Final Negative Determination of Scope Inquiry on Certain Circular Welded Non-Alloy Steel Pipe and Tube From Brazil, the Republic of Korea, Mexico and Venezuela

DEPARTMENT OF COMMERCE

[A-351-809, A-580-809, A-201-805, A-307-805]

Final Negative Determination of Scope Inquiry on Certain Circular

Welded Non-Alloy Steel Pipe and Tube From Brazil, the Republic of

Korea, Mexico and Venezuela

AGENCY: Import Administration, International Trade Administration

Commerce.

ACTION: Notice of Final Negative Determination of Scope Inquiry.

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SUMMARY: On January 13, 1994, we preliminarily determined that (i) pipe

certified to American Petroleum Institute (API) 5L line pipe

specifications (API 5L line pipe or line pipe) and (ii) pipe certified

to both the API 5L line pipe specifications and the less-stringent

American Society for Testing and Materials (ASTM) A-53 standard pipe

specifications (dual-certified pipe,1) when actually used as

certain circular welded non-alloy steel pipe (standard pipe), and

falling within the physical parameters outlined in the scope of the

orders, are within the scope of the antidumping duty orders on standard

pipe from Brazil, the Republic of Korea, Mexico and Venezuela. See

Preliminary Affirmative Determination of Scope Inquiry, 59 FR 1929

(January 13, 1994) (Preliminary). We gave interested parties an

opportunity to comment.

\1\ This merchandise, sometimes referred to as ``dual-

stenciled,'' may also include ``multiple-stenciled'' pipe.

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After a thorough analysis of the comments received from the

parties, as well as a review of the record evidence from the less-than-

fair-value (LTFV) investigations which gave rise to these antidumping

duty orders, we determine that (i) pipe certified to the API 5L line

pipe specification, and (ii) pipe certified to both the API 5L line

pipe specifications and the less-stringent ASTM A-53 standard pipe

specifications which fall within the physical parameters outlined in

the scope of the orders and enter as line pipe of a kind used for oil

and gas pipelines are outside the scope of the antidumping duty orders

on certain welded carbon steel non-alloy pipe from Brazil, Korea,

Mexico and Venezuela, irrespective of end use.

EFFECTIVE DATE: March 21, 1996.

FOR FURTHER INFORMATION CONTACT: Robert M. James at (202) 482-5222 or

Zev Primor at (202) 482-5253, Office of Antidumping Compliance, Import

Administration, International Trade Administration, U.S. Department of

Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.

20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute (the

Tariff Act of 1930, as amended (the Tariff Act)) and to the

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

existed on December 31, 1994.

Background

On April 22, 1993, Allied Tube & Conduit Corporation, Sawhill

Tubular Division, Tex-Tube Division American Tube Company, Century Tube

Corporation, Laclede Steel Company, LTV Tubular Products Company,

Sharon Tube Company, Western Tube & Conduit Corporation, Wheatland Tube

Company, and CSI Tubular Products, Inc., petitioners in these cases,

requested that the Department of

[[Page 11609]]

Commerce (the Department) conduct an anticircumvention inquiry.

Petitioners argued pursuant to section 781(c) of the Tariff Act and 19

CFR 353.29(g)(1993), that certain exports from Brazil, Korea and Mexico

of API 5L line pipe and dual-certified pipe were circumventing the

antidumping duty orders on standard pipe because they were actually

used in a standard pipe application. The Department concluded that a

scope inquiry pursuant to 19 CFR 353.29(i) was the appropriate avenue

for addressing the issues raised by petitioners.

The Department initiated its scope inquiry on June 7, 1993 and

granted interested parties the opportunity to comment on whether API 5L

line pipe and dual-certified pipe, when used in standard pipe

applications, are within the scope of the orders. We received comments

from petitioners and six respondents on July 6, 1993 and rebuttal

comments on July 19, 1993. Petitioners and five respondents also met

separately with the Acting Assistant Secretary for Import

Administration to voice their concerns on this issue.

Exports of standard pipe from Venezuela were the subject of a

concurrent antidumping investigation. The scope of the resulting order

is identical to that of the orders covering Brazil, Korea and Mexico.

As a result, we determined that it was appropriate to include imports

from Venezuela in the present scope inquiry. See Memorandum from

Director, Office of Antidumping Compliance, to Deputy Assistant

Secretary for Compliance, October 25, 1993 (hereafter, October 25

Memorandum). In this memorandum we also determined that the record

evidence regarding the scope of the orders contained sufficient

ambiguity to necessitate further comments by the parties. Accordingly,

we asked that interested parties comment on the so-called ``Diversified

Products'' criteria (see below). Petitioners and four respondents filed

comments on November 22, 1993 and rebuttals on December 3, 1993.

On January 13, 1994, the Department published in the Federal

Register its preliminary affirmative scope determination. We concluded

that sufficient ambiguity existed in the record to necessitate

consideration of the ``Diversified Products'' criteria found at 19 CFR

353.29(i)(2). We further determined that the meaning of certain

exclusionary language in the scope of the orders was unclear and,

further, that petitioners had predicated this exclusionary language

upon the ``actual end use'' of the subject merchandise (as opposed to

the ``chief'' or ``primary end use,'' as respondents argue). We further

determined that the scope language ``does not clearly include or

exclude line pipe or dual certified pipe . . . which is actually used

in standard pipe applications.'' Preliminary at 1930. As a result of

our Diversified Products analysis, we determined that line pipe and

dual-certified pipe, when actually used in a standard pipe application

and falling within the physical parameters outlined in the orders, are

within the scope of these orders. See Preliminary at 1933.

Since publication of our preliminary determination we received

comments and rebuttal comments from the following parties: petitioners;

Mannesmann Pipe & Steel Corporation (Mannesmann); Korea Iron and Steel

Association, Dongbu Steel Company, Ltd., Hyundai Steel Pipe Company,

Ltd., Korea Steel Pipe Company, Ltd., Pusan Steel Pipe Company, Ltd.,

and Union Steel Manufacturing Company, Ltd. (collectively, the Korean

respondents); Hyundai Pipe Co., Ltd. (Hyundai); Villacero and Tuberia

Nacional (Villacero); Hylsa, S.A. de C.V. (Hylsa); and Western American

Manufacturing, Inc. (Western). The Governments of Korea and Mexico also

submitted comments.

On April 13, 1994, the Department issued a draft end-use

certificate and requested comments from the interested parties

regarding implementation of end-use certification procedures in the

event of a final affirmative determination. Petitioners, respondents,

and the Government of Mexico commented on the draft end-use

certificate, as did a number of U.S. pipe importers and distributors.

In light of our negative final determination, however, the issue of

end-use certification is moot, so we have not addressed these comments.

Analysis

The regulations governing the Department's antidumping scope

determinations can be found at 19 CFR 353.29. Our criteria for

determining whether a product is included in the scope of an order are

set forth in section 353.29(i)(1). These criteria are the descriptions

of the merchandise contained in the order, the petition, the initial

LTFV investigation, and the determinations of the Department and the

International Trade Commission (ITC). If these descriptions are not

dispositive of the issue, the Department will further consider the

factors provided for under 19 CFR 353.29(i)(2), commonly referred to as

the ``Diversified Products'' criteria (see Diversified Products Corp.

v. United States, 572 F. Supp. 883 (CIT 1983)). These factors are as

follows: (i) the physical characteristics of the product subject to the

scope inquiry; (ii) the expectations of the ultimate purchasers; (iii)

the ultimate use of the product; and (iv) the channels of trade.

However, if the record of the Department's and ITC's proceedings is

dispositive of the issue, then the Department will issue a final scope

determination without reference to the ``Diversified Products''

criteria.

After careful consideration of the comments by the interested

parties, and based upon our review of the record for purposes of this

final determination, we have determined that the scope language adopted

by the Department in the antidumping duty orders excludes line pipe and

dual-certified pipe. This conclusion is supported by the record of the

Department's original investigations. We will address each of the

relevant aspects of the original investigations in turn, below.2

\2\ Because in this final scope determination we have found the

scope language to be dispositive, we have not addressed the

``Diversified Products'' criteria found in section 353.29(i)(2), nor

have we specifically addressed comments by the parties on these

criteria.

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The Language of the Petitions Did Not Address Line or Dual-

Certified Pipe

The original antidumping duty petitions defined the subject

merchandise as ``welded non-alloy steel pipes, of circular cross-

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

regardless of wall thickness, surface finish . . . or end finish . . .

These pipes and tubes are generally known as standard pipe, though they

may also be called structural or mechanical tubing in certain

applications.'' Antidumping Petition, September 24, 1991 at 4. The

product descriptions continued, as required by our regulations,3

with an illustrative listing of typical uses for standard pipe, and

observed that the subject merchandise is most commonly produced to the

ASTM A-53 specification for standard pipe. The petitions did not

mention either line pipe or dual-certified pipe.

\3\ 19 CFR 353.12(b)(4) directs petitioners to include ``[a]

detailed description of the merchandise that defines the requested

scope of the investigation including technical characteristics and

uses of the merchandise, and its current U.S. Tariff classification

number.'' (Emphasis added.)

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In its initiation notice, the Department adopted petitioners'

language to define the merchandise covered by the six concurrent

investigations and also did not mention either line pipe or dual-

certified pipe. See Initiation of Antidumping Duty Investigations:

Circular Welded Non-Alloy Steel Pipe

[[Page 11610]]

from Brazil, the Republic of Korea, Mexico, Romania, Taiwan and

Venezuela, 56 FR 52528 (October 21, 1991). The petitions and the

Department's notice of initiation do not indicate that actual end use

was a consideration in crafting the scope of the investigations. To the

extent that uses of the subject merchandise are noted, this was in

accordance with the Department's regulations. These materials support

the conclusion that physical characteristics, not actual end uses,

defined the scope of the petitions and the initial investigations.

However, the petitions and the initiation notice do not address and,

therefore, do not definitively resolve the treatment of line pipe or

dual-certified pipe.

The Final Scope Language Adopted by the Department Excludes Line

and Dual-Certified Pipe

While the record reflects some initial uncertainty at least as to

whether multiple-stenciled pipe was covered by the Department's

investigations, this uncertainty was resolved early in the proceedings.

Prior to submitting their questionnaire responses, respondents

requested clarification as to whether triple-certified pipe was

included in the scope of the investigations. See Memoranda, Case

Analyst to the File, November 15, 1991. In their comments of November

19, 1991, petitioners recognized that an importer could sell dual-

certified pipe entered under the HTS line pipe item into either the

line pipe or standard pipe market after it entered the United

States.4 Indeed, the purpose of dual-certifying a product is to

alert potential consumers of that product's suitability for use in

either line pipe or standard pipe applications. Petitioners did not tie

treatment of dual-certified pipe to the market in which it was sold.

Instead, petitioners stated that ``[d]ual or triple certified standard

pipe should be covered by these investigations only if they enter the

United States under one of the tariff numbers listed in section I.D.3

of the petitions.'' These tariff numbers, under heading 7306.30 of the

HTS, cover standard pipe, and not line or dual-certified pipe. See

Petitioners' November 19, 1991 submission at 1. Petitioners further

stated that ``[a]ny pipe entered under [HTS] item 7306.10.10 [i.e., the

item heading for line pipe] would be line pipe outside the scope of the

petitions.'' This statement indicates that in the petitioners' view,

the inclusion or exclusion of line pipe is tied to the HTS category.

\4\ Petitioners reiterated this knowledge in their April 22,

1993 anticircumvention petitions: ``[E]nd users of dual-certified

pipe knew that such pipe could be used as either line pipe or

standard pipe . . . End users in the plumbing and building trade,

for example, purchase it for use as standard pipe while energy

companies and utilities purchase it for use as line pipe.''

Anticircumvention Petitions at 13.

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With regard to dual-certified pipe, petitioners noted that this

pipe ``generally enters the United States under the separate tariff

item H[T]S 7306.10.10 while other standard pipe enters into tariff

items H[T]S 7306.30.10 or 7306.30.50.'' Petitioners explained that:

``General Rules of Interpretation 6 and 3(a) of the [HTS]

provide that goods that are classifiable under two or more tariff

subheadings are to be classified under the subheading providing the

most specific description. Subheading 7306.10 which covers `line

pipe of a kind used for oil and gas pipelines' is more specific

than, and therefore takes precedence over, subheading 7306.30,

`other, welded, of circular cross-section, of iron or non-alloy

steel'.'' 5

\5\ Petitioners' November 19, 1991 Letter at 1 and 2.

Here, petitioners recognized that dual-certified pipe was entering

the United States under the HTS item for line pipe because the proper

Customs classification for dual-certified pipe is under this item.

Taken together, these statements establish that petitioners understood

that HTS classification of pipe products was based upon the specificity

of the category, not actual use, and that dual-certified pipe would be

placed in the line pipe category and, thus, excluded from the order.

Petitioners reiterated their intention to exclude any pipe entered

as line pipe in a March 5, 1992 letter to the Department (addressing

structural tubing and mechanical tubing). In this submission,

petitioners stated that ``[t]he scope, as defined by the petition, the

Department and the Commission, clearly excludes both imports of line

pipe entering the United States in [HTS] category 7306.10 and oil

country tubular goods . . .''.

Accordingly, the Department did not require respondents to report

API 5L line pipe and dual-certified pipe as part of its investigations,

and our preliminary and final determinations of sales at less-than-

fair-value adopted the exclusionary language suggested by petitioners

in defining the scope of the orders:

. . . circular welded non-alloy steel pipes and tubes, of

circular cross-section, not more than 406.4 millimeters (16 inches)

in outside diameter, regardless of wall thickness, surface finish

(black, galvanized, or painted), or end finish (plain end, bevelled

end, threaded, or threaded and coupled). These pipes and tubes are

generally known as standard pipe, though they may also be called

structural or mechanical tubing in certain applications. Standard

pipes and tubes are intended for 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 also be

used for light load-bearing and mechanical applications, such as for

fence tubing, and for protection of electrical wiring, such as

conduit shells.

The scope is not limited to standard pipe and tube fencing or

those types of mechanical and structural pipe that are used in

standard pipe applications. All carbon steel pipes and tubes within

the physical description outlined above are included within the

scope of this investigation, except line pipe, oil country tubular

goods, boiler tubing, mechanical tubing, pipe and tube hollows for

redraws, finished scaffolding, and finished conduit. Standard pipe

that is dual or triple certified/stenciled that enters the U.S. as

line pipe of a kind used for oil or gas pipelines is also not

included in this investigation.6

\6\ Final Determination of Sales at Less Than Fair Value, 57 FR

42940 (September 17, 1992); see also Preliminary Determination of

Sales at Less Than Fair Value, 57 FR 17883 (April 28, 1992)

(emphasis added).

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In keeping with the petition and petitioners' November 19, 1991

letter, the scope language adopted by the Department does not make

actual end use a principal consideration in defining the products

covered by the investigations. The first paragraph of the scope

language merely describes the physical characteristics of the subject

merchandise and offers, as do many antidumping duty orders, an

illustrative list of its typical uses. The second paragraph states that

``[a]ll carbon steel pipes and tubes within the physical description

outlined above are included within the scope of these orders . . .''.

Therefore, the language of the scope of the orders relies on physical

characteristics, not on actual or potential end uses.

The scope language goes on to specifically exclude certain types of

pipe that fit the physical description, including ``line pipe, oil

country tubular goods, pipe and tube hollows for redraws, finished

scaffolding, and finished conduit.'' The scope language excludes these

separate categories of pipe, based upon industry classifications,

without discussion of actual end uses. It follows that line pipe is not

covered by the order regardless of how it is finally used.

As to dual-certified pipe, the same analysis of the order's

language holds. The scope provides that ``[s]tandard pipe that is dual

or triple certified/

[[Page 11611]]

stenciled that enters the U.S. as line pipe of a kind used for oil or

gas pipelines is also not included in these orders.'' The emphasis on

pipe ``that enters the U.S. as line pipe,'' language suggested by

petitioners, underscores that the key factors the Department used in

determining the scope of the investigations were the physical

characteristics and the classification of the merchandise as it passed

through U.S. Customs (i.e., ``enters the U.S.''), and not on its

disposition at some later point in the stream of commerce. This

conclusion is supported by the fact that the phrase ``line pipe of a

kind used for oil and gas pipelines'' is taken verbatim from HTS item

7306.10.10. The phrase ``of a kind used for'' is commonly used by

Customs to signify the chief, or principal, use of a product and not

its actual use. See Group Italglass U.S.A., Inc. v. United States, Slip

Op. 93-46 at 6 (CIT March 29, 1993) (``The language in heading 7010 `of

a kind' preceding `used for' simply buttresses the interpretative rule

for use provisions that it is the use of the class or kind of goods

imported that is controlling rather than the use to which the specific

imports were put.''). Therefore, by the language of the scope, if pipe

enters the United States as pipe ``of a kind used for oil and gas

pipelines'' (i.e., is classified by Customs under HTS item 7306.10.10),

it is excluded from the scope of the orders.

The Determinations of the ITC Did Not Cover Line Pipe

The ITC, in defining the like product for purposes of its injury

investigations, followed the language adopted by the Department in the

notice of initiation. In its preliminary determination, the ITC first

discussed the products ``subject to these investigations;'' the ITC

later defined line pipe and dual-certified pipe under the separate

heading ``Other Pipe and Tube Products,'' stating that line pipe is

``produced to meet different specifications than `standard' pipes, and

a large percentage of line pipes are made to larger diameters than the

pipes and tubes subject to these investigations.'' Determinations of

the Commission (Preliminary), USITC Publication 2454 (November 1991) at

A-9. The ITC continued to draw a distinction between line and dual-

certified pipe in its final determination and did not include producers

of line pipe in its definition of the U.S. industry for purposes of its

affirmative injury determination. The ITC did not, therefore, examine

the impact of imports of line pipe upon the domestic industry. See

Determinations of the Commission (Final), USITC Publication 2564

(October 1992) at I-7 through I-13. Under U.S. law, the Department

cannot cover within the scope of an order merchandise which has not

first been subject to an affirmative injury determination. See Section

731 of the Tariff Act.

The record with respect to dual-certified pipe is less clear. The

ITC's ``Producers' Questionnaire'' requested data on domestic

production of pipes ``that were single or multiple stenciled to meet

standard pipe specifications.'' ITC Producers' Questionnaire at 14

(original emphasis; submitted as Exhibit 10 to Petitioners' July 6,

1993 Comments). The ITC noted that 15.5 percent of the reported

domestic shipments comprised dual-certified pipe and that ``the

products in question were not sold as standard pipe.'' USITC

Publication 2564 at I-12, note 20 and I-21, note 48. However, the ITC

did not indicate whether or not these shipments were included in its

injury analysis. Furthermore, as petitioners have acknowledged, the ITC

did not include dual-certified pipe in its purchasers' or importers'

questionnaires. See Petitioners' February 23, 1994 Comments at 16.

Therefore, while the ITC's determinations support the conclusion that

line pipe is not covered, the record with respect to the ITC's

treatment of dual-certified pipe is inconclusive, but cannot be read to

conflict with the Department's scope language excluding dual-certified

pipe.

In light of the language of the scope and the underlying record of

the investigations, the Department has concluded that an affirmative

scope ruling would be contrary to the scope language as written and

would represent an impermissable expansion of the scope of the orders.

Accordingly, we have concluded that API 5L line pipe and dual-certified

pipe do not fall within the scope of the orders.

Comments by the Parties

Petitioners maintain that our preliminary affirmative scope

determination is correct, is supported by substantial record evidence

and is in accordance with law. According to petitioners, the ``plain

language'' of the scope includes all pipe meeting the published

physical description of the subject merchandise which is used as, or

intended for use as, standard pipe ``without regard to the tariff

number or industry specifications.'' Petitioners' February 16, 1994

Comments at 2. In light of the Department's preliminary determination

that the scope is not dispositive of this issue, petitioners aver that

the Department's analysis of the ``Diversified Products'' criteria

leads properly to the same affirmative determination. Id. at 3.

Petitioners support the Department's preliminary conclusion (as

outlined in its October 25 Memorandum) that petitioners relied upon HTS

item numbers to identify merchandise covered by the investigations

because they presumed incorrectly that these tariff classifications

were based upon the actual and not the principal end use of the

merchandise. Petitioners February 23, 1994 Rebuttal Comments at 9 and

10. Further, petitioners suggest, the Department's statements in the

orders' scope that standard pipes ``are intended for [specific uses]''

and that ``line pipe of a kind used for oil and gas pipelines is

excluded'' constitute an ``actual'' end-use test and that the

merchandise covered by the scope of the orders is, in fact, defined in

terms of actual end use. Thus, the Department must conduct an analysis

of whether the merchandise is actually used in a standard- or line-pipe

application. See, e.g., Petitioners' Rebuttal Comments, February 23,

1994 at 7 through 9, and 12 through 13. Petitioners further argue that

the Court of International Trade (CIT), in Ipsco, Inc. v. United

States, 715 F. Supp. 1104 (CIT 1989) (Ipsco), held that the

Department's use of the phrase ``intended for use'' permits an inquiry

into how the API 5L and dual-certified pipes at issue here are actually

used. Id. at 14.

Finally, Petitioners suggest that, because the ITC included in its

analysis dual-certified pipe used as standard pipe, a final affirmative

determination would be fully consonant with the requirement, pursuant

to the statute and the General Agreement on Tariffs and Trade (GATT),

that products be subject to an affirmative injury finding prior to the

imposition of antidumping duties. Id. at 15.

Hylsa, the Korean Respondents, Mannesmann, Villacero and Western

agree that the plain language of the scope of these orders is

dispositive of this issue in that this language expressly excludes the

subject products. Respondents further argue that use, actual or

otherwise, played no role in the Department's determination of the

scope of the orders. Respondents suggest that the phrase ``of a kind

used for'' is a Customs ``term of art'' which imposes a chief- or

primary-use test, not an actual end-use test. See, e.g., Villacero's

Comments, February 11, 1994 at 7; Korean Respondents' Comments,

February 16, 1994 at 6 and 7, and 8 through 17, and Hylsa's Comments,

February 16, 1994 at 4 through 9. Respondents also find the Ipsco

decision inapposite here,

[[Page 11612]]

contending that the issue before the CIT in Ipsco involved an order

where ``end use was the defining characteristic'' of that order's

scope. Hyundai's Comments, February 15, 1994 at 7 (original emphasis).

In contrast, argue respondents, the scope of the standard pipe orders

includes ``express exclusionary language;'' therefore, respondents

contend, ``the list of end uses is, as the Department itself concedes,

`illustrative'.'' Korean Respondents' Comments, February 16, 1994 at 25

(original emphasis).

Hylsa, Hyundai, the Korean Respondents, Mannesmann and Villacero

also argue that, contrary to the statute and the GATT, inclusion of API

5L line pipe and dual-certified pipe would subject merchandise to

antidumping duties without the requisite affirmative determination of

material injury to the domestic industry. Citing to these and previous

investigations of standard and line pipe, respondents contend that the

ITC has consistently identified line pipe as a separate like product.

See, e.g., Korean Respondents' February 16, 1994 Comments at 35 and 36.

In these investigations, respondents continue, the ITC limited its

injury analysis to the domestic standard pipe industry and, therefore,

did not include line or dual-certified pipe in its investigations.

The Department's Response

For the reasons cited in the analysis section above, the Department

disagrees with petitioners. After further review of the record

evidence, we find that the language of the orders excludes API 5L line

pipe and dual-certified pipe irrespective of actual end use. While

there may be uncertainty over why these products were excluded from the

orders, as suggested in our October 25 Memorandum, the descriptions of

the merchandise contained in the petition, the initial investigations,

and the determinations of the Department and the ITC, plus the record

compiled during this scope inquiry, indicate that it is correct to

conclude that API 5L line pipe and dual-certified pipe were excluded

from these proceedings from their inception. Further, these documents

indicate that at the time the petition was filed and during the

investigations, the actual end use of the imported merchandise was not

a determinative factor in the formulating the scope description which

was, rather, based upon physical characteristics coupled with product

classifications under the Harmonized Tariff Schedule of the United

States.\7\

\7\ Petitioners also suggest that the order provides HTS numbers

``for convenience and customs purposes'' and the written

descriptions of the merchandise are dispositive. See Petitioners'

February 23, 1994 Rebuttal Comments at 5 and note 13. While the

Department typically includes this disclaimer in its published

notices, here, petitioners explicitly based the product coverage

upon HTS classifications, and quoted directly from the applicable

Customs language to further buttress this emphasis on tariff

classifications. The Department's adoption of petitioners language

and reliance upon Customs classifications is, in fact, part of the

written description of the scope and is, therefore, controlling.

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With respect to petitioners' argument that they misunderstood the

underlying principles of the HTS tariff classifications, as stated in

the analysis section above, petitioners' November 19, 1991 letter

recognizes that the classification system is based on the specificity

of the HTS category, and that dual-certified pipe entered as line pipe

could be sold and actually used as either standard or line pipe

following importation. Further, petitioners state in their July 6, 1993

scope comments that their position with respect to pipe entered under

HTS item 7306.10.10 was based not on the actual use of the pipe but,

rather, on petitioners' lack of interest in pursuing the small quantity

of dual-certified pipe entered under HTS item 7306.10.10 which might

later be used as standard pipe. Petitioners noted their ``belief that

little imported dual stencilled pipe entered as line pipe was going

into standard pipe applications'' and suggested that the quantity of

dual-certified pipe actually used in standard pipe applications ``would

have little or no impact on the operation of a dumping order.''

Petitioners July 6, 1993 Scope Comments at 10.\8\

\8\ In their April 22, 1993 request for an anticircumvention

inquiry (which gave rise to the instant scope inquiry), petitioners

maintained that the scope ``specifically excludes'' API 5L line and

dual-certified pipe. Petitioners quoted the Department's scope

language that ``pipe that is dual or triple certified-stenciled that

enters the U.S. as line pipe of a kind used for oil and gas

pipelines is also not included in this investigation,'' and stated

that ``[l]ine pipe is also specifically excluded'' from the scope of

the orders. See Petitioners' April 22, 1993 Anticircumvention

Petition at 3 and 25. Petitioners included these statements as part

of their explanation of why anticircumvention proceedings, and not a

scope inquiry, were necessary to address petitioners' concerns.

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Even if it were the case, as we suggested in our October 25

Memorandum, that petitioners operated under the ``incorrect

presumption'' that HTS tariff numbers were based upon actual end use,

and that the subject merchandise would be so classified (see October 25

Memorandum at 5, note 5 and 8), the Department does not now have the

discretion to ``correct'' this misapprehension within the context of a

scope inquiry. It is well established that the Department has the

authority to clarify the scope of an antidumping duty order. The

Department may not, however, modify or expand the scope of an order

``in a way contrary to its terms.'' See, e.g., Smith Corona Corp. v.

United States, 915 F.2d 683 (Fed. Cir. 1990); Alsthom Atlantique v.

United States, 787 F.2d 565 (Fed. Cir. 1986); Royal Business Machines

v. United States, 669 F.2d 692 (Fed. Cir. 1982).\9\ Moreover,

regardless of petitioners' intentions, the fact remains that, as a

result of the scope language suggested repeatedly by petitioners and

adopted by the Department in its initiation of these investigations,

the ITC did not consider whether the domestic industry was injured by

imports of line pipe; with respect to dual-certified pipe, the record

is unclear.

\9\ This does not, however, preclude the Department's addressing

the types of concerns raised here by petitioners at the

investigation stage of a proceeding in formulating the scope

language. In fact, the Department has addressed these same concerns

in several recent pipe investigations. See, e.g., Final

Determination of Sales at Less Than Fair Value: Certain Small

Diameter Seamless Carbon and Alloy Steel Standard, Line and Pressure

Pipe from Brazil, 60 FR 31960 (June 19, 1995).

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As to the decision in Ipsco, it is inapposite to the instant scope

inquiry. In Oil Country Tubular Goods from Canada (which gave rise to

the Ipsco decision) the actual end use of the merchandise was an

explicit part of the scope of the order which contains no exclusionary

provisions whatever. See Antidumping Duty Order: Oil Country Tubular

Goods (OCTG) from Canada 51 FR 21782 (June 16, 1986). In contrast to

that case, here the scope of the order is driven by physical

characteristics and tariff classification of the merchandise, not

actual end use, and specifically excludes certain categories of pipe,

including line and dual-stenciled pipe, without reference to intended

or actual uses.

Conclusion

For the reasons cited above, the Department determines that: (i)

pipe certified to the API 5L line pipe specification, and (ii) pipe

certified to both the API 5L line pipe specifications and the less-

stringent ASTM A-53 standard pipe specifications which fall within the

physical parameters outlined in the scope of the orders and enter as

line pipe of a kind used for oil and gas pipelines are outside the

scope of the antidumping duty orders on certain welded carbon steel

non-alloy pipe from Brazil, Korea, Mexico and Venezuela, irrespective

of end use. We will notify

[[Page 11613]]

directly the U.S. Customs Service of this determination.

Dated: March 14, 1996.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 96-6862 Filed 3-20-96; 8:45 am]

BILLING CODE 3510-DS-P