00-31236. Notice of Preliminary Results of Antidumping Duty Administrative Review: Iron Construction Castings from Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request from respondent Canada Pipe Company Limited (“Canada Pipe”), the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on iron construction castings (“ICCs”) from Canada. The period of review (“POR”) is March 1, 1999, through February 28, 2000. This review covers imports of ICC from one producer, Canada Pipe.

We have preliminarily determined the dumping margin for Canada Pipe to be 7.07 percent.

EFFECTIVE DATE:

December 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Nithya Nagarajan, AD/CVD Enforcement, Office IV, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone [phone].

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department's regulations are to the current regulations at 19 CFR part 351 (2000).

Background

On March 5, 1986, the Department published in the Federal Register (51 FR 7600) the antidumping duty order on ICC from Canada. On March 16, 2000, the Department published in the Federal Register (65 FR 14242) a notice of opportunity to request an administrative review of this antidumping duty order. On March 31, 2000, in accordance with 19 CFR 351.213(b)(1), the respondent Canada Pipe requested that the Department conduct an administrative review of its exports of subject merchandise to the United States. We published the notice of initiation of this review on May 1, 2000 (65 FR 25303).

Scope of the Review

The merchandise covered by the order consists of certain iron construction castings from Canada, limited to manhole covers, rings, and frames, catch basin grates and frames, cleanout covers and frames used for drainage or access purposes for public utility, water and sanitary systems, classifiable as heavy castings under Harmonized Tariff Schedule (HTS) item numbers 7325.10.0010, 7325.10.0020, and 7325.10.0025. The HTS item number is provided for convenience and Customs purposes only. The written description remains dispositive.

Product Comparisons

The ICC exported by Canada Pipe to the United States includes manhole sets, catch basin sets, and trench gates and is the identical merchandise sold by Canada Pipe in its home market in Canada. Therefore, we have compared U.S. sales to contemporaneous sales of identical or similar merchandise in Canada.

Export Price

Section 772(a) of the Act defines export price (“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 for exportation to the United States.

Canada Pipe sells subject merchandise directly to its customers in the United States and uses its affiliate Bibby USA as the importer of record. The sales documentation on the record in this proceeding indicates that Canada Pipe's U.S. sales occurred in Canada between Canada Pipe and the unaffiliated U.S. purchaser. Specifically, we have found the following facts: (1) Bibby USA does not contact the U.S. customers; (2) Bibby Ste-Croix in Canada contacts the U.S. customers; (3) the U.S. customers send the purchase order to Canada Pipe; (4) Canada Pipe makes all arrangements for shipping and delivery to the U.S. customers directly in Canada; (5) Canada Pipe invoices are issued and the U.S. customers pay Canada Pipe directly in Canada; and (6) Canada Pipe retains title to the merchandise until the point of delivery to the U.S. customers. Given these facts, we preliminarily determine that these sales were made in Canada by Canada Pipe and, thus, should be treated as EP transactions (see Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea, Final Results of Administrative Review, 65 FR 13359 (March 13, 2000) and accompanying Decision Memorandum at Comment 12; and Porcelain-on-Steel Cookware from Mexico, Final Results of Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying Decision Memorandum at Comment 2).

We calculated an EP for all of Canada Pipe's sales because the merchandise was sold directly by Canada Pipe to the first unaffiliated purchaser in the United States prior to importation, and constructed export price (“CEP”) was not otherwise warranted based on the facts of record. We made deductions from the starting price for movement expenses in accordance with section 772(c)(2)(A) of the Act. These include foreign movement expense (inland freight), international freight, U.S. brokerage and U.S. duties. We also deducted the amount for billing adjustments from the starting price and added duty drawback, in accordance with section 772(c)(1)(B) of the Act.

Normal Value

We compared the aggregate quantity of home market and U.S. sales and determined that the quantity of the company's sales in its home market was more than five percent of the quantity of its sales to the U.S. market. Consequently, in accordance with section 773(a)(1)(B) of the Act, we based normal value (“NV”) on home market sales, all of which were to unaffiliated customers.

We calculated monthly weighted-average NVs based on ex-works or delivered prices to unaffiliated customers. We made adjustments to the starting price, where appropriate, for billing adjustments. We made deductions, where appropriate, from the starting price for early payment discounts, inland insurance, and inland freight. We made circumstance of sale (“COS”) adjustments, in accordance with section 773(a)(6)(C)(iii) of the Act, for direct selling expenses, including credit expenses.

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 (“CV”), that of the sales from which we derive selling, general and administrative (“SG&A”) expenses and profit. With respect to U.S. price and EP transactions, the LOT is the level of the sale to the unaffiliated customer, and with respect to CEP transactions, the LOT 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 transactions, 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).

Canada Pipe reported that during the POR it sold subject merchandise through three channels of distribution in the home market: sales made by Canada Pipe directly to original equipment manufacturers (OEM) (Channel 1), sales from Canada Pipe directly to end-users (Channel 2), and sales from Canada Pipe to distributors (Channel 3). In examining the record, we found that Canada Pipe performs substantially similar selling functions (e.g. sales planning, advertising, technical service, etc.) for all three reported channels of distribution. Due to the proprietary nature of the examined selling functions, see Preliminary Determination: Level of Trade Analysis (Preliminary LOT Memorandum), dated concurrently with this notice, on file in Room B-099 of the main Department of Commerce Building, the Central Records Unit (“CRU”). Based upon an analysis of the information provided on the record, we conclude that there is no difference in the selling functions performed by Canada Pipe in making sales through these three channels of distribution. Therefore, using the information on the record, the Department preliminarily determines that Canada Pipe makes all sales at the same LOT in the home market.

See Preliminary LOT Memorandum

Canada Pipe reported two channels of distribution (i.e. sales to OEMs and sales to distributors) in the United States during the POR. In examining the record, we found that Canada Pipe performs substantially similar selling functions (e.g. sales planning, advertising, technical service, etc.) for both reported channels of distribution. Due to the proprietary nature of the examined selling functions, see Preliminary LOT Memorandum. Based upon an analysis of the information provided on the record, we conclude that there is no significant difference in the selling functions performed by Canada Pipe in making sales through both channels of distribution. Therefore, the Department preliminarily determines that Canada Pipe makes all sales at the same LOT in the United States market. See Preliminary LOT Memorandum.

In order to determine whether sales in the United States are at a different LOT than sales in the home market, we reviewed the selling activities associated with the LOT in each market. We compared Canada Pipe's selling activities for U.S. EP transactions to the selling activities performed for the home market LOT sales by Canada Pipe (e.g. sales planning, advertising, technical service, etc.). We found that there was no significant difference in the selling functions performed for Canada Pipe's EP sales than for sales at the home market LOT, sufficient to constitute a difference in LOT. See Preliminary LOT Memorandum.

As such, we have preliminarily determined that a LOT adjustment is not appropriate. See Preliminary LOT Memorandum.

Currency Conversion

Pursuant to section 773A(a) of the Act, we made currency conversions into U.S. dollars 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 the Review

As a result of this review, we preliminarily determine that a 7.07 percent dumping margin exists for Canada Pipe for the period March 1, 1999, through February 29, 2000. The Department will disclose calculations performed within five days of the date of publication of this notice to the parties of this proceeding in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 44 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. 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. Interested parties are invited to comment on these preliminary results. Parties who submit arguments are requested to submit with the argument (1) a statement of the issue and (2) a brief summary of the argument. Further, we would appreciate it if parties submitting written comments would also provide the Department with an additional copy of the public versions of those comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results.

Upon completion of this administrative review, the Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. We have calculated importer specific duty assessment rates based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of examined sales. Where the importer-specific assessment rate is above de minimus, we will instruct Customs to assess duties on that importer's entries of subject merchandise. The Department will issue appraisement instructions directly to Customs.

Furthermore, the following deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of ICC from Canada 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 Act: (1) The cash deposit rate for Canada Pipe will be the rate established in the final results of this 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 company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, or the original 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 previous review, the cash deposit rate will be 14.67 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 administrative review for a subsequent review period.

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.

This administrative review and notice are in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: December 1, 2000.

Troy H. Cribb,

Assistant Secretary for Import Administration.