64 FR 42902 August 6, 1999 DEPARTMENT OF COMMERCE International Trade Administration [A-549-807] 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 Thai Benkan Corporation, Ltd., (TBC), 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 TCB, a manufacturer/exporter of this merchandise to the United States, during the period July 1, 1997, through June 30, 1998. We have preliminarily determined that sales of the subject merchandise have been made below normal value. 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 export price and the normal value. 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 6, 1999. FOR FURTHER INFORMATION CONTACT: Zev Primor or Wendy Frankel, Antidumping/Countervailing Duty Enforcement, Office 4 Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-4114 or 482-5849, respectively. 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 (April 1998). SUPPLEMENTARY INFORMATION: 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 30, 1998, the respondent 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, 1997, through June 30, 1998. We published a notice of initiation of the review on August 27, 1998 (63 FR 45796). On September 15, 1998, the Department sent an antidumping questionnaire to TBC. The Department received questionnaire responses in October and November of 1998. On May 7, 1999, we issued a supplemental questionnaire and received a response to that questionnaire on May 27, 1999. 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 10, 1999, the Department extended the time limit for the preliminary results of this case (Notice of Extension of Time Limits for Preliminary Results of Antidumping Duty Administrative Review, 64 FR 11824). Scope of the Review The product covered by this order is certain carbon steel butt-weld pipe [[Page 42903]] 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, 1997, through June 30, 1998. Verification As provided in section 782(i) of the Act, we verified information provided by TBC. We used standard verification procedures, including on-site inspection of the respondent's facilities, the examination of relevant sales, financial, and/or cost records, and selection of original documentation containing relevant information. Our verification results are outlined in the verification reports placed on file in the Central Records Unit (CRU). Product Comparisons In accordance with section 771(16) of the Act, we considered all products within the scope of this review that were produced by the respondent, and sold in the ordinary course of trade in the comparison market during the POR, to be foreign like products for purposes of determining the appropriate product comparisons to U.S. sales. Fair 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 fair value, we compared export price (EP) to normal value (NV), as described in the ``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. During the POR, TBC reported that it made all of its sales to the United States through its affiliate, Benkan America, Inc. (BA), which is the importer of record for the subject merchandise. When sales are made prior to the date of importation through an affiliate in the United States, the Department uses the following criteria to determine whether U.S. sales should be classified as EP sales: (1) whether the merchandise in question is shipped directly from the manufacturer to the unaffiliated buyer without being introduced into the physical inventory of the selling agent; (2) whether direct shipment from the manufacturer to the unaffiliated buyer is the customary channel for sales of the subject merchandise between the parties involved; and (3) whether the affiliate in the United States acts only as a processor of sales-related documentation and a communication link with the unaffiliated U.S. buyer. Where the factors indicate that the activities of the selling entity in the United States are ancillary to the sale (e.g., arranging transportation or customs clearance), we treat the transactions as EP sales. Where the U.S. selling agent is substantially involved in the sales process (e.g., negotiating prices and key sales terms), we treat the transactions as CEP sales. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod From Korea, 63 FR 40404, 40417-19 (July 29, 1998). According to TBC, the imported merchandise was delivered directly to the unaffiliated customers' warehouses without being moved into BA's inventory. See TBC's October 22, 1998, questionnaire response at A-12. Additionally, in its supplemental questionnaire response, dated May 27, 1999, TBC reiterated that BA never moved the subject merchandise into its inventory or otherwise took possession of the merchandise. Furthermore, TBC states that BA merely acted as a processor of paper and a communication link between the foreign producer and unaffiliated U.S. customers. At no point, according to TBC, was BA involved in any pricing decisions; rather BA served only as a paper facilitator ensuring that purchasing orders from the unrelated U.S. customers were transferred to TBC and that TBC's sales invoices were properly delivered to U.S. customers. Finally, TBC stated that the above method of transaction represents BA's normal practice of facilitating the sale of merchandise produced by foreign affiliates. Accordingly, TBC reported these sales as EP sales. See TBC's supplemental questionnaire response, dated May 27, 1999, at S-5. Based on our review of the record information concerning TBC's sales to the United States and after conducting a sales verification, we determined that BA does not maintain warehousing facilities in the United States. Thus it is not able to store TBC's merchandise prior to a sale in the United States. Moreover, our verification of the sales transaction methods indicates that BA was not involved in any part of the price negotiation process nor did it provide any additional services to the U.S. customers. See Memorandum to the File regarding Verification of the Sales Questionnaire Responses of Thai Benkan, Ltd., Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand, Administrative Review (1997-1998) (TBC Verification Report) dated July 31, 1999. As such, we have concluded that the subject merchandise was sold prior to importation (outside of the United States) to the unaffiliated U.S. purchaser. Consequently, we preliminary determine that these sales are EP transactions. Export Price We calculated EP in accordance with sections 772(a) and (c) of the Act where the respondents sold the subject merchandise directly to the first unaffiliated purchasers in the United States prior to importation. Specifically, we calculated EP based on the packed prices to unaffiliated customers in the United States. We made deductions, where appropriate, 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. We also increased EP by the allocated amount of duty drawback. Normal Value 1. Viability In accordance with section 773(a)(1)(C)(ii) of the Act, we determine that the home market for the respondent serves as a viable basis for calculating normal value (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. 2. Arm's-Length Transactions A significant number of home market sales was made through TBC's affiliates: Marubeni Thailand Co., Ltd., Benkan Corporation of Japan and Bensho Corporation, Ltd. However, in all cases, TBC reported home market sales from its affiliates to the first unrelated home market customer. Consequently, no sales to affiliated parties were considered in our analysis. [[Page 42904]] Level of Trade In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as the EP or the CEP transaction. The NV LOT for EP sales is that of the starting-price sales in the comparison market, or when NV is based on constructed value (CV), that of the sales from which we derive selling, general and administrative expenses and profit. For EP sales, the U.S. LOT is also the level of the starting-price sale, which is usually from the exporter to the importer. To determine whether NV sales are at a different LOT than EP, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different LOT, and the different affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 FR 61731, 61732 (November 19, 1997). Based on our analysis of these factors, we found that for TBC no LOT difference existed between its respective U.S. and home market sales. Therefore, we have made no LOT adjustment under section 773(a)(7)(A) of the Act. For a detailed discussion of these LOT issues, see Memorandum to the File regarding Level of Trade Analysis of Thai Benkan, Ltd.; Certain Carbon Steel Butt-Weld Pipe Fittings from Thailand, Administrative Review (1997-1998) (TBC LOT Analysis), dated July 30, 1999. Constructed Value In this case, we preliminarily determined NV for all U.S. sales based on contemporaneous home market sales. Consequently, we did not use CV in our analysis. Price-to-Price Comparisons 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 level of trade as the EP 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 billing adjustments. To adjust for differences in circumstances of sales (COS) between the home market and the EP transactions in the United States, we reduced home market prices by an amount for home market imputed credit expenses, where applicable, and made an upward adjustment for U.S. credit, where appropriate. To adjust for differences in packing between the two markets, we deducted HM packing costs and added U.S. packing costs. In addition, we made adjustments, where appropriate, for differences in costs attributable to physical differences of the merchandise (DIFMER) pursuant to section 773(a)(6)(C) of the Act. Currency Conversion Pursuant to section 773A(a) of the Act, for purposes of the preliminary results, we converted foreign currencies into the U.S. dollars using the official exchange rates in effect on the date of the U.S. sales. These official exchange rates are based on the daily rates identified by the Federal Reserve Bank. Section 773A(a) of the Act directs the Department to use a daily exchange rate to convert foreign currencies into U.S. dollars unless the daily rate involves a ``fluctuation'' It is our practice to find that a fluctuation exists when the daily exchange rate differs from a benchmark rate by 2.25 percent. See Preliminary Results of Antidumping Duty Administrative Review: Certain Welded Carbon Steel Pipe and Tube from Turkey, 61 FR 35188, 35192 (July 5, 1996). The benchmark rate is defined as the moving average of the rates for the past 40 business days. Where we determined that the daily rates applicable to this review fluctuated, as defined above, we converted foreign currencies into U.S. dollars using the benchmark exchange rate. Preliminary Results of the Review As a result of this review, we preliminarily determine that the following weighted-averaged dumping margins exist for the period July 1, 1997 through June 20, 1998: ------------------------------------------------------------------------ Weighted- average Manufacturer/exporter margin (percent) ------------------------------------------------------------------------ Thai Benkan Corporation, Ltd............................... 0.94 ------------------------------------------------------------------------ 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. 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. All case briefs must be submitted within 30 days of the date of 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. A hearing, if requested, will be held two days after the date the rebuttal briefs are filed or the first business day thereafter. 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. 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 EP sales we calculated a per-unit customer or importer- specific assessment rate by aggregating the dumping margins calculated for all U.S. sales to each customer/importer and dividing this amount by the total quantity of those sales. 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: 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 [[Page 42905]] 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. 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 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 30, 1999. Joseph A. Spetrini, Acting Assistant Secretary for Import Administration. [FR Doc. 99-20344 Filed 8-5-99; 8:45 am] BILLING CODE 3510-DS-M