Certain Stainless Steel Butt-Weld Pipe Fittings From Taiwan: Preliminary Results of Antidumping Duty Administrative Review, Notice of Intent To Rescind in Part, and Notice of Intent Not To Revoke Order in Part, 32532-32539 [E9-16114]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 74, Number 129 (Wednesday, July 8, 2009)]
[Notices]
[Pages 32532-32539]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-16114]


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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, Notice 
of Intent To Rescind in Part, and Notice of Intent Not To Revoke Order 
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 Enterprises, Inc., Core Pipe (formerly known as 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. and Liang Feng Enterprise (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 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). The Department also finds that 
revocation of the order with respect to Ta Chen is not warranted under 
19 CFR 351.222(b)(2).
    Based on Tru-Flow's, Liang Feng's, Censor's, and PFP's certified 
statements, and 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 period of review (POR), we 
hereby give notice that we intend to rescind the review regarding these 
companies. For a full discussion of the intent to rescind with respect 
to Liang Feng, Tru-Flow, Censor, and PFP, please refer to 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.

DATES: Effective Date: July 8, 2009.

FOR FURTHER INFORMATION CONTACT: John Drury or Angelica Mendoza, 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) 482-3019, respectively.

SUPPLEMENTARY INFORMATION: 

Period of Review

    The POR for this administrative review is June 1, 2007, through May 
31, 2008.

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) (LTFV 
Order). On June 9, 2008, the Department published a notice of 
opportunity to request administrative review for the period June 1, 
2007, through May 31, 2008. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 73 FR 32557 (June 9, 2008).
    In accordance with 19 CFR 351.213(b)(1) and (2), on June 27, 2008, 
petitioners requested an antidumping duty administrative review for Ta 
Chen, Liang Feng, Tru-Flow, Censor, and PFP. On June 30, 2008, Ta Chen 
requested an administrative review in accordance with 19 CFR 
351.213(b)(1) and (2). Ta Chen also requested, under 19 CFR 
351.222(b)(2) and (e), that the antidumping duty order on SSBWPFs, as 
it relates to Ta Chen, be revoked based on the absence of dumping, and 
included with its request certain company certifications regarding 
revocation.
    On July 30, 2008, the Department published the notice of initiation 
of this administrative review. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews, Request for Revocation in 
Part, and Deferral of Administrative Review, 73 FR 44220 (July 30, 
2008).
    On August 25, 2008, the Department issued its antidumping duty 
questionnaire to Ta Chen. On September 3, 2008, the Department issued 
its antidumping duty questionnaire to Liang Feng, Tru-Flow, Censor, and 
PFP. On September 29, 2008, the Department

[[Page 32533]]

received a letter from Tru-Flow, Liang Feng, Censor, and PFP stating 
that each company had no sales or shipments of subject merchandise to 
the United States during the POR. However, at the time that the letter 
was filed, the attached certifications of no shipments were for all 
firms except Liang Feng Enterprise. In addition, the certification from 
Censor was incomplete. Also, it was unclear from the certifications as 
to whether or not Liang Feng Stainless Steel Fitting Co., Ltd., and 
Liang Feng Enterprise were different names for the same company or were 
different companies. On September 30, 2008, Ta Chen submitted its 
response to section A of the Department's questionnaire. On October 1, 
2008, Censor and Liang Feng resubmitted certifications that neither 
company had shipments of certain stainless steel butt-weld pipe 
fittings from Taiwan during the POR.
    On October 16, 2008, Ta Chen submitted its responses to sections B, 
C, and D of the Department's questionnaire. On November 5, 2008, Ta 
Chen submitted unsolicited revisions to the databases for both its home 
market and United States sales, as well as revisions to the cost 
database.
    On January 23, 2009, the Department issued a supplemental section D 
questionnaire. On February 5, 2009, petitioners submitted comments 
regarding Ta Chen's sections B and C response. On February 25, 2009, Ta 
Chen responded to the Department's January 23, 2009, section D 
supplemental questionnaire. On February 27, 2009, the Department issued 
a sections A-C supplemental questionnaire.
    On March 5, 2009, the Department extended the time limit for the 
preliminary results of this administrative review by 120 days, to not 
later than June 30, 2009. See Stainless Steel Butt-Weld Pipe Fittings 
From Taiwan: Notice of Extension of Time Limit for Preliminary Results 
of Antidumping Duty Administrative Review, 74 FR 9590 (March 5, 2009).
    On March 9, 2009, petitioners submitted comments with respect to Ta 
Chen's section D supplemental questionnaire response. On March 12, 
2009, the Department issued a second section D supplemental 
questionnaire. On March 27, 2009, Ta Chen submitted separate responses 
to the section A-C supplemental questionnaire and the second section D 
supplemental questionnaire. Ta Chen submitted additional information 
with respect to the section D supplemental response on April 3, 2009. 
On April 9, 2009, the Department issued the third section D 
supplemental questionnaire. Ta Chen submitted a response to the third 
section D supplemental questionnaire on April 17, 2009.
    On April 22, 2009, the Department issued its verification agenda 
outlining the general procedures for the Department's verification of 
Ta Chen's cost information in Taiwan. Ta Chen submitted an unsolicited 
supplemental section D response on April 27, 2009. The Department 
verified Ta Chen's cost information as submitted on the record, in 
Tainan, Taiwan from May 4, 2009, through May 8, 2009. See Verification 
of the Cost Response of Ta Chen Stainless Steel Pipe Co., Ltd. in the 
Antidumping Duty Administrative Review of Stainless Steel BWPF from 
Taiwan (Ta Chen Verification Report), dated June 29, 2009. The 
Department issued the second section A-C supplemental questionnaire on 
May 28, 2009. Ta Chen submitted a response to the second section A-C 
supplemental questionnaire on June 12, 2009. The Department issued a 
third section A-C supplemental questionnaire on June 12, 2009. Ta Chen 
submitted a response to the third section A-C supplemental 
questionnaire on June 22, 2009.

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 29, 2008 and October 1, 2008, Liang Feng, Tru-Flow, 
PFP, and Censor submitted certifications 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 CBP inquiries in order to determine that there were no 
identifiable entries of SSBWPFs during the POR manufactured or exported 
by Liang Feng, Tru-Flow, PFP or Censor. There was no evidence of 
entries from these companies. See Memorandum to the File, through 
Angelica Mendoza, Program Manager, from John Drury, Analyst, Ta Chen 
Stainless Pipe Co., Ltd. No Shipments Inquiry, dated May 26, 2009. 
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.

Notice of Intent Not To Revoke Order In Part

    On June 30, 2008, Ta Chen requested that, pursuant to 19 CFR 
351.222(b)(2), the Department revoke it from the antidumping duty order 
on certain stainless steel butt-weld pipe fittings from Taiwan at the 
conclusion of this administrative review. Ta Chen submitted along with 
its revocation request a certification stating that: (1) The company 
sold subject merchandise at not less than NV during the POR, and that 
in the future it would not sell such merchandise at less than NV; (2) 
the company has sold the subject merchandise to the United States in 
commercial quantities during each of the past three years; and (3) the 
company agrees to immediate reinstatement of the antidumping duty 
order, if the Department concludes that the company, subsequent to 
revocation, sold the subject merchandise at less than NV. See 19 CFR 
351.222(e).
    In determining whether or not to revoke an antidumping duty order 
with respect to a particular producer/exporter under 19 CFR 
351.222(b)(2), the Department considers whether: (1) The producer/
exporter has sold the subject merchandise at not less than NV for a 
period of at least three consecutive years; (2) the producer/exporter 
has agreed to immediate reinstatement of the order if the Department 
finds that it has resumed making sales at less than NV; and (3) the 
continued application of the order is not otherwise necessary to offset 
dumping. In this case, our preliminary margin calculation shows that Ta 
Chen sold the subject merchandise at less than NV during the current 
review period. See ``Preliminary Results of the Review'' section below. 
Moreover, Ta Chen received antidumping duty margins above de minimis in 
the previous two administrative reviews. Ta Chen makes its request 
predicated on the assumption that action by the Court of International 
Trade will result in recalculations for both administrative reviews of 
margins at zero or de minimis. However, it is not the Department's 
policy to take pending court appeals into account when determining 
whether revocation of the merchandise produced and exported by a 
particular company from an existing antidumping duty order is 
warranted. See, e.g., Certain Steel Concrete Reinforcing Bars From 
Turkey; Final Results of Antidumping Duty Administrative Review and 
Determination To Revoke in Part, 73 FR

[[Page 32534]]

66218, 66219 (Nov. 7, 2008). While we acknowledge that the Department's 
determinations in the two prior segments of this proceeding are 
currently in litigation, there is no final and conclusive judgment from 
any court supporting Ta Chen's arguments or invalidating the 
Department's findings in the prior administrative reviews. Therefore, 
we preliminarily find that Ta Chen has sold subject merchandise at less 
than NV within the period of at least three consecutive years. 
Accordingly, we preliminarily determine, pursuant to 19 CFR 
351.222(b)(2), that revocation of the order with respect to Ta Chen is 
not warranted.

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.

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 the 2007-2008 Administrative Review of 
the Antidumping Duty Order of Certain Stainless Steel Butt-Weld Pipe 
Fittings from Taiwan: Ta Chen Stainless Pipe Co., Ltd. (June 30, 2009) 
(Analysis Memorandum).
    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, 73 FR 
38972 (July 8, 2008) (unchanged in the final results) 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) (unchanged in the final 
results). For those products which Ta Chen cannot identify with 
certainty the producers from which certain merchandise was purchased, 
the Department has applied facts available. See ``Application of 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, dated 
September 30, 2008, at 20-22. 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, 
dated October 16, 2008, at B-8 through B-10 and C-8 through C-10. For 
U.S. sales, Ta Chen reported only constructed export price (CEP) sales, 
and we used the invoice date (or shipment date, if the shipment date 
occurred before 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 (or shipment of the merchandise, if the 
shipment date occurred before the invoice date). See Ta Chen's section 
A questionnaire response, dated September 30, 2008, at 20-22.

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

[[Page 32535]]

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, Ta Chen International (TCI). See Analysis Memorandum, dated 
June 30, 2009. 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). See Ta Chen's section A questionnaire response, dated 
September 30, 2008, at A-16. The Department 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. Also, TCI generally 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 C questionnaire 
response, dated October 16, 2008, at C-26 through C-28 and Appendix 30 
and the section A-C supplemental response, dated March 27, 2009, at 9.
    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. For indent sales, we also made deductions for U.S. port 
warehousing expenses. See Ta Chen's section A-C supplemental response, 
dated March 27, 2009, at 20-21. 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 
response, dated September 30, 2008, at 2 and Exhibit 1.

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, 73 FR 38972 (July 8, 2008), 
and Certain Stainless Steel Butt-Weld Pipe Fittings from Taiwan: Final 
Results and Final Rescission in Part of Antidumping Duty Administrative 
Review, 74 FR 1174 (January 12, 2009).
    Therefore, pursuant to section 773(b) of the Act, we conducted a 
COP analysis of HM 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 ``Test of Home 
Market Sales Prices'' section below for treatment of home market 
selling expenses. In our COP analysis, we have relied upon Ta Chen's 
cost of production (``COP'') and constructed value (``CV'') information 
from the company's submissions dated April 3, 2009, as amended April 
27, 2009, (``Revised Section D Database'') except in the following 
instances.
    First, we adjusted Ta Chen's reported direct material costs to 
reflect the actual costs of the direct material used to produce the 
merchandise under consideration produced during the POR (i.e., pipe). 
We adjusted the reported pipe costs because we found that the reported 
costs do not reasonably reflect the costs incurred to produce the 
merchandise under consideration during the POR in accordance with 
section 773(f)(1)(A) of the Act. The reported pipe costs do not reflect 
actual costs because the direct material variances used to calculate 
the costs as reported in Ta Chen's normal books and records include 
amounts accumulated from prior to the POR.
    To determine the adjustment to Ta Chen's reported per-unit direct 
material costs, we relied on the results of our analysis of nineteen 
control numbers (``CONNUMs'') for which the monthly per-unit standard 
direct material costs and related production quantities were available 
on the record of this proceeding. We recalculated the monthly per-unit 
direct material costs for these CONNUMs by applying the related monthly 
variances incurred by the pipe plant to the standard monthly direct 
material costs of each CONNUM. We calculated the monthly variances of 
the pipe plant as the ratio of the total actual material and conversion 
costs incurred by the pipe plant for a particular month to the total 
standard costs incurred by the pipe plant for that month. We calculated 
the revised weight-averaged POR per-unit direct material cost per kg 
for each of the nineteen CONNUMs, determined the percentage difference 
between the revised and reported direct material costs of each of the 
CONNUMs, and then calculated one overall weight-averaged percentage of 
difference based on the production quantities (i.e. weight) of the 
CONNUMs. We applied this adjustment to the per-unit direct material 
costs of all CONNUMs reported as self-produced or subcontracted.
    Second, we reduced the costs of Ta Chen's self-produced and 
subcontracted products for the purchase price variance incurred on 
purchased products. In its normal books and records, Ta Chen assigns 
any purchase price variances incurred on the purchased products among 
all products whether purchased, self-produced, or subcontracted. We 
find that Ta Chen's methodology, which was used as the basis for the 
company's reported costs, is distortive because the purchase price 
variance included in the costs of the self-produced and subcontracted 
products does not relate to the self-produced and subcontracted 
products. Therefore, for purposes of these preliminary results, we have 
adjusted the reported costs of the self-produced and subcontracted 
products to exclude the purchase price variance from those costs.

[[Page 32536]]

    Finally, we revised the numerator of Ta Chen's reported general and 
administrative (``G&A'') expense rate to include certain expenses 
excluded by Ta Chen. We also reduced the numerator of the G&A expense 
rate for gains realized in FY 2007 on the disposals of assets. See 
Memorandum from LaVonne Clark, Senior Accountant, through Michael P. 
Martin, Lead Accountant, to Neal M. Halper, Director, Office of 
Accounting: Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results--Ta Chen Stainless Steel Pipe 
Co., Ltd., June 30, 2009.
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 (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 (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 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. Additionally, based on information obtained in the verification, 
the Department finds that the use of FA is appropriate with regard to 
sales of two of Ta Chen's CONNUMs because evidence on the record 
indicates that all sales of these CONNUMs should be classified as 
material purchased from other manufacturers.
    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 
section 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 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 and did not 
properly identify two CONNUMs in the sales databases as purchased 
products, per evidence collected at verification.

A. 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 30, 2008, at pages 2-4 and 31-
32. Ta Chen indicated that it reported itself (i.e., Ta Chen) as the 
manufacturer for sales observations which it produced. For those which 
were toll processed, Ta Chen identified the manufacturer or 
manufacturers that toll processed the type of fittings in question. In 
instances where the sale was made of fittings purchased from a 
supplier, Ta Chen stated that it reported the supplier or suppliers of 
the type of fittings in question as the manufacturer(s) in its sales 
databases. See Ta Chen's section B and C response, dated October 16, 
2008, at B-37 through B-38, and C-54 through C-55; see also Ta Chen's 
supplemental section D questionnaire response, dated February 25, 2009, 
at 3 through 4, Ta Chen's supplemental section A-C questionnaire 
response, dated March 27, 2009, at 2 through 4 and Appendices Q2b and 
Q2c, Ta Chen's supplemental section A-C questionnaire response, dated 
June 22, 2009, at 1 through 3, Ta Chen's supplemental section A-C 
questionnaire response, dated June 22, 2009, at 1 through 3, Ta Chen's 
supplemental section A-C response, dated June 24, 2009, at 1 through 2 
and its other June 24, 2009 supplemental section A-C response at 1 
through 3. Once the fittings that are toll-produced or purchased enter 
into Ta Chen's inventory system, Ta Chen states that it is neither able 
to distinguish between the manufacturers that toll process merchandise 
nor able to distinguish merchandise from those that supply certain 
types of subject fittings that Ta Chen re-sells. See Ta Chen's 
supplemental section A-C questionnaire response, dated March 27, 2009, 
at 2 through 4 and Appendices Q2b and Q2c.
    Appendices A2b and Q2c of the March 27, 2009 supplemental 
questionnaire response identifies fittings which are purchased, 
subcontracted, or manufactured by Ta Chen. These fittings are 
identified by control number (CONNUM). Thus, evidence on the record 
indicates that CONNUMs of merchandise purchased by Ta Chen were unique 
and were neither manufactured by Ta Chen nor toll produced. In 
addition, Appendix Q2c indicates that some of the fittings purchased 
from other producers were manufactured by only one producer during the 
POR. Id.
    The Department preliminarily determines 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. However, Ta Chen was unable to report the actual 
producer of the purchased fittings. See Analysis Memorandum dated June 
30, 2009.

[[Page 32537]]

    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 February 27, 2009, 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 ``could not 
determine the subcontracted items or purchased items from (the) 
specific subcontractor or vendor'' See Ta Chen's section A-C 
supplemental questionnaire response, dated March 27, 2009, at 2. 
Pursuant to section 776(a) of the Act, we determine that an application 
of FA to those sales identified as purchased from other manufacturers, 
and not identified specifically as produced by one company, is 
appropriate. Because Ta Chen has stated that it is unable to segregate 
merchandise once it enters into its accounting system, and because 
certain merchandise was identified as possibly being produced by more 
than one producer, the Department will apply FA to those sales of 
merchandise purchased from other sources where the producer is not 
specifically identified. As FA, the Department will apply to those 
sales identified as sales of purchased merchandise, where the producer 
is not specifically identified, the average rate calculated for all 
merchandise produced or toll processed by Ta Chen.

B. Control Numbers

    As noted above, Ta Chen not only manufactures subject fittings, but 
also purchases completed fittings and has some toll processing 
performed by other unaffiliated Taiwanese manufacturers. During 
verification, Ta Chen stated to the Department that all of the fittings 
purchased from other manufacturers had certain identical physical 
characteristics. That is, if a fitting had a specific physical 
characteristic, it was purchased from a different manufacturer. See 
Verification of the Cost 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 
29, 2009, at 14. However, for all sales of three CONNUMs, Ta Chen 
reported that these fittings were toll-produced rather than purchased.
    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 
sufficiently identify certain sales of the subject merchandise as 
purchased from other manufacturers, as requested by the Department in 
its antidumping duty questionnaire and in its February 27, 2009, 
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. 
Despite Ta Chen's statements that it had identified all sales in terms 
of manufacturing type, evidence on the record indicates that Ta Chen 
did not identify these certain sales as purchased. See Ta Chen's 
section A-C supplemental questionnaire response, dated March 27, 2009, 
at 2. See also Ta Chen's section D supplemental questionnaire response, 
dated February 25, 2009, at 1-4; Ta Chen's section A-C supplemental 
questionnaire response, dated March 27, 2009, at 1-4 and Exhibits Q2b 
and Q2c; Ta Chen's Section A-C supplemental questionnaire response, 
dated June 22, 2009, at 1-3; and Ta Chen's section A-C supplemental 
questionnaire response, dated June 24, 2009, at 1-2, and its other 
supplemental questionnaire response, also dated June 24, 2009, at 1-3. 
Pursuant to section 776(a) of the Act, we determine that an application 
of FA to those sales identified as toll-produced that should be 
identified as purchased from other manufacturers is appropriate. 
Because Ta Chen did not segregate merchandise as purchased, the 
Department will apply FA to those sales of merchandise identified as 
toll-produced but having certain physical characteristics indicating 
that they were purchased from other manufacturers.

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 a LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales for which we are unable to quantify a 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 
response, dated September 30, 2008, at 16 through 24 and Appendix 30; 
see also Ta Chen's section A-C supplemental questionnaire response, 
dated March 27, 2009, at 4 through 11. 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. 
All of Ta Chen's sales to the United States were CEP sales made through 
TCI. There were two types of CEP sales; those sales from TCI's 
inventory to unaffiliated customers, and ``back-to-back'' CEP sales 
(called indent sales by Ta Chen) where merchandise is shipped directly 
from the foreign manufacturer/reseller to the unrelated U.S. customers. 
For indent sales, Ta Chen invoices TCI and TCI invoices the unrelated 
customers. Thus, while the channel of distribution for U.S. sales is 
from Ta Chen to TCI, there are different types of sales within this 
channel of distribution and different selling activities provided by

[[Page 32538]]

Ta Chen to TCI depending upon the type of CEP sale. However, the 
Department does not find these CEP sales to be at different LOTs. The 
types of customers are identical. Additionally, the selling functions 
provided by Ta Chen to TCI for both types of sales appear to be 
substantially similar. Therefore, we preliminary determine that Ta 
Chen's U.S. sales constitute a single LOT. See Analysis Memorandum 
dated June 30, 2009.
    In analyzing the respective LOTs for home market sales and U.S. CEP 
sales, the Department's practice is to ``examine stages in the 
marketing process and selling functions along the chain of distribution 
between the producer and the unaffiliated customer.'' See, e.g., 
Certain Hot-Rolled Carbon Steel Flat Products From Romania: Preliminary 
Results of the Antidumping Duty Administrative Review, 72 FR 44821, 
44824 (``HRS from Romania'') (August 9, 2007) (unchanged in final 
results, Certain Hot-Rolled Carbon Steel Flat Products from Romania: 
Final Results of Antidumping Duty Administrative Review, 72 FR 71357 
(December 17, 2007)). If the home market sales are at a different LOT 
than CEP sales and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between sales 
on which NV is based and home market sales at the LOT of the export 
transaction, the Department makes a level of trade adjustment under 
Section 773(a)(7)(A) of the Act. See HRS from Romania at 44824. For CEP 
sales, 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 affects price comparability, we adjust NV 
under Section 773(a)(7)(B) of the Act (the CEP offset). Id. Substantial 
differences in selling activities are a necessary, but not sufficient, 
condition for determining that there is a difference in the stages of 
marketing. See 19 CFR 351.412(c)(2). Some overlap in selling activities 
will not preclude a determination that two sales are at different 
stages of marketing. Id. It is within this framework that the 
Department conducts its LOT analysis.
    We compared the selling functions Ta Chen provided in the home 
market LOT with the selling functions provided to the U.S. LOT. Based 
on our analysis, we preliminarily determine that the HM LOT is not at a 
more advanced level than Ta Chen's U.S. LOT. As stated above, the 
Department analyzes selling activities in four categories: sales 
process and marketing support, freight and delivery, inventory 
maintenance and warehousing, and warranty and technical services. For 
the first category, the sales process and marketing support includes 
the following selling activities: customer contact, order acceptance, 
risk of non-payment, payment processing, market research, and travel 
and entertainment. The freight and delivery category includes packing 
and loading as well as freight and delivery. The inventory maintenance 
category stands alone, while the warranty and technical services 
category includes customer complaints, technical assistance, and after-
sale services.
    Of the twelve selling functions, Ta Chen reported that sales in the 
home market had higher selling activities in eleven of the twelve 
selling functions. However, based on our analysis of the evidence on 
the record, we preliminarily determine that five of the selling 
activities (order acceptance, inventory maintenance, market research, 
technical assistance, and packing/loading) are, on the whole, equal in 
both the home market LOT and CEP LOT. Additionally, we preliminarily 
determine that three of the selling functions (risk of non-payment, 
payment processing, and customer contact) are more intense in the home 
market LOT than in the CEP LOT. Also, we preliminarily determine that 
one of the selling functions (freight and delivery), is more intense in 
the U.S. market. Finally, for the travel and entertainment and the 
customer complaints selling functions, we preliminarily find that we 
are unable to determine with certainty the levels of selling activities 
in both markets but believe that they are substantially similar. 
Therefore, based on the Department's examination of the claimed selling 
functions, we preliminarily determine that the home market LOT is not 
at a more advanced stage than the CEP LOT and are not granting a CEP 
offset. See Analysis Memorandum dated June 30, 2009.

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, 2007, through May 31, 2008, to be as follows:

------------------------------------------------------------------------
                                                             Weighted-
                                                          average margin
------------------------------------------------------------------------
Ta Chen Stainless Pipe Co., Ltd.........................           0.80%
------------------------------------------------------------------------

Disclosure and Public Comment

    The Department will disclose to parties to the proceedings 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 or the first business day thereafter. 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 or the first 
business day thereafter. 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 or the first business day 
thereafter. 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. See Antidumping and Countervailing Duty Proceedings:

[[Page 32539]]

Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This 
clarification will apply to entries of subject merchandise during the 
POR 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 Requirements

    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. See LTFV 
Order. 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, 2009.
John M. Andersen,
Acting Deputy Assistant Secretary for AD/CVD Operations.
[FR Doc. E9-16114 Filed 7-7-09; 8:45 am]
BILLING CODE 3510-DS-P