Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Preliminary Results of Antidumping Duty Administrative Review and Notice of Intent to Rescind in Part, 38972-38979 [E8-15475]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 131 (Tuesday, July 8, 2008)]
[Notices]
[Pages 38972-38979]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-15475]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-583-816


Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: 
Preliminary Results of Antidumping Duty Administrative Review and 
Notice of Intent to Rescind in Part

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from respondent Ta Chen Stainless Pipe 
Co., Ltd. (Ta Chen or respondent) and from Flowline Division of 
Markovitz

[[Page 38973]]

Enterprises, Inc. (Flowline Division), Gerlin, Inc., Shaw Alloy Piping 
Products, Inc., and Taylor Forge Stainless, Inc., (collectively, 
petitioners), the Department of Commerce (the Department) is conducting 
an administrative review of the antidumping duty order on certain 
stainless steel butt-weld pipe fittings (SSBWPFs) from Taiwan. 
Petitioners requested that the Department conduct an administrative 
review of Ta Chen, Liang Feng Stainless Steel Fitting Co., Ltd. (Liang 
Feng), Tru-Flow Industrial Co., Ltd. (Tru-Flow), Censor International 
Corporation (Censor), and PFP Taiwan Co., Ltd. (PFP).
    With regard to Ta Chen, the Department preliminarily determines 
that sales of SSBWPFs from Taiwan have been sold in the United States 
at less than fair value (LTFV), as provided in section 733(b) of the 
Tariff Act of 1930, as amended (the Act).
    On September 10, 2007, Tru-Flow, Liang Feng, Censor, and PFP 
certified that they had no sales or shipments of subject merchandise to 
the United States during the period of review (POR). Based on Tru-
Flow's, Liang Feng's, Censor's, and PFP's certified statements, 
information from U.S. Customs and Border Protection (CBP) indicating 
that these companies had no shipments to the United States of the 
subject merchandise during the POR, and the Department's verification 
of Liang Feng (as explained below), we hereby give notice that we 
intend to rescind the review regarding these four companies. For a full 
discussion of the intent to rescind with respect to Liang Feng, Tru-
Flow, Censor, and PFP, see the ``Notice of Intent to Rescind in Part'' 
section of this notice.
    If these preliminary results of review of Ta Chen's sales are 
adopted in the final results, we will instruct CBP to assess 
antidumping duties on appropriate entries based on the difference 
between the constructed export price (CEP) and the normal value (NV). 
Interested parties are invited to comment on these preliminary results. 
Parties who submit comments in this proceeding are requested to submit 
with the argument: 1) a statement of the issues, 2) a brief summary of 
the argument, and 3) a table of authorities.

EFFECTIVE DATE: July 8, 2008.

FOR FURTHER INFORMATION CONTACT: John Drury or Judy Lao, AD/CVD 
Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0195 or (202) 482-7924, respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

    The POR for this administrative review is June 1, 2006, through May 
31, 2007.

Background

    On June 16, 1993, the Department published in the Federal Register 
the antidumping duty order on SSBWPFs from Taiwan. See Amended Final 
Determination and Antidumping Duty Order: Certain Stainless Steel Butt-
Weld Pipe Fittings from Taiwan, 58 FR 33250 (June 16, 1993). On June 1, 
2007, the Department published a notice of opportunity to request 
administrative review for the period June 1, 2006, through May 31, 
2007. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity to Request Administrative Review, 
72 FR 30542 (June 1, 2007).
    In accordance with 19 CFR 351.213(b)(1) and (2), on June 28, 2007, 
petitioners requested an antidumping duty administrative review for Ta 
Chen, Liang Feng, Tru-Flow, Censor, and PFP. On June 28, 2007, Ta Chen 
requested an administrative review in accordance with 19 CFR 
351.213(b)(1) and (2). On July 26, 2007, the Department published the 
notice of initiation of this administrative review. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Request 
for Revocation In Part, 72 FR 41057 (July 26, 2007).
    On August 6, 2007, the Department issued its antidumping duty 
questionnaire to Ta Chen, Liang Feng, Tru-Flow, Censor, and PFP. On 
September 10, 2007, the Department received statements from Liang Feng, 
Tru-Flow, Censor, and PFP, certifying that they had neither sales nor 
exports of subject SSBWPFs to the United States during the POR. On 
September 11, 2007, Ta Chen submitted its response to section A of the 
Department's questionnaire. On September 24, 2007, Ta Chen submitted 
its responses to sections B, C, and D of the Department's 
questionnaire.
    On October 10, 2007, petitioners submitted comments regarding Ta 
Chen's section A response, primarily regarding alleged affiliation 
issues. On October 31, 2007, petitioners submitted comments on Ta 
Chen's section B and C responses. On November 29, 2007, petitioners 
submitted comments regarding Ta Chen's section D response. On December 
28, 2007, the Department issued a supplemental section A through D 
questionnaire to Ta Chen. Ta Chen responded to the Department's section 
A through D supplemental questionnaire on January 28, 2008. On February 
4 and 5, 2008, the Department issued additional A through D 
supplemental questionnaires requesting minor corrections and additional 
information to respondent's January 28, 2008 submission. On February 7, 
2008, respondent submitted the information requested by the Department 
in its February 4 and 5, 2008, supplemental questionnaires. On February 
28, 2008, and March 6, 2008, the Department issued additional 
supplemental questionnaires.
    On March 7, 2008, the Department extended the time limit for the 
preliminary results of this administrative review by 120 days, to not 
later than June 30, 2007. See Certain Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan: Notice of Extension of Time Limit for Preliminary 
Results in Antidumping Duty Administrative Review, 73 FR 12375 (March 
7, 2008).
    Ta Chen submitted a response to the Department's February 28, 2008, 
questionnaire on March 13, 2008. In addition, on March 13, 2008, 
respondent submitted a response to petitioners' affiliation allegations 
made on October 10, 2007. This submission was rejected by the 
Department on March 27, 2008, for being untimely filed. See Memorandum 
to the File from John Drury entitled ``2006-2007 Administrative Review 
of Stainless Steel Butt-Weld Pipe Fittings from Taiwan: E-mail 
conversation between counsel for Ta Chen and the Department of 
Commerce'' dated March 27, 2008. On March 14, 2008, respondent 
submitted a response to the Department's March 6, 2008 questionnaire. 
In addition, on March 14, 2008, the Department issued its verification 
agenda outlining the general procedures for the Department's 
verification of Ta Chen's information in Taiwan. On March 18, 2008, 
respondent submitted a revised section D database to the Department. On 
March 19, 2008, the Department issued an addendum to its March 14, 
2008, verification agenda for Ta Chen. On March 19, 2008, the 
Department issued verification agendas for Liang Feng Stainless Steel 
Fitting Co. Ltd., and Liang Feng Enterprise, outlining the general 
procedures for its verifications of those companies in Taiwan. On March 
24, 2008, petitioners submitted a letter in response to

[[Page 38974]]

respondent's March 14, 2008 comments.\1\
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    \1\ On March 28, 2008, the Department rejected petitioners' 
March 24, 2008, submission on the basis that it contained new 
information, and stated that petitioners could revise and resubmit 
its letter by redacting all new information. Per the Department's 
request, petitioners re-submitted its March 24, 2008, letter on 
April 1, 2008.
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    The Department verified Ta Chen's home market sales, partial U.S. 
sales, and cost information as submitted on the record, in Tainan, 
Taiwan from March 24, 2008, through April 4, 2008. The Department 
verified information regarding Liang Feng Stainless Steel Fitting Co. 
Ltd., and Liang Feng Enterprise on April 1, 2008. See Verification of 
the Questionnaire Responses of Ta Chen Stainless Pipe Co., Ltd. in the 
Antidumping Review of Certain Stainless Steel Butt-Weld Pipe Fittings 
from Taiwan (Ta Chen Verification Report), June 10, 2008, and 
Verification of the Sales Questionnaire Response of Liang Feng 
Stainless Steel Co., Ltd. in the Antidumping Review of Certain 
Stainless Steel Butt-Weld Pipe Fittings from Taiwan (Liang Feng 
Verification Report). On March 25, 2008, Ta Chen submitted its minor 
corrections presented at verification.
    On April 4, 2008, the Department issued Ta Chen a verification 
agenda outlining the general procedures for verification of its sales 
made through its U.S. affiliate, Ta Chen International (TCI). The 
Department verified TCI's U.S. sales from April 14, 2008, through April 
17, 2008, in Long Beach, California. On April 14, 2008, Ta Chen 
submitted a response to petitioners' April 1, 2008, submission. On 
April 21, 2008, Ta Chen submitted its minor corrections presented at 
its U.S. verification. On May 8, 2008, Ta Chen submitted corrections to 
its minor correction presented at its U.S. verification, as requested 
by the Department.
    On June 12, 2008, the Department received comments from petitioners 
regarding Ta Chen's selling activities and the Department's findings 
regarding Ta Chen's selling activities in the home and U.S. markets. On 
June 18, 2008, both petitioners and respondent filed comments regarding 
the Department's verification reports. On June 20, 2008, respondent 
filed comments in response to petitioners' June 12, 2008, comments.

Notice of Intent to Rescind Review in Part

    Pursuant to 19 CFR 351.213(d)(3), the Department may rescind an 
administrative review, in whole or with respect to a particular 
exporter or producer, if the Secretary concludes that there were no 
entries, exports, or sales of the subject merchandise during the POR. 
See, e.g., Certain Oil Country Tubular Goods from Mexico: Preliminary 
Results of Antidumping Duty Administrative Review and Partial 
Rescission, 71 FR 27676-78 (May 12, 2006); Stainless Steel Sheet and 
Strip in Coils from Japan: Final Rescission of Antidumping Duty 
Administrative Review, 71 FR 26041 (May 3, 2006).
    On September 10, 2007, Liang Feng, Tru-Flow, PFP, and Censor each 
submitted letters on the record certifying that their firms had no 
sales, entries, or exports of SSBWPFs to the United States during the 
POR. To confirm their statements, the Department conducted a CBP data 
inquiry and determined that there were no identifiable entries of 
SSBWPFs during the POR manufactured or exported by Liang Feng, Tru-
Flow, PFP or Censor. See Memorandum to the File, through Angelica 
Mendoza, Program Manager from Judy Lao, Analyst: Ta Chen Stainless Pipe 
Co., Ltd. No Shipments Inquiry dated May 29, 2008. Based on the 
Department's verification of Liang Feng on April 1, 2008, the 
Department preliminarily determines that Liang Feng's certification of 
no shipments is correct. See the Analysis Memorandum dated June 30, 
2008, for further information. Therefore, in accordance with 19 CFR 
351.213(d)(3), the Department preliminarily intends to rescind this 
review with respect to Liang Feng, Tru-Flow, PFP and Censor.

Scope of the Order

    The products covered by this order are certain stainless steel 
butt-weld pipe fittings, whether finished or unfinished, under 14 
inches inside diameter. Certain welded stainless steel butt-weld pipe 
fittings are used to connect pipe sections in piping systems where 
conditions require welded connections. The subject merchandise is used 
where one or more of the following conditions is a factor in designing 
the piping system: (1) corrosion of the piping system will occur if 
material other than stainless steel is used; (2) contamination of the 
material in the system by the system itself must be prevented; (3) high 
temperatures are present; (4) extreme low temperatures are present; and 
(5) high pressures are contained within the system.
    SSBWPFs come in a variety of shapes, with the following five shapes 
the most basic: elbows, tees, reducers, stub ends, and caps. The edges 
of finished SSBWPFs are beveled. Threaded, grooved, and bolted fittings 
are excluded from the order. The SSBWPFs subject to the order are 
currently classifiable under subheading 7307.23.00 of the Harmonized 
Tariff Schedule of the United States (HTSUS).
    Although the HTSUS subheading is provided for convenience and 
customs purposes, our written description of the scope of the review is 
dispositive. SSBWPFs manufactured to American Society of Testing and 
Materials specification A774 are included in the scope of this order.

Affiliation

    Petitioners claim that Ta Chen and its U.S. subsidiary, Ta Chen 
International (TCI), have several related parties that were not 
disclosed in its financial statements. Therefore, petitioners contend 
that Ta Chen's and TCI's financial statements (and thus its underlying 
accounting records) should not be relied upon for the purposes of these 
preliminary results. For the preliminary results, we have determined 
that the evidence on the record does not warrant a finding that the 
Department should disregard Ta Chen's or TCI's financial statements.
    With respect to petitioners' argument that Ta Chen withheld from 
the Department the identities of a significant number of companies 
documented as Ta Chen affiliates, but not acknowledged as such by Ta 
Chen, the Department addressed this issue in the most recently 
completed antidumping duty administrative review for this order. See 
Notice of Final Results and Final Rescission in Part of Antidumping 
Duty Administrative Review: Certain Stainless Steel Butt-Weld Pipe 
Fittings From Taiwan, 73 FR 1202 (January 7, 2008), and accompanying 
Issues and Decision Memorandum at Comment 1, (Ta Chen 05-06). In 
addressing the issues of affiliation raised by petitioners, the 
Department noted that on May 30, 2007, the United States Court of 
International Trade (CIT) issued a decision and remand with respect to 
a number of identical issues raised by petitioners for the 2002-2003 
administrative review of stainless steel butt-weld pipe fittings from 
Taiwan. See Ta Chen Stainless Steel Pipe Co., Ltd. v. United States, 
Consol. Court No. 05-00094, Slip Op. 07-87 (CIT May 30, 2007) (Ta Chen 
v. United States 2007). Based on the remand decision in Ta Chen v. 
United States 2007, the Department undertook an exhaustive review of Ta 
Chen's affiliated parties, and determined that Ta Chen had been a 
cooperative respondent and had accurately reported its affiliated 
parties as defined under section 771(33) of the Act (or 19 U.S.C. Sec.  
1677(33)). See Final Results of Redetermination Pursuant to Court

[[Page 38975]]

Remand, Ta Chen Stainless Steel Pipe Co., Ltd. v. United States, 
Consol. Court No. 05-00094, Slip Op. 07-87 (CIT May 30, 2007), October 
2, 2007.
    On September 11, 2007, Ta Chen provided its response to the 
Department's section A antidumping duty questionnaire and reported a 
number of affiliated parties. See Ta Chen's section A questionnaire 
response dated September 11, 2007, at pages 7--12. In a supplemental 
questionnaire response, Ta Chen stated that it had reported all 
affiliated parties. See Ta Chen's supplemental questionnaire response 
dated January 28, 2008, at page 9. Based on an analysis of the 
information on the record, the Department preliminarily determines that 
Ta Chen's reported affiliates, and the relationships between Ta Chen 
and the reported affiliates, have not changed since the Department's 
analysis in Ta Chen 05-06. Additionally, the Department notes that in 
Alloy Piping Products, Inc. v. United States, Ct. No. 06-00454, Slip 
Op. 08-30 (CIT March 13, 2008), the CIT held that because ``the 
language of the Act and the regulations restrict antidumping reviews to 
cases where the foreign producer or affiliated parties deal in the 
subject merchandise, Commerce need not make a finding of affiliation 
for each company that does not actually sell the subject merchandise'' 
Id. at 10. Based on the decisions of the CIT, and the analysis of the 
evidence on the record, the Department preliminarily determines that Ta 
Chen has been a cooperative respondent with respect to the issue of 
reporting affiliated parties, and that Ta Chen accurately reported its 
affiliated parties as defined under section 771(33) of the Act.

Product Comparisons

    For the purpose of determining appropriate product comparisons to 
SSBWPFs sold in the United States, we considered all SSBWPFs covered by 
the scope that were sold by Ta Chen in the home market during the POR 
to be ``foreign like products,'' in accordance with section 771(16) of 
the Act. Where there were no contemporaneous sales of identical 
merchandise in the home market to compare to U.S. sales, we compared 
U.S. sales to the next most similar foreign like product on the basis 
of the physical characteristics reported by Ta Chen, as follows: 
specification, seam, grade, size and schedule.
    The record shows that Ta Chen both purchased from and entered into 
tolling arrangements with unaffiliated Taiwanese manufacturers of 
SSBWPFs. We have preliminarily determined that Ta Chen is the sole 
exporter of the SSBWPFs under review, as the record evidence does not 
indicate that these manufacturers had knowledge that the purchased 
SSBWPFs would be exported to the United States. See Analysis Memorandum 
for the Preliminary Results of Administrative Review of Certain 
Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Ta Chen Stainless 
Pipe Co., Ltd. (June 30, 2008). Therefore, knowledge that the SSBWPFs 
would also be sold to the United States cannot be imputed to those 
unaffiliated manufacturers. See 19 CFR 351.401(h).
    Section 771(16)(A) of the Act defines ``foreign like product'' to 
be ``{t{time} he subject merchandise and other merchandise which is 
identical in physical characteristics with, and was produced in the 
same country by the same person as, that merchandise.'' Thus, 
consistent with the Department's past practice in reviews under this 
order, for products that Ta Chen has identified with certainty that it 
purchased from a particular unaffiliated producer and resold in the 
U.S. market, we have restricted the matching of products to products 
purchased by Ta Chen from the same unaffiliated producer and resold in 
the home market. See, e.g., Certain Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan: Preliminary Results of Antidumping Duty 
Administrative Review and Notice of Intent to Rescind in Part, 72 FR 
35970 (July 2, 2007) and Certain Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan: Preliminary Results of Antidumping Duty 
Administrative Review and Notice of Intent to Rescind in Part, 71 FR 
39663 (July 13, 2006). For those products which Ta Chen cannot identify 
with certainty from which producers the merchandise was purchased, the 
Department has applied adverse facts available. See the ``Application 
of Facts Available and Adverse Facts Available'' section below.

Date of Sale

    The Department's regulations state that it will normally use the 
date of invoice, as recorded in the exporter's or producer's records 
kept in the ordinary course of business, as the date of sale. See 19 
CFR 351.401(i). If the Department can establish ``a different date 
{that{time}  better reflects the date on which the exporter or producer 
establishes the material terms of sale,'' the Department may choose a 
different date. Id.
    In the present review, Ta Chen claimed that invoice date should be 
used as the date of sale for its sales in the home market and to the 
United States. See Ta Chen's section A questionnaire response at 20-22 
(Sept. 11, 2007). For home market (HM) sales, the Department examined 
whether the date Ta Chen issued its pro forma invoice or its actual 
invoice best reflects the date of sale. Based upon our review of the 
record evidence, we have preliminarily determined that actual invoice 
date should be the sale date because the material terms are set on the 
invoice date, and can potentially be changed up until the point of 
invoice date. This methodology is consistent with the practice in all 
the previous reviews of this proceeding. See Ta Chen's section B 
through D questionnaire response at B8-B9 and C9-C-10 (September 24, 
2007). For U.S. sales, Ta Chen reported only constructed export price 
(CEP) sales, and we used the invoice date for sales to the first 
unaffiliated U.S. customer as changes to the terms of the sale may 
occur up to the issuance of the invoice. See Verification of the Sales 
Responses of Ta Chen International, United States Affiliate of Ta Chen 
Stainless Pipe Co., Ltd. (``Ta Chen'') in the Antidumping Review of 
Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan (TCI 
Verification Report), June 10, 2008, at page 10.

Fair Value Comparisons

    To determine whether sales of SSBWPFs by Ta Chen to the United 
States were made at prices below NV, we compared CEP to NV, as 
described below. Pursuant to section 777A(d)(2) of the Act, we compared 
the CEPs of individual U.S. transactions to the monthly weighted-
average NV of the foreign like product.

Constructed Export Price

    Section 772(b) of the Act defines CEP as ``the price at which the 
subject merchandise is first sold (or agreed to be sold) in the United 
States before or after the date of importation by or for the account of 
the producer or exporter of such merchandise or by a seller affiliated 
with the producer or exporter, to a purchaser not affiliated with the 
producer or exporter `` Consistent with recent past reviews, pursuant 
to section 772(b) of the Act, we calculated the price of Ta Chen's 
sales based on CEP because the sale to the first unaffiliated U.S. 
customer was made by Ta Chen's U.S. affiliate, TCI. See the Analysis 
Memorandum dated June 30, 2008, for further information. Ta Chen has 
two channels of distribution for U.S. sales: 1) Ta Chen ships the 
merchandise to TCI for inventory in its warehouses and subsequent 
resale to unaffiliated buyers (stock sales), and 2) Ta Chen ships the 
merchandise directly to TCI's U.S. customer (indent sales). The 
Department

[[Page 38976]]

finds that both stock and indent sales qualify as CEP sales because the 
original sale is between TCI and the U.S. customer. In addition, TCI 
handles all communication with the U.S. customer, from customer order 
to receipt of payment, and incurs the risk of non-payment. In addition, 
TCI handles customer complaints concerning issues such as product 
quality, specifications, delivery, and product returns. TCI is also 
responsible for payment of the ocean freight for all U.S. sales, while 
Ta Chen arranges the ocean freight logistics and paperwork. See Ta 
Chen's section A questionnaire response at A18 (Sept. 11, 2006).
    We calculated CEP based on ex-warehouse or delivered prices to 
unaffiliated purchasers in the United States and, where appropriate, we 
added billing adjustments and deducted discounts. In accordance with 
section 772(d)(1) of the Act, the Department deducted direct and 
indirect selling expenses, including inventory carrying costs incurred 
by TCI for stock sales, related to commercial activity in the United 
States. We also made deductions for movement expenses, which include 
foreign inland freight, foreign brokerage and handling, ocean freight, 
containerization expense, Taiwan harbor construction tax, marine 
insurance, U.S. inland freight, U.S. brokerage and handling, and U.S. 
customs duties. Finally, in accordance with sections 772(d)(3) and 
772(f) of the Act, we deducted CEP profit.

Normal Value

1. Home Market Viability

    To determine whether there is a sufficient volume of sales in the 
home market to serve as a viable basis for calculating NV, we compared 
Ta Chen's volume of home market sales of the foreign like product to 
the volume of U.S. sales of the subject merchandise, in accordance with 
section 773(a)(1)(B) of the Act. As Ta Chen's aggregate volume of home 
market sales of the foreign like product was greater than five percent 
of its aggregate volume of U.S. sales for the subject merchandise, we 
determined that the home market was viable. See Ta Chen's Section A 
Resp., at 2 and Exhibit 1 (September 11, 2007).

2. Cost of Production Analysis

    Because we disregarded sales below the cost of production (COP) in 
the prior administrative review, we have reasonable grounds to believe 
or suspect that sales by Ta Chen in its home market were made at prices 
below the COP, pursuant to sections 773(b)(1) and 773(b)(2)(A)(ii) of 
the Act. See Certain Stainless Steel Butt-Weld Pipe Fittings From 
Taiwan: Preliminary Results of Antidumping Duty Administrative Review 
and Notice of Intent to Rescind in Part, 72 FR 35972-35973 (July 2, 
2007), and Notice of Final Results and Final Rescission in Part of 
Antidumping Duty Administrative Review: Certain Stainless Steel Butt-
Weld Pipe Fittings From Taiwan, 73 FR 1202 (January 7, 2008).
    Therefore, pursuant to section 773(b) of the Act, we conducted a 
COP analysis of home market sales by Ta Chen.

A. Calculation of COP

    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of the respondent's cost of materials and fabrication 
for the foreign like product, plus amounts for general and 
administrative (G&A) expenses, financial expenses and all costs and 
expenses incidental to packing the merchandise. See the ``Test of Home 
Market Sales Prices'' section below for treatment of home market 
selling expenses. In our COP analysis, we relied on the COP data 
submitted by Ta Chen in its original and supplemental cost 
questionnaire responses, and adjusted the reported direct materials 
costs based on our findings at verification. See below.

B. Test of Home Market Prices

    We compared the weighted-average COP to home market sales of the 
foreign like product, as required under section 773(b) of the Act, in 
order to determine whether these sales had been made at prices below 
the COP. In determining whether to disregard home market sales made at 
prices below the COP, we examined whether such sales were made within 
an extended period of time in substantial quantities, and were not at 
prices that permitted the recovery of all costs within a reasonable 
period of time, in accordance with sections 773(b)(1)(A) and 
773(b)(1)(B) of the Act.

C. Results of COP Test

    In accordance with section 773(b)(1) of the Act, when less than 20 
percent of Ta Chen's sales of a given product were at prices less than 
the 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, as defined by section 773(b)(2)(C) of the Act. 
When 20 percent or more of Ta Chen's sales of a given product during 
the POR were at prices less than the COP, we determined that such sales 
have been made in ``substantial quantities'' within an extended period 
of time, in accordance with sections 773(b)(2)(B) and 773(b)(2)(C) of 
the Act. In such cases, because we use POR average costs, we also 
determined that such sales were not made at prices that would permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(2)(D) of the Act. Therefore, for purposes of this 
administrative review, we appropriately disregarded below-cost sales 
and used the remaining sales as the basis for determining NV, in 
accordance with section 773(b)(1) of the Act.

3. Price-to-Price Comparisons

    As there were sales at prices above the COP for all product 
comparisons, we based NV on prices to home market customers. We 
deducted credit expenses and added interest revenue. In addition, we 
made adjustments, where appropriate, for physical differences in the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. 
Finally, in accordance with section 773(a)(6) of the Act, we also 
deducted home market packing costs and added U.S. packing costs.

Application of Facts Available

    Pursuant to section 776(a)(2)(D) of the Act, the Department finds 
that the use of facts available (``FA'') is appropriate with regard to 
Ta Chen's reported costs of production. The Department preliminarily 
finds that Ta Chen significantly under-reported the direct material 
costs used in the cost of production of the subject merchandise. 
Furthermore, pursuant section 776(a)(2)(D) of the Act, the Department 
preliminarily finds that the application of FA is warranted with regard 
to Ta Chen's sales in the United States of merchandise purchased from 
other Taiwanese producers because the Department is unable to identify 
with certainty the actual producer of the merchandise being sold by Ta 
Chen.
    Section 776(a)(2) of the Act, provides that, if an interested 
party: (A) withholds information that has been requested by the 
Department; (B) fails to provide such information in a timely manner or 
in the form or manner requested; (C) significantly impedes a proceeding 
under the antidumping statute; or (D) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsection 782(d) of the Act, use facts otherwise available in reaching 
the applicable determination. Section 782(d) of the Act provides that 
the Department must inform the interested party of the nature of any 
deficiency in its response and, to the extent practicable, allow the 
interested party to remedy or explain such deficiency. We

[[Page 38977]]

find that pursuant to section 776(a)(2)(D) of the Act, the application 
of FA is warranted for the calculation of Ta Chen's costs of production 
because Ta Chen provided information that could not be fully verified. 
Furthermore, we find that pursuant to section 776(a)(2)(D) of the Act, 
the application of FA is warranted because Ta Chen failed to identify 
with certainty the manufacturer for certain sales of SSBWPFs made by Ta 
Chen.

A. Cost of Production/Direct Materials Adjustment

    Ta Chen purchases stainless steel coils to produce pipe, which it 
in turn processes into pipe fittings. See Ta Chen's sections B--D 
questionnaire response, September 27, 2007, at D-5. At verification, 
the Department found that Ta Chen's per-unit pipe fittings direct 
material cost (i.e., the standard cost of pipe, plus the variance) 
inexplicably rose much more slowly throughout the POR than the price of 
Ta Chen's raw material input for making pipes (i.e., stainless steel 
coils). See Ta Chen Verification Report, June 10, 2008, Section XIV at 
page 72. Normally, if raw material prices increase significantly then 
either the standard cost must increase significantly or the variance 
between actual and standard cost must increase significantly. For Ta 
Chen, neither of these increases appears to have occurred, with the 
result being that for some months the recorded cost of the input 
stainless steel coils used to produce the pipe exceeded Ta Chen's 
reported direct materials costs for fittings. Company officials could 
not explain this discrepancy at verification. Id. Therefore, the 
Department preliminarily determines that an adjustment is necessary to 
correct for this unexplained difference.
    To adjust for the under-reporting of direct materials costs, the 
Department estimated direct material cost for the two sample products 
reviewed at verification (i.e., one 304L and one 316L), yielded for 
pipe making and fittings fabrication. To adjust for the apparent 
underestimation of reported pipe costs, the Department first calculated 
estimated pipe input (coil) costs by using per kilogram (kg) coil 
purchase costs (for which data are available on the record for both 
coil grades, 304L and 316L, for all months of the POR). See Ta Chen's 
March 13, 2008, supplemental response at Exhibit 4th Supp.-18. The 
Department applied the per-kg. coil costs to the total reported weight 
of the pieces produced, by month. See Ta Chen Verification Report at 
Verification Exhibits 4 and 19. The Department then added to the 
estimated pipe input (coil) costs additional adjustments to account for 
yield loss from coil to pipe, yield loss from pipe to fittings, and 
pipe conversion costs. These additional adjustments were based upon the 
company's reported standard costs. Id. We compared the results of our 
calculation to Ta Chen's reported costs to calculate the adjustment to 
cost. We then applied these adjusted costs to Ta Chen's reported costs 
for merchandise produced and toll-produced by others for Ta Chen.
    Pursuant to section 776(a) of the Act, we determine that these 
adjustments are an appropriate application of FA to direct materials 
cost. Ta Chen could not provide an explanation of the discrepancies 
between the reported per-unit costs and other verified information, the 
Department determines that the application of FA is warranted. Also, we 
preliminarily conclude that Ta Chen did not fail to act to the best of 
its ability because the underlying data verified and Ta Chen provided 
the information that highlighted the apparent discrepancies. As such, 
the Department determines that adverse FA pursuant to section 776(b) of 
the Act is not warranted in this instance. Therefore as noted above, we 
are adjusting the costs of production. See the Analysis Memo for a more 
detailed discussion of the calculations.

B. Identity of Manufacturers

    Ta Chen not only manufactures subject fittings, but it also 
purchases completed fittings and has some toll processing performed by 
other unaffiliated Taiwanese manufacturers. See Ta Chen's section A 
questionnaire response dated September 11, 2007, at page 30. Ta Chen 
indicated that it reported itself (i.e., Ta Chen) as the manufacturer 
for sales observations which it produced or which were toll processed. 
In instances where the sale was made of fittings purchased from a 
supplier, Ta Chen stated that it reported the supplier as the 
manufacturer in its sales databases.
    However, during verification the Department found that Ta Chen had 
reported the other manufacturers' names in the manufacturing field for 
the sales database for all fittings that were purchased as well as toll 
processed. The Department also found that Ta Chen was apparently unable 
to distinguish between the manufacturers that toll process from those 
that supply certain types of subject fittings that Ta Chen re-sells, 
once the fittings that are toll-produced or purchased enter into Ta 
Chen's inventory system. See Ta Chen Verification Report at Section V, 
page 24.
    For all fittings, the cost test and the DIFMER data must be 
manufacturer specific. The cost database does not distinguish control 
numbers (CONNUMs) by supplier. However, we can distinguish between toll 
processed and purchased merchandise by CONNUM in the cost database as 
the Department found at verification that CONNUMs of merchandise 
purchased by Ta Chen were unique. See Ta Chen's supplemental 
questionnaire response, March 13, 2008, at page 4. For the sales 
database, as stated above, for merchandise not identified as 
manufactured by Ta Chen, we are unable to distinguish between sales of 
toll processed merchandise from sales of merchandise purchased from 
other producers.
    During verification, Ta Chen stated that in the normal course of 
business, it does not keep track of each specific manufacturer for each 
sale of fittings once the fittings enter into Ta Chen's inventory 
system. Ta Chen stated that the manufacturer identity of fittings that 
are toll processed and supplied is lost within its inventory before 
they are sold. See Ta Chen Verification Report at Section V, page 24. 
Ta Chen claims that companies that toll process and supply it fittings 
are not knowledgeable of Ta Chen's final customer or destination for 
the fittings. Although Ta Chen was able to identify which products it 
had purchased or toll processed during the POR for purposes of 
reporting its cost database, it is allegedly unable to link those with 
its sales database because of the loss of the manufacturer's identity 
that takes place when the subject fittings are commingled in inventory.
    In examining the issue of manufacturer further at verification, Ta 
Chen informed the Department that for merchandise supplied by other 
manufacturers, ``when the fittings were supplied to Ta Chen Taiwan it 
knew which supplier had supplied the merchandise, but once the fittings 
entered into its inventory it could no longer distinguish'' who the 
manufacturer was. Id. With respect to the toll-processed merchandise, 
Ta Chen stated that ``when the fittings were shipped to Ta Chen Taiwan 
it knew which subcontractor had toll processed the fittings, but once 
the fittings entered into its inventory it could no longer distinguish 
which subcontractor had done the toll processing.'' Id. In response to 
questions about merchandise quality issues, Ta Chen stated that its 
``quality control department checks the merchandise. The company stated 
that if there are

[[Page 38978]]

problems with the merchandise, the subcontractor or supplier would have 
to return to pick it up. The company said that in theory a mill test 
certificate would be provided to Ta Chen Taiwan by the subcontractors 
and suppliers.'' Id. at 26. Finally, the Department examined the system 
by which Ta Chen records purchases of fittings, and noted that there 
are codes available to denote the manufacturer from which fittings are 
purchased. Id. at 26-27.
    The Department preliminarily determines, contrary to Ta Chen's 
statements at verification, that it is able to segregate those sales 
which were toll-produced on behalf of Ta Chen from those sales of 
merchandise which were purchased from unrelated manufacturers. See the 
Analysis Memorandum dated June 30, 2008, for further information. 
Additionally, while Ta Chen did not report the actual manufacturer of 
certain sales of SSBWPFs as requested by the Department, claiming that 
it was unable to distinguish from which producer it purchased certain 
fittings, the Department found at verification that Ta Chen was aware 
of the individual manufacturer of fittings both for quality assurance 
purposes and at least before the merchandise entered into Ta Chen's 
inventory system.
    As noted above, section 776(a)(2) of the Act provides that, inter 
alia, if an interested party or any other person withholds information 
that has been requested by the Department or significantly impedes a 
proceeding under the antidumping statute, the administering authority 
and the Commission shall, subject to section 782(d), use the facts 
otherwise available in reaching the applicable determination under this 
title.
    We preliminarily find that the use of FA is warranted in accordance 
with section 776(a)(2)(D) of the Act, because Ta Chen did not 
specifically identify the manufacturer of the subject merchandise, as 
requested by the Department in its antidumping duty questionnaire and 
in its March 6, 2008, supplemental questionnaire. Consistent with 
Section 782(d) of the Act, the Department requested clarification of Ta 
Chen's reporting of the manufacturers' identities with respect to the 
purchased fittings. However, Ta Chen reported that it ``is unable to 
discern which company manufactured the fitting.'' See Ta Chen's 
supplemental questionnaire response dated March 13, 2008, at page 1. At 
verification, Ta Chen again stated to Department officials that it was 
unable to discern which company manufactured the purchased fittings. 
See Ta Chen Verification Report, Section V at pages 23--28. See also 
TCI Verification Report, Section IV at page 8 and Section IX.A.30 at 
page 21. Additionally, at verification, the Department found that Ta 
Chen had not reported toll-processed merchandise as being produced by 
Ta Chen, as it had previously indicated to the Department. See Ta 
Chen's section B-D response, September 24, 2007, at pages B-31 and C-53 
and 54. Instead, Ta Chen had reported the toll-producer as the 
manufacturer, rather than Ta Chen. The Department also found that the 
toll-producers were the same companies from which Ta Chen also 
purchased fittings. Id. at 24.
    Pursuant to section 776(a) of the Act, we determine that an 
application of FA to those sales identified as purchased from other 
manufacturers is appropriate. Despite Ta Chen's claims to the contrary, 
the Department found numerous instances where it appears that Ta Chen 
could segregate toll-produced and purchased material according to 
manufacturer. However, because Ta Chen has stated that it is unable 
segregate merchandise once it enters into its accounting system, the 
Department will apply FA to those sales of merchandise purchased from 
other sources. The Department intends to examine this issue more 
closely for the final results of this review. Therefore the Department 
will apply as FA to those sales identified as sales of purchased 
merchandise the average rate calculated for all merchandise produced or 
toll processed by Ta Chen.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determined NV based on sales in the comparison market 
at the same level of trade (LOT) as the CEP transaction. The NV LOT is 
that of the starting-price sales in the comparison market. For CEP, it 
is the level of the constructed sale from the exporter to the importer. 
To determine whether NV sales are at a different LOT than CEP sales, we 
examine different 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 difference 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, where possible, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales for which we are unable to quantify an LOT adjustment, if 
the NV level is more remote from the factory than the CEP level and 
there is no basis for determining whether the difference in levels 
between NV and CEP sales affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP offset provision).
    Ta Chen reported two channels of distribution in the home market: 
unaffiliated distributors and end-users. We examined the selling 
activities reported for each channel of distribution and organized the 
reported selling activities into the following four selling functions: 
sales process and marketing support, freight and delivery, inventory 
maintenance and warehousing, and warranty and technical services. We 
found that Ta Chen's level of selling functions to its home market 
customers for each of the four selling functions did not vary 
significantly by channel of distribution. See Ta Chen's section A 
Resp., at 16-25 (Sept. 11, 2007); see also Ta Chen's supplemental 
questionnaire response, at 6 and Exhibit 8, (January 28, 2008). 
Therefore, we preliminarily conclude that the selling functions for the 
reported channels of distribution constitute one LOT in the comparison 
market.
    For CEP sales, we examined the selling activities related to each 
of the selling functions between Ta Chen and its U.S. affiliate, TCI. 
Ta Chen reported that all of its sales to the United States are CEP 
sales made through TCI, i.e., through one channel of distribution, and 
claimed that there is only one LOT. We examined the four selling 
functions and found that Ta Chen's selling functions for sales to TCI 
are performed regardless of whether shipments are going to TCI or 
directly to the unaffiliated customer. Therefore, we preliminary 
determine that Ta Chen's U.S. sales constitute a single LOT.
    We then compared the selling functions Ta Chen provided in the home 
market LOT with the selling functions provided to the U.S. LOT. In the 
home market, Ta Chen provides significant selling functions related to 
the sales process and marketing support, warranty and technical 
service, inventory maintenance, and some technical services in the 
comparison market, which it does not for the U.S. LOT. On this basis, 
we determined that the HM LOT is at a more advanced level than Ta 
Chen's U.S. LOT. However, since we have preliminarily determined that 
there is only one LOT in the home market, we are unable to calculate a 
LOT adjustment. Because we have preliminarily determined that NV is 
established at a LOT that is at a more advanced stage of distribution 
than the LOT of the CEP transactions, and we are unable to quantify a 
LOT adjustment

[[Page 38979]]

pursuant to section 773(a)(7)(A) of the Act. Therefore, for these 
preliminary results, we have applied a CEP offset to the NV-CEP 
comparisons, in accordance with section 773(a)(7)(B) of the Act.
    The Department intends to examine this issue fully for the final 
results in light of comments by parties on this issue.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions into U.S. dollars based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Federal Reserve Bank, 
in accordance with section 773A(a) of the Act.

Preliminary Results of the Review

    As a result of our review, we preliminarily determine the weighted-
average dumping margin for the producer/exporter listed below for the 
period June 1, 2006, through May 31, 2007, to be as follows:
    Weighted-Average Margin
    Ta Chen Stainless Pipe Co., Ltd
    2.93%

Disclosure and Public Comment

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within five days of the 
date of publication of this notice. See 19 CFR 351.224(b). Pursuant to 
19 CFR 351.309, interested parties may submit cases briefs not later 
than 30 days after the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 35 days after the date of publication of this notice. 
Parties who submit case briefs or rebuttal briefs in this proceeding 
are requested to submit with each argument: 1) a statement of the 
issue; 2) a brief summary of the argument; and, 3) a table of 
authorities.
    Interested parties who wish to request a hearing or to participate 
if one is requested must submit a written request to the Assistant 
Secretary for Import Administration, Room 1870, within 30 days of the 
date of publication of this notice. Requests should contain: 1) the 
party's name, address and telephone number; 2) the number of 
participants; and, 3) a list of issues to be discussed. See 19 CFR 
351.310(c). Issues raised in the hearing will be limited to those 
raised in the respective case briefs. The Department will issue the 
final results of the administrative review, including the results of 
its analysis of issues raised in any written briefs, not later than 120 
days after the date of publication of this notice, pursuant to section 
751(a)(3)(A) of the Act.

Assessment Rates

    Upon completion of this review the Department will determine, and 
CBP shall assess, antidumping duties on all appropriate entries. In 
accordance with 19 CFR 351.212(b)(1), we have calculated an importer-
specific ad valorem rate for merchandise exported by Ta Chen which is 
subject to this review. The Department intends to issue assessment 
instructions to CBP 15 days after the publication of final results of 
this review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). See Antidumping and Countervailing Duty 
Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 
2003). This clarification will apply to entries of subject merchandise 
during the period of review produced by Ta Chen or by any of the 
companies for which we are rescinding this review and for which Ta Chen 
or each no-shipment respondent did not know its merchandise would be 
exported by another company to the United States. In such instances, we 
will instruct CBP to liquidate unreviewed entries at the all-others 
rate if there is no rate for the intermediate company(ies) involved in 
the transaction.

Cash Deposit

    The following cash deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise 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: (1) the cash deposit rate for the reviewed 
company will be the rate listed in the final results of review; (2) for 
previously investigated companies not listed above, 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, a prior review, or the 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) 
the cash deposit rate for all other manufacturers or exporters will 
continue to be the ``all others'' rate of 51.01 percent, which is the 
``all others'' rate established in the LTFV investigation. These 
deposit requirements, when imposed, shall remain in effect until 
further notice.

Notification to Interested Parties

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) 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 the antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 30, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-15475 Filed 7-7-08; 8:45 am]
BILLING CODE 3510-DS-S