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 antidumping duty

administrative review.

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SUMMARY: In response to a request from 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 from Taiwan. This

review covers one manufacturer and exporter of the subject merchandise.

The period of review (POR) is June 1, 1996, through May 31, 1997.

We preliminarily determine that sales have been made below normal

value (NV). If these preliminary results are adopted in our final

results of administrative review, we will instruct the U.S. Customs

Service to assess

[[Page 30711]]

antidumping duties based on the difference between export price (EP) or

constructed export price (CEP) and NV.

Interested parties are invited to comment on these preliminary

results. Parties who submit argument in this proceeding are requested

to submit with the argument: (1) A statement of the issue; and (2) a

brief summary of the argument.

EFFECTIVE DATE: June 5, 1998.

FOR FURTHER INFORMATION CONTACT: Robert James or John Kugelman,

Enforcement Group III--Office 8, Import Administration, International

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

Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-

5222 and (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

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), as

amended by the Uruguay Round Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department of Commerce's (the

Department) regulations are to the provisions codified at 19 CFR part

353 (April 1997). Where appropriate, references may be made to the

Department's new regulations (62 FR 27296), not in effect for this

review, as a statement of current departmental practice.

Background

The Department published in the Federal Register the antidumping

duty order on certain stainless steel butt-weld pipe fittings from

Taiwan on June 16, 1993 (58 FR 33250). On June 11, 1997, we published

in the Federal Register (62 FR 31786) a notice of opportunity to

request an administrative review of the antidumping duty order on

certain stainless steel butt-weld pipe fittings from Taiwan covering

the period June 1, 1996, through May 31, 1997.

On June 30, 1997, in accordance with 19 CFR 353.22(a)(2), Ta Chen

requested that we conduct an administrative review for the

aforementioned period. On August 1, 1997, the Department published a

notice of ``Initiation of Antidumping Review'' (62 FR 41339). The

Department issued an antidumping questionnaire and supplemental

questionnaire to Ta Chen, which responded. No parties submitted

comments to the Department regarding questionnaire responses.

Under section 751(a)(3)(A) of the Act, the Department may extend

the deadline for completion of an administrative review if it

determines that it is not practicable to complete the review within the

statutory time limit of 245 days. On February 25, 1998, the Department

extended the time limits for these preliminary results to May 31, 1998

in accordance with the Act. See Certain Stainless Steel Butt-Weld Pipe

Fittings from Taiwan; Extension of Time Limits for Antidumping Duty

Administrative Review (63 FR 13031, March 17, 1998).

The Department is conducting this administrative review in

accordance with section 751 of the Act.

Scope of the Review

The products subject to this investigation 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 in designing

the piping system: (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 these

investigations. The pipe fittings subject to these investigations are

classifiable under subheading 7307.23.00 of the Harmonized Tariff

Schedule of the United States (HTSUS).

Although the HTSUS subheading is provided for convenience and

customs purposes, our written description of the scope of these

investigations is dispositive.

Pipe fittings manufactured to American Society of Testing and

Materials specification A774 are included in the scope of this order.

The POR is June 1, 1996 through May 31, 1997. This review covers

sales of certain stainless steel butt-weld pipe fittings from Taiwan by

Ta Chen.

Verification

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

provided by the respondent 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 public versions of the

verification reports, available to the public in Room B-099 of the main

Commerce Building.

Fair Value Comparisons

To determine whether sales of subject merchandise by respondent to

the United States were made at below NV, we compared, where

appropriate, the EP and CEP to the NV, as described below.

Pursuant to section 777A(d)(2), we compared the EPs or CEPs of

individual U.S. transactions to the monthly weighted-average NV of the

foreign like product where there were sales at prices above the cost of

production (COP), as discussed in the Cost of Production Analysis

section, below.

Export Price

We calculated the price of certain of Ta Chen's United States sales

based on EP, in accordance with section 772(a) of the Act, when the

subject merchandise was sold to unaffiliated purchasers in the United

States prior to the date of importation and CEP was not otherwise

warranted based on the facts of the record.

We calculated EP based on packed FOB or delivered prices to

unaffiliated customers in the United States. Where appropriate, we made

deductions from the starting price for movement expenses, which

included foreign inland freight, foreign brokerage and handling,

international freight, marine insurance, U.S. inland freight, U.S.

brokerage and handling, and U.S. Customs duties. We also made

deductions for discounts. See Preliminary Analysis Memorandum (Analysis

Memo), June 1, 1998, at 6-7 and 8-9.

Constructed Export Price

We calculated the price of Ta Chen's remaining United States sales

based on CEP, in accordance with section 772(b) of the Act, when the

subject merchandise was sold in the United States to unaffiliated

customers. In this review all of Ta Chen's CEP sales were made after

importation (i.e., the sales were made from TCI's warehouse locations

in California and Texas).

We calculated CEP based on FOB or delivered prices to unaffiliated

purchasers in the United States. Where appropriate, we deducted

discounts. Also where appropriate, in accordance

[[Page 30712]]

with section 772(d)(1), the Department deducted commissions and direct

selling expenses from the starting price. We deducted those indirect

selling expenses, including inventory carrying costs, which related to

commercial activity in the United States. We also made deductions for

movement expenses, which include foreign inland freight, foreign

brokerage and handling, international freight, marine insurance, U.S.

inland freight, U.S. brokerage and handling, and U.S. Customs duties.

Finally, pursuant to section 772(d)(3) of the Act, we made an

adjustment for CEP profit. See Analysis Memo at 7-8 and 9-11.

Normal Value

Based on a comparison of the aggregate quantity of home-market and

U.S. sales, we determined that the home market is viable as a basis for

calculating NV. We determined that the quantity of the foreign like

product sold in the exporting country was sufficient to permit a proper

comparison with the sales of the subject merchandise to the United

States, pursuant to section 773(a)(1) of the Act because Ta Chen had

sales in Taiwan which were greater than five percent of its sales in

the U.S. market. Therefore, in accordance with section 773(a)(1)(B)(i)

of the Act, we based NV on the price at which the foreign like product

was first sold for consumption in the home market, in the usual

commercial quantities, in the ordinary course of trade, and, to the

extent practicable, at the same level of trade.

We calculated NV based on packed, FOB or delivered prices to

unaffiliated purchasers in Taiwan. We made adjustments for differences

in packing in accordance with section 773(a)(6)(A) of the Act. We also

made adjustments, where appropriate, for movement expenses consistent

with section 773(a)(6)(B) of the Act; these included inland freight

from plant to customer. In addition, we made adjustments for

differences in cost attributable to differences in physical

characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)

of the Act, as well as for differences in circumstances of sale (COS)

in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR

353.56. We made COS adjustments by deducting direct selling expenses

incurred for home market sales (i.e. credit expenses) and adding U.S.

direct selling expenses (i.e. credit expenses and bank charges).

Cost of Production Analysis

In the original less-than-fair-value (LTFV) investigation of Ta

Chen (the most recently-completed segment of this proceeding at the

time of our initiation of this administrative review) we disregarded

sales found to be below the COP. Therefore, in accordance with section

773(b)(2)(A)(i) of the Act, the Department has reasonable grounds to

believe or suspect that sales below the COP may have occurred during

this review period. Thus, pursuant to section 773(b) of the Act, we

initiated a COP investigation of Ta Chen in the instant review.

Before making any fair value comparisons, we conducted the COP

analysis described below.

A. Calculation of COP

We calculated COP on a product specific basis, based on the sum of

the respondent's cost of materials and fabrication for the foreign like

product, plus amounts for home-market selling, general, and

administrative expenses (SG&A), and packing costs in accordance with

section 773(b)(3) of the Act.

B. Test of Home-Market Prices

We used the respondent's weighted-average COP for the period June

1996 to May 1997. We compared the weighted-average COP figures to home-

market prices of the foreign like product as required under section

773(b) of the Act. In determining whether to disregard home-market

sales made at prices below the COP, we examined whether such sales had

been made at prices below the COP within an extended period of time in

substantial quantities, and such sales were made at prices which

permitted the recovery of all costs within a reasonable period of time.

On a product-specific basis, we compared the COP to the home-market

prices (not including VAT), less any applicable movement charges and

discounts.

C. Results of COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20

percent of the respondent's sales of a given product were at prices

below the COP, we did not disregard any below-cost sales of that

product because we determined that the below-cost sales were not made

in substantial quantities. Where 20 percent or more of the respondent's

sales of a given product were at prices below the COP, we disregarded

the below-cost sales of that model because such sales were found to be

made within an extended period of time in substantial quantities, in

accordance with sections 773(b)(2)(B) and (C) of the Act, and because

the below cost sales of the product were at prices which would not

permit recovery of all costs within a reasonable period of time, in

accordance with section 773(b)(2)(D) of the Act. Where all

contemporaneous sales of comparable products were made at prices below

the COP, we calculated NV based on CV, in accordance with section

773(a)(4) of the Act.

The results of our cost test for Ta Chen indicated that for certain

home market models less than twenty percent of the sales of the model

were at prices below COP. We therefore retained all sales of these

models in our analysis and used them as the basis for determining NV.

Our cost test for Ta Chen also indicated that for certain other home

market models more than twenty percent of the home market sales within

an extended period of time were at prices below COP and would not

permit the full recovery of all costs within a reasonable period of

time. In accordance with section 773(b)(1) of the Act, we therefore

excluded the below-cost sales of these models from our analysis and

used the remaining above-cost sales as the basis for determining NV.

Constructed Value

For Ta Chen's products for which we could not determine the NV

based on comparison market sales because there were no contemporaneous

sales of a comparable product, we compared U.S. prices to constructed

value (CV), in accordance with Cemex v. United States, 133 F.3d 897

(Fed. Cir. 1998) (Cemex), as discussed below.

On January 8, 1998, the Court of Appeals for the Federal Circuit

(the Court) issued its decision in Cemex. In that case, which involved

a determination by the Department under pre-URAA law, the Court

discussed the appropriateness of using CV as the basis for foreign

market value when the Department finds home market sales to be outside

the ordinary course of trade. However, the URAA amended the definition

of sales outside the ordinary course of trade to include sales below

cost. See section 771(15) of the Act. Consequently, the Department has

reconsidered its practice in light of this court decision and has

determined that it would be inappropriate to resort directly to CV, in

lieu of foreign market sales, as the basis for NV when the Department

finds foreign market sales of merchandise identical or most similar to

that sold in the United States to be outside the ordinary course of

trade. Instead, the Department will use sales of similar merchandise,

if such sales exist. The Department will use CV as the basis for NV

only when there are no above-cost sales that are otherwise suitable for

comparison. Therefore, in this

[[Page 30713]]

proceeding, when making comparisons we considered all products sold in

the home market, in accordance with section 771(16) of the Act that

were in the ordinary course of trade for purposes of determining

appropriate product comparisons to U.S. sales. Where there were no

sales of identical merchandise in the home market made in the ordinary

course of trade to compare to U.S. sales, we compared U.S. sales to

sales of the most similar foreign like product made in the ordinary

course of trade, based on the model-matching characteristics listed in

Sections B and C of our antidumping questionnaire. Therefore, we have

implemented the Court's decision in this case, to the extent that the

data on the record permitted.

In accordance with section 773(e)(1) of the Act, we calculated CV

based on the sum of the COM of the product sold in the United States,

plus amounts for home market SG&A expenses, and profit and U.S. packing

costs. We calculated CV based on the methodology described in the

``Calculation of COP'' section of this notice, above, plus an amount

for profit. In accordance with section 773(e)(2)(A), we used the actual

amounts incurred and realized by Ta Chen in connection with the

production and sale of the foreign like product, in the ordinary course

of trade, for consumption in the foreign country to calculate SG&A

expenses and profit.

For price-to-CV comparisons, we made adjustments to CV in

accordance with section 773(a)(8) of the Act and 19 CFR 353.56 for COS

differences. For comparisons to EP, we made COS adjustments by

deducting direct selling expenses incurred on home market sales and

adding U.S. direct selling expenses. For comparisons to CEP, we made

deductions for direct selling expenses incurred on home market sales.

Differences in Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the comparison market at

the same level of trade (LOT) as the EP or CEP transaction. The NV LOT

is that of the starting-price sales in the comparison market or, when

NV is based on constructed value, that of the sales from which we

derive selling, general and administrative expenses and profit. For EP,

the LOT is also the level of the starting-price sale, which is usually

from exporter to importer. For CEP, it is the level of the constructed

sale from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP or

CEP, we examine stages in the marketing process and selling functions

along the chain of distribution between the producer and the

unaffiliated customer. If the comparison-market sales are at a

different LOT, and the difference affects price comparability, as

manifested in a pattern of consistent price differences between the

sales on which NV is based and comparison-market sales at the LOT of

the export transaction, we make a LOT adjustment under section

773(a)(7)(A) of the Act. Finally, for CEP sales, if the NV level is

more remote from the factory than the CEP level and there is no basis

for determining whether the difference in the levels between NV and CEP

affects price comparability, we adjust NV under section 773(a)(7)(B) of

the Act (the CEP offset provision). See, Notice of Final Determination

of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel

Plate from South Africa, 62 FR 61731 (November 19, 1997).

In its questionnaire responses Ta Chen stated that there were no

differences in its selling functions by channels of marketing within

each market. In order to confirm independently the absence of separate

levels of trade within or between the U.S. and home markets, we

examined Ta Chen's questionnaire responses for indications that its

functions as a seller differed qualitatively and quantitatively among

customer categories. See commentary to section 351.412 of the

Department's new regulations (62 FR 27371).

Ta Chen reported two channels of distribution in the home market

(to distributors and to end-users) and a single channel of distribution

in the United States (to distributors). Upon review, we have determined

preliminarily that Ta Chen performed the same selling functions for its

home market and U.S. customers, irrespective of distribution channel.

Pursuant to section 773(a)(1)(B)(i) of the Act, we consider the selling

functions reflected in the starting price of home-market and EP sales,

and those reflected in the CEP after the deductions pursuant to section

772(d) of the Act. Our analysis of the questionnaire responses leads us

to conclude that sales within or between each market are not made at

different levels of trade. Accordingly, we preliminarily find that all

sales in the home market and the U.S. market were made at the same

level of trade. Therefore, all price comparisons are at the same level

of trade and an adjustment pursuant to section 773(a)(7)(A) of the Act

is not warranted.

Currency Conversion

For purposes of the preliminary results, we made currency

conversions based on the official exchange rates in effect on the dates

of the U.S. sales as published by the Federal Reserve Bank of New York.

Section 773A(a) of the Act directs the Department to use a daily

exchange rate in effect on the date of sale of subject merchandise in

order to convert foreign currencies into U.S. dollars, unless the daily

rate involves a ``fluctuation.'' In accordance with the Department's

practice, we have determined, as a general matter, that a fluctuation

exists when the daily exchange rate differs from a benchmark by 2.25

percent. See, e.g., Certain Stainless Steel Wire Rods from France:

Preliminary Results of Antidumping Duty Administrative Review (61 FR

8915, 8918, March 6, 1996) and Policy Bulletin 96-1: Currency

Conversions, 61 FR 9434, March 8, 1996. The benchmark is defined as the

rolling average of rates for the past 40 business days. When we

determined a fluctuation existed, we substituted the benchmark for the

daily rate.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the

following weighted-average dumping margin exists for the period June 1,

1996, through May 30, 1997:

Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan

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

Weighted-

average

Producer/manufacturer/exporter margin

(percent)

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

Ta Chen.................................................... 1.19

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Parties to this proceeding may request disclosure within five days

of publication of this notice and any interested party may request a

hearing within 10 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 and/or

written comments no later than 30 days after the date of publication.

Rebuttal briefs and rebuttals to written comments, limited to issues

raised in such briefs or comments, may be filed no later than 37 days

after the date of publication of this notice. Parties who submit case

briefs or rebuttal briefs in this proceeding are requested to submit

with each argument (1) a statement of the issue and (2) a brief summary

of the argument.

[[Page 30714]]

The Department will publish a notice of the final results of the

administrative review, including its analysis of issues raised in any

such written briefs or at a hearing, if held, not later than 120 days

after the date of publication of this notice.

The Department shall determine and the Customs Service shall assess

antidumping duties on all appropriate entries. The Department will

issue appropriate appraisement instructions directly to the Customs

Service upon completion of this review. The final results of this

review shall be the basis for the assessment of antidumping duties on

entries of merchandise covered by this review and for future deposits

of estimated duties. For duty assessment purposes, we calculated an

importer-specific assessment rate by aggregating the dumping margins

calculated for all U.S. sales to each importer and dividing this amount

by the total entered value of subject merchandise entered during the

POR for each importer.

The following cash deposit requirements will be effective upon

publication of the final results of this administrative review for all

shipments of the subject merchandise 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 rate

for Ta Chen will be the rate established in the final results of this

administrative review; (2) for merchandise exported by manufacturers or

exporters not covered in these reviews but covered in a previous

segment of this proceeding, the cash deposit rate will be the company-

specific rate published for the most recent segment; (3) if the

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

deposit rate will be 51.01 percent, the ``all others'' rate established

in the LTFV investigation. These deposit requirements, when imposed,

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

next administrative review.

This notice also serves as a preliminary 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 occurred and the subsequent

assessment of double antidumping duties. This determination is issued

and published in accordance with section 751(a)(1) of the Act (19

U.S.C. 1675(a)(1)) and 19 CFR 353.22(c)(5).

Dated: June 1, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-15041 Filed 6-4-98; 8:45 am]

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