Certain Malleable Cast Iron Pipe Fittings From Brazil: Preliminary Results of Antidumping Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping administrative review.

SUMMARY:

The Department of Commerce is conducting an administrative review of the antidumping duty order on certain malleable cast iron pipe fittings from Brazil in response to a request from a respondent, Industria de Fundicao Tupy Ltda. This review covers the period May 1, 1998, through April 30, 1999.

We preliminarily determine that sales have been made below normal value. Interested parties are invited to comment on these preliminary results. Parties who submit argument are requested to submit with the argument (1) a statement of the issue and (2) a brief summary of the argument.

EFFECTIVE DATE:

February 8, 2000.

FOR FURTHER INFORMATION CONTACT:

Thomas Schauer or Richard Rimlinger, Office of AD/CVD Enforcement, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-0410 or (202) 482-4477, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930(the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR Part 351 (1998).

Background

On May 28, 1999, the Department received a request from Industria de Fundicao Tupy Ltda. (Tupy) to conduct an administrative review of the antidumping duty order on certain malleable cast iron pipe fittings from Brazil. On June 30, 1999, the Department published a notice of initiation of an administrative review of Tupy, covering the period May 1, 1998, through April 30, 1999, in the Federal Register (64 FR 14860).

Scope of Review

Imports covered by this review are shipments of certain malleable cast iron pipe fittings, other than grooved, from Brazil. In the original antidumping duty order, these products were classifiable in the Tariff Schedules of the United States, Annotated, under item numbers 610.7000 and 610.7400. These products are currently classifiable under item numbers 7307.19.00 and 7307.19.90 of the Harmonized Tariff Schedule of the United States (HTSUS). The HTSUS item numbers are provided for convenience and customs purposes. The written description remains dispositive.

United States Price

In calculating the price to the United States, we used export price (EP) as defined in section 772(a) of the Act because the subject merchandise was sold to an unaffiliated U.S. purchaser in the United States prior to the date of importation into the United States and the use of constructed export price was not indicated by the facts of record.

We calculated EP for U.S. sales based on C&F U.S. port prices to the United States. We made adjustments for domestic inland freight, domestic inland freight insurance, domestic brokerage and handling, international freight, and freight revenue in accordance with section 772(c)(2)(A) of the Act. According to Tupy's representations, the material terms of sale were established on the purchase-order date. Therefore, we used the purchase-order date as the date of sale for the U.S. market. No other adjustments to EP were claimed.

Normal Value

In order to determine whether there is a sufficient volume of sales in the home market to serve as a basis for calculating normal value (NV), we compared the respondent'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) of the Act. Because the aggregate volume of home-market sales of the foreign like product was greater than five percent of the aggregate volume of U.S. sales of the subject merchandise, we determined that the home market provides a viable basis for calculating NV. Therefore, in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on the price at which the foreign like product was first sold to unaffiliated customers for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade.

We compared the EP sales of individual transactions to the monthly weighted-average price of sales of the identical product Tupy sold in Brazil. We based NV on delivered prices to unaffiliated purchasers in the home market. Where applicable, we made adjustments to home-market price for billing adjustments and inland freight. We matched EP sales to sales at the same level of trade in the home market and made no level-of-trade adjustment. (See Level of Trade below.)

When applicable, we made adjustments for differences in packing in accordance with section 773(a)(6)(A) of the Act. We made adjustments for differences in circumstances of sale (COS) in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. To make COS adjustments, we reduced home-market price by an amount for home-market credit, advertising expenses, and commissions, and we increased it by an amount for U.S. credit expenses. We also made adjustments, in accordance with 19 CFR 351.410(e), for indirect selling expenses incurred on home market or U.S. sales where commissions were granted on sales in one market but not in the other (the “commission offset”). Specifically, where commissions were granted in the home market but not in the U.S. market, we made a upward adjustment to normal value for the lesser of (1) the amount of the commission paid in the home market, or (2) the amount of indirect selling expenses incurred in the U.S. market. We also deducted value-added taxes pursuant to section 773(a)(6)(B)(iii) of the Act. Because we compared U.S. sales to identical merchandise sold in the home market, no adjustment for differences in cost attributable to differences in physical characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) of the Act was necessary.

Level of Trade

As set forth in section 773(a)(1)(B)(i) of the Act and in the Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act, at 829-831 (see H.R. Doc. No. 103-316, at 829-831 (1994)), to the extent practicable, the Department calculates NV based on sales at the same level of trade as the U.S. sales (either EP or constructed export price). When the Department is unable to find sale(s) in the comparison market at the same level of trade as the U.S. sale(s), the Department may compare sales in the U.S. and foreign markets at different levels of trade. When NV is based on constructed value (CV), the level of trade is that of the sales from which we derive selling, general and administrative expenses (SG&A) and profit.

To determine whether home-market sales are at a different level of trade than U.S. sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. If the comparison-market sales are at a different level of trade and the differences affect 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 level of trade of the export transaction, we make a level-of-trade adjustment under section 773(a)(7)(A) of the Act. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).

In implementing these principles in this review, we examined information from the respondent regarding the marketing stages involved in the reported home-market and EP sales, including a description of the selling activities Tupy performed for each channel of distribution. Tupy reported three types of customers in the home market: wholesalers, distributors, and retailers. We found that the selling and other activities associated with selling to each of the three types of customers differed significantly from activities for the other two types of customers. For example, we found differences with respect to inventory maintenance, freight and delivery arrangements, packing and handling, advertising, technical services, and sales and administrative functions. Based on these differences, we found that the three types of home-market customers constituted three different levels of trade.

All of the U.S. sales were EP sales. Based on our examination of the record, we determined that the level of trade of the EP sales was the same as that of the home-market wholesale level of trade. We found that the level of trade of the EP sales was different from that of distributor and retail sales because Tupy performed a number of selling functions for distributor and retail sales at a moderate or high level that it either did not perform or performed at a low level for the EP and wholesale sales. These selling functions included freight and delivery arrangements, inventory maintenance, packing and handling, advertising, technical services, and sales and administrative functions.

Because we found that Tupy's EP sales were made at the same level of trade as its home-market wholesale level and because we were able to match EP sales to home-market sales made at the wholesale level of trade in all instances, no level-of-trade adjustments to normal value were necessary.

Preliminary Results of Review

As a result of our comparison of EP and NV, we preliminarily determine a weighted-average dumping margin of 2.91 percent for Tupy for the period May 1, 1998, through April 30, 1999.

Any interested party may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held 38 days after the date of publication of this notice, or the first workday thereafter. Issues raised in hearings will be limited to those raised in the respective case and rebuttal briefs. Interested parties may submit case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, which must be limited to issues raised in the case briefs, may be filed not later than 35 days after the date of publication.

Parties who submit argument are requested to submit with the argument (1) a statement of the issue, and (2) a brief summary of the argument. The Department will publish a notice of final results of this administrative review, which will include the results of its analysis of issues raised in any such comments or at a hearing.

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an exporter/customer-specific assessment value for subject merchandise. Upon completion of this review, the Department will issue appraisement instructions directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon publication of the final results of this administrative review for all shipments of certain malleable cast iron pipe fittings from Brazil entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided for by section 751(a)(2)(c) of the Act: (1) The cash deposit rate for Tupy will be the rate established in the final results of this review; (2) for previously reviewed or 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, or the original less-than-fair-value (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) for all other producers and/or exporters of this merchandise, the cash deposit rate shall be 5.64 percent, the all-others rate established in the LTFV investigation.

The deposit rate, when imposed, shall remain in effect until publication of the final results of the next administrative review.

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this determination in accordance with sections 751(a)(1) and 777(i)(1) of the Act.