Light-Walled Rectangular Pipe and Tube From Mexico: Preliminary Results of Antidumping Duty Administrative Review, 55559-55568 [2010-22777]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 176 (Monday, September 13, 2010)]
[Notices]
[Pages 55559-55568]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-22777]



[[Page 55559]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-201-836]


Light-Walled Rectangular Pipe and Tube From Mexico: Preliminary 
Results of Antidumping Duty Administrative Review

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

SUMMARY: In response to requests from Productos Laminados de Monterrey 
S.A. de C.V. (Prolamsa), Nacional de Acero S.A de C.V (Nacional), 
Ternium S.A de C.V. (Ternium) and petitioners,\1\ the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on light-walled rectangular pipe and tube 
(LWRPT) from Mexico. The review covers imports of subject merchandise 
from nine firms, two of which were selected as mandatory respondents 
(i.e., Maquilacero and Regiomontana de Perfiles y Tubos S.A. de C.V.). 
The period of review (POR) is January 30, 2008, to July 31, 2009.
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    \1\ Petitioners include Atlas Tube, Bull Moose Tube Company, and 
Searing Industries, Inc.
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    We preliminarily determine that sales of LWRPT from Mexico have 
been made below normal value (NV) by Maquilacero and Regiopytsa during 
the POR. If these preliminary results are adopted in our final results 
of this administrative review, we will issue appropriate assessment 
instructions to U.S. Customs and Border Protection (CBP). Interested 
parties are invited to comment on these preliminary results. Parties 
who submit argument in these proceedings 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.

DATES: Effective Date: September 13, 2010.

FOR FURTHER INFORMATION CONTACT: Edythe Artman, Ericka Ukrow 
(Maquilacero), or John Drury, Brian Davis (Regiopytsa), 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-
3931, (202) 482-0405, (202) 482-0195, or (202) 482-7924, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On August 5, 2008, the Department published in the Federal Register 
the antidumping duty order covering, inter alia, LWRPT from Mexico. See 
Light-Walled Rectangular Pipe and Tube from Mexico, the People's 
Republic of China, and the Republic of Korea: Antidumping Duty Orders; 
Light-Walled Rectangular Pipe and Tube from the Republic of Korea: 
Notice of Amended Final Determination of Sales at Less Than Fair Value, 
73 FR 45403 (August 5, 2008) (Order). On August 3, 2009, the Department 
published in the Federal Register its notice of opportunity to request 
an administrative review of this order entitled Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity To Request Administrative Review, 74 FR 38397 (August 3, 
2009), covering, inter alia, LWRPT from Mexico for the POR (i.e., 
January 30, 2008, through July 31, 2009).
    In response, on August 28, 2009, petitioners requested that the 
Department conduct an administrative review of entries of subject 
merchandise made by nine Mexican producers/exporters \2\ for the POR 
January 30, 2008, through July 31, 2009. In addition, on August 31, 
2009, the Department received requests for review from three Mexican 
exporters/producers and their affiliates included in the petitioner's 
request (i.e., Prolamsa, Nacional, and Ternium).
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    \2\ These producers/exporters are Prolamsa, Maquilacero S.A. de 
C.V. (Maquilacero), Regiomontana de Perfiles y Tubos S.A. de C.V. 
(Regiopytsa), Nacional, Industrias Monterrey S.A. de C.V. (IMSA), 
Perfiles y Herrajes LM S.A. de C.V. (Perfiles y Herrajes), Galvak 
S.A. de C.V. (Galvak), Hylsa S.A. de C.V. (Hylsa), and Ternium.
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    On September 22, 2009, the Department published in the Federal 
Register a notice of initiation of this antidumping duty administrative 
review covering the period January 30, 2008, through July 31, 2009. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 74 FR 48224 (September 22, 
2009) (Initiation Notice).\3\
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    \3\ As noted in the memorandum to Richard O. Weible, Director, 
AD/CVD Operations, Office 7, entitled, ``Respondent Selection 
Memorandum,'' dated October 15, 2009, there were spelling errors 
with respect to the names of certain companies for which we 
initiated reviews in our Initiation Notice at 74 FR 48225. We 
published a correction regarding these company names in the 
following month's notice of initiation of antidumping and 
countervailing duty reviews and also correctly identified the POR as 
January 30, 2008, through July 31, 2009, see Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and 
Request for Revocation in Part, 74 FR 54958 (October 26, 2009).
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    On September 22, 2009, Ternium S.A. de C.V., and its affiliates 
Hylsa S.A. de C.V.; Galvak S.A. de C.V.; and Industrias Monterrey S.A. 
de C.V. requested that the Department rescind the review of these 
companies and/or clarify that the administrative review of Ternium and 
its affiliates was initiated solely based on Ternium's request for 
review. Based on 19 CFR 303(f)(3)(ii), Ternium alleged that 
petitioner's request was invalid due to the fact that the certificate 
of service did not indicate that copies were served on counsel to 
Ternium and its affiliates or on these companies directly. In response, 
petitioner contended that domestic parties complied with the 
Department's service regulations at 19 CFR 303(f)(3)(ii) by serving a 
copy of the review request to all parties on the latest public service 
list for the proceeding, thus, using the list generated in the 
investigation of the present proceeding. Petitioners also argued that 
even if domestic parties did not technically comply with the 
Department's notice regulation, service in accordance with the 
Department's latest service list for the proceeding represents a good 
faith attempt to service. Petitioners re-filed their review request 
with a revised public service list and specifically served Ternium 
parties concurrent with the filing on September 25, 2009. In its 
response letter to Ternium's request, on October 14, 2009, the 
Department clarified that the initiation of Ternium and its affiliates 
was based on both Ternium's request for review, dated August 31, 2009, 
and petitioner's review request, dated August 28, 2009. Moreover, as 
noted above, a request for review with corrected errors was served to 
all parties and filed on September 25, 2009, demonstrating a good faith 
attempt to comply with the Department's service requirements on behalf 
of petitioners. See Letter from petitioners titled, ``Light-Walled 
Rectangular Pipe and Tube from Mexico: Administrative Review,'' dated 
September 25, 2009.
    On September 28, 2009, the Department issued a letter to all 
interested parties indicating its intention to select mandatory 
respondents based on U.S. import data obtained from U.S. CBP and 
provided parties an opportunity to comment on the CBP data. See Letter 
from the Department titled, ``To All Interested Parties,'' dated 
September 28, 2009. Petitioners responded, on October 1, 2009, and 
recommended the Department choose the largest exporters by volume as 
respondents. In addition, in its October 16, 2009, letter, Prolamsa 
requested to be selected as a mandatory respondent alleging that it is 
the largest Mexican producer and exporter of LWRPT to the United Sates, 
and also

[[Page 55560]]

because the number of valid, pending review requests is not large.
    On October 15, 2009, the Department determined that, because it was 
not feasible to examine all nine producers/exporters of the subject 
merchandise; the most appropriate methodology for purposes of this 
review was to select the two largest producers/exporters by export 
volume. Accordingly, the Department selected Maquilacero and Regiopytsa 
as mandatory respondents.\4\ See Memorandum to Richard O. Weible, 
Director, AD/CVD Operations, Office 7, ``Respondent Selection 
Memorandum,'' dated October 15, 2009.
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    \4\ The companies not selected as mandatory respondents for this 
review are Prolamsa, Nacional, Industrias Monterrey S.A. de C.V., 
Perfiles y Herrajes LM S.A. de C.V., Galvak S.A. de C.V., Hylsa S.A. 
de C.V., and Ternium.
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    The Department issued its standard antidumping duty questionnaire 
to Maquilacero and Regiopytsa on October 16, 2009.

Maquilacero

    Maquilacero submitted its response to section A of the 
questionnaire (AQR) on November 16, 2009, its response to sections B 
and C of the questionnaire (BQR, CQR, respectively) on December 8, 
2009, and section D response (DQR) on December 14, 2009. On January 19, 
2010, Maquilacero submitted cost data using quarterly averaging cost 
periods and requested that the Department rely on this quarterly cost 
data for purposes of calculating its margin. The Department issued a 
supplemental questionnaire to Maquilacero for sections A through C of 
the questionnaire on February 2, 2010. Maquilacero filed its response 
on March 4, 2010. On April 8, 2010, the Department issued a second 
supplemental questionnaire (SSQR) covering sections A through C of the 
Department's antidumping duty questionnaire. On April 30, 2010, 
Maquilacero filed its response to the Department's SSQR. On May 14, 
2010, the Department issued its first supplemental questionnaire 
covering section D of the Department's antidumping duty questionnaire. 
On June 14, 2010, Maquilacero filed its response to the Department's 
May 14, 2010, section D supplemental questionnaire (FDQR). Maquilacero 
submitted its response to the Department's June 14, 2010, third 
supplemental questionnaire (TSQR) on June 30, 2010. On August 9, 2010, 
the Department issued a second supplemental section D questionnaire 
(SDQR), and on August 11, 2010, a fourth supplemental questionnaire 
covering sections A through C. Maquilacero submitted its response to 
the Department's SDQR on August 17, 2010, and its response to the 
fourth supplemental questionnaire on August 23, 2010.
    The Department received no comments on any of Maquilacero's 
questionnaire responses from petitioners.

Regiopytsa

    Regiopytsa submitted its response to section A of the questionnaire 
(RAQR) on November 24, 2009, and its response to sections B and C of 
the questionnaire (RBQR, RCQR, respectively) on December 8, 2009. On 
December 22, 2009, the Department received a company-specific 
allegation from petitioners that home market sales made by Regiopytsa 
were made at prices below the cost of production. On January 25, 2010, 
petitioners, at the Department's request, revised their December 22, 
2009 cost allegation. See Memo to the File titled, ``Telephone Call 
with Petitioners' Counsel Regarding Sales-Below-Cost Allegation for 
Regiomontana de Perfiles y Tubos S.A. de C.V.,'' dated January 12, 2010 
(Cost Allegation Memo), which explains that petitioners must submit a 
cost test comparing the net home market price with the cost of 
production rather than the cost of manufacture. On February 16, 2010, 
the Department initiated a sales-below-cost of production investigation 
with respect to Regiopytsa. See Memorandum to the File titled, ``The 
Petitioners' Allegation of Sales Below the Cost of Production for 
Regiomontana de Perfiles y Tubos S.A. de C.V.''
    On February 19, 2010, the Department issued a letter to Regiopytsa 
requesting that it respond to section D of the Department's antidumping 
duty questionnaire. On March 3, 2010, the Department issued a 
supplemental questionnaire covering Regiopytsa's RAQR, RBQR, and RCQRs. 
On March 22, 2010, Regiopytsa submitted its response to section D of 
the Department's antidumping duty questionnaire (RDQR). On March 31, 
2010, Regiopytsa submitted its response to the Department's March 3, 
2010 supplemental questionnaire (RSQR). On April 16, 2010, petitioners 
submitted comments covering both Regiopytsa's RDQR and RSQR. On April 
30, 2010, Regiopytsa submitted an additional response containing 
supplemental information covering the Department's March 3, 2010, 
supplemental questionnaire (RSSQR). On May 14, 2010, the Department 
issued a supplemental questionnaire covering Regiopytsa's RDQR. On May 
17, 2010, the Department issued a supplemental questionnaire covering 
both Regiopytsa's RSQR and RSSQRs. On June 11, 2010, Regiopytsa 
submitted its response to the Department's May 14, 2010 supplemental 
questionnaire (RSDQR). On June 18, 2010, Regiopytsa submitted its 
response to the Department's May 17, 2010 supplemental questionnaire as 
well as provided additional information related to the Department's May 
14, 2010, supplemental questionnaire covering Regiopytsa's RDQR 
(collectively, RSSQR).
    On July 15, 2010, Regiopytsa submitted its minor corrections 
related to the sales verification (see letter titled, ``Light-Walled 
Rectangular Pipe and Tube from Mexico: Submission of Minor 
Corrections'') and on July 21, 2010, it submitted the sales 
verification exhibits (see letter titled, ``Light-Walled Rectangular 
Pipe and Tube from Mexico: Submission of Sales Verification 
Exhibits''). On July 26, 2010, Regiopytsa submitted is minor 
corrections related to the cost verification (see letter titled, 
``Light-Walled Rectangular Pipe and Tube from Mexico: Submission of 
Minor Corrections'') and on July 27, 2010, it submitted the cost 
verification exhibits (see letter titled, ``Light-Walled Rectangular 
Pipe and Tube from Mexico: Submission of Cost Verification Exhibits''). 
On August 30, 2010, the Department requested Regiopytsa revise its cost 
file presented during the Department's July 19, 2010 through July 23, 
2010 cost verification. Additionally, on August 31, 2010, the 
Department requested Regiopytsa revise its home market and U.S. sales 
databases pursuant to the Department's verification findings and the 
minor corrections presented by company officials at the start of the 
verifications. See Memorandum to the File titled, ``Telephone Call with 
Counsel to Regiomontana de Perfiles y Tubos S.A. de C.V. 
(``Regiopytsa'') Requesting Revised COP File Reflecting Certain Minor 
Corrections Presented at Verification,'' dated August 30, 2010 and 
Letter to Regiopytsa from Angelica L. Mendoza, Program Manager, 
regarding Submission of Revised Sales Databases, dated August 31, 2010. 
Regiopytsa submitted its revised cost database on August 31, 2010, and 
its revised sales databases on September 2, 2010.

Non-Selected Companies

    In situations where we cannot apply our normal methodology of 
calculating a weighted-average margin due to requests to protect 
business-proprietary

[[Page 55561]]

information but where use of a simple average does not yield the best 
proxy of the weighted-average margin relative to publicly available 
data, normally we will use the publicly available figures as a matter 
of practice. See Ball Bearings and Parts Thereof From France, et al.: 
Final Results of Antidumping Duty Administrative Reviews, Final Results 
of Changed-Circumstances Review, and Revocation of an Order in Part, 75 
FR 53,661 (September 1, 2010). See ``Rates for Non-Selected Companies'' 
below.

Tolling of Deadlines

    As explained in the memorandum from the Deputy Assistant Secretary 
(DAS) for Import Administration, the Department exercised its 
discretion to toll deadlines for the duration of the closure of the 
Federal Government from February 5, through February 12, 2010. Thus, 
all deadlines in this segment of the proceeding were extended by seven 
days. See Memorandum to the Record from Ronald Lorentzen, DAS for 
Import Administration, regarding ``Tolling of Administrative Deadlines 
As a Result of the Government Closure During the Recent Snowstorm,'' 
dated February 12, 2010. Therefore, the deadline for the preliminary 
results of this review became May 17, 2010.
    Subsequently, on May 10, 2010, the Department published in the 
Federal Register a notice extending the time limits for the preliminary 
results of this review. See Light-Walled Rectangular Pipe and Tube from 
Mexico; Extension of Time Limit for Preliminary Results of Antidumping 
Duty Administrative Review, 75 FR 25841 (May 10, 2010). This extension 
established the deadline for these preliminary results as September 7, 
2010, at 25842.

Period of Review

    The POR is January 30, 2008, through July 31, 2009.

Scope of the Order

    The merchandise that is the subject of this order is certain welded 
carbon-quality light-walled steel pipe and tube, of rectangular 
(including square) cross section, having a wall thickness of less than 
4 mm.
    The term carbon-quality steel includes both carbon steel and alloy 
steel which contains only small amounts of alloying elements. 
Specifically, the term carbon-quality includes products in which none 
of the elements listed below exceeds the quantity by weight 
respectively indicated: 1.80 percent of manganese, or 2.25 percent of 
silicon, or 1.00 percent of copper, or 0.50 percent of aluminum, or 
1.25 percent of chromium, or 0.30 percent of cobalt, or 0.40 percent of 
lead, or 1.25 percent of nickel, or 0.30 percent of tungsten, or 0.10 
percent of molybdenum, or 0.10 percent of niobium, or 0.15 percent 
vanadium, or 0.15 percent of zirconium. The description of carbon-
quality is intended to identify carbon-quality products within the 
scope. The welded carbon-quality rectangular pipe and tube subject to 
this order is currently classified under the Harmonized Tariff Schedule 
of the United States (HTSUS) subheadings 7306.61.50.00 and 
7306.61.70.60. While HTSUS subheadings are provided for convenience and 
Customs purposes, our written description of the scope of this order is 
dispositive.

Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended 
(the Act), and 19 CFR 351.307, we conducted sales and cost 
verifications of the questionnaire responses of Regiopytsa from July 
12, 2010, through July 16, 2010 (sales) and July 19, 2010, through July 
23, 2010 (cost). We used standard verification procedures, including 
on-site inspection of Regiopytsa's production facility in Apodaca, 
Mexico. Our verification results are outlined in the following 
memoranda: (1) Memorandum to the File, through Angelica L. Mendoza, 
Program Manager, ``Verification of the Home Market and Export Price 
Sales Responses of Regiomontana de Perfiles y Tubos S.A. de C.V. in the 
Administrative Review of the Antidumping Duty Order on Light-Walled 
Rectangular Pipe and Tube from Mexico,'' dated September 7, 2010 (Sales 
Verification Report); and (2) Memorandum to File, through Neal Halper, 
``Verification of the Cost Response of Regiomontana de Perfiles y Tubos 
S.A. de C.V. in the Antidumping Duty Review of Light-Walled Rectangular 
Pipe and Tube from Mexico,'' dated September 7, 2010 (Cost Verification 
Report). Public versions of these reports are on file in the Central 
Records Unit (CRU) located in room 7046 of the main Department of 
Commerce Building, 14th Street and Constitution Avenue, NW., 
Washington, DC.

Affiliated Respondents

    Under section 771(33)(E) of the Act, if one party owns, directly or 
indirectly, five percent or more of the other, such parties are 
considered to be affiliated for purposes of the antidumping law. 
Furthermore, pursuant to 19 CFR 351.403, a respondent is required to 
report the downstream sales of its affiliate(s) to the first 
unaffiliated customer if the respondent's sales to that affiliate, (1) 
account for greater than five percent of the respondent's total home 
market sales of foreign like product, and (2) if those sales to the 
affiliate are determined to not be at arm's length.

Maquilacero

    In the final determination of the sales at less-than-fair-value 
investigation of LWRPT from Mexico, the Department determined that, 
pursuant to section 771(33)(E), Maquilacero had one affiliated party 
and used the downstream sales reported by Maquilacero's affiliate. See 
Notice of Final Determination of Sales at Less Than Fair Value: Light-
Walled Rectangular Pipe and Tube From Mexico, 73 FR 35649 (June 24, 
2008). For purposes of this administrative review, and pursuant to 
section 771(33)(E) of the Act, we determined that Maquilacero owns, 
directly or indirectly, five percent or more of another party and, 
therefore, Maquilacero submitted its affiliate's downstream sales as 
well as its POR sales of the foreign like product to this affiliate.

Regiopytsa

    For purposes of this administrative review, and pursuant to section 
771(33)(E) of the Act, we determined that Regiopytsa owns, directly or 
indirectly, five percent or more of another party. See Regiopytsa's 
RAQR at pages A-13 through A-18. However, at page 5 of its RSQR and 
page 3 of its RSSQR, Regiopytsa indicated that sales of merchandise 
that would constitute the foreign like product were made to its 
affiliate in the home market during the POR. Therefore, we asked that 
Regiopytsa report its downstream sales from the affiliate to 
unaffiliated customers. We also performed an arm's-length test. Due to 
the proprietary nature of the discussion, please see memorandum to the 
file titled, ``Analysis of Data Submitted by Regiomontana de Perfiles y 
Tubos S.A. de C.V. for the Preliminary Results of the Antidumping Duty 
Administrative Review of Light-Walled Rectangular Pipe and Tube from 
Mexico'' (A-201-836) and dated September 7, 2010 (Regiopytsa 
Preliminary Analysis Memo Memorandum), for a detailed explanation.

Fair Value Comparisons

    To determine whether sales of subject merchandise were made in the 
United States at less than fair value, we compared the export price 
(EP) to the NV, as described in the ``Export Price''

[[Page 55562]]

and ``Normal Value'' sections of this notice. In accordance with 
section 777A(d)(2) of the Act, we compared the EP of sales within the 
POR to the monthly weighted-average normal value of the foreign like 
product where there were sales made in the ordinary course of trade, as 
discussed in the ``Price-to-Price Comparisons'' section below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Maquilacero and Regiopytsa covered by the 
description in the ``Scope of the Order'' section above, and sold in 
the home market during the POR, to be foreign like product for purposes 
of determining appropriate product comparisons to U.S. sales. We relied 
on six characteristics to match U.S. sales of subject merchandise to 
home sales of the foreign like product: (1) Steel input type; (2) 
whether metallic coated or not; (3) whether painted or not; (4) 
perimeter; (5) wall thickness; and (6) shape. Where there were no 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 characteristics and reporting instructions listed in 
the Department's original October 16, 2009, questionnaire.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales made in the home market at 
the same level of trade (LOT) as EP or the constructed export price 
(CEP). The NV LOT is based on the starting price of sales in the home 
market or, when NV is based on constructed value (CV), that of the 
sales from which we derived selling, general, and administrative (SG&A) 
expenses and profit. See also 19 CFR 351.412(c)(1)(iii). With respect 
to CEP transactions in the U.S. market, the CEP LOT is the level of the 
constructed sale from the exporter to an affiliated importer after the 
deductions required under section 772(d) of the Act. See 19 CFR 
351.412(c)(1)(ii). For EP, it is the starting price, which is usually 
from exporter to importer. See 19 CFR 351.412(c)(1)(i). In this review, 
Maquilacero and Regiopytsa claimed their sales to the United States 
were entirely EP sales.
    To determine whether NV sales are at a different LOT than EP sales, 
we examine stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated 
customer. See 19 CFR 351.412(c)(2). If the home 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 home market sales at the LOT of the 
export transaction, we make a LOT adjustment under section 773(a)(7)(A) 
of the Act and 19 CFR 351.412. See, e.g., Notice of Final Determination 
of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel 
Plate from South Africa, 62 FR 61731 (November 19, 1997).

Maquilacero

    We obtained information from Maquilacero regarding the marketing 
stages involved in making their reported home market and U.S. sales to 
both unaffiliated customers. Maquilacero provided a description of all 
selling activities performed, along with a flowchart and description 
comparing the LOTs among each channel of distribution and customer 
category for both markets. See Maquilacero's AQR at A-13 through A-16, 
Exhibit A-6, and FSQR at 15 through 18 and Exhibit SA-10.
    Maquilacero sold LWRPT to end-users and retailers/distributors in 
both the home and U.S. markets.
    For the U.S. market, Maquilacero reported one LOT, with one channel 
of distribution, for its EP sales. See FSQR at 17. Based on our 
analysis of Maquilacero's selling functions for its sales to the United 
States, we determine that there was one LOT, i.e., the EP LOT (LOTU1), 
for its U.S. sales.
    For the home market, Maquilacero identified two channels of 
distribution described as follows: (1) Direct sales made by 
Maquilacero, and (2) indirect sales made by its affiliated reseller to 
the first unaffiliated customer. Maquilacero further reported that the 
downstream sales through its affiliated reseller were made at a 
distinct LOT, resulting in two LOTs in the home market. We reviewed the 
intensity at which Maquilacero performed each of the claimed selling 
functions with respect to each claimed channel of distribution. While 
we find small differences in the degree of selling functions that exist 
between Maquilacero and its affiliated reseller; such differences are 
not so significant that they would constitute a distinction in the 
performance of selling activities or have an effect on price 
comparability. Therefore, based on our analysis of all of Maquilacero's 
home market selling functions, we preliminary find that the selling 
functions for the reported channels of distribution constitute one LOT 
in the home market, the NV LOT. For further discussion, see the ``Level 
of Trade'' section in the Memorandum to the File, through Angelica L. 
Mendoza, Program Manager, Office 7, entitled ``Analysis of Data 
Submitted by Maquilacero S.A. de C.V. for the Preliminary Results of 
the Antidumping Duty Administrative Review on Light-Walled Rectangular 
Pipe and Tube from Mexico,'' dated September 7, 2010. (Maquilacero 
Preliminary Analysis Memo).
    We then compared the NV LOT, based on the selling functions 
associated with the transactions between Maquilacero and its affiliated 
reseller in the home market, to the EP LOT, which is based on the 
selling functions associated with the transaction between Maquilacero 
and its customers, based on our analysis of record evidence, we find 
that the degree to which Maquilacero provides the selling functions for 
its customers in both markets to be similar (i.e., sales forecasting, 
strategic/economic planning, advertising and promotion, packing, order 
input/processing, market research, cash and early payment discounts, 
warranty service, sales and marketing support, technical assistance, 
and after-sales services). Therefore, we matched EP sales to sales at 
the same LOT in the home market and did not make a LOT adjustment. See 
section 773(a)(7)(A) of the Act. A complete and detailed explanation of 
our level of trade analysis can be found in the ``Level of Trade'' 
section of Maquilacero's Preliminary Analysis Memo.

Regiopytsa

    We obtained information from Regiopytsa regarding the marketing 
stages involved in making sales in both the reported home and U.S. 
markets. Regiopytsa provided a description of all selling activities 
performed among each channel of distribution and customer category for 
both markets, along with a flowchart and description comparing the 
LOTs. See Regiopytsa's RAQR at A-18 through A-23, and Exhibit A-4.
    For both the home market and U.S. market, Regiopytsa sold LWRPT to 
end-users and retailers/distributors.
    In the U.S. market, Regiopytsa made only EP sales. The company 
reported one LOT, with one channel of distribution to two classes of 
customers, which were distributors and steel service centers. See RAQR 
at A-19 through A-20 and Exhibit A-4. Based on our analysis of 
Regiopytsa's selling functions for its sales to the United States, we 
determine that there was one LOT for its U.S. sales.
    For sales in the home market, Regiopytsa reported one channel of 
distribution to two classes of customers,

[[Page 55563]]

which were distributors and end-users. Id. Certain home market 
customers were affiliated parties. For all sales to its affiliates, the 
merchandise was resold to unaffiliated customers. However, Regiopytsa 
reported a single level of trade in the home market. Based on our 
analysis of all of Regiopytsa's home market selling functions, we 
preliminary find that the selling functions for the reported channel of 
distribution constitute one LOT in the home market, the NV LOT. For 
further discussion, see the ``Level of Trade'' section in the 
Memorandum to the File, from John Drury and Brian Davis, International 
Trade Compliance Analysts, entitled, ``Analysis of Data Submitted by 
Regiomontana de Perfiles S.A. de C.V. for the Preliminary Results of 
the Antidumping Duty Administrative Review on Light-Walled Rectangular 
Pipe and Tube from Mexico,'' dated September 7, 2010 (Regiopytsa 
Preliminary Analysis Memo).
    We then compared the NV LOT, based on the selling functions 
associated with the sales at the NV LOT, to the EP LOT. Based on our 
analysis of record evidence, we preliminarily find that the degree to 
which Regiopytsa provides the selling functions for its customers in 
the home market to be greater than those provided in the U.S. market. 
While both markets had many similar selling functions (i.e., sales 
promotion, packing, inventory maintenance, and after-sales services), 
Regiopytsa provided certain selling functions in the home market that 
it did not provide in the U.S. market (i.e., providing discounts, 
commissions to selling agents, and post-sale warehousing). However, we 
preliminarily find that we are unable to quantify the differences in 
levels of trade because we have found a single level of trade in 
Regiopytsa's home market. Therefore, we matched the EP sales to HM 
sales without making an adjustment for LOT. See section 773(a)(7)(A) of 
the Act. A complete and detailed explanation of our level of trade 
analysis can be found in the ``Level of Trade'' section of the 
Regiopytsa's Preliminary Analysis Memo.

Date of Sale

    The Department will normally use invoice date, as recorded in the 
exporter's or producer's records kept in the ordinary course of 
business, as the date of sale, but may use a date other than the 
invoice date if it better reflects the date on which the material terms 
of sale are established. See 19 CFR 351.401(i).

Maquilacero

    Maquilacero reported the invoice date as the date of sale for all 
sales made in each channel of distribution for both the home and U.S. 
markets. See Maquilacero's BQR at page B-25, CQR at C-20, First 
Supplemental Questionnaire Response (FSQR) at 27 and 49, and the 
Affiliate's Section B Questionnaire Response (AFBQR) at B-23. Pursuant 
to 19 CFR 351.401(i), the Department will normally use the invoice date 
as the date of sale unless an interested party submits information that 
supports the use of a different date.
    For purposes of this review, we examined whether invoice date or 
another date better represents the date on which the material terms of 
sale were established. In its FSQR at page 29, Maquilacero states that 
sales are invoiced at the price in effect at the time of shipment; 
therefore, changes in the material terms of sale, such as price, can 
occur until the issuance of the invoice on the date of shipment. The 
Department examined sales documentation, including order confirmations 
and invoices, provided by Maquilacero for its U.S. market sales (e.g., 
FSQR at 30 thorough 31, Exhibits SA-3 and SA-4) and found that the 
material terms of sale were set on the date on which the invoice is 
issued, which is coincident with the date of shipment. Therefore, we 
preliminarily determine that invoice date is the appropriate date of 
sale for the U.S. market sales in this administrative review because it 
better represents the date upon which the material terms were 
established. See Maquilacero's FSQR at 27, 30 through 31 and exhibit 
SA-3 for a sample sale.
    With respect to Maquilacero's home market sales, there were small 
differences in quantity between purchase order, order confirmation, and 
invoice date. Based on record evidence, the purchase order is subject 
to cancellation, and all material terms of sale are subject to change 
up until the merchandise is released for shipment at the date of the 
invoice. See FSQR at 27, 31 and exhibit SA-4 for a sample sale. 
Therefore, for Maquilacero's home market sales, we have preliminarily 
used invoice date as the date of sale. See Maquilacero's Preliminary 
Analysis Memo for a further discussion of this issue.

Regiopytsa

    Regiopytsa reported the invoice date as the date of sale for all 
sales made in each channel of distribution for both the home (except 
where noted below) and U.S. markets. See Regiopytsa's RAQR at page A-
32, RBQR at page B-16, and RCQR at C-14. For purposes of this review, 
we examined whether invoice date or another date better represents the 
date on which the material terms of sale were established for 
Regiopytsa's home market and U.S. sales. The Department examined sales 
documentation, including order confirmations and invoices, provided by 
Regiopytsa for both its home market and U.S. sales and found that the 
material terms of sale were set on the date on which the invoice is 
issued. See Regiopytsa's RAQR at attachment 6 for sample home market 
sales documents (i.e., purchase order, invoice, credit notice, and 
weight slip) and at attachment 7 for sample U.S. sales documents (i.e., 
purchase order, internal order (export), invoice, packing list, and 
U.S. Customs Entry Summary Form 7501).
    With respect to its home market, Regiopytsa explained that certain 
sales involved ``special invoicing.'' See Regiopytsa's RAQR at pages 32 
through 33, RSQR at pages 15 through 17, and RSSQR at attachment 1. 
Based on our analysis of these sales, the Department has determined 
that material terms of sale are subject to change up until the 
merchandise is released for shipment, which occurs after the invoice 
date. Therefore, for these preliminary results, the Department finds 
that the shipment date is the appropriate date of sale for such sales. 
For the remainder of Regiopytsa's home market sales, we have 
preliminarily used invoice date as the date of sale as we have 
preliminarily found that materials terms of sale are subject to change 
up until the date upon which the invoice is issued. See Regiopytsa's 
Preliminary Analysis Memo for a further discussion of this issue.
    With respect to Regiopytsa's U.S. sales, in its RSQR at page 33, 
Regiopytsa explained that there are, ``generally no changes in the 
material terms of sale between the order date and the date of 
invoice.'' Regiopytsa also explained that in some instances, ``such as 
when steel prices change substantially, a price increase or decrease 
will occur during this period,'' and that, ``if there is a change in 
quantity or type of product ordered, the purchase order is cancelled 
and a new order is issued.'' See verification exhibit (VE) 16 
(``Completeness'') at pages 0375-0377 for an example of a cancelled 
sale; see also VE-4 (``Home Market Sales Process'') at pages 0422 (the 
initial invoice) and 0429 (credit note adjusting price). Therefore, we 
preliminarily determine that invoice date is the appropriate date of 
sale for Regiopytsa's U.S. sales in this

[[Page 55564]]

administrative review because it best represents the date upon which 
the material terms were established.

Export Price

    Section 772(a) of the Act defines EP as ``the price at which the 
subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of subject merchandise 
outside of the United States to an unaffiliated purchaser in the United 
States or to an unaffiliated purchaser for exportation to the United 
States, as adjusted under subsection (c).'' 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,'' as adjusted under sections 772(c) and (d).

Maquilacero

    Maquilacero has classified all its U.S. sales as EP sales; see CQR 
at C-16. For purposes of these preliminary results, we accepted this 
classification and calculated EP in accordance with section 772(a) of 
the Act because the merchandise was sold prior to importation by the 
exporter or producer outside the United States to the first 
unaffiliated purchaser in the United States and because CEP was not 
otherwise warranted. We calculated EP based on the packed price charged 
to the first unaffiliated U.S. customer. We made deductions for 
movement expenses, where appropriate, in accordance with section 
772(c)(2)(A) of the Act, including foreign inland freight from the 
plant to the port of exportation, brokerage and handling expenses 
incurred in the home market, international freight and warehousing 
expenses, where appropriate.

Regiopytsa

    Regiopytsa has classified all their U.S. sales as EP sales; see 
RCQR at C-14. For purposes of these preliminary results, we accepted 
this classification and calculated EP in accordance with section 772(a) 
of the Act because the merchandise was sold prior to importation by the 
exporter or producer outside the United States to the first 
unaffiliated purchaser in the United States and because CEP was not 
otherwise warranted. We calculated EP based on the packed price charged 
to the first unaffiliated U.S. customer. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act, 
including inland freight (plant/warehouse to port of exportation), 
country of manufacture inland insurance, brokerage and handling 
expenses, and inland freight (warehouse to the unaffiliated customer), 
where appropriate.

Normal Value

A. Selection of Home Market

    To determine whether there is a sufficient volume of sales of LWRPT 
in the home market to serve as a viable basis for calculating NV, we 
compared Maquilacero's and Regiopytsa's volume of home market sales of 
the foreign like product to the volume of each company's respective 
U.S. sales of the subject merchandise, in accordance with section 
773(a) of the Act.
    Pursuant to section 773(a)(1)(B) of the Act, because both 
Maquilacero's and Regiopytsa'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 subject merchandise, we determined that the 
home market was viable for comparison purposes for both companies.

B. Affiliated Party Transactions and Arm's Length Test

    Sales to affiliated customers in the home market not made at arm's 
length prices are excluded from our analysis because we consider them 
to be outside the ordinary course of trade. See section 773(f)(2) of 
the Act; see also 19 CFR 351.102(b). Consistent with 19 CFR 351.403(c) 
and (d) and agency practice, ``the Department may calculate NV based on 
sales to affiliates if satisfied that the transactions were made at 
arm's length.'' See China Steel Corp. v. United States, 264 F. Supp. 2d 
1339, 1365 (CIT 2003). To test whether the sales to affiliates were 
made at arm's length prices, we compared, on a model-specific basis, 
the starting prices of sales to affiliated and unaffiliated customers, 
net of all direct selling expenses, billing adjustments, discounts, 
rebates, movement charges, and packing. Where prices to the affiliated 
party are, on average, within a range of 98 to 102 percent of the price 
of identical or comparable merchandise to the unaffiliated parties, we 
determine that the sales made to the affiliated party are at arm's 
length. See Antidumping Proceedings: Affiliated Party Sales in the 
Ordinary Course of Trade, 67 FR 69186, 69194 (November 15, 2002).

Maquilacero

    Maquilacero reported that it made sales in the home market to one 
affiliated reseller and to unaffiliated customers and reported the 
downstream sales from its affiliated reseller to the first unaffiliated 
customers. With respect to Maquilacero, we found that prices to its 
affiliate were, on average, within the 98 to 102 percent of the price 
of identical or comparable subject merchandise sold to unaffiliated 
parties. Therefore, we determined that all sales to the affiliated 
party were made at arm's-length; thus we included these sales in our 
analysis. See Maquilacero's Preliminary Analysis Memo for a further 
discussion of this issue.

Regiopytsa

    Regiopytsa reported that it made sales of the foreign like product 
to two affiliated parties during the POR. One affiliate purchased the 
foreign like product for consumption, while the second affiliate resold 
the foreign like product and non-prime merchandise in the home market. 
See Regiopytsa's December 7, 2009, response at pages B-14 through B-15. 
We performed the arm's-length test on Regiopytsa's sales to affiliates 
and found that prices to its affiliates were, on average, within the 98 
to 102 percent of the price of identical or comparable subject 
merchandise sold to unaffiliated parties. Therefore, we determined that 
all sales to the affiliated parties were made at arm's-length; thus we 
included these sales in our analysis. See Regiopytsa's Preliminary 
Analysis Memo for a further discussion of this issue.

C. Cost-Averaging Methodology

    The Department's normal practice is to calculate an annual 
weighted-average cost for the POR. See, e.g.,Certain Pasta From Italy: 
Final Results of Antidumping Duty Administrative Review, 65 FR 77852 
(December 13, 2000), and accompanying Issues and Decision Memorandum at 
Comment 18, and Notice of Final Results of Antidumping Duty 
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from 
Canada, 71 FR 3822 (January 24, 2006), and accompanying Issues and 
Decision Memorandum at Comment 5 (explaining the Department's practice 
of computing a single weighted-average cost for the entire period). We 
recognize that possible distortions may result if we use our normal 
annual-average cost method during a period of significant cost changes. 
In determining whether to deviate from our normal methodology of 
calculating an annual weighted-average cost, we evaluate the case-
specific record evidence using two primary factors: (1) The change in 
the cost of manufacturing (COM) recognized by the

[[Page 55565]]

respondent during the POR must be deemed significant; and (2) the 
record evidence must indicate that sales prices during the shorter 
averaging periods could be reasonably linked with the COP or CV during 
the same shorter averaging periods. See, e.g.,Stainless Steel Sheet and 
Strip in Coils From Mexico; Final Results of Antidumping Duty 
Administrative Review, 75 FR 6627 (February 10, 2010) (SSSS from 
Mexico), and accompanying Issues and Decision Memorandum at Comment 6 
and Stainless Steel Plate in Coils From Belgium: Final Results of 
Antidumping Duty Administrative Review, 73 FR 75398 (December 11, 
2008), and accompanying Issues and Decision Memorandum at Comment 4 
(SSPC from Belgium).
    Regiopytsa provided pertinent information for control numbers with 
the five highest volumes sold in the comparison market and the United 
States over the POR in its June 11, 2010, response to the Department's 
RSDQR at exhibit 6 and Maquilacero provided the same information in its 
June 14, 2010 response to the Department's FDQR at exhibit 34.
1. Significance of Cost Changes
    In prior cases, we established 25 percent as the threshold (between 
the highest cost and lowest costs quarter by COM) for determining that 
the changes in COM are significant enough to warrant a departure from 
our standard annual-cost approach. See SSPC from Belgium at Comment 4. 
In the instant case, record evidence shows that Regiopytsa and 
Maquilacero experienced significant changes (i.e., changes that 
exceeded 25 percent) between the highest cost and lowest cost quarterly 
COM divided by the lowest quarterly COM during the POR. This change in 
COM is attributable primarily to the price volatility for hot rolled 
steel coil used in the manufacture of LWRPT. Hot rolled steel coil is 
the major input consumed in the production of LWRPT. See ``Cost of 
Production and CV Calculation Adjustment for the Preliminary Results--
Regiomontana de Perfiles y Tubos S.A. de C.V.'' from Stephanie C. 
Arthur to Neal M. Halper, dated September 7, 2010 (Regiopytsa Cost 
Calculation Memorandum) at page 1 and ``Cost of Production and CV 
Calculation Adjustment for the Preliminary Results--Maquilacero S.A. de 
C.V.'' from Frederick W. Mines to Neal M. Halper, dated September 7, 
2010 (Maquilacero Cost Calculation Memorandum) at pages 1 and 2. We 
found that prices for hot rolled steel coil changed significantly 
throughout the POR and, as a result, directly affected the cost of the 
material inputs consumed by Regiopytsa and Maquilacero.\5\ See 
Regiopytsa Cost Calculation Memorandum at attachment 3 and Maquilacero 
Cost Calculation Memorandum at attachment 1.
---------------------------------------------------------------------------

    \5\ We also found that prices for cold rolled steel coil (a 
major input consumed to produce certain LWRPT) changed significantly 
throughout the POR and, as a result, directly affected the cost of 
the material inputs consumed by Regiopytsa. See Regiopytsa Cost 
Calculation Memorandum for further details.
---------------------------------------------------------------------------

2. Linkage Between Cost and Sales Information
    Consistent with past precedent, because we found the changes in 
costs to be significant, we evaluated whether there is evidence of a 
linkage between the cost changes and the sales prices during the POR. 
The Department's definition of ``linkage'' does not require direct 
traceability between specific sales and their specific production costs 
but, rather, relies on whether there are elements that would indicate a 
reasonable correlation between the underlying costs and the final sales 
prices levied by the company. See SSPC from Belgium at Comment 4. These 
correlative elements may be measured and defined in a number of ways 
depending on the associated industry and the overall production and 
sales processes. To determine whether a reasonable correlation existed 
between the sales prices and their underlying costs during the POR, we 
compared weighted-average quarterly net sales prices to the 
corresponding quarterly COM for the five control numbers with the 
highest volume of sales in the comparison market and the five control 
numbers with the highest sales volume to the United States. After 
reviewing this information, we determined that sales prices and costs 
were generally trending in a consistent manner, and therefore, showed 
evidence of linkage. See Regiopytsa Cost Calculation Memorandum at 
attachments 1 and 2 and Maquilacero Cost Calculation Memorandum at 
attachments 3 and 4.
    Because we have found significant cost changes in COM as well as 
reasonable linkage between costs and sales prices, we have 
preliminarily determined that a quarterly costing approach leads to 
more appropriate comparisons in our antidumping duty calculations for 
Regiopytsa and Maquilacero.

D. Cost of Production Analysis

Maquilacero
    In the previous segment of this proceeding, the Department 
disregarded sales made by Maquilacero that were found to be below its 
cost of production (COP). See Notice of Preliminary Determination of 
Sales at Less Than Fair Value: Light-Walled Rectangular Pipe and Tube 
From Mexico, 73 FR 5521 (January 30, 2008). Therefore, pursuant to 
section 773(b)(2)(A)(ii) of the Act, there were reasonable grounds to 
believe or suspect that the respondent made sales of the foreign like 
product in the home market at prices below the COP within the meaning 
of section 773(b) of the Act, as below cost sales made by Maquilacero 
were disregarded in the most recently completed investigation. 
Accordingly, on October 16, 2009, the Department requested that 
Maquilacero respond to section D (Cost of Production/Constructed Value) 
of the Department's antidumping duty questionnaire.
Regiopytsa
    Based on petitioners' cost allegation (see Cost Allegation Memo), 
the Department had reasonable grounds to believe or suspect that 
Regiopytsa had made below-cost sales of foreign like product. See 
section 773(b)(2)(A)(i) of the Act. Therefore, the Department initiated 
a cost investigation of Regiopytsa on February 19, 2010, and requested 
that Regiopytsa file a response to section D of the Department's 
antidumping duty questionnaire.
    For Maquilacero and Regiopytsa, we calculated the COP on a product-
specific basis, based on the sum of costs of materials and fabrication 
for the foreign like product plus amounts for general and 
administrative (G&A) expenses, interest expenses, and the costs of all 
expenses incidental to preparing the foreign like product for shipment 
in accordance with section 773(b)(3) of the Act.
    We relied on the COP information provided by Maquilacero and 
Regiopytsa except for the following adjustments:
Maquilacero
    1. Using Maquilacero's hot rolled coil inventory movement data from 
the August 16, 2010, response, we measured the cost changes in terms of 
a percentage, to develop the direct material indices for each quarter. 
We used these indices to calculate an annual weighted-average material 
cost for the POR and then restate that annual average material cost to 
each respective quarter on an equivalent basis.
    2. We made two adjustments to Maquilacero's G&A expense: (1) By 
offsetting project revenue against the G&A expense up to the amount of 
the expenses related to producing the project revenue which is included 
in the

[[Page 55566]]

reported costs, and (2) by including Corporacion Maquilacero S.A. de 
C.V.'s (Maquilacero's affiliate) net results. See Maquilacero Cost 
Calculation Memorandum.
Regiopytsa
    1. Using Regiopytsa's inventory movement data for hot-rolled and 
cold-rolled coil we obtained during our verification of the company's 
cost response, we measured the cost changes throughout the period, in 
terms of a percentage, to develop the direct material indices for each 
quarter. We used these indices to calculate an indexed annual weighted-
average material cost for the POR, and then restated that annual 
average material cost to each respective quarter on an equivalent 
basis.
    2. We made an upward adjustment to Regiopytsa's reported COM to 
account for an un-reconciled cost difference.
    3. We deducted certain freight-in expenses from Regiopytsa's 
reported direct materials costs because we discovered during our cost 
verification that these charges had been double-counted in the reported 
costs.
    4. During the POR, Regiopytsa purchased hot-rolled steel coils from 
an affiliate. For each quarter, we have analyzed these transactions 
within the context of section 773(f)(2) of the Act (the ``transactions 
disregarded'' provision) and have made an adjustment to Regiopytsa's 
reported direct material costs to account for the difference between 
transfer and market price for these inputs.
    5. We excluded the value of purchased scrap from Regiopytsa's 
calculation of its direct materials scrap offset ratio.
    For further details regarding these adjustments for Maquilacero and 
Regiopytsa, see Maquilacero's and Regiopytsa's Cost Calculation Memos, 
which are on file in the CRU of the main Commerce Department building.
    On a product-specific basis, we compared the adjusted weighted-
average COP figures to the home market sales of the foreign like 
product, as required under section 773(b) of the Act, to determine 
whether these sales were made at prices below the COP. The prices were 
exclusive of any applicable movement charges, packing expenses, 
warranties, and indirect selling expenses. In determining whether to 
disregard home market sales made at prices below their COP and in 
accordance with sections 773(b)(2)(B), (C), and (D) of the Act, we 
examined whether such sales were made within an extended period of time 
in substantial quantities and at prices which permitted the recovery of 
all costs within a reasonable period of time.
    We found that, for certain products, more than 20 percent of 
respondents' home market sales were at prices below the COP and these 
below-cost sales were made within an extended period of time in 
substantial quantities. In addition, these sales were made at prices 
that did not permit the recovery of costs within a reasonable period of 
time. Therefore, we disregarded these sales and used the remaining 
sales of the same product as the basis for determining normal value in 
accordance with section 773(b)(1) of the Act.

E. Price-to-Price Comparisons

Maquilacero
    We calculated NV based on prices to unaffiliated and affiliated 
customers that passed the arm's length and cost tests, where 
appropriate. We accounted for billing adjustments, discounts, and 
rebates, where appropriate. We also made deductions, where applicable, 
for inland freight, insurance, handling, and warehousing, pursuant to 
section 773(a)(6)(B) of the Act. We also made adjustments for 
differences in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act. In particular, we made COS adjustments 
for imputed credit expenses, warranty expenses, and commissions. 
Finally, we deducted home market packing costs and added U.S. packing 
costs in accordance with sections 773(a)(6)(A) and (B) of the Act. For 
more information, see Maquilacero's Preliminary Analysis Memo.
Regiopytsa
    We calculated NV based on prices to unaffiliated customers that 
passed the cost test. We accounted for billing adjustments, discounts, 
and rebates, where appropriate. We also made deductions, where 
applicable, for inland freight, insurance, handling, and warehousing, 
pursuant to section 773(a)(6)(B) of the Act. We also made adjustments 
for differences in COS in accordance with section 773(a)(6)(C)(iii) of 
the Act and 19 CFR 351.410. In particular, we made COS adjustments for 
warranty, commission, and certain direct selling expenses. Finally, we 
deducted home market packing costs and added U.S. packing costs in 
accordance with sections 773(a)(6)(A) and (B) of the Act. See 
Regiopytsa's Preliminary Analysis Memo for a detailed explanation of 
these adjustments.
Use of Adverse Facts Available
    For the reasons discussed below, we determine that the use of 
adverse facts available is appropriate for the preliminary results with 
respect to certain unreported expenses incurred by Regiopytsa on U.S. 
sales and unreported sales in the U.S. market.

A. Use of Facts Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information requested by the administering authority, fails 
to provide such information by the deadlines for submission of the 
information and in the form or manner requested, significantly impedes 
a proceeding under this title, or provides such information but the 
information cannot be verified as provided in section 782(i) of the 
Act, the administering authority shall use facts otherwise available in 
reaching the applicable determination.
    During verification, we discovered that certain U.S. sales had 
incurred unreported direct selling expenses. In light of this fact, we 
carefully examined all pre-selected and surprise U.S. sales in order to 
determine if any had these unreported direct selling expenses. While 
examining the documentation for the ten U.S. pre-selected and surprise 
sales, we found that some sales had certain direct selling expenses 
that were incurred by Regiopytsa but were not reported to the 
Department. Also during verification, company officials explained that 
in gathering the sales documentation for a U.S. surprise sale, 
Regiopytsa discovered that a sale, originally reported as subject 
merchandise in the U.S. sales file, was in fact non-subject 
merchandise. As a result of this discovery, Regiopytsa conducted a 
manual review of the U.S. sales file in order to determine whether or 
not other sales were improperly reported as subject or non-subject. 
Company officials explained that as a result of this manual review, 
Regiopytsa uncovered additional sales which were reported as subject 
merchandise but were in fact non-subject in nature. Additionally, 
company officials explained that one sale was subject merchandise, but 
was originally considered non-subject merchandise, was inadvertently 
not reported to the Department. See Sales Verification Report for 
additional details.
    Pursuant to section 776(a)(2) of the Act, because Regiopytsa failed 
to report certain direct selling expenses incurred on U.S. sales and 
did not correctly identify all U.S. sales of subject merchandise prior 
to the start of verification (i.e., before the deadline to

[[Page 55567]]

submit new factual information) it is appropriate to use facts 
available.

B. Application of Adverse Inference for Facts Available

    Section 776(b) of the Act provides that, if the Department finds 
that an interested party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information, the 
Department may use an inference adverse to the interests of that party 
in selecting the facts otherwise available. In addition, the Statement 
of Administrative Action accompanying the Uruguay Round Agreements Act, 
H.R. Rep. 103-316, Vol. 1, 103d Cong. (1994) (SAA), explains that the 
Department may employ an adverse inference ``to ensure that the party 
does not obtain a more favorable result by failing to cooperate than if 
it had cooperated fully.'' See SAA at 870. It is the Department's 
practice to consider, in employing adverse inferences, the extent to 
which a party may benefit from its own lack of cooperation. See, e.g., 
Id.
    Furthermore, ``affirmative evidence of bad faith on the part of a 
respondent is not required before the Department may make an adverse 
inference.'' See Antidumping Duties; Countervailing Duties, Final Rule, 
62 FR 27296, 27340 (May 19, 1997) (Preamble). We find that, by failing 
to report the expenses associated with certain U.S. sales prior to 
verification, Regiopytsa failed to cooperate to the best of its 
ability. In addition, with regard to Regiopytsa's failure to report all 
EP sales of LWRPT to the United States during the POR, we find that 
Regiopytsa failed to cooperate by not acting to the best of its ability 
to comply with a request for information. In particular, in section A 
of the Department's antidumping duty questionnaire, dated October 16, 
2009, we explicitly requested that Regiopytsa report the total quantity 
and value of the merchandise, under review, it sold during the POR in 
(or to) the United States. Therefore, the Department has preliminarily 
determined that in selecting from among the facts otherwise available, 
an adverse inference is warranted.
    The Federal Circuit has stated that, ``{w{time} hile the * * * 
adverse facts available * * * standard does not require perfection and 
recognizes that mistakes sometimes occur, it does not condone 
inattentiveness, carelessness, or inadequate record keeping.'' See 
Nippon Steel Corporation v. United States, 337 F.3d 1373, 1382 (Fed. 
Cir. 2003). The AFA standard, moreover, assumes that because 
respondents are in control of their own information, they are required 
to take reasonable steps to present information that reflects its 
experience for reporting purposes before the Department. Therefore, we 
find it appropriate to use an inference that is adverse to the 
company's interests in selecting from among the facts otherwise 
available.
    As partial adverse facts available, and to account for the 
unreported direct selling expenses, we applied the highest, verified 
per MT unreported direct selling expense to all of Regiopysta's U.S. 
sales (except for the sales of subject merchandise reviewed during 
verification). Also as partial adverse facts available, and in order to 
account for an unreported U.S. sale of subject merchandise, we applied 
the highest calculated margin to the quantity and value of that 
sale.\6\ Moreover, because we are relying on the company's own 
information, there is no need to corroborate the chosen facts available 
under section 776(c) of the Act. For a detailed discussion on the 
Department's application of adverse facts available, see the ``Issues'' 
section of Regiopytsa's Preliminary Analysis Memorandum.
---------------------------------------------------------------------------

    \6\ We note that in a letter dated August 31, 2010, we requested 
that Regiopytsa provide us with a revised database (inclusive of 
revisions that occurred as a result of minor corrections and 
findings during verification). The remaining sales (i.e., those 
reported as subject when they were non-subject) were removed from 
consideration for these preliminary results.
---------------------------------------------------------------------------

Currency Conversion
    The Department's preferred source for daily exchange rates is the 
Federal Reserve Bank. See Preliminary Results of Antidumping Duty 
Administrative Review: Stainless Steel Sheet and Strip in Coils from 
France, 68 FR 47049, 47055 (August 7, 2003), unchanged in Notice of 
Final Results of Antidumping Duty Administrative Review: Stainless 
Steel Sheet and Strip in Coils From France, 68 FR 69379 (December 12, 
2003). However, the Federal Reserve Bank does not track or publish 
exchange rates for the Mexican peso. Therefore, pursuant to section 
773A(a) of the Act, we made currency conversions from Mexican pesos to 
U.S. dollars based on the daily exchange rates from Factiva, a Dow 
Jones & Reuters Retrieval Service. Factiva publishes exchange rates for 
Monday through Friday only. We used the rate of exchange on the most 
recent Friday for conversion dates involving Saturday through Sunday 
where necessary. See Import Administration Web site at: https://ia.ita.doc.gov/exchange/.
Rates for Non-Selected Companies
    Based on our analysis of the responses and our available resources, 
we selected certain companies for individual examination of their sales 
of the subject merchandise to the United States during the POR as 
permitted under section 777A(c)(2) of the Act. For responding companies 
under review of the antidumping duty order on LWRPT from Mexico that 
were not individually examined, we have assigned the simpl