Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-816]

Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan;

Preliminary Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of administrative review.

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SUMMARY: In response to a request by respondent Ta Chen Stainless Pipe

Co., Ltd. (Ta Chen), the Department of Commerce (the Department) is

conducting an administrative review of the antidumping duty order on

certain stainless steel butt-weld pipe fittings (pipe fittings) from

Taiwan. This review covers one manufacturer/exporter of the subject

merchandise to the United States during the period December 23, 1992

through May 31, 1994.

We preliminarily determine that Ta Chen made sales of pipe fittings

below the foreign market value (FMV) for this period of review (POR).

If these preliminary results are adopted in our final results of

administrative review, we will instruct the U.S. Customs Service to

assess antidumping duties equal to the difference between United States

price (USP) and the FMV.

We invite interested parties to comment on these preliminary

results. Parties who submit comments are requested to submit with the

argument (1) a statement of the issues and (2) a brief summary of the

argument.

EFFECTIVE DATE: May 15, 1997.

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

Kugelman at (202) 483-0649, Antidumping and Countervailing Duty

Enforcement Group III, Import Administration, International Trade

Administration, U.S. Department of

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Commerce, 14th Street and Constitution Avenue, NW, Washington, DC

20230.

APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all

citations to 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.

SUPPLEMENTARY INFORMATION:

Background

On June 16, 1993, the Department published in the Federal Register

the antidumping duty order on pipe fittings from Taiwan (58 FR 33250).

On June 7, 1994, the Department published the notice of ``Opportunity

to Request Administrative Review'' for the period December 23, 1992

through May 31, 1994 (59 FR 29411). In accordance with 19 CFR

353.22(a)(1), Ta Chen requested that we conduct a review of its sales

for this period. On July 15, 1994, we published in the Federal Register

a notice of initiation of an antidumping duty administrative review

covering the period December 23, 1992 through May 31, 1994 (59 FR

36160). The Department is now conducting this administrative review in

accordance with section 751 of the Tariff Act.

Scope of the Review

The products subject to this antidumping duty order are certain

stainless steel butt-weld pipe fittings, whether finished or

unfinished, under 14 inches inside diameter.

Certain welded stainless steel butt-weld pipe fittings (pipe

fittings) are used to connect pipe sections in piping systems where

conditions require welded connections. The subject merchandise is used

where one or more of the following conditions is a factor: (1)

corrosion of the piping system will occur if material other than

stainless steel is used; (2) contamination of the material in the

system by the system itself must be prevented; (3) high temperatures

are present; (4) extreme low temperatures are present; (5) high

pressures are contained within the system.

Pipe fittings come in a variety of shapes, with the following five

shapes the most basic: ``elbows,'' ``tees,'' ``reducers,'' ``stub

ends,'' and ``caps.'' The edges of finished pipe fittings are beveled.

Threaded, grooved, and bolted fittings are excluded from this

antidumping duty order. The pipe fittings subject to this order are

classifiable under subheading 7307.23.00 of the Harmonized Tariff

Schedule of the United States (HTS).

Although the HTS subheading is provided for convenience and Customs

purposes, our written description of the scope of this order remains

dispositive.

Use of Best Information Available

We preliminarily determine that the use of best information

otherwise available (BIA), in accordance with section 776(c) of the

Tariff Act, is appropriate for Ta Chen for the period December 23, 1992

through May 31, 1994. We find that in this review Ta Chen

mischaracterized and failed to fully disclose its relationships with

certain U.S. customers and, as a result, did not report its first U.S.

sale to an unrelated party. Therefore, Ta Chen failed to provide the

Department with the U.S. sales data necessary to calculate margins in

this review. Although the bases for this determination are discussed

below, much of the relevant information is proprietary in nature and

cannot be discussed in this public notice. A more detailed analysis is

found in the Department's proprietary Analysis Memorandum, on file in

Room B-099 of the Main Commerce Building.

The Department's definition of related parties is found at section

771(13) of the Tariff Act. Section 771(13) states, inter alia, that:

for purposes of determining United States price, the term

``exporter'' includes the person by whom or for whose account the

merchandise is imported into the United States if--

* * * * *

(B) Such person owns or controls, directly or indirectly,

through stock ownership or control or otherwise, any interest in the

business of the exporter, manufacturer, or producer;

(C) The exporter, manufacturer, or producer owns or controls,

directly or indirectly, through stock ownership or control or

otherwise, any interest in the business conducted by such person * *

*

See Section 771(13) of the Tariff Act (emphasis added).

Throughout this administrative review Ta Chen insisted that it was

not related to any U.S. customer. However, in a supplemental

questionnaire response submitted in a companion case 1

(relevant portions of which have been incorporated into the record of

this review), Ta Chen for the first time disclosed considerable new

information concerning the instant review period which indicates that

Ta Chen was related to two U.S. customers within the meaning of section

771(13) of the Tariff Act. Section 771(13)(C) holds that the term

``exporter'' includes the person by whom or for whose account the

merchandise is imported into the United States if the exporter

``controls, directly or indirectly, through stock ownership or control

or otherwise, any interest in the business conducted by such person.''

The record evidence leads us to conclude that Ta Chen exercised de

facto operational control over these U.S. customers.

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\1\ This document is Ta Chen's November 12, 1996 supplemental

questionnaire response submitted in the 1994--1995 administrative

review of welded stainless steel pipe from Taiwan, case number A-

583-815.

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Our discussion below focuses on two parties, referred to here as

Company A and Company B, which Ta Chen reported as unrelated customers.

Prior to June, 1992 Ta Chen had sold pipe from the U.S. inventory of

its wholly-owned subsidiary, Ta Chen International (TCI). In June 1992,

after Ta Chen decided to stop selling its products from TCI's

inventory, TCI and Company A (a U.S. company established in 1988 by the

president of a Taiwanese firm), signed an agreement whereby Company A

would purchase all of TCI's considerable U.S. inventory and would

effectively replace TCI as the principal distributor of Ta Chen pipe

products in the United States. In a separate June 1992 agreement

between Ta Chen and Company A, Company A also committed itself to

purchasing very substantial, and rapidly increasing, dollar values of

Ta Chen products over the following two years. In September 1993, a

member of Ta Chen's board of directors sold all of his stock in Ta

Chen, allegedly severed all ties with Ta Chen, and incorporated a new

entity, Company B. This new Company B purchased all of Company A's

assets, including inventory, and assumed all of Company A's obligations

regarding its lease of space from Ta Chen's president, purchase

commitments, credit arrangements, etc.

During the instant period of review Ta Chen controlled both Company

A's and then Company B's disbursements through physical custody of

their signature stamps, whereby officials of TCI were authorized to

execute checks and other instruments on behalf of Company A and Company

B. Ta Chen also shared common sales department personnel and office

equipment with Company A and Company B. Furthermore, Ta Chen's sales

manager also served as sales manager for both Company A and Company B.

Ta Chen also had full and unrestricted access, via a dedicated

telephone connection, to Company A's and Company B's computer

accounting systems, including their accounts receivable, accounts

payable, payroll, and other company books. Ta Chen indicated that it

was the sole supplier of stainless steel pipe and

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pipe fittings to Company A and Company B and, further, that its

president participated directly in negotiating the terms of certain

sales Company A and Company B made to subsequent purchasers of pipe

fittings in the United States. Finally, first Company A and, later,

Company B, pledged their accounts receivable and inventory as security

for a sizable line of credit obtained from a local bank by TCI. These

companies also pledged their full cooperation in enforcing this lien in

the event Ta Chen defaulted on its debt.

In addition, we note that for the instant period of review, record

evidence strongly indicates that Ta Chen and Company B were related

parties as defined by section 771(13)(B) of the Tariff Act. At least

for some portion of 1992 until the end of September 1993 (i.e., during

the first POR), Ta Chen's board member simultaneously owned Company B

and held equity interest in Ta Chen. Petitioners in the stainless steel

pipe case have supplied a Dun & Bradstreet report on Company B and a

supporting affidavit which indicates that while Company B was

incorporated in 1993, the board member actually founded the company and

made sales in 1992.

Based on this evidence of Ta Chen's connections with Company A and

Company B, in particular its control over operational functions such as

disbursements, sales personnel, and Ta Chen's involvement in Company

A's and Company B's sales activities, we preliminarily determine that

Ta Chen had a substantial interest in Company A and Company B during

the 1992-1994 POR. Therefore, Ta Chen was related to Company A and

Company B within the meaning of section 771(13) of the Tariff Act.

Because Ta Chen reported U.S. sales to Company A and Company B instead

of the first sale to an unrelated party, the use of best information

otherwise available is warranted.

In selecting BIA, the Department has established a ``two-tier''

hierarchy:

1. When a company refuses to cooperate with the Department or

otherwise significantly impedes the proceedings we use as BIA the

higher of (a) the highest of the rates found for any firm for the same

class or kind of merchandise in the same country of origin in the LTFV

investigation or a prior administrative review, or (b) the highest rate

found in this review for any firm for the same class or kind of

merchandise in the same country of origin.

2. When a company substantially cooperated with our requests for

information, but failed to provide the information in a timely manner

or in the form required, we use as BIA the higher of (a) the highest

rate (including the ``all others'' rate) ever applicable to the firm

for the same class or kind of merchandise from either the LTFV

investigation or a prior administrative review, or (b) the highest rate

calculated in this review for any firm for the class or kind of

merchandise in the same country of origin. See Antifriction Bearings

(Other Than Tapered Roller Bearings) and Parts Thereof From France, et

al.; Final Results of Antidumping Duty Administrative Reviews 57 FR

28360, 28379 (June 24, 1992); see also Allied Signal v. United States,

996 F.2d 1195 (Fed. Cir. 1993).

We find that because Ta Chen failed to provide accurate information

on its relationships to other companies and misreported its sales in

this administrative review, Ta Chen failed to cooperate with the

Department and has significantly impeded these proceedings.

Accordingly, we are assigning Ta Chen a margin based on ``first-tier,''

or uncooperative, BIA.

Preliminary Results of Review

As a result of our review, we preliminarily determine the weighted-

average margin for Ta Chen for the period December 23, 1992 through May

31, 1994 to be 76.20 percent, i.e., the highest margin found for any

respondent in the LTFV investigation. See Amended Final Determination

and Antidumping Duty Order; Certain Welded Stainless Steel Butt-Weld

Pipe Fittings From Taiwan, 58 FR 33250 (June 16, 1993).

Parties to these proceedings may request disclosure within five

days of publication of this notice and may request a hearing within ten

days of publication. Any hearing, if requested, will be held 44 days

after the date of publication, or the first business day thereafter.

Interested parties may submit case briefs or written comments, or both,

no later than 30 days after the date of publication. Rebuttal briefs

and rebuttals to written comments, limited to issues raised in the case

briefs and comments, may be submitted no later than 37 days after the

date of publication of this notice. Parties who submit arguments in

these proceedings are requested to submit with the argument (1) a

statement of the issues and (2) a brief summary of the argument. The

Department will issue final results of these administrative reviews,

including the results of our analysis of the issues in any such written

comments or at a hearing.

The Department shall determine, and the U.S. Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between U.S. price and FMV 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 completion of the final results of this administrative review for

all shipments of welded stainless steel pipe fittings from Taiwan

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

publication of the final results of this administrative review, as

provided in section 751(a)(1) of the Tariff Act:

(1) The cash deposit rate for Ta Chen will be the rate established

in the final results of this administrative review;

(2) For previously reviewed or investigated companies other than Ta

Chen, 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, or the

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) If neither the exporter nor the manufacturer is a firm covered

in this or any other review conducted by the Department, the cash

deposit rate will be 51.01 percent. See Amended Final Determination and

Antidumping Duty Order; Certain Welded Stainless Steel Butt-Weld Pipe

Fittings From Taiwan, 58 FR 33250 (June 16, 1993).

This notice serves as a preliminary reminder to importers of their

responsibility to file a certificate regarding the reimbursement of

antidumping duties prior to liquidation of the relevant entries during

each review period. Failure to comply with this requirement could

result in the Secretary's presumption that reimbursement of antidumping

duties occurred and the subsequent assessment of double antidumping

duties.

This administrative review and this notice are in accordance with

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

353.22.

Dated: May 8, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import Administration.

[FR Doc. 97-12799 Filed 5-14-97; 8:45 am]

BILLING CODE 3510-DS-P