02-19984. Certain Carbon Steel Butt-Weld Pipe Fittings From Thailand: Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review.

SUMMARY:

In response to a timely request by Tube Forgings of America, Inc., (the petitioner), the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain carbon steel butt-weld pipe fittings (pipe fittings) from Thailand. This review covers Thai Benkan Corporation, Ltd. (TBC), a manufacturer/exporter of this merchandise to the United States, during the period July 1, 2000, through June 30, 2001. We have preliminarily determined that sales of the subject merchandise have been made below normal value (NV). If these preliminary results are adopted in our final results of administrative review, we will instruct the U.S. Customs Service to assess antidumping duties based on the difference between the NV and the export price (EP) or constructed export price (CEP). Interested parties are invited to comment on these preliminary results. Parties who submit arguments in this proceeding are requested to submit with the arguments: (1) a statement of the issues; and (2) a brief summary of the arguments.

EFFECTIVE DATE:

August 7, 2002.

FOR FURTHER INFORMATION CONTACT:

Zev Primor or Tom Futtner, Antidumping/Countervailing Duty Enforcement, Office 4, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC 20230; telephone: [phone] or 482-3814, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute And Regulations:

Unless otherwise indicated, all citations to the statute are references to the provisions as of January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930, (the Act) as amended, by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations refer to the regulations codified at 19 CFR Part 351 (2001).

Background

On July 6, 1992, the Department published in the Federal Register an antidumping duty order on pipe fittings from Thailand (57 FR 29702). On July 31, 2001, the petitioner requested, in accordance with section 351.213(b) of the Department's regulations, an administrative review of the antidumping duty order on pipe fittings from Thailand covering the period, July 1, 2001, through June 30, 2001. We published a notice of initiation of the review on August 20, 2001(66 FR 43570). On September 13, 2001, the Department sent an antidumping questionnaire to TBC.^[1] The Department received questionnaire responses in October and November of 2001. On February 12, 2002, we issued a supplemental questionnaire and received a response to that questionnaire on April 30, 2002. The Department is conducting this review in accordance with section 751 of the Act.

Extension of Deadlines

Under section 751(a)(3)(A) of the Act, the Department may extend the deadline for completion of preliminary review results if it determines that it is not practicable to complete the review within the statutory time limit. On March 12, 2002, the Department extended the time limit for the preliminary results of this case (see Notice of Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 67 FR 11092).

Scope of the Review

The product covered by this order is certain carbon steel butt-weld pipe fittings, having an inside diameter of less than 14 inches, imported in either finished or unfinished form. These formed or forged pipe fittings are used to join sections in piping systems where conditions require permanent, welded connections, as distinguished from fittings based on other fastening methods (e.g., threaded, grooved, or bolted fittings). Carbon steel pipe fittings are currently classified under subheading 7307.93.30 of the Harmonized Tariff Schedule (HTS). Although the HTS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive. The review covers TBC and the period of review (POR) July 1, 2000, through June 30, 2001.

TBC's Financial Status

TBC informed the Department that it is currently in receivership under Thai bankruptcy law. TBC stated that while it continues its production activities as the debtor-in-possession, it had to lay off a large number of its production and office employees, including managers. According to TBC, these lay-offs have seriously affected TBC's ability to handle its day-to-day bookkeeping and administrative functions. TBC claims that the employees who possessed the experience relevant to the Department's antidumping reviews either left the company or were furloughed indefinitely. The minimal remaining staff is preoccupied with the bankruptcy proceedings, evaluating the company's assets, collecting receivables, negotiating loans and responding to creditors' inquiries. TBC maintains that under these circumstances, it has a limited ability to provide the necessary information to the Department. On numerous occasions, TBC requested extensions of time in order to collect the requested information and respond to the Department's antidumping questionnaires. The Department granted all extension requests and, in order to accommodate TBC, postponed the issuance of the preliminary results in this administrative review. See section “Extension of Deadlines” above, and letters from Perkins Coie, LLP to the Department, dated October 4, 2001, October 9, 2001, October 26, 2001, and February 13, 2002. The Department also postponed the verification until after the publication of the preliminary results.

Partial Facts Available

Sections 776(a)(2)(A) and 776(a)(2)(B) of the Act, provide for the use of facts available when an interested party withholds information that has been requested by the Department, or when an interested party fails to provide the information requested in a timely manner and in the form required. While the Department granted TBC's requests for additional time to respond to the questionnaires, and TBC did appear to cooperate to the best of its ability, TBC did not submit all the information necessary for the Department to accurately conduct its review. For example, TBC did not, as requested by the Department, submit down-stream home market sales by its affiliated parties to whom TBC sold subject merchandise. See the Affiliation section of this notice below for a further discussion of TBC's downstream sales in the home market. Similarly, TBC did not provide reliable differences-in-merchandise (DIFMER) or CV data. As a result, the Department's analysis was limited to those U.S. sales by TBC which could be compared to sales of identical merchandise in the home market. See Questionnaire Response to Section B, p. 42, dated Nov. 30, 2001, Questionnaire Response to Section C, p. 47, dated Nov. 30, 2001, and Supplemental Questionnaire Response, p. C-11, dated April 30, 2002. As long recognized by the CIT, the burden is on the respondent, not the Department, to create a complete and accurate record. See Pistachio Group of Association Food Industries v. United States, 641 F. Supp. 31, 39-40 (CIT 1987). Therefore, in accordance with section 776(a)(2) of the Act, we are applying partial facts otherwise available in calculating TBC's dumping margins. However, since TBC did cooperate to the best of its ability, we are not making any adverse assumptions. Therefore, in the absence of downstream sales, as facts available, we have conducted our analysis using sales to unaffiliated home market customers and sales to affiliated parties that passed the arm's-length test. Further, for those U.S. transactions that would have required the use of DIFMER (U.S. sales compared to similar merchandise if the home market) or CV (where there were neither identical nor similar products sold in the home market) to make NV comparisons, we have applied as facts available to those U.S. transactions the weighted-average dumping margin found on the U.S transactions that were compared to sales of identical merchandise in the home market.

Product Comparisons

In accordance with section 771(16) of the Act, all merchandise produced by the respondent, and covered by the description in the Scope of Investigation section above, that were sold in Thailand during the POR, are considered to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. To appropriately match U.S. sales of subject merchandise to sales of the foreign like product in the comparison market, we used the following product characteristics: industry standard, type of fitting, degree of processing, size, thickness, and type of material. As stated above, TBC did not provide the Department with reliable DIFMER figures. Consequently, as discussed above, where there were no sales of identical merchandise in the home market to compare to U.S. sales, we applied facts available.

Normal Value Comparisons

With respect to TBC, in determining whether this respondent's sales of pipe fittings to customers in the United States were made at less than NV, we compared CEP to NV, as described in the Constructed Export Price, and Normal Value sections of this notice. In accordance with section 777A(d)(2) of the Act, we calculated monthly weighted-average prices for NV and compared these to the prices of individual U.S. transactions.

Constructed Export Price

We treated U.S. transactions as CEP in accordance with section 772(b) of the Act because all U.S. sales were made first to TBC's U.S.-based subsidiary and only after importation were they resold to the first unaffiliated purchaser. We based CEP on the packed FOB or delivered prices to unaffiliated purchasers in the United States. Where appropriate, we made deductions for foreign inland freight from the plant to the port, foreign inland insurance, foreign brokerage and handling, international freight, marine insurance, U.S. customs brokerage and duties, and U.S. inland freight because these expenses were incident to bringing the subject merchandise from the original place of shipment in the exporting country to the place of delivery. In addition, we deducted U.S. indirect selling expenses and inventory carrying costs in accordance with section 772(d)(1) of the Act, and made an adjustment for profit in accordance with section 772(d)(3) of the Act. We also increased CEP by the reported amount of duty drawback.

Normal Value

A. -Viability

In accordance with section 773(a)(1)(C)(ii) of the Act, we preliminarily determine that the home market for the respondent serves as a viable basis for calculating NV because the aggregate volume of the respondent's home market sales of the foreign like product was greater than five percent of the aggregate volume of its U.S. sales of the subject merchandise.

B. -Affiliated-Party Transactions and Arm's-Length Test

1. -Affiliation

As stated above, a portion of TBC's merchandise was sold during the POR through the reseller, Marubeni Thailand Co., Inc., (Marubeni Thailand). In its October 24, 2001, questionnaire response, TBC states that Marubeni Thailand and TBC are “affiliated” because of TBC's substantial “dependence” on Marubeni Thailand for its home market sales. TBC further stated that it intended to report to the Department the downstream sales by Marubeni Thailand to the first unaffiliated customer in the home market. See Antidumping Questionnaire Response, Section A, p. A-9, dated October 24, 2001. On October 26, 2001, however, TBC notified the Department that due to the financial difficulties stemming from its bankruptcy proceedings, it was not able to obtain the cooperation of Marubeni Thailand in reporting downstream sales from Marubeni Thailand to the first unrelated home market customer. TBC asked the Department for additional time to collect this information. See Letter to the Department from Yoshihiro Saito, counsel to TBC. The Department granted TBC's request.

On November 30, 2001, TBC submitted its questionnaire response for home market sales (Section B) stating that it was unable to obtain down stream sales from Marubeni Thailand. See TBC's Questionnaire Response (Section B), at 7. On February 13, 2002, the Department issued a supplemental questionnaire again requesting downstream sales from Marubeni Thailand. On April 30, 2002, TBC stated that it was unable to obtain such information and urged the Department to reconsider the “affiliation” between Marubeni Thailand and itself. TBC reasoned that the affiliation no longer applied in the current administrative review because: (1) There is no direct stock ownership between TBC and Marubeni Thailand; (2) although Marubeni Japan owns stock in both TBC and Marubeni Thailand, the two Thai-based companies are not under “common control” of Marubeni Japan; (3) unlike in the prior review, TBC no longer depends heavily on Marubeni Thailand's home market network of customers; and (4) TBC uses Marubeni Thailand as a reseller primarily to protect itself against bad debts, i.e., as a “credit hedge.” See TBC's Supplemental Questionnaire Response, at B5-B8.

The Department preliminarily disagrees with TBC's conclusion that it is no longer affiliated with Marubeni Thailand. This is consistent with the prior review of the antidumping duty order, in which TBC reported Marubeni Thailand as an affiliated party and provided downstream sales from Marubeni Thailand to the first unrelated customer. See Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand; Final Results of Antidumping Duty Administrative Review, 64 FR 68487 (Dec. 13, 1999). In the instant review, there were no changes in stock ownership or business relations among all relevant parties. The fact that TBC's was unable to obtain downstream sales does not change its status as a party affiliated with Marubeni Thailand. Consequently, for these preliminary results, we will continue to treat TBC and Marubeni Thailand as affiliated parties.

2. -Arm's-Length Test

TBC reported that it made home market sales to both affiliated and unaffiliated companies. See Questionnaire Response to Section B, p. 7, dated Nov. 30, 2001. We applied the arm's-length test by comparing sales made to TBC's home market affiliate to sales of identical merchandise from TBC to unaffiliated home market customers. To test whether these sales were made at arm's-length prices, we compared model-specific prices to affiliated and unaffiliated customers net of all discounts and rebates, movement charges, direct selling expenses, and home market packing. Where, for the tested models of subject merchandise, prices to the affiliated party were on average 99.5 percent or more of the price to the unaffiliated parties, we determined that sales made to the affiliated party were at arm's-length. See 19 CFR 351.403(c) and Preamble - Department's Final Antidumping Regulations 62 FR 27296, 27355 (May 19, 1997). If the sales to the affiliated customer satisfied the arm's-length test, we used them in our analysis. If the sales to the affiliated customer in the home market did not satisfy the arm's-length test, sales to that customer were excluded from our analysis because we considered them to be outside the ordinary course of trade. See 19 CFR 351.102 (defining “ordinary course of trade”).

Level of Trade/CEP Offset

Section 773(a)(1)(B)(i) of the Act states that, to the extent practicable, the Department will calculate NV based on sales at the same level of trade (LOT) as the EP or CEP transaction. Sales are made at different LOTs if they are made at different marketing stages (or their equivalent). See 19 CFR 351.412(c)(2). 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 Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa (CTL Plate from South Africa), 62 FR 61731, 61732 (November 19, 1997). To determine whether the comparison sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the chain of distribution), including selling functions, class of customer (customer category), and the level of selling expenses for each type of sale. Also, pursuant to 19 CFR 351.412 (c), in identifying the LOT for CEP sales, we considered only the selling activities reflected in the price after the deduction of expenses and profit under section 772(d) of the Act. See Micron Technology, Inc. v. United States, 243 F3d 1301, 1314-1315 (Fed. Cir. 2001).

When the Department is unable to match U.S. sales to sales of the foreign like product in the comparison market at the same LOT as the EP or CEP, the Department may compare the U.S. sale to sales at a different LOT in the comparison market. In comparing EP or CEP sales at a different LOT in the comparison market, where available data make it practicable, we make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP sales only, if a NV LOT is more remote from the factory than the CEP LOT and we are unable to make an LOT adjustment, the Department grants a CEP offset, as provided in section 773(a)(7)(B) of the Act. See CTL Plate from South Africa.

We obtained information from TBC regarding the marketing stages involved in making the reported home market and U.S. sales, including a description of the selling activities performed by TBC for each channel of distribution. While TBC did not request an LOT adjustment, it did request a CEP offset.

TBC reported home market sales to three customer categories through three distribution channels. In each of the distribution channels, TBC offered to its customers the same type of services such as booking orders, arranging freight, inventory maintenance, technical assistance and general customer service. Based on an analysis of the level and nature of the selling functions performed in each home market channel of distribution, we find that TBC's home market sales comprise a single LOT. For details, see the July 31, 2002, Memorandum to the File regarding TBC: Level of Trade Analysis.

For its U.S. sales, TBC reported CEP sales made to a single customer category through one channel of distribution. After deducting the CEP selling expenses incurred by its U.S. affiliate, Benkan America, Inc. (BAI) and reviewing the U.S. market selling functions reported by TBC, we found that TBC's United States sales also comprise a single LOT. Id. at 3.

In determining whether different LOTs existed in the home and U.S. markets, we examined whether TBC's sales in the two markets involved different marketing stages (or their equivalent) based on the channel of distribution, customer categories and selling functions reported. In analyzing TBC's selling activities for CEP sales, we noted, preliminarily, that the home market LOT is different from, and constitutes a more advanced stage of distribution, than the CEP LOT because after making the CEP deductions under section 772(d) of the Act, the home market LOT includes significantly more selling functions than the CEP LOTs. While in the home market TBC performs selling functions such as booking orders, price negotiation, arranging freight, inventory maintenance, etc., it does not offer similar selling functions in the U.S. market. Therefore, because of the nature and level of selling functions offered by TBC in the home market, we find that the home market LOT is at a different, more advanced marketing stage than the CEP LOT. Consequently, since NV is established at a LOT which constitutes a more advanced LOT than the CEP LOT, and the data do not provide an appropriate basis upon which to determine a LOT adjustment (TBC has only one level of trade in the home market), we conclude that TBC is entitled to a CEP offset to NV. Id. at 4.

Price-to-Price Comparisons

As stated above, TBC did not report product-specific CV data. See TBC's Supplemental Questionnaire Response, at B15-B21. Consequently, we preliminarily determined NV for all U.S. sales based on contemporaneous home market sales for identical merchandise or facts available. In accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold for consumption in the exporting country in the usual commercial quantities and in the ordinary course of trade and at the same LOT as the CEP sale. In accordance with section 773(a)(6) of the Act, where applicable, we made adjustments to home market prices for movement expenses (inland freight) and credit expenses. To adjust for differences in packing between the two markets, we deducted home market packing costs and added U.S. packing costs.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with section 773A of the Act based on exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank, the Department's preferred source for exchange rates.

Preliminary Results of the Review

As a result of this review, we preliminarily determine that the following weighted-average dumping margin exists for the period July 1, 2000, through June 30, 2001:

Manufacturer/Exporter	Weighted-Average ­ Margin (percent)
Thai Benkan Corporation, Ltd.	3.15

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within 5 days of the date of publication of this notice. Any interested party may request a hearing within 30 days of the date of publication of this notice. Parties who submit arguments in this proceeding are requested to submit with each argument: (1) a statement of the issue; and (2) a brief summary of the argument. The schedule for submitting case briefs will be established after publication of this notice. Rebuttal briefs, which are limited to issues raised in the case briefs, may be filed not later than seven days after the case briefs are filed.

The Department will publish a notice of the final results of this administrative review, which will include the results of its analysis of the issues raised in any written comments or at the hearing, within 120 days from the publication of these preliminary results.

Assessment Rate

The Department shall determine, and Customs shall assess, antidumping duties on all appropriate entries. Upon completion of this review, the Department will issue appraisement instructions directly to Customs. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the determination and for future deposits of estimated duties. For assessment of CEP sales, we have calculated a per-unit importer-specific assessment rate by aggregating the dumping margins calculated for all U.S. sales to each importer and dividing this amount by the total quantity of those sales. Where the importer-specific assessment rate is above de minimis, the Department will instruct Customs to assess antidumping duties on all entries of subject merchandise by that importer during the POR.

Cash Deposit Requirements

Furthermore, the following cash deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of pipe fittings from Thailand 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 established in the final results of this administrative review, except if the rate is less than 0.5 percent ad valorem and, therefore, de minimis, no cash deposit will be required; (2) for exporters not covered in this review, but covered in the original less than fair value (LTFV) investigation or a previous review, the cash deposit rate will continue to be the company-specific rate published in the most recent period; (3) if the exporter is not a firm covered in this review, a previous review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (4) if neither the exporter nor the manufacturer is a firm covered in this or any previous reviews or the original LTFV investigation, the cash deposit rate will be 39.10 percent, the “All Others” rate which is based on the LTFV investigation (57 FR 29702, July 6, 1992). These requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Importers

This notice serves as a preliminary reminder to importers of their responsibility under

19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

This administrative review and notice are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 1677f(i)(1)).

DATED: July 31, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Footnotes

1.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales, or, if the home market is not viable, of sales in the most appropriate third-country market (this section is not applicable to respondents in non-market economy (NME) cases). Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production (COP) of the foreign like product and the constructed value (CV) of the merchandise under investigation. Section E requests information on further manufacturing.