[Federal Register Volume 61, Number 191 (Tuesday, October 1, 1996)]
[Pages 51263-51266]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-25115]



Certain Forged Stainless Steel Flanges From India; Final Results 
of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Final Results of Antidumping Duty Administrative 


SUMMARY: On March 29, 1996, the Department of Commerce (the Department) 
published the preliminary results of its 1994-95 administrative review 
of the antidumping duty order on certain forged stainless steel flanges 
from India. The review covers one manufacturer/exporter, Akai Impex, 
Ltd. (Akai), for the period February 9, 1994 through January 31, 1995. 
We gave interested parties an opportunity to comment on our preliminary 
results. We received comments from the sole respondent, Akai, and 

[[Page 51264]]

comments from the petitioners, Flowline, Gerlin, Inc., Ideal Forging 
Corp., and Maass Flange.

EFFECTIVE DATE: October 1, 1996.

Maureen McPhillips or John Kugelman, Office of AD/CVD Enforcement, 
Group III, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone (202) 482-3019 or 482-0649, 



    On March 29, 1996, the Department published in the Federal Register 
(61 FR 14073) the preliminary results of its 1994-95 administrative 
review of the antidumping duty order on certain forged stainless steel 
flanges from Indian (59 FR 5994, February 9, 1994). On November 7, 
1995, the Department extended the date for the final results (60 FR 
56141). The Department has now completed this administrative review in 
accordance with section 751 of the Tariff Act of 1930, as amended (the 

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Act by the Uruguay Round Agreements 
Act (URAA). In addition, unless otherwise indicated, all citations to 
the Department's regulations are to the current regulations, as amended 
by the interim regulations published in the Federal Register on May 11, 
1995 (60 FR 25130).

Scope of the Review

    The products covered by this review are certain forged stainless 
steel flanges both finished and not-finished, generally manufactured to 
specification ASTM A-182, and made in alloys such as 304, 304L, 316, 
and 316L. The scope includes five general types of flanges. They are 
weld neck, used for butt-weld line connections; threaded, used to make 
threaded line connections; slip-on and lap joint, used to make stub-
end/butt-weld line connections; socket weld, used to fit pipe into 
machined recessions; and blind, used to seal off lines. The sizes of 
the flanges within the scope range generally from one to six inches; 
however, all sizes of the merchandise described above are included in 
the scope. Specifically excluded from the scope of this review are cast 
stainless steel flanges. Cast stainless steel flanges generally are 
manufactured to specification ASTM-A-351. The flanges subject to this 
review are currently classifiable under subheadings 7307.21.1000 and 
7307.21.5000 of the Harmonized Tariff Schedule of the United States 
(HTSUS). The HTSUS subheadings are provided for convenience and Customs 
purposes. The written description of the scope remains dispositive.
    The review covers one Indian manufacturer/exporter, Akai, and the 
period February 9, 1994 through January 31, 1995.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received a case brief from the respondent, 
Akai, and a rebuttal brief from the petitioners.
    Comment 1: Akai maintains that the Department overstated Akai's 
actual profit in its calculation of constructed value (CV) by failing 
to remove the following third-country expenses from the gross unit 
price: clearing and handling charges, legal stamp charge, inland 
freight, inland insurance, international freight, marine insurance, and 
    Department's Position: We agree with Akai. In the Department's 
preliminary results of this administrative review, we deducted the 
total cost of manufacturing, banking charges, and credit expenses from 
the third-country gross unit price to derive actual profit for the 
calculation of CV.
    To accurately determine the actual profit realized by Akai in 
connection with the production and sale of stainless steel flanges in 
the ordinary course of trade, for consumption in the foreign country, 
it is necessary to deduct the amount, if any, included in the price, 
attributable to any additional costs, charges, and expenses incident to 
bringing the foreign like product from the original place of shipment 
to the place of delivery to the purchaser (see, section 773 
(a)(6)(B)(ii) of the Act)).
    Comment 2: Akai states that certain U.S. observation numbers appear 
to be accounted for twice in the margin calculation section of the 
computer program.
    The petitioners counter that Akai's claim is nothing more than 
conjecture and, since Akai failed to point out any specific error 
committed by the Department, no changes should be made to the 
referenced transactions.
    Department's Position: The duplication of U.S. sales observation 
numbers resulted from an error in programming. For these final results, 
we have corrected the computer program in order to eliminate the 
duplication of some U.S. sales in the calculation of Akai's dumping 
    Comment 3: Akai requests that the Department reconfirm its 
calculation of the normal values (NV), as totally different flanges 
have the same NV in a number of instances (e.g., the 1'' BLIND 316L, 
the \3/4\'' SORF SOLID, and the 1'' SORF SOLID).
    The petitioners claim that Akai's references are both vague and 
incomplete because Akai fails to provide any indication of where the 
error occurs in the programming or the cause of the error. The 
petitioners propose that there is no reason why two different products 
could not have the same NV, particularly where NV is based in part on 
third-country prices. Since Akai does not provide any specific details 
or substantive reasoning demonstrating exactly why the NVs cannot be 
the same, the petitioners believe the Department should dismiss Akai's 
    Department's Position: We agree with the petitioners. Akai failed 
to indicate the section of the computer program where the calculation 
of the normal values of two different flanges results in identical 
normal values. Moreover, Akai did not give any reason why it would be 
impossible for the NVs of different flanges to be identical. 
Calculation of the NVs of the third-country Canadian sales requires the 
deduction of nine different expense categories. In addition, each NV is 
a weighted-average price. It is certainly conceivable, therefore, that 
two different flanges could have some variables with different values, 
yet have identical NVs. In any event, we are unable to reach any 
conclusions about Akai's comments on our calculation of NVs without 
more specific information.
    Comment 4: Akai states that the Department, in this first 
administrative review, has not followed the product-matching 
methodology used in the original investigation where the Department 
considered only the physical characteristics of the product in order of 
importance (i.e., alloy, type, and size) to match the U.S. product to 
the third-country product. Akai points out that the matching 
methodology used in the original investigation was articulated in the 
standard Department decision memorandum and in the Department's 
questionnaire. In this fist administrative review, however, Akai 
contends that the Department has now added cost considerations in 
``some unclear and undefined way'' to determine the appropriate model 
match. In support of its contention that the Department's product-
matching methodology should be based purely on

[[Page 51265]]

the physical characteristics of the merchandise and not on cost 
considerations, Akai cites the Court of International Trade's (CIT) 
decisions in Federal-Mogul Corporation and the Torrington Company v. 
United States, Slip Op. 96-37 (CIT, February 13, 1996) at 13 and 16, 
and NSK v. United States, Slip Op. 96-53 (CIT, March 13, 1996). 
Moreover, Akai maintains that the Department offers no rationale for 
the inconsistency in the product-matching methodology between the 
original investigation and this annual review. Akai cites Bowe Passat 
v. United States, Slip Op. 96-73 (CIT, May 8, 1996) to illustrate its 
position that ``inconsistent treatment, without any rationale, is 
contrary to law.'' In conclusion, Akai states that the Department 
provides no explanation or support whatsoever for the matching 
methodology chosen, which is, according to Akai, contrary to law.
    The petitioners counter that Akai's comments concerning the model-
match methodology chosen by the Department are both inaccurate and 
irrelevant. First, the petitioners state that the Department is not 
required to follow the product-matching methodology used in the 
original investigation in any subsequent administrative reviews. 
Indeed, they maintain that in any investigation or subsequent review, 
there is a learning curve which the Department travels, and it should 
not be restricted from modifying and improving its matching methodology 
as it learns more about the various products. Moreover, the petitioners 
state that Akai's contention that the Department's ``new'' methodology 
incorrectly includes cost considerations is based on Akai's improper 
reading of the computer program. The petitioners point out that the 
program sorts third-country and U.S. models based on alloy grade, size 
trademark, designation, and ASTM standard designation and, when the two 
data bases are later merged, the same criteria are used without any 
consideration of costs. The petitioners believe that perhaps Akai is 
confused by the Department's calculation of the difference-in-
merchandise adjustments difmers) which occurs earlier in the program. 
According to the petitioners, the Department calculated the difmers to 
ensure that the variable differences in costs between the U.S. and the 
third-country models met the Department's 20 percent rule and had 
nothing to do with the Department's matching of U.S. and third-country 
    Department's Position: Akai had no home market or third-country 
sales during the period of investigation (POI). The Department, 
therefore, in accordance with section 773(a)(4) of the Act, used CV to 
calculate foreign market value (FMV) (see Final Determination of Sales 
at Less Than Fair Value; Certain Forged Stainless Steel Flanges from 
India, 58 FR 68853 (December 29, 1993). The CV of the subject 
merchandise is the sum of the cost of manufacturing, the actual amounts 
incurred by the exporter during the POI or period of review (POR) for 
selling, general, and administrative expenses, the actual profits and 
the cost of all containers and all other expenses incidental to placing 
the subject merchandise in condition packed ready for shipment to the 
United States (see section 773(e) of the Act). Since we used the CV of 
the subject merchandise to determine FMV during the POI, rather than a 
price-to-price comparison with home market or third-country models, 
model-matching methodology was irrelevant.
    For the preliminary results of this administrative review Akai did 
have third-country sales to Canada which we used for comparison 
purposes, if we found an appropriate match. For those sales without a 
third-country match, we used the CV of the subject merchandise.
    With respect to Akai's objection to the Department's ``addition'' 
of cost considerations in its model-match methodology in the 
preliminary results of this administrative review, in accordance with 
section 771(16)(A) of the Act, the Department first identifies and 
compares that merchandise which is ``identical'' in physical 
characteristics, followed by sales of merchandise which is most 
``similar'' in physical characteristics. To make these determinations, 
the Department devises a hierarchy of commercially meaningful 
characteristics, suitable to each class or kind of merchandise. The 
courts have recognized that the Department has broad discretion to 
devise the model-match methodology it deems the most appropriate to 
determine what constitutes similar merchandise. See Torrington Co. v. 
United States, 881 F. Supp. 622, 635 (CIT 1995), Koyo Seiko Co. v. 
United States, 66 F.3d 1204, 1209 (CAFC 1995), NTN Bearing Corp. v. 
United States, 747 F.Supp. 726, 736 (1990). For the preliminary results 
of this administrative review, the Department selected alloy grade, 
size, type, and the ASTM standard designation as the hierarchy of 
physical characteristics to use in determining the identical or most 
similar third-country model to compare to each U.S. model.
    In addition, in determining NV, the Department must base its 
valuation on the price of ``such or similar merchandise'' sold in the 
home market (third country) (see 19 U.S.C. Sec. 1677b(a)(1)(A)). ``Such 
or similar merchandise'' is defined in relevant part as ``[m]erchandise 
produced in the same country and by the same person as the merchandise 
which is the subject of the investigation, like that merchandise in 
component material or materials and in the purposes for which used, and 
approximately equal in commercial value to that merchandise'' (19 
U.S.C. Sec. 1677(16)(B)). When several third-country models are equally 
similar in physical characteristics, we choose the third-country model 
which, when compared to the U.S. model, has the lowest difference in 
variable costs of manufacturing, provided the difmer does not exceed 20 
percent of the total cost of manufacturing of the U.S. model. If these 
conditions prevail, the Department calculates an adjustment for the 
difference in cost in order to select the home market (third-country) 
model with the smallest cost difference between it and the U.S. model. 
The Department's adoption of the ``20 percent difmer'' test, pursuant 
to 19 CFR Sec. 353.57(b)(1992), ensures the selection of the home 
market (third-country) model with the greatest commercial similarity to 
the U.S. model (see Final Results of Antidumping Duty Administrative 
Review of Tapered Roller Bearings from Japan, 57 FR 4952 (February 11, 
1992). Therefore, when the four physical criteria of alloy, type, size, 
and ASTM standard designation were equally similar, we matched the U.S. 
model to the third-country model having the least difference in 
variable costs between it and the U.S. model, provided the cost 
difference was no greater than 20 percent.

Final Results of Review

    As a result of our review, we determine that the following 
weighted-average margin exists:

          Manufacturer/exporter             Period of review   (percent)
Akai Impex, Ltd.........................    02/09/94-01/31/95      2.56 

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between export price and normal value may vary from the 
percentage stated above. The Department will issue appraisement 
instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of review for all 
shipments of certain forged stainless steel flanges from India

[[Page 51266]]

within the scope of the order entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rate for the reviewed 
company will be the rate listed above; (2) for previously reviewed or 
investigated companies not listed above, the 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 less-than-fair-value (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) 
for all other producers and/or exporters of this merchandise, the cash 
deposit rate will be 162.44 percent, the ``all others'' rate 
established in the LTFV investigation. These deposit requirements shall 
remain in effect until publication of the final results of the next 
administrative review.
    This notice serves as a final reminder to importers of their 
responsibility under 19 CFR Sec. 353.26 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 subsequent assessment 
of double antidumping duties.

Notification of Interested Parties

    This notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR Sec. 353.34(d). Timely written 
notification of return/destruction of APO materials or conversion to 
judicial protective order is hereby requested. Failure to comply with 
the regulations and the terms of an APO is a sanctionable violation. 
Timely written notification of the return/destruction of APO materials 
or conversion to judicial protective order is hereby requested.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 CFR 
Sec. 353.22.

    Dated: September 23, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-25115 Filed 9-30-96; 8:45 am]