03-31480. Notice of Preliminary Determination of Sales at Not Less Than Fair Value: Wax and Wax/Resin Thermal Transfer Ribbons From the Republic of Korea

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary determination of sales at not less than fair value.

EFFECTIVE DATE:

December 22, 2003.

FOR FURTHER INFORMATION CONTACT:

Fred Baker at [phone], or Robert James at [phone]; AD/CVD Enforcement, Group III, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

 

Preliminary Determination

We preliminarily determine that wax and wax/resin thermal transfer ribbons (TTR) from the Republic of Korea (Korea) are not being, nor are likely to be, sold in the United States at less than fair value (LTFV), as provided in section 733 of the Tariff Act of 1930, as amended (the Tariff Act).

Interested parties are invited to comment on this preliminary determination. Unless extended, we will make our final determination not later than 75 days after the date of this preliminary determination.

Case History

The Department initiated this investigation on June 19, 2003.^[1] See Notice of Initiation of Antidumping Duty Investigation: Thermal Transfer Ribbons From France, Japan and the Republic of Korea, 68 FR 38305 (June 27, 2003) (Initiation Notice). Since the initiation of the investigation, the following events have occurred.

On July 14, 2003, the United States International Trade Commission (the Commission) preliminarily determined that “there is a reasonable indication that an industry in the United States is materially injured by reason of imports from France, Japan, and Korea of certain wax and wax/resin thermal transfer ribbons.” See Certain Wax and Wax/Resin Thermal Transfer Ribbons From France, Japan, and Korea, 68 FR 42759 (July 18, 2003).

On July 21, 2003, the Department toured the petitioner's production facilities in New York, and met with petitioner to discuss product characteristics. See Memorandum to the File dated July 30, 2003, on file in room B-099 of the Department of Commerce building.

On July 28, 2003, and July 30, 2003, petitioner submitted comments regarding the scope of the investigation. On August 7, 2003, General Company Limited, an interested party, also commented on the scope of the investigation. On September 2, 2003, petitioner submitted a “test” description to the Department, for the purpose of determining whether a product should be classified as a wax, resin enhanced wax, or wax/resin ribbon. On September 9, 2003, Armor submitted comments on petitioner's September 2, 2003 test proposal. On September 11, 2003, the Department issued a clarification to the scope of this investigation. See Memorandum from Edward C. Yang, Office Director to Joseph A. Spetrini, Deputy Assistant Secretary; Antidumping Investigation on Certain Wax and Wax/Resin Thermal Transfer Ribbon from France, Japan and Korea: Scope Clarification, on file in room B-099 of the Department of Commerce building. The Department removed the word “pure” from the section discussing the exclusion of resin TTR in the scope language.

On November 4, 2003, petitioner submitted a letter to the Department correcting a typographical error in the color specification of the scope, as written in the petition and initiation notice: “−20>a*<35” should read, “−20<a*<35.”

On July 21, 2003, Illinois Tool Works, Inc. (ITW), the only known Korean producer/exporter of TTR to the United States, submitted comments about model match criteria. On July 30, 2003 the Department sent a letter to interested parties soliciting comments on model match criteria. On August 4, 2003, August 18, 2003, and September 4, 2003 petitioner submitted comments regarding the model match criteria. On August 4, 2003, ITW submitted additional comments regarding the model match criteria. Additional model match comments were submitted by other interested parties on this record, as follows: Armor, S.A., on August 5, 2003 and August 6, 2003; Dai Nippon Printing Company, Ltd., on August 5, 2003; and Brother International Corporation, on August 6, 2003. On August 28, 2003, the Department issued a letter to interested parties in which it clarified its model match criteria. On October 9, 2003, the Department met with petitioner's counsel to discuss its model match comments. See Memorandum to the file dated October 10, 2003 on file in room B-099 of the Department of Commerce building.

On August 1, 2003, the Department issued section A of its questionnaire to ITW. On August 8, 2003, the Department issued sections B, C and E of its questionnaire, including model match criteria. On September 5, 2003, ITW submitted its section A response. On September 8, 2003, ITW submitted a supplemental section A response, consisting of the section A response of an affiliated U.S. reseller (Reseller 1).^[2] We received ITW's sections B, C, and E responses on September 24, 2003. ITW also submitted on September 24, 2003, a supplemental section C response consisting of the section C response of Reseller 1.

On October 1, 2003 the Department returned ITW's section A response to ITW with a request that it rebracket numerous sections of the response because the Department determined that numerous portions of its submission for which ITW had requested proprietary treatment did not merit proprietary treatment. ITW submitted a rebracketed section A response on October 8, 2003. On November 12, 2003 the Department returned ITW's sections B, C, and E responses and its supplemental sections A and C responses (i.e., the responses of Reseller 1) with a request that it rebracket portions of those submissions because the Department determined that numerous portions for which ITW had requested proprietary treatment did not merit proprietary treatment. ITW submitted rebracketed versions on November 20, 2003.

On November 3, 2003 the Department requested that ITW submit an additional section B response in order to report all of its home market sales of slit TTR. (In its September 24, 2003 section B response ITW had submitted only its home market sales of jumbo roll TTR.) Also on November 3, 2003 the Department requested that ITW submit section C responses from two additional affiliated U.S. resellers (Reseller 2 and Reseller 3). (The actual names of these resellers are business proprietary information.) We received all three of these responses on November 21, 2003.

On October 15, 2003 petitioner made a submission alleging that ITW had made sales in its home market below their cost of production, and requested that the Department initiate a below-cost investigation of ITW's home market sales. On October 29, 2003 the Department requested that petitioner revise its cost allegation. See Memorandum from Laurens van Houten to the File dated October 29, 2003, on file in room B-099 of the Department of Commerce building. On November 5, 2003 petitioner submitted a revised cost allegation. The Department initiated a below-cost sales investigation on November 19, 2003. See Memorandum from Neal Halper to Richard Weible dated November 19, 2003 on file in room B-099 of the Department of Commerce building. On November 20, 2003 the Department requested that ITW respond to section D of the Department's August 8, 2003 questionnaire. The due date for ITW's section D response is now December 16, 2003.

On September 30, 2003, we received comments from petitioner about ITW's and Reseller 1's section A responses. On November 7, 2003, we received comments from petitioner concerning ITW's and Reseller 1's section C responses, and ITW's sections B and E responses. On November 28, 2003, the Department issued to ITW a supplemental questionnaire concerning its section E response. ITW's response to this supplemental questionnaire is due December 18, 2003. On December 1, 2003, the Department issued to ITW a supplemental questionnaire about its sections A, B, and C responses and Reseller 1's sections A and C responses. ITW's response to this supplemental questionnaire is due December 22, 2003. On December 8, 2003 petitioner submitted additional comments concerning the proper calculation of ITW's dumping margin in the preliminary determination. ITW responded to petitioner's comments in a submission dated December 10, 2003.

On October 3, 2003, the petitioner made a timely request for a forty-day postponement of the preliminary determination pursuant to section 733(c)(1)(A) of the Tariff Act. On October 21, 2003, we postponed the preliminary determination until no later than December 16, 2003. See Wax and Wax/Resin Thermal Transfer Ribbons from France, Japan, and the Republic of Korea; Notice of Postponement of Preliminary Determinations in Antidumping Duty Investigations, 68 FR 60085 (October 21, 2003).

Selection of Respondents

Section 777A(c)(1) of the Tariff Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Where it is not practicable to examine all known producers/exporters of subject merchandise, section 777A(c)(2) of the Tariff Act permits the Department to investigate either: (1) A sample of exporters, producers, or types of products that is statistically valid, based on the information available at the time of selection; or (2) exporters and producers accounting for the largest volume of the subject merchandise that can reasonably be examined.

During the period of investigation (POI), only ITW was identified as a producer/exporter of subject merchandise from Korea. Therefore, we selected ITW as the sole respondent in the investigation of TTR from Korea.

Period of Investigation

The POI is April 1, 2002, through March 31, 2003. This period corresponds to the four most recently completed fiscal quarters as of the month prior to the month of filing of the petition (i.e., June 2003) involving imports from a market economy, and is in accordance with our regulations. See 19 CFR 351.204(b)(1).

Scope of Investigation

This investigation covers wax and wax/resin thermal transfer ribbons (TTR), in slit or unslit (“jumbo”) form originating from Korea with a total wax (natural or synthetic) content of all the image side layers, that transfer in whole or in part, of equal to or greater than 20 percent by weight and a wax content of the colorant layer of equal to or greater than 10 percent by weight, and a black color as defined by industry standards by the CIELAB (International Commission on Illumination) color specification such that L*<35, -20<a*<35 and -40<b*<31, and black and near-black TTR. TTR is typically used in printers generating alphanumeric and machine-readable characters, such as bar codes and facsimile machines.

The petition does not cover pure resin TTR, and finished thermal transfer ribbons with a width greater than 212 millimeters (mm), but not greater than 220 mm (or 8.35 to 8.66 inches) and a length of 230 meters (m) or less (i.e., slit fax TTR, including cassetted TTR), and ribbons with a magnetic content of greater than or equal to 45 percent, by weight, in the colorant layer.The merchandise subject to this investigation may be classified in the Harmonized Tariff Schedule of the United States (HTSUS) at heading 3702 and subheadings 3921.90.40.25, 9612.10.90.30, 3204.90, 3506.99, 3919.90, 3920.62, 3920.99 and 3926.90. The tariff classifications are provided for convenience and Customs and Border Protection (CBP) purposes; however, the written description of the scope of the investigation is dispositive.

On October 29, 2003 and November 24, 2003, the petitioner submitted documents it claims suggest the respondents in the TTR investigations are attempting to circumvent a potential TTR antidumping order by slitting subject merchandise jumbo rolls in a third country. The petitioner contends the country of origin of slit TTR should be determined by the country of origin of the jumbo TTR roll from which it was slit, regardless of where the slitting occurred. The petitioner argues that slitting subject merchandise jumbo TTR rolls does not involve a substantial transformation, and therefore, does not change the country of origin of slit TTR rolls.

On November 26, 2003 and December 12, 2003, Armor S.A. (respondent in the antidumping investigation of TTR from France) submitted comments regarding the petitioner's allegation. Armor S.A. (Armor) argues the further manufacturing process does in fact substantially transform the jumbo TTR rolls, and thus does change the country of origin of the merchandise. On December 5, 2003, petitioner made a response to Armor's November 26, 2003 submission.

We have reviewed the petitioner's and Armor's comments. However, as a determination of whether or not slitting jumbo TTR rolls constitutes a substantial transformation and, therefore, changes the country of origin of the merchandise for purposes of administering the antidumping law, and as such a change may affect the scope of this investigation and future proceedings, it is necessary to provide interested parties the opportunity to comment on this issue. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997). The due date for such comments is two weeks after publication of this notice. The due date for any rebuttal comments is five days later.

We remind parties that case and rebuttal briefs, whether commenting on this country of origin issue, or any other issue, must be limited to the facts already on the record in accordance with section 351.301 of the Department's regulations.

Constructed Export Price

In accordance with section 772(a) of the Tariff Act, export price (EP) is 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 the subject merchandise outside of the United States to an unaffiliated purchaser for exportation to the United States. In accordance with section 772(b) of the Tariff Act, constructed export price (CEP) is 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 an unaffiliated purchaser, as adjusted under sections 772(c) and (d) of the Tariff Act. For purposes of this investigation ITW has classified its sales as CEP sales. See ITW's September 24, 2003 section C response, at C-7.

ITW states that all of its U.S. sales were imported by its U.S. affiliate, ITW Thermal Files (ITWTF), and that it made all of its U.S. sales through ITWTF. See September 5, 2003, section A response at A-2 and A-18. Based on this information, we preliminarily determine that ITW's U.S. sales are CEP sales.

For purposes of this preliminary determination, we used the U.S. sales listings submitted by ITWTF and Reseller 1 on September 24, 2003, and by Reseller 2 and Reseller 3 on November 21, 2003. We calculated CEP in accordance with section 772(b) of the Tariff Act. We based CEP on packed prices from ITWTF, Reseller 1, Reseller 2, or Reseller 3 for shipment to distributors, converters, original equipment manufacturers, and end-users in the U.S. market. We made adjustments for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act; these included, where appropriate, foreign inland freight, brokerage and handling, international freight, U.S. inland freight, and U.S. Customs duties. In accordance with section 772(d)(1) of the Tariff Act, we deducted those selling expenses associated with economic activities occurring in the United States, including warehousing, commissions, warranty expenses, discounts, U.S. repacking, inventory carrying costs, and indirect selling expenses. We made an adjustment for profit in accordance with section 772(d)(3) of the Tariff Act. Because we do not have total cost data on the record of this investigation, we calculated profit using data from ITWTF's financial statement. See the preliminary determination analysis memorandum dated December 16, 2003 for details of our calculation. We added duty drawback to the U.S. starting price in accordance with section 772(c)(1)(B) of the Tariff Act, and made additional upward adjustments to the U.S. starting price for freight revenue and revenues ITW reported as “additional revenues.” We made an adjustment for further manufacturing in accordance with 772(d)(2) of the Tariff Act.

Normal Value

In accordance with section 773(a)(1)(C) of the Tariff Act, to determine whether there was sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is greater than or equal to five percent of the aggregate volume of U.S. sales), we compared ITW's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise. Because ITW's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales for the subject merchandise, we determined that the home market was viable. We therefore based NV on home market sales to unaffiliated purchasers made in the usual commercial quantities and in the normal course of trade.

Since no information on the record indicates that ITW made any sales to affiliates in its home market, we did not use an arm's-length test for comparison market sales.

On November 19, 2003 the Department initiated a below-cost sales investigation with respect to ITW's home market sales. The due date for ITW's section D questionnaire response is December 16, 2003. Since the due date of ITW's cost submission makes it impossible for the Department to perform a cost analysis for purposes of this preliminary determination, we intend to issue an analysis of ITW's cost data following publication of this preliminary determination and allow parties an opportunity to comment on that analysis.

For purposes of this preliminary determination, we used the home market sales listing ITW submitted with its November 21, 2003 section B supplemental questionnaire response. We calculated NV based on prices to unaffiliated customers in the home market. We made an adjustment for rebates in accordance with 19 CFR 351.401(c). We made an adjustment for inland freight pursuant to section 773(a)(6)(B) of the Tariff Act. We also made circumstance-of-sale adjustments for imputed credit expenses in accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. Since ITW has reported commissions in its U.S. market but not in its home market, we deducted home market indirect selling expenses, including inventory carrying costs, but limited the deduction to the amount of commissions paid in the U.S. market in accordance with 19 CFR 351.410(e). Finally, we deducted home market packing costs and added U.S. packing costs in accordance with subsections 773(a)(6)(A) and (B) of the Tariff Act.

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Tariff Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade (LOT) as the CEP transaction. The NV LOT is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive selling, general and administrative expenses and profit. For CEP, it is the level of the constructed sale from the exporter to the importer. Moreover, for CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and profit, pursuant to section 772(d) of the Tariff Act. See Micron Technology, Inc. v. United States, 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001).

To determine whether the comparison-market sales are at a different LOT than CEP 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 LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Tariff Act. Finally, for CEP sales, if the NV LOT is more remote from the factory than the CEP level and there is no basis for determining whether the differences in the levels between NV and CEP affect price comparability, we adjust NV under section 773(a)(7)(B) of the Tariff Act. See, e.g., Certain Carbon Steel Plate from South Africa, Final Determination of Sales at Less Than Fair Value, 62 FR 61731 (November 19, 1997).

In applying these principles in this investigation, we asked ITW to identify the specific differences and similarities in selling functions and support services between all phases of marketing in the home market and the United States. ITW identified one channel of distribution in the home market (direct sales to unaffiliated customs), and therefore claimed only one level of trade in the home market. See ITW's September 24, 2003 section B response, at B-9. However, ITW also identified three different customer categories in the home market: distributors, OEM dealers, and converters. See September 5, 2003 section A response, at A-15 and its September 24, 2003 section B response, at B-8. Our August 1, 2003 questionnaire requested (at page A-8) that ITW provide a list of selling activities performed for each combination of distribution channel and customer category. Instead, for the home market ITW provided such a list only for its one channel of distribution. See ITW's September 5, 2003 section A response at attachment A-9-B. Therefore, because we do not have a list of selling expenses for each combination of customer category and channel of distribution, we are unable to determine whether only one level of trade exists in the home market. ITW requested a CEP offset, but because we are unable to determine the home market level of trade at this time, we cannot determine whether a CEP offset is warranted. Therefore, in this preliminary determination we have made no level-of-trade adjustment, and have denied ITW's claimed CEP offset. In our December 1, 2003 supplemental questionnaire, we requested additional information about ITW's selling activities for its customer categories. Based on our analysis of ITW's response (due December 22, 2003), for the final determination we will consider whether a level-of-trade adjustment or CEP offset is warranted in this case.

Suspension of Liquidation

The dumping margins are as follows:

Producer/exporter	Margin (percentage)
ITW	1.27
All Others	1.27

Because the estimated weighted-average dumping margin for the examined company is de minimis, we are not directing U.S. Customs and Border Protection (CBP) to suspend liquidation of entries of TTR from Korea.

International Trade Commission Notification

In accordance with section 733(f) of the Tariff Act, we have notified the Commission of our determination. If the final determination in this proceeding is affirmative, the Commission will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of TTR from Korea are materially injuring, or threatening material injury to, the U.S. industry.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs within 50 days of the date of publication of this notice. See 19 CFR 351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days after the deadline for the submission of case briefs. See 19 CFR 351.309(d). The Department, at its discretion, may extend the filing date for case and rebuttal briefs. Any such extension will be announced in writing and placed on the public record of this proceeding. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Further, we request that parties submitting briefs and rebuttal briefs provide the Department with a copy of the public version of such briefs on diskette.

In accordance with section 774 of the Tariff Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs. If a request for a hearing is made, we will tentatively hold the hearing two days after the deadline for submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). The Department will make its final determination no later than 75 days after the date of issuance of this preliminary determination.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Tariff Act.

Dated: December 16, 2003.

James Jochum,

Assistant Secretary for Import Administration.

Footnotes

1.  The petitioner in this investigation is International Imaging Materials, Inc. (IIMAK).

2.  The actual name of this reseller has been afforded treatment as business proprietary information.