Certain Forged Stainless Steel Flanges From India; Preliminary Results of Antidumping Duty New Shipper Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The Department of Commerce (the Department) is conducting a new shipper administrative review of the antidumping duty order on certain forged stainless steel flanges (stainless steel flanges) from India manufactured by Micro Forge (India) (Micro Forge). The period of review (POR) covers February 1, 2006, through July 31, 2006. We preliminarily determine to apply an adverse facts available (AFA) rate to Micro Forge's U.S. sale. We invite interested parties 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; and (2) a brief summary of the argument.

EFFECTIVE DATE:

July 31, 2007.

FOR FURTHER INFORMATION CONTACT:

Michael J. Heaney, or Robert James, 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) 482-4475 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Background

On February 9, 1994, the Department published the antidumping duty order on stainless steel flanges from India. See Amended Final Determination and Antidumping Duty Order; Certain Forged Stainless Steel Flanges from India, 59 FR 5994 (February 9, 1994) (Amended Final Determination). On August 31, 2006, the Department received requests for new shipper reviews for the period February 1, 2006, through July 31, 2006, from Micro Forge and Pradeep Metals Limited (Pradeep). On October 6, 2006, the Department published a notice initiating the requested reviews. See Stainless Steel Flanges from India: Notice of Initiation of Antidumping Duty New Shipper Reviews, 71 FR 59081 (October 6, 2006). On March 23, 2007, we extended the time limit for the preliminary results of the new shipper reviews to July 26, 2007. See Stainless Steel Flanges from India: Notice of Extension of Time Limit for Preliminary Results of Antidumping New Shipper Review, 72 FR 13746 (March 23, 2007). On March 30, 2007, we rescinded the review with respect to Pradeep. See Certain Forged Steel Flanges from India: Notice of Partial Rescission of New Shipper Review, 72 FR 15104, (March 30, 2007).On October 13, 2006, the Department sent standard section A, B, C, and D questionnaires to Micro Forge. On October 28, 2006, Micro Forge filed its response to section A of our questionnaire. In its Section A response, Micro Forge indicated that it made no sales of the subject merchandise in either India (its home market) or in any third-country market. See Micro Forge October 28, 2006, Section A response at page 4. On November 15, 2006, Micro Forge filed its response to sections C and D of our questionnaire. Micro Forge indicated that it filed a response to Section D of our questionnaire because it had no sales of subject merchandise in either India or in third countries during the period of review.

In our analysis of Micro Forge's response to Sections A, C, and D of our questionnaire, the Department discovered serious deficiencies. Among other things, these deficiencies included Micro Forge's failing to 1) adequately describe how it produced flanges, 2) detail or explain the services that Micro Forge received from affiliated parties relating to the production and sale of flanges, 3) report the basis of its calculation for certain adjustments to the U.S. price, and to clarify whether these U.S. adjustments were reported in the original currency of transaction, 4) explain the basis for the calculation of direct materials (DIRMAT), labor (DIRLAB), variable overhead (VOH), fixed overhead (FOH), general and administrative expenses (GNA) and interest (INTEX) expenses that support its CV calculation. These deficiencies were such that the Department was unable to calculate a margin for Micro Forge. Therefore we sent a supplemental section A, C, and D questionnaire to Micro Forge on April 4, 2007, that requested the additional information necessary for us to complete our analysis. We established a due date of April 17, 2006, for Micro Forge to respond to our April 4, 2007, supplemental questionnaire.

On April 17, 2007, Micro Forge sent an e-mail to the Department attempting to secure a one-month extension in which to respond to our April 4, 2007, supplemental questionnaire. As required by 19 CFR 351.103, Micro Forge failed to file its April 17, 2007, request with the Department's Central Records Unit (CRU). Moreover, Micro Forge's April 17, 2007, e-mail failed to meet the format, service, and certification requirements stipulated at 19 CFR 351.303. These deficiencies notwithstanding, we placed Micro Forge's e-mail and our April 17, 2007, e-mail response to Micro Forge on the record of this proceeding. See April 16, 2007, e-mail from Mayur Joshi to Robert James. Also on April 17, 2007, we issued a letter to Micro Forge, granting Micro Forge an extension until April 27, 2007, in which to respond to our April 4, 2007, supplemental questionnaire. However, in granting the extension to Mico Forge we informed Micro Forge that in future filings it must adhere to our filing requirements. See April 17, 2007, e-mail from Robert James to Mayur Joshi.

The April 27, 2007, deadline passed with no response from Micro Forge. On May 7, 2007, Micro Forge submitted another e-mail in which it attempted to submit a response to our April 4, 2007, supplemental questionnaire. On May 11, 2007, Micro Forge filed with our CRU an undated response to our April 4, 2007, supplemental questionnaire. On May 14, 2007, we sent Micro Forge a letter indicating that “your electronic mail submission fails to meet the filing format, service, and certification requirements required by 19 CFR 351.303.” We further informed Micro Forge in our May 14, 2007, letter that we were cancelling the sales and constructed value verification of Micro Forge due to begin on May 21, 2007. We informed Micro Forge that we were cancelling this verification because of the company's “failure to provide complete and timely response to the Department's original and supplemental questionnaires.” On May 17, 2007, we issued a letter to Micro Forge in which we rejected Micro Forge's May 11, 2007, response as untimely. (Micro Forge filed its response two weeks past the April 27, 2007, extended due date.) We further indicated in our May 17, 2007, letter that we were returning copies of Micro Forge's submission pursuant to section 351.302(d)(1) and (2) of the Department's regulations.

Scope of the order

The products covered by this order are certain forged stainless steel flanges, both finished and not finished, generally manufactured to specification ASTM A-182, and made in alloys such as 304, 304L, 316, and 316L. The scope includes five general types of flanges. They are weld-neck, used for butt-weld line connection; threaded, used for threaded line connections; slip-on and lap joint, used with stub-ends/butt-weld line connections; socket weld, used to fit pipe into a machined recession; and blind, used to seal off a line. The sizes of the flanges within the scope range generally from one to six inches; however, all sizes of the above-described merchandise are included in the scope. Specifically excluded from the scope of this order are cast stainless steel flanges. Cast stainless steel flanges generally are manufactured to specification ASTM A-351. The flanges subject to this order are currently classifiable under subheadings 7307.21.1000 and 7307.21.5000 of the Harmonized Tariff Schedule (HTS). Although the HTS subheading is provided for convenience and customs purposes, the written description of the merchandise under review is dispositive of whether or not the merchandise is covered by the scope of the order.

Use of Adverse Facts Available

In accordance with section 776(a)(2) of the Tariff Act of 1930, as amended (the Tariff Act), the Department has determined that the use of adverse facts available is appropriate for purposes of determining the preliminary dumping margin for the subject merchandise sold by Micro Forge. Pursuant to section 776(a)(2) of the Tariff Act the Department shall (with certain exceptions not applicable here) use the facts otherwise available in reaching applicable determinations under this subtitle if an interested party (A) withholds information that has been requested by the administrating authority; (B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782 of the Tariff Act; (C) significantly impedes a proceeding under this subtitle; or (D) provides such information but the information cannot be verified as provided in section 782(i). See Tariff Act section 776(a)(2). Moreover, section 776(b) of the Tariff Act provides, in relevant part, that:

The Department preliminarily determines that Mico Forge's questionnaire responses of October 28, 2006, and November 15, 2006, cannot serve as the basis for the calculation of Micro Forge's margin because we are unable to trust the reliability of the information conveyed in those questionnaire responses. The deficiencies identified in Micro Forge's October 28, 2006, section A response and in Micro Forge's November 15, 2006 section C and D responses are outlined in a July 24, 2007, Memorandum entitled “Preliminary Results in the Antidumping Duty Administrative Review of Stainless Steel Flanges from India: Total Adverse Facts Available and Corroboration Memorandum for Company Rate” (Corroboration Memorandum). These deficiencies are so substantial that the Department has no reliable basis upon which it can conduct a margin analysis. See Section 782(e) of the Tariff Act. Furthermore, in failing to provide information within a timely manner, Micro Forge has withheld information that has been requested and has significantly impeded this proceeding within the meaning of section 776(a)(2)(A) and (C) of the Tariff Act. Moreover, Micro Forge failed to provide U.S. sales and CV information in a timely manner and this precluded us from proceeding with a planned verification of Micro Forge's sales and cost information. Therefore, we are basing Micro Forge's margin on the facts otherwise available, in accordance with sections 776(a)(2)(A) through (C) of the Tariff Act. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances: Certain Orange Juice From Brazil, 71 FR 2183, 2184 (January 13, 2006). See also Notice of Final Determination of Sales of Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August 30, 2002); Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products From Brazil, 65 FR 5554, 5567 (February 4, 2000); Static Random Access Memory Semiconductors from Taiwan: Final Determination of Sales at Less than Fair Value, 63 FR 8909, 8910 (February 23, 1998).

Further, we find that an adverse inference is warranted pursuant to section 776(b) of the Department's Regulations. Micro Forge submitted substantially deficient respnses to the Department's original questionnaires. As previously noted, Micro Forge failed to (1) adequately describe how it produced flanges, (2) detail or explain the services that Micro Forge received from affiliated parties relating to the production and sale of flanges, (3) report the basis of its calculation for certain adjustments to the U.S. price, and to clarify whether these U.S. adjustments were reported in the original currency of transaction, (4) explain the basis for the calculation of DIRMAT, DIRLAB, VOH, FOH, GNA, and INTEX expenses that support its CV calculation. In addition, Micro Forge's attempted response to the Department's April 4, 2007, supplemental questionnaire did not adhere to the filing deadline, already extended. Micro Forge submitted its response two weeks past the extended deadline of April 27, 2007, and barely two weeks before the Department's scheduled verification. Micro Forge's belated and inadequate response to our April 4, 2007, letter thus left the Department inadequate time to analyze its response prior to conducting a verification of the information contained in Micro Forge's submissions. By declining to provide requested information in a timely fashion despite an extension, Micro Forge failed to cooperate to the best of its ability in that it did not put forth its maximum efforts to investigate and obtain the requested information from its records. Furthermore, despite repeated instructions and opportunities, Micro Forge failed to properly file its supplemental response with the Department. Consequently, the Department finds that an adverse inference is warranted in determining an antidumping duty margin for Micro Forge. As a result, we are basing Micro Forge's margin on the facts otherwise available, in accordance with section 776(a)(2)(A)(C) of the Act. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances: Certain Orange Juice From Brazil, 71 FR 2183, 2184 (January 13, 2006). See also Notice of Final Determination of Sales of Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (Aug. 30, 2002); Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Products From Brazil, 65 FR 5554, 5567 (Feb. 4, 2000); Static Random Access Memory Semiconductors from Taiwan: Final Determination of Sales at Less than Fair Value, 63 FR 8909, 8910 (Feb. 23, 1998).

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 information that is adverse to the interests of the party as the facts otherwise available. See section 776(b) of the Tariff Act. Adverse inferences are appropriate “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreement Act, H.R. Doc. No. 103-316 (1994) at 870. Under the statutory scheme, such adverse inferences may include reliance on information derived from 1) the petition; 2) a final determination in the investigation; 3) any previous review or determination; or 4) any other information placed on the record. See section 776(b) of the Tariff Act. The SAA authorizes the Department to consider the extent to which a party may benefit from its own lack of cooperation. Id. The Department's practice when selecting an adverse rate from among the possible sources of information is to ensure that the margin is sufficiently adverse to induce the respondents to provide the Department with complete and accurate information in a timely manner. See Notice of Final Determination of Sales of Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55796 (August 30, 2002). Because Micro Forge currently has the “All Others” cash deposit rate of 162.14 percent, the Department determines that assigning the highest margin from the original petition and investigation in this case, 210.00 percent, will prevent Micro Forge from benefitting from its failure to cooperate with the Department's requests for information. See Amended Final Determination 59 FR at 5995.

The rate selected as the adverse facts available rate of 210.00 percent, as previously noted, originates from the final determination of the LTFV investigation and is based on secondary information (i.e. the petition). Section 776(c) of the Tariff Act requires the Department to corroberate secondary information, to the extent practicable. In order to corroberate secondary information, the Department will determine whether the information has probative value including whether the information is reliable and relevant. See 19 CFR 351.308(d).

To assess the reliability of the petition margin, in accordance with section 776(c) of the Act, to the extent practicable, we examined the key elements of the calculations of export price and normal value upon which the petitioners based their margins for the petition. The U.S. prices in the petition were based on quotes to U.S. customers, most of which were obtained through market research. Petitioners calculation of FMV (the predecessor to NV) and U.S. price is described at pages 22-30 of the Petition. Those pages are attached as Exhibit 1 of the Corroboration Memorandum. (See Petition for the Imposition of Antidumping Duties, December 29, 1993, (Petitition) at page 26.) Petitioners calculated a margin of 210 percent for a 6-inch 150# 304 weld neck flange. We were able to corroborate the U.S. prices in the petition, which were used as the basis of the 210.00 percent rate (based on the highest rate in the original petition and antidumping duty order) by comparing these prices to publicly available information based on IM-145 import statistics from the U.S. International Trade Commission's Web site via dataweb for HTS number 7307215000, i.e., the HTS item numbers corresponding to all of Micro Forge's U.S. sales. See Corroboration Memorandum at Exhibit 2. We noted the weighted average reported Customs unit value for HTS number 7307215000 during the POR was $5.76/kg. Id. Moreover, the U.S. price per kilogram for the 6-inch 150# 304 weld neck flange is $4.37. Based upon the foregoing, we determine that the U.S. Customs unit entered value of $5.76 per kilogram is proximate both to the range of prices outlined in the petition (which range from $4.01 to $7.76 per kilogram (Id. at 7-8) and to the $4.37 per kilogram price of the 6 inch 150# 304 weld neck flange (Id at 8.). We thus conclude that the Customs unit entered value of $5.76 continues to evince the reliability of the Petition. The NVs in the petition were based on actual price quotations obtained through market research. See Petition at 22, (Exhibit 1 of the Corroboration Memorandum). The Department is not aware of other independent sources of information that would enable it to corroborate the margin calculations in the petition further.

With respect to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal as to whether there are circumstances that would render a margin not relevant. Where circumstances indicate that the selected margin is not appropriate as adverse facts available, the Department will disregard the margin and determine an appropriate margin as in Flowers from Mexico, 61 FR at 6814. Further, in accordance with F. LII De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F. 3d 1027, 1032 (Fed. Cir. June 16, 2000), we also examine whether information on the record would support the selected rates as reasonable facts available.

We find that the 210.00 percent rate which we are using for these preliminary results is relevant as applied to Micro Forge. The 210.00 percent margin rate has been used recently in a prior administrative review of this proceeding. See Certain Forged Stainless Steel Flanges from India: Preliminary Results of Antidumping Duty Administrative Review, 68 FR 11361, 11365 (March 10, 2003) (in which the Department applied the 210.00 percent rate to Snowdrop as the basis of adverse facts available). See also, Certain Forged Stainless Steel Flanges from India: Preliminary Results of Antidumping Duty Administrative Review, 71 FR 11379, 11380 (March 7, 2006) (in which the Department applied the 210.00 percent rate to Paramount as the basis of adverse facts available). There is no evidence on the record of this proceeding which suggests that Micro Forge is sufficiently different from these producers such that the 210 percent rate should be inapplicable to Micro Forge. Furthermore, as discussed previously, the Indian imports under the HTS number corresponding to Micro Forge's U.S. sales have average unit values similar to those found in the petition. Thus, we conclude that we have corroberated the relevance of this rate as applied to Micro Forge to the extent practicable.

The implementing regulation for section 776 of the Act, codified at 19 CFR 351.308(d), states, “(t)he fact that corroboration may not be practicable in a given circumstance will not prevent the Secretary from applying an adverse inference as appropriate and using the secondary information in question.” Additionally, the SAA at 870 states specifically that, where “corroboration may not be practicable in a given circumstance,” the Department may nevertheless apply an adverse inference. The SAA at 869 emphasizes that the Department need not prove that the facts available are the best alternative information. Therefore, based on our efforts, described above, to corroborate information contained in the petition and in accordance with 776(c) of the Tariff Act, which discusses facts available and corroboration, we consider the margins in the petition to be corroborated to the extent practicable for purposes of this preliminary determination. See Certain Cut-to-Length Carbon Steel Plate from Mexico: Final Results of Antidumping Duty Administrative Review, 64 FR 76, 84 (January 4, 1999).

Preliminary Results of Review

As a result of our review, the Department preliminarily finds the following weighted-average dumping margins exist for the period February 1, 2006, through July 31, 2006:

Disclosure and Public Comment

The Department will disclose calculations performed within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). An interested party may request a hearing within 30 days of publication of the preliminary results. See CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first business day thereafter, unless the Department alters the date per 19 CFR 351.310(d).

Interested parties may submit case briefs or written comments no later than 30 days after the date of publication of these preliminary results of review. Parties may also submit rebuttal briefs or written comments. Pursuant to 19 CFR 309(d), rebuttal briefs and rebuttals to written comments are limited to issues raised in the case briefs, and may be filed no later than 5 days after the time limit for filing the case briefs. Parties who submit argument in these proceedings are requested to submit with the argument: (1) a statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities. See 19 CFR 351.309(c)(2). Further, the Department requests parties submitting written comments to provide the Department with an additional copy of the public version of any such comments on diskette. The Department will issue final results of this administrative review, including the results of our analysis of the issues raised in any such written comments or at a hearing, within 120 days of publication of these preliminary results.

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department intends to issue appropriate instructions for Micro Forge directly to CBP within 15 days of publication of the final results of this review. The final results of this review shall be the basis for assessment of antidumping duties on entries of merchandise covered by the final results of this review, and for future deposits of estimated duties, where applicable.

Cash Deposit Requirements

Bonding is no longer permitted to fulfill security requirements for shipments from Micro Forge of certain stainless steel flanges from India entered, or withdrawn from warehouse, for consumption on or after the publication date of these final results of new shipper review.The following deposit requirements will be effective upon completion of the final results of this new shipper review for all shipments of flanges from India entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Tariff Act: 1) the cash deposit rate for the reviewed company will be the rate established in the final results of this new shipper review; if the rate for a particular company is zero or de minimis (i.e., less than 0.50 percent), no cash deposit will be required for that company; 2) for manufacturers or exporters not covered in this review, but covered in the original less-than-fair-value investigation or a previous review, the cash deposit will continue to be the most recent rate published in the final determination or final results for which the manufacturer or exporter received a company-specific rate; 3) if the exporter is not a firm covered in this review, a prior review or the original investigation, but the manufacturer is, the cash deposit rate will be that established for the most recent period for that manufacturer of the merchandise; and 4) if neither the exporter nor the manufacturer is a firm covered in this or any previous reviews, the cash deposit rate will be 162.14 percent, the “all others” rate established in the LTFV investigation. See Amended Final Determination 59 FR at 5995. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

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 notice in accordance with sections 751(a)(2)(B) and 777(i)(1) of the Tariff Act and 19 CFR 351.221(b)(4) and 19 CFR 351.214.