[Federal Register Volume 59, Number 191 (Tuesday, October 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-24537]
[[Page Unknown]]
[Federal Register: October 4, 1994]
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DEPARTMENT OF COMMERCE
[A-533-811]
Preliminary Determination of Sales at Less Than Fair Value:
Certain Carbon Steel Butt-Weld Pipe Fittings From India
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: October 4, 1994.
FOR FURTHER INFORMATION CONTACT: Sue Strumbel, Office of Countervailing
Investigations, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
1442.
PRELIMINARY DETERMINATION: We preliminarily determine that certain
carbon steel butt-weld pipe fittings from India are being sold in the
United States at less than fair value, as provided in section 733 of
the Tariff Act of 1930, as amended (the ``Act''). The estimated margins
of sales at less than fair value are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on March 21, 1994, (59
FR 14148) the following events have occurred.
On April 14, 1994, the United States International Trade Commission
(``ITC'') issued an affirmative preliminary injury determination (see
ITC Investigation No. 731-TA-689).
In accordance with 19 CFR 353.42(b)(1994), antidumping duty
questionnaires were presented to two Indian producers which account for
over 60 percent of all Indian exports of certain carbon steel butt-weld
pipe fittings to the United States during the POI. These companies are
Karmen Steels of India (Karmen) and Sivanandha Pipe Fittings Limited
(Sivanandha).
The petitioner requested a 50-day postponement of the preliminary
determination on June 30, 1994. The request was granted by the
Department of Commerce on July 19, 1994 (59 FR 37961, July 26, 1994).
Scope of the Investigation
The products covered by these investigations are certain carbon
steel butt-weld pipe fittings having an inside diameter of less than
fourteen inches (355 millimeters), imported in either finished or
unfinished condition. Pipe fittings are formed or forged steel products
used to join pipe sections in piping systems where conditions require
permanent welded connections, as distinguished form fittings based on
other methods of fastening (e.g., threaded, grooved, or bolted
fittings). Butt-weld fittings come in a variety of shapes which include
``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished
pipe fittings are beveled, so that when a fitting is placed against the
end of a pipe (the ends of which have also been beveled), a shallow
channel is created to accommodate the ``bead'' of the weld which joins
the fitting to the pipe. These pipe fittings are currently classifiable
under subheading 7307.93.3000 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 this investigation is dispositive.
Period of Investigation
The period of investigation (``POI'') is September 1, 1993, through
February 28, 1994 for Sivanandha and August 1, 1993, through February
28, 1994 for Karmen. Although we originally established the same POI
for both companies, Karmen was not able to provide foreign market
values (FMV) for sales during that period because it had no home market
or third country sales and its U.S. sale(s) involved merchandise which
had not yet been produced. Therefore, in accordance with section
353.42(b)(1) of our regulations, we extended Karmen's POI by one month
in order to capture sales of merchandise that had been produced.
Product Comparisons
For Sivanandha, we first compared merchandise identical in all
respects. If no identical merchandise was sold, we compared the most
similar merchandise, as determined by the model-matching criteria
contained in Appendix V of the questionnaire (``Appendix V'') (on file
in room B-099 of the main building of the Department of Commerce
(``Public File'')). For the U.S. sales compared to sales of similar
merchandise, we made an adjustment, pursuant to 19 CFR 353.57, for
physical differences in merchandise.
Karmen, did not make home market or third country sales of the
subject merchandise. Therefore, we based FMV on constructed value (CV),
in accordance with section 773(a)(2) of the Act.
Additionally, Karmen reported that it has an arrangement with a
Singaporean company, under which the Singaporean company supplies
Karmen with rusty pipe fittings. Karmen reconditions and refurbishes
these pipe fittings and exports them to the Singaporean company's U.S.
customer. Karmen claims that since the Singaporean company only pays
Karmen for the refurbishing, and Karmen does not take title to this
merchandise, these sales should not be treated as Karmen sales. For
purposes of the preliminary determination, we are not treating these
refurbished pipe fittings as sales subject to this investigation. We
will further examine this issue for purposes of the final
determination.
Fair Value Comparisons
To determine whether Sivanandha's or Karmen's sales for export to
the United States were made at less than fair value, we compared the
United States price (``USP'') to the FMV, as specified in the ``United
States Price'' and ``Foreign Market Value'' sections of this notice.
United States Price
Because Sivanandha's and Karmen's U.S. sales of subject merchandise
were made to unrelated purchasers prior to importation into the United
States, and the exporter's sales price methodology was not indicated by
other circumstances, in accordance with section 772(b) of the Act, we
based USP on the purchase price (``PP'') sales methodology.
We calculated Sivanandha's PP sales based on packed, CIF prices to
unrelated customers in the United States. We made deductions to the
USP, where appropriate, for foreign inland freight, containerization,
ocean freight, and marine insurance.
In accordance with Section 772(d)(1)(B) of the Act, we added to
Sivanandha's USP the amount of import duties imposed on inputs which
were subsequently rebated upon exportation of the finished merchandise
to the United States.
We made an adjustment to U.S. price for excise and sales taxes paid
on the comparison sales in India, in accordance with our practice,
pursuant to the Court of International Trade (CIT) decision in Federal-
Mogul, et al. v. United States, 834 F. Supp. 1993. See Preliminary
Antidumping Duty Determination and Postponement of Final Determination;
Color Negative Photographic Paper and Chemical Components Thereof from
Japan, 59 FR 16177, 16179, April 6, 1994, for an explanation of this
tax methodology.
We calculated Karmen's PP sales based on packed, CIF prices to
unrelated customers in the United States. We made deductions to the
USP, where appropriate, for foreign inland freight, containerization,
ocean freight and marine insurance. In calculating U.S. credit expense,
we used the borrowing rate in the United States on short-term dollar-
denominated loans. For a further discussion of the Department's
treatment of credit in this investigation, please see Memorandum from
Barbara R. Stafford to Susan G. Esserman (September 26, 1994) on file
in room B-099 of the U.S. Department of Commerce.
Foreign Market Value
For Sivanandha, in order to determine whether there was a
sufficient volume of sales in the home market to serve as a viable
basis for calculating FMV, we compared the volume of home market sales
of subject merchandise to the volume of third country sales of subject
merchandise, in accordance with section 773(a)(1)(B) of the Act. As a
result, we determined that Sivanandha's home market was viable.
We adjusted for a excise and sales tax collected in the Indian home
market. (See the United States Price section of this notice, above.)
For Karmen, because it sells the subject merchandise only in the
U.S. market, we used CV, pursuant to section 773(e) of the Act. We
calculated CV based on the sum of the cost of materials, fabrication,
general expenses, U.S. imputed credit costs, U.S. packing costs and
profit. In accordance with section 773(e)(1)(B) (i) and (ii) of the
Act, we: (1) Included the greater of either Karmen's reported general
expenses or the statutory minimum of ten percent of the cost of
manufacture (COM), as appropriate and; (2) used the statutory minimum
of eight percent of the sum of COM and general expenses for profit. In
reporting its CVs, Karmen allocated labor costs and variable
manufacturing overhead in such a way as to assign equal amounts for new
pipe fittings and refurbished pipe fittings. We believe that the
allocation method Karmen used to report CVs results in understating the
costs of producing new fittings, because based on our experience in
past cases, we would expect that costs incurred in the early production
stages would not be incurred in refurbishing fittings. Therefore, we
have recalculated these costs by assigning all labor and variable
manufacturing overhead costs to the production of new pipe fittings. We
will seek additional information on the actual costs for purposes of
the final determination.
Pursuant to section 773(a)(4)(B) of the Act and 19 CFR
353.56(a)(2), we made circumstance-of-sale (COS) adjustments for
differences in movement charges between shipments to the United States
and shipments to India. For Sivanandha, we also made COS adjustments
for differences in quality inspection charges, credit and advertising
expenses. In accordance with 19 CFR 353.56(b)(1), we added U.S.
indirect selling expenses as an offset to the home market commission,
but capped this addition by the amount of the home market commission.
Finally, we deducted home market packing expenses and added U.S.
packing expenses to Sivanandha's FMV, in accordance with section
773(a)(1) of the Act.
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 776(b) of the Act, we will verify
information used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of certain
carbon steel butt-weld pipe fittings from India, as defined in the
``Scope of Investigation'' section of this notice, that are entered, or
withdrawn from warehouse, for consumption on or after the date of
publication of this notice in the Federal Register. The Customs Service
shall require a cash deposit or posting of a bond equal to the
estimated dumping margins, as shown below. This suspension of
liquidation will remain in effect until further notice. The weighted-
average dumping margins are as follows:
------------------------------------------------------------------------
Margin
Manufacturers/producers/exporters percent
------------------------------------------------------------------------
Sivanandha................................................... 10.16
Karmen....................................................... 37.04
All others................................................... 15.85
------------------------------------------------------------------------
Article VI, paragraph 5 of the General Agreement on Tariffs and
Trade provides that ``(no) product * * * shall be subject to both
antidumping and countervailing duties to compensate for the same
situation for dumping or export subsidization.'' This provision is
implemented by section 772(d)(1)(D) of the Act. Since antidumping
duties cannot be assessed on the portion of the margin attributable to
export subsidies, there is no basis to require a cash deposit or bond
for that amount.
Accordingly in this investigation, Sivanandha's FMV is based on
home market sales and hence, the antidumping margin must be adjusted.
In the Preliminary Affirmative Countervailing Duty Determination:
Certain Carbon Steel Butt-Weld Pipe Fittings from India, (59 FR 28337,
published June 1, 1994), Sivanandha's export subsidy was 3.53 percent
ad valorem, which will be subtracted from the margins for cash deposit
or bonding purposes. The rate listed above reflects this adjustment.
Since Karmen only has U.S. sales, its FMV is based on CV which reflects
export subsidies. Because the export subsidies were reflected in both
USP and FMV, the subsidies did not affect the margin calculations using
CV.
The Customs Service shall require a cash deposit or the posting of
a bond equal to the estimated preliminary dumping margins, as shown
above. The suspension of liquidation will remain in effect until
further notice.
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine whether these imports are materially injuring,
or threaten material injury to, the U.S. industry within 75 days after
our final determination.
Public Comment
Interested parties who wish to request a hearing must submit a
written request to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, Room B-099, within ten days of the
publication of this notice. Requests should contain: (1) The party's
name, address, and telephone number; (2) the number of participants;
and (3) a list of the issues to be discussed.
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary no later than November 16, 1994, and rebuttal briefs no later
than November 23, 1994. A hearing, if requested, will be held on
November 28, 1994, at 1 p.m. at the U.S. Department of Commerce in Room
1414. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours prior to the scheduled time. In accordance with 19
CFR 353.38(b), oral presentations will be limited to issues raised in
the briefs.
We will make our final determination not later than 75 days after
the date of this preliminary determination.
This determination is published pursuant to section 733(f) of the
Act and 19 CFR 353.15(a)(4).
Dated: September 26, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-24537 Filed 10-3-94; 8:45 am]
BILLING CODE 3510-DS-M
