03-28225. Certain Forged Stainless Steel Flanges From India; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results and partial rescission of antidumping duty administrative review.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain forged stainless steel flanges (stainless steel flanges) from India (A-533-809) manufactured by Chandan Steel Ltd. (Chandan), Isibars Ltd. (Isibars), and Viraj Forgings Ltd. (Viraj). The period of review (POR) is February 1, 2002, through January 31, 2003. We preliminary determine that these respondents did not make sales of stainless steel flanges below the normal value (NV). In addition, we have determined to rescind the review with respect to Shree Ganesh Forgings Ltd. (Shree Ganesh). If these preliminary results are adopted in our final results of administrative review, we will instruct the U.S. Customs and Border Protection (CBP) to assess antidumping duties based on the difference between United States price and the NV. Interested parties are invited 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 and (2) a brief summary of the argument.

EFFECTIVE DATE:

November 10, 2003.

FOR FURTHER INFORMATION CONTACT:

Thomas Killiam or Mike Heaney, AD/CVD Enforcement, Group III, 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 (59 FR 5994). On February 3, 2003, the Department published the notice of “Opportunity to Request Administrative Review” for this order covering the period February 1, 2002 through January 31, 2003 (68 FR 5272). In accordance with 19 CFR 351.213(b)(2), on February 28, 2003, Chandan, Isibars, Shree Ganesh, and Viraj requested a review. On March 18, 2003, we initiated this antidumping duty administrative review, and on March 25, 2003, we published in the Federal Register a notice of initiation (68 FR 14394).

Partial Rescission

Pursuant to 19 CFR 351.213(d), the Department will rescind an administrative review if a party withdraws its request for review within 90 days of the publication of our Notice of Initiation. On April 23, 2003, Shree Ganesh withdrew its request for review. As Shree Ganesh withdrew its request for review within 90 days of our Notice of Initiation, and as no other party requested a review of Shree Ganesh, we hereby rescind the review with respect to Shree Ganesh.

Scope of the Review

The products under review 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 subheadings are 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 review.

Period of Review (POR)

The POR is February 1, 2002, through January 31, 2003.

Fair Value Comparisons

To determine whether sales of flanges from India were made in the United States at less than fair value, we compared the export price (EP) or constructed export price (CEP) to the normal value (NV), as described in the “Export Price and Constructed Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(1)(A)(I) of the Tariff Act, we calculated EPs and CEPs and compared these prices to weighted-average normal values or CVs, as appropriate.

Export Price and Constructed Export Price

In accordance with section 772 of the Tariff Act, we calculated either an EP or a CEP, depending on the nature of each sale. Section 772(a) of the Tariff Act defines EP as the price at which the subject merchandise is first sold before the date of importation by the exporter or producer outside the United States to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for exportation to the United States. Section 772(b) of the Tariff Act defines CEP as the price at which the subject merchandise is first sold in the United States before or after the date of importation, by or for the account of the producer or exporter of the merchandise, or by a seller affiliated with the producer or exporter, to an unaffiliated purchaser, as adjusted under sections 772(c) and (d) of the Tariff Act.

We calculated EP and CEP, as appropriate, based on prices charged to the first unaffiliated customer in the United States. We used the date of invoice as the date of sale. We based EP on the packed C&F, CIF duty paid, FOB, or ex-dock duty paid prices to the first unaffiliated purchasers in the United States. We added to U.S. price amounts for duty drawback, when reported, pursuant to section 772(c)(1)(B) of the Tariff Act. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act, including: foreign inland freight, foreign brokerage and handling, bank export document handling charges, ocean freight, and marine insurance.

In addition, for Viraj's CEP sales, in accordance with section 772(d)(1) of the Tariff Act, we deducted from the starting price those selling expenses that were incurred in selling the subject merchandise in the United States, including direct selling expenses (i.e., credit), and imputed inventory carrying costs. In accordance with section 772(d)(3) of the Tariff Act, we deducted an amount for profit allocated to the expenses deducted under sections 772(d)(1) and (2) of the Tariff Act.

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), for each respondent we compared the volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise. Since we found no reason to determine that quantity was not the appropriate basis for these comparisons, we did not use value as the measure. See 19 CFR 351.404(b)(2).

As in prior reviews, we based our comparisons of the volume of U.S. sales to the volume of home market sales on reported stainless steel flange weight, rather than on number of pieces; since flange sizes, prices and costs vary greatly across models, comparisons of aggregate data based on the number of pieces could be misleading.

We determined that for Viraj, the home market was viable because Viraj's home market sales were greater than 5 percent of its U.S. sales based on aggregate volume by weight. Because Isibars reported no home market or third country sales, we based NV on CV, pursuant to section 351.404(a) of the Department's regulations. For Chandan, pursuant to section 351.404(e), we used the United Kingdom as the comparison market, because it was Chandan's largest export market, Chandan's volume there exceeded five percent of its U.S. volume of subject merchandise in the POR, and there is no evidence on the record indicating the United Kingdom would be inappropriate to serve as the basis for NV.

B. Arm's Length Sales

Since no information on the record indicates any comparison market sales to affiliates, we did not use an arm's-length test for comparison market sales.

C. Cost of Production Analysis

In the most recently completed review, Viraj made sales which failed the cost test. Therefore, pursuant to section 773(b)(2)(A)(ii) of the Tariff Act, in this review we had a reasonable basis to believe or suspect that Viraj made sales in the home market below the cost of production (COP). See Certain Forged Stainless Steel Flanges From India: Final Results and Partial Rescission of Antidumping Duty Administrative Review 68 FR 42005 (July 16, 2003); for the cost test results in particular, which were unchanged in the final results, see Certain Forged Stainless Steel Flanges from India, Preliminary Results of Antidumping Duty Administrative Review, 68 FR 11361 (March 10, 2003). Therefore, pursuant to section 773(b)(1) of the Tariff Act, in this review we initiated an investigation to determine whether Viraj's sales of flanges were made at prices below COP during the POR.

We based product definitions for both model-matching and costs on grade, flange type, size, pressure rating, and finish. Where necessary, we converted costs from a per-piece basis to a per-kilogram basis. See the company-specific analysis memoranda, dated October 31, 2003 and available in the Central Records Unit.

In accordance with section 773(b)(3) of the Tariff Act, we calculated COP for Viraj based on the sum of the costs of materials and fabrication employed in producing the foreign like product, plus selling, general, and administrative expenses (SG&A) and packing. We relied on the home market sales and COP information provided by Viraj. After calculating COP, we tested whether home market sales of stainless steel flanges were made at prices below COP within an extended period of time in substantial quantities and whether such prices permitted the recovery of all costs within a reasonable period of time. We compared model-specific COPs to the reported home market prices less movement charges, discounts, and rebates.

Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 20 percent of a respondent's home market sales for a model are at prices less than the COP, we do not disregard any below-cost sales of that model because we determine that the below-cost sales were not made within an extended period of time in “substantial quantities.” Where 20 percent or more of a respondent's home market sales of a given model are at prices less than COP, we disregard the below-cost sales because they are (1) made within an extended period of time in substantial quantities in accordance with sections 773(b)(2)(B) and (C) of the Tariff Act, and (2) based on comparisons of prices to weighted-average COPs for the POR, were at prices which would not permit the recovery of all costs within a reasonable period of time in accordance with section 773(b)(2)(D) of the Tariff Act.

The results of our cost test for Viraj indicated that for certain comparison market models, less than 20 percent of the sales of the model were at prices below COP. We therefore retained all sales of these comparison market models in our analysis and used them as the basis for determining NV. Our cost test also indicated that within an extended period of time (one year, in accordance with section 773(b)(2)(B) of the Tariff Act), for certain comparison market models, more than 20 percent of the comparison market sales were sold at prices below COP. In accordance with section 773(b)(1) of the Tariff Act, we therefore excluded these below-cost sales from our analysis and used the remaining above-cost sales as the basis for determining NV.

D. Product Comparisons

We compared Viraj's U.S. sales with contemporaneous sales of the foreign like product in the home market, and Chandan's U.S. sales to its contemporaneous sales of the foreign like product in the United Kingdom. We considered stainless steel flanges identical based on matching grade, type, size, pressure rating and finish. We used a 20 percent difference-in-merchandise (DIFMER) cost deviation limit as the maximum difference in cost allowable for similar merchandise, the DIFMER being defined as the absolute value of the difference between the U.S. and comparison market variable costs of manufacturing, divided by the total cost of manufacturing of the U.S. product.

E. Level of Trade

In accordance with section 773(a)(1)(B) of the Tariff 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. To determine whether comparison market sales are at a different level of trade than U.S. sales, we examined stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. Chandan reported no difference in selling activities in the U.S. and comparison market, and made no claim for an LOT adjustment. We noted no significant differences in functions provided in either of Chandan's markets. Based upon the record evidence, we have determined that there is no difference in LOT between Chandan's U.S. market and third market sales, and therefore we made no LOT adjustment, per 19 CFR 351.412(c)(2).

Viraj also claimed no LOT adjustment, and we noted no differences in selling services provided, in either its EP or CEP sales, between the U.S. and home markets. Therefore, based upon the record evidence, we have determined that there is no difference in level of trade between Viraj's U.S. market and home market sales, and no LOT adjustment is appropriate, per 19 CFR 351.412(c)(2).

F. Comparison Market Price

For Chandan and Viraj, in the United Kingdom and India markets, respectively, we based comparison market prices on the packed, ex-factory or delivered prices to the unaffiliated purchasers. We made adjustments for differences in packing and for movement expenses in accordance with sections 773(a)(6)(A) and (B) of the Tariff Act. 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 Tariff Act, and for differences in circumstances of sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. For comparison to EP we made COS adjustments by deducting comparison market direct selling expenses and adding U.S. direct selling expenses.

In accordance with section 773(a)(4) of the Tariff Act, we based NV on CV if we were unable to find a contemporaneous comparison market match for the U.S. sale. We calculated CV based on the cost of materials and fabrication employed in producing the subject merchandise, SG&A, and profit. In accordance with 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and profit on the amounts incurred and realized by the respondent 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 also made adjustments, where applicable, for comparison market indirect selling expenses to offset commissions in EP comparisons.

Preliminary Results of Review

As a result of our review, we preliminarily determine the weighted-average dumping margins for the period February 1, 2002, through January 31, 2003, to be as follows:

Manufacturer/exporter	Margin (percent)
Chandan	0
Isibars	0
Viraj	0.04 (de minimis)

The Department will disclose calculations performed in connection with these preliminary results of review 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 no later than 30 days after the date of publication of these preliminary results of review. Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than 35 days after the date of publication of this notice. 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. The Department will issue the 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 120 days of publication of these preliminary results.

Duty Assessment and Cash Deposit Requirements

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we will calculate assessment rates for the merchandise based on the ratio of the total amount of antidumping duties calculated for the examined sales made during the POR to the total quantity (in kilograms) of the sales used to calculate those duties. This rate will be assessed uniformly on all entries of merchandise of that manufacturer/exporter made during the POR. The Department will issue appropriate appraisement instructions directly to CBP upon completion of the review.

Furthermore, the following deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of flanges from India entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Tariff Act: (1) The cash deposit rates for the reviewed companies will be the rates established in the final results of administrative review; (2) for merchandise exported by manufacturers or exporters not covered in this review but covered in the original less-than-fair-value (LTFV) investigation or a previous review, the cash deposit will continue to be the most recent rate published in the final determination or final results for which the manufacturer or exporter received a company-specific rate; (3) if the exporter is not a firm covered in this review, or the original investigation, but the manufacturer is, the cash deposit rate will be that established for the manufacturer of the merchandise in the final results of this review, or the LTFV investigation; and (4) if neither the exporter nor the manufacturer is a firm covered in this review or any previous reviews, the cash deposit rate will be 162.14 percent, the “all others” rate established in the LTFV investigation (59 FR 5994) (February 9, 1994).

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: October 31, 2003.

James J. Jochum,

Assistant Secretary for Import Administration.