01-7928. Initiation of Antidumping Duty Investigation: Oleoresin Paprika From India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

EFFECTIVE DATE:

March 30, 2001.

FOR FURTHER INFORMATION CONTACT:

Mark Ross or Karin Ryerson, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

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 Department of Commerce's (the Department's) regulations are to the provisions at 19 CFR Part 351 (2000).

The Petition

On March 6, 2001, the Department received a petition on imports of oleoresin paprika filed in proper form by Rezolex, Ltd., Co. (referred to hereafter as “the petitioner”). On March 14, 2001, the Department requested additional information and clarification of certain areas of the petition and received a response on March 19, 2001.

In accordance with section 732(b) of the Act, the petitioner alleges that imports of oleoresin paprika from India are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act and that such imports are materially injuring and threaten to injure an industry in the United States.

The Department finds that the petitioner filed this petition on behalf of the domestic industry because it is an interested party as defined in section 771(9)(C) of the Act. Furthermore, the petitioner has demonstrated sufficient industry support with respect to the antidumping duty investigation it is requesting the Department to initiate (see “Determination of Industry Support for the Petition” below).

Scope of Investigation

The merchandise subject to this investigation consists of oleoresin extracts made from red peppers (generally known as “oleoresin paprika”), regardless of solvent content or pepper pungency. Other names that refer to this product may include, but are not limited to, paprika oleoresin, oleoresin of paprika, paprika extract, extract of paprika, and “ORP.” Manufacturers typically produce oleoresin paprika from the pepper variety called Capsicum Annum L., but they may produce oleoresin paprika from other red pepper varieties. Except as specified below, all products, concentrations, and qualities of oleoresin paprika regardless of pepper source are included in this investigation.

The merchandise subject to this investigation may enter under 1301.90.9090, 1302.19.9040, 3203.00.8000, 3205.00.0500, 3301.90.1010, 3301.90.1050, and 3301.90.5000 of the Harmonized Tariff Schedule of the United States (HTSUS), but these subheadings also cover products that are outside the scope of this investigation. Specifically excluded from the scope of this investigation are any oleoresin extracts of red peppers that have an American Spice Trade Association (ASTA) value of less than 500 ASTA or 20,000 Color Units (500 ASTA × 40 = 20,000 Color Units) as determined by spectrophotometric measurement. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this investigation is dispositive.

During our review of the petition, we discussed the scope with the petitioner to ensure that it accurately reflects the products for which the domestic industry is seeking relief. Moreover, as discussed in the preamble to the Department's regulations (62 FR 27296, 27323), we are setting aside a period for interested parties to raise issues regarding product coverage. The Department encourages all interested parties to submit such comments within 20 calendar days of publication of this notice. Comments should be addressed to Import Administration's Central Records Unit at Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petition

Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for: (1) At least 25 percent of the total production of the domestic like product; and (2) more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition.

Section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the administering agency shall: (i) poll the industry or rely on other information in order to determine if there is support for the petition as required by subparagraph (A), or (ii) determine industry support using a statistically valid sampling method.

Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether the petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While the Department and the ITC must apply the same statutory definition regarding the domestic like product (see section 771(10) of the Act), they do so for different purposes and pursuant to separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the domestic like product, such differences do not render the decision of either agency contrary to law.^[1]

Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this title.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” i.e., the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition.

In this case, we have adopted the definition of the domestic like product defined in the “Scope of Investigation” section, above. That definition was developed in consultation with the petitioner.

The petitioner established industry support representing over 50 percent of total production of the domestic like product. In addition, the Department received no opposition to the petition. Therefore, the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) are met. Furthermore, the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition. Thus, the requirements of section 732(c)(4)(A)(ii) are also met.

Accordingly, the Department determines that the petition was filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act (see Initiation Checklist, Re: Industry Support).

Export Price and Normal Value

The following is a description of the allegation of sales at less than fair value upon which the Department based its decision to initiate this investigation. The sources of data for the deductions and adjustments relating to U.S. price and normal value are discussed in the Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act, we may reexamine the information and revise the margin calculations, if appropriate. The anticipated period of investigation is January 1, 2000, through December 31, 2000.

The petitioner identified the following Indian companies as producers of oleoresin paprika in its petition: Akay Flavours & Aromatics, Ltd., Asian Herbex, Ltd., D.V. Deo, Enjay Marketing Services Pvt., Ltd., Enjayes Spices & Chemical Oils, Ltd., Flavours and Essences Pvt., Ltd., Gujarat Packaging, Indoworld Trading Corporation, Kancor Flavours & Extracts Ltd., Paprika Oleo's (India), Ltd., Plant Lipids Ltd., and Synthite Industrial Chemicals Ltd. The petitioner determined export prices for some of these producers based on price quotes obtained by company personnel. All U.S. prices were denominated in U.S. dollars and, where appropriate, the petitioner made adjustments for movement expenses. To support the accuracy of this information the petitioner provided an affidavit from the company official that was responsible for collecting the information. As a result of our review of the petitioner's calculation of certain export prices, we determined that it was necessary to revise certain adjustments for movement expenses (see Initiation Checklist, Re: Less-Than-Fair-Value Allegation).

With respect to normal value, the petitioner stated that it could not find data regarding Indian home-market or third-country prices. In support of its claim that home-market and third-country pricing information is unavailable, the petitioner provided an affidavit from the company official that was responsible for preparing the petition. Lacking Indian home-market or third-country pricing information, the petitioner based normal value on constructed value. Pursuant to section 773(e) of the Act constructed value includes cost of materials and fabrication, selling, general, and administrative expenses, packing, and profit. The petitioner calculated the cost of materials and fabrication, selling, general, and administrative expense, and packing components of constructed value based on its own production experience, using publicly available data to make adjustments for known differences between costs incurred to produce oleoresin paprika in the United States and India. For profit, the petitioner relied upon the financial statements of an Indian oleoresin paprika producer.

Fair Value Comparison

Based on the data provided by the petitioner, there is reason to believe that imports of oleoresin paprika from India are being, or are likely to be, sold in the United States at less than fair value. As a result of the comparison of export prices to normal value, we recalculated estimated dumping margins for imports of oleoresin paprika from India that range from 22.29 percent to 46.75 percent.

Allegations and Evidence of Material Injury and Causation

The petition alleges that the U.S. industry producing the domestic like product is being materially injured and is threatened with material injury by reason of the imports of the subject merchandise sold at less than normal value. The petitioner contends that the industry's injured condition is evidenced by the loss of customers, producers leaving the industry, stagnate domestic sales volumes, and declining trends in employment and pricing.

The allegations of injury and causation are supported by relevant evidence including U.S. Customs import data, lost sales, and pricing information. The Department assessed the allegations and supporting evidence regarding material injury and causation and determined that these allegations are supported by accurate and adequate evidence and meet the statutory requirements for initiation (see Initiation Checklist, Re: Material Injury).

Initiation of Antidumping Investigation

Based upon our examination of the petition on oleoresin paprika from India, we find that the petition meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of oleoresin paprika from India are being, or are likely to be, sold in the United States at less than fair value. Unless postponed, we will make our preliminary determination no later than 140 days after the date of this initiation.

Distribution of Copies of the Petition

In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the representatives of the government of India. We will attempt to provide a copy of the public version of the petition to each producer named in the petition, as appropriate.

International Trade Commission Notification

We have notified the ITC of our initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

The ITC will preliminarily determine, no later than April 20, 2001, whether there is a reasonable indication that imports of oleoresin paprika are causing material injury, or threatening to cause material injury, to a U.S. industry. A negative ITC determination will result in this investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits.

This notice is published pursuant to section 777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties of the Assistant Secretary for Import Administration.

Dated: March 26, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, Import Administration.

Footnotes

1.  See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 639, 642-44 (CIT 1988); High Information Content Flat Panel Displays and Display Glass from Japan: Final Determination; Rescission of Investigation and Partial Dismissal of Petition, 56 FR 32376, 32380-81 (July 16, 1991).