[Federal Register Volume 59, Number 191 (Tuesday, October 4, 1994)] [Unknown Section] [Page 0] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 94-24537] [[Page Unknown]] [Federal Register: October 4, 1994] ----------------------------------------------------------------------- DEPARTMENT OF COMMERCE [A-533-811] Preliminary Determination of Sales at Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings From India AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: October 4, 1994. FOR FURTHER INFORMATION CONTACT: Sue Strumbel, Office of Countervailing Investigations, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482- 1442. PRELIMINARY DETERMINATION: We preliminarily determine that certain carbon steel butt-weld pipe fittings from India are being sold in the United States at less than fair value, as provided in section 733 of the Tariff Act of 1930, as amended (the ``Act''). The estimated margins of sales at less than fair value are shown in the ``Suspension of Liquidation'' section of this notice. Case History Since the initiation of this investigation on March 21, 1994, (59 FR 14148) the following events have occurred. On April 14, 1994, the United States International Trade Commission (``ITC'') issued an affirmative preliminary injury determination (see ITC Investigation No. 731-TA-689). In accordance with 19 CFR 353.42(b)(1994), antidumping duty questionnaires were presented to two Indian producers which account for over 60 percent of all Indian exports of certain carbon steel butt-weld pipe fittings to the United States during the POI. These companies are Karmen Steels of India (Karmen) and Sivanandha Pipe Fittings Limited (Sivanandha). The petitioner requested a 50-day postponement of the preliminary determination on June 30, 1994. The request was granted by the Department of Commerce on July 19, 1994 (59 FR 37961, July 26, 1994). Scope of the Investigation The products covered by these investigations are certain carbon steel butt-weld pipe fittings having an inside diameter of less than fourteen inches (355 millimeters), imported in either finished or unfinished condition. Pipe fittings are formed or forged steel products used to join pipe sections in piping systems where conditions require permanent welded connections, as distinguished form fittings based on other methods of fastening (e.g., threaded, grooved, or bolted fittings). Butt-weld fittings come in a variety of shapes which include ``elbows,'' ``tees,'' ``caps,'' and ``reducers.'' The edges of finished pipe fittings are beveled, so that when a fitting is placed against the end of a pipe (the ends of which have also been beveled), a shallow channel is created to accommodate the ``bead'' of the weld which joins the fitting to the pipe. These pipe fittings are currently classifiable under subheading 7307.93.3000 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 this investigation is dispositive. Period of Investigation The period of investigation (``POI'') is September 1, 1993, through February 28, 1994 for Sivanandha and August 1, 1993, through February 28, 1994 for Karmen. Although we originally established the same POI for both companies, Karmen was not able to provide foreign market values (FMV) for sales during that period because it had no home market or third country sales and its U.S. sale(s) involved merchandise which had not yet been produced. Therefore, in accordance with section 353.42(b)(1) of our regulations, we extended Karmen's POI by one month in order to capture sales of merchandise that had been produced. Product Comparisons For Sivanandha, we first compared merchandise identical in all respects. If no identical merchandise was sold, we compared the most similar merchandise, as determined by the model-matching criteria contained in Appendix V of the questionnaire (``Appendix V'') (on file in room B-099 of the main building of the Department of Commerce (``Public File'')). For the U.S. sales compared to sales of similar merchandise, we made an adjustment, pursuant to 19 CFR 353.57, for physical differences in merchandise. Karmen, did not make home market or third country sales of the subject merchandise. Therefore, we based FMV on constructed value (CV), in accordance with section 773(a)(2) of the Act. Additionally, Karmen reported that it has an arrangement with a Singaporean company, under which the Singaporean company supplies Karmen with rusty pipe fittings. Karmen reconditions and refurbishes these pipe fittings and exports them to the Singaporean company's U.S. customer. Karmen claims that since the Singaporean company only pays Karmen for the refurbishing, and Karmen does not take title to this merchandise, these sales should not be treated as Karmen sales. For purposes of the preliminary determination, we are not treating these refurbished pipe fittings as sales subject to this investigation. We will further examine this issue for purposes of the final determination. Fair Value Comparisons To determine whether Sivanandha's or Karmen's sales for export to the United States were made at less than fair value, we compared the United States price (``USP'') to the FMV, as specified in the ``United States Price'' and ``Foreign Market Value'' sections of this notice. United States Price Because Sivanandha's and Karmen's U.S. sales of subject merchandise were made to unrelated purchasers prior to importation into the United States, and the exporter's sales price methodology was not indicated by other circumstances, in accordance with section 772(b) of the Act, we based USP on the purchase price (``PP'') sales methodology. We calculated Sivanandha's PP sales based on packed, CIF prices to unrelated customers in the United States. We made deductions to the USP, where appropriate, for foreign inland freight, containerization, ocean freight, and marine insurance. In accordance with Section 772(d)(1)(B) of the Act, we added to Sivanandha's USP the amount of import duties imposed on inputs which were subsequently rebated upon exportation of the finished merchandise to the United States. We made an adjustment to U.S. price for excise and sales taxes paid on the comparison sales in India, in accordance with our practice, pursuant to the Court of International Trade (CIT) decision in Federal- Mogul, et al. v. United States, 834 F. Supp. 1993. See Preliminary Antidumping Duty Determination and Postponement of Final Determination; Color Negative Photographic Paper and Chemical Components Thereof from Japan, 59 FR 16177, 16179, April 6, 1994, for an explanation of this tax methodology. We calculated Karmen's PP sales based on packed, CIF prices to unrelated customers in the United States. We made deductions to the USP, where appropriate, for foreign inland freight, containerization, ocean freight and marine insurance. In calculating U.S. credit expense, we used the borrowing rate in the United States on short-term dollar- denominated loans. For a further discussion of the Department's treatment of credit in this investigation, please see Memorandum from Barbara R. Stafford to Susan G. Esserman (September 26, 1994) on file in room B-099 of the U.S. Department of Commerce. Foreign Market Value For Sivanandha, in order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating FMV, we compared the volume of home market sales of subject merchandise to the volume of third country sales of subject merchandise, in accordance with section 773(a)(1)(B) of the Act. As a result, we determined that Sivanandha's home market was viable. We adjusted for a excise and sales tax collected in the Indian home market. (See the United States Price section of this notice, above.) For Karmen, because it sells the subject merchandise only in the U.S. market, we used CV, pursuant to section 773(e) of the Act. We calculated CV based on the sum of the cost of materials, fabrication, general expenses, U.S. imputed credit costs, U.S. packing costs and profit. In accordance with section 773(e)(1)(B) (i) and (ii) of the Act, we: (1) Included the greater of either Karmen's reported general expenses or the statutory minimum of ten percent of the cost of manufacture (COM), as appropriate and; (2) used the statutory minimum of eight percent of the sum of COM and general expenses for profit. In reporting its CVs, Karmen allocated labor costs and variable manufacturing overhead in such a way as to assign equal amounts for new pipe fittings and refurbished pipe fittings. We believe that the allocation method Karmen used to report CVs results in understating the costs of producing new fittings, because based on our experience in past cases, we would expect that costs incurred in the early production stages would not be incurred in refurbishing fittings. Therefore, we have recalculated these costs by assigning all labor and variable manufacturing overhead costs to the production of new pipe fittings. We will seek additional information on the actual costs for purposes of the final determination. Pursuant to section 773(a)(4)(B) of the Act and 19 CFR 353.56(a)(2), we made circumstance-of-sale (COS) adjustments for differences in movement charges between shipments to the United States and shipments to India. For Sivanandha, we also made COS adjustments for differences in quality inspection charges, credit and advertising expenses. In accordance with 19 CFR 353.56(b)(1), we added U.S. indirect selling expenses as an offset to the home market commission, but capped this addition by the amount of the home market commission. Finally, we deducted home market packing expenses and added U.S. packing expenses to Sivanandha's FMV, in accordance with section 773(a)(1) of the Act. Currency Conversion We made currency conversions based on the official exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank. Verification As provided in section 776(b) of the Act, we will verify information used in making our final determination. Suspension of Liquidation In accordance with section 733(d)(1) of the Act, we are directing the Customs Service to suspend liquidation of all entries of certain carbon steel butt-weld pipe fittings from India, as defined in the ``Scope of Investigation'' section of this notice, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. The Customs Service shall require a cash deposit or posting of a bond equal to the estimated dumping margins, as shown below. This suspension of liquidation will remain in effect until further notice. The weighted- average dumping margins are as follows: ------------------------------------------------------------------------ Margin Manufacturers/producers/exporters percent ------------------------------------------------------------------------ Sivanandha................................................... 10.16 Karmen....................................................... 37.04 All others................................................... 15.85 ------------------------------------------------------------------------ Article VI, paragraph 5 of the General Agreement on Tariffs and Trade provides that ``(no) product * * * shall be subject to both antidumping and countervailing duties to compensate for the same situation for dumping or export subsidization.'' This provision is implemented by section 772(d)(1)(D) of the Act. Since antidumping duties cannot be assessed on the portion of the margin attributable to export subsidies, there is no basis to require a cash deposit or bond for that amount. Accordingly in this investigation, Sivanandha's FMV is based on home market sales and hence, the antidumping margin must be adjusted. In the Preliminary Affirmative Countervailing Duty Determination: Certain Carbon Steel Butt-Weld Pipe Fittings from India, (59 FR 28337, published June 1, 1994), Sivanandha's export subsidy was 3.53 percent ad valorem, which will be subtracted from the margins for cash deposit or bonding purposes. The rate listed above reflects this adjustment. Since Karmen only has U.S. sales, its FMV is based on CV which reflects export subsidies. Because the export subsidies were reflected in both USP and FMV, the subsidies did not affect the margin calculations using CV. The Customs Service shall require a cash deposit or the posting of a bond equal to the estimated preliminary dumping margins, as shown above. The suspension of liquidation will remain in effect until further notice. ITC Notification In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final determination is affirmative, the ITC will determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry within 75 days after our final determination. Public Comment Interested parties who wish to request a hearing must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room B-099, within ten days of the publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. In accordance with 19 CFR 353.38, case briefs or other written comments in at least ten copies must be submitted to the Assistant Secretary no later than November 16, 1994, and rebuttal briefs no later than November 23, 1994. A hearing, if requested, will be held on November 28, 1994, at 1 p.m. at the U.S. Department of Commerce in Room 1414. Parties should confirm by telephone the time, date, and place of the hearing 48 hours prior to the scheduled time. In accordance with 19 CFR 353.38(b), oral presentations will be limited to issues raised in the briefs. We will make our final determination not later than 75 days after the date of this preliminary determination. This determination is published pursuant to section 733(f) of the Act and 19 CFR 353.15(a)(4). Dated: September 26, 1994. Susan G. Esserman, Assistant Secretary for Import Administration. [FR Doc. 94-24537 Filed 10-3-94; 8:45 am] BILLING CODE 3510-DS-M