[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Notices]
[Pages 23760-23764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11381]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-533-502]
Certain Welded Carbon Steel Standard Pipes and Tubes From India:
Preliminary Results of New Shipper Antidumping Duty Administrative
Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Antidumping Duty New Shipper
Administrative Review.
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SUMMARY: In response to requests by Lloyd's Metals & Engineers Ltd.
(Lloyd's) and Rajinder Pipes Ltd. (Rajinder), the Department of
Commerce (the Department) is conducting a new shipper administrative
review of the antidumping duty order on certain welded carbon steel
standard pipes and tubes from India. The period of review (POR) is May
1, 1995 through April 30, 1996. We have preliminarily determined that
sales have been made below the normal value (NV). If these preliminary
results are adopted in our final results of administrative review, we
will instruct the U.S. Customs Service to assess antidumping duties
equal to the difference between the export price (EP) or construed
export price (CEP) and NV. Interested parties are invited to comment on
these preliminary results. Parties who submit argument in this
proceeding are requested to submit with the argument (1) a statement of
the issue and (2) a brief summary of the argument.
EFFECTIVE DATE: May 1, 1997.
FOR FURTHER INFORMATION CONTACT:
Kristie Strecker, Matthew Rosenbaum or Thomas O. Barlow, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C.
20230; telephone (202) 482-4733.
SUPPLEMENTARY INFORMATION:
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. In addition, unless otherwise indicated,
all citations to the Department's regulations are to the current
regulations, as amended by the interim regulations published in the
Federal Register on May 11, 1995 (60 FR 25130).
Background
On April 30, 1996, the Department received a request from Lloyd's
for a new shipper review pursuant to section 751(a)(2)(B) of the Act
and section 353.22(h) of the Department's interim regulations. On May
22, 1996, the Department also received a request from Rajinder for a
new shipper review. The petitioner in this case is the Standard Pipe
Subcommittee of the Committee on Pipe and Tube Imports (the
Petitioner).
Section 751(a)(2) of the Act and section 353.22(h) of the
Department's regulations govern determinations of antidumping duties
for new shippers. These provisions state that, if the Department
receives a request for review from an exporter or producer of the
subject merchandise that (1) did not export the merchandise to the
United States during the period of investigation (POI) and, (2) is not
affiliated with any exporter or producer who exported the subject
merchandise during that period, the Department shall conduct a new
shipper review to establish an individual weighted-average dumping
margin for such exporter or producer, if the Department has not
previously established such a margin for the exporter or producer. To
establish these facts, the exporter or producer must include with its
request, with appropriate certification: (i) The date on which the
merchandise was first entered, or withdrawn from warehouse, for
consumption, or, if it cannot certify as to the date of first entry,
the date on which it first shipped the merchandise for export to the
United States; (ii) a list of the firms with which it is affiliated;
and (iii) a statement from such exporter or producer, and from each
affiliated firm, that it did not, under its current or a former name,
export the merchandise during the POI. The requests from Lloyd's and
Rajinder were accompanied by information and certifications
establishing the date on which each company first shipped and entered
subject merchandise, the names of Lloyd's and Rajinder's affiliated
parties, and statements from Lloyd's and Rajinder and their affiliated
parties that they did not, under any name, export the subject
merchandise during the POI. Based on the above information, on June 27,
1996, the Department initiated a new shipper review of Lloyd's and
Rajinder (61 FR 33492). On December 30, 1996, we published an extension
of the time limit for the preliminary results of this review until
April 23, 1997 (61 FR 68713). The Department is now conducting this
review in accordance with section 751 of the Act and section 353.22 of
its regulations.
[[Page 23761]]
Scope of the Review
The products covered by this review include circular welded non-
alloy steel pipes and tubes, of circular cross-section, with an outside
diameter of 0.372 inch or more but not more than 406.4 millimeters (16
inches) in outside diameter, regardless of wall thickness, surface
finish (black galvanized, or painted), or end finish (plain end,
bevelled end, threaded, or threaded and coupled). These pipes and tubes
are generally known as standard pipe, though they may also be called
structural or mechanical tubing in certain applications. Standard pipes
and tubes are intended for the low-pressure conveyance of water, steam,
natural gas, air and other liquids and gases in plumbing and heating
systems, air-conditioner units, automatic sprinkler systems, and other
related uses. Standard pipe may also be used for light load-bearing and
mechanical applications, such as for fence tubing, and for protection
of electrical wiring, such as conduit shells.
The scope is not limited to standard pipe and fence tubing or those
types of mechanical and structural pipe that are used in standard pipe
applications. All carbon-steel pipes and tubes within the physical
description outlined above are included in the scope of this order,
except for line pipe, oil-country tubular goods, boiler tubing, cold-
drawn or cold-rolled mechanical tubing, pipe and tube hollows for
redraws, finished scaffolding, and finished rigid conduit.
Imports of the products covered by this review are currently
classified under the following Harmonized Tariff Schedule (HTS)
subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32,
7306.30.50.40, 07306.30.50.55, 7306.30.50.85, and 7306.30.50.90.
Although the HTS subheadings are provided for convenience and customs
purposes, our written description of the scope of this proceeding is
dispositive.
The review covers two producers/exporters. The POR is May 1, 1995
through April 30, 1996.
Level of Trade
To the extent practicable, we determine NV for sales at the same
level of trade as the U.S. sales (either EP or CEP). When there are no
sales at the same level of trade, we compare U.S. sales to home market
(or, if appropriate, third-country) sales at a different level of
trade. The NV level of trade is that of the starting-price sales in the
home market.
For both EP and CEP, the relevant transaction for the level-of-
trade analysis is the sale (or constructed sale) from the exporter to
the importer. While the starting price for CEP is that of a subsequent
resale to an unaffiliated buyer, the construction of the CEP results in
a price that would have been charged if the importer had not been
affiliated. We calculate the CEP by removing from the first resale to
an independent U.S. customer the expenses under section 772(d) of the
Act and the profit associated with these expenses. These expenses
represent activities undertaken by the affiliated importer. Because the
expenses deducted under section 772(d) represent selling activities in
the United States, the deduction of these expenses normally yields a
different level of trade for the CEP than for the later resale (which
we use for the starting price). Movement charges, duties and taxes
deducted under section 772(c) do not represent activities of the
affiliated importer, and we do not remove them to obtain the CEP level
of trade.
To determine whether home market sales are at a different level of
trade than U.S. sales, we examine whether the home market sales are at
different stages in the marketing process than the U.S. sales. The
marketing process in both markets begins with goods being sold by the
producer and extends to the sale to the final user, regardless of
whether the final user is an individual consumer or an industrial user.
The chain of distribution between the producer and the final user may
have many or few links, and each respondent's sales occur somewhere
along this chain. In the United States, the respondent's sales are
generally to an importer, whether independent or affiliated. We review
and compare the distribution systems in the home market and U.S. export
markets, including selling functions, class of customer, and the extent
and level of selling expenses for each claimed level of trade. Customer
categories such as distributor, original equipment manufacturer (OEM),
or wholesaler are commonly used by respondents to describe levels of
trade, but, without substantiation, they are insufficient to establish
that a claimed level of trade is valid. An analysis of the chain of
distribution and of the selling functions substantiates or invalidates
the claimed levels of trade. If the claimed levels are different, the
selling functions performed in selling to each level should also be
different. Conversely, if levels of trade are norminally the same, the
selling functions performed should also be the same. Different levels
of trade necessarily involve differences in selling functions, but
differences in selling functions, even substantial ones, are not alone
sufficient to establish a difference in the levels of trade. A
different level of trade is characterized by purchasers at different
stages in the chain of distribution and sellers performing
qualitatively or quantitatively different functions in selling to them.
When we compare U.S. sales to home market sales at a different
level of trade, we make a level-of-trade adjustment if the difference
in levels of trade affects price comparability. We determine any effect
on price comparability by examining sales at different levels of trade
in a single market, the home market. Any price effect must be
manifested in a pattern of consistent price differences between home
market sales used for comparison and sales at the equivalent level of
trade of the export transaction. To quantify the price differences, we
calculate the difference in the average of the net prices of the same
models sold at different levels of trade. We use the average difference
in net prices to adjust NV when NV is based on a level of trade
different from that of the export sale. If there is no pattern of
consistent price differences, the difference in levels of trade does
not have a price effect and, therefore, no adjustment is necessary.
The statute also provides for an adjustment to NV when NV is based
on a level of trade different from that of the CEP if the NV level is
more remote from the factory than the CEP and if we are unable to
determine whether the difference in levels of trade between CEP and NV
affects the comparability of their prices. This latter situation can
occur where there is no home market level of trade equivalent to the
U.S. sales level or where there is an equivalent home market level but
the data are insufficient to support a conclusion on price effect. This
adjustment, the CEP offset, is identified in section 773(a)(7)(B) and
is the lower of the following:
The indirect selling expenses on the home market sale, or
The indirect selling expenses deducted from the starting
price in calculating CEP.
The CEP offset is not automatic each time we use CEP. The CEP
offset is made only when the level of trade of the home market sale is
more advanced than the level of trade of the U.S. (CEP) sale and there
is not an appropriate basis for determining whether there is an effect
on price comparability.
In this review, Rajinder reported two channels of distribution in
the home market: (1) sales to government
[[Page 23762]]
agencies, which include sales made to original equipment manufacturers
(OEMs) and end-users (Channel One); and (2) sales made to local
distributors, which include sales made to trading companies (Channel
Two). We found that the two home market channels differed significantly
with respect to selling activities. The level of selling activities
with respect to Channel One was much greater than that with respect to
Channel Two. Channel One activities included strategic and economic
planning, market research, computer, legal, accounting, audit and
business systems development, engineering services, inventory, agent
coordination, and delivery arrangement. Channel Two activities
consisted of only advertising. The Channel One sales, therefore,
constitute a more advanced level of trade. Based on these differences
and other factors such as the point in the chain of distribution where
the relevant selling expenses occurred, we found that the two home
market channels constituted two different levels of trade.
Rajinder reported only CEP sales in the U.S. market. The CEP sales
were based on sales made by the exporter to the U.S. affiliate through
one channel of distribution which was to a local distributor. The
single selling activity associated with these sales was inventory
maintenance. Hence, we determined these sales constitute a single level
of trade.
To determine whether sales in the comparison market were at a
different level of trade than CEP sales, we examined whether the CEP
and comparison sales were at different stages in the marketing process.
We made this determination on the basis of a review of the distribution
system in the two markets, including selling functions, class of
customer, and the level of selling expenses for each type of sale. In
Rajinder's Channel Two level of trade for the home market, as noted
above, we found that the selling activity included only advertising
while that for the CEP level of trade consisted only of inventory
maintenance. While these selling functions differ, as explained above,
differences in selling functions, even substantial ones, are not alone
sufficient to establish a difference in the level of trade. In the
present case, there is a single selling function in both the U.S. and
home market channel of distribution and the selling expenses incurred
with respect to both of these channels of distribution were comparable.
Moreover, both the CEP sales and the Channel Two home market sales were
to the same customer category, distributors.
Based upon this evidence, we have concluded that the differences
between the channels of distribution for the CEP and Channel Two home
market sales are not sufficient to constitute different levels of
trade. Therefore, to the extent possible, we have used the Channel Two
sales for comparison purposes in our analysis without making a level-
of-trade adjustment.
However, for certain CEP sales we found that sales of identical
matches took place only at the Channel One level of trade. Therefore,
we matched these U.S. sales to sales at the Channel One level of trade.
However, because we have not been able to determine the extent of any
pattern of consistent price differences between sales at Channels One
and Two, we have not made a level-of-trade adjustment. Instead, for
purposes of these preliminary results, we have applied a CEP-offset
adjustment in accordance with section 773(a)(7)(B) of the Act. Prior to
the completion of our final results we will further examine the record
concerning this issue.
Lloyd's reported two channels of distribution in the home market:
(1) Sales to OEMs and end-users; and (2) sales to local distributors.
We found that in both home market channels of distribution Lloyd's
selling activities included the following: strategic and economic
planning; market research; computer, legal, accounting, audit and/or
systems development assistance; personnel training, personnel exchange,
and manpower assistance program; engineering services; technical
programs; advertising; packing; and inventory maintenance. Therefore,
we concluded that the selling activities associated with all home
market sales were the same and we determined that these two channels of
distribution constitute one level of trade.
Lloyd's made one EP sale to an unaffiliated customer through a
single channel of distribution (sale made to a trading company).
Respondent stated that this EP sale had many of the same selling
functions as the home market level of trade described above. Therefore,
based upon this information, we have determined that the level of trade
for the EP sale is the same as that in the home market, and we have
made no level-of-trade adjustment.
Product Comparisons
In accordance with section 777A(d)(2) of the Act, we calculated for
Lloyd's and Rajinder transaction-specific EPs and CEPs for comparison
to monthly weighted-average NVs. We compared EP or CEP sales to sales
in the home market of identical merchandise.
Export Price
For Lloyd's, we calculated EP in accordance with section 772(a) of
the Act, because the subject merchandise was sold directly to the first
unaffiliated purchaser in the United States prior to importation and
CEP methodology was not otherwise warranted based on the facts of this
review.
We calculated EP based on packed, C.&F. prices to unaffiliated
customers in the United States. We made deductions for domestics inland
freight, insurance, brokerage, and ocean freight in accordance with
section 772(c)(2) of the Act. We made additions for duty drawback,
where applicable, in accordance with section 772(c)(1)(B) of the Act.
No other adjustments were claimed or allowed.
Constructed Export Price
For Rajinder, we based our margin calculation on CEP as defined in
section 772(b) of the Act because the subject merchandise was first
sold in the United States to a person not affiliated with Rajinder
after importation by Rajinder International Incorporated (RII), a
seller affiliated with Rajinder.
We calculated CEP based on ex-warehouse prices from RII to the
unaffiliated purchasers. We deducted inland freight, insurance,
brokerage and warehousing from the price pursuant to section 772(c)(2)
of the Act. We also deducted an amount from the price for the following
expenses, in accordance with section 772(d)(1) of the Act, that related
to economic activity in the United States: commissions, direct selling
expenses, including credit expenses, and indirect selling expenses,
including inventory carrying costs. In accordance with section
772(d)(3) of the Act, we also deducted from the price an amount for
profit to arrive at the CEP. We added duty drawback to the starting
price in accordance with section 772(c)(1)(B) of the Act.
Normal Value
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
we compared Lloyd's and Rajinder's volume of home market sales of the
foreign like product to the volume of its U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act. Since
both Lloyd's and Rajinder's aggregate volume of home market sales of
the foreign like product was greater than five percent of its aggregate
volume of its U.S. sales of the subject merchandise, we determined that
the home market was viable. Therefore, in
[[Page 23763]]
accordance with section 773(a)(1)(B)(i), we based NV on the prices at
which the foreign like products were first sold for consumption in the
exporting country.
Home market prices were based on the packed, ex-factory or
delivered prices of identical merchandise to unaffiliated purchasers in
the home market. Where applicable, we made adjustments for differences
in packing and for movement expenses in accordance with sections
773(a)(6) (A) and (B) of the Act. For comparison to EP, we made
circumstance-of-sale (COS) adjustments in accordance with section
773(a)(6)(C)(iii) of the Act by deducting home market direct selling
expenses and adding U.S. direct selling expenses. For comparisons to
CEP, we made COS adjustments by deducting home market direct selling
expenses.
We based NV on the price at which the foreign like product was
first sold for consumption in the exporting country, in the usual
commercial quantities, in the ordinary course of trade and at the same
level of trade as the EP or CEP, to the extent practicable, in
accordance with section 773(a)(1)(B)(i) of the Act.
No other adjustments were claimed or allowed.
Cost of Production Analysis
Based on allegations made by Petitioner, we had reasonable grounds
to believe or suspect that sales of both Lloyd's and Rajinder in the
home market were made at prices below the cost of producing the
merchandise. As a result, we initiated an investigation to determine
whether Lloyd's and Rajinder made home market sales during the POR at
prices below its cost of production (COP) within the meaning of section
773(b) of the Act.
A. Calculation of COP
We calculated the COP based on the sum of the costs of materials
and fabrication employed in producing the foreign like product, plus
amounts for home market selling, general and administrative expenses
(SG&A) and packing costs in accordance with section 773(b)(3) of the
Act. We relied on the home market sales and COP information provided by
Lloyd's and Rajinder in their questionnaire responses.
B. Test of Home Market Prices
We tested whether home market sales of pipes and tubes were made at
prices below COP within an extended period of time in substantial
quantities and whether such prices permitted recovery of all costs
within a reasonable period of time. We compared model-specific COPs to
the reported home market prices less any applicable movement charges,
rebates, and direct selling expenses.
C. Results of COP Test
Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20
percent of a respondent's sales of a given product were at prices less
than COP, we did not disregard any below-cost sales of that product
because we determined that the below-cost sales were not made in
``substantial quantities.'' Where 20 percent or more of a respondent's
sales of a given product during the POR were at prices less than the
COP, we disregarded the below-cost sales where such sales were found to
be made 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 Act). Where we disregarded all contemporaneous
sales of the comparison product based on this test, we calculated NV
based on CV, in accordance with section 773(a)(4) of the Act.
We found that, for certain pipe and tube products, more than 20
percent of Lloyd's home sales were sold at below the COP. Further, we
did not find that the prices for these sales provided for the recovery
of costs within a reasonable period of time. We therefore excluded
these sales from our analysis and used the remaining sales as the basis
for determining NV in accordance with section 773(b)(1) of the Act.
For Rajinder, we found that the below-cost sales accounted for less
than 20 percent of its sales (on a model-specific basis). Therefore, we
did not disregard any of Rajinder's below-cost sales.
Verification
As provided in section 782(i) of the Act, we verified information
provided by the respondents using standard verification procedures,
including on-site inspection of the manufacturers' facilities, the
examination of relevant sales and financial records, and selection of
original documentation containing relevant information. We verified
Lloyd's responses to the Department's questionnaires from March 24 to
March 28, 1997, at the sales office in Bombay, India. We verified
Rajinder's responses from March 31 to April 2, 1997, at its factory in
Kanpur, India. Our verification results are outlined in the
verification reports, the public versions of which are available in the
Central Records Unit of the Department of Commerce, room B-099.
Currency Conversion
For purposes of the preliminary results, 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 of New York.
Section 773A(a) of the Act directs the Department to use a daily
exchange rate in order to convert foreign currencies into U.S. dollars,
unless the daily rate involves a ``fluctuation.'' In accordance with
the department's practice, we have determined as a general matter that
a fluctuation exists when the daily exchange rate differs from a
benchmark by 2.25 percent. The benchmark is defined as the rolling
average of rates for the past 40 business days. When we determine a
fluctuation exists, we substitute the benchmark for the daily rate.
Preliminary Results of the Review
As a result of our comparisons of CEP and EP with NV, we
preliminarily determine that the following weighted-average dumping
margins exist for the period May 1, 1995 through April 30, 1996:
------------------------------------------------------------------------
Manufacturer/exporter Margin
------------------------------------------------------------------------
Lloyd's Metals and Engineers Ltd.............................. 0.00
Rajinder Pipes Ltd............................................ 0.00
------------------------------------------------------------------------
Interested parties may request disclosure within 5 days of the date
of publication of this notice and may request a hearing within 10 days
of publication. Any hearing, if requested, will be held as early as
convenient for the parties but not later than 34 days after the date of
publication or the first business day thereafter. Case briefs from
interested parties may be submitted not later than 20 days after the
date of publication. Rebuttal briefs, limited to issues raised in the
case briefs, may be filed not later than 27 days after the date of
publication. The Department will issue the final results of this new
shipper administrative review, including the results of its analysis of
issues raised in any such written comments or at a hearing, within 90
days of publication of these preliminary results.
Upon completion of this new shipper review, the Department will
issue appraisement instructions directly to the Customs Service. The
results of this review shall be the basis for the assessment of
antidumping duties on entries of merchandise covered by this review and
for future deposits of estimated duties.
Furthermore, upon completion of this review, the posting of a bond
or security in lieu of a cash deposit, pursuant to
[[Page 23764]]
section 751(a)(2)(B)(iii) of the Act and section 353.22(h)(4) of the
Department's interim regulations, will no longer be permitted and,
should the final results yield a margin of dumping, a cash deposit will
be required for each entry of the merchandise.
The following deposit requirements will be effective upon
publication of the final results of this new shipper antidumping duty
administrative review for all shipments of certain welded carbon steel
standard pipes and tubes from India entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided by section 751(a)(1) of the Act: (1) the cash deposit rate for
the reviewed companies will be those established in the final results
of this new shipper administrative review; (2) for exporters not
covered in this review, but covered in previous reviews or the original
less-than-value (LTFV) investigation, the cash deposit rate 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,
previous reviews, or the original LTFV investigation, but the
manufacturer is, the cash deposit rate will be that established for the
most recent period for the manufacturer of the merchandise; and (4) the
cash deposit rate for all other manufacturers or exporters will
continue to be 7.08 percent, the all-others rate established in the
LTFV investigation (51 FR 17384, May 12, 1986).
These requirements, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 353.36 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 new shipper administrative review and notice are in accordance
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and
Section 19 CFR 353.22(h) 1996.
Dated: April 23, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-11381 Filed 4-30-97; 8:45 am]
BILLING CODE 3510-DS-M
