E7-1575. Certain Forged Stainless Steel Flanges From India; Preliminary Results of New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting a new shipper review of the antidumping duty order on certain forged stainless steel flanges (stainless steel flanges) from India manufactured by Kunj Forgings (Kunj). The period of review (POR) covers February 1, 2005, through January 31, 2006. We preliminarily determine that Kunj made sales of subject merchandise at less than normal value (NV) in the United States during the POR. If these preliminary results are adopted in the final results of this new shipper review, we will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on entries of the subject merchandise for which the importer-specific assessment rates are above de minimis.

We invite interested parties to comment on these preliminary results. Parties who submit argument in these proceedings are requested to submit with the argument 1) a statement of the issues; 2) a brief summary of the argument; and 3) a table of authorities cited.

EFFECTIVE DATE:

January 31, 2007.

FOR FURTHER INFORMATION CONTACT:

Fred Baker or Robert James, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230, telephone [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 9, 1994, the Department published the antidumping duty order on stainless steel flanges from India. See Amended Final Determination and Antidumping Duty Order; Certain Forged Stainless Steel Flanges from India, 59 FR 5994 (February 9, 1994). On February 28, 2006, we received requests for new shipper reviews from Kunj Forgings Pvt. Ltd. (Kunj), Micro Forge (India) Ltd. (Micro), Pradeep Metals Limited (Pradeep), and Rollwell Forge, Ltd. (Rollwell) for the period February 1, 2005, through January 31, 2006. We initiated the reviews on April 6, 2006. See Stainless Steel Flanges from India: Notice of Initiation of Antidumping Duty New Shipper Reviews 71 FR 17439 (April 6, 2006). On September 29, 2006, we rescinded the reviews with respect to Micro, Pradeep, and Rollwell. See Certain Forged Stainless Steel Flanges from India: Notice of Partial Rescission of New Shipper Reviews, 71 FR 27468 (September 29, 2006).

On October 3, 2006, we extended the time limit for the preliminary results of this new shipper review to no later than January 25, 2007. See Stainless Steel Flanges From India: Notice of Extension of Time Limit for the Preliminary Results of Antidumping Duty New Shipper Review, 71 FR 58372 (October 3, 2006).

Scope of the Order

The products covered by this order are certain forged stainless steel flanges, both finished and not finished, generally manufactured to specification ASTM A-182, and made in alloys such as 304, 304L, 316, and 316L. The scope includes five general types of flanges. They are weld-neck, used for butt-weld line connection; threaded, used for threaded line connections; slip-on and lap joint, used with stub-ends/butt-weld line connections; socket weld, used to fit pipe into a machined recession; and blind, used to seal off a line. The sizes of the flanges within the scope range generally from one to six inches; however, all sizes of the above-described merchandise are included in the scope. Specifically excluded from the scope of this order are cast stainless steel flanges. Cast stainless steel flanges generally are manufactured to specification ASTM A-351. The flanges subject to this order are currently classifiable under subheadings 7307.21.1000 and 7307.21.5000 of the Harmonized Tariff Schedule (HTS). Although the HTS subheading is provided for convenience and customs purposes, the written description of the merchandise under review is dispositive of whether or not the merchandise is covered by the scope of the order.

Verification

As provided in section 782(i)(3) of the Tariff Act of 1930, as amended (the Tariff Act), from December 11, 2006, through December 14, 2006, we verified information provided by Kunj. We used standard verification procedures, including the examination of relevant sales, cost, and financial records, and the selection of original documentation containing relevant information. Our verification results are outlined in the public version of the verification report, on file in the CRU located in room B-099 in the main Department of Commerce building.

Bona Fides Analysis

Consistent with the Department's practice, we investigated the bona fides nature of the sales that Kunj made during the POR. Based on our investigation in the bona fide nature of the sales, the questionnaire responses Kunj submitted, and our verification thereof, as well as our preliminary determination that Kunj was not affiliated with any exporter or producer that had previously shipped subject merchandise to the United States, we preliminarily determine that Kunj's sales were made on a bona fide basis. For a complete discussion of our analysis, see the Department's January 25, 2007, memorandum to the file “Analysis of the Bona Fide Nature of Kunj's Sales During the Period of Review,” on file in room B-099 of the Department of Commerce building.

Comparisons to Normal Value

To determine whether sales of subject merchandise to the United States by Kunj were made at less than NV, we compared the U.S. export price (EP) to the NV, as described in the “Export Price” and “Normal Value” sections of this notice, below. In accordance with section 777A(d)(2) of the Tariff Act, we calculated monthly weighted-average prices for NV and compared these to the prices of individual EP transactions. We found that for all U.S. sales there were no contemporaneous home market sales that passed the Department's twenty percent difference-in-merchandise (difmer) test. (For an explanation of our difmer analysis, see the memorandum to the file, “Analysis of Data Submitted By Kunj Forgings Pvt., Ltd., in the 2005-2006 New Shipper Review of Stainless Steel Flanges from India,” dated January 25, 2007 (analysis memorandum).) Therefore, we used constructed value (CV) as the basis for normal value. We describe below our calculation of NV, CV, and EP.

Product Comparisons

In accordance with section 771(16) of the Tariff Act, we considered all products described by the Scope of the Order section, above, which were produced and sold by Kunj in the home market, to be foreign like products for purposes of determining appropriate comparisons to U.S. sales. We made comparisons using the following five model match characteristics: (1) Grade; (2) Type; (3) Size; (4) Pressure rating; (5) Finish.

Export Price

In accordance with section 772(a) of the Tariff Act, EP is defined as the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for exportation to the United States. In accordance with section 772(b) of the Tariff Act, constructed export price (CEP) is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter, as adjusted under subsections (c) and (d). For Kunj's sales to the United States, we used EP in accordance with section 772(a) of the Tariff Act because its merchandise was sold directly to the first unaffiliated purchaser prior to importation, and CEP was not otherwise warranted based on the facts of record.

We calculated EP based on the prices charged to the first unaffiliated customer in the United States. We used invoice date as the date of sale. We based EP on the packed FOB Indian port prices to the first unaffiliated purchasers in the United States. We made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act, including domestic inland freight and domestic brokerage and handling.

Normal Value

A. Viability

In order to determine whether there is sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product during the POR is equal to or greater than five percent of the aggregate volume of U.S. sales of subject merchandise during the POR), we compared Kunj's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise. See section 773(a)(1)(C)(iii) of the Tariff Act. Based on Kunj's reported home market and U.S. sales quantities, we determine that the volume of aggregate home market sales during the POR is equal to or greater than five percent of the aggregate volume of U.S. sales of subject merchandise during the POR. Accordingly, we find that Kunj had a viable home market. Therefore, we based NV on home market sales to unaffiliated purchasers made in the usual quantities and in the ordinary course of trade. See the January 25, 2007, analysis memorandum for a further discussion of home market viability.

B. Price-to-Price Comparisons

As indicated above, we compared U.S. sales with contemporaneous sales of the foreign like product in India. As noted, we considered stainless steel flanges identical based on the following five criteria: grade, type, size, pressure rating, and finish. As with EP, we used invoice date as the date of sale.

In calculating the net unit price, we used the gross unit price as it appeared on the invoice for each sale, rather than Kunj's reported gross unit price which (as we first discovered at the verification) was net of various unexplained expenses. We also made an adjustment to gross unit price for Kunj's reported late delivery discounts. We made adjustments for differences in packing costs between the two markets and for movement expenses in accordance with sections 773(a)(6)(A) and (B) of the Tariff Act. We adjusted for differences in the circumstances of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made these COS adjustments by deducting home market direct selling expenses and adding U.S. direct selling expenses. Home market direct selling expenses consisted of warranty expenses, bank charges, and imputed credit. U.S. direct selling expenses consisted of imputed credit and bank charges. Finally, we made adjustments, where appropriate, for physical differences between the U.S. models and the home market models to which it was being compared.

Constructed Value

In accordance with section 773(a)(4) of the Tariff Act, we based NV on CV because, as indicated above under the section “Comparisons to Normal Value,” we were unable to find a contemporaneous comparison market match for any of the U.S. sales. We calculated CV based on the cost of materials and fabrication employed in producing the subject merchandise, SG&A, and profit, as required by 19 CFR 351.401(b)(1). In calculating the cost of materials, we denied Kunj's claim for an offset to material costs for revenue generated by sales of scrap because Kunj did not adequately support either the amount of the offset nor its means of valuing the scrap sales price. See verification report at 33. In accordance with section 772(e)(2)(A) of the Tariff Act, we based SG&A expenses and profit on the amounts incurred and realized by Kunj in connection with the production and sale of the foreign like product in the ordinary course of trade for consumption in the foreign country. For selling expenses, we used the weighted-average comparison market selling expenses. Where appropriate, we made COS adjustments to CV in accordance with section 773(a)(8) of the Tariff Act and 19 CFR 351.410. We made the COS adjustments by deducting home market direct selling expenses and adding U.S. direct selling expenses. The COS adjustments for CV were the same as those for price-to-price comparisons. See “Price-to-Price Comparisons” (above).

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to the extent practicable, we determine NV based on sales in the home market at the same level of trade (LOT) as EP or CEP. The NV LOT is that of the starting-price sales in the home market or, when NV is based on CV, that of the sales from which we derive SG&A expenses and profit. For CEP it is the level of the constructed sale from the exporter to an affiliated importer after the deductions required under section 772(d) of the Tariff Act.

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 Tariff Act. 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 Tariff Act (the CEP-offset provision). See Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 (November 19, 1997).

In implementing these principles in this review, we obtained information from Kunj about the marketing stages involved in its U.S. and home market sales, including a description of its selling activities in the respective markets. Generally, if the reported levels of trade are the same in the home and U.S. markets, the functions and activities of the seller should be similar. Conversely, if a party reports differences in levels of trade the functions and activities should be dissimilar.

Kunj reported one channel of distribution and one LOT in the home market contending that all home market sales were to end users. See Kunj's November 6, 2006, submission, at 18. After examining the record evidence provided by Kunj, we preliminarily determine that a single LOT exists in the home market.

Kunj further contends it provided substantially the same level of customer support on its U.S. EP sales to distributors/importers as it provided on its home market sales to end users. This support included manufacturing to order, and making arrangements for freight and insurance. See Kunj's May 8, 2006, submission at A-13. The Department has determined that we will find sales to be at the same LOT when the selling functions performed for each customer class are sufficiently similar. See 19 CFR 351.412 (c)(2). We find Kunj performed virtually the same level of customer support services on its U.S. EP sales as it did on its home market sales.

The record evidence supports a finding that in both markets and in all channels of distribution Kunj performs essentially the same level of services. Therefore, based on our analysis of the selling functions performed on EP sales in the United States, and its sales in the home market, we determine that the EP and the starting price of home market sales represent the same stage in the marketing process, and are thus at the same LOT. Accordingly, we preliminarily find that no level of trade adjustment is appropriate for Kunj.

Currency Conversions

We made currency conversions into U.S. dollars in accordance with section 773(a) of the Tariff Act, based on the exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of Review

As a result of our review we preliminarily find that a weighted-average dumping margin of 1.52 percent exists for Kunj for the period February 1, 2005, through January 31, 2006.

The Department will disclose calculations performed within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication. See CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first business day thereafter, unless the Department alters the date per 19 CFR 351.310(d).

Interested parties may submit case briefs or written comments no later than 30 days after the date of publication of these preliminary results of new shipper review. Rebuttal briefs and rebuttals to written comments, limited to issues raised in the case briefs and comments, may be filed no later than 5 days after the date of submission of case briefs and written comments. Parties who submit argument in these proceedings are requested to submit with the argument (1) a statement of the issue, (2) a brief summary of the argument, and (3) a table of authorities. Further, parties submitting written comments should provide the Department with an additional copy of the public version of any such comments on diskette. The Department will issue final results of this administrative review, including the results of our analysis of the issues raised in any such written comments or at a hearing, within 90 days of publication of these preliminary results.

Assessment Rates

Upon issuance of the final results of this review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated importer-specific assessment rates based on the total amount of antidumping duties calculated for the examined sales made during the POR divided by the total quantity (in kilograms) of the examined sales. Upon completion of this review, where the assessment rate is above de minimis, we shall instruct CBP to assess duties on all entries of subject merchandise by that importer. The Department intends to issue assessment instructions to CBP fifteen days after the date of publication of the final results of review.

Cash Deposit Requirements

The following cash deposit rate will be effective upon publication of the final results of this new shipper review for shipments of stainless steel flanges from India entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(2)(C) of the Tariff Act. For subject merchandise produced and exported by Kunj, the cash deposit rate will be the rate established in the final results of this review, except if the rate is less than 0.5 percent and, therefore, de minimis, the cash deposit rate will be zero. This cash deposit requirement, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) 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.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act.

Dated: January 25, 2007.

David M. Spooner,

Assistant Secretary for Import Administration.