of API-5L specification

pipe. Third, normally we will require only the importer of record to

certify to the use of the imported merchandise. If it later proves

necessary for adequate implementation, we may also require producers

who export such products to the United States to provide such

certification on invoices accompanying shipments to the United States.

Period of Investigation

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

31, 1995.

Facts Available

At verification, we found the following inaccuracies in the

information provided by RIH which render the response unusable for

purposes of margin calculations: unreported home market and U.S. sales;

errors in the quantity and value reconciliations; certain discounts and

rebates reported that should not have been; certain U.S. prices

reported incorrectly; and certain discrepancies found in the pre-

selected and surprise sales 2. In addition, we found errors in the

calculations of the following: indirect selling expenses; average stock

days; and variable/total costs. The deficiencies found are outlined in

detail

[[Page 24273]]

in the public version of our April 3, 1996, verification report.

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

\2\ We chose certain sales to examine at verification in order

to verify the specific sales data reported (e.g., date of sale, date

of payment, quantity, unit price, etc.).

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

We have determined that the questionnaire responses of the

respondent are unverifiable. The misreporting and inaccuracies of the

information were so material and pervasive as to make the responses

unreliable within the meaning of section 782(e)(3) of the Act.

Therefore, RIH's responses provide an inadequate basis for calculating

dumping margins.

We note that the respondent has cooperated throughout the

investigation. In July and August 1995, we received questionnaire

responses from RIH. In addition, RIH responded to five supplemental

questionnaires; we received those responses in September-October 1994,

and January-February 1996. In addition, RIH went through the entire

verification process in South Africa in March 1996. Therefore, because

the respondent has fully cooperated in this investigation, we are not

using an adverse inference in selecting from among the facts otherwise

available (see ``Interested Party Comment'' section of this notice).

Section 776(a)(2)(D) states that the Department ``shall, subject to

section 782(d), use the facts otherwise available in reaching the

applicable determination under this title'' if an interested party or

any other person provides such information but the information cannot

be verified. The statute also provides that the facts otherwise

available may be based on secondary information.

Section 776(c) provides that where the Department relies on

``secondary information,'' the Department shall, to the extent

practicable, corroborate that information from independent sources

reasonably at the Department's disposal. The Statement of

Administrative Action (SAA), accompanying the URAA, clarifies that the

petition is ``secondary information.'' See! H. Doc. 316, 103d

Cong., 2d Sess. 870 (1996). The SAA also clarifies that ``corroborate''

means to determine that the information used has probative value. Id.

However, where corroboration is not practicable, the Department may use

uncorroborated information. Given that the facts available margin for

the respondent involves information contained in the petition, we are

required to corroborate this data, to the extent practicable, pursuant

to section 776(c) of the Act, because the information submitted by RIH

was not verifiable.

In the present case, the petition is the only information on the

record which could form the basis for a dumping calculation.

Accordingly, the Department has based the margin on information in the

petition. In accordance with section 776(c) of the Act, we attempted to

corroborate the data contained in the petition. Because the petitioners

based export price and normal value on independent, public sources

(U.S. import statistics and a price list from one of respondent's

distributors, respectively), we find that this information has

probative value. See Notice of Preliminary Determination of Sales at

Less Than Fair Value: Clad Steel Plate from Japan (61 FR 7469, 7470,

February 28, 1996). Regarding the discounts used for normal value, we

are not aware of any practicable means of corroborating such

information. For a further discussion, see the May 6, 1996, memorandum

from the Team to Gary Taverman.

Accordingly, we have relied upon the information contained in the

petition. We have assigned to all exporters a margin of 117.66 percent,

the average margin calculated in the petition on merchandise which is

within the scope of this investigation.

Fair Value Comparisons

This final determination has been made using the average margin

calculated in the petition as the facts available. For a discussion of

how export price and normal value were calculated in the petition, see

the Initiation of Antidumping Duty Investigations: Circular Welded Non-

Alloy Steel Pipe from Romania and South Africa (60 FR 27078, May 22,

1995).

Verification

As provided in section 782(i) of the Act, we attempted to verify

the information submitted by the respondent. We used standard

verification procedures, including examination of relevant accounting

and sales records and original source documents provided by the

respondent. However, as stated above, we found numerous errors at

verification (see the April 3, 1996, verification report). Thus, we did

not use the respondent's information for our final determination.

Interested Party Comment

Use of Facts Available

The petitioners assert that the Department should make its final

determination based on an adverse assumption of the facts available

(AFA). The petitioners argue that respondent failed verification

because the Department found errors in the respondent's home market and

U.S. sales data such that it would not be possible to accurately

determine normal value, export price or difference in merchandise

adjustments.

In addition, the petitioners argue that the respondent failed to

accurately report certain home market sales of the foreign like

product. They cite Circular Welded Non-Alloy Steel Pipes from Brazil

(57 FR 42940, September 17, 1992) in which the Department based its

final determination on the best information available (the statutory

predecessor to facts available) in part because the respondent had not

reported certain home market sales of subject pipe which it contended

were not comparable to the products sold in the U.S. market.

The petitioners state that the respondent has met the statutory

requirement (19 U.S.C. 1677e) for the application of facts available

which stipulates that the Department may rely on an adverse assumption

of the facts available when ``an interested party has failed to

cooperate by not acting to the best of its ability to comply with a

request for information.'' They also argue that the pervasive nature of

the deficiencies, despite numerous opportunities to correct the

information, and unilateral decision making exhibited by the

respondent, indicate a respondent who has not made its best effort to

comply with the Department's information requests.

The respondent argues that the Department should not use AFA in its

final determination because (1) it has cooperated with the Department

throughout the investigation; and (2) the errors found at verification

were inadvertent and due to RIH's inexperience with the Department's

antidumping laws. It argues that the Department should resort to less

drastic solutions than AFA if it finds gaps in the record; the

respondent states that the Department has sufficient verified

information on the record to fill such gaps. It notes that the statute

states that the Department should not resort to adverse inferences

unless an interested party ``has failed to cooperate by not acting to

the best of its ability to comply with a request for information.'' (19

U.S.C. 1677e(b)).

Regarding the excluded products in the home market, the respondent

argues that the costs of those products are significantly higher than

the standard pipe products and that there were no sales of these

products to the United States. Thus, they would not have been

considered in the analysis.

DOC Position

We agree, in part, with the petitioners. Section 782(e)(3) of the

Act states that, in reaching a determination, the

[[Page 24274]]

Department will not decline to consider information that is submitted

by an interested party and is necessary to the determination but does

not meet all the applicable requirements established by the Department

if the information is not so incomplete that it cannot serve as a

reliable basis for reaching the applicable determination.

At verification, we discovered numerous errors in the respondent's

reported information. For example, the vast majority of the pre-

selected and surprise sales contained discrepancies. While many of

these errors may be corrected, the number of errors discovered draw

into question the completeness and accurateness of respondent's

remaining sales (i.e., the sales not specifically reviewed at

verification). Additionally, we discovered that the respondent did not

report certain home market and U.S. sales and incorrectly reported the

sales price for certain U.S. sales. Based on these errors and others

discussed in the verification report, we find that the respondent's

response is so incomplete that it cannot serve as a reliable basis for

this determination. Because the information cannot be verified, section

776(a) requires us to use the facts otherwise available.

As facts available, we are basing the respondent's margin on the

average margin calculated in the petition. We are using the petition

rates because this is the only information on the record which could

form the basis for a dumping margin (see ``Facts Available'' section

above).

The respondent has been fully cooperative in the investigation, as

noted above. Also, the errors discovered at verification do not

indicate that the respondent withheld or misreported information to

``obtain a more favorable result.'' SAA at 870. Rather, some of the

errors hurt the respondent while others helped it. Therefore, we have

used the average margin contained in the petition, rather than the

highest margin. The Department's practice has been to assign the

highest margin contained in the petition only where the respondent was

found to have been uncooperative. See Final Determination of Sales at

Less Than Fair Value: Oil Country Tubular Goods from Italy (60 FR

33558, 33559, June 28, 1995).

Because we are basing our final determination on the facts

available, all other interested party comments are moot.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B) of the Act, we are

directing the Customs Service to continue to suspend liquidation of all

entries of circular welded non-alloy steel pipe from South Africa, as

defined in the ``Scope of Investigation'' section of this notice, that

are entered, or withdrawn from warehouse for consumption, on or after

November 30, 1995, the date of publication of our preliminary

determination in the Federal Register. The Customs Service shall

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

amount by which the normal value exceeds the export price, as shown

below. In accordance with section 733(d) of the Act, the suspension of

liquidation based on the Department's preliminary determination may not

remain in effect for more than six months (including the statutorily

permissible extension). In accordance with this provision, the

suspension of liquidation will remain in effect until May 28, 1996.

The weighted-average dumping margin is as follows:

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

Weighted-

average

Exporter/manufacturer margin

percentage

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

All exporters.............................................. 117.66

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

ITC Notification

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

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

the ITC will determine, within 45 days, whether these imports are

causing material injury, or threat of material injury, to an industry

in the United States. If the ITC determines that material injury, or

threat of material injury, does not exist, the proceeding will be

terminated and all securities posted will be refunded or canceled. If

the ITC determines that such injury does exist, the Department will

issue an antidumping duty order directing Customs officials to assess

antidumping duties on all imports of the subject merchandise entered,

or withdrawn from warehouse, for consumption on or after the effective

date of the suspension of liquidation.

This determination is published pursuant to section 735(d) of the

Act.

Dated: May 6, 1996.

Paul L. Joffe,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-11940 Filed 5-13-96; 8:45 am]

BILLING CODE 3510-DS-P