Certain Malleable Iron Pipe Fittings From the People's Republic of China: Notice of Preliminary Results of Antidumping Duty Administrative Review, 76234-76241 [E5-7785]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 246 (Friday, December 23, 2005)]
[Notices]
[Pages 76234-76241]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-7785]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-570-881)


Certain Malleable Iron Pipe Fittings From the People's Republic 
of China: Notice of Preliminary Results of Antidumping Duty 
Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from Anvil International, Inc. and 
Ward Manufacturing, Inc., domestic producers and interested parties in 
this proceeding, the Department of Commerce (``the Department'') is 
conducting an administrative review of the antidumping duty order on 
certain malleable iron pipe fittings (``MPF'') from the People's 
Republic of China (``PRC''). The period of review (``POR'') is December 
2, 2003, through November 30, 2004. We have preliminarily determined 
that sales were made below normal value (``NV''). If these preliminary 
results are adopted in our final results of review, the Department will 
instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on all appropriate entries of MPF during the POR for 
which the importer-specific assessment rates are above de minimis. 
Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE: December 23, 2005.

FOR FURTHER INFORMATION CONTACT: Tisha Loeper-Viti at (202) 482-7425 or 
Ryan Douglas at (202) 482-1277, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

    On December 1, 2004, the Department published a notice of 
opportunity to request an administrative review of this order. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity To Request Administrative Review, 69 FR 
69889 (December 1, 2004). On December 30, 2004, in accordance with 19 
CFR 351.213(b)(1), Anvil International, Inc. and Ward Manufacturing, 
Inc. (collectively, ``the petitioners'') requested that the Department 
conduct administrative reviews of Beijing Sai Lin Ke Hardware Co., Ltd. 
(``SLK''), Langfang Pannext Pipe Fitting Co., Ltd. (``Pannext''), 
Chengde Malleable Iron General Factory (``Chengde''), and SCE Co., Ltd. 
(``SCE'').
    On January 31, 2005, the Department published a notice of 
initiation of this administrative review. See Initiation of Antidumping 
and Countervailing Duty Administrative Reviews and Request for 
Revocation in Part, 70 FR 4818 (January 31, 2005). On September 2, 
2005, the Department extended the due date for the preliminary results 
of this review to December 16, 2005. See Notice of Extension of Time 
Limit for the Preliminary Results of Antidumping Duty Administrative 
Review: Certain Malleable Iron Pipe Fittings from the People's Republic 
of China, 70 FR 52634 (September 2, 2005).
    On March 14, 2005, we issued antidumping questionnaires to SLK, 
Pannext, Chengde and SCE. SLK, Pannext, and SCE submitted timely 
responses to the Department's questionnaire in April and May 2005. For 
information on Chengde's response, see the Facts Otherwise Available 
section below. We issued supplemental questionnaires in July and 
November of 2005 to certain respondents, as appropriate, and received 
timely responses to each.
    On August 15, 2005, the petitioners submitted publicly available 
information for consideration in valuing the factors of production 
(``FOPs''). SLK and Pannext submitted information for this purpose on 
August 25, 2005. The petitioners submitted rebuttal comments on 
September 2, 2005.

[[Page 76235]]

Scope of the Order

    For purposes of this order, the products covered are certain 
malleable iron pipe fittings, cast, other than grooved fittings, from 
the PRC. The merchandise is currently classifiable under item numbers 
7307.19.90.30, 7307.19.90.60 and 7307.19.90.80 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''). Excluded from the scope of 
this order are metal compression couplings, which are imported under 
HTSUS number 7307.19.90.80. A metal compression coupling consists of a 
coupling body, two gaskets, and two compression nuts. These products 
range in diameter from 1/2 inch to 2 inches and are carried only in 
galvanized finish. Although HTSUS subheadings are provided for 
convenience and Customs purposes, the Department's written description 
of the scope of this proceeding is dispositive.

Separate-Rates Determination

    The Department has treated the PRC as a non-market-economy 
(``NME'') country in all past antidumping duty investigations and 
administrative reviews. See, e.g., Final Determination of Sales at Less 
Than Fair Value: Tetrahydrofurfuryl Alcohol From the People's Republic 
of China, 69 FR 34130 (June 18, 2004). A designation as an NME country 
remains in effect until it is revoked by the Department. See section 
771(18)(C)(i) of the Tariff Act of 1930, as Amended (``the Act'').
    It is the Department's standard policy to assign all exporters of 
subject merchandise subject to review in an NME country a single rate 
unless an exporter can demonstrate an absence of government control, 
both in law and in fact, with respect to exports. To establish whether 
an exporter is sufficiently independent of government control to be 
entitled to a separate rate, the Department analyzes the exporter in 
light of the criteria established in the Final Determination of Sales 
at Less Than Fair Value: Sparklers from the People's Republic of China, 
56 FR 20588 (May 6, 1991) (``Sparklers''); and Final Determination of 
Sales at Less Than Fair Value: Silicon Carbide from the People's 
Republic of China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide'').
    SLK, Pannext, and SCE all provided the requested separate-rate 
information in their responses to our original and supplemental 
questionnaires. Accordingly, consistent with Notice of Final 
Determination of Sales at Less Than Fair Value: Bicycles From the 
People's Republic of China, 61 FR 19026 (April 30, 1996), we performed 
separate-rates analyses to determine whether each exporter is 
independent from government control.

A. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; and (2) any 
legislative enactments decentralizing control of companies.
    One of the respondents has placed on the record a number of 
documents to demonstrate absence of de jure control including the 
``Foreign Trade Law of the People's Republic of China,'' the 
``Administrative Regulations of the People's Republic of China 
Governing the Registration of Legal Corporations,'' and the ``Law of 
the People's Republic of China on Foreign Capital Enterprises.'' The 
Department has analyzed such PRC laws and found that they establish an 
absence of de jure control. See, e.g., Preliminary Results of New 
Shipper Review: Certain Preserved Mushrooms From the People's Republic 
of China, 66 FR 30695 (June 7, 2001), unchanged in the final 
determination. We have no information in this proceeding that would 
cause us to reconsider this determination. Thus, we believe that the 
evidence on the record supports a preliminary finding of an absence of 
de jure government control based on: (1) an absence of restrictive 
stipulations associated with the exporter's business license; and (2) 
the legal authority on the record decentralizing control over the 
respondent.

B. Absence of De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Final Determination of Sales at Less Than Fair Value: Certain Preserved 
Mushrooms from the People's Republic of China, 63 FR 72255 (December 
31, 1998). Therefore, the Department has determined that an analysis of 
de facto control is critical in determining whether respondents are, in 
fact, subject to a degree of government control which would preclude 
the Department from assigning separate rates. The Department typically 
considers four factors in evaluating whether each respondent is subject 
to de facto government control of its export functions: (1) whether the 
exporter sets its own export prices independent of the government and 
without the approval of a government authority; (2) whether the 
respondent has the authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of its management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses.
    SLK and SCE reported that they are wholly owned by foreign 
entities. Pannext reported that it is privately owned by individual 
shareholders. Each has asserted the following: (1) There is no 
government participation in setting export prices; (2) sales managers 
and authorized employees have the authority to bind sales contracts; 
(3) they do not have to notify any government authorities of management 
selections; (4) there are no restrictions on the use of export revenue; 
(5) each is responsible for financing its own losses. The questionnaire 
responses of SLK, Pannext, and SCE do not suggest that pricing is 
coordinated among exporters. During our analysis of the information on 
the record, we found no information indicating the existence of 
government control. Consequently, we preliminarily determine that SLK, 
Pannext, and SCE have met the criteria for the application of a 
separate rate.
    Because we find the information provided by Chengde to be 
unreliable and Chengde has not cooperated to the best of its ability, 
we are applying an adverse inference with respect to Chengde for these 
preliminary results and preliminarily find that it is part of the PRC-
wide entity. For further information, see the Facts Otherwise Available 
section below.

Export Price

    For all sales made by SCE and certain sales made by Pannext,\1\ we 
based the U.S. price on export price (``EP''), in accordance with 
section 772(a) of the Act, because the first sale to an unaffiliated 
purchaser was made prior to importation and constructed export price 
(``CEP'') was not otherwise warranted by the facts on the record. We 
calculated EP based on the packed price from the exporter to the first 
unaffiliated customer in the United States.
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    \1\ In this review, Pannext has reported that all of its sales 
are EP transactions. For purposes of these preliminary results, 
however, we are treating Pannext's sales made through its U.S. 
affiliate as CEP transactions. See the Constructed Export Price 
section below for further details.
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    For SCE, we deducted foreign inland freight, foreign brokerage and 
handling, international ocean freight, marine insurance, and U.S. 
inland freight

[[Page 76236]]

expenses, where appropriate, from the gross unit price, in accordance 
with section 772(c) of the Act.
    For Pannext, we deducted discounts, foreign inland freight, foreign 
brokerage and handling, international ocean freight, marine insurance, 
freight surcharges, U.S. brokerage and handling expenses, and U.S. 
import duties, where appropriate, from the gross unit price, in 
accordance with section 772(c) of the Act.

Constructed Export Price

    In accordance with section 772(b) of the Act, we used CEP 
methodology when the first sale to an unaffiliated purchaser occurred 
after importation of the merchandise into the United States. We 
calculated CEP for all of SLK's sales and, as described further below, 
for certain U.S. sales made by Pannext through its U.S. affiliate to 
unaffiliated U.S. customers.
    For SLK, we made adjustments to the gross unit price for foreign 
inland freight, foreign warehousing, foreign brokerage and handling, 
international ocean freight, marine insurance, U.S. inland freight, 
U.S. brokerage and handling expenses, U.S. warehousing, and U.S. 
customs duties. In accordance with section 772(d)(1) of the Act, we 
also deducted those selling expenses associated with economic 
activities occurring in the United States, including commissions, 
credit expenses, advertising expenses, inventory carrying costs, and 
indirect selling expenses. We also made an adjustment for profit in 
accordance with section 772(d)(3) of the Act.
    In this review, Pannext has reported that all of its sales are EP 
transactions. In the LTFV investigation, however, Pannext reported all 
sales through its U.S. affiliate as CEP transactions. See Notice of 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Certain Malleable Iron Pipe 
Fittings From the People's Republic of China, 68 FR 33911 (June 6, 
2003), unchanged in the final determination. We find that the sales in 
the current review follow the same fact pattern as the sales reported 
as CEP transactions during the LTFV investigation. Pannext reported 
that its date of sale (i.e., date all material terms of sale are set) 
is the date of shipment and that its U.S. affiliate issues the official 
invoice to the unaffiliated U.S. customer upon shipment of the 
merchandise by Pannext to the U.S. customer. Pannext issues an invoice 
to the U.S. affiliate (e.g., a transfer-price sale between Pannext and 
the U.S. affiliate) for the sale typically in an amount that differs 
from that between the U.S. affiliate and the unaffiliated U.S. 
customer. According to Pannext, its U.S. affiliate receives the 
purchase order, order confirmation, and payment from the unaffiliated 
U.S. customer. In its questionnaire response, Pannext describes its 
U.S. affiliate as its ``sales headquarters'' that is involved in the 
marketing and sale of subject merchandise and incurs expenses typically 
associated with CEP sales (e.g., indirect selling expenses, credit 
expenses, etc.). Pannext further reported that the chairman of Pannext 
is also the president of the U.S. affiliate and has the power to 
contractually bind Pannext to U.S. sales. Based on this information and 
the fact that Pannext has not demonstrated sufficiently why the 
Department should not continue to treat these sales as CEP transactions 
in the current review, we find that the sales made through Pannext's 
U.S. affiliate should be treated as CEP transactions consistent with 
the Department's treatment of such sales in the LTFV investigation.
    For Pannext's CEP transactions, we made adjustments to the gross 
unit price for discounts, foreign inland freight, foreign brokerage and 
handling, international ocean freight, marine insurance, freight 
surcharges, U.S. brokerage and handling expenses, and U.S. import 
duties. In accordance with section 772(d)(1) of the Act, we also 
deducted those selling expenses associated with economic activities 
occurring in the United States, including credit expenses and indirect 
selling expenses. We also made an adjustment for profit in accordance 
with section 772(d)(3) of the Act.
    Where movement expenses were provided by PRC service providers or 
paid for in Chinese renminbi, we valued these services using Indian 
surrogate values. See Surrogate Values section below. Where applicable, 
we used the actual reported expense for those movement expenses 
provided by market economy (``ME'') suppliers and paid for in an ME 
currency.

Normal Value

    Section 773(c)(1) of the Act provides that, in the case of an NME, 
the Department shall determine normal value (``NV'') using an FOP 
methodology if the merchandise is exported from an NME and the 
information does not permit the calculation of NV using home-market 
prices, third-country prices, or constructed value under section 773(a) 
of the Act. Because information on the record does not permit the 
calculation of NV using home-market prices, third-country prices, or 
constructed value and no party has argued otherwise, we calculated NV 
based on FOP in accordance with sections 773(c)(3) and (4) of the Act 
and 19 CFR 351.408(c).
    Because we are using surrogate-country FOP prices to determine NV, 
section 773(c)(4) of the Act requires that the Department use values 
from an ME (surrogate) country that is at a level of economic 
development comparable to that of the PRC and that is a significant 
producer of comparable merchandise. We find that India, Indonesia, Sri 
Lanka, the Philippines, and Egypt are ME countries at a level of 
economic development comparable to that of the PRC. For a further 
discussion of our surrogate selection, see the February 14, 2005, 
memorandum from Ron Lorentzen to Wendy Frankel regarding Request for a 
List of Surrogate Countries, which is available in the Department's 
Central Records Unit (``CRU''), room B099 of the main Commerce 
building. In addition, according to the Monthly Statistics of the 
Foreign Trade of India (``MSFTI'') as published by the Directorate 
General of Commercial Intelligence and Statistics of the Ministry of 
Commerce and Industry, Government of India, and available from World 
Trade Atlas, we found that India exported 12,073,802 kilograms of 
comparable merchandise (i.e., cast iron pipe fittings NESOI or steel 
based on HTS number 7307.19) during the POR valued at USD 24,535,575. 
See World Trade Atlas at https://www.gtis.com/wta.htm. Therefore, we 
find that India is a significant producer of comparable merchandise. 
Additionally, we are able to access Indian data that are 
contemporaneous with this POR. As in the LTFV investigation, we have 
chosen India as the primary surrogate country and are using Indian 
prices to value the FOPs. See the December 16, 2005, memorandum from 
Ryan A. Douglas to the File regarding Preliminary Valuation of Factors 
of Production (``FOP Memo'').
    We selected, where possible, publicly available values from India 
that were average non-export values, representative of a range of 
prices within the POR or most contemporaneous with the POR, product-
specific, and tax-exclusive. Also, where we have relied upon import 
values, we have excluded imports from NME countries as well as from 
South Korea, Thailand, and Indonesia. The Department has found that 
South Korea, Thailand, and Indonesia maintain broadly available, non-
industry-specific export subsidies. The existence of these subsidies 
provides sufficient reason to believe or suspect that export prices 
from these countries may be subsidized. See Final Determination of 
Sales at Less

[[Page 76237]]

Than Fair Value: Certain Automotive Replacement Glass Windshields From 
the People's Republic of China, 67 FR 6482 (February 12, 2002), and 
accompanying Issues and Decision Memorandum at Comment 1. Our practice 
of excluding subsidized prices has been upheld in China National 
Machinery Import and Export Corporation v. United States, 293 F. Supp. 
2d 1334, 1136 (CIT 2003).
    While it is our preferred methodology to use a producer's actual 
FOPs in the calculation of NV, the Department has found it necessary to 
depart from that practice in instances where the actual FOP is a 
process provided by a subcontractor. In such cases, where we have had 
difficulty obtaining reliable surrogate values for the subcontracted 
production processes, we have resorted to using the subcontractor's 
FOPs as the producer's own. See Certain Helical Spring Lock Washers 
from the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Determination Not to Revoke the Antidumping 
Duty Order, in Part, 69 FR 12119 (March 15, 2004), and accompanying 
Issues and Decision Memorandum at comment 4. In the instant review, one 
of SLK's suppliers subcontracted its galvanizing process to another 
company. SLK has provided the FOPs for these processes along with the 
supplier's own FOPs. Due to the difficulty in obtaining reliable 
surrogate values for galvanizing, we have instead applied values to the 
subcontractors' FOPs.

Surrogate Values

    To value all material inputs, by-products, and packing materials, 
we used per-kilogram import values obtained from MSFTI. As appropriate, 
we adjusted these values to account for freight costs incurred between 
the suppliers and the factory. We calculated these freight costs based 
on the shorter of the reported distance from the domestic supplier to 
the factory or distance from the port in accordance with the decision 
in Sigma Corporation v. United States, 117F. 3d 1401, 1407-8 (Fed. Cir. 
1997). We made currency conversions into U.S. dollars, in accordance 
with section 773A of the Act, based on the exchange rates in effect on 
the dates of the U.S. sale(s) as certified by the U.S. Federal Reserve 
Bank.
    To value electricity, we used the 2000 electricity price data from 
International Energy Agency, Energy Prices and Taxes - Quarterly 
Statistics (Second Quarter 2003). To value water, we used the Revised 
Maharashtra Industrial Development Corporation water rates for June 1, 
2003, available at https://www.midcindia.com/water_supply. To value 
coke and firewood, we used the per-kilogram values obtained from MSFTI 
and made adjustments to account for freight costs incurred between the 
suppliers and the factory. To value coal we used the Teri Energy Data 
Directory & Yearbook (2004).
    For labor, we used the most recent regression-based wage rate for 
the PRC in ``Expected Wages of Selected NME Countries,'' available at 
https://ia.ita.doc.gov.
    For factory overhead, selling, general, and administrative expenses 
(``SG&A''), and profit values, we used the 2002-2003 financial 
statements of Vishal Malleables Limited (``Vishal'') and the 2003-2004 
financial statements of Ennore Foundries Limited (``Ennore'') and 
Bhagwati Autocast Limited (``Bhagwati''), all of which are Indian 
producers of comparable merchandise. From this information, we were 
able to determine factory overhead as a percentage of the total raw 
materials, labor and energy (``ML&E'') costs; SG&A as a percentage of 
ML&E plus overhead (i.e., cost of manufacture); and the profit rate as 
a percentage of the cost of manufacture plus SG&A. The Department used 
the 2001-2002 financial statements of Vishal in the final determination 
of the LTFV investigation. See Final Determination at comment 3. 
Although the petitioner claimed in its September 2, 2005, submission, 
that both Ennore and Bhagwati were primarily producers of merchandise 
for the automotive industry and, therefore, not producers of comparable 
merchandise, we observe that both companies produce primarily cast iron 
products utilizing substantially the same raw materials and production 
processes as the respondents in the current review. We also observe 
that Vishal manufactures products for the automotive industry as well. 
Furthermore, it is the Department's preference to use multiple 
financial statements when they are not distortive or otherwise 
unreliable, in order to eliminate potential distortions that may arise 
from using those of a single producer. See, e.g., Final Results of New 
Shipper Review: Certain Preserved Mushrooms From the People's Republic 
of China, 66 FR 45006 (August 27, 2001), and accompanying Issues and 
Decision Memorandum at Comment 1 and Brake Rotors From the People's 
Republic of China: Preliminary Results of Third New Shipper Review and 
Preliminary Results and Partial Rescission of Second Antidumping Duty 
Administrative Review, 64 FR 73007 (December 29, 1999). We find it 
appropriate, therefore, for these preliminary results, to average the 
financial ratios derived from the financial statements of Vishal, 
Ennore, and Bhagwati to calculate factory overhead and SG&A expenses 
for the respondents and, as Bhagwati did not earn a profit in 2003-
2004, to average the profit ratios of only Vishal and Ennore.
    SLK and Pannext have also placed on the record of the current 
review the 2002-2003 financial statements of Rajesh Malleables Limited 
(``Rajesh''), an Indian producer of identical merchandise. We have 
declined to include Rajesh's financial data in our calculation of 
surrogate financial ratios because we have determined that this company 
is a ``sick company'' under India's Sick Industrial Companies (Special 
Provisions) Act of 1985, amended 1993. It is the Department's policy 
not to use the financial statements of ``sick'' companies in its 
calculations of surrogate financial ratios. See, e.g., Persulfates from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review, 70 FR 6836 (February 9, 2005), and accompanying 
Issues and Decision Memorandum at Comment 3.
    In calculating the surrogate ratios for Vishal, Ennore, and 
Bhagwati for purposes of this review, we deviated from the methodology 
used in the LTFV investigation in two respects. First, regarding the 
treatment of job and process charges, although such charges are treated 
as overhead expenses in the financial statements, we are categorizing 
these expenses as ML&E in order to mirror the respondents' experience, 
explained below, as much as possible and avoid double counting. One of 
the respondents is an independent producer and the FOPs we are using 
for the second respondent are from its supplier, which is also an 
integrated producer. The third respondent, SLK, purchases MPF from 
several producers, two of which are not fully integrated. These two 
producers out-source certain processes to sub-contractors. As explained 
below in the Facts Otherwise Available section, however, we are valuing 
the actual inputs used in these processes, rather than valuing the 
processes themselves, and including them in ML&E in the respondent's 
build-up of NV. Therefore, it is appropriate to apply the surrogate 
financial ratios to these producers' costs as if they were also 
integrated producers in order to avoid double counting the expenses 
associated with the out-sourced processes.
    Second, regarding the treatment of changes in inventory, it is the

[[Page 76238]]

Department's practice to exclude from our calculation of surrogate 
financial ratios increases or decreases in finished-goods inventory, as 
well as increases or decreases in the broader categories of stock or 
inventory where there is insufficient detail regarding the content of 
these categories. We find that each of the financial statements we are 
analyzing here, however, provides sufficient detail that enables us to 
discriminate between inventory changes in finished goods and inventory 
changes in work-in-process and raw materials. As the latter two items 
are properly categorized as production expenses, we are including them 
in our calculation as ML&E. Consistent with the LTFV investigation, we 
continue to exclude changes in finished-goods inventory.
    We used two sources to calculate a surrogate value for domestic 
brokerage expenses. We averaged December 2003-November 2004 data 
contained in Essar Steel's February 28, 2005, public version response 
submitted in the antidumping duty administrative review of Hot-Rolled 
Carbon Steel Flat Products from India with October 2002-September 2003 
data contained in Pidilite Industries' March 9, 2004, public version 
response submitted in the antidumping duty investigation of Carbazole 
Violet Pigment 23 from India. The brokerage expense data reported by 
Essar Steel and Pidilite Industries in their public versions is ranged 
data. We first derived an average per-unit amount from each source. We 
then adjusted each average rate for inflation and, finally, averaged 
the two per-unit amounts to derive an overall average rate for the POR.
    To value truck freight, we used the freight rates published by 
Indian Freight Exchange available at https://www.infreight.com. To value 
domestic warehousing, we used a rate obtained from the Board of 
Jawaharlal Nehru Port Trust, available at https://www.jnport.com/new_
site/itarriff_crc.asp. To value international ocean freight and U.S. 
inland freight, we used price quotes obtained from Maersk Sealand 
available at https://www.maersksealand.com. To value marine insurance, 
we used a price quote obtained from RJG Consultants and available at 
https://www.rjgconstultants.com. Where necessary, we adjusted the 
surrogate values to reflect inflation/deflation using the Indian 
Wholesale Price Index as published on the Reserve Bank of India Web 
site, available at https://www.rbi.org.in.
    For further detail regarding all of the above surrogate values, see 
the FOP Memo.

Facts Otherwise Available

    Section 776(a)(1) and (2) of the Act provides that the Department 
shall apply ``facts otherwise available'' if, inter alia, necessary 
information is not on the record or an interested party or any other 
person: (A) withholds information that has been requested, (B) fails to 
provide information within the deadlines established, or in the form 
and manner requested by the Department, subject to subsections (c)(1) 
and (e) of section 782 of the Act, (C) significantly impedes a 
proceeding, or (D) provides information that cannot be verified as 
provided by section 782(i) of the Act.
    In addition, section 776(b) of the Act provides that, if the 
Department finds that an interested party ``has failed to cooperate by 
not acting to the best of its ability to comply with a request for 
information,'' the Department may use information that is adverse to 
the interests of that party as facts otherwise available. The purpose 
of applying an adverse inference is ``to ensure that the party does not 
obtain a more favorable result by failing to cooperate than if it had 
cooperated fully.'' See Statement of Administrative Action (SAA) 
accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Session at 870 
(1994).

SLK

    SLK purchased MPF from several unaffiliated suppliers in the PRC. 
For one supplier, SLK was able to provide the Department with FOPs 
based only on a standard production formula. Because this information 
is not based on the supplier's actual production experience and it 
cannot be verified, the Department has declined to use the reported 
FOPs. SLK also suggested an alternative methodology; however, we do not 
have sufficient information at this time to apply that alternative. Due 
to the totality of the circumstances, however, we have determined that 
SLK has acted to the best of its ability to provide the Department with 
the requested information and, in the absence of the actual FOPs, for 
the purposes of these preliminary results, an adverse inference is not 
warranted. As facts otherwise available for those products that SLK 
also purchased from other suppliers, we are using the weighted-average 
FOPs (weighted by purchased quantity) of the other suppliers. For those 
U.S. sales of products not purchased from other suppliers (i.e., unique 
products provided only by this supplier), we are applying SLK's 
weighted-average margin calculated for its other reported U.S. sales.
    For another of SLK's suppliers, SLK was unable to provide complete 
FOPs for galvanized MPF. During the POR, this supplier subcontracted 
the galvanizing process to two different subcontractors: one for the 
first nine months of the POR and the other for the last three months of 
the POR. Because the first subcontractor did not maintain production 
records, SLK was able to provide the Department with complete FOPs for 
only those products produced during the last three months of the POR. 
Because of the small percentage of NV attributable to galvanizing, and 
because SLK has cooperated with the Department's request for 
information to the best of its ability, for the purposes of the 
prelminary results, we are applying neutral facts available by using 
the three months of data representing the FOPs for galvanizing MPF 
provided by the second subcontractor for the full POR.
    SLK reported that certain products it sold to the U.S. during the 
POR were sold out of its own inventory and not purchased from any of 
its suppliers during the POR. Thus, for these products, SLK was unable 
to provide the Department with purchased quantities to use as a 
weighting factor to average each supplier's reported FOPs.\2\ 
Additionally, SLK was unable to provide FOP data for approximately one 
half of those products because none of SLK's suppliers produced these 
products during the POR. The percentage of sales, by volume, that these 
products represent is less than three percent of its U.S. sales during 
the POR. Because of this, and because the Department did not request 
SLK to provide FOPs for these products based on a prior period, we find 
that an adverse inference is not warranted for the preliminary results. 
As neutral facts available, where we are unable to weight average the 
product-specific FOPs of each supplier by SLK's purchased quantities, 
we are using a simple average of the reported product-specific FOPs 
provided by the suppliers of that product. For the remaining products 
sold out of inventory, none of SLK's suppliers reported FOPs. For sales 
of these products, for the purpose of the preliminary results, we are 
applying SLK's weighted-average margin calculated using its other

[[Page 76239]]

reported U.S. sales as neutral facts available.
---------------------------------------------------------------------------

    \2\ The Department requested that SLK report the quantities of 
each product it purchased from each supplier during the POR. This 
information is being used to weight the product-specific FOPs of 
each supplier during the POR.
---------------------------------------------------------------------------

    Finally, SLK did not report FOPs for a small number of unique 
products purchased from all but one of its suppliers. Due to the small 
number of sales affected by these missing FOPs, for the purpose of the 
preliminary results, we are applying neutral facts available to these 
sales. As neutral facts available, we are applying the average of the 
FOPs for the same products purchased from other suppliers, if 
available. If unavailable, we are applying SLK's weighted-average 
margin.
    We will provide SLK with an opportunity to cure the deficiencies 
discussed above and will revisit the facts-available calls for SLK for 
the final results of review in light of the adequacy of SLK's response 
to this opportunity. If appropriate, we may resort to the use of 
adverse facts available (``AFA'') for SLK for the final results of 
review.
    For further detail, see the December 16, 2005, memorandum from 
Jennifer Moats to the File regarding the 2003-2004 Administrative 
Review of the Antidumping Duty Order on Certain Malleable Iron Pipe 
Fittings from the People's Republic of China: Analysis Memorandum for 
Preliminary Results for Beijing Sai Lin Ke Hardware Co., Ltd.

Pannext

    Pannext did not report FOPs for less than one percent of its U.S. 
sales made during the POR. Pannext has stated that it was not able to 
supply FOPs for these sales because the products were sold out of 
inventory and were not produced during the POR. Pannext has suggested 
that the Department use the FOPs of the most similar products that were 
produced during the POR and identified the most similar products in its 
December 1, 2005, submission to the Department. However, Pannext did 
not provide any supporting information on the criteria used to identify 
the products on this list as ``most similar'' to those products without 
reported FOP data. Therefore, we are unable to use Pannext's suggested 
methodology for these preliminary results. Because the sales in 
question constitute a small percentage of Pannext's sales of MPF to the 
United States during the POR and Pannext has cooperated to the best of 
its ability, we find that an adverse inference is not warranted in this 
case. As neutral facts available, for purposes of the preliminary 
results, we are applying Pannext's calculated weighted-average margin 
of its other reported U.S. sales during the POR to those U.S. sales 
that were sold out of inventory. We will provide Pannext with an 
additional opportunity to explain the methodology it used to identify 
the ``most similar'' products reported to the Department following 
these preliminary results, and will revisit this issue for the final 
results of this proceeding. If appropriate, we may resort to the use of 
AFA for Pannext for the final results of review.
    For further detail, see the December 16, 2005, memorandum from 
Sochieta Moth to the File regarding the 2003-2004 Administrative Review 
of the Antidumping Duty Order on Certain Malleable Iron Pipe Fittings 
from the People's Republic of China: Analysis Memorandum for 
Preliminary Results for Pannext Fittings Corporation.

Chengde

    In the current proceeding, Chengde significantly impeded both our 
ability to complete the review of the MPF order which we are conducting 
pursuant to section 751 of the Act, and to impose the correct 
antidumping duties, as mandated by section 731 of the Act. As discussed 
below, we preliminarily find that its failure to cooperate with the 
Department to the best of its ability in responding to the Department's 
request for information warrants the use of adverse facts available in 
determining dumping margins for its sales of merchandise subject to the 
order.
    Chengde has had extensive difficulty complying with the 
Department's filing and service requirements during the course of this 
proceeding. On April 29, 2005, the Department rejected Chengde's 
sections A, C, and D questionnaire responses due to filing format and 
service deficiencies, offering Chengde the opportunity to correct the 
deficiencies and resubmit its responses. Chengde resubmitted its 
responses on May 18, 2005. The Department subsequently discovered that 
the submissions contained inconsistencies regarding bracketed 
information. After giving Chengde multiple opportunities to re-bracket 
the proprietary information and resubmit its responses correctly, which 
Chengde did not do, the Department notified Chengde on July 7, 2005, 
that Chengde's improperly bracketed information would be treated as 
public information by the Department. On July 21, 2005, after 
improperly filing a request for an extension and failing to serve it on 
the other parties to the proceeding, the Department again reminded 
Chengde of the filing requirements and helped it meet those 
requirements.
    In addition to filing problems, Chengde had difficulty complying 
with the Department's requests for information. Thus far we have issued 
two supplemental questionnaires to Chengde. The first supplemental 
questionnaire was issued on July 20, 2005. Chengde's response was 
received on August 10, 2005. On November 23, 2005, we issued a second 
supplemental questionnaire to Chengde requesting, among other things, 
revised U.S. sales and FOP databases and reconciliations for Chengde's 
reported FOPs. Chengde requested an extension until December 23, 2005, 
to respond to the supplemental questionnaire. The Department granted 
Chengde the full extension requested, on the condition that Chengde 
provide the Department with a specified minimal amount of information 
necessary for the Department to perform its calculation analysis of 
Chengde's sales of subject merchandise during the POR. Chengde provided 
revised databases on December 5, 2005. However, we find that the 
databases are so deficient they cannot be used for the purpose of 
performing a calculation for Chengde. Our review of the data revealed 
several major inconsistencies and omissions in Chengde's most recent 
U.S. sales and FOP databases. For example, Chengde did not provide FOP 
data for 26 of its sales (representing 23 different products), and it 
provided different per-piece weights for the same products in its FOP 
and U.S. sales databases. Because Chengde has not provided complete or 
usable data to the Department despite the multiple opportunities 
provided, pursuant to section 776(a)(1) of the Act, the Department will 
apply facts available to Chengde because it did not provide the 
necessary information to calculate a dumping margin. Because Chengde 
has not cooperated to the best of its ability pursuant to section 
776(b) of the Act, it is appropriate to use AFA for Chengde for 
purposes of the preliminary results of review. Furthermore, we find 
that because Chengde's information is unreliable it does not merit a 
separate rate and will be subject to the PRC-wide rate.
    As AFA for the PRC-wide entity (including Chengde), for the 
preliminary results, we are applying the highest weighted-average 
margin calculated in this proceeding (i.e., 200.24 percent). In this 
case, the rate is the margin calculated for another respondent (i.e., 
SCE) in the instant segment of the proceeding.
    For further detail, see the December 16, 2005, memorandum from 
Tisha Loeper-Viti to Wendy J. Frankel regarding the 2003-2004 
Administrative Review of the Antidumping Duty Order on Certain 
Malleable Iron Pipe Fittings

[[Page 76240]]

from the People's Republic of China: Adverse Facts Available Analysis 
Memorandum for Preliminary Results for Chengde Malleable Iron General 
Factory.
    We intend to issue Chengde one more supplemental questionnaire 
outlining the deficiencies we are able to identify in its current 
submissions. Should Chengde's forthcoming response to the Department's 
second and third (to be issued following the preliminary results) 
supplemental questionnaires be incomplete or unusable, or should 
Chengde fail to provide additional data requested by the Department 
within the requested time frame, we may continue to use AFA for Chengde 
for the final results of review.

Corroboration of Secondary Information

    Section 776(c) of the Act provides that when the Department relies 
on the facts otherwise available and relies on ``secondary 
information,'' the Department shall, to the extent practicable, 
corroborate that information from independent sources reasonably at its 
disposal. Secondary information is defined in the SAA as ``information 
derived from the petition that gave rise to the investigation or 
review, the final determination concerning subject merchandise, or any 
previous review under section 751 concerning the subject merchandise.'' 
See SAA at 870. The SAA provides that to ``corroborate'' means simply 
that the Department will satisfy itself that the secondary information 
to be used has probative value. See id. The SAA also states that 
independent sources used to corroborate may include, for example, 
published price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See id. As noted in Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan; Preliminary Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996) (``TRBs''), to 
corroborate secondary information, the Department will, to the extent 
practicable, examine the reliability and relevance of the information 
used. While the Department need not prove that the selected facts 
available are the best alternative information (SAA at 869), where 
circumstances indicate that the selected margin is not appropriate as 
AFA, the Department will disregard the margin and determine an 
appropriate margin.'' See TRBs, 61 FR at 57392. See also Fresh Cut 
Flowers from Mexico; Preliminary Results of Antidumping Duty 
Administrative Review, 61 FR 6812, 6814 (February 22, 1996) 
(disregarding the highest margin in the case as best information 
available because the margin was based on another company's 
uncharacteristic business expense resulting in an extremely high 
margin).
    In this review, we are using as AFA the margin calculated for a 
respondent in the instant review, which constitutes secondary 
information within the meaning of the SAA. See SAA at 870.
    Unlike other types of information such as input costs or selling 
expenses, however, there are no independent sources for calculated 
dumping margins. Thus, in an administrative review, if the Department 
chooses as facts available a calculated dumping margin from the current 
or from a prior segment of the proceeding, it is not necessary to 
question the reliability of the margin if it was calculated from sales 
and cost data. The 200.24 percent rate is based on information provided 
by SCE in the instant review of this proceeding. Therefore, we consider 
this rate to be reliable.
    With respect to the relevance aspect of corroboration, the 
Department will consider information reasonably at its disposal to 
determine whether a margin continues to have relevance. Nothing in the 
record of this review calls into question the relevance of the margin 
we have selected as AFA. Moreover, the selected margin will be applied 
as the PRC-wide rate and will be applicable to exporters who do not 
have a separate rate. Thus, it is appropriate to use the selected rate 
as adverse facts available in the instant review. Accordingly, we have 
corroborated the AFA rate identified above, as required, by section 
776(c) of the Act (i.e., established its probative value).
    Because this is a preliminary margin, the Department will consider 
all margins on the record at the time of the final results for the 
purpose of determining the most appropriate final margin based on total 
AFA. See Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Solid Fertilizer Grade Ammonium Nitrate From the Russian 
Federation, 65 FR 1139 (January 7, 2000).

Preliminary Results of Review

    We preliminarily determine that the following dumping margins 
exist:

------------------------------------------------------------------------
                Manufacturer/exporter                  Margin (percent)
------------------------------------------------------------------------
Beijing Sai Lin Ke Hardware Co., Ltd................               23.44
Langfang Pannext Pipe Fitting Co., Ltd..............                5.25
SCE Co., Ltd........................................              200.24
PRC-Wide Entity (including Chengde).................              200.24
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR Sec.  351.224(b). Interested parties are invited to 
comment on the preliminary results. Interested parties may submit case 
briefs and rebuttal briefs, limited to issues raised in the case 
briefs. The Department will notify all parties of the briefing and 
hearing request schedule at a later date. Parties who submit arguments 
are requested to submit with each argument a statement of the issue, a 
brief summary of the argument, and a table of authorities. Further, we 
would appreciate if parties submitting written comments provide an 
additional copy of the public version of any such comments on a 
diskette. Any interested party may request a hearing. See 19 CFR 
351.310(c). The Department will publish a notice of the final results 
of this review, which will include the results of its analysis of 
issues raised in any written comments or hearing, within 120 days from 
publication of this notice.

Assessment

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
exporter/importer (or customer)-specific assessment rate for 
merchandise subject to this review. To determine whether the duty 
assessment rates covering the period were de minimis, in accordance 
with the requirement set forth in 19 CFR 351.106(c)(2), for each 
respondent we calculate importer (or customer)-specific ad valorem 
rates by aggregating the dumping margins calculated for all U.S. sales 
to that importer (or customer) and dividing this amount by the total 
value of the sales to that importer (or customer). Where an importer 
(or customer)-specific ad valorem rate is greater than de minimis and 
the respondent has reported reliable entered values, we apply the 
assessment rate to the entered value of the importer's/customer's 
entries during the review period. Where an importer (or customer)-
specific ad valorem rate is greater than de minimis and we do not have 
entered values for all U.S. sales, we calculate a per-unit assessment 
rate by aggregating the dumping duties due for all U.S. sales to each 
importer (or customer) and dividing this amount by

[[Page 76241]]

the total quantity sold to that importer (or customer). The Department 
will issue assessment instructions directly to CBP within 15 days of 
publication of the final results of review.

Cash Deposit Requirements

    The following cash deposit rates will be effective upon publication 
of the final results for all shipments of MPF from the PRC entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date, as provided for by section 751(a)(1) of the Act: (1) for the 
above listed respondents, which each have a separate rate, the cash 
deposit rate will be the company-specific rate established in the final 
results of the review; (2) the cash deposit rates for any other 
companies that have separate rates established in the investigation, 
but were not reviewed in this proceeding, will not change; (3) for all 
other PRC exporters, the cash deposit rate will be 200.24 percent, the 
PRC-wide rate established in the LTFV; and (4) for non-PRC exporters of 
MPF from the PRC, the cash deposit rate will be the rate applicable to 
the PRC supplier of that exporter. These deposit rates, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.
    This notice also 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 determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 16, 2005.
Stephen J. Claeys,
Acting Assistant Secretaryfor Import Administration.
[FR Doc. E5-7785 Filed 12-22-05; 8:45 am]
BILLING CODE 3510-DS-S