Certain Welded Stainless Steel Pipe From Taiwan; Preliminary Results of Antidumping Duty Administrative Reviews

DEPARTMENT OF COMMERCE

International Trade Administration

[A-583-815]

Certain Welded Stainless Steel Pipe From Taiwan; Preliminary

Results of Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of administrative reviews.

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SUMMARY: In response to requests by respondent Ta Chen Stainless Pipe

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

conducting administrative reviews of the antidumping duty order on

certain welded stainless steel pipe from Taiwan (A-583-815). These

reviews cover one manufacturer/exporter of the subject merchandise to

the United States during the periods June 22, 1992 through November 30,

1993 and December 1, 1993 through November 30, 1994.

We preliminarily determine that Ta Chen made sales of welded

stainless steel pipe (WSSP) below the foreign market value (FMV) for

both periods 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 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 December 30, 1992, the Department published in the Federal

Register the antidumping duty order on WSSP from Taiwan (57 FR 62300).

On November 26, 1993, the Department published the notice of

``Opportunity to Request Administrative Review'' for the period June

22, 1992 through November 30, 1993 (58 FR 62326). In accordance with 19

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

sales for this period. On January 18, 1994, we published in the Federal

Register a notice of initiation of an antidumping duty administrative

review covering the period June 22, 1992 through November 30, 1993. The

Department subsequently published a notice of ``Opportunity to Request

Administrative Review'' for the period December 1, 1993 through

November 30, 1994 on December 6, 1994 (59 FR 62710). Again, Ta Chen

requested a

[[Page 26777]]

review of its sales for this period. On January 13, 1995, we published

in the Federal Register our notice of initiation of the second

administrative review (60 FR 3192). The Department is now conducting

these administrative reviews in accordance with section 751 of the

Tariff Act.

Scope of the Review

The merchandise subject to this administrative review is certain

welded austenitic stainless steel pipe (WSSP) that meets the standards

and specifications set forth by the American Society for Testing and

Materials (ASTM) for the welded form of chromium-nickel pipe designated

ASTM A-312. The merchandise covered by the scope of the order also

includes austenitic welded stainless steel pipes made according to the

standards of other nations which are comparable to ASTM A-312.

WSSP is produced by forming stainless steel flat-rolled products

into tubular configuration and welding along the seam. WSSP is a

commodity product generally used as a conduit to transmit liquids or

gases. Major applications of WSSP include, but are not limited to,

digester lines, blow lines, pharmaceutical lines, petrochemical stock

lines, brewery process and transport lines, general food processing

lines, automotive paint lines, and paper process machines.

Imports of WSSP are currently classifiable under the following

Harmonized Tariff Schedule of the United States (HTS) subheadings:

7306.40.1000, 7306.40.5005, 7306.40.5015, 7306.40.5145, 7306.40.5060,

and 7306.40.5075. Although these subheadings include both pipes and

tubes, the scope of this investigation is limited to welded austenitic

stainless steel pipes. The HTS subheadings are provided for convenience

and Customs purposes; the 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 June 22, 1992

through November 30, 1993 and the period December 1, 1993 through

November 30, 1994. We find that in each 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 these two

reviews. 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 the first and second administrative reviews Ta Chen

insisted that it was not related to any U.S. customer. However, in a

supplemental questionnaire response submitted in the third (1994-1995)

administrative review (relevant portions of which have been

incorporated into the records of these reviews), Ta Chen for the first

time disclosed information which clearly indicates that Ta Chen was

related to two U.S. customers, within the meaning of section 771(13) of

the Tariff Act, during the first and second review periods. 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.

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 first (1992-1993) and second (1993-1994) periods 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 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

WSSP 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 first 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

[[Page 26778]]

board member simultaneously owned Company B and held equity interest in

Ta Chen. Petitioners 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 1992-1993 and 1993-1994 periods of review. 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

both the first and second administrative reviews, 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 periods June 22, 1992 through

November 30, 1993 and December 1, 1993 through November 30, 1993 to be

31.90 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 Pipe From Taiwan, 57 FR

62300, 62301 (December 30, 1992).

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 these administrative reviews

for all shipments of WSSP from Taiwan entered, or withdrawn from

warehouse, for consumption on or after the publication of the final

results of these administrative reviews, 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 these administrative reviews;

(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 these reviews, 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 these or any other review conducted by the Department, the cash

deposit rate will be 19.84 percent. See Amended Final Determination and

Antidumping Duty Order; Certain Welded Stainless Steel Pipe From

Taiwan, 57 FR 62300 (December 30, 1992).

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. These administrative reviews 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. 97-12800 Filed 5-14-97; 8:45 am]

BILLING CODE 3510-DS-P