[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Notices]
[Pages 23760-23764]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11381]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-533-502]


Certain Welded Carbon Steel Standard Pipes and Tubes From India: 
Preliminary Results of New Shipper Antidumping Duty Administrative 
Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty New Shipper 
Administrative Review.

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SUMMARY: In response to requests by Lloyd's Metals & Engineers Ltd. 
(Lloyd's) and Rajinder Pipes Ltd. (Rajinder), the Department of 
Commerce (the Department) is conducting a new shipper administrative 
review of the antidumping duty order on certain welded carbon steel 
standard pipes and tubes from India. The period of review (POR) is May 
1, 1995 through April 30, 1996. We have preliminarily determined that 
sales have been made below the 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 
equal to the difference between the export price (EP) or construed 
export price (CEP) and NV. Interested parties are invited to comment on 
these preliminary results. Parties who submit argument in this 
proceeding are requested to submit with the argument (1) a statement of 
the issue and (2) a brief summary of the argument.

EFFECTIVE DATE: May 1, 1997.

FOR FURTHER INFORMATION CONTACT:
Kristie Strecker, Matthew Rosenbaum or Thomas O. Barlow, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW., Washington, D.C. 
20230; telephone (202) 482-4733.

SUPPLEMENTARY INFORMATION:

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 Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act. 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).

Background

    On April 30, 1996, the Department received a request from Lloyd's 
for a new shipper review pursuant to section 751(a)(2)(B) of the Act 
and section 353.22(h) of the Department's interim regulations. On May 
22, 1996, the Department also received a request from Rajinder for a 
new shipper review. The petitioner in this case is the Standard Pipe 
Subcommittee of the Committee on Pipe and Tube Imports (the 
Petitioner).
    Section 751(a)(2) of the Act and section 353.22(h) of the 
Department's regulations govern determinations of antidumping duties 
for new shippers. These provisions state that, if the Department 
receives a request for review from an exporter or producer of the 
subject merchandise that (1) did not export the merchandise to the 
United States during the period of investigation (POI) and, (2) is not 
affiliated with any exporter or producer who exported the subject 
merchandise during that period, the Department shall conduct a new 
shipper review to establish an individual weighted-average dumping 
margin for such exporter or producer, if the Department has not 
previously established such a margin for the exporter or producer. To 
establish these facts, the exporter or producer must include with its 
request, with appropriate certification: (i) The date on which the 
merchandise was first entered, or withdrawn from warehouse, for 
consumption, or, if it cannot certify as to the date of first entry, 
the date on which it first shipped the merchandise for export to the 
United States; (ii) a list of the firms with which it is affiliated; 
and (iii) a statement from such exporter or producer, and from each 
affiliated firm, that it did not, under its current or a former name, 
export the merchandise during the POI. The requests from Lloyd's and 
Rajinder were accompanied by information and certifications 
establishing the date on which each company first shipped and entered 
subject merchandise, the names of Lloyd's and Rajinder's affiliated 
parties, and statements from Lloyd's and Rajinder and their affiliated 
parties that they did not, under any name, export the subject 
merchandise during the POI. Based on the above information, on June 27, 
1996, the Department initiated a new shipper review of Lloyd's and 
Rajinder (61 FR 33492). On December 30, 1996, we published an extension 
of the time limit for the preliminary results of this review until 
April 23, 1997 (61 FR 68713). The Department is now conducting this 
review in accordance with section 751 of the Act and section 353.22 of 
its regulations.

[[Page 23761]]

Scope of the Review

    The products covered by this review include circular welded non-
alloy steel pipes and tubes, of circular cross-section, with an outside 
diameter of 0.372 inch or more but not more than 406.4 millimeters (16 
inches) in outside diameter, regardless of wall thickness, surface 
finish (black galvanized, or painted), or end finish (plain end, 
bevelled end, threaded, or threaded and coupled). These pipes and tubes 
are generally known as standard pipe, though they may also be called 
structural or mechanical tubing in certain applications. Standard pipes 
and tubes are intended for the low-pressure conveyance of water, steam, 
natural gas, air and other liquids and gases in plumbing and heating 
systems, air-conditioner units, automatic sprinkler systems, and other 
related uses. Standard pipe may also be used for light load-bearing and 
mechanical applications, such as for fence tubing, and for protection 
of electrical wiring, such as conduit shells.
    The scope is not limited to standard pipe and fence tubing or those 
types of mechanical and structural pipe that are used in standard pipe 
applications. All carbon-steel pipes and tubes within the physical 
description outlined above are included in the scope of this order, 
except for line pipe, oil-country tubular goods, boiler tubing, cold-
drawn or cold-rolled mechanical tubing, pipe and tube hollows for 
redraws, finished scaffolding, and finished rigid conduit.
    Imports of the products covered by this review are currently 
classified under the following Harmonized Tariff Schedule (HTS) 
subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 
7306.30.50.40, 07306.30.50.55, 7306.30.50.85, and 7306.30.50.90. 
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 two producers/exporters. The POR is May 1, 1995 
through April 30, 1996.

Level of Trade

    To the extent practicable, we determine NV for sales at the same 
level of trade as the U.S. sales (either EP or CEP). When there are no 
sales at the same level of trade, we compare U.S. sales to home market 
(or, if appropriate, third-country) sales at a different level of 
trade. The NV level of trade is that of the starting-price sales in the 
home market.
    For both EP and CEP, the relevant transaction for the level-of-
trade analysis is the sale (or constructed sale) from the exporter to 
the importer. While the starting price for CEP is that of a subsequent 
resale to an unaffiliated buyer, the construction of the CEP results in 
a price that would have been charged if the importer had not been 
affiliated. We calculate the CEP by removing from the first resale to 
an independent U.S. customer the expenses under section 772(d) of the 
Act and the profit associated with these expenses. These expenses 
represent activities undertaken by the affiliated importer. Because the 
expenses deducted under section 772(d) represent selling activities in 
the United States, the deduction of these expenses normally yields a 
different level of trade for the CEP than for the later resale (which 
we use for the starting price). Movement charges, duties and taxes 
deducted under section 772(c) do not represent activities of the 
affiliated importer, and we do not remove them to obtain the CEP level 
of trade.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with goods being sold by the 
producer and extends to the sale to the final user, regardless of 
whether the final user is an individual consumer or an industrial user. 
The chain of distribution between the producer and the final user may 
have many or few links, and each respondent's sales occur somewhere 
along this chain. In the United States, the respondent's sales are 
generally to an importer, whether independent or affiliated. We review 
and compare the distribution systems in the home market and U.S. export 
markets, including selling functions, class of customer, and the extent 
and level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturer (OEM), 
or wholesaler are commonly used by respondents to describe levels of 
trade, but, without substantiation, they are insufficient to establish 
that a claimed level of trade is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. If the claimed levels are different, the 
selling functions performed in selling to each level should also be 
different. Conversely, if levels of trade are norminally the same, the 
selling functions performed should also be the same. Different levels 
of trade necessarily involve differences in selling functions, but 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the levels of trade. A 
different level of trade is characterized by purchasers at different 
stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    When we compare U.S. sales to home market sales at a different 
level of trade, we make a level-of-trade adjustment if the difference 
in levels of trade affects price comparability. We determine any effect 
on price comparability by examining sales at different levels of trade 
in a single market, the home market. Any price effect must be 
manifested in a pattern of consistent price differences between home 
market sales used for comparison and sales at the equivalent level of 
trade of the export transaction. To quantify the price differences, we 
calculate the difference in the average of the net prices of the same 
models sold at different levels of trade. We use the average difference 
in net prices to adjust NV when NV is based on a level of trade 
different from that of the export sale. If there is no pattern of 
consistent price differences, the difference in levels of trade does 
not have a price effect and, therefore, no adjustment is necessary.
    The statute also provides for an adjustment to NV when NV is based 
on a level of trade different from that of the CEP if the NV level is 
more remote from the factory than the CEP and if we are unable to 
determine whether the difference in levels of trade between CEP and NV 
affects the comparability of their prices. This latter situation can 
occur where there is no home market level of trade equivalent to the 
U.S. sales level or where there is an equivalent home market level but 
the data are insufficient to support a conclusion on price effect. This 
adjustment, the CEP offset, is identified in section 773(a)(7)(B) and 
is the lower of the following:
     The indirect selling expenses on the home market sale, or
     The indirect selling expenses deducted from the starting 
price in calculating CEP.
    The CEP offset is not automatic each time we use CEP. The CEP 
offset is made only when the level of trade of the home market sale is 
more advanced than the level of trade of the U.S. (CEP) sale and there 
is not an appropriate basis for determining whether there is an effect 
on price comparability.
    In this review, Rajinder reported two channels of distribution in 
the home market: (1) sales to government

[[Page 23762]]

agencies, which include sales made to original equipment manufacturers 
(OEMs) and end-users (Channel One); and (2) sales made to local 
distributors, which include sales made to trading companies (Channel 
Two). We found that the two home market channels differed significantly 
with respect to selling activities. The level of selling activities 
with respect to Channel One was much greater than that with respect to 
Channel Two. Channel One activities included strategic and economic 
planning, market research, computer, legal, accounting, audit and 
business systems development, engineering services, inventory, agent 
coordination, and delivery arrangement. Channel Two activities 
consisted of only advertising. The Channel One sales, therefore, 
constitute a more advanced level of trade. Based on these differences 
and other factors such as the point in the chain of distribution where 
the relevant selling expenses occurred, we found that the two home 
market channels constituted two different levels of trade.
    Rajinder reported only CEP sales in the U.S. market. The CEP sales 
were based on sales made by the exporter to the U.S. affiliate through 
one channel of distribution which was to a local distributor. The 
single selling activity associated with these sales was inventory 
maintenance. Hence, we determined these sales constitute a single level 
of trade.
    To determine whether sales in the comparison market were at a 
different level of trade than CEP sales, we examined whether the CEP 
and comparison sales were at different stages in the marketing process. 
We made this determination on the basis of a review of the distribution 
system in the two markets, including selling functions, class of 
customer, and the level of selling expenses for each type of sale. In 
Rajinder's Channel Two level of trade for the home market, as noted 
above, we found that the selling activity included only advertising 
while that for the CEP level of trade consisted only of inventory 
maintenance. While these selling functions differ, as explained above, 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the level of trade. In the 
present case, there is a single selling function in both the U.S. and 
home market channel of distribution and the selling expenses incurred 
with respect to both of these channels of distribution were comparable. 
Moreover, both the CEP sales and the Channel Two home market sales were 
to the same customer category, distributors.
    Based upon this evidence, we have concluded that the differences 
between the channels of distribution for the CEP and Channel Two home 
market sales are not sufficient to constitute different levels of 
trade. Therefore, to the extent possible, we have used the Channel Two 
sales for comparison purposes in our analysis without making a level-
of-trade adjustment.
    However, for certain CEP sales we found that sales of identical 
matches took place only at the Channel One level of trade. Therefore, 
we matched these U.S. sales to sales at the Channel One level of trade. 
However, because we have not been able to determine the extent of any 
pattern of consistent price differences between sales at Channels One 
and Two, we have not made a level-of-trade adjustment. Instead, for 
purposes of these preliminary results, we have applied a CEP-offset 
adjustment in accordance with section 773(a)(7)(B) of the Act. Prior to 
the completion of our final results we will further examine the record 
concerning this issue.
    Lloyd's reported two channels of distribution in the home market: 
(1) Sales to OEMs and end-users; and (2) sales to local distributors. 
We found that in both home market channels of distribution Lloyd's 
selling activities included the following: strategic and economic 
planning; market research; computer, legal, accounting, audit and/or 
systems development assistance; personnel training, personnel exchange, 
and manpower assistance program; engineering services; technical 
programs; advertising; packing; and inventory maintenance. Therefore, 
we concluded that the selling activities associated with all home 
market sales were the same and we determined that these two channels of 
distribution constitute one level of trade.
    Lloyd's made one EP sale to an unaffiliated customer through a 
single channel of distribution (sale made to a trading company). 
Respondent stated that this EP sale had many of the same selling 
functions as the home market level of trade described above. Therefore, 
based upon this information, we have determined that the level of trade 
for the EP sale is the same as that in the home market, and we have 
made no level-of-trade adjustment.

Product Comparisons

    In accordance with section 777A(d)(2) of the Act, we calculated for 
Lloyd's and Rajinder transaction-specific EPs and CEPs for comparison 
to monthly weighted-average NVs. We compared EP or CEP sales to sales 
in the home market of identical merchandise.

Export Price

    For Lloyd's, we calculated EP in accordance with section 772(a) of 
the Act, because the subject merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation and 
CEP methodology was not otherwise warranted based on the facts of this 
review.
    We calculated EP based on packed, C.&F. prices to unaffiliated 
customers in the United States. We made deductions for domestics inland 
freight, insurance, brokerage, and ocean freight in accordance with 
section 772(c)(2) of the Act. We made additions for duty drawback, 
where applicable, in accordance with section 772(c)(1)(B) of the Act. 
No other adjustments were claimed or allowed.

Constructed Export Price

    For Rajinder, we based our margin calculation on CEP as defined in 
section 772(b) of the Act because the subject merchandise was first 
sold in the United States to a person not affiliated with Rajinder 
after importation by Rajinder International Incorporated (RII), a 
seller affiliated with Rajinder.
    We calculated CEP based on ex-warehouse prices from RII to the 
unaffiliated purchasers. We deducted inland freight, insurance, 
brokerage and warehousing from the price pursuant to section 772(c)(2) 
of the Act. We also deducted an amount from the price for the following 
expenses, in accordance with section 772(d)(1) of the Act, that related 
to economic activity in the United States: commissions, direct selling 
expenses, including credit expenses, and indirect selling expenses, 
including inventory carrying costs. In accordance with section 
772(d)(3) of the Act, we also deducted from the price an amount for 
profit to arrive at the CEP. We added duty drawback to the starting 
price in accordance with section 772(c)(1)(B) of the Act.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared Lloyd's and Rajinder's volume of home market sales of the 
foreign like product to the volume of its U.S. sales of the subject 
merchandise, in accordance with section 773(a)(1)(C) of the Act. Since 
both Lloyd's and Rajinder's aggregate volume of home market sales of 
the foreign like product was greater than five percent of its aggregate 
volume of its U.S. sales of the subject merchandise, we determined that 
the home market was viable. Therefore, in

[[Page 23763]]

accordance with section 773(a)(1)(B)(i), we based NV on the prices at 
which the foreign like products were first sold for consumption in the 
exporting country.
    Home market prices were based on the packed, ex-factory or 
delivered prices of identical merchandise to unaffiliated purchasers in 
the home market. Where applicable, we made adjustments for differences 
in packing and for movement expenses in accordance with sections 
773(a)(6) (A) and (B) of the Act. For comparison to EP, we made 
circumstance-of-sale (COS) adjustments in accordance with section 
773(a)(6)(C)(iii) of the Act by deducting home market direct selling 
expenses and adding U.S. direct selling expenses. For comparisons to 
CEP, we made COS adjustments by deducting home market direct selling 
expenses.
    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, in the ordinary course of trade and at the same 
level of trade as the EP or CEP, to the extent practicable, in 
accordance with section 773(a)(1)(B)(i) of the Act.
    No other adjustments were claimed or allowed.

Cost of Production Analysis

    Based on allegations made by Petitioner, we had reasonable grounds 
to believe or suspect that sales of both Lloyd's and Rajinder in the 
home market were made at prices below the cost of producing the 
merchandise. As a result, we initiated an investigation to determine 
whether Lloyd's and Rajinder made home market sales during the POR at 
prices below its cost of production (COP) within the meaning of section 
773(b) of the Act.

A. Calculation of COP

    We calculated the COP based on the sum of the costs of materials 
and fabrication employed in producing the foreign like product, plus 
amounts for home market selling, general and administrative expenses 
(SG&A) and packing costs in accordance with section 773(b)(3) of the 
Act. We relied on the home market sales and COP information provided by 
Lloyd's and Rajinder in their questionnaire responses.

B. Test of Home Market Prices

    We tested whether home market sales of pipes and tubes were made at 
prices below COP within an extended period of time in substantial 
quantities and whether such prices permitted recovery of all costs 
within a reasonable period of time. We compared model-specific COPs to 
the reported home market prices less any applicable movement charges, 
rebates, and direct selling expenses.

C. Results of COP Test

    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than 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.'' Where 20 percent or more of a respondent's 
sales of a given product during the POR were at prices less than the 
COP, we disregarded the below-cost sales where such sales were found to 
be made at prices which would not permit the recovery of all costs 
within a reasonable period of time (in accordance with section 
773(b)(2)(D) of the Act). Where we disregarded all contemporaneous 
sales of the comparison product based on this test, we calculated NV 
based on CV, in accordance with section 773(a)(4) of the Act.
    We found that, for certain pipe and tube products, more than 20 
percent of Lloyd's home sales were sold at below the COP. Further, we 
did not find that the prices for these sales provided for the recovery 
of costs within a reasonable period of time. We therefore excluded 
these sales from our analysis and used the remaining sales as the basis 
for determining NV in accordance with section 773(b)(1) of the Act.
    For Rajinder, we found that the below-cost sales accounted for less 
than 20 percent of its sales (on a model-specific basis). Therefore, we 
did not disregard any of Rajinder's below-cost sales.

Verification

    As provided in section 782(i) of the Act, we verified information 
provided by the respondents using standard verification procedures, 
including on-site inspection of the manufacturers' facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. We verified 
Lloyd's responses to the Department's questionnaires from March 24 to 
March 28, 1997, at the sales office in Bombay, India. We verified 
Rajinder's responses from March 31 to April 2, 1997, at its factory in 
Kanpur, India. Our verification results are outlined in the 
verification reports, the public versions of which are available in the 
Central Records Unit of the Department of Commerce, room B-099.

Currency Conversion

    For purposes of the preliminary results, 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 of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars, 
unless the daily rate involves a ``fluctuation.'' In accordance with 
the department's practice, we have determined as a general matter that 
a fluctuation exists when the daily exchange rate differs from a 
benchmark by 2.25 percent. The benchmark is defined as the rolling 
average of rates for the past 40 business days. When we determine a 
fluctuation exists, we substitute the benchmark for the daily rate.

Preliminary Results of the Review

    As a result of our comparisons of CEP and EP with NV, we 
preliminarily determine that the following weighted-average dumping 
margins exist for the period May 1, 1995 through April 30, 1996:

------------------------------------------------------------------------
                     Manufacturer/exporter                       Margin 
------------------------------------------------------------------------
Lloyd's Metals and Engineers Ltd..............................      0.00
Rajinder Pipes Ltd............................................      0.00
------------------------------------------------------------------------

    Interested parties may request disclosure within 5 days of the date 
of publication of this notice and may request a hearing within 10 days 
of publication. Any hearing, if requested, will be held as early as 
convenient for the parties but not later than 34 days after the date of 
publication or the first business day thereafter. Case briefs from 
interested parties may be submitted not later than 20 days after the 
date of publication. Rebuttal briefs, limited to issues raised in the 
case briefs, may be filed not later than 27 days after the date of 
publication. The Department will issue the final results of this new 
shipper administrative review, including the results of its analysis of 
issues raised in any such written comments or at a hearing, within 90 
days of publication of these preliminary results.
    Upon completion of this new shipper review, the Department will 
issue appraisement instructions directly to the Customs Service. The 
results of this review shall be the basis for the assessment of 
antidumping duties on entries of merchandise covered by this review and 
for future deposits of estimated duties.
    Furthermore, upon completion of this review, the posting of a bond 
or security in lieu of a cash deposit, pursuant to

[[Page 23764]]

section 751(a)(2)(B)(iii) of the Act and section 353.22(h)(4) of the 
Department's interim regulations, will no longer be permitted and, 
should the final results yield a margin of dumping, a cash deposit will 
be required for each entry of the merchandise.
    The following deposit requirements will be effective upon 
publication of the final results of this new shipper antidumping duty 
administrative review for all shipments of certain welded carbon steel 
standard pipes and tubes from India 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 companies will be those established in the final results 
of this new shipper administrative review; (2) for exporters not 
covered in this review, but covered in previous reviews or the original 
less-than-value (LTFV) investigation, 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, 
previous reviews, or the original LTFV investigation, but the 
manufacturer is, the cash deposit rate will be that 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 7.08 percent, the all-others rate established in the 
LTFV investigation (51 FR 17384, May 12, 1986).
    These requirements, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.36 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 new shipper administrative review and notice are in accordance 
with section 751(a)(2)(B) of the Act (19 U.S.C. 1675(a)(2)(B)) and 
Section 19 CFR 353.22(h) 1996.

    Dated: April 23, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-11381 Filed 4-30-97; 8:45 am]
BILLING CODE 3510-DS-M