Final Determination of Sales at Less Than Fair Value and Critical Circumstances: Certain Malleable Iron Pipe Fittings From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final determination of sales at less than fair value and critical circumstances.

EFFECTIVE DATE:

October 28, 2003.

FOR FURTHER INFORMATION CONTACT:

Helen Kramer, Anya Naschak, or Ann Barnett-Dahl, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0405, 482-6375, or 482-3833, respectively.

Final Determination

We determine that certain malleable iron pipe fittings from the People's Republic of China (PRC) are being, or are likely to be, sold in the United States at less than fair value, as provided in section 735 of the Tariff Act of 1930, as amended (the Act). The estimated margin of dumping is shown in the “Continuation of Suspension of Liquidation” section of this notice.

Case History

On April 22, 2003, we published in the Federal Register a preliminary determination that critical circumstances exist for imports of malleable pipe fittings for one of the mandatory respondents, Jinan Meide Casting Co. (JMC), and one of the non-selected respondents, SCE Co., Ltd. (SCE), based on an increase in imports exceeding the required 15 percent, but that no massive imports exist for the other mandatory respondents, Langfang Pannext Pipe Fitting Co., Ltd. (Pannext), and Beijing Sai Lin Ke Hardware Co., Ltd. (SLK), and the other non-selected respondents, Myland Industrial Co., Ltd. (Myland) and Chengde Malleable Iron General Factory (Chengde). In addition, we found that imports of subject merchandise were massive in the three-month comparison period for the PRC-wide entity for which data are available.

We published the preliminary determination in this investigation on June 6, 2003. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Malleable Iron Pipe Fittings from the People's Republic of China, 68 FR 33911 (June 6, 2003) (Preliminary Determination). Since the publication of the Preliminary Determination, the following events have occurred.

On June 3, 2003, in order to remedy deficiencies in respondents' reporting of scrap inputs, the Department asked respondents to weigh and keep accurate records of each ingredient that goes into the cupola and to submit biweekly reports to the Department until two weeks before verification. JMC and Pannext each submitted three production reports covering a six-week period, and SLK submitted four reports covering an eight-week period.

On June 4, 2003, SLK requested that the Department correct an alleged ministerial error in SLK's margin calculation. On June 13, 2003, the Department determined that the error in the margin calculation resulted from SLK's failure to indicate that it had reported the weight of the fittings in its revised sales database in pounds, although all other data were in kilograms. In addition, the Department determined that this error was not ministerial in nature. As a result, at that time we did not make the suggested correction. However, SLK subsequently revised its reported weights, which are used in the calculation of U.S. price, to kilograms, and we have used the corrected weights for the final determination.

On July 3, 2003, the petitioners (Ward Manufacturing, Inc. and Anvil International, Inc.) submitted a request for a public hearing in accordance with 19 CFR 351.310(c). On July 7, 2003, respondents JMC and Pannext requested a hearing. On September 2, 2003, the Department informed all interested parties that a hearing would be held (see Memorandum from Ann Barnett-Dahl to the File dated September 2, 2003). On September 5, 2003, the petitioners requested that the Department conduct a portion of the hearing in closed session. The hearing was held on September 17, 2003. The petitioners and three respondents submitted case briefs and rebuttal briefs on September 8 and 15, 2003, respectively.

On July 16, 2003, JMC, Pannext and SLK placed on the record public information for the purpose of providing the Department with additional information that can be used in valuing the factors of production.

The Department conducted verifications on the following dates: June 25, 2003, Houston, Texas—Pannext Fittings Corp.; July 8-10, 2003, Chicago, Illinois—LDR Industries, Inc.; July 28-August 1, 2003, Jinan, PRC—JMC; August 11-12, 2003, Beijing, PRC—SLK; August 13-15, 2003, Tianjin, PRC—a supplier to SLK.

Period of Investigation

The period of investigation is April 1, 2002 through September 30, 2002.

Non-Market Economy Country Status

The Department has treated the PRC as a non-market economy (NME) country in all its past antidumping investigations. A designation as an NME country remains in effect until the Department revokes it. See section 771(18)(C) of the Act. The respondents in this investigation have not requested revocation of the PRC's NME status. We have continued to treat the PRC as an NME in this investigation. For further discussion, see the Department's Preliminary Determination, 68 FR 33391, 33913.

Separate Rates

In our Preliminary Determination, we determined that the respondents had met the criteria for the application of separate antidumping duty rates. We have not received any other information that would warrant reconsideration of our separate rates determination with respect to these companies. For a complete discussion of the Department's determination that the respondents are entitled to a separate rate, see Preliminary Determination.

The PRC-Wide Rate

For the reasons set forth in the Preliminary Determination, we continue to find that the use of adverse facts available for the PRC-wide rate is appropriate for other exporters in the PRC, based on our presumption that those respondents who failed to demonstrate entitlement to a separate rate constitute a single enterprise under common control by the Chinese government. See Preliminary Determination, 68 FR 33911, 33915-33916. The PRC-wide rate applies to all entries of the merchandise under investigation except for entries from the three mandatory respondents and the respondents that are entitled to a separate rate.

When analyzing the petition for purposes of the initiation, the Department reviewed all of the data upon which the petitioner relied in calculating the estimated dumping margin and determined that the margin in the petition was appropriately calculated and supported by adequate evidence in accordance with the statutory requirements for initiation. In order to corroborate the petition margin for purposes of using it as adverse facts available, we examined the price and cost information provided in the petition in the context of our preliminary determination. For further details, see Memorandum from Ann Barnett-Dahl to Richard Weible, Office Director, Total Facts Available Corroboration Memorandum for All Others Rate, dated May 28, 2003.

Consistent with our Preliminary Determination, as adverse facts available, we have used the rate from the petition, recalculated with the new surrogate value information discussed in the Memorandum to the File Regarding Total Facts Available Corroboration Memorandum for the PRC-Wide Rate, October 20, 2003. See also the Issues and Decision Memorandum for the Final Determination in the Less Than Fair Value Investigation of Certain Malleable Iron Pipe Fittings from the People's Republic of China: April 1, 2002 through September 30, 2002, at Comments 4 through 10, accompanying this notice (Decision Memorandum). The recalculated rate for the China-wide entity is 111.36 percent.

Surrogate Country

For purposes of the final determination, the Department continues to find that India is the appropriate primary surrogate country. For further discussion and analysis regarding the surrogate country selection, see the Department's Preliminary Determination at 33916.

Use of Facts Available

Section 776(a) of the Act provides that, if necessary information is not available on the record, or if an interested party fails to provide such information in a timely manner or in the form or manner requested, the Department shall use, subject to sections 782(d) and (e) of the Act, facts otherwise available in reaching the applicable determination. If an interested party is unable to submit the information requested or in the requested form, that party is required to notify the Department promptly and must suggest a reasonable alternative. See section 782(c)(1).

In the Preliminary Determination, we relied on partial facts available for the value of recycled scrap because the information on the record did not satisfy the statute with respect to the unreported inputs in the calculation of normal value. See Preliminary Determination at 33918. After the Preliminary Determination, but prior to verification, on June 3, 2003, the Department requested that respondents “weigh and keep accurate written records of each ingredient that goes into the cupola for each charge on a CONNUM specific basis * * * Provide the source of each input, e.g. purchased or reprocessed material * * * {and} for each CONNUM, record (1) The total casting weight, (2) the total weight of produced subject merchandise, and (3) the total weight of generated scrap,” in an effort to allow respondents another opportunity to alleviate the Department's concerns regarding the quantities of inputs reported to date. On June 4, 2003, the Department also requested that respondents address the Department's concerns regarding the underreporting of metallic inputs during the POI. Although respondents submitted additional information in response to each of these requests, the information provided to the Department did not address the Department's concern that respondents have failed to report sufficient quantities of inputs to account for total production during the POI, and the reported information continued to have significant discrepancies that have not been explained. Therefore, the application of facts available is appropriate pursuant to section 776(a), because the Department does not have the necessary information needed to calculate its margin, respondents did not provide the information, and respondents have not proposed any reasonable alternatives to account for underreported or unreported inputs, in accordance with section 782(c)(1).

For Pannext, as facts available for the under-reported purchased scrap inputs, the Department is continuing to increase purchased scrap, where necessary, to the POI-wide average quantity for steel scrap input as reported in its response, when the reported metallic inputs (including steel scrap and pig iron) to produce one kilogram of output was less than one kilogram. For JMC, as facts available for the under-reported purchased scrap inputs, the Department is increasing the reported purchased and non-subject merchandise recycled scrap inputs for those CONNUM where the sum of these inputs is less than one kilogram to produce one kilogram of output. The factor used to increase these CONNUMs is the average of the CONNUMs where the sum of the inputs is greater than or equal to one. For SLK the Department has also increased the inputs when the sum of the inputs are less than one kilogram to produce one kilogram of output for certain suppliers. See SLK Proprietary Analysis Memo.

Additionally, as facts available for recycled scrap that was not reported in the “form or manner requested” (see section 776(a) of the Act), the Department is continuing to use an average of the adjustment ratios for JMC and Pannext as calculated in petitioners' May 15th letter at Exhibit 4, and increasing JMC, Pannext, and SLK's reported values for metallic inputs by this average, 56.83%. For a complete discussion of this issue, see accompanying Decision Memorandum at Comment 1.

For this final determination, given an increase in total inputs as described above and in the Decision Memorandum at Comment 1, the Department must increase respondents' energy inputs to a level that corresponds to the increase in these inputs. Therefore the Department has applied neutral facts available to value respondents' energy inputs to determine normal value in accordance with section 773(c)(1) of the Tariff Act. As facts available for these underreported energy inputs, the Department has used respondents' reported energy data to find an appropriate neutral facts available adjustment for these underreported inputs. For a complete discussion of this issue, see accompanying Decision Memorandum at Comment 2 and JMC, Pannext, and SLK's Proprietary Analysis Memoranda.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation, and to which we have responded, are listed in the Appendix to this notice and addressed in the Decision Memorandum, which is hereby adopted by this notice. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in B-099. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/frn/ . The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Determination

Based on our findings at verification, and analysis of comments received, we have made adjustments to the calculation methodology in calculating the final dumping margin in this proceeding. See Final Analysis Memorandum for JMC; Final Analysis Memorandum for Pannext; and Final Analysis Memorandum for SLK.

Verification

Pursuant to section 782(i) of the Act, we verified the information submitted by each respondent for use in our final determination. We used standard verification procedures including examination of relevant accounting and production records, and original source documents provided by the respondents. For changes from the Preliminary Determination as a result of verification, see Final Analysis Memorandum for Pannext and Final Analysis Memorandum for SLK.

Scope of Investigation

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

Final Determination of Critical Circumstances

On April 22, 2003, before the Preliminary Determination, we made a preliminary finding of critical circumstances with respect to JMC, SCE, and the PRC-wide entity on the basis of massive imports of the subject merchandise over a relatively short period and a history of injurious dumping from the PRC based on a current antidumping duty order on the subject merchandise imposed by the European Community. See Notice of Preliminary Determination of Critical Circumstances: Certain Malleable Iron Pipe Fittings from the People's Republic of China, 68 FR 19779, 19780. We received no comments on this issue from any of the parties. Based on our final determination of sales at less than fair value, pursuant to section 735(a)(3)(A)(i) and (B), we therefore determine that critical circumstances exist with respect to JMC, SCE, and the PRC-wide entity.

Continuation of Suspension of Liquidation

In accordance with section 735(c)(1)(B) of the Act, we are directing the BCBP to continue to suspend liquidation of all entries of subject merchandise from the PRC, that are entered, or withdrawn from warehouse, for consumption as follows: for Pannext, SLK, or Chengde, on or after the date of publication of the Preliminary Determination in the Federal Register, June 6, 2003; for JMC, SCE and companies subject to the PRC-wide rate, on or after the date which is 90 days prior to the date of publication of the Preliminary Determination, i.e., March 8, 2003, due to the Final Determination of Critical Circumstances. BCBP shall continue to require a cash deposit or posting of a bond equal to the estimated amount by which the normal value exceeds the U.S. price as shown below. These suspension of liquidation instructions will remain in effect until further notice.

The weighted-average dumping margins are as follows:

ITC Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (ITC) of our determination. As our final determination is affirmative, the ITC will, within 45 days, determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry. If the ITC determines that material injury, or threat of material injury does not exist, the proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing Customs officials to assess antidumping duties on all imports of the subject merchandise entered for consumption on or after the effective date of the suspension of liquidation.

This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

Appendix I

General Issues

Comment 1: Whether to Apply Facts Available for Material Inputs

Comment 2: Whether to Apply Facts Available for Energy Inputs

Comment 3: Financial Ratios

Comment 4: Surrogate Values—Whether to Update Information for the POI

Comment 5: Surrogate Values—Recycled Iron Scrap

Comment 6: Surrogate Values—Iron and Steel Shavings

Comment 7: Surrogate Values—Ferrosilicon

Comment 8: Surrogate Values—Firewood

Comment 9: Surrogate Values—Wood Pallets

Comment 10: Surrogate Values—Zinc Dust and Zinc Powder

Comment 11: Whether to Consider Certain Inputs as Overhead Items

Comment 12: Whether the Department Correctly Calculated the Distance for the Non-Market Economy (“NME”) Inland Freight Charge for Respondents

Comment 13: Calculate Cost of Production (“COP”) on a per-piece basis

Comment 14: Whether to Add Surrogate Freight to the Surrogate Values of Recycled Scrap

Company Specific Issues

A. JMC

Comment 15: Whether Certain Sales by JMC should be considered CEP

Comment 16: Ministerial Errors

B. Pannext

Comment 17: Whether to Correct Items found at Verification

C. SLK

Comment 18: Use of Yield-Adjusted Factors of Production for SLK supplier

Comment 19: Weight-Averaging in the Normal Value calculation

Comment 20: Use of the Correct Weight of the Finished Product