03-3852. Notice of Final Determination of Sales at Less Than Fair Value: Non-Malleable Cast Iron Pipe Fittings from the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Final Determination of Sales at Less Than Fair Value.

EFFECTIVE DATE:

February 18, 2003.

FOR FURTHER INFORMATION CONTACT:

Ronald Trentham or Sam Zengotitabengoa, AD/CVD Enforcement, Group II, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone: [phone], and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Final Determination

We determine that non-malleable cast iron pipe fittings (pipe fittings) from the People's Republic of China (PRC) are being sold, or are likely to be sold, in the United States at less than fair value (LTFV), as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The estimated margins of sales at LTFV are shown in the “Final Determination of Investigation” section of this notice.

Case History

On September 25, 2002, the Department of Commerce (the Department) published the preliminary determination of sales at LTFV in the antidumping duty investigation of pipe fittings from the PRC. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Non-Malleable Cast Iron Pipe Fittings from the People's Republic of China, 67 FR 60,214 (September 25, 2002) (Preliminary Determination). Since the preliminary determination, the following events have occurred.

On September 30, 2002, and October 1, 2002, respectively, Jinan Meide Casting Co., Ltd. (JMC) and Shanghai Foreign Trade Enterprises Co., Ltd. (SFTEC) (the respondents) filed preliminary determination clerical error allegations. The Department concluded that certain allegations constituted ministerial errors, to be corrected in the final determination, but that the errors did not amount to significant ministerial errors for purposes of issuing an amended preliminary determination. See Ministerial Error Allegations Memorandum, from Holly A. Kuga to Bernard T. Carreau, dated November 4, 2002 (Ministerial Error Allegations Memorandum). From October 25, 2002, through November 5, 2002, the Department conducted a sales and factors of production verification of JMC and SFTEC. See Memorandum to the File from the Team, Verification of Sales Information Reported by Jinan Meide Casting Co., Ltd., to the file, dated December 4, 2002; Memorandum to the File from the Team, Verification of Sales Information Reported by Shanghai Foreign Trade Enterprises Co., Ltd., to the file, dated December 4, 2002; Memorandum to Neal M. Halper from the Team, Verification Report on the Factors of Production Data Submitted by Jinan Meide Casting Co., Ltd., dated December 11, 2002 (JMC FOP Verification Report); and Memorandum to Neal M. Halper from the Team, Verification Report on the Factors of Production Data Submitted by Shanghai Foreign Trade Enterprises, Ltd., and its Suppliers, dated December 11, 2002 (SFTEC FOP Verification Report). SFTEC filed surrogate value information and data on September 11, 2002, and November 25, 2002. JMC filed available surrogate value information and data on November 4, 2002, and the petitioners¹ filed surrogate value information and data on November 1, 2002. On October 25, 2002, SFTEC filed a request for a public hearing in this investigation, and JMC and the petitioners filed a request to appear and participate at a hearing if one was requested by another party. SFTEC withdrew its request for a hearing on January 7, 2003. The respondents filed case briefs on December 23, 2002, and the petitioners filed a case brief on December 24, 2002. The respondents and the petitioners filed rebuttal briefs on January 3, 2003. In response to requests, we held meetings with the petitioners, on January 14, 2003, JMC, on February 4, 2003, and SFTEC, on February 5, 2003, during which the party in question highlighted issues raised in its briefs.

Scope of the Investigation

For purposes of this investigation, the products covered are finished and unfinished non-malleable cast iron pipe fittings with an inside diameter ranging from 1/4 inch to 6 inches, whether threaded or un-threaded, regardless of industry or proprietary specifications. The subject fittings include elbows, ells, tees, crosses, and reducers as well as flanged fittings. These pipe fittings are also known as “cast iron pipe fittings” or “gray iron pipe fittings.” These cast iron pipe fittings are normally produced to ASTM A-126 and ASME B.l6.4 specifications and are threaded to ASME B1.20.1 specifications. Most building codes require that these products are Underwriters Laboratories (UL) certified. The scope does not include cast iron soil pipe fittings or grooved fittings or grooved couplings.

Fittings that are made out of ductile iron that have the same physical characteristics as the gray or cast iron fittings subject to the scope above or which have the same physical characteristics and are produced to ASME B.16.3, ASME B.16.4, or ASTM A-395 specifications, threaded to ASME B1.20.1 specifications and UL certified, regardless of metallurgical differences between gray and ductile iron, are also included in the scope of this petition. These ductile fittings do not include grooved fittings or grooved couplings. Ductile cast iron fittings with mechanical joint ends (MJ), or push on ends (PO), or flanged ends and produced to the American Water Works Association (AWWA) specifications AWWA C110 or AWWA C153 are not included.

Imports of covered merchandise are classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under item numbers 7307.11.00.30, 7307.11.00.60, 7307.19.30.60 and 7307.19.30.85. HTSUS subheadings are provided for convenience and Customs purposes. The written description of the scope of this proceeding is dispositive.

Period of Investigation (POI)

The POI is July 1, 2001, through December 31, 2001.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this proceeding and to which we have responded are listed in the Appendix to this notice and addressed in the Issues and Decision Memorandum from Bernard T. Carreau, Deputy Assistant Secretary, Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration (Decision Memorandum) dated February 7, 2003, which is hereby adopted by this notice. Parties can find a complete discussion of the issues raised in this investigation and the corresponding recommendations in this public memorandum which is on file in the Central Records Unit (CRU), room B-099 of the main Department building. In addition, a complete version of the Decision Memorandum can be accessed directly on the internet at http://ia.ita.doc.gov. The paper copy and electronic version of the Decision Memorandum are identical in content.

Non-Market Economy

The Department has treated the PRC as a non-market economy (NME) country in all its past antidumping investigations. See Notice of Final Determination of Sales at Less Than Fair Value: Honey from the People's Republic of China, 66 FR 50608 (October 4, 2001); Notice of Final Determination of Sales at Less Than Fair Value: Certain Folding Gift Boxes from the People's Republic of China, 66 FR 58115 (November 20, 2001). An NME country designation remains in effect until it is revoked by the Department. See section 771(18)(C) of the Act. The respondents in this investigation have not requested a revocation of the PRC's NME status. Therefore, we have continued to treat the PRC as a NME country in this investigation. For further details, see the Preliminary Determination.

Separate Rates

In our Preliminary Determination, we found that both responding companies, JMC and SFTEC, met the criteria for the application of separate, company-specific antidumping duty rates. We have not received any other information since the preliminary determination which would warrant reconsideration of our separates rates determination with respect to these companies. For a complete discussion of the Department's determination that the respondents are entitled to a separate rate, see the Preliminary Determination.

The PRC-Wide Rate

In the Preliminary Determination, we found that the use of adverse facts available (FA) for the PRC-wide rate was appropriate for other exporters in the PRC based on our presumption that those respondents who failed to demonstrate entitlement to a separate rate constitute a single enterprise under common control by the Chinese government. The PRC-wide rate applies to all entries of the merchandise under investigation except for entries from JMC and SFTEC.

Section 776(c) of the Act provides that, when the Department relies on secondary information in using facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. At the preliminary determination, we corroborated the information contained in the petition regarding export price and normal value (NV). See Memorandum to Holly A. Kuga, Corroboration of Secondary Information, dated September 19, 2002 (Preliminary Corroboration Memorandum). In order to corroborate the petition information, we recalculated the petition margin to reflect new information placed on the record of the investigation after initiation and prior to the preliminary determination. Id., at page 6. We received no comments regarding our application of total adverse FA to the PRC-wide entity or our corroboration of petition information. As a result, we have continued to apply an adverse FA rate to the PRC-wide entity. For further discussion, see Preliminary Determination.

For the Preliminary Determination, we derived overhead, selling, general, and administrative (SG&A) expenses, and profit ratios from the 1999-2000 combined income, value of production, expenditure and appropriation account for a sample of 1,914 public companies in India that were reported in the June 2001 Reserve Bank of India Bulletin. Both JMC and SFTEC alleged that in the Preliminary Determination, the Department overstated SG&A expenses. After review, we agreed that the calculation of the SG&A ratio was in error. See Ministerial Error Allegations Memorandum. For the final determination, we recalculated the petition margin using the corrected SG&A ratio and corrected several other arithmetic errors. We also adjusted the surrogate value for electricity As a result of these recalculations, the PRC-wide rate is, for the final determination, 75.5 percent ad valorem. See Memorandum to the File from the Team, Corroboration of Secondary Information, dated February 7, 2003.

Surrogate Country

For purposes of the final determination, we continue to find that India remains the appropriate surrogate country for the PRC. For further discussion and analysis regarding the surrogate country selection for the PRC, see the Preliminary Determination.

Verification

As provided in section 782(i) of the Act, we verified the information submitted by the respondents for use in our final determination. We used standard verification procedures including examination of relevant accounting and production records, and original source documents provided by the respondents. For changes from the Preliminary Determination as a result of verification, see the “Changes Since the Preliminary Determination” section below.

Changes Since the Preliminary Determination

Based on our findings at verification and on our analysis of the comments received, we have made adjustments to the calculation methodologies used in the preliminary determination. These adjustments are listed below and discussed in detail in the (1) Decision Memorandum, (2) Memorandum to the File, Surrogate Country Values Used for the Final Determination of the Antidumping Duty Investigation of Non-Malleable Cast Iron Pipe Fittings from the People's Republic of China, dated February 7, 2003, (Surrogate Country Values Memorandum) and (3) Memorandum to the File from the Team, Final Calculation of Antidumping Duty Investigation of Non-Malleable Cast Iron Pipe Fittings From the People's Republic of China for Shanghai Foreign Trade Enterprises Co., Ltd., dated February 7, 2003 (SFTEC's Final Calculation Memorandum), and Memorandum to the File from the Team, Final Calculation of Antidumping Duty Investigation of Non-Malleable Cast Iron Pipe Fittings From the People's Republic of China for Jinan Meide Casting Co., Ltd., dated February 7, 2003 (JMC's Final Calculation Memorandum).

1. We corrected the SG&A and the plastic sheet surrogate value for JMC. See Ministerial Error Allegations Memorandum and JMC's Final Calculation Memorandum.

2. We corrected the SG&A and the wooden crates surrogate value for SFTEC. See Ministerial Error Allegations Memorandum and SFTEC's Final Calculation Memorandum.

3. We revised our calculation of freight costs for the factors of production to include the revised distances identified during verification. See JMC's Final Calculation Memorandum and SFTEC's Final Calculation Memorandum.

4. We adjusted the surrogate value for pig iron. See Decision Memorandum, at Comment 6.

5. We adjusted SFTEC's reported raw material consumption factors to reflect only the sales revenue received from scrap sales based on the surrogate value for cast iron scrap. See Decision Memorandum, at Comment 3, and SFTEC's Final Calculation Memorandum.

6. We adjusted the surrogate value for electricity. See Surrogate Country Values Memorandum.

7. As partial FA for JMC, we adjusted the conversion costs at the gray iron casting workshop to account for the difference between the highest product-specific yield loss and the average yield loss of all products in the gray iron casting workshop. See Decision Memorandum, at Comment 1, and JMC's Final Calculation Memorandum.

8. We have allowed JMC's offset for scrap recovered. See Decision Memorandum, at Comment 5, and JMC's Final Calculation Memorandum.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B)(ii) of the Act, we are directing the Customs Service to continue suspension liquidation of entries of subject merchandise from the PRC that are entered, or withdrawn from warehouse, for consumption on or after September 25, 2002 (the date of publication of the Preliminary Determination in the Federal Register). We will instruct the Customs Service to require a cash deposit or the posting of a bond equal to the weighted-average amount by which NV exceeds the U.S. price, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice.

Final Determination of Investigation

We determine that the following weighted-average percentage margins exist for the period July 1, 2001, through December 31, 2001:

Manufacturer/exporter	Weighted-Average Margin (percent)
Jinan Meide Casting Co., Ltd.	7.08
Shanghai Foreign Trade Enterprises Co., Ltd.	6.34
PRC-Wide Rate	75.50

The PRC-wide rate applies to all entries of the subject merchandise except for entries from JMC and SFTEC.

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our determination. As our final determination is affirmative, the ITC will determine, within 45 days, whether these imports are materially injuring, or threaten material injury to, the U.S. industry. If the ITC determines that material injury, or threat of material injury does not exist, the proceeding will be terminated and all securities posted will be refunded or cancelled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing Customs officials to assess antidumping duties on all imports of subject merchandise entered for consumption on or after the effective date of the suspension of liquidation.

Notification Regarding Administrative Protective Order (APO)

This notice also serves as a reminder to parties subject to APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Dated: February 7, 2003.

Faryar Shirzad,

Assistant Secretaryfor Import Administration.

Appendix Issues in Decision Memorandum

Comment 1: Whether Respondents Properly Reported the Necessary Information to the Department

Comment 2: Whether the Department Correctly Calculated the Distance for the NME Inland Freight Charge

Comment 3: Whether the Department Should Correct the Treatment of Scrap and Coke Offset Reported by SFTEC

Comment 4: Whether the Department Correctly Derived Surrogate Financial Ratios

Comment 5: Whether the Department Should Credit JMC with the Recovery of Scrap from the Smoothing and Threading Workshops

Comment 6: Whether the Department Erred in Valuing the Surrogate Value for Pig Iron

Comment 7: Whether the Department Should Adjust SFTEC's Coke Usage

Comment 8: Whether the Department Properly Calculated the Surrogate Brokerage and Handling Value

Comment 9: Whether the Department will Correct the Ministerial Errors from the Preliminary Determination

Footnotes

1.  The petitioners in this case are Anvil International, Inc. and Ward Manufacturing, Inc. (collectively referred to as the Petitioners).