[Federal Register Volume 60, Number 117 (Monday, June 19, 1995)]
[Notices]
[Pages 31960-31974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14937]
-----------------------------------------------------------------------
DEPARTMENT OF COMMERCE
[A-351-826]
Notice of Final Determination of Sales at Less Than Fair Value:
Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line
and Pressure Pipe From Brazil
Agency: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: June 19, 1995.
FOR FURTHER INFORMATION CONTACT: Irene Darzenta or Fabian Rivelis,
Office of Antidumping Investigations, Import Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone (202) 482-6320 or 482-3853,
respectively.
Final Determination
The Department of Commerce (the Department) determines that small
diameter circular seamless carbon and alloy steel, standard, line and
pressure pipe from Brazil (seamless pipe) is being sold, or is likely
to be sold, in the United States at less than fair value, as provided
in section 735 of the Tariff Act of 1930, as amended (the ``Act'')
(1994). The estimated margins are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the notice of preliminary determination on January 27, 1995
(60 FR 5351, January 27, 1995), the following events have occurred.
On February 10, 1995, we issued a supplemental questionnaire to
respondent Mannesmann S.A. (MSA) and its affiliated Brazilian and U.S.
sales organizations, Mannesmann Comercial S.A. (MCSA) and Mannesmann
Pipe & Steel Corporation (MPS), respectively (collectively
``Mannesmann''), concerning certain items in its December 9, 1994,
response, which we deemed required further clarification and/or
information prior to verification. On February 28, and March 9, 1995,
Mannesmann submitted its responses to this questionnaire, including
revised home market and U.S. sales listings.
In response to respondent's request, we postponed the final
determination until June 12, 1995, pursuant to section 735(a)(2)(A) of
the Act (60 FR 9012, February 16, 1995).
In our notice of preliminary determination we stated that we would
solicit further information on various scope-related issues, including
class or kind of merchandise. On February 10, 1995, we issued a
questionnaire to interested parties to request further information on
whether the scope of the investigation constitutes more than one class
or kind of merchandise. Responses to this questionnaire were submitted
on March 27, 1995.
In March and April, 1995, we conducted verification of Mannesmann's
questionnaire responses. Our verification reports were issued in May,
1995.
On April 27, 1995, Koppel Steel Corporation, a U.S. producer of
subject merchandise which appeared as an interested party from the
outset of this investigation, requested co-petitioner status, which the
Department granted.
Case and rebuttal briefs were submitted on May 19, 1995, and May
25, 1995, respectively. In its rebuttal [[Page 31961]] brief,
petitioner maintained that the Department should not consider certain
information in respondent's case brief because it allegedly constituted
an ``untimely submission of factual information.'' MSA disagreed with
petitioner in a letter submitted on June 5, 1995. However, we
determined that MSA's case brief did not contain new factual
information. On June 6, 1995, the Department returned MSA's June 5,
1995, letter, because it constituted an unsolicited submission untimely
filed after the briefing period.
Because no requests were received from interested parties, we did
not hold a public hearing in this proceeding.
Scope of Investigation
The following scope language reflects certain modifications made
for purposes of the final determination, where appropriate, as
discussed in the ``Scope Issues'' section below.
The scope of this investigation includes seamless pipes produced to
the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and
meeting the physical parameters described below, regardless of
application. The scope of this investigation also includes all products
used in standard, line, or pressure pipe applications and meeting the
physical parameters below, regardless of specification.
For purposes of this investigation, seamless pipes are seamless
carbon and alloy (other than stainless) steel pipes, of circular cross-
section, not more than 114.3 mm (4.5 inches) in outside diameter,
regardless of wall thickness, manufacturing process (hot-finished or
cold-drawn), end finish (plain end, bevelled end, upset end, threaded,
or threaded and coupled), or surface finish. These pipes are commonly
known as standard pipe, line pipe or pressure pipe, depending upon the
application. They may also be used in structural applications. Pipes
produced in non-standard wall thicknesses are commonly referred to as
tubes.
The seamless pipes subject to these investigations are currently
classifiable under subheadings 7304.10.10.20, 7304.10.50.20,
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and
7304.59.80.25 of the Harmonized Tariff Schedule of the United States
(HTSUS).
The following information further defines the scope of this
investigation, which covers pipes meeting the physical parameters
described above:
Specifications, Characteristics and Uses: Seamless pressure pipes
are intended for the conveyance of water, steam, petrochemicals,
chemicals, oil products, natural gas and other liquids and gasses in
industrial piping systems. They may carry these substances at elevated
pressures and temperatures and may be subject to the application of
external heat. Seamless carbon steel pressure pipe meeting the American
Society for Testing and Materials (ASTM) standard A-106 may be used in
temperatures of up to 1000 degrees fahrenheit, at various American
Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes
made to ASTM standard A-335 must be used if temperatures and stress
levels exceed those allowed for A-106 and the ASME codes. Seamless
pressure pipes sold in the United States are commonly produced to the
ASTM A-106 standard.
Seamless standard pipes are most commonly produced to the ASTM A-53
specification and generally are not intended for high temperature
service. They are intended for the low temperature and pressure
conveyance of water, steam, natural gas, air and other liquids and
gasses in plumbing and heating systems, air conditioning units,
automatic sprinkler systems, and other related uses. Standard pipes
(depending on type and code) may carry liquids at elevated temperatures
but must not exceed relevant ASME code requirements.
Seamless line pipes are intended for the conveyance of oil and
natural gas or other fluids in pipe lines. Seamless line pipes are
produced to the API 5L specification.
Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53 and API 5L specifications. Such triple certification of
pipes is common because all pipes meeting the stringent A-106
specification necessarily meet the API 5L and ASTM A-53 specifications.
Pipes meeting the API 5L specification necessarily meet the ASTM A-53
specification. However, pipes meeting the A-53 or API 5L specifications
do not necessarily meet the A-106 specification. To avoid maintaining
separate production runs and separate inventories, manufacturers triple
certify the pipes. Since distributors sell the vast majority of this
product, they can thereby maintain a single inventory to service all
customers.
The primary application of ASTM A-106 pressure pipes and triple
certified pipes is in pressure piping systems by refineries,
petrochemical plants and chemical plants. Other applications are in
power generation plants (electrical-fossil fuel or nuclear), and in
some oil field uses (on shore and off shore) such as for separator
lines, gathering lines and metering runs. A minor application of this
product is for use as oil and gas distribution lines for commercial
applications. These applications constitute the majority of the market
for the subject seamless pipes. However, A-106 pipes may be used in
some boiler applications.
The scope of this investigation includes all seamless pipe meeting
the physical parameters described above and produced to one of the
specifications listed above, regardless of application, and whether or
not also certified to a non-covered specification. Standard, line and
pressure applications and the above-listed specifications are defining
characteristics of the scope of this investigation. Therefore, seamless
pipes meeting the physical description above, but not produced to the
A-335, A-106, A-53, or API 5L standards shall be covered if used in a
standard, line or pressure application.
For example, there are certain other ASTM specifications of pipe
which, because of overlapping characteristics, could potentially be
used in A-106 applications. These specifications generally include A-
162, A-192, A-210, A-333, and A-524. When such pipes are used in a
standard, line or pressure pipe application, such products are covered
by the scope of this investigation.
Specifically excluded from this investigation are boiler tubing and
mechanical tubing, if such products are not produced to A-335, A-106,
A-53 or API 5l specifications and are not used in standard, line or
pressure applications. In addition, finished and unfinished OCTG are
excluded from the scope of this investigation, if covered by the scope
of another antidumping duty order from the same country. If not covered
by such an OCTG order, finished and unfinished OCTG are included in
this scope when used in standard, line or pressure applications.
Finally, also excluded from this investigation are redraw hollows for
cold-drawing when used in the production of cold-drawn pipe or tube.
Although the HTSUS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
investigation is dispositive.
Scope Issues
Interested parties in these investigations have raised several
issues related to the scope. We considered these issues in our
preliminary determination and invited additional comments from the
parties. These [[Page 31962]] issues, which are discussed below, are:
(A) whether to continue to include end use as a factor in defining the
scope of these investigations; (B) whether the seamless pipe subject to
these investigations constitutes more than one class or kind of
merchandise; and (C) miscellaneous scope clarification issues and scope
exclusion requests.
A. End Use
We stated in our preliminary determination that we agreed with
petitioner that pipe products identified as potential substitutes used
in the same applications as the four standard, line, and pressure pipe
specifications listed in the scope would fall within the class or kind
of subject merchandise and, therefore, within the scope of any orders
issued in these investigations. However, we acknowledged the
difficulties involved with requiring end-use certifications,
particularly the burdens placed on the Department, the U.S. Customs
Service, and the parties, and stated that we would strive to simplify
any procedures in this regard.
For purposes of these final determinations, we have considered
carefully additional comments submitted by the parties and have
determined that it is appropriate to continue to employ end use to
define the scope of these cases with respect to non-listed
specifications. We find that the generally accepted definition of
standard, line and pressure seamless pipes is based largely on end use,
and that end use is implicit in the description of the subject
merchandise. Thus, end use must be considered a significant defining
characteristic of the subject merchandise. Given our past experience
with substitution after the imposition of antidumping orders on steel
pipe products,\1\ we agree with petitioner that if products produced to
a non-listed specification (e.g., seamless pipe produced to A-162, a
non-listed specification in the scope) were actually used as standard,
line, or pressure pipe, then such product would fall within the same
class or kind of merchandise subject to these investigations.
\1\ See Preliminary Affirmative Determination of Scope Inquiry
on Antidumping Duty Orders on Certain Welded Non-Alloy Steel Pipes
from Brazil, the Republic of Korea, Mexico and Venezuela, 59 FR
1929, January 13, 1994.
---------------------------------------------------------------------------
Furthermore, we disagree with respondents' general contention that
using end use for the scope of an antidumping case is beyond the
purview of the U.S. antidumping law. The Department has interpreted
scope language in other cases as including an end-use specification.
See Ipsco Inc. v. United States, 715 F.Supp. 1104 (CIT 1989) (Ipsco).
In Ipsco, the Department had clarified the scope of certain orders, in
particular the phrase, ``intended for use in drilling for oil and
gas,'' as covering not only API specification OCTG pipe but, `` `all
other pipe with [certain specified] characteristics used in OCTG
applications * * *' '' Ipsco at 1105. In reaching this determination,
the Department also provided an additional description of the covered
merchandise, and initiated an end-use certification procedure.
Regarding implementation of the end use provision of the scope of
these investigations, and any orders which may be issued in these
investigations, we are well aware of the difficulty and burden
associated with such certifications. Therefore, in order to maintain
the effectiveness of any order that may be issued in light of actual
substitution in the future (which the end-use criterion is meant to
achieve), yet administer certification procedures in the least
problematic manner, we have developed an approach which simplifies
these procedures to the greatest extent possible.
First, we will not require end-use certification until such time as
petitioner or other interested parties provide a reasonable basis to
believe or suspect that substitution is occurring.2 Second, we
will require end-use certification only for the product(s) (or
specification(s)) for which evidence is provided that substitution is
occurring. For example, if, based on evidence provided by petitioner,
the Department finds a reasonable basis to believe or suspect that
seamless pipe produced to A-162 specification is being used as pressure
pipe, we will require end-use certifications for imports of A-162
specification. Third, normally we will require only the importer of
record to certify to the end use of the imported merchandise. If it
later proves necessary for adequate implementation, we may also require
producers who export such products to the United States to provide such
certification on invoices accompanying shipments to the United States.
For a complete discussion of interested party comments and the
Department's analysis on this topic, see June 12, 1995, End Use
Decision Memorandum from Deputy Assistant Secretary Barbara Stafford
(DAS) to Assistant Secretary Susan Esserman (AS).
\2\ This approach is consistent with petitioner's request.
B. Class or Kind
In the course of these investigations, certain respondents have
argued that the scope of the investigations should be divided into two
classes or kinds. Siderca S.A.I.C., the Argentine respondent, has
argued that the scope should be divided according to size: seamless
pipe with an outside diameter of 2 inches or less and pipe with an
outside diameter of greater than 2 inches constitute two classes or
kinds. Mannesmann S.A., the Brazilian respondent, and Mannesmannrohren-
Werke AG, the German respondent, argued that the scope should be
divided based upon material composition: carbon and alloy steel
seamless pipe constitute two classes or kinds.
In our preliminary determinations, we found insufficient evidence
on the record that the merchandise subject to these investigations
constitutes more than one class or kind. We also indicated that there
were a number of areas where clarification and additional comment were
needed. For purposes of the final determination, we considered a
significant amount of additional information submitted by the parties
on this issue, as well as information from other sources. This
information strongly supports a finding of one class or kind of
merchandise. As detailed in the June 12, 1995, Class or Kind Decision
Memorandum from DAS to AS, we analyzed this issue based on the criteria
set forth by the Court of International Trade in Diversified Products
v. United States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria
are as follows: (1) the general physical characteristics of the
merchandise; (2) expectations of the ultimate purchaser; (3) the
ultimate use of the merchandise; (4) the channels of trade in which the
merchandise moves; and (5) the cost of that merchandise.
In the past, the Department has divided a single class or kind in a
petition into multiple classes or kinds where analysis of the
Diversified Products criteria indicates that the subject merchandise
constitutes more than one class or kind. See, for example, Final
Determination of Sales at Less than Fair Value; Anti-Friction Bearings
(Apart from Tapered Roller Bearings) from Germany, 54 Fed. Reg. 18992,
18998 (May 3, 1989) (``AFBs from Germany''); Pure and Alloy Magnesium
from Canada: Final Affirmative Determination; Rescission of
Investigation and Partial Dismissal of Petition, 57 Fed. Reg. 30939
(July 13, 1992).
1. Physical Characteristics
We find little meaningful difference in physical characteristics
between seamless pipe above and below two inches. Both are covered by
the same technical specifications, which contains
[[Page 31963]] detailed requirements.3 While we recognize that
carbon and alloy pipe do have some important physical differences
(primarily the enhanced heat and pressure tolerances associated with
alloy grade steels), it is difficult to say where carbon steel ends and
alloy steel begins. As we have discussed in our Class or Kind Decision
Memorandum of June 12, 1995, carbon steel products themselves contain
alloys, and there is a range of percentages of alloy content present in
merchandise made of carbon steel. We find that alloy grade steels, and
pipes made therefrom, represent the upper end of a single continuum of
steel grades and associated attributes.4
\3\ The relevant ASTM specifications, as well as product
definitions from other independent sources (e.g., American Iron and
Steel Institute (AISI)), describe the sizes for standard, line, and
pressure pipe, as ranging from \1/2\ inch to 60 inches (depending on
application). None of these descriptions suggest a break point at
two inches.
\4\ The Department has had numerous cases where steel products
including carbon and alloy grades were considered to be within the
same class or kind. See, e.g., Preliminary Determination of Sales at
Less than Fair Value: Oil Country Tubular Goods from Austria, et
al., 60 Fed. Reg. 6512 (February 2, 1995); Final Determination of
Sales at Less than Fair Value: Certain Alloy and Carbon Hot-Rolled
Bars, Rods, and Semi-Finished Products of Special Bar Quality
Engineered Steel from Brazil, 58 Fed. Reg. 31496 (June 3, 1993);
Final Determination of Sales at Less than Fair Value: Forged Steel
Crankshafts from the United Kingdom, 60 Fed. Reg. 22045 (May 9,
1995).
---------------------------------------------------------------------------
In those prior determinations where the Department divided a single
class or kind, the Department emphasized that differences in physical
characteristics also affected the capabilities of the merchandise
(either the mechanical capabilities, as in AFBs from Germany, 54 Fed.
Reg. at 18999, 19002-03, or the chemical capabilities, as in Pure and
Alloy Magnesium from Canada, 57 Fed. Reg. at 30939), which in turn
established the boundaries of the ultimate use and customer
expectations of the products involved.
As the Department said in AFBs from Germany,
[t]he real question is whether the physical differences are so
material as to alter the essential nature of the product, and,
therefore, rise to the level of class or kind distinctions. We
believe that the physical differences between the five classes or
kinds of the subject merchandise are fundamental and are more than
simply minor variations on a theme.
54 Fed. Reg. at 19002. In the present cases, there is insufficient
evidence to conclude that the differences between pipe over 2 inches in
outside diameter and 2 inches or less in outside diameter, rise to the
level of a class or kind distinction.
Furthermore, with regard to Siderca's allegation that a two-inch
breakpoint is widely recognized in the U.S. market for seamless pipe,
the Department has found only one technical source of U.S. market data
for seamless pipe, the Preston Pipe Report. The Preston Pipe Report,
which routinely collects and publishes U.S. market data for this
merchandise, publishes shipment data for the size ranges \1/2\ to 4\1/
2\ inches: it does not recognize a break point at 2 inches.
Accordingly, the Department does not agree with Siderca that ``the U.S.
market'' recognizes 2 inches as a physical boundary line for the
subject merchandise.
In these present cases, therefore, the Department finds that there
is insufficient evidence that any physical differences between pipe
over 2 inches in outside diameter and 2 inches or less in outside
diameter, or between carbon and alloy steel, rise to the level of class
or kind distinctions.
2. Ultimate Use and Purchaser Expectations
We find no evidence that pipe above and below two inches is used
exclusively in any specific applications. Rather, the record indicates
that there are overlapping applications. For example, pipe above and
below two inches may both be used as line and pressure pipe. The
technical definitions for line and pressure pipe provided by ASTM,
AISI, and a variety of other sources do not recognize a distinction
between pipe over and under two inches.
Likewise, despite the fact that alloy grade steels are associated
with enhanced heat and pressure tolerances, there is no evidence that
the carbon or alloy content of the subject merchandise can be
differentiated in the ultimate use or expectations of the ultimate
purchaser of seamless pipe.
3. Channels of Trade
Based on information supplied by the parties, we determine that the
vast majority of the subject merchandise is sold through the same
channel of distribution in the United States and is triple-stenciled in
order to meet the greatest number of applications.
Accordingly, the channels of trade offer no basis for dividing the
subject merchandise into multiple classes or kinds based on either the
size of the outside diameter or on pipe having a carbon or alloy
content.
4. Cost
Based on the evidence on the record, we find that cost differences
between the various products do exist. However, the parties varied
considerably in the factors which they characterized as most
significant in terms of affecting cost. There is no evidence that the
size ranges above and below two inches, and the difference between
carbon and alloy grade steels, form a break point in cost which would
support a finding of separate classes or kinds.
In conclusion, while we recognize that certain differences do exist
between the products in the proposed class or kind of merchandise, we
find that the similarities significantly outweigh any differences.
Therefore, for purposes of the final determination, we will continue to
consider the scope as constituting one class or kind of merchandise.
C. Miscellaneous Scope Clarification Issues and Exclusion Requests
The miscellaneous scope issues include: (1) Whether OCTG and
unfinished OCTG are excluded from the scope of these investigations;
(2) whether pipes produced to non-standard wall thicknesses (commonly
referred to as ``tubes'') are covered by the scope; (3) whether certain
merchandise (e.g., boiler tubing, mechanical tubing) produced to a
specification listed in the scope but used in an application excluded
from the scope is covered by the scope; and (4) whether redraw hollows
used for cold drawing are excluded from the scope. For a complete
discussion of interested party comments and the Department's analysis
on these topics, see June 12, 1995, Additional Scope Clarifications
Decision Memorandum from DAS to AS.
Regarding OCTG, petitioner requested that OCTG and unfinished OCTG
be included within the scope of these investigations if used in a
standard, line or pressure pipe application. However, OCTG and
unfinished OCTG, even when used in a standard, line or pressure pipe
application, may come within the scope of certain separate, concurrent
investigations. We intend that merchandise from a particular country
not be classified simultaneously as subject to both an OCTG order and a
seamless pipe order. Thus, to eliminate any confusion, we have revised
the scope language above to exclude finished and unfinished OCTG, if
covered by the scope of another antidumping duty order from the same
country. If not covered by such an OCTG order, finished and unfinished
OCTG are included in this scope when used in a standard, line or
pressure pipe application, and, as with other non-listed
specifications, may be subject to end-use certification if there is
evidence of substitution. [[Page 31964]]
Regarding pipe produced in non-standard wall thicknesses, we
determine that these products are clearly within the parameters of the
scope of these investigations. For clarification purposes, we note that
the physical parameters of the scope include all seamless carbon and
alloy steel pipes, of circular cross-section, not more than 4.5 inches
in outside diameter, regardless of wall thickness. Therefore, the fact
that such products may be referred to as tubes by some parties, and may
be multiple-stenciled, does not render them outside the scope.
Regarding pipe produced to a covered specification but used in a
non-covered application, we determine that these products are within
the scope. We agree with the petitioner that the scope of this
investigation includes all merchandise produced to the covered
specifications and meeting the physical parameters of the scope,
regardless of application. The end-use criteria included in the scope
is only applicable to products which can be substituted in the
applications to which the covered specifications are put i.e. standard,
line, and pressure applications.
It is apparent that at least one party in this case interpreted the
scope incorrectly. Therefore, we have clarified the scope to make it
more explicit that all products made to ASTM A-335, ASTM A-106, ASTM A-
53 and API 5L are covered, regardless of end use.
With respect to redraw hollows for cold drawing, the scope language
excludes such products specifically when used in the production of
cold-drawn pipe or tube. We understand that petitioner included this
exclusion language expressly and intentionally to ensure that hollows
imported into the United States are sold as intermediate products, not
as merchandise to be used in a covered application.
Standing
The Argentine, Brazilian, and German respondents have challenged
the standing of Gulf States Tube to file the petition with respect to
pipe and tube between 2.0 and 4.5 inches in outside diameter, arguing
that Gulf States Tube does not produce these products.
Pursuant to section 732(b)(1) of the Act, an interested party as
defined in section 771(9)(C) of the Act has standing to file a
petition. (See also 19 C.F.R. Sec. 353.12(a).) Section 771(9)(C) of the
Act defines ``interested party,'' inter alia, as a producer of the like
product. For the reasons outlined in the ``Scope Issues'' section
above, we have determined that the subject merchandise constitutes a
single class or kind of merchandise. The International Trade Commission
(ITC) has also preliminarily determined that there is a single like
product consisting of circular seamless carbon and alloy steel
standard, line, and pressure pipe, and tubes not more than 4.5 inches
in outside diameter, and including redraw hollows. (See USITC
Publication 2734, August 1994 at 18). For purposes of determining
standing, the Department has determined to accept the ITC's definition
of like product, for the reasons set forth in the ITC's preliminary
determination. Because Gulf States is a producer of the like product,
it has standing to file a petition with respect to the class or kind of
merchandise under investigation. Further, as noted in the ``Case
History'' section of this notice, on April 27, 1995, Koppel, a U.S.
producer of the product size range at issue, filed a request for co-
petitioner status, which the Department granted. As a producer of the
like product, Koppel also has standing.
The Argentine respondent argues that Koppel's request was filed too
late to confer legality on the initiation of these proceedings with
regard to the products at issue. Gulf States Tube maintains that the
Department has discretion to permit the amendment of a petition for
purposes of adding co-petitioners who produce the domestic like
product, at such time and upon such circumstances as deemed appropriate
by the Department.
The Court of International Trade (CIT) has upheld in very broad
terms the Department's ability to allow amendments to petitions. For
example, in Citrosuco Paulista, S.A. v. United States, 704 F. Supp.
1075 (Ct. Int'l Trade 1988), the Court sustained the Department's
granting of requests for co-petitioner status filed by six domestic
producers on five different dates during an investigation. The Court
held that the addition of the co-petitioners cured any defect in the
petition, and that allowing the petition to be amended was within
Commerce's discretion:
[S]ince Commerce has statutory discretion to allow amendment of
a dumping petition at any time, and since Commerce may self-initiate
a dumping petition, any defect in a petition filed by [a domestic
party is] cured when domestic producers of the like product [are]
added as co-petitioners and Commerce [is] not required to start a
new investigation.
Citrosuco, 704 F. Supp. at 1079 (emphasis added). The Court reasoned
that if Commerce were to have dismissed the petition for lack of
standing, and to have required the co-petitioners to refile at a later
date, it ``would have elevated form over substance and fruitlessly
delayed the antidumping investigation * * * when Congress clearly
intended these cases to proceed expeditiously.'' Id. at 1083-84.
Koppel has been an interested party and a participant in these
investigations from the outset. The timing of Koppel's request for co-
petitioner status and the fact that it made its request in response to
Siderca's challenge to Gulf States's Tube's standing does not render
its request invalid. See Final Affirmative Countervailing Duty
Determination; Live Swine and Fresh, Chilled, and Frozen Pork Products
from Canada, 50 FR 25097 (June 17, 1985). The Department has rejected a
request to add a co-petitioner based on the untimeliness of the request
only where the Department determined that there was not adequate time
for opposing parties to submit comments and for the Department to
consider the relevant arguments. See Final Affirmative Countervailing
Duty Determination: Certain Stainless Steel Hollow Products from
Sweden, 52 FR 5794, 5795, 5803 (February 26, 1987). In this
investigation, the respondents have had an opportunity to comment on
Koppel's request for co-petitioner status, and the Argentine respondent
has done so in its case brief. Therefore, we have determined that,
because respondents would not be prejudiced or unduly burdened,
amendment of the petition to add Koppel as co-petitioner is
appropriate.
Period of Investigation
The period of investigation (POI) is January 1, through June 30,
1994.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Such or Similar Comparisons
We have determined that all the products covered by this
investigation constitute a single category of such or similar
merchandise. Where there were no sales of identical merchandise in the
home market to compare to U.S. sales, we made similar merchandise
comparisons, when verified data permitted, on the basis of the criteria
defined in Appendix V to the antidumping questionnaire, on file in Room
B-099 of the main building of the Department.
Fair Value Comparisons
To determine whether Mannesmann's sales of seamless pipe from MSA
to the United States were made at less than fair value, we compared the
United States price (USP) to the foreign market value (FMV), as
specified in the ``United [[Page 31965]] States Price'' and ``Foreign
Market Value'' sections of this notice.
In accordance with past practice and consistent with our decision
in the preliminary determination, we considered Brazil's economy to be
hyperinflationary during the POI. Pursuant to our methodology
concerning such an economy, we made contemporaneous sales comparisons
based on the month of the U.S. sale.
In accordance with 19 CFR 353.58, we made comparisons at the same
level of trade. For those U.S. sales where there were no comparable
sales at the same level of trade in the home market, we used home
market sales at a different level of trade as the basis of our less
than fair value comparisons. Based on our analysis of Mannesmann's
questionnaire response, we have accepted its claim that MSA's sales
from its factory to unrelated customers and its sales through its
related distributor MCSA represent two distinct levels of trade.
However, because we could not determine that the difference in level of
trade affects price comparability, we made no adjustment to FMV. See
Comment 5 of the ``Company-specific Issues'' sub-section of the
``Interested Party Comments'' section of this notice.
We also made adjustments for differences-in-merchandise (difmer),
where possible, in accordance with 19 CFR 353.57. At verification, we
found that respondent's reported variable cost of manufacture data
included cost differences not attributable to physical differences in
the merchandise. Therefore, we modified the submitted cost data where
we had information on the record to eliminate cost differences
unrelated to physical differences.
For those products for which difmer cost modification was not
possible and those U.S. sales with no comparable home market products
and no cost data, we based our analysis, pursuant to section 776(C) of
the Act, on the best information available (BIA). As BIA, we used a
calculated margin that is sufficiently adverse to fulfill the statutory
purpose of the BIA rule. See June 12, 1995, Final Determination
Concurrence Memorandum. See also DOC Position to Comment 2 of the
``Company-specific Issues'' sub-section of the ``Interested Party
Comments'' section of this notice.
United States Price
We calculated USP according to the methodology described in our
preliminary determination, with the following exceptions:
1. We corrected certain clerical errors found at verification,
including: (a) The reported product codes for four products; (b) the
reported sales date and end-finish for one transaction; (c) the level
of trade reported for one customer; and (d) the reported U.S. duty
charges for certain transactions.
2. We revised the reported ocean freight, U.S. brokerage, and U.S.
inland freight amounts for certain transactions to reflect actual
expenses.
3. We recalculated credit expenses using respondent's revised U.S.
shipment dates submitted in the March 9, 1995, response. These dates
reflect the approximate date on which the merchandise left the factory.
4. We made a deduction for foreign inland freight charges that were
previously not reported in respondent's sales listing.
5. We made a deduction for bank fees paid by MSA for entering into
foreign exchange contracts, which had not been reported in respondent's
sales listing. See Comment 8 of the ``Company-specific Issues'' sub-
section of the ``Interested Party Comments'' section of this notice.
Foreign Market Value
As stated in the preliminary determination, we determined that
respondent's home market was viable with respect to sales of seamless
pipe during the POI to serve as the basis for FMV.
Based on the results of the Department's related party sales test
as set forth in Appendix II of the Final Determination of Sales at Less
Than Fair Value: Certain Cold-Rolled Carbon Steel Flat Products from
Argentina, 58 FR 37062 (July 9, 1993), we excluded respondent's related
party sales from our analysis, and used only those sales made to
unrelated parties.
We calculated FMV according to the methodology described in our
preliminary determination with the following exceptions:
1. Where we had verified transaction-specific data on the record,
we excluded from our analysis those home market sales that were found
to have been returned, and incorrectly included in respondent's sales
listing.
2. For both MSA's and MCSA's sales, we revised the reported
insurance charges, where appropriate, based on the applicable, verified
insurance percentage rates prevailing during the POI.
3. We corrected clerical errors made with respect to the reported
interest revenue amounts for two transactions.
4. For MSA's sales, we reduced the reported inland freight charges
by the amount by which they exceeded the actual amounts charged by
MSA's freight supplier.
5. With respect to MCSA's sales, we corrected the surface treatment
codes for those products reported incorrectly as corrosion-resistant.
6. We made no adjustment for inflation value in addition to an
adjustment for the reported, verified credit expenses which included an
inflation factor. See Comment 4 in the ``Company-specific Issues'' sub-
section of the ``Interested Party Comments'' section of this notice.
7. Because the reported U.S. and home market packing expenses did
not verify, we used BIA for these expenses. As BIA for home market
packing expenses, we used the lowest domestic packing expense noted on
the record. As BIA for U.S. packing expenses, we used the highest
export packing expense noted on the record. See Comment 6 in the
``Company-specific Issues'' sub-section of the ``Interested Party
Comments'' section of this notice.
8. Where possible, we made difmer adjustments based on the
submitted cost data, modified to eliminate cost differences unrelated
to physical differences between the merchandise being compared. See
Comment 2 in the ``Company-specific Issues'' sub-section of the
``Interested Party Comments'' section of this notice.
Currency Conversion
No certified rates of exchange, as furnished by the Federal Reserve
Bank of New York, were available for the POI. In place of the official
certified rates, we used the daily official exchange rates for the
Brazilian currency, as well as the UFIR 5 index, published by the
Central Bank of Brazil which were provided by respondent in its
February 28, 1995, response and verified by the Department.
\5\ The UFIR is an inflationary neutral currency unit.
---------------------------------------------------------------------------
Verification
As provided in section 776(b) of the Act, we verified information
provided by Mannesmann by using standard verification procedures,
including the examination of relevant sales and financial records, and
selection of original source documentation containing relevant
information.
Interested Party Comments
General Issues
Comment 1
Mannesmann argues that petitioner lacks standing to seek the
imposition of antidumping duties on products that it does not produce.
According to Mannesmann, petitioner has admitted [[Page 31966]] that it
is incapable of manufacturing seamless pipe and tube in dimensions
above two inches in outside diameter. Therefore, respondent maintains
that petitioner is not an ``interested party'' with respect to this
merchandise. Accordingly, the Department should amend the scope of the
investigation to limit it only to those dimensions and pipe types that
petitioner has a proven ability to manufacture.
Gulf States Tube contends that the antidumping statute neither
requires nor permits the Department to limit the scope of the
investigation to products that the petitioner itself produces. Gulf
States Tube also maintains that respondent's standing claim is untimely
and may not be considered by the Department at this stage of the
proceeding. Nevertheless, Gulf States Tube asserts that the issue is
rendered moot by the request of Koppel Steel Corporation, a domestic
producer of subject merchandise in sizes larger than two inches in
outside diameter, for co-petitioner status.
DOC Position
We disagree with respondent for the reasons outlined in the
``Standing'' section of this notice.
Comment 2
Mannesmann contends that including an end-use certification
requirement in the scope would be both illegal and unworkable.
Respondent maintains that petitioner is effectively seeking to
circumvent the established legal procedure by arguing for an open-ended
scope definition that encompasses products that it does not manufacture
and that petitioner has conceded are not causing present injury. In
addition, respondent states that it is clear that any end-use
certification procedure designed to implement such a scope definition
is wholly unworkable because of the manner in which the subject
products are sold. That is, in almost all cases the importer of record
does not know the ultimate use of the pipe products it sells, and in
many instances, neither do its customers. According to respondent, as a
practical matter, the effect of an end-use certification requirement
would be to ask the impossible of importers. Furthermore, respondent
states that the anticircumvention procedures of the antidumping law
provide ample remedy to petitioner in cases of order circumvention via
product substitution. Respondent emphasizes that absent the detailed
inquiry required by anti-circumvention legal provisions, the Department
cannot include within the scope of this investigation other merchandise
simply because such other products might in theory be utilized for the
same purposes as pipe meeting the listed specifications. According to
respondent, to do otherwise is contrary to the antidumping law and
deprives respondents of their right to a full and fair hearing on any
circumvention allegations that might be advanced by petitioner at some
later date.
Petitioner argues that there is no factual or legal basis for
eliminating end use as a defining element of the scope of the
investigation. Furthermore, not only is the feasibility of specific
enforcement mechanisms irrelevant to the scope determination, but it is
also untrue that any end use certification procedure would be
unworkable. According to petitioner, there is no evidence on the record
of this investigation that an end-use certification program must
require the submission of an end-use certificate by the importer at the
time of importation. Rather, petitioner proposes a program whereby the
end-use certificate travels with the pipe to the ultimate end-user, who
may then send it back up the line of distribution. When final duties
are assessed, the Department may assume that any pipe for which no
certificates can be produced was used in subject applications. Contrary
to Mannesmann's arguments, petitioner maintains that the Department and
the U.S. Customs Service are perfectly capable of administering an
order that includes end use in its scope definition. In the event that
products meeting the physical description of subject merchandise, but
which are not certified to one or more of the covered specifications,
are being substituted into one of the listed applications, the burden
would be on the petitioner, other domestic producers or interested
parties to notify Customs and the Department with some objective
evidence supporting a reasonable belief that substitution is occurring.
Accordingly, it is both unnecessary and inappropriate at this point to
engage in debate about the feasibility and desirability of specific
end-use certification procedures. According to petitioner, the facts
and policy considerations relevant to such a debate are not available
on this record, and the selection of a specific enforcement mechanism
is beyond the Department's responsibilities in this proceeding.
DOC Position
We disagree with respondent's assertion that including end-use in
the scope of the investigation would be unlawful. The Department has
interpreted scope language in other cases as including an end-use
specification. See Ipsco Inc. v. United States, 715 F. Supp. 1104 (CIT
1989). See ``Scope Issues'' section of this notice for further
discussion on end-use.
Comment 3
Mannesmann contends that the carbon and alloy pipe products subject
to investigation are distinct classes or kinds of merchandise.
Mannesmann asserts that the criteria set out in Diversified Products
support a division between carbon and alloy products. Specifically,
Mannesmann argues that carbon and alloy pipes differ in terms of
physical characteristics, uses, customer expectations and cost. With
respect to physical characteristics, alloy seamless pipes contain
higher grade steel than carbon seamless pipe, and because of their
different chemistries, these products have different performance
characteristics. With respect to end use which, according to
respondent, is inherently tied to physical characteristics, carbon pipe
is not as versatile as alloy steel pipe and is not suited for the more
sophisticated applications, such as operations in high temperature
environments. Respondent asserts that the Department has consistently
emphasized the relationship between physical characteristics and end
use in past cases (e.g., Torrington Co. v. United States, 745 F.Supp.
718, 726 (CIT 1990) (Torrington)). In addition, respondent states that
customer expectations vary depending upon the ability of specific
merchandise to perform a given task. With regard to alloy and carbon
steel pipe, the ultimate purchaser does not expect these two types of
pipe to be interchangeable, and is willing to pay more for alloy steel
pipe because it must perform under more adverse conditions than the
conditions for which carbon pipe is suited. With respect to cost,
respondent states that the cost of alloy pipe is higher than that of
carbon pipe because of the more expensive raw materials and production
costs incurred in producing alloy pipe. Finally, with respect to
channels of trade, respondent states that carbon and alloy pipe move in
similar channels, but that this factor is not determinative as to class
or kind of merchandise.
Petitioner maintains that the subject merchandise constitutes a
single class or kind. With respect to Mannesmann's proposal for a split
in class or kind on the basis of material composition, petitioner
asserts that the factual evidence does not support such a division.
Petitioner states that the application of the criteria employed by the
Department in Diversified Products [[Page 31967]] compels the
conclusion that there is a single class or kind of merchandise.
According to petitioner, the physical characteristics of carbon and
alloy pipe represent a continuum of products produced with varying
chemical compositions to meet a range of heat, pressure and tensile
requirements. According to petitioner, there is simply no bright
dividing line between the physical characteristics of the products.
Petitioner states that the customer's expectations and use of the
product are dictated by the engineering specification required by the
intended application. Because the majority of all subject seamless pipe
is triple-certified, the pipe may be put to any of the uses that apply
to each of the individual specifications to which it is certified.
Petitioner points out that the vast majority of seamless pipe is sold
through the same channel of trade--distributors. Finally, petitioner
adds that, because the majority of seamless pipe is triple-certified,
it has identical costs regardless of the customer to whom it is sold.
DOC Position
We agree with petitioner that the subject merchandise constitutes a
single class or kind for the reasons outlined in the ``Scope Issues''
section of this notice. Furthermore, respondent's reliance on
Torrington is misplaced. In Torrington, the Court of International
Trade found that the Department's division of antifriction bearings
into five classes or kinds, based in large part on the physical
characteristics of the different types of antifriction bearings, was
supported by substantial evidence on the record. In this case, as we
stated in our ``Scope Issues'' section, that there is insufficient
evidence to show that the difference between carbon and alloy steel
rises to a class or kind distinction. See ``Scope Issues'' section of
this notice for further discussion on class or kind.
Company-Specific Issues
Comment 1
Petitioner argues that BIA must be applied to Mannesmann's
responses for the following reasons:
(a) the Department was unable to verify the accuracy or
completeness of Mannesmann's sales listings;
(b) MSA's difmer data is erratic and contains serious errors; and
(c) the information for various sales charges and adjustments
reported by respondent could not be verified.
Petitioner maintains that Mannesmann's home market sales response
must be considered unreliable when viewed in the context of the
totality of problems identified at verification and the additional
opportunities Mannesmann had prior to verification to provide an
accurate response.
With respect to reason (a) above, petitioner states that the
Department's verification report confirms that Mannesmann omitted
certain sales of subject merchandise from its home market sales
listing, often characterizing these omissions as insignificant in terms
of the percentage they constitute of total reported sales. Petitioner
asserts that since only a portion of Mannesmann's total reported sales
will be matched to U.S. sales in dumping margin analysis and the
Department's standard hyperinflation methodology requires separate FMV
calculations for each month, omissions such as those observed by the
Department can have a significant impact on the ultimate margin
calculation. According to petitioner, the Department must examine each
of the errors and omissions noted in the verification report in the
context of its potential impact on monthly sales matches.
In addition to these sales omissions, petitioner notes further that
certain sales were reported incorrectly because of errors in accounting
for merchandise returns and invoice price corrections. Also, the gross
prices for numerous transactions and the surface treatment codes for
certain products were reported incorrectly.
With respect to reason (b), petitioner maintains that the cost data
submitted by respondent remains erratic and unusable even after the
Department's request for its revision in a deficiency letter issued
subsequent to the preliminary determination. Reason (b) is discussed in
detail under Comment 2 below.
With respect to reason (c), petitioner takes issue with
verification findings for certain charges and adjustments, i.e., that
MSA's home market inland freight and insurance expenses were
overstated, that foreign inland freight charges incurred by MSA on U.S.
sales were not reported, that home market and U.S. packing costs were
not verified, MPS' reporting of estimated movement charges for certain
U.S. transactions, and U.S. shipment date.
Respondent argues that the discrepancies noted by the Department in
the verification reports either do not have appreciable effects on
antidumping analysis or serve to disadvantage respondent. Therefore,
its responses should be used in the Department's final analysis. For
example, respondent asserts that a portion of the unreported sales
would be irrelevant to product comparisons in the Department's analysis
because it did not make any sales of those same products in the United
States during the POI.
With respect to the transactions which were omitted inadvertently
from MCSA's February 28, 1995, sales listing due to programming errors,
respondent points out that these sales were originally reported to the
Department in the December 9, 1994, sales listing, and considered in
the Department's preliminary analysis. Respondent states that these
omitted sales fall into two categories: (1) sales of products which
were not matched to U.S. products in the preliminary determination and
were irrelevant in the margin calculation; and (2) sales of products
which were potential matches for products sold to the United States.
However, the sales of potentially matchable products were either not
made in the same month as the corresponding U.S. products to which they
were matched, or the Department has the necessary data from the
December 9 response to utilize the sales for matching purposes. With
respect to certain sales of cold-drawn pipe which were never reported
to the Department, respondent argues that this is an insignificant
portion of total reported home market sales, and that examining these
sales within the context of the Department's preliminary determination
product concordance indicates that none of the unreported sales should
be treated as the most similar match to U.S. sales of cold drawn pipe.
With respect to another group of products that were not reported to the
Department because of a product selection error made during response
preparation, respondent argues that these products are irrelevant to
product comparisons on the basis of specification.
Furthermore, respondent notes that any other discrepancies found at
verification are minor and/or disadvantage respondent. Such
discrepancies include: the incorrect reporting of four U.S. product
codes for certain transactions; the overstatement of MSA's home market
inland freight and insurance charges; MSA's omission of foreign inland
freight charges for U.S. sales; and certain estimated U.S. movement
charges which were not updated to reflect actual charges incurred.
DOC Position
We disagree with petitioner that Mannesmann's responses cannot be
used for the final determination. While we noted several discrepancies
at verification, these discrepancies were neither pervasive nor
representative of a [[Page 31968]] pattern of misrepresentation which
would merit the rejection of the questionnaire response in total.
It is true that respondent omitted certain home market sales from
its February 28, 1995, sales listing for a variety of reasons, ranging
from incorrect product code selection to inadvertent programming errors
(see MSA/MCSA Verification Report at 49-55). However, we were able to
verify the nature and magnitude of these errors, and found that they
are not significant with respect to either the percentage of total home
market sales reported or potential home market matches. In order to
arrive at this conclusion, we conducted a comparative analysis between
the characteristics (and weighted-average prices) of the omitted home
market products originally reported in Mannesmann's December 9, 1994,
sales listing, and those of the reported home market products in
respondent's February 28, 1995, sales listings. As a result of this
exercise, we found that for some of the omitted sales, there did not
exist contemporaneous sales of identical products reported in
respondent's February 28, 1995, sales listings. We then compared the
product characteristics of the omitted sales to those of the U.S.
sales, and found that none of the omitted home market sales would be
comparable to the U.S. products sold during the POI on the basis of
grade. Regarding those sales of another group of products that were not
reported to the Department because of a product selection error, we
found that, regardless of the month in which they were sold, these
products would not be comparable to those sold to the United States on
the basis of specification. Finally, we have determined to apply BIA to
respondent's U.S. sales of cold-drawn pipe made during the POI for the
reasons outlined in Comments 2 and 9 below.
Furthermore, with respect to those home market sales affected by
merchandise returns which were verified not to be usable for margin
analysis, we found that the home market sales quantity affected was
insignificant in terms of total reported home market sales quantity.
Because these sales were incorrectly included in respondent's home
market sales listing, we excluded them from our analysis where we could
clearly identify the affected individual transactions from data
contained in verification exhibits.
In addition, regarding the gross prices of those transactions which
were found to be overreported, we included these sales in our analysis,
but did not make any adjustments to price. Our decision to make no
adjustment is based on the fact that the prices at issue represent an
overstatement of actual prices charged and any revision of such prices
would not only be burdensome given the number of affected transactions,
but would also require the revision of other sales-related data (e.g.,
taxes) which are calculated based upon price and were not examined
specifically at verification within the context of overreported gross
prices.
As for the other areas stated by petitioner in which discrepancies
were found (e.g., difmer, packing, etc.), we made appropriate
adjustments in accordance with verification findings based on
information on the record, as discussed in the ``United States Price,''
``Foreign Market Value'' and ``Interested Party Comments'' sections of
this notice.
Comment 2
Petitioner contends that Mannesmann's difmer cost data remains
erratic and unusable for the final determination and, therefore, the
Department should apply BIA to calculate the margin for any U.S. sale
for which there is no contemporaneous identical match in the home
market. According to petitioner, Mannesmann's difmers are deficient
because they are not based on replacement costs in the month of
shipment; rather Mannesmann's costs have been reported on a historical
basis. Petitioner points out that the fact that Mannesmann has recorded
its historical costs in UFIRs does not transform them into replacement
costs, and that this approach has been rejected in previous cases by
the Department (e.g., Final Determination of Sales at Less Than Fair
Value: Silicon Metal from Brazil, 59 FR 42806, August 19, 1994)
(Silicon Metal from Brazil). Even though the Department changed its
hyperinflationary methodology in 1994 by providing for indexing of
costs across different months, petitioner maintains that the costs that
are indexed still must be replacement costs during the month of
shipment, and must not represent historical costs. Petitioner argues
that UFIR indexation is no substitute for the reporting of actual
monthly replacement costs.
Petitioner also maintains that the fluctuations in cost are not
limited to the materials component of the reported costs; there are
also significant variations in the reported labor and variable overhead
costs from month to month for the same products, indicating that the
data is unreliable. According to petitioner, while the Department
verified that the reported cost data was submitted in accordance with
the exact methodology used in its normal cost accounting system, the
Department did not verify that the system accurately states
respondent's costs for purposes of this investigation. Citing Final
Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Lead
and Bismuth Carbon Steel Products from the United Kingdom (58 FR 6207,
January 27, 1993), petitioner emphasizes that the Department has
rejected the use of cost differences unrelated to physical differences
for difmer adjustment purposes in past cases.
With respect to petitioner's request for the use of BIA, respondent
asserts that petitioner ignores the facts on the record and that the
Department was able to trace the reported cost data to source
documentation, and tie them to financial statements.
Furthermore, respondent asserts that petitioner's attempt to link
the concepts of replacement costs and monetary correction in arguing
that MSA's reported costs do not account for changes in replacement
costs is confused. According to MSA, a monetary correction is merely an
adjustment to financial statements to measure the cost for holding
balances in certain accounts during periods of inflation. Such an
adjustment has nothing to do with production costs or difmer
calculations. Respondent notes that the Department has confirmed this
in past cases by treating such monetary corrections as offsets or
additions to financing expenses (e.g., Final Results of Administrative
Review: Gray Portland Cement from Mexico, 58 FR 47253 (1993)).
Respondent asserts that, contrary to petitioner's attempt to
confuse the significance of MSA's UFIR-based cost system, this system
accounts for the effects of changes in replacement costs. In addition,
respondent opposes petitioner's characterization that a UFIR-based
system is tantamount to reporting historical costs. According to
respondent, the historical method contrasts sharply with the UFIR
system, which carries costs forward on a steady currency basis and, in
effect, reaches the same result as a replacement cost system. The UFIR-
based methodology is applicable for both finished goods and inputs and
ensures that MSA's costs reflect market conditions. Because this
methodology tracks the inflation rate, material and finished goods are
constantly inflated when expressed in Brazilian currency. According to
respondent, this result is precisely the intent of the replacement cost
accounting system, i.e., to express costs in real terms. Therefore,
respondent's UFIR-based system accurately tracks cost on a replacement
basis and is not, [[Page 31969]] as petitioner suggests, on a
historical cost basis.
DOC Position
We agree in part with both petitioner and respondent. At
verification, we noted that respondent's reported UFIR-based material
and fabrication costs varied substantially for the same product
produced in different months. We were able to establish that this cost
variance was due to a combination of factors which are unrelated to
physical differences: (1) the nature of MSA's cost accounting system;
(2) the process used to produce the input bar consumed in the
production of subject merchandise (whether it was produced using ingot
or a continuous caster); and (3) whether the material was purchased
(imported) or produced in-house by the respondent.
Contrary to petitioner's contention that replacement costs must be
used when indexing costs between different months, for difmer purposes,
we consider it appropriate to have cost data submitted in UFIR, as
maintained by the company in its ordinary course of business. (See
Department Policy Bulletin No. 94.5 dated March 25, 1994.) The UFIR is
not a methodological creation of the respondent; UFIR- denominated
costs must be kept in the ordinary course of business for reporting
purposes to the ``Junta Comercial'' (the Brazilian equivalent of the
Securities and Exchange Commission). Also, we find that petitioner's
cite to Silicon Metal from Brazil as case precedence for the Department
rejecting submitted UFIR costs is misplaced. In Silicon Metal from
Brazil, unlike the instant case, there was no UFIR type indexation
scheme in effect. Rather, the ``monetary correction'' methodology
(i.e., year-end restatement of assets/liabilities) used by respondent
was deemed inappropriate.
Furthermore, we disagree with petitioner's contentions that MSA's
submitted variable fabrication costs are unreliable and that the
differences in fabrication costs cannot be explained by alleged
differences in input steel costs. As stated above, we verified that
MSA's submitted cost data was extracted directly from its normal cost
accounting system which records the actual costs incurred to
manufacture each batch of pipe produced. We thus have no reason to
believe that MSA's submitted cost data is unreliable in general.
Second, we observed at verification that steel bar produced from ingot
versus a continuous caster will affect both material and fabrication
costs.
However, notwithstanding the fact that respondent's variable costs
were reported in accordance with its normal cost accounting system, we
agree with petitioner that we must use variable costs for difmer
adjustment purposes which are not distortive in margin analysis. For
difmer purposes, it is the Department's practice to consider only those
cost differences associated with physical differences in the products
under comparison. The flaw we found in MSA's reporting methodology was
one of not neutralizing the cost differences resulting from different
production processes or supply sources for input bar, which is an
inherent result of its normal cost accounting system. Therefore, for
purposes of the final determination, we have modified respondent's
variable costs of manufacture for those products for which we had
information on the record to enable us to compute a difmer adjustment
exclusive of the cost differences unrelated to physical differences.
For the material costs of these products, we computed a POI weighted-
average bar cost for all subject merchandise using the same material
grade bar. We then determined the product-specific material costs by
multiplying product-specific POI average yield rates by the POI
weighted average bar cost. For fabrication costs, we had available a
breakout of the quantity of continuous casted versus ingot bar used in
production for specific products for each month of the POI. From this
data, we identified for similar product matches, which months used
comparably sourced bar.
However, for certain products we did not have the information
concerning the POI monthly quantity of input bar produced via the
continuous-casted versus ingot methods. Additionally, we were unable to
determine the percentage of such products produced from imported tube
versus MSA-produced tube. We note that the vast majority of the U.S.
products that are affected by this lack of information on the record
are cold-drawn pipes. See Comment 9 below. Therefore, for a small
percentage of U.S. sales quantity, we were unable to eliminate the
fabrication cost differences resulting from the different production
processes and/or sources of input bar. For those sales of U.S. products
where we did not have reliable fabrication costs, we used a margin
based on BIA. As BIA, we used a calculated margin that is sufficiently
adverse to fulfill the statutory purpose of the BIA rule (section
776(c) of the Act) and which is indicative of, and bears a rational
relationship to, the respondent's sales. See National Steel v. United
States, 870 F.Supp. 1130 (CIT 1994).
Comment 3
Petitioner argues that MSA and MCSA incorrectly reported invoice
date as the date of sale for all home market sales. It maintains that
the correct date of sale is Mannesmann's internal order date because it
is at this time that final agreement on the essential terms of sale,
including price and the manner in which it will be adjusted for
inflation, is made. Petitioner asserts that the only changes in the
essential terms of sale between Mannesmann's internal order and invoice
dates are a currency conversion and an inflation adjustment, both of
which are performed automatically by computer without negotiation with
the customer; and that this was the only variance between order and
invoice date noticed by the Department at verification. According to
petitioner, the automatic restatement of the price by computer to
account for inflation is not a substantive change in the material terms
of sale. Petitioner cites Final Determination of Sales at Less Than
Fair Value: Brass Sheet and Strip from France (52 FR 812, January 9,
1987) (Brass Sheet and Strip) to support its position that it is the
Department's established practice to use as the date of sale, the date
on which basic terms become determinable, without regard to automatic
mechanisms that might alter or establish specific terms.
For the final determination, petitioner urges the Department to use
the sales listings submitted on December 9, 1994, despite substantial
alterations made to them (i.e., in the subsequent sales listings
submitted on February 28, 1995). According to petitioner, these
listings provide internal order dates and invoice numbers that can
easily be matched to the invoice numbers reported in Mannesmann's
February 28, 1995, response. For any sales in the February 28, sales
listing which cannot be matched to an alleged ``proper'' date of sale
using the December 9, listing, petitioner maintains that the Department
should apply partial BIA by using the average time lag between order
and invoice date for other sales to place the sale in the appropriate
month. This method of partial BIA would entail deflating prices for
such months because the prices and adjustments in the February 28,
response are stated in cruzeiros valued for months later than the
actual date of sale claimed by petitioner, so that they are restated in
terms of the value of the cruzeiro during the month of sale.
Alternatively, if the currency conversion is too burdensome, the
Department should apply, as partial BIA to such sales, either the
highest [[Page 31970]] calculated margin for the company or the highest
margin alleged in the petition.
Respondent argues that invoice date is the correct date of sale in
accordance with the Department's normal methodology. It is also the
date mandated by Brazilian law and accounting practices, which do not
recognize a sale until the invoice is generated, and the date
consistent with MSA and MCSA's recordkeeping system in the ordinary
course of trade. Respondent takes issue with petitioner's assertion
that the only subsequent changes in the essential terms of sale between
MSA's internal order entry and shipment are a currency conversion and
an inflation adjustment. Respondent states that not only did the high
rate of inflation during the POI preclude any determination of the
essential terms of sale (particularly price) until the time of
invoicing, but also that there are significant fluctuations in price
and quantity that typically occur between the order date and invoice
date which the Department confirmed at verification. Citing the
Preliminary Determination of Sales at Less Than Fair Value: Canned
Pineapple Fruit from Thailand (60 FR 2734, January 11, 1995),
respondent asserts that the Department has, under appropriate
circumstances in past cases, specifically endorsed invoice date as the
date of sale. In addition, respondent states that the purchase order is
sometimes not received until after the invoice is generated by MCSA and
the order shipped. According to respondent, invoice date is the most
consistent and reliable basis for reporting comparable dates of sale in
Brazil from both MSA and MCSA.
DOC Position
We agree with respondent and have accepted its reported date of
sale. At the verification of both MSA and MCSA, respondent provided
source documentation substantiating its reasons for using invoice date
as the date of sale. These reasons included not only the effects of
inflation between purchase order date and invoice date, but also the
fact that Mannesmann's internal order is subject to numerous
fluctuations in price and quantity up until the date of invoice. (See
Verification Report at 11-12 and 47.) Our decision in this instance is
consistent with past cases. See Amended Final Determination of Sales at
Less Than Fair Value: Ferrosilicon from Brazil, 59 FR 8598, February
23, 1994).
We also note that the facts in Brass Sheet and Strip are different
from those in the instant case. In Brass Sheet and Strip, a formal
contract between the buyer and seller established a price based upon a
publicly quoted metal value source. The parties had agreed upon a time
period during which the customer could lock in the publicly quoted
rate; no further negotiations were necessary. In Brass Sheet and Strip,
the price and quantity terms were sufficiently definite and effectively
finalized as of the date of the initial contract, and the parties had
no further ability to change the price by negotiation. In the instant
case, not only are prices subject to fluctuation due to the
hyperinflationary adjustment in Brazil, but customers often negotiate a
different price or make material changes to quantity between the date
of initial order entry and invoice date. While the Brass Sheet and
Strip case involved long-term, fixed contracts where there was nothing
left for the parties to negotiate, the instant case reflects the fact
that when a purchase order to schedule production enters into MSA's
system, the negotiating continues and a price adjustment often follows
at the time of invoicing. With respect to this price adjustment, we
could find no evidence in the source documentation examined at
verification that, at the time of order, the customer had knowledge of
the index (or indices) that would be used by respondent to make the
adjustment for inflation, and that the customer therefore knew the
exact price to which it had agreed. We also noted evidence of post-
order cancellations, indicating that the customer was not bound by the
terms set in the order.
We note that our decision in this case to accept the date of
invoice as the date of sale is based upon the factual evidence on the
record. In general, issues regarding the appropriate date of sale are
examined on a case-by-case basis, and our decision in this case should
not be interpreted as a general policy preference in future cases.
Comment 4
Consistent with its contention that the appropriate date of sale is
the date of respondent's internal order, petitioner maintains that the
home market prices and other cruzeiro-denominated data reported by
Mannesmann must be restated in terms of the value of the cruzeiro
during the month of sale. Similarly, according to petitioner, an
inflation factor should not be included in any credit expense
adjustment. Petitioner argues that to some extent the inflator in the
credit expense adjustment can be expected to offset the inflator in the
price. However, since the two inflators are derived differently and
serve different purposes, they are seldom, if ever, equal. Whereas the
credit expense inflator reflects inflation from the invoice date to the
actual date of payment, the price inflator is based on the number of
days between the invoice and the expected date of payment. Furthermore,
petitioner states that the Department verified that the rates used for
the price inflator are not proportional across payment terms.
Therefore, while the credit expense inflator should reflect the actual
inflation rate, the price inflator may be higher or lower than the true
rate depending on the date of actual payment. According to petitioner,
the Department can determine the actual gross unit price in terms of
cruzeiros during the month of sale by subtracting the reported
inflation value from the reported gross unit price (invoice price). In
addition, the indexed value of the reported (inflated) gross price
should be compared to the price of the internal order, and any excess
should be treated as interest revenue attributable to that sale because
the price inflator may be higher than the true inflation rate.
Petitioner suggests that the reported inflation value be subtracted
from gross price to obtain the price in terms of cruzeiros as valued
during the month of shipment, and the resulting values can be converted
to cruzeiros as valued on the actual date of sale (i.e., the internal
order date) using the exchange rates provided in Mannesmann's response.
The indexed value of the reported (inflated) gross price should then be
compared to the price of the internal order, and any excess should be
treated as interest revenue attributable to that sale.
Respondent maintains that the Department has verified the reported
home market credit expenses and the rates for short-term loans
available in Brazil during the POI without discrepancy and, therefore,
should deduct these credit expenses as reported from FMV. Mannesmann
disputes petitioner's allegation that interest revenue affects credit
expenses and that, if a customer made a late payment, Mannesmann is not
entitled to an adjustment for credit expenses because it would
understate home market price. Respondent states that in the few
instances when a customer did not pay on the expected date, interest
revenue amounts were reported as an upward adjustment to the home
market price, as verified by the Department. Also, if a customer did
pay late, not only did Mannesmann incur the opportunity cost of not
having the customer's money from the invoice date to the expected
payment date, but it also suffered a [[Page 31971]] financial loss from
delayed payment during the period between the payment date listed on
the invoice and the actual payment date. Therefore, according to
Mannesmann, denying an adjustment for credit expenses for the time
following payment due date and actual payment is totally illogical.
DOC Position
As discussed above in Comment 3, we have determined that invoice
date is the appropriate date of sale in this case. Therefore, we
consider moot petitioner's arguments with respect to the restatement of
home market prices to reflect the value of the cruzeiro on the order
date.
In our preliminary determination, we adjusted FMV for inflation
occurring between order and invoice date, which factors in expected
payment terms, as well as credit expenses, which include an inflation
factor based on actual payment terms. Based on verification findings
and our acceptance of respondent's date of sales methodology, we have
determined that this adjustment was incorrect because it double-counted
the value of inflation. Therefore, for purposes of the final
determination, we only made an adjustment to FMV for credit expenses as
reported and verified.
Comment 5
Mannesmann argues that the Department should compare U.S. sales by
MPS with home market sales made by MSA, including sales to its related
party MCSA, and that it provided evidence that MSA's sales to MCSA are
arm's-length transactions. However, if the Department does not treat
MSA's sales to MCSA as arm's-length transactions, the Department should
make a level of trade adjustment to reflect the additional selling
expenses (i.e., indirect selling expenses and inventory carrying costs)
incurred by MCSA.
Mannesmann asserts that 19 CFR 353.58 requires that a level of
trade adjustment be made when FMV and U.S. price are not based on sales
at the same commercial level of trade. According to respondent, MSA and
MCSA operate at different levels of trade in Brazil. MCSA is a
distributor that purchases from MSA and sells to customers from
inventory, requiring MCSA to incur considerable inventory and selling
expenses. In contrast, both MSA in Brazil and MPS in the United States
are not made from inventory, but are manufactured to order. To support
its argument, respondent cites Final Determination of Sales at Less
Than Fair Value: Stainless Steel Bar from Spain (59 FR 66931, December
28, 1994) (Stainless Steel Bar) where the Department granted such an
adjustment under allegedly similar factual circumstances.
Petitioner contends that Mannesmann did not provide the evidence it
purports to have provided substantiating its claim regarding the arm's-
length nature of the transactions between MSA and MCSA. At the
preliminary determination, the Department determined that sales to MCSA
were not made at arm's length, and based FMV on MSA's and MCSA's sales
to unrelated customers. According to petitioner, nothing in the
verification report obligates the Department to change that finding.
Furthermore, petitioner argues that Mannesmann has not proven its
entitlement to a level of trade adjustment. Petitioner asserts that it
has not been clearly established that two levels of trade exist. In
addition, petitioner states that while Mannesmann argues that
differences in selling expenses exist due to inventory costs, it has
not proven that a correlation exists between both prices and selling
expenses at each level of trade.
According to petitioner, absent additional information concerning
differences in the customer bases (e.g., relative size and purchasing
power of customers), evidence that price differences correlate to level
of trade differences, a level of trade adjustment is not appropriate.
However, if the Department nonetheless decides to grant respondent the
requested adjustment, it should be based on differences in actual
expenses incurred on MCSA's sales; i.e., the adjustment should be made
on the reported indirect selling expenses only, exclusive of the
reported inventory carrying costs. Petitioner also adds that these
selling expenses must be offset by the indirect selling expenses
incurred by MSA on U.S. sales because the basic purpose of a level of
trade adjustment is to account for differences in the level of trade
between U.S. and home market sales.
DOC Position
With regard to the arm's-length nature of related party sales, we
agree with petitioner. Based on the results of our related party test
(as described in the FMV section of this notice), we found that MSA's
sales to MCSA are not at arm's length and, thus, we excluded them from
our dumping analysis for purposes of the final determination. This
result is consistent with that in our preliminary determination, and
since that time, respondent has not provided any new evidence to
justify a departure from our normal related party test.
With regard to matching by level of trade, we have accepted
respondent's level of trade classification because the record indicates
that the alleged difference in level of trade involves different
selling activities and expenses. However, with regard to the
respondent's claim for a level of trade adjustment, we have determined
that an adjustment is not warranted because we are uncertain whether
the difference in level of trade affects price comparability.
In analyzing the prices at the two levels of trade, we compared
average prices, adjusted for all direct selling expenses, by product
and month of sale for the POI. The results of this analysis indicate
that prices overlap for a significant number of sales. However, because
for each month only a small number of prices by product were available
and the monthly inflation rate was high, we have concluded that the
data does not provide a reliable indication of the pattern of prices at
the two levels of trade. Therefore, we do not have a basis to conclude
whether there is or is not a pattern of price differences attributable
to level of trade. Accordingly, we have not made a level of trade
adjustment.
Comment 6
Petitioner maintains that Mannesmann's packing expenses are
unverified and may not be relied upon for purposes of the final
determination. Petitioner also maintains that these costs appear to
have been based solely on labor and materials without any allocation of
overhead costs, and MCSA failed to report any repacking costs
associated with its sales. Therefore, petitioner advocates using BIA.
As BIA, petitioner requests that the Department either not make any
upward adjustment to U.S. price for packing or use the lower of the
amounts reported in the U.S. sales listing and the lowest export
packing amount reported on the chart on page 41 of the Department's May
11, 1995, Verification Report. Additionally, petitioner proposes that
the Department should (1) subtract the lowest of the packing amount
reported for the home market sales listing and the lowest domestic
packing amount from the verification report chart, and (2) add as an
offset to FMV the higher of the amount of the highest U.S. packing
amount reported in the sales listing and the highest amount of export
packing reported on page 41 of the verification report.
Respondent argues that the Department should apply an average per
[[Page 31972]] unit packing cost based on MSA's simulated cost data
provided at verification which tied to the cost data provided in
Exhibit 18 of the December 9, 1994, response, as this is the most
accurate and reliable data on which to calculate MSA's packing costs.
MSA provides a monthly average packing cost calculation for each of the
four products sold in each market in Exhibit 2 of its May 19, 1995,
case brief. Therefore, the Department should match the resulting
average monthly packing data to the sales listing based on the month of
shipment for home market sales, as all home market shipments occurred
between January and June 1994. For U.S. sales, many shipments of which
occurred after the POI, respondent proposes using an average POI
packing expense (also provided in Exhibit 2). For sales of products
which do not match to one of the four product codes, the average
packing expense of all four product codes should be applied.
DOC Position
We agree with petitioner that the reported packing expenses were
unverified. At verification, respondent explained that MSA's cost
accounting system cannot separately identify packing costs incurred for
export and domestic sales. Therefore, in order to derive the monthly
per unit packing amounts reported in the U.S. and home market sales
listings, MSA conducted packing simulation exercises for four
products--three hot-finished and one cold-drawn. That is, they
estimated the time it took to pack the products based on actual
experience and derived the associated materials and labor costs from
their accounting records. However, we could not tie the monthly packing
costs resulting from this exercise to the reported monthly per unit
packing amounts in respondent's home market and U.S. sales listings.
Respondent could not explain the reason for the discrepancy. Therefore,
we determine that these costs were not verified. Because the reported
costs cannot be used for purposes of our analysis, we used BIA. As BIA
for these costs, we subtracted from FMV, the lowest domestic packing
amount reported on the record, and added to FMV, the highest export
packing amount reported on the record.
Comment 7
Respondent maintains that the Department verified that no
galvanized, threaded or coupled products were sold to the United States
during the POI. Therefore, MCSA's sales of such products will not be
matched to U.S. products and are thereby irrelevant in the Department's
margin analysis. With respect to the unreported bevelling costs,
respondent states that MSA's cost for producing bevelled pipe was used
as a surrogate value for MCSA's sales of bevelled product. Mannesmann
states that it is logical that its cost of bevelling would be lower
than the bevelling costs charged by a third party. The use of the third
party bevelling cost would have resulted in higher home market variable
costs which, in turn, would have resulted in a lower difmer to be added
to FMV. According to Mannesmann, the use of MSA's bevelling costs as a
surrogate for third party expenses incurred by MCSA was therefore
conservative and reasonable.
Petitioner contends that Mannesmann often reports significantly
different costs in the same month for products that are identical
except for end finish, and that these variations do not make sense,
particularly because the differences between black plain-end pipe and
bevelled-end pipe are insignificant especially in terms of material
costs. According to petitioner, there is no consistency in the margins
by which reported materials costs differ for otherwise identical
products with different end finishes. Neither is there any evidence on
the record to suggest a reason for attributing such widely varying
costs to virtually identical products simply by reason of end finish.
Petitioner notes that, in some instances, Mannesmann has reported
identical costs for different end finishes. Petitioner maintains that
these facts cast doubt on Mannesmann's entire cost accounting system.
In addition, Mannesmann's principal contention concerning MCSA's
third party bevelling costs (i.e., that they are higher than MSA's)
constitutes non-record information upon which the Secretary may not
rely. MCSA's bevelling costs have never been separately reported on the
record and, therefore, could not have been verified. Thus, any
bevelling cost attributed to products sold by MCSA must be based on
BIA.
DOC Position
We agree with petitioner and respondent in part. We verified that
while MCSA failed to report third party galvanization, coupling and
threading costs for certain products, no such products were sold to the
United States during the POI and, therefore, were not used in product
comparisons. Thus, the omission of these costs did not affect any
difmer adjustments that were made for similar product comparisons.
However, even if such products were used in product comparisons, MCSA's
omission of these costs for difmer adjustment purposes would have the
effect of underestimating home market costs and thereby overstating the
upward difmer adjustment made to FMV. Therefore, we did not make any
adjustment for the omitted costs at issue.
With respect to bevelling costs, we note that there were U.S. sales
of bevelled pipe during the POI. We also note that for MCSA's sales of
bevelled products that were used in product comparisons, MSA's costs of
bevelling were included in the reported variable costs of manufacture.
This is consistent with the verified product coding methodology used by
MCSA. That is, for those products that were further processed by third
parties prior to sale, MCSA reported only its own internal product
code, and for those products that did not undergo further processing,
MCSA reported both MSA's product code and its own product code (see May
11, 1995, Verification Report at 8). For the transactions consisting of
the bevelled products sold by MCSA which were used in product
comparisons, respondent reported both product codes, indicating that
the bevelling was performed at MSA's mill. However, we modified these
costs for difmer adjustment purposes for the reasons stated in DOC
Position to Comment 2 above.
Comment 8
Petitioner alleges that a deduction to U.S. price should be made
for the ``bank fees'' incurred by MSA for entering into exchange
contracts in order to receive payment from MPS on its shipments to the
United States. According to petitioner, such fees are a necessary and
direct selling expense relating to U.S. sales. Since similar fees are
not incurred for home market sales, the fees must be deducted from USP
in order to obtain a proper comparison. Petitioner maintains that
Mannesmann's claims that the fees do not affect the U.S. price and that
Mannesmann invests a portion of these funds (which respondent has not
quantified) is irrelevant to the Department's analysis.
Respondent maintains that this proposal is incorrect for the
following reasons: (1) The exchange contract transaction does not
impact the U.S. customer, but is solely a mechanism whereby MSA can be
paid in local currency for foreign currency sales as required by
Brazilian law; and (2) throughout the POI, MSA chose to receive payment
in Brazilian currency under the exchange contracts in advance (when the
order was booked from the mill), a portion of which it
[[Page 31973]] invested and gained returns which exceeded any fees paid
to the bank. According to Mannesmann, the Department should treat the
exchange contracts as intercompany transfers of funds between MSA and
MPS that have no effect on the payment from the U.S. customer.
Respondent claims that any bank fees incurred pre-shipment by MSA are
administrative fees that have no bearing on U.S. price.
DOC Position
We disagree with respondent that these fees are intracompany
transfers. They are fees paid to third parties in the U.S. sales
process which we conclude are included in the ultimate price between
MPS and the U.S. customer. These types of fees are normally taken into
account in the Department's margin analysis. Therefore, we made an
adjustment to U.S. price in the amount of the fee reported in the
sample exchange contract provided in Exhibit 10 of the December 9,
1994, response.
Comment 9
Petitioner states that respondent included in its sales listing
sales of cold-drawn products finished from imported tube hollows.
According to petitioner, such products are not subject merchandise
produced in Brazil and should not have been included in the sales
listing. Petitioner urges that the Department apply BIA to all sales of
cold-drawn pipe in the final determination. In addition, petitioner
maintains that none of the difmers provided for cold-drawn products can
be used because it is not known how many are affected by the inclusion
of imported tube hollows. There is no information on the record that
would allow the Department to equate the cost of producing cold-drawn
pipe with the cost of finishing cold-drawn tube hollows.
Respondent asserts that the cold-drawn products referred to fall
within the scope of the investigation. Mannesmann reported as subject
merchandise sales of all products within the scope of the
investigation, regardless of whether those products were made from
ingots or billets, or in the case of the limited amount of cold-drawn
products, purchased hollows. Therefore, unless the petitioner contends
that pipe manufactured in Brazil from imported hollows are excluded
from the scope of the investigation, Mannesmann asserts that it
properly reported all shipments of subject merchandise, including small
diameter cold-drawn product manufactured from hollows. Moreover, the
Department verified the quantity and price of purchased hollow tubes,
and traced the reliability of those material costs reported for cold-
drawn products.
DOC Position
We agree with petitioner in part. Our verification findings
revealed that respondent had properly reported sales of cold-drawn
seamless pipe as subject merchandise in its sales listings (but for
certain omissions discussed in Comment 1 above). We also found that
respondent used imported tubes in the production of cold-drawn pipe
during the POI. However, respondent failed to inform the Department
that it used any material input other than in-house produced bar for
the production of cold-drawn pipe during the POI, despite the
Department's questions concerning the materials used in the production
of the subject merchandise in its February 10, 1995, supplemental
questionnaire. Consequently, we are unable to make a reliable difmer
adjustment for U.S. sales of cold-drawn products because the variable
costs reported include costs unassociated with physical differences.
Therefore, because we cannot use or modify the reported difmer data for
these cold-drawn products as we do not have the information on the
record to do so, we have used BIA for the affected sales. See also DOC
Position to Comment 2 above.
Comment 10
Petitioner contends that approximately two-thirds of the exchange
rates reported in MCSA's sales listing, which are necessary for the
proper calculation of difmers and should reflect the average monthly
rate for the month of shipment, are incorrect. Therefore, the
Department should cross-check each reported exchange rate against the
actual monthly rate, and make appropriate corrections for the final
determination.
Respondent maintains that petitioner's contention is incorrect.
According to respondent, the rates at issue were adjusted to ensure
that they matched the date of shipment from the factory, and this is
the reason for the 22 day adjustment reflected in Mannesmann's
response. Mannesmann reported all difmer data and the relevant exchange
rates based on the month in which the pipe was shipped from MSA's mill.
Because MSA does not maintain inventories of finished pipe, the month
of shipment from MSA is also the month in which the pipe was produced.
Similarly, in the case of U.S. sales, the Department asked MPS to
revise its reported shipment date to reflect the date on which the pipe
left the mill. Thus, in all cases involving sales by MSA or MPS, the
reported date of shipment reflects the month in which pipe was produced
and shipped.
For sales by MCSA, pipe produced by MSA and shipped to MCSA is
placed in MCSA's inventory from which it is subsequently resold to
MCSA's customers. The reported shipment date for MCSA sales, therefore,
does not reflect when the pipe was produced and shipped from MSA. In
order to ascertain when a given quantity of pipe was produced and
shipped from MSA, MCSA's average days in inventory (as reported in
Exhibit 24 of the December 9, 1994, response) was subtracted from the
reported shipment date. Therefore, all difmer data and exchange rates
for MCSA were based on MCSA's date of shipment minus the average number
of days in inventory in order to ensure that the difmer data and
exchange rate reflected the date on which the merchandise was produced
and shipped from the factory.
DOC Position
We consider this issue raised by petitioner to be moot based on our
treatment of difmer costs discussed in Comment 2 above. By using
revised UFIR costs for difmer adjustment purposes, we no longer need to
convert these costs to U.S. dollars using an average exchange rate.
However, we note that we verified the daily CR/UFIR and US$/CR exchange
rates reported by respondent in Exhibits 4 and 5 of the February 28,
1995, response against source documentation and found that they were
based on official government rates. (See May 11, 1995, Verification
Report at 37.) Therefore, for purposes of converting home market
prices, difmer costs and other adjustments to U.S. dollars on the date
of the U.S. sale, we intend to use the verified government exchange
rates that were verified. This is consistent with past practice. (See
Silicon Metal from Brazil.)
Comment 11
Petitioner maintains that Mannesmann has improperly submitted
untimely new factual information in its case brief, including: (1) an
affidavit by an MPS employee which presents evidence of differences
between carbon and alloy pipe within the context of the criteria in
Diversified Products relevant to the issue of whether the subject
merchandise should constitute more than one class or kind; (2) portions
of the record of proceedings before the International Trade Commission
concerning the issue of whether to continue to include end use as a
defining characteristic of the scope; and (3) factual information
concerning the [[Page 31974]] manner in which it calculated MCSA's
bevelling costs that had not been submitted to the Department
previously. According to petitioner, the Department must strike this
information from the record and may not consider it in the final
determination.
DOC Position
We disagree with petitioner. With respect to the portions of
Mannesmann's case brief referred to above concerning class or kind and
end use, we note that the information contained therein further
corroborates data previously submitted on the record by respondent (see
Mannesmann's submissions dated October 21, 1994, October 31, 1994, and
March 27, 1994). With respect to bevelling costs, we did not rely on
the information referred to by petitioner for purposes of the final
determination (see DOC Position to Comment 7 above).
Continuation of Suspension of Liquidation
In accordance with section 733(d)(1) of the Act 19 USC 1673b(d)(1),
we directed the Customs Service to suspend liquidation of all entries
of seamless pipe from Brazil, as defined in the ``Scope of
Investigation'' section of this notice, that are entered, or withdrawn
from warehouse, for consumption on or after January 27, 1995.
Pursuant to the results of this final determination, we will
instruct the Customs Service to require a cash deposit or posting of a
bond equal to the estimated dumping margin, as shown below, for entries
of seamless pipe from Brazil that are entered, or withdrawn from
warehouse, for consumption from the date of the publication of this
notice in the Federal Register. The suspension of liquidation will
remain in effect until further notice.
------------------------------------------------------------------------
Manufacturer/producer/exporter Margin percent
------------------------------------------------------------------------
Mannesmann S.A.......................................... 125.00
All Others.............................................. 125.00
------------------------------------------------------------------------
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. The ITC will make its determination whether
these imports materially injure, or threaten injury to, a U.S.
industry, within 45 days of the publication of this notice. If the ITC
determines that material injury, or threat of material injury, does not
exist, the proceeding will be terminated and all securities posted as a
result of the suspension of liquidation will be refunded or cancelled.
If the ITC determines that material injury or threat of material injury
does exist, the Department will issue an antidumping duty order.
Notification to Interested Parties
This notice serves as the only reminder to parties subject to
administrative protective order (APO) in these investigations of their
responsibility covering the return or destruction of proprietary
information disclosed under APO in accordance with 19 CFR 353.34(d).
Failure to comply is a violation of the APO.
This determination is published pursuant to section 735(d) of the
Act (19 USC 1673(d)) and 19 CFR 353.20.
Dated: June 12, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-14937 Filed 6-16-95; 8:45 am]
BILLING CODE 3510-DS-P
