Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

[A-549-502]

Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

SUMMARY: On May 9, 1996, the Department of Commerce (the Department)

published the preliminary results of the administrative review of the

antidumping duty order on certain welded carbon steel pipes and tubes

from Thailand. This review covers Saha Thai Steel Pipe Company, SAF

Steel Pipe Export Company, and Pacific Pipe Company. The period of

review (POR) is March 1, 1994 through February 28, 1995. We gave

interested parties an opportunity to comment on our preliminary

results. Based on our analysis of the comments received, we have

changed the results from those presented in the preliminary results of

review.

EFFECTIVE DATE: November 1, 1996.

FOR FURTHER INFORMATION CONTACT: James Rice or Jean Kemp, AD/CVD

Enforcement Group III, Office 9, Import Administration, International

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

Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-

1374 or (202) 482-4037, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

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 Tariff Act of 1930 (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).

Background

On May 9, 1996, the Department published in the Federal Register

the preliminary results of the administrative review of the antidumping

duty order on certain welded carbon steel pipes and tubes from Thailand

(61 FR 21159, May 9, 1996). The Department has now completed this

administrative review in accordance with section 751 of the Act.

Scope of the Review

The products covered by this administrative review are certain

welded carbon steel pipes and tubes from Thailand. The subject

merchandise has an outside diameter 0.375 inches or more, but not

exceeding 16 inches. These products, which are commonly referred to in

the industry as ``standard pipe'' or ``structural tubing,'' are

hereinafter designated as ``pipe and tube.'' The merchandise is

classifiable under the Harmonized Tariff Schedule (HTS) item numbers

7306.30.1000, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055,

7306.30.5085 and 7306.30.5090. Although the HTSUS subheadings are

provided for convenience and Customs purposes, our written description

of the scope of the order is dispositive.

[[Page 56516]]

Verification

As provided in section 782(i) of the Act, we verified information

provided by Saha Thai and SAF by using standard verification

procedures, including on-site inspection of the manufacturer's

facilities, the examination of relevant sales and financial records,

and selection of original documentation containing relevant

information. Our verification results are outlined in the public

versions of the verification reports.

Analysis of Comments Received

We gave interested parties an opportunity to comment on the

preliminary results. We received comments and rebuttal comments from

Saha Thai/SAF, manufacturers/exporters of the subject merchandise

(respondents), and from Allied Tube & Conduit Corporation, Sawhill

Tubular Division of Armco, Inc., American Tube Company, Inc., Laclede

Steel Company, Sharon Tube Company, Wheatland Tube Company, and Eagle

Pipe (petitioners).

Comment 1: Petitioners contend that for Saha Thai/SAF's U.S. sales

the Department used an incorrect date of sale in its margin

calculation. These incorrect dates were used to determine which sales

took place in the POR, for choosing exchange rates, and for product

matching with home market sales. Petitioners argue that the dates

provided to the Department reflect downstream sales made by parties in

the United States who the Department determined were not related to

Saha Thai or SAF (see memo from Joseph A. Spetrini to Susan G. Esserman

dated April 29, 1996). Because respondent did not provide any sales

dates reflecting the transactions between Saha Thai/SAF and U.S.

importers/resellers, and because certain invoice dates for SAF sales

represent sales based upon long-term contracts which may have been

signed months or years in advance of the invoice date, petitioners hold

that the appropriate date of sale is either the date of the underlying

contract or the date of the purchase order from the U.S. customer to

SAF. However, since neither date appears in SAF's sales listing,

petitioners contend that it is impossible to determine which sales are

appropriately in the POR.

In addition, petitioners argue that there is an unknown universe of

sales contracts and purchase orders made during the POR which would

have been sold by the importers after the POR. These sales were not

reported as Saha Thai sales because the basis for reporting Saha Thai's

U.S. sales was the importers' sales to downstream customers. These

sales may or may not have had SAF invoice dates or entry dates within

the POR. The only other date reported by Saha Thai is the shipment

date, but again, this date does not reflect the date of the sales

contract or purchase order date.

As a result of this failure to place the necessary date of sale

information on the record of this review, petitioners argue that the

Department should base its final results on facts available, pursuant

to 19 U.S.C. 1677e(a), which states that the Department shall base its

determination on the facts available, subject to certain

qualifications, ``if: (1) necessary information is not available on the

record, or (2) an interested party or other person--(A) withholds

information that has been requested by the administering authority * *

* (B) fails to provide such information by the deadlines for submission

of the information or in the form and manner requested, subject to

subsections (c)(1) and (e) of section 1677m of this title, (C)

significantly impedes a proceeding under this subtitle, or (D) provides

such information but the information cannot be verified. * * *''

Petitioners contend that respondents have clearly withheld

information requested by the Department which, if provided, would have

allowed the Department to complete its statutorily mandated tasks in

this review. Specifically, the Department requested information

regarding the sales process between Saha Thai and its customers.

According to petitioners, Saha Thai failed to provide a complete

explanation of its sales process and did not clearly state that it

enters into contracts for the sale of pipe, either directly or through

SAF, to the importers. It provided no details of any such contracts,

and did not provide an example of a contract prior to verification. In

addition, the Department warned Saha Thai in a letter of January 11,

1996 that it should ``be prepared to reclassify these SAF-related sales

if the Department determines that they should be treated as EP sales.''

Petitioners assert that this is an unambiguous request for Saha Thai to

ensure that the proper information was on the record to perform an EP

sales analysis. Saha Thai responded by simply stating that ``there is

no legal basis for reclassification of SAF-based U.S. sales.''

Petitioners contend that the information currently existing on record

cannot be used for the final results under 19 U.S.C. 1677m(e) since the

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

reaching the final results and cannot be used without undue difficulty.

Consistent with sections 1677e(b) (3) and (5), the Department should

apply the 17.28 percent margin found in the amended final results of

the 1992-93 administrative review. Petitioners add that resorting to

facts available would be consistent with Departmental practice, as

evidenced by Circular Welded Non-Alloy Steel Pipe from South Africa (61

FR 24271, 24272-3, May 14, 1996) and Circular Welded Non-Alloy Steel

Pipe from Brazil (57 FR 42940, September 17, 1992), affirmed sub nom.

Persico Pizzamiglio S.A. v. United States, Slip Op. 94-61 (CIT 1994).

Respondents argue that they prepared their questionnaire response

based on the assumption that the Department would accept their

arguments that Saha Thai's U.S. sales would be considered CEP sales due

to the relationship which existed between the producer/exporter and

importer/reseller in the U.S. The respondents did not anticipate the

Department's contrary decision. Saha Thai argues that neither the

Department nor petitioners raised any significant concerns over the

dates of sale reported in Saha Thai's responses, and did not advise

Saha Thai that it should report two dates of sale in its supplemental

questionnaire response, one for the resale in the United States and one

for the sale from Saha Thai to SAF. Respondents add that petitioners'

call for the use of facts available is an ``extraordinarily harsh''

result, considering the circumstances involved in this case.

Respondents agree with petitioners that the incorrect date of sale

was used in the preliminary determination and that a date of sale,

using pre-URAA methodologies, does not appear in the response.

Respondents propose that the Department use Saha Thai's invoice date as

the date of sale for purposes of its final determination. According to

Saha Thai, the proposed antidumping duty regulations make invoice date

the date of sale in most circumstances, including those prevailing in

this administrative review. Proposed section 351.401(i) states that

``in identifying the date of sale of the subject merchandise or foreign

like product, the Secretary normally will use the date of invoice, as

recorded in the exporters or producer's records kept in the ordinary

course of business.'' As an alternative, Saha Thai suggests that the

Department reopen the administrative record for the limited purpose of

permitting Saha Thai to submit the dates of sale for all sales subject

to review.

Respondents also disagree with petitioners' concerns that certain

sales subject to the review are missing from the data base. Respondents

assert they

[[Page 56517]]

reported all sales which entered the U.S. during the period of review.

Department's Position: In its questionnaire response, Saha Thai

asserted that because it and its two primary U.S. customers shared an

ownership interest in SAF Steel Export Company, the importers/resellers

in the United States were related to the producer/manufacturer by means

of this common ownership of SAF. Saha Thai reported the subsequent

downstream sales as constructed export price (CEP) sales made to the

first unrelated party in the United States. However, in our preliminary

results, we treated Saha Thai and SAF as a single enterprise and

determined that this enterprise was not related to the importers/

resellers in the United States, and we instead used Saha Thai/SAF's

export price (EP) sales to these importers/resellers as the United

States sales. As a result of this decision by the Department to review

the EP sales made by Saha Thai/SAF rather that the downstream sales

originally reported as CEP, the Department finds that the record of

this review does not contain the information normally required to

determine the date of sale to be used to compare these EP sales to

normal value. Given this background, the Department agrees with both

parties that an incorrect date of sale was used in the preliminary

results of this administrative review for these sales.

However, the Department disagrees with petitioners' assertion that

resorting to facts available is appropriate for our final results.

Although respondents contend that they had no expectation that the

Department would examine Saha Thai/SAF's sales to the U.S. importers,

respondents should have reported the contract date of the sales in

question. Notwithstanding the deficient content of Saha Thai's

response, the Department determines that resorting to facts available

in this review would not be appropriate because Saha Thai's response is

otherwise usable within the meaning of section 782(e) of the Act. Saha

Thai's response was timely and verifiable. The response also listed the

invoice dates of sales made by Saha Thai/SAF to the U.S. importers/

resellers, which the Department has found to be a reliable alternative

for the missing date of sale information. Moreover, the Department does

not consider respondents to have withheld ``information that has been

requested'' by the Department, as the Department did not clearly

instruct Saha Thai/SAF to report the date of sale for its sales to the

U.S. importers.

Although the dates of sale of transactions between Saha Thai/SAF

and the primary U.S. importers/resellers are not on the record of this

proceeding, the respondent did provide, and the Department verified,

the invoice date pertaining to these sales made by Saha Thai/SAF to the

importers/resellers in the United States. Because the Department has

determined that the use of facts available is not appropriate, the

Department has determined to use invoice date as date of sale. Using

invoice date as date of sale is consistent with the Department's

proposed antidumping regulations and represents a reasonable surrogate

for the actual date of sale when the essential terms of the sale were

established: as stated in the Department's Notice of Proposed

Rulemaking and Request for Public Comment (61 FR 7308, 7330, February

27, 1996), the Department ``will rely on the date of invoices as date

of sale.''

The Department acknowledges that certain U.S. sales were made

pursuant to long-term contracts between Saha Thai/SAF and the U.S.

purchasers/resellers and that there may be a substantial lag between

the contract date and invoice date. However, the Department verified

that Saha Thai/SAF reported all invoices during the POR that were

issued pursuant to these contracts and that these invoices contain the

price, quantity, specifications, and the terms of sale established in

the long-term contracts. We are assured that we analyzed all sales of

subject merchandise which were shipped to the United States during the

POR. Therefore, after extensive consideration of the date of sale

issue, we conclude that for the sales in question it is reasonable to

utilize date of invoice as date of sale.

Comment 2: Petitioners allege that the Department has incorrectly

reduced the amount of ocean freight to be deducted from export price by

multiplying that value by the exchange rate. Saha Thai's reported ocean

freight was reported in U.S. dollars/MT. Therefore, the Department

erred by multiplying this value by the exchange rate. Respondents did

not address this issue.

Department's Position: We agree with petitioners, and the final

results incorporate this correction to the program.

Comment 3: Petitioners contend that the Department erred by

deducting indirect selling expenses and inventory carrying costs from

both export price and normal value. Such deductions are appropriate

only in a constructed export price scenario (see 19 USC 1677a(d)).

Saha Thai states that U.S. direct selling expenses should not have

been deducted from export price, in accordance with section 772 of the

URAA.

Department's Position: The Department agrees with both parties

that, in accordance with section 772 of the Act, direct and indirect

selling expenses should not have been deducted from export price. Also,

indirect selling expenses should not have been deducted from NV, in

accordance with section 773 of the Act. These corrections are reflected

in the final results.

Comment 4: Petitioners argue that, in calculating constructed value

(CV) for four products not sold in the home market, the Department

applied an incorrect methodology to calculate profit. Petitioners

allege that the department calculated CV profit based upon the average

profit of all the products sold in the home market. Petitioners contend

that the Department should have calculated the profit on these four

product codes using the average profit of those home market sales that

passed the arms-length test and exclusive of sales made at below cost

of production. Petitioners add that 19 USC 1667b(e)(2)(A) requires that

CV profit be calculated using ``actual amounts incurred and realized *

* * for profits, in connection with the production and sale of a

foreign like product, in the ordinary course of trade, for consumption

in the foreign country. * * *'' According to petitioners, the statutes

states that sales disregarded pursuant to 19 USC 1667b(b)(1) as being

made at below the cost of production shall be outside the ordinary

course of trade (see 19 USC 1677(15)).

Respondents contend that the Department's calculation of profit for

merchandise sold in the United States but not in the home market is

correct. Respondents state that the Tariff Act of 1930 as amended by

the URAA and the accompanying Statement of Administrative Action (SAA)

clearly state that the exclusion of below-cost sales is not required

nor is contemplated by the statute to calculate the profit for products

not sold in the home market. According to respondents, 19 USC

1677b(e)(2)(A) states that the profit used in constructed value shall

be based on the ``actual amounts incurred and realized'' by the

producer ``in connection with the production and sale of a foreign like

product, in the ordinary course of trade, for consumption in the

foreign country. * * *'' In such cases where there are no home market

sales of the foreign like product, 19 USC 1677b(e)(2)(B) sets forth

three alternatives for determining a CV profit: (1) The actual amount

of profit incurred or realized by the same producer on home market

sales of the same general

[[Page 56518]]

category of products; (2) the weighted-average of actual amounts

incurred or realized by other investigated companies on home market

sales of the foreign like product; or (3) any other reasonable method,

provided that the amount of profit does not exceed the profit normally

realized by other companies on home market sales of the same general

category of profits. Respondents argue that 19 USC 1677b(e)(2)(B)(i)

contains no limitations on the universe of sales to be used by the

Department in calculating average profit, except that the sales must be

from the same ``general category of products.'' Respondents continue by

stating that the prohibition against below-cost sales contained in 19

USC 1677b(e)(2)(A) is not applicable to the alternative methodologies

contained in 19 USC 1677b(e)(2)(B). While both these sections make

reference to the calculation of profit, the SAA makes clear that these

provisions are separate and distinct and can only be used in narrowly

defined circumstances. Respondents contend that if Congress had

contemplated the exclusion of below-cost sales in such circumstances, a

specific reference would have appeared in the statute or in the SAA.

Department's Position: When calculating profit for purposes of CV,

we have excluded below-cost sales in accordance with section

773(e)(2)(A) only when we have disregarded home market sales because

they failed the cost test. See Statement of Administrative Action

Accompanying the URAA, reprinted in H.R. Doc. No. 316, 103rd Cong., 2nd

Sess. 834, 839-840 (1994). We have not calculated CV profit in

accordance with section 773(e)(2)(B) because that provision applies

only when there are no home market sales of the foreign like product or

when all such sales are at below-cost prices (SAA at 840). In this

review, we have determined that all products produced by the respondent

and sold in the home market during the POR are foreign like products

within the meaning of section 771(16). Moreover, we have determined

that there are sufficient above-cost sales upon which to base CV

profit. Accordingly, section 773(e)(2)(B) is not applicable in this

review.

Comment 5: Petitioners argue that Saha Thai's duty drawback

calculation is incorrect, and that the adjustment to export price

should be denied. Petitioners contend that at verification, the

Department discovered for the first time that the reported drawback for

1995 sales was based upon December 1994 data because Saha Thai had not

received the correct data in time for the response. According to

petitioners, this information was not disclosed to the Department until

verification. Petitioners contend that Saha Thai is eligible for a

drawback only in the amount of duties actually paid and rebated, in

accordance with 19 U.S.C. 1677a(c)(1)(B). Because that amount was

unknown as late as April, 1996, when Saha Thai submitted its final

revisions to its response, the duty drawback adjustment made to 1995

sales should be denied.

In addition, petitioners argue that Saha Thai has overstated the

duty drawback adjustment it is entitled to on all U.S. sales by the

amount of the back guarantees posted to the Thai government. According

to petitioners, Saha Thai is required to post a cash deposit equal to

the value of the import duties plus an additional 20 percent.

Petitioners contend that Saha Thai is not entitled to claim the entire

amount as a drawback of duties. It is argued that the additional 20

percent does not represent a drawback within the meaning of section

772(c)(1)(B) because this 20 percent represents a premium owed to the

government as a penalty if the merchandise is not exported in the

required time period. The statute states that an exporter is eligible

for an adjustment only for import duties paid and rebated, thus Saha

Thai's claim for an adjustment for the entire amount paid plus 20

percent overstates what Saha Thai is eligible to claim.

Respondents agree with petitioners that its reported 1995 duty

drawback figures were necessarily based upon its December 1994 actual

drawback experience. Saha Thai states that it did not have access to

drawback documentation for shipments made in 1995 until well after its

response was due to the Department.

Regarding petitioners' concern that respondent overstated its

drawback figures to include the 20 percent bank guarantee, Saha Thai

states petitioners are in error. Saha Thai asserts that the Department

thoroughly verified petitioners' concerns regarding this issue, and

found Saha Thai's claims to be consistent with information in Saha

Thai's records. At verification, the Department reviewed Saha Thai's

bank guarantees, Customs Department duty refund documentation, and

various import documents which demonstrate that the duty drawback

figures reported to the Department do not include the additional 20

percent premium charged on bank guarantees.

Department's Position: For both 1994 and 1995 (for which

documentation was not available at the time of the questionnaire

responses, but was available to respondent and the Department at

verification), the Department verified that Saha Thai correctly

reported its claimed duty drawback adjustment and that Saha Thai did

not include the additional 20 percent bank premium. For further

information, please see the Department's verification report (Memo to

File from James Rice and Rick Johnson, April 30, 1996).

Comment 6: Petitioners argue that the Department should disregard

Saha Thai's claimed theoretical weight adjustment. Petitioners note

that the Department's verification report indicates that Saha Thai has

the ability to calculate a product-specific weight adjustment, and

argue that respondent should have done so rather that calculate an

average weight adjustment. Petitioners contend that in previous

reviews, Saha Thai has provided the information necessary to make this

calculation. Use of a single ratio is, according to petitioners,

unjustified where the respondent has demonstrated the ability to

compile the necessary information in a similar review.

Saha Thai argues that the Department has accepted a weighted-

average adjustment in previous reviews (1992-93 administrative review).

Additionally, previously calculated product-specific theoretical weight

adjustments varied with factors that occur randomly by size and by time

period. Saha Thai can often use coils of two or three different

thicknesses to produce a given size and grade of pipe. The use of

thicker or thinner coils depends on the coil in stock, and the unit

price affects the weighted-average theoretical weight adjustment in

ways that are unpredictable and not intrinsically related to the

physical characteristics of the merchandise. Moreover, there is no

evidence on the record indicating that Saha Thai takes such variations

into account in pricing its product in any market.

Department's Position: As stated in the Department's verification

report, we reviewed Saha Thai's theoretical weight adjustment

calculation and found it consistent with previous administrative

reviews (see Certain Circular Welded Carbon Steel Pipes and Tubes from

Thailand: Amended Final Results of Antidumping Duty Administrative

Review in Accordance with Decision on Remand 61 FR 29533 (June 11,

1996) and Certain Circular Welded Carbon Steel Pipes and Tubes from

Thailand 56 FR 58355 (November 19, 1991), which were accepted by the

Department. In addition, it was determined by the Department that coils

of varying thicknesses are used by Saha Thai to produce a particular

size and grade pipe

[[Page 56519]]

product. In addition, even though the final product may incorporate

various thicknesses of coil (representing different coil costs), there

was no evidence found a verification that such different coil costs

affected the final price of the subject merchandise.

Comment 7: Petitioners object to Saha Thai's practice of shifting

the interest expense embedded in the cost of coil to SG&A. Petitioners

contend that this practice of deducting interest expense from the coil

cost and adding it to SG&A has the effect of reducing Saha Thai's

reported cost of production. Petitioners contend that these interest

costs are a part of the direct acquisition cost of the coil and are

properly included in raw materials costs.

Saha Thai argues that the Department resolved this issue in the

final results of the 1992-93 administrative review, finding that

interest expenses are fungible and therefore should be treated as a

general expense of the corporation. Consistent with that determination,

respondent holds that it is appropriate to transfer interest expenses

from raw material cost to SG&A. Such expenses should be included either

in SG&A, as provided in Saha Thai's supplemental questionnaire

response, or in interest expense.

Department's Position: As stated in the final results of the 1992-

93 administrative review of this case, we consider the cost of raw

materials to be the price reflected in the supplier's invoice for those

materials. Any financing charges itemized on the supplier's invoice are

properly regarded as interest expenses, not material costs. See, Oil

Country Tubular Goods From Israel; Final Results of Antidumping Duty

Administrative Review, 57 FR 1140 (April 3, 1992). We consider the

expenses Saha Thai incurs to finance its material purchases through its

supplier to be fungible and, therefore, a general expense of operating

the company. See, Circular Welded Carbon Steel Pipes and Tubes from

Thailand; Final Determination of Sales at Less Than Fair Value, 51 FR

3384 (January 27, 1986), Circular Welded Carbon Steel Pipes and Tubes

from Thailand: Final Results of Antidumping Duty Administrative Review,

61 FR 1328 (January 19, 1996). Therefore we have continued to classify

Saha Thai's interest expenses as SG&A expenses for these final results

of review.

Comment 8: Petitioner states that the Department incorrectly

calculated total cost of production (TOTCOP) and net sales price

(NPRICOP) for its below cost sales test. 19 USC 1677b(b)(3) requires

that cost of production include (1) to the cost of materials,

fabrication and processing, (2) an amount for selling, administrative

and general expenses, and (3) the cost of containers (packing).

Petitioners argue that the Department failed to include selling

expenses in its calculation of TOTCOP. Petitioners contend that the

Department improperly deducted selling expenses from NPRICOP rather

than properly adding them to TOTCOP in accordance with the statute.

Respondents note that petitioners' arguments are not reflective of

the Department's standard policy regarding the calculation of TOTCOP

and NPRICOP. Saha Thai asserts that if selling expenses are included in

TOTCOP, then domestic transportation and selling expenses should not be

deducted from the NPRICOP in order to ensure that there is an apples-

to-apples comparison.

Department's Position: The Department agrees that our comparison of

net sales price and cost of production was incorrect. In order to

ensure an ``apples to apples'' comparison between the net home market

selling price and the total cost of production of the subject

merchandise, for the final results of this administrative review, in

accordance with section 773(b)(3)(B) we included selling expenses in

the calculation of total cost of production and did not deduct domestic

transportation expenses from NPRICOP.

Comment 9: Saha Thai argues that the Department departed from

established practice when it immediately resorted to constructed value

rather than moving on to the next most similar home market sale where

an appropriate (identical or first most similar) match could not be

found. Respondents cite Certain Forged Steel Crankshafts from the

United Kingdom (56 FR 5975, 5977, February 14, 1991) (Crankshafts from

the United Kingdom) in which the Department stated ``In the first

review, when there were no contemporaneous sales of the most similar

home market model to compare with sales of a U.S. model, we examined

the other similar models for contemporaneity. As a result of this

examination, we found that none of those other sales was

contemporaneous. As a result, we had to rely on CV as the basis for

FMV. However, the facts are different in this review. In this review

[the second administrative review of Crankshafts from the United

Kingdom], when there were no contemporaneous sales of the most similar

model match, there were often contemporaneous sales of the next most

similar models.'' Saha Thai adds that this policy was followed in

previous reviews in this proceeding, and that the Department should use

the suggested model matches as submitted by Saha Thai.

Petitioners argue that the Department correctly resorted to CV, and

is acting in accordance with longstanding Departmental policy in

accordance with precedent of the Court of International Trade.

Petitioners cite 19 U.S.C. 1677(16), which provides for only one

foreign like product for each U.S. product sold. Petitioners contend

that this provision sets up a hierarchy of three choices for foreign

like product in order of preference and dictates that the foreign like

product is the first category for which a determination may be made,

indicating that once a foreign like product is established, that choice

cannot be altered by the operation of the 90/60 window. The foreign

like product cannot be different during different 90/60 day periods of

the same review period.

Petitioners contend that 19 U.S.C. 1677(a)(4) directs the

Department to apply constructed value whenever a duly chosen foreign

like product cannot be used to determine normal value under section

1677(a)(1)(B). Citing Color Television Receivers from the Republic of

Korea (58 FR 52262, 52263 (October 7, 1993)), petitioners assert that

both the Department and the CIT have adhered strictly to the plain

language of the statute by refusing to read into the hierarchy such

factors as whether a sale is in the ordinary course of trade (see,

Cyanuric Acid and its Chlorinated Derivatives from Japan Used in the

Swimming Pool Trade, 49 FR 7424 (February 29, 1984), which was

sustained in Monsanto Co. v. United States, 698 F. Supp. 275 (CIT

1988), at the same level of trade (citing Timken Co. v. United States,

673 F. Supp. 495 (CIT 1987) and NTN Bearing Co. v. United States, 747

F. Supp. 726, 736 (CIT 1990)), or whether the price is below the cost

of production (citing Antifriction Bearings from France et al., 57 FR

28360, 28373 (June 24, 1992)). The same considerations of statutory

interpretation also prevent the 90/60 contemporaneity test from being

insinuated into section 1677(16).

Petitioners hold that attaching the 90/60 contemporaneity test to

section 1677(16) would not only be inconsistent with Departmental

practice and the CIT, but would also reach beyond the scope of the

Department's statutory authority. Petitioners state that the Department

is bound by the plain language of the statute--a conclusion that it

must base normal value on CV pursuant to 19 U.S.C. 1677b.

Department's Position: In this review, we used the following model

match methodology: in the model match

[[Page 56520]]

program, we compared U.S. sales to contemporaneous home market sales of

the comparison model that was physically ``most similar'' and which

passed the 20 percent difmer test (which often resulted in an identical

match). In the margin calculation program, we used the results of the

model match program to merge a U.S. sale with the ``most similar'' home

market sale within the 90-60 window. If no match was found, either

because the model match program found no contemporaneous sale of an

identical or similar product or because the appropriate home market

sales failed the COP test, the U.S. sale was compared to CV.

We disagree with the respondents' contention that this methodology

is a departure from ``established practice.'' Our model match

methodology is consistent with our practice of determining the foreign

like product based upon the similarity of the merchandise and resorting

to CV only when the sale of the identical or most similar merchandise

fails our COP test. See, e.g., Antifriction bearings (Other than

Tapered Roller Bearings and Parts Thereof from France et al., 58 FR

39729, 39764-66 (July 26, 1993). We also disagree with the respondents'

contention that we must use the ``next most similar'' match before

resorting to CV. Section 771(16) of the Act provides the Department

with discretion to determine which merchandise (foreign like product)

may be reasonably compared to subject merchandise and provides a

hierarchy of preferences for determining which merchandise sold in the

foreign market is most similar to merchandise sold in the United

States. The model match methodology we used in this review identified

the ``most similar'' foreign like product taking into account the

contemporaneity of the match. After identifying the ``most similar''

foreign like product, we apply the cost test under Sec. 773(b) because

the COP test should not be part of the basis for determining the ``most

similar'' foreign like product. Section 771(16) does not direct us to

the ``next most similar'' foreign like product if the first match is

sold below cost. Therefore, we use CV when the ``most similar'' foreign

like product is sold below cost. This methodology, which the Court of

International Trade affirmed in Federal Mogul Corp. v. United States,

918 F. Supp. 386, 396-97 (CIT 1996), is consistent with the requirement

in section 771(16) that the determination of the foreign like product

be based solely upon the similarity of the merchandise and not whether

the merchandise is sold below cost. The methodology used in Crankshafts

from the United Kingdom was a deviation from our standard practice that

was necessitated by the unique model matching issues and home market

price fluctuations which occurred in that review. The facts on the

record in this review do not warrant a similar deviation from our

standard practice.

Although petitioners agree with the Department's use of CV, we

disagree with petitioners' contention that section 771(16) provides for

only one foreign like product for each U.S. product sold throughout the

POR. Under the URAA, the term ``foreign like product'' was substituted

for ``such or similar'' to conform with terminology used in the

Antidumping Agreement. By this substitution Congress did not intend to

affect the interpretation or practice followed by the Department in

administering the antidumping duty statute. SAA at 820. Accordingly,

depending on the nature of the product subject to examination, there

may be various models that qualify as the ``foreign like product''

within the meaning of section 771(16) just as there may be various

models of ``similar'' merchandise under the pre-URAA statute. Nor do we

agree, as petitioners' suggest, that the 90/60 day test is irrelevant

to selecting the foreign like product under section 771(16). The

Department must identify an appropriate universe of transactions from

which it can select the best model match. Because section 773(a)(1)

requires that price comparisons be based on reasonably contemporaneous

sales, it is the Department's practice to select matches from the

universe of contemporaneous sales. The cases cited by the petitioners

in support of its proposition do not demonstrate that this application

of our contemporaneity test is unreasonable because none of those cases

involved the question of an appropriate comparison based on the date of

sale.

Comment 10: Saha Thai contends that the Department improperly

deducted packing costs from the net U.S. price and from net home market

price, but also added U.S. packing costs to normal value, thus

comparing an unpacked U.S. price to a packed price in the home market.

Petitioners agree with Saha Thai that U.S. packing should not be

deducted from U.S. price.

Department's Position: The Department agrees that in accordance

with section 772(c)(1), U.S. packing should not be deducted from U.S.

price. U.S. packing should instead be added to normal value in

accordance with section 773(a)(6)(A).

Comment 11: Saha Thai alleges that the Department's margin program

erroneously compares a total cost of production (TOTCOM) inclusive of

packing costs to a net price (NPRICOP) from which packing costs have

been deducted. The Department should have compared RCOP (total COP

exclusive of packing) to NPRICOP.

Petitioners disagree with Saha Thai, and argue that section

1677(b)(3)(C) specifically requires the cost of packing be included in

the cost of production for comparison to the home market price.

Department's Position: In accordance with section 773(b)(3)(C), we

have included packing costs in our calculation of the cost of

production. Consistent with our practice described in Comment 8, we

have included these packing expenses costs in NPRICOP to obtain an

``apples-to-apples'' comparison between TOTCOP and NPRICOP.

Comment 12: Saha Thai argues that the Department erred in

calculating export price by deducting U.S. direct selling expenses.

Respondent contends that U.S. direct selling expenses should have been

added to the normal value as a circumstance of sale adjustment, citing

Koyo Seiko Co., v. United States, 796 F. Supp. 1526, 1531 (CIT 1992).

Petitioners disagree with Saha Thai's assertion that U.S. direct

selling expenses should be added to normal value as a circumstance of

sale adjustment. Petitioners contend that it has been long-standing

Departmental policy to deduct direct selling expenses from U.S. price

(export price) rather than add it to FMV (normal value), as proposed by

Saha Thai. According to petitioners, the court reviewed the matter de

novo after finding out that, because it was the Department's policy, it

would have been futile for Koyo Seiko to have raised the issue before

the agency. Moreover, petitioners hold that the court's position on

direct selling expenses was subsequently vacated by the CIT after

remand, citing Koyo Seiko Co. v. United States, 806 F. Supp. 1008 (CIT

1992).

Department's Position: As stated in Stainless Steel Cookware from

the Republic of Korea; Final Results of Administrative Review, 59 FR

10788 (March 8, 1994), it is the Department's policy, when purchase

price (EP) sales are examined, to add U.S. direct selling expenses to

FMV (NV) as a circumstance-of-sale adjustment, pursuant to section 773

of the Act. The URAA did not change this policy. The Koyo Seiko

decisions are irrelevant to this determination because these cases

involved exporter's sales price (CEP) sales which are not subject to

[[Page 56521]]

examination in this review. Therefore, we have corrected this error.

Comment 13: Saha Thai contends that the Department erred in

deducting inventory carrying expenses from net price for purposes of

comparing selling price with cost of production. Saha Thai argues that

this value is included in its reported general and administrative

expenses and is included in its total cost of production. Therefore,

the Department should not have deducted inventory carrying expenses

from the net price before comparing that net price to Saha Thai's cost

of production. Saha Thai holds that this deduction is contrary to the

Department's policy (see Import Administration Policy Bulletin, No.

94.6, March 25, 1994). Petitioners did not comment on this issue.

Department's Position: The Department agrees with respondent

because the deduction of inventory carrying expenses from net price

does not result in an apples-to-apples comparison. The Department does

not make adjustments for imputed costs in comparing prices to COP. To

deduct inventory carrying expenses from the net price without a similar

adjustment to total cost of production would distort the Department's

cost test.

Comment 14: Saha Thai argues that the Department double counted

respondents' interest expense for both total cost of production and

constructed value. The Department created the variable INTEX, which

represents Saha Thai's net interest expense as a percentage of its

total cost of goods sold. Saha Thai holds that its actual interest

expense is already reported in its general and administrative expenses.

This addition of an imputed interest factor, according to respondent,

is in violation of section 773(e)(2)(A) of the Act, which requires that

the Department base selling, general, and administrative expenses on

``actual amounts incurred and realized'' by the respondent. In

computing CV these costs may not be based on imputed amounts or an

arbitrary minimum.

Petitioners contend that it is appropriate for the Department to

use the higher INTEX value as a substitute for Saha Thai's reported

interest expense as an adverse inference because Saha Thai failed to

report the correct sales for the POR.

Department's Position: The Department agrees with respondents,

because the inclusion of the imputed interest expense factor INTEX has

the effect of double counting Saha Thai's reported, and verified,

interest expense. We have deleted the variable INTEX from the margin

calculation program.

Comment 15: Saha Thai argues that the Department erred in computing

the import-specific assessment rate by multiplying the margin by U.S.

quantity twice. Petitioners did not comment on this issue.

Department's Position: We agree with respondent, and this error as

been corrected.

Final Results of Review

As a result of our review, we have determined that the following

margins exist:

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

Margin

Manufacturer/exporter Time period (percent)

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

Saha Thai/SAF........................... 3/1/94-2/28/95 5.95

Pacific Pipe Co......................... 3/1/94-2/28/95 (\1\)

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

\1\ No sales during the review period.

The Department shall determine, and the Customs Service shall

access, antidumping duties on all appropriate entries. Individual

differences between United States price and normal value may vary from

the percentages 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 welded carbon steel pipes and tubes from Thailand

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

publication date, as provided for by section 751(a)(1) of the Act: (1)

the cash deposit rates for the reviewed companies will be the rates for

those firms as stated above; (2) for previously investigated or

reviewed companies not listed above, the cash deposit 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 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) the cash

deposit rate for all other manufacturers or exporters will continue to

be 15.67 percent, all other rates established in the LTFV

investigation. See Final Determination and Antidumping Duty Order:

Certain Welded Carbon Steel Pipes and Tubes from Thailand, (51 FR 8341,

March 11, 1986).

These deposit requirements, when imposed, 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 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 incurred and the subsequent

assessment of double antidumping duties.

This notice also serves as the only reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with section 353.34(d) of the Department's

regulations. Timely 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.

This administrative review and notice are in accordance with

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

Dated: October 23, 1996.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 96-28116 Filed 10-31-96; 8:45 am]

BILLING CODE 3510-DS-M