[Federal Register Volume 60, Number 38 (Monday, February 27, 1995)]
[Notices]
[Pages 10542-10545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4725]
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DEPARTMENT OF COMMERCE
[A-508-807]
Notice of Final Determination of Sales at Less Than Fair Value:
Certain Carbon Steel Butt-Weld Pipe Fittings From Israel
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: February 27, 1995.
FOR FURTHER INFORMATION CONTACT: Jennifer Yeske or Gary Bettger, 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-
0189 and 482-2239, respectively.
Final Determination
We determine that certain carbon steel butt-weld pipe fittings from
Israel are being 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''). The estimated margin is shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the publication of the preliminary determination in the
Federal Register on October 4, 1994 (59 FR 50568), the following events
have occurred:
On October 5, 1994, pursuant to section 353.20(b)(1) of the
Department's regulations (19 CFR 353.20(b)(1)(1994), Pipe Fittings
Carmiel, Inc. (``Carmiel'') requested that the final determination in
this case be postponed. On November 14, 1994, the Department published
in the Federal Register a notice postponing the publication of the
final determination in this case until not later than February 16, 1995
(59 FR 56461).
On October 20, 1994, Carmiel filed a second supplemental/deficiency
response, which included a revised home market sales listing. On
November 27, November 28, and December 4, 1994, we verified Carmiel's
sales information at its offices in Tel Aviv, Israel. On January 23,
1995, and on January 30, 1995, petitioner and respondent submitted case
and rebuttal briefs to the Department.
Scope of the Investigation
The products covered by this investigation 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 from 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. [[Page 10543]]
Product Comparisons
Carmiel sold identical products in both Israel and the United
States during the POI. Therefore, in making our fair value comparisons,
we compared sales of merchandise identical in all respects.
Fair Value Comparisons
To determine whether Carmiel's sales for export 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 States Price'' and ``Foreign Market Value'' sections of
this notice. In accordance with 19 CFR 353.58, we made comparisons at
the same level of trade.
We made revisions to Carmiel's reported data, where appropriate,
based on verification findings.
United States Price
Because Carmiel's U.S. sales were made to unrelated purchasers in
the United States prior to importation, and because the exporter's
sales price methodology was not indicated by other circumstances, we
based USP on the purchase price (``PP'') sales methodology in
accordance with section 772(b) of the Act.
We calculated Carmiel's USP based on packed C.I.F. prices to
unrelated customers in the United States. We made deductions, where
appropriate, for marine insurance, ocean freight, foreign inland
freight, port fees, and customs agents fees and expenses.
We made an adjustment to U.S. price for the value-added tax
(``VAT'') paid on the comparison sales in Israel, in accordance with
our practice, pursuant to the Court of International Trade (CIT)
decision in Federal-Mogul, et al v. United States, Slip Op. 93-194 (CIT
October 7, 1993). (See Final Determination of Sales at Less Than Fair
Value: Calcium Aluminate Cement, Cement Clinker and Flux from France,
59 FR 14136, March 25, 1994).
Foreign Market Value
In order to determine whether the sales in the home market are an
adequate basis for the FMV, the Department generally compares the
quantity of such or similar merchandise sold in the home market during
the POI to the quantity sold for exportation to third countries. In
this case, Carmiel made sales only to the United States and Israel
during the POI. Based on the substantial quantity of home market sales
in relation to its U.S. sales, we determined that the home market was
viable.
In our preliminary determination, we stated that the appropriate
date of sale is the date of the first written document which sets the
price and quantity for the sale (see Certain Stainless Steel Butt-Weld
Pipe and Tube Fittings From Japan; Final Results of Antidumping Duty
Administrative Review (59 FR 12240, 12241; March 16, 1994) and
Antifriction Bearings (Other Than Tapered Rolling Bearings) and Parts
Thereof From France, et al., (58 FR 39729, 39783; July 26, 1993)).
Accordingly, on October 20, 1994, respondent submitted a new home
market sales listing using the invoice date as the date of sale. We
confirmed at verification that the invoice date is the first written
document setting the terms of sale in the home market and is, thus, the
appropriate date of sale.
We have calculated FMV using the delivered prices reported by
Carmiel in its October 20, 1994 home market sales listing. We adjusted
the prices for certain discounts offered to home market customers.
Also, in light of the decision of the Court of Appeals for the Federal
Circuit in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland
Cement v. United States, 13#F.3d 398 (Fed. Cir., 1994), we adjusted for
post-sale home market movement charges under the circumstances-of-sale
provision of the Act (Section 773(a)(4)(B)). This adjustment included
home market inland freight.
We also made circumstance-of-sale adjustments, where appropriate,
for differences in credit expenses, pursuant to 19 CFR 353.56(a)(2). In
calculating U.S. credit expense, we used the interest rate paid by
Carmiel for short-term New Israeli Shekel (``NIS'') loans linked to the
dollar. In calculating the home market credit expense, we used
Carmiel's borrowing rate for unlinked short-term NIS loans.
We adjusted for VAT in accordance with our standard practice. (See
the United States Price section of this notice, above.)
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the dates of the U.S. sales, as published in the
International Monetary Fund's International Financial Statistics (see
19 CFR 353.60).
Final Negative Determination of Critical Circumstances
Petitioner alleged that critical circumstances exist with respect
to imports of pipe fittings from Israel. In our preliminary
determination, pursuant to section 733(e)(1) of the Act and 19 CFR
353.16, we analyzed the allegation using the Department's standard
methodology. Because the information on which our analysis was based
has not changed, we have performed the same analysis as explained in
the preliminary finding. Based on this analysis, the Department
determines, in accordance with section 735(a)(3) of the Act, that
critical circumstances do not exist with respect to imports of certain
carbon steel butt-weld pipe fittings from Israel.
Verification
As provided in section 776(b) of the Act, we verified information
provided by the respondent using standard verification procedures,
including the examination of relevant sales, cost and financial
records, and selection of original source documentation.
Interested Party Comments
Comment 1
Carmiel argues that U.S. sales relating to the September 22, 1993,
invoice are outside the period of investigation. The company claims
that the terms of these sales were set in the purchase order, which is
dated March 25, 1993. Carmiel argues that while the actual quantity
shipped changed slightly before the shipment date, this change was very
small and resulted from limitations imposed by the size of the shipping
containers.
DOC Position
We agree with respondent. Carmiel appropriately excluded these
sales from its U.S. sales listing because the terms of the sales were
set well before the POI. We agree that the change in quantity was minor
and does not constitute a change in the basic terms of the sale.
Comment 2
At verification, Carmiel officials notified the Department that
they had not reported an additional home market discount which was
given to customers who made prompt payments. The information pertaining
to these discounts was submitted to the Department after the
verification was completed, and the Department returned the information
as untimely. Carmiel argues that the Department should accept the
information and make an adjustment for this discount. According to
Carmiel, these discounts were inadvertently omitted from the company's
response because the response was prepared by an outside consultant
using data that was not computerized. Furthermore, Carmiel argues that
the information should be considered verified, regardless of when
[[Page 10544]] it was submitted, because the team verified the actual
prices paid on home market sales.
Petitioner argues that the Department should deny Carmiel the
adjustment because the information was submitted after the deadline for
submission of factual information. Petitioner notes that Carmiel chose
not to report this information on a timely basis.
DOC Position
We agree with petitioner. Section 353.31(a)(i) of the Department's
regulations states that the last date factual information can be
submitted for consideration in a final determination is ``seven days
before the scheduled date on which the verification is to commence.''
This information was not submitted prior to the start of verification
and, therefore, it is untimely. It also is unclear that the information
was ``inadvertently'' omitted as Carmiel claims. At verification,
Carmiel officials stated that they had chosen not to report this
discount because the value of the discount was insignificant compared
to the amount of work involved. Thus, even if the Department were to
consider inadvertency as an excuse, it has not been established in this
instance. Finally, while the Department's verifiers did examine several
home market sales, they saw no documentation regarding these discounts
and thus, there is no basis for considering these discounts to have
been verified.
Comment 3
Carmiel argues that the Department should calculate the home market
credit expense using a higher interest rate than that used for the
preliminary determination. Carmiel points out that, at verification,
the team saw evidence of company borrowing at a much higher interest
rate, indicating that the company's home market credit costs were
actually higher than reported. Using the lower rate to make the credit
adjustment would understate the company's expenses. Therefore, the
Department should use either the higher rate, or an average of the
reported rate and the higher rate.
Petitioner claims that there is no verified information indicating
the extent of Carmiel's borrowing which is taken out at the higher
interest rate. While officials stated that the majority of Carmiel's
short-term financing was at the higher rate, this claim was not
substantiated. Additionally, petitioner argues, rational economic
behavior suggests that the majority of Carmiel's financing would be at
the lower rates. Moreover, the Department does not possess enough
verified information to appropriately weight the two rates in order to
calculate an average. Finally, petitioner points out that Carmiel chose
to report the lower, more conservative rate.
DOC Position
Carmiel reported the lower rate in its response, and we verified
this rate. While we also verified that Carmiel received some financing
at the higher rate, we do not have verified information regarding the
total amount of Carmiel's borrowings at this rate. We agree with
petitioner that without knowing what portion of Carmiel's short-term
financing is at the higher rate, it is not possible to calculate a
relevant average of the two rates. Therefore, we have used the lower
interest rate reported by respondents in making the home market credit
adjustment.
Comment 4
Carmiel states that the Department's adjustments for VAT in this
case are a misapplication of the statute because Carmiel reported its
home market sales ``net'' of VAT. Carmiel recognizes that this
adjustment was made as a result of the CIT decision in Federal-Mogul
Corp v. United States, 15 ITRD 1127 (CIT 1993); however, Carmiel argues
that the court also misinterpreted the statute. According to Carmiel,
the statute only requires the Department to adjust for VAT when it is
included in or added to the home market prices reported. Thus, when the
tax is not included in or added to the prices reported, the Department
should not then add the tax to FMV. Carmiel claims that adding VAT to
both FMV and USP, as was done in the preliminary determination,
resulted in significant distortions to Carmiel's margin.
Petitioner argues that the Department appropriately adjusted for
VAT by adding the tax to both FMV and USP and that this adjustment did
not distort Carmiel's margins. Petitioner cites Calcium Aluminate
Coment, Cement Clinker and Flux from France, 59 FR 14136, 14138 25,
1994) in support of the argument that the Department must include an
adjustment for VAT in the USP to account for VAT in the home market.
Because respondent has reported home market sales values excluding VAT,
the Department should add VAT to the net FMV and USP.
DOC Postition
The statute provides for dumping determinations to be made on a tax
inclusive basis. Section 772(d)(1)(c) of the Act provides for an
offsetting adjustment to U.S. price, based on the presumption that home
market prices include VAT. Accordingly, the Department has insisted
that HM prices be reported on a VAT inclusive basis (see Final
Determination of Sales at Less than Fair Value: Antifriction Bearings
(Other Than Tapered Roller Bearings) and Parts Thereof from The Federal
Republic of Germany, 54 FR 18992, May 3, 1989). Allowing respondents to
choose whether to report HM prices net of taxes would allow them to
partially determine their own dumping margins. Because respondent
reported its home market sales net of VAT, we have added the VAT back
onto the home market price and adjusted the USP accordingly.
Comment 5
Petitioner argues that two companies, Keshta Ltd. (``Keshta'') and
Keshet Steel Import/Export Company (``Keshet''), are so closely related
to Carmiel that the three companies should be treated as one for the
purposes of the final determination.
Carmiel states that since it reported the sales of both Keshet and
Keshta, the companies are essentially being treated as one company.
Furthermore, since Carmiel is the only exporter, Keshet and Keshta
would be subject to the all others rate (Carmiel's rate) if they did
begin to export to the United States.
DOC Position
We verified that neither Keshet nor Keshta made sales to the United
States during the POI. Moreover, we verified that the sales of both
Keshet and Keshta were included in Carmiel's home market sales
response. Therefore, the three companies have been treated as one
company for purposes of this determination.
Comment 6
Petitioner argues that certain of Carmiel's movement expenses are
most likely incurred by value and, thus, should have been allocated by
value rather than by weight.
Carmiel argues that the results of allocating by value versus
allocating by weight will be virtually the same given the small amounts
in question and the fact that the price and weight of the elbows in
question rise proportionately. Furthermore, Carmiel states that the
costs were allocated according to the Department's instructions.
Therefore, the Department should continue to use the costs as allocated
by Carmiel and as verified by the Department.
DOC Position
We agree with petitioner that marine insurance and agents fees
should have [[Page 10545]] been allocated by value, rather than weight.
In response to Carmiel's assertion that it followed the Department's
instructions, we note that the Department's August 3, 1994 deficiency
questionnaire, at page 4, instructed respondent to allocate expenses on
the basis that they are incurred. Since these expenses are incurred by
value, they should be allocated on such basis. Accordingly, we have
reallocated marine insurance and agents fees by value.
Comment 7
Petitioner states that the payment date for one home market invoice
should be corrected based on findings at verification.
Carmiel notes that, while several payment dates were found to be
incorrect at verification, the payment date problems were minor and
resulted from the fact that its records are not computerized.
Therefore, correcting the payment dates will not have a significant
effect. Nonetheless, respondent states that all of the verified payment
dates should be corrected.
DOC Position
We agree with both petitioner and respondent. It would be
inappropriate to use payment dates which we know to be incorrect for
the final determination. Therefore, we have corrected the misreported
payment dates on the verified sales. We have used these corrected
payment dates to calculate the home market credit adjustment.
Suspension of Liquidation
We are directing the U.S. Customs Service to continue to suspend
liquidation of all entries of butt-weld pipe fittings from Israel, as
defined in the ``Scope of Investigation'' section of this notice, that
are produced and sold by Carmiel and that are entered, or withdrawn
from warehouse, for consumption on or after October 4, 1994.
The Customs Service shall require a cash deposit or the posting of
a bond equal to the estimated weighted-average amount by which the
foreign market value of the subject merchandise exceeds the United
States price as shown below. The suspension of liquidation will remain
in effect until further notice. The weighted-average dumping margins
are as follows:
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter (percent)
------------------------------------------------------------------------
Pipe Fittings Carmiel, Inc................................. 8.84
All Others................................................. 8.84
------------------------------------------------------------------------
Adjustment of Deposit Rate for Countervailing Duties
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, the level of export subsidies as determined in the
final affirmative determination in the concurrent countervailing duty
investigation of certain carbon steel butt-weld pipe fittings from
Israel, which was 2.26 percent, will be subtracted from the margin for
cash deposit or bonding purposes. This results in a deposit rate of
6.58 percent for Carmiel and a deposit rate of 6.58 percent for all
others.
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination.
Notice to Interested Parties
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the return or destruction of proprietary information
disclosed under APO in accordance with 19 CFR 353.35(d). Failure to
comply is a violation of the APO.
This determination is published pursuant to section 735(d) of the
Act (19 U.S.C. 1673(d)).
Dated: February 16, 1995.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration.
[FR Doc. 95-4725 Filed 2-24-95; 8:45 am]
BILLING CODE 3510-S-P