E9-16114. Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan: Preliminary Results of Antidumping Duty Administrative Review, Notice of Intent To Rescind in Part, and Notice of Intent Not To Revoke Order in Part

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests from respondent Ta Chen Stainless Pipe Co., Ltd. (Ta Chen or respondent) and from Flowline Division of Markovitz Enterprises, Inc., Core Pipe (formerly known as Gerlin, Inc.), Shaw Alloy Piping Products, Inc., and Taylor Forge Stainless, Inc. (collectively, petitioners), the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain stainless steel butt-weld pipe fittings (SSBWPFs) from Taiwan. Petitioners requested that the Department conduct an administrative review of Ta Chen, Liang Feng Stainless Steel Fitting Co., Ltd. and Liang Feng Enterprise (Liang Feng), Tru-Flow Industrial Co., Ltd. (Tru-Flow), Censor International Corporation (Censor), and PFP Taiwan Co., Ltd. (PFP).

With regard to Ta Chen, the Department preliminarily determines that SSBWPFs from Taiwan have been sold in the United States at less than fair value (LTFV), as provided in section 733(b) of the Tariff Act of 1930, as amended (the Act). The Department also finds that revocation of the order with respect to Ta Chen is not warranted under 19 CFR 351.222(b)(2).

Based on Tru-Flow's, Liang Feng's, Censor's, and PFP's certified statements, and information from U.S. Customs and Border Protection (CBP) indicating that these companies had no shipments to the United States of the subject merchandise during the period of review (POR), we hereby give notice that we intend to rescind the review regarding these companies. For a full discussion of the intent to rescind with respect to Liang Feng, Tru-Flow, Censor, and PFP, please refer to the “Notice of Intent to Rescind in Part” section of this notice.

If these preliminary results of review of Ta Chen's sales are adopted in the final results, we will instruct CBP to assess antidumping duties on appropriate entries based on the difference between the constructed export price (CEP) and the normal value (NV). Interested parties are invited to comment on these preliminary results.

DATES:

Effective Date: July 8, 2009.

FOR FURTHER INFORMATION CONTACT:

John Drury or Angelica Mendoza, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

The POR for this administrative review is June 1, 2007, through May 31, 2008.

Background

On June 16, 1993, the Department published in the Federal Register the antidumping duty order on SSBWPFs from Taiwan. See Amended Final Determination and Antidumping Duty Order: Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan, 58 FR 33250 (June 16, 1993) (LTFV Order). On June 9, 2008, the Department published a notice of opportunity to request administrative review for the period June 1, 2007, through May 31, 2008. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 73 FR 32557 (June 9, 2008).

In accordance with 19 CFR 351.213(b)(1) and (2), on June 27, 2008, petitioners requested an antidumping duty administrative review for Ta Chen, Liang Feng, Tru-Flow, Censor, and PFP. On June 30, 2008, Ta Chen requested an administrative review in accordance with 19 CFR 351.213(b)(1) and (2). Ta Chen also requested, under 19 CFR 351.222(b)(2) and (e), that the antidumping duty order on SSBWPFs, as it relates to Ta Chen, be revoked based on the absence of dumping, and included with its request certain company certifications regarding revocation.

On July 30, 2008, the Department published the notice of initiation of this administrative review. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, Request for Revocation in Part, and Deferral of Administrative Review, 73 FR 44220 (July 30, 2008).

On August 25, 2008, the Department issued its antidumping duty questionnaire to Ta Chen. On September 3, 2008, the Department issued its antidumping duty questionnaire to Liang Feng, Tru-Flow, Censor, and PFP. On September 29, 2008, the Department received a letter from Tru-Flow, Liang Feng, Censor, and PFP stating that each company had no sales or shipments of subject merchandise to the United States during the POR. However, at the time that the letter was filed, the attached certifications of no shipments were for all firms except Liang Feng Enterprise. In addition, the certification from Censor was incomplete. Also, it was unclear from the certifications as to whether or not Liang Feng Stainless Steel Fitting Co., Ltd., and Liang Feng Enterprise were different names for the same company or were different companies. On September 30, 2008, Ta Chen submitted its response to section A of the Department's questionnaire. On October 1, 2008, Censor and Liang Feng resubmitted certifications that neither company had shipments of certain stainless steel butt-weld pipe fittings from Taiwan during the POR.

On October 16, 2008, Ta Chen submitted its responses to sections B, C, and D of the Department's questionnaire. On November 5, 2008, Ta Chen submitted unsolicited revisions to the databases for both its home market and United States sales, as well as revisions to the cost database.

On January 23, 2009, the Department issued a supplemental section D questionnaire. On February 5, 2009, petitioners submitted comments regarding Ta Chen's sections B and C response. On February 25, 2009, Ta Chen responded to the Department's January 23, 2009, section D supplemental questionnaire. On February 27, 2009, the Department issued a sections A-C supplemental questionnaire.

On March 5, 2009, the Department extended the time limit for the preliminary results of this administrative review by 120 days, to not later than June 30, 2009. See Stainless Steel Butt-Weld Pipe Fittings From Taiwan: Notice of Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 74 FR 9590 (March 5, 2009).

On March 9, 2009, petitioners submitted comments with respect to Ta Chen's section D supplemental questionnaire response. On March 12, 2009, the Department issued a second section D supplemental questionnaire. On March 27, 2009, Ta Chen submitted separate responses to the section A-C supplemental questionnaire and the second section D supplemental questionnaire. Ta Chen submitted additional information with respect to the section D supplemental response on April 3, 2009. On April 9, 2009, the Department issued the third section D supplemental questionnaire. Ta Chen submitted a response to the third section D supplemental questionnaire on April 17, 2009.

On April 22, 2009, the Department issued its verification agenda outlining the general procedures for the Department's verification of Ta Chen's cost information in Taiwan. Ta Chen submitted an unsolicited supplemental section D response on April 27, 2009. The Department verified Ta Chen's cost information as submitted on the record, in Tainan, Taiwan from May 4, 2009, through May 8, 2009. See Verification of the Cost Response of Ta Chen Stainless Steel Pipe Co., Ltd. in the Antidumping Duty Administrative Review of Stainless Steel BWPF from Taiwan (Ta Chen Verification Report), dated June 29, 2009. The Department issued the second section A-C supplemental questionnaire on May 28, 2009. Ta Chen submitted a response to the second section A-C supplemental questionnaire on June 12, 2009. The Department issued a third section A-C supplemental questionnaire on June 12, 2009. Ta Chen submitted a response to the third section A-C supplemental questionnaire on June 22, 2009.

Notice of Intent To Rescind Review in Part

Pursuant to 19 CFR 351.213(d)(3), the Department may rescind an administrative review, in whole or with respect to a particular exporter or producer, if the Secretary concludes that there were no entries, exports, or sales of the subject merchandise during the POR. See, e.g., Certain Oil Country Tubular Goods from Mexico: Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission, 71 FR 27676-78 (May 12, 2006); Stainless Steel Sheet and Strip in Coils from Japan: Final Rescission of Antidumping Duty Administrative Review, 71 FR 26041 (May 3, 2006).

On September 29, 2008 and October 1, 2008, Liang Feng, Tru-Flow, PFP, and Censor submitted certifications on the record certifying that their firms had no sales, entries, or exports of SSBWPFs to the United States during the POR. To confirm their statements, the Department conducted CBP inquiries in order to determine that there were no identifiable entries of SSBWPFs during the POR manufactured or exported by Liang Feng, Tru-Flow, PFP or Censor. There was no evidence of entries from these companies. See Memorandum to the File, through Angelica Mendoza, Program Manager, from John Drury, Analyst, Ta Chen Stainless Pipe Co., Ltd. No Shipments Inquiry, dated May 26, 2009. Therefore, in accordance with 19 CFR 351.213(d)(3), the Department preliminarily intends to rescind this review with respect to Liang Feng, Tru-Flow, PFP and Censor.

Notice of Intent Not To Revoke Order In Part

On June 30, 2008, Ta Chen requested that, pursuant to 19 CFR 351.222(b)(2), the Department revoke it from the antidumping duty order on certain stainless steel butt-weld pipe fittings from Taiwan at the conclusion of this administrative review. Ta Chen submitted along with its revocation request a certification stating that: (1) The company sold subject merchandise at not less than NV during the POR, and that in the future it would not sell such merchandise at less than NV; (2) the company has sold the subject merchandise to the United States in commercial quantities during each of the past three years; and (3) the company agrees to immediate reinstatement of the antidumping duty order, if the Department concludes that the company, subsequent to revocation, sold the subject merchandise at less than NV. See 19 CFR 351.222(e).

In determining whether or not to revoke an antidumping duty order with respect to a particular producer/exporter under 19 CFR 351.222(b)(2), the Department considers whether: (1) The producer/exporter has sold the subject merchandise at not less than NV for a period of at least three consecutive years; (2) the producer/exporter has agreed to immediate reinstatement of the order if the Department finds that it has resumed making sales at less than NV; and (3) the continued application of the order is not otherwise necessary to offset dumping. In this case, our preliminary margin calculation shows that Ta Chen sold the subject merchandise at less than NV during the current review period. See “Preliminary Results of the Review” section below. Moreover, Ta Chen received antidumping duty margins above de minimis in the previous two administrative reviews. Ta Chen makes its request predicated on the assumption that action by the Court of International Trade will result in recalculations for both administrative reviews of margins at zero or de minimis. However, it is not the Department's policy to take pending court appeals into account when determining whether revocation of the merchandise produced and exported by a particular company from an existing antidumping duty order is warranted. See, e.g., Certain Steel Concrete Reinforcing Bars From Turkey; Final Results of Antidumping Duty Administrative Review and Determination To Revoke in Part, 73 FR 66218, 66219 (Nov. 7, 2008). While we acknowledge that the Department's determinations in the two prior segments of this proceeding are currently in litigation, there is no final and conclusive judgment from any court supporting Ta Chen's arguments or invalidating the Department's findings in the prior administrative reviews. Therefore, we preliminarily find that Ta Chen has sold subject merchandise at less than NV within the period of at least three consecutive years. Accordingly, we preliminarily determine, pursuant to 19 CFR 351.222(b)(2), that revocation of the order with respect to Ta Chen is not warranted.

Scope of the Order

The products covered by this order are certain stainless steel butt-weld pipe fittings, whether finished or unfinished, under 14 inches inside diameter. Certain welded stainless steel butt-weld pipe fittings are used to connect pipe sections in piping systems where conditions require welded connections. The subject merchandise is used where one or more of the following conditions is a factor in designing the piping system: (1) Corrosion of the piping system will occur if material other than stainless steel is used; (2) contamination of the material in the system by the system itself must be prevented; (3) high temperatures are present; (4) extreme low temperatures are present; and (5) high pressures are contained within the system.

SSBWPFs come in a variety of shapes, with the following five shapes the most basic: Elbows, tees, reducers, stub ends, and caps. The edges of finished SSBWPFs are beveled. Threaded, grooved, and bolted fittings are excluded from the order. The SSBWPFs subject to the order are currently classifiable under subheading 7307.23.00 of the Harmonized Tariff Schedule of the United States (HTSUS).

Although the HTSUS subheading is provided for convenience and customs purposes, our written description of the scope of the review is dispositive. SSBWPFs manufactured to American Society of Testing and Materials specification A774 are included in the scope of this order.

Product Comparisons

For the purpose of determining appropriate product comparisons to SSBWPFs sold in the United States, we considered all SSBWPFs covered by the scope that were sold by Ta Chen in the home market during the POR to be “foreign like products,” in accordance with section 771(16) of the Act. Where there were no contemporaneous sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the physical characteristics reported by Ta Chen, as follows: Specification, seam, grade, size and schedule.

The record shows that Ta Chen both purchased from and entered into tolling arrangements with unaffiliated Taiwanese manufacturers of SSBWPFs. We have preliminarily determined that Ta Chen is the sole exporter of the SSBWPFs under review, as the record evidence does not indicate that these manufacturers had knowledge that the purchased SSBWPFs would be exported to the United States. See Analysis Memorandum for the Preliminary Results of the 2007-2008 Administrative Review of the Antidumping Duty Order of Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Ta Chen Stainless Pipe Co., Ltd. (June 30, 2009) (Analysis Memorandum).

Section 771(16)(A) of the Act defines “foreign like product” to be “{t}he subject merchandise and other merchandise which is identical in physical characteristics with, and was produced in the same country by the same person as, that merchandise.” Thus, consistent with the Department's past practice in reviews under this order, for products that Ta Chen has identified with certainty that it purchased from a particular unaffiliated producer and resold in the U.S. market, we have restricted the matching of products to products purchased by Ta Chen from the same unaffiliated producer and resold in the home market. See, e.g., Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent to Rescind in Part, 73 FR 38972 (July 8, 2008) (unchanged in the final results) and Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent to Rescind in Part, 71 FR 39663 (July 13, 2006) (unchanged in the final results). For those products which Ta Chen cannot identify with certainty the producers from which certain merchandise was purchased, the Department has applied facts available. See “Application of Facts Available” section below.

Date of Sale

The Department's regulations state that it will normally use the date of invoice, as recorded in the exporter's or producer's records kept in the ordinary course of business, as the date of sale. See 19 CFR 351.401(i). If the Department can establish “a different date {that} better reflects the date on which the exporter or producer establishes the material terms of sale,” the Department may choose a different date. Id.

In the present review, Ta Chen claimed that invoice date should be used as the date of sale for its sales in the home market and to the United States. See Ta Chen's section A questionnaire response, dated September 30, 2008, at 20-22. For home market (HM) sales, the Department examined whether the date Ta Chen issued its pro forma invoice or its actual invoice best reflects the date of sale. Based upon our review of the record evidence, we have preliminarily determined that actual invoice date should be the sale date because the material terms are set on the invoice date, and can potentially be changed up until the point of invoice date. This methodology is consistent with the practice in all the previous reviews of this proceeding. See Ta Chen's section B through D questionnaire response, dated October 16, 2008, at B-8 through B-10 and C-8 through C-10. For U.S. sales, Ta Chen reported only constructed export price (CEP) sales, and we used the invoice date (or shipment date, if the shipment date occurred before the invoice date) for sales to the first unaffiliated U.S. customer as changes to the terms of the sale may occur up to the issuance of the invoice (or shipment of the merchandise, if the shipment date occurred before the invoice date). See Ta Chen's section A questionnaire response, dated September 30, 2008, at 20-22.

Fair Value Comparisons

To determine whether sales of SSBWPFs by Ta Chen to the United States were made at prices below NV, we compared CEP to NV, as described below. Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of individual U.S. transactions to the monthly weighted-average NV of the foreign like product.

Constructed Export Price

Section 772(b) of the Act defines CEP as “the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter * * *” Consistent with recent past reviews, pursuant to section 772(b) of the Act, we calculated the price of Ta Chen's sales based on CEP because the sale to the first unaffiliated U.S. customer was made by Ta Chen's U.S. affiliate, Ta Chen International (TCI). See Analysis Memorandum, dated June 30, 2009. Ta Chen has two channels of distribution for U.S. sales: (1) Ta Chen ships the merchandise to TCI for inventory in its warehouses and subsequent resale to unaffiliated buyers (stock sales), and (2) Ta Chen ships the merchandise directly to TCI's U.S. customer (indent sales). See Ta Chen's section A questionnaire response, dated September 30, 2008, at A-16. The Department finds that both stock and indent sales qualify as CEP sales because the original sale is between TCI and the U.S. customer. In addition, TCI handles all communication with the U.S. customer, from customer order to receipt of payment, and incurs the risk of non-payment. Also, TCI generally handles customer complaints concerning issues such as product quality, specifications, delivery, and product returns. TCI is also responsible for payment of the ocean freight for all U.S. sales, while Ta Chen arranges the ocean freight logistics and paperwork. See Ta Chen's section C questionnaire response, dated October 16, 2008, at C-26 through C-28 and Appendix 30 and the section A-C supplemental response, dated March 27, 2009, at 9.

We calculated CEP based on ex-warehouse or delivered prices to unaffiliated purchasers in the United States and, where appropriate, we added billing adjustments and deducted discounts. In accordance with section 772(d)(1) of the Act, the Department deducted direct and indirect selling expenses, including inventory carrying costs incurred by TCI for stock sales, related to commercial activity in the United States. We also made deductions for movement expenses, which include foreign inland freight, foreign brokerage and handling, ocean freight, containerization expense, Taiwan harbor construction tax, marine insurance, U.S. inland freight, U.S. brokerage and handling, and U.S. customs duties. For indent sales, we also made deductions for U.S. port warehousing expenses. See Ta Chen's section A-C supplemental response, dated March 27, 2009, at 20-21. Finally, in accordance with sections 772(d)(3) and 772(f) of the Act, we deducted CEP profit.

Normal Value

1. Home Market Viability

To determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV, we compared Ta Chen's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(B) of the Act. As Ta Chen's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales for the subject merchandise, we determined that the home market was viable. See Ta Chen's section A response, dated September 30, 2008, at 2 and Exhibit 1.

2. Cost of Production Analysis

Because we disregarded sales below the cost of production (COP) in the prior administrative review, we have reasonable grounds to believe or suspect that sales by Ta Chen in its home market were made at prices below the COP, pursuant to sections 773(b)(1) and 773(b)(2)(A)(ii) of the Act. See Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent to Rescind in Part, 73 FR 38972 (July 8, 2008), and Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Final Results and Final Rescission in Part of Antidumping Duty Administrative Review, 74 FR 1174 (January 12, 2009).

Therefore, pursuant to section 773(b) of the Act, we conducted a COP analysis of HM sales by Ta Chen.

A. Calculation of COP

In accordance with section 773(b)(3) of the Act, we calculated COP based on the sum of the respondent's cost of materials and fabrication for the foreign like product, plus amounts for general and administrative (G&A) expenses, financial expenses and all costs and expenses incidental to packing the merchandise. See “Test of Home Market Sales Prices” section below for treatment of home market selling expenses. In our COP analysis, we have relied upon Ta Chen's cost of production (“COP”) and constructed value (“CV”) information from the company's submissions dated April 3, 2009, as amended April 27, 2009, (“Revised Section D Database”) except in the following instances.

First, we adjusted Ta Chen's reported direct material costs to reflect the actual costs of the direct material used to produce the merchandise under consideration produced during the POR (i.e., pipe). We adjusted the reported pipe costs because we found that the reported costs do not reasonably reflect the costs incurred to produce the merchandise under consideration during the POR in accordance with section 773(f)(1)(A) of the Act. The reported pipe costs do not reflect actual costs because the direct material variances used to calculate the costs as reported in Ta Chen's normal books and records include amounts accumulated from prior to the POR.

To determine the adjustment to Ta Chen's reported per-unit direct material costs, we relied on the results of our analysis of nineteen control numbers (“CONNUMs”) for which the monthly per-unit standard direct material costs and related production quantities were available on the record of this proceeding. We recalculated the monthly per-unit direct material costs for these CONNUMs by applying the related monthly variances incurred by the pipe plant to the standard monthly direct material costs of each CONNUM. We calculated the monthly variances of the pipe plant as the ratio of the total actual material and conversion costs incurred by the pipe plant for a particular month to the total standard costs incurred by the pipe plant for that month. We calculated the revised weight-averaged POR per-unit direct material cost per kg for each of the nineteen CONNUMs, determined the percentage difference between the revised and reported direct material costs of each of the CONNUMs, and then calculated one overall weight-averaged percentage of difference based on the production quantities (i.e. weight) of the CONNUMs. We applied this adjustment to the per-unit direct material costs of all CONNUMs reported as self-produced or subcontracted.

Second, we reduced the costs of Ta Chen's self-produced and subcontracted products for the purchase price variance incurred on purchased products. In its normal books and records, Ta Chen assigns any purchase price variances incurred on the purchased products among all products whether purchased, self-produced, or subcontracted. We find that Ta Chen's methodology, which was used as the basis for the company's reported costs, is distortive because the purchase price variance included in the costs of the self-produced and subcontracted products does not relate to the self-produced and subcontracted products. Therefore, for purposes of these preliminary results, we have adjusted the reported costs of the self-produced and subcontracted products to exclude the purchase price variance from those costs.

Finally, we revised the numerator of Ta Chen's reported general and administrative (“G&A”) expense rate to include certain expenses excluded by Ta Chen. We also reduced the numerator of the G&A expense rate for gains realized in FY 2007 on the disposals of assets. See Memorandum from LaVonne Clark, Senior Accountant, through Michael P. Martin, Lead Accountant, to Neal M. Halper, Director, Office of Accounting: Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results—Ta Chen Stainless Steel Pipe Co., Ltd., June 30, 2009.

B. Test of Home Market Prices

We compared the weighted-average COP to home market sales of the foreign like product, as required under section 773(b) of the Act, in order to determine whether these sales had been made at prices below the COP. In determining whether to disregard home market sales made at prices below the COP, we examined whether such sales were made within an extended period of time in substantial quantities, and were not at prices that permitted the recovery of all costs within a reasonable period of time, in accordance with sections 773(b)(1)(A) and (B) of the Act.

C. Results of COP Test

In accordance with section 773(b)(1) of the Act, when less than 20 percent of Ta Chen's sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in substantial quantities, as defined by section 773(b)(2)(C) of the Act. When 20 percent or more of Ta Chen's sales of a given product during the POR were at prices less than the COP, we determined that such sales have been made in “substantial quantities” within an extended period of time, in accordance with sections 773(b)(2)(B) and (C) of the Act. In such cases, because we use POR average costs, we also determined that such sales were not made at prices that would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Therefore, for purposes of this administrative review, we appropriately disregarded below-cost sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

3. Price-to-Price Comparisons

As there were sales at prices above the COP for all product comparisons, we based NV on prices to home market customers. We deducted credit expenses and added interest revenue. In addition, we made adjustments, where appropriate, for physical differences in the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. Finally, in accordance with section 773(a)(6) of the Act, we also deducted home market packing costs and added U.S. packing costs.

Application of Facts Available

Pursuant to section 776(a)(2)(D) of the Act, the Department finds that the use of facts available (“FA”) is appropriate with regard to Ta Chen's sales in the United States of merchandise purchased from other Taiwanese producers because the Department is unable to identify with certainty the actual producer of the merchandise being sold by Ta Chen. Additionally, based on information obtained in the verification, the Department finds that the use of FA is appropriate with regard to sales of two of Ta Chen's CONNUMs because evidence on the record indicates that all sales of these CONNUMs should be classified as material purchased from other manufacturers.

Section 776(a)(2) of the Act, provides that, if an interested party: (A) Withholds information that has been requested by the Department; (B) fails to provide such information in a timely manner or in the form or manner requested; (C) significantly impedes a proceeding under the antidumping statute; or (D) provides such information but the information cannot be verified, the Department shall, subject to section 782(d) of the Act, use facts otherwise available in reaching the applicable determination. Section 782(d) of the Act provides that the Department must inform the interested party of the nature of any deficiency in its response and, to the extent practicable, allow the interested party to remedy or explain such deficiency. We find that pursuant to section 776(a)(2)(D) of the Act, the application of FA is warranted because Ta Chen failed to identify with certainty the manufacturer for certain sales of SSBWPFs made by Ta Chen and did not properly identify two CONNUMs in the sales databases as purchased products, per evidence collected at verification.

A. Identity of Manufacturers

Ta Chen not only manufactures subject fittings, but it also purchases completed fittings and has some toll processing performed by other unaffiliated Taiwanese manufacturers. See Ta Chen's section A questionnaire response dated September 30, 2008, at pages 2-4 and 31-32. Ta Chen indicated that it reported itself (i.e., Ta Chen) as the manufacturer for sales observations which it produced. For those which were toll processed, Ta Chen identified the manufacturer or manufacturers that toll processed the type of fittings in question. In instances where the sale was made of fittings purchased from a supplier, Ta Chen stated that it reported the supplier or suppliers of the type of fittings in question as the manufacturer(s) in its sales databases. See Ta Chen's section B and C response, dated October 16, 2008, at B-37 through B-38, and C-54 through C-55; see also Ta Chen's supplemental section D questionnaire response, dated February 25, 2009, at 3 through 4, Ta Chen's supplemental section A-C questionnaire response, dated March 27, 2009, at 2 through 4 and Appendices Q2b and Q2c, Ta Chen's supplemental section A-C questionnaire response, dated June 22, 2009, at 1 through 3, Ta Chen's supplemental section A-C questionnaire response, dated June 22, 2009, at 1 through 3, Ta Chen's supplemental section A-C response, dated June 24, 2009, at 1 through 2 and its other June 24, 2009 supplemental section A-C response at 1 through 3. Once the fittings that are toll-produced or purchased enter into Ta Chen's inventory system, Ta Chen states that it is neither able to distinguish between the manufacturers that toll process merchandise nor able to distinguish merchandise from those that supply certain types of subject fittings that Ta Chen re-sells. See Ta Chen's supplemental section A-C questionnaire response, dated March 27, 2009, at 2 through 4 and Appendices Q2b and Q2c.

Appendices A2b and Q2c of the March 27, 2009 supplemental questionnaire response identifies fittings which are purchased, subcontracted, or manufactured by Ta Chen. These fittings are identified by control number (CONNUM). Thus, evidence on the record indicates that CONNUMs of merchandise purchased by Ta Chen were unique and were neither manufactured by Ta Chen nor toll produced. In addition, Appendix Q2c indicates that some of the fittings purchased from other producers were manufactured by only one producer during the POR. Id.

The Department preliminarily determines that it is able to segregate those sales which were toll-produced on behalf of Ta Chen from those sales of merchandise which were purchased from unrelated manufacturers. However, Ta Chen was unable to report the actual producer of the purchased fittings. See Analysis Memorandum dated June 30, 2009.

As noted above, section 776(a)(2) of the Act provides that, inter alia, if an interested party or any other person withholds information that has been requested by the Department or significantly impedes a proceeding under the antidumping statute, the administering authority and the Commission shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title.

We preliminarily find that the use of FA is warranted in accordance with section 776(a)(2)(D) of the Act, because Ta Chen did not specifically identify the manufacturer of the subject merchandise, as requested by the Department in its antidumping duty questionnaire and in its February 27, 2009, supplemental questionnaire. Consistent with section 782(d) of the Act, the Department requested clarification of Ta Chen's reporting of the manufacturers' identities with respect to the purchased fittings. However, Ta Chen reported that it “could not determine the subcontracted items or purchased items from (the) specific subcontractor or vendor” See Ta Chen's section A-C supplemental questionnaire response, dated March 27, 2009, at 2. Pursuant to section 776(a) of the Act, we determine that an application of FA to those sales identified as purchased from other manufacturers, and not identified specifically as produced by one company, is appropriate. Because Ta Chen has stated that it is unable to segregate merchandise once it enters into its accounting system, and because certain merchandise was identified as possibly being produced by more than one producer, the Department will apply FA to those sales of merchandise purchased from other sources where the producer is not specifically identified. As FA, the Department will apply to those sales identified as sales of purchased merchandise, where the producer is not specifically identified, the average rate calculated for all merchandise produced or toll processed by Ta Chen.

B. Control Numbers

As noted above, Ta Chen not only manufactures subject fittings, but also purchases completed fittings and has some toll processing performed by other unaffiliated Taiwanese manufacturers. During verification, Ta Chen stated to the Department that all of the fittings purchased from other manufacturers had certain identical physical characteristics. That is, if a fitting had a specific physical characteristic, it was purchased from a different manufacturer. See Verification of the Cost Questionnaire Responses of Ta Chen Stainless Pipe Co., Ltd. in the Antidumping Review of Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan (Ta Chen Verification Report), June 29, 2009, at 14. However, for all sales of three CONNUMs, Ta Chen reported that these fittings were toll-produced rather than purchased.

We preliminarily find that the use of FA is warranted in accordance with section 776(a)(2)(D) of the Act, because Ta Chen did not sufficiently identify certain sales of the subject merchandise as purchased from other manufacturers, as requested by the Department in its antidumping duty questionnaire and in its February 27, 2009, supplemental questionnaire. Consistent with section 782(d) of the Act, the Department requested clarification of Ta Chen's reporting of the manufacturers' identities with respect to the purchased fittings. Despite Ta Chen's statements that it had identified all sales in terms of manufacturing type, evidence on the record indicates that Ta Chen did not identify these certain sales as purchased. See Ta Chen's section A-C supplemental questionnaire response, dated March 27, 2009, at 2. See also Ta Chen's section D supplemental questionnaire response, dated February 25, 2009, at 1-4; Ta Chen's section A-C supplemental questionnaire response, dated March 27, 2009, at 1-4 and Exhibits Q2b and Q2c; Ta Chen's Section A-C supplemental questionnaire response, dated June 22, 2009, at 1-3; and Ta Chen's section A-C supplemental questionnaire response, dated June 24, 2009, at 1-2, and its other supplemental questionnaire response, also dated June 24, 2009, at 1-3. Pursuant to section 776(a) of the Act, we determine that an application of FA to those sales identified as toll-produced that should be identified as purchased from other manufacturers is appropriate. Because Ta Chen did not segregate merchandise as purchased, the Department will apply FA to those sales of merchandise identified as toll-produced but having certain physical characteristics indicating that they were purchased from other manufacturers.

Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determined NV based on sales in the comparison market at the same level of trade (LOT) as the CEP transaction. The NV LOT is that of the starting-price sales in the comparison market. For CEP, it is the level of the constructed sale from the exporter to the importer. To determine whether NV sales are at a different LOT than CEP sales, we examine different selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison market sales are at a different LOT, and the difference affects price comparability as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison market sales at the LOT of the export transaction, where possible, we make a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales for which we are unable to quantify a LOT adjustment, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in levels between NV and CEP sales affects price comparability, we adjust NV under section 773(a)(7)(B) of the Act (the CEP offset provision).

Ta Chen reported two channels of distribution in the home market: unaffiliated distributors and end-users. We examined the selling activities reported for each channel of distribution and organized the reported selling activities into the following four selling functions: Sales process and marketing support, freight and delivery, inventory maintenance and warehousing, and warranty and technical services. We found that Ta Chen's level of selling functions to its home market customers for each of the four selling functions did not vary significantly by channel of distribution. See Ta Chen's section A response, dated September 30, 2008, at 16 through 24 and Appendix 30; see also Ta Chen's section A-C supplemental questionnaire response, dated March 27, 2009, at 4 through 11. Therefore, we preliminarily conclude that the selling functions for the reported channels of distribution constitute one LOT in the comparison market.

For CEP sales, we examined the selling activities related to each of the selling functions between Ta Chen and its U.S. affiliate, TCI. All of Ta Chen's sales to the United States were CEP sales made through TCI. There were two types of CEP sales; those sales from TCI's inventory to unaffiliated customers, and “back-to-back” CEP sales (called indent sales by Ta Chen) where merchandise is shipped directly from the foreign manufacturer/reseller to the unrelated U.S. customers. For indent sales, Ta Chen invoices TCI and TCI invoices the unrelated customers. Thus, while the channel of distribution for U.S. sales is from Ta Chen to TCI, there are different types of sales within this channel of distribution and different selling activities provided by Ta Chen to TCI depending upon the type of CEP sale. However, the Department does not find these CEP sales to be at different LOTs. The types of customers are identical. Additionally, the selling functions provided by Ta Chen to TCI for both types of sales appear to be substantially similar. Therefore, we preliminary determine that Ta Chen's U.S. sales constitute a single LOT. See Analysis Memorandum dated June 30, 2009.

In analyzing the respective LOTs for home market sales and U.S. CEP sales, the Department's practice is to “examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer.” See, e.g., Certain Hot-Rolled Carbon Steel Flat Products From Romania: Preliminary Results of the Antidumping Duty Administrative Review, 72 FR 44821, 44824 (“HRS from Romania”) (August 9, 2007) (unchanged in final results, Certain Hot-Rolled Carbon Steel Flat Products from Romania: Final Results of Antidumping Duty Administrative Review, 72 FR 71357 (December 17, 2007)). If the home market sales are at a different LOT than CEP sales and the difference affects price comparability, as manifested in a pattern of consistent price differences between sales on which NV is based and home market sales at the LOT of the export transaction, the Department makes a level of trade adjustment under Section 773(a)(7)(A) of the Act. See HRS from Romania at 44824. For CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in levels between NV and CEP affects price comparability, we adjust NV under Section 773(a)(7)(B) of the Act (the CEP offset). Id. Substantial differences in selling activities are a necessary, but not sufficient, condition for determining that there is a difference in the stages of marketing. See 19 CFR 351.412(c)(2). Some overlap in selling activities will not preclude a determination that two sales are at different stages of marketing. Id. It is within this framework that the Department conducts its LOT analysis.

We compared the selling functions Ta Chen provided in the home market LOT with the selling functions provided to the U.S. LOT. Based on our analysis, we preliminarily determine that the HM LOT is not at a more advanced level than Ta Chen's U.S. LOT. As stated above, the Department analyzes selling activities in four categories: sales process and marketing support, freight and delivery, inventory maintenance and warehousing, and warranty and technical services. For the first category, the sales process and marketing support includes the following selling activities: customer contact, order acceptance, risk of non-payment, payment processing, market research, and travel and entertainment. The freight and delivery category includes packing and loading as well as freight and delivery. The inventory maintenance category stands alone, while the warranty and technical services category includes customer complaints, technical assistance, and after-sale services.

Of the twelve selling functions, Ta Chen reported that sales in the home market had higher selling activities in eleven of the twelve selling functions. However, based on our analysis of the evidence on the record, we preliminarily determine that five of the selling activities (order acceptance, inventory maintenance, market research, technical assistance, and packing/loading) are, on the whole, equal in both the home market LOT and CEP LOT. Additionally, we preliminarily determine that three of the selling functions (risk of non-payment, payment processing, and customer contact) are more intense in the home market LOT than in the CEP LOT. Also, we preliminarily determine that one of the selling functions (freight and delivery), is more intense in the U.S. market. Finally, for the travel and entertainment and the customer complaints selling functions, we preliminarily find that we are unable to determine with certainty the levels of selling activities in both markets but believe that they are substantially similar. Therefore, based on the Department's examination of the claimed selling functions, we preliminarily determine that the home market LOT is not at a more advanced stage than the CEP LOT and are not granting a CEP offset. See Analysis Memorandum dated June 30, 2009.

Currency Conversion

For purposes of the preliminary results, we made currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank, in accordance with section 773A(a) of the Act.

Preliminary Results of the Review

As a result of our review, we preliminarily determine the weighted-average dumping margin for the producer/exporter listed below for the period June 1, 2007, through May 31, 2008, to be as follows:

	Weighted- average margin
Ta Chen Stainless Pipe Co., Ltd	0.80%

Disclosure and Public Comment

The Department will disclose to parties to the proceedings the calculations performed in connection with these preliminary results within five days of the date of publication of this notice. See 19 CFR 351.224(b). Pursuant to 19 CFR 351.309, interested parties may submit cases briefs not later than 30 days after the date of publication of this notice or the first business day thereafter. Rebuttal briefs, limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication of this notice or the first business day thereafter. Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.

Interested parties who wish to request a hearing or to participate if one is requested must submit a written request to the Assistant Secretary for Import Administration, Room 1870, within 30 days of the date of publication of this notice or the first business day thereafter. Requests should contain: (1) The party's name, address and telephone number; (2) the number of participants; and, (3) a list of issues to be discussed. See 19 CFR 351.310(c). Issues raised in the hearing will be limited to those raised in the respective case briefs. The Department will issue the final results of the administrative review, including the results of its analysis of issues raised in any written briefs, not later than 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

Upon completion of this review the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an importer-specific ad valorem rate for merchandise exported by Ta Chen which is subject to this review. The Department intends to issue assessment instructions to CBP 15 days after the publication of final results of this review.

The Department clarified its “automatic assessment” regulation on May 6, 2003. See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the POR produced by Ta Chen or by any of the companies for which we are rescinding this review and for which Ta Chen or each no-shipment respondent did not know its merchandise would be exported by another company to the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction.

Cash Deposit Requirements

The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for the reviewed company will be the rate listed in the final results of review; (2) for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be the “all others” rate of 51.01 percent, which is the “all others” rate established in the LTFV investigation. See LTFV Order. These deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of the antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: June 30, 2009.

John M. Andersen,

Acting Deputy Assistant Secretary for AD/CVD Operations.