Certain Forged Stainless Steel Flanges From India; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-533-809]

Certain Forged Stainless Steel Flanges From India; Final Results

of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative

Review.

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SUMMARY: On March 29, 1996, the Department of Commerce (the Department)

published the preliminary results of its 1994-95 administrative review

of the antidumping duty order on certain forged stainless steel flanges

from India. The review covers one manufacturer/exporter, Akai Impex,

Ltd. (Akai), for the period February 9, 1994 through January 31, 1995.

We gave interested parties an opportunity to comment on our preliminary

results. We received comments from the sole respondent, Akai, and

rebuttal

[[Page 51264]]

comments from the petitioners, Flowline, Gerlin, Inc., Ideal Forging

Corp., and Maass Flange.

EFFECTIVE DATE: October 1, 1996.

FOR FURTHER INFORMATION CONTACT:

Maureen McPhillips or John Kugelman, Office of AD/CVD Enforcement,

Group III, Import Administration, International Trade Administration,

U.S. Department of Commerce, 14th Street and Constitution Avenue, NW,

Washington, DC 20230; telephone (202) 482-3019 or 482-0649,

respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 29, 1996, the Department published in the Federal Register

(61 FR 14073) the preliminary results of its 1994-95 administrative

review of the antidumping duty order on certain forged stainless steel

flanges from Indian (59 FR 5994, February 9, 1994). On November 7,

1995, the Department extended the date for the final results (60 FR

56141). The Department has now completed this administrative review in

accordance with section 751 of the Tariff Act of 1930, as amended (the

Act).

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Act by the Uruguay Round 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).

Scope of the Review

The products covered by this review are certain forged stainless

steel flanges both finished and not-finished, generally manufactured to

specification ASTM A-182, and made in alloys such as 304, 304L, 316,

and 316L. The scope includes five general types of flanges. They are

weld neck, used for butt-weld line connections; threaded, used to make

threaded line connections; slip-on and lap joint, used to make stub-

end/butt-weld line connections; socket weld, used to fit pipe into

machined recessions; and blind, used to seal off lines. The sizes of

the flanges within the scope range generally from one to six inches;

however, all sizes of the merchandise described above are included in

the scope. Specifically excluded from the scope of this review are cast

stainless steel flanges. Cast stainless steel flanges generally are

manufactured to specification ASTM-A-351. The flanges subject to this

review are currently classifiable under subheadings 7307.21.1000 and

7307.21.5000 of the Harmonized Tariff Schedule of the United States

(HTSUS). The HTSUS subheadings are provided for convenience and Customs

purposes. The written description of the scope remains dispositive.

The review covers one Indian manufacturer/exporter, Akai, and the

period February 9, 1994 through January 31, 1995.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received a case brief from the respondent,

Akai, and a rebuttal brief from the petitioners.

Comment 1: Akai maintains that the Department overstated Akai's

actual profit in its calculation of constructed value (CV) by failing

to remove the following third-country expenses from the gross unit

price: clearing and handling charges, legal stamp charge, inland

freight, inland insurance, international freight, marine insurance, and

packing.

Department's Position: We agree with Akai. In the Department's

preliminary results of this administrative review, we deducted the

total cost of manufacturing, banking charges, and credit expenses from

the third-country gross unit price to derive actual profit for the

calculation of CV.

To accurately determine the actual profit realized by Akai in

connection with the production and sale of stainless steel flanges in

the ordinary course of trade, for consumption in the foreign country,

it is necessary to deduct the amount, if any, included in the price,

attributable to any additional costs, charges, and expenses incident to

bringing the foreign like product from the original place of shipment

to the place of delivery to the purchaser (see, section 773

(a)(6)(B)(ii) of the Act)).

Comment 2: Akai states that certain U.S. observation numbers appear

to be accounted for twice in the margin calculation section of the

computer program.

The petitioners counter that Akai's claim is nothing more than

conjecture and, since Akai failed to point out any specific error

committed by the Department, no changes should be made to the

referenced transactions.

Department's Position: The duplication of U.S. sales observation

numbers resulted from an error in programming. For these final results,

we have corrected the computer program in order to eliminate the

duplication of some U.S. sales in the calculation of Akai's dumping

margin.

Comment 3: Akai requests that the Department reconfirm its

calculation of the normal values (NV), as totally different flanges

have the same NV in a number of instances (e.g., the 1'' BLIND 316L,

the \3/4\'' SORF SOLID, and the 1'' SORF SOLID).

The petitioners claim that Akai's references are both vague and

incomplete because Akai fails to provide any indication of where the

error occurs in the programming or the cause of the error. The

petitioners propose that there is no reason why two different products

could not have the same NV, particularly where NV is based in part on

third-country prices. Since Akai does not provide any specific details

or substantive reasoning demonstrating exactly why the NVs cannot be

the same, the petitioners believe the Department should dismiss Akai's

request.

Department's Position: We agree with the petitioners. Akai failed

to indicate the section of the computer program where the calculation

of the normal values of two different flanges results in identical

normal values. Moreover, Akai did not give any reason why it would be

impossible for the NVs of different flanges to be identical.

Calculation of the NVs of the third-country Canadian sales requires the

deduction of nine different expense categories. In addition, each NV is

a weighted-average price. It is certainly conceivable, therefore, that

two different flanges could have some variables with different values,

yet have identical NVs. In any event, we are unable to reach any

conclusions about Akai's comments on our calculation of NVs without

more specific information.

Comment 4: Akai states that the Department, in this first

administrative review, has not followed the product-matching

methodology used in the original investigation where the Department

considered only the physical characteristics of the product in order of

importance (i.e., alloy, type, and size) to match the U.S. product to

the third-country product. Akai points out that the matching

methodology used in the original investigation was articulated in the

standard Department decision memorandum and in the Department's

questionnaire. In this fist administrative review, however, Akai

contends that the Department has now added cost considerations in

``some unclear and undefined way'' to determine the appropriate model

match. In support of its contention that the Department's product-

matching methodology should be based purely on

[[Page 51265]]

the physical characteristics of the merchandise and not on cost

considerations, Akai cites the Court of International Trade's (CIT)

decisions in Federal-Mogul Corporation and the Torrington Company v.

United States, Slip Op. 96-37 (CIT, February 13, 1996) at 13 and 16,

and NSK v. United States, Slip Op. 96-53 (CIT, March 13, 1996).

Moreover, Akai maintains that the Department offers no rationale for

the inconsistency in the product-matching methodology between the

original investigation and this annual review. Akai cites Bowe Passat

v. United States, Slip Op. 96-73 (CIT, May 8, 1996) to illustrate its

position that ``inconsistent treatment, without any rationale, is

contrary to law.'' In conclusion, Akai states that the Department

provides no explanation or support whatsoever for the matching

methodology chosen, which is, according to Akai, contrary to law.

The petitioners counter that Akai's comments concerning the model-

match methodology chosen by the Department are both inaccurate and

irrelevant. First, the petitioners state that the Department is not

required to follow the product-matching methodology used in the

original investigation in any subsequent administrative reviews.

Indeed, they maintain that in any investigation or subsequent review,

there is a learning curve which the Department travels, and it should

not be restricted from modifying and improving its matching methodology

as it learns more about the various products. Moreover, the petitioners

state that Akai's contention that the Department's ``new'' methodology

incorrectly includes cost considerations is based on Akai's improper

reading of the computer program. The petitioners point out that the

program sorts third-country and U.S. models based on alloy grade, size

trademark, designation, and ASTM standard designation and, when the two

data bases are later merged, the same criteria are used without any

consideration of costs. The petitioners believe that perhaps Akai is

confused by the Department's calculation of the difference-in-

merchandise adjustments difmers) which occurs earlier in the program.

According to the petitioners, the Department calculated the difmers to

ensure that the variable differences in costs between the U.S. and the

third-country models met the Department's 20 percent rule and had

nothing to do with the Department's matching of U.S. and third-country

products.

Department's Position: Akai had no home market or third-country

sales during the period of investigation (POI). The Department,

therefore, in accordance with section 773(a)(4) of the Act, used CV to

calculate foreign market value (FMV) (see Final Determination of Sales

at Less Than Fair Value; Certain Forged Stainless Steel Flanges from

India, 58 FR 68853 (December 29, 1993). The CV of the subject

merchandise is the sum of the cost of manufacturing, the actual amounts

incurred by the exporter during the POI or period of review (POR) for

selling, general, and administrative expenses, the actual profits and

the cost of all containers and all other expenses incidental to placing

the subject merchandise in condition packed ready for shipment to the

United States (see section 773(e) of the Act). Since we used the CV of

the subject merchandise to determine FMV during the POI, rather than a

price-to-price comparison with home market or third-country models,

model-matching methodology was irrelevant.

For the preliminary results of this administrative review Akai did

have third-country sales to Canada which we used for comparison

purposes, if we found an appropriate match. For those sales without a

third-country match, we used the CV of the subject merchandise.

With respect to Akai's objection to the Department's ``addition''

of cost considerations in its model-match methodology in the

preliminary results of this administrative review, in accordance with

section 771(16)(A) of the Act, the Department first identifies and

compares that merchandise which is ``identical'' in physical

characteristics, followed by sales of merchandise which is most

``similar'' in physical characteristics. To make these determinations,

the Department devises a hierarchy of commercially meaningful

characteristics, suitable to each class or kind of merchandise. The

courts have recognized that the Department has broad discretion to

devise the model-match methodology it deems the most appropriate to

determine what constitutes similar merchandise. See Torrington Co. v.

United States, 881 F. Supp. 622, 635 (CIT 1995), Koyo Seiko Co. v.

United States, 66 F.3d 1204, 1209 (CAFC 1995), NTN Bearing Corp. v.

United States, 747 F.Supp. 726, 736 (1990). For the preliminary results

of this administrative review, the Department selected alloy grade,

size, type, and the ASTM standard designation as the hierarchy of

physical characteristics to use in determining the identical or most

similar third-country model to compare to each U.S. model.

In addition, in determining NV, the Department must base its

valuation on the price of ``such or similar merchandise'' sold in the

home market (third country) (see 19 U.S.C. Sec. 1677b(a)(1)(A)). ``Such

or similar merchandise'' is defined in relevant part as ``[m]erchandise

produced in the same country and by the same person as the merchandise

which is the subject of the investigation, like that merchandise in

component material or materials and in the purposes for which used, and

approximately equal in commercial value to that merchandise'' (19

U.S.C. Sec. 1677(16)(B)). When several third-country models are equally

similar in physical characteristics, we choose the third-country model

which, when compared to the U.S. model, has the lowest difference in

variable costs of manufacturing, provided the difmer does not exceed 20

percent of the total cost of manufacturing of the U.S. model. If these

conditions prevail, the Department calculates an adjustment for the

difference in cost in order to select the home market (third-country)

model with the smallest cost difference between it and the U.S. model.

The Department's adoption of the ``20 percent difmer'' test, pursuant

to 19 CFR Sec. 353.57(b)(1992), ensures the selection of the home

market (third-country) model with the greatest commercial similarity to

the U.S. model (see Final Results of Antidumping Duty Administrative

Review of Tapered Roller Bearings from Japan, 57 FR 4952 (February 11,

1992). Therefore, when the four physical criteria of alloy, type, size,

and ASTM standard designation were equally similar, we matched the U.S.

model to the third-country model having the least difference in

variable costs between it and the U.S. model, provided the cost

difference was no greater than 20 percent.

Final Results of Review

As a result of our review, we determine that the following

weighted-average margin exists:

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Margin

Manufacturer/exporter Period of review (percent)

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Akai Impex, Ltd......................... 02/09/94-01/31/95 2.56

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The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between export price and normal value may vary from the

percentage stated above. The Department will issue appraisement

instructions directly to the Customs Service.

Furthermore, the following deposit requirements will be effective

upon publication of this notice of final results of review for all

shipments of certain forged stainless steel flanges from India

[[Page 51266]]

within the scope of the order entered, or withdrawn from warehouse, for

consumption on or after the publication date, as provided by section

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

company will be the rate listed above; (2) for previously reviewed or

investigated companies not listed above, the rate will continue to be

the company-specific rate published for the most recent period; (3) if

the exporter is not a firm covered in this review, a prior review, or

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

manufacturer is, the cash deposit rate will be the rate established for

the most recent period for the manufacturer of the merchandise; and (4)

for all other producers and/or exporters of this merchandise, the cash

deposit rate will be 162.44 percent, the ``all others'' rate

established in the LTFV investigation. These deposit requirements shall

remain in effect until publication of the final results of the next

administrative review.

This notice serves as a final reminder to importers of their

responsibility under 19 CFR Sec. 353.26 to file a certificate regarding

the reimbursement of antidumping duties prior to liquidation of the

relevant entries during this review period. Failure to comply with this

requirement could result in the Secretary's presumption that

reimbursement of antidumping duties occurred and subsequent assessment

of double antidumping duties.

Notification of Interested Parties

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR Sec. 353.34(d). Timely written

notification of return/destruction of APO materials or conversion to

judicial protective order is hereby requested. Failure to comply with

the regulations and the terms of an APO is a sanctionable violation.

Timely written notification of the return/destruction of APO materials

or conversion to judicial protective order is hereby requested.

This administrative review and notice are in accordance with

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

Sec. 353.22.

Dated: September 23, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-25115 Filed 9-30-96; 8:45 am]

BILLING CODE 3510-DS-M