03-5185. Notice of Amended Preliminary Antidumping Duty Determination of Sales at Less Than Fair Value: Certain Frozen Fish Fillets From the Socialist Republic of Vietnam

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Amended preliminary antidumping duty determination of sales at less than fair value.

EFFECTIVE DATE:

March 5, 2003.

FOR FURTHER INFORMATION CONTACT:

Alex Villanueva or James C. Doyle, AD/CVD Enforcement Group III, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone], or [phone], respectively.

Scope of the Investigation

For purposes of this investigation, the product covered is frozen fish fillets, including regular, shank, and strip fillets, whether or not breaded or marinated, of the species Pangasius Bocourti, Pangasius Hypophthalmus (also known as Pangasius Pangasius), and Pangasius Micronemus. The subject merchandise will be hereinafter referred to as frozen “basa” and “tra” fillets, which are the Vietnamese common names for these species of fish. These products are classifiable under tariff article codes 0304.20.60.30 (Frozen Catfish Fillets), 0304.20.60.96 (Frozen Fish Fillets, NESOI), 0304.20.60.43 (Frozen Freshwater Fish Fillets) and 0304.20.60.57 ^[1] (Frozen Sole Fillets) of the Harmonized Tariff Schedule of the United States (“HTSUS”). This investigation covers all frozen fish fillets meeting the above specification, regardless of tariff classification. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this proceeding is dispositive.

Background

On January 29, 2003, An Giang Fisheries Import and Export Joint Stock Company (“Agifish”), Vinh Hoan Company Limited (“Vinh Hoan”), Nam Viet Company Limited (“Nam Viet”) and Can Tho Agricultural and Animal Products Import Export Company (“CATACO”), hereinafter collectively referred to as “Mandatory Respondents,” timely filed allegations that the Department made ministerial errors in the preliminary determination.

On February 3, 2003, Catfish Farmers of America (“CFA”) and the individual U.S. catfish processors America's Catch Inc.; Consolidated Catfish Co., L.L.C.; Delta Pride Catfish, Inc.; Harvest Select Catfish, Inc.; Heartland Catfish Company; Pride of the Pond; Simmons Farm Raised Catfish, Inc.; and Southern Pride Catfish Co., Inc., hereinafter referred to collectively as “Petitioners,” timely filed allegations that the Department made ministerial errors in the preliminary determination.

Amendment of Preliminary Determination

On January 24, 2003, the Department of Commerce (“the Department”) preliminarily determined that certain frozen fish fillets from the Socialist Republic of Vietnam (“Vietnam”) are being, or are likely to be, sold in the United States at less than fair value (“LTFV”), as provided in section 733(a) of the Tariff Act. See Notice of Preliminary Determination of Sales at Less Than Fair Value, Affirmative Preliminary Determination of Critical Circumstances and Postponement of Final Determination: Certain Frozen Fish Fillets from the Socialist Republic of Vietnam (“Preliminary Determination”) 68 FR 4986 (January 31, 2003).

The Department is amending the Preliminary Determination in the antidumping investigation of certain frozen fish fillets from the Socialist Republic of Vietnam.

Significant Ministerial Error

A significant ministerial error is defined as an error, the correction of which, singly or in combination with other errors, would result in (1) a change of at least five absolute percentage points in, but not less than 25 percent of, the weighted-average dumping margin calculated in the original (erroneous) preliminary determination; or (2) a difference between a weighted-average dumping margin of zero or de minimis and a weighted-average dumping margin of greater than de minimis or vice versa. See 19 CFR 351.224(g).

Ministerial Error Allegations from the Mandatory Respondents

Comment 1: U.S. Price to Normal Value Comparison

The Mandatory Respondents argue that in calculating the company-specific dumping margins for the Preliminary Determination, the Department applied an incorrect U.S. price for Mandatory Respondents' sales of glazed frozen fish fillets (coated with water, then frozen). The Mandatory Respondents claim that for sales involving glazed fillets, Mandatory Respondents reported in the field “NETPRIU,” the per-unit price for glazed fillets based on the actual sales quantity (minus the weight of the glaze). In addition, the Mandatory Respondents also reported the corresponding net sales quantity (minus the weight of the glaze) in the filed labeled “QTYNETU.”

The Mandatory Respondents argue that the Department inadvertently relied upon a price for glazed sales reported in the field “GRSUPRU.” However, the Mandatory Respondents argue, the prices reported in this field for glazed fillets do not reflect the actual per-unit prices of glazed products. The Mandatory Respondents note that the per-unit prices reported in “GRSUPRU” field are based on gross sales quantities, including the weight of the glaze. The Mandatory Respondents claim that the Department did not intend to use the gross-weight prices for glazed sales reported in this field in the margin calculations. Therefore, the Mandatory Respondents argue, the Department must rely upon the per-unit price for glazed products reported in the field “NETPRIU.”

Department's Position

We agree with the Mandatory Respondents. In our Preliminary Determination, we overlooked that the Mandatory Respondents' factor utilization rates, and hence normal values, were calculated based on weights net of glazing water. Therefore, when calculating the dumping margin, we compared each Mandatory Respondent's normal value based on net weight to U.S. prices based on gross weight. This resulted in a distortion which we are correcting.

During the course of the investigation, each Respondent explained that some customers purchased subject merchandise that was water glazed. In addition, the Mandatory Respondents stated that the water and other inputs used to produce glazed products were reported in the factors of production data. Therefore, in the numerator, the Mandatory Respondents included those factors of production used to produce subject merchandise inclusive of water glazing. However, the denominator used by the Mandatory Respondents represents the weight of the frozen fish products without the excess water weight associated with glazing. Consequently, the consumption ratio of each factor of production reported by the Mandatory Respondents was calculated by using the factors of production (including glazing) as the numerator and the weight of the frozen fish products without the excess water weight associated with glazing as the denominator. As a result, the consumption ratios used to calculate the normal value are based on a weight net of water.

For every U.S. sale, the Mandatory Respondents reported a gross and net price (adjusted for net weight) and a gross and net weight (net of water content associated with glazing). In our Preliminary Determination, we based our U.S. starting prices on gross price and weighted the average price per control number (CONNUM) by the gross weight.

To calculate the dumping margins, in the Preliminary Determination, we compared the U.S. starting gross price to the normal value calculated on a net basis, inadvertently creating a distorted comparison. For this amended preliminary determination, we have corrected the U.S. sales starting price by replacing the gross price with the net price and have averaged the dumping margins by the net weight in order to achieve a net normal value for a comparison to the net U.S. price. We note that the Department will revisit all aspects of this issue in the final determination.

The correction of this error in combination with the correction of the other errors would result in a margin of 38.09% for Nam Viet and 31.45% for Agifish, while the margins of the remaining Mandatory Respondents do not change significantly as noted below. This is more than five percentage points different from and more than 25 percent of the weighted-average dumping margin calculated in the Preliminary Determination. Accordingly, the error regarding the use of net weight and net price alleged by the Mandatory Respondents is a significant ministerial error within the meaning of 19 CFR 351.224(g) with regard to Nam Viet and Agifish.

However, we note that the correction of this error in combination with the correction of the others does not fulfill the requirement of a significant ministerial error within the meaning of 19 CFR 351.224(g) for CATACO and Vinh Hoan. Therefore, we are not amending our Preliminary Determination with regard to CATACO's and Vinh Hoan's U.S. price to normal value comparisons. For a more detailed analysis, please see the company-specific analysis memorandums.

Comment 2: ByProduct Offset

Citing the factors valuation memorandum that accompanied the Preliminary Determination, the Mandatory Respondents argue that the Department clearly stated that “for each of the companies in this investigation, the Department has offset the cost of manufacturing by the value of the reported by-products.” See Memorandum to the File from Alex Villanueva, Lisa Shishido, Joseph Welton, and Paul Walker, through Edward C. Yang and James C. Doyle: Factors Valuations for Agifish, Vinh Hoan, Nam Viet and CATACO (“Factor Memo”), dated January 24, 2003 at 7. However, the Mandatory Respondents argue, in the company-specific margin calculations, the Department did not follow its stated methodology and, instead, applied each company's byproduct credit as an offset to the final normal value, rather than as a deduction to the cost of manufacturing. According to the Mandatory Respondents, the Department's Factor Memo indicates that the Department fully intended to deduct each company's byproduct offset from the cost of manufacturing. The Mandatory Respondents assert that it is the Department's normal practice to treat income generated from the sale of byproducts as an offset to production costs and that the cost associated with the production of byproducts are reflected in the costs of the primary products generated in the production process. Thus, the Mandatory Respondents argue, the Department erred in deducting each company's by-product credits from normal value and must reconfigure the preliminary dumping margin calculations to ensure that the company-specific byproduct offsets are correctly deducted from the cost of manufacturing.

Department's Position

We agree with the Mandatory Respondents that the Department incorrectly deducted the byproduct credit from normal value. The Factor Memo clearly stated that for each of the companies in this investigation, the Department would offset the cost of manufacturing by the value of the reported byproducts. We note, however, that the company-specific analysis memorandums provided the programming language demonstrating the byproduct offset was being deducted from the total normal value. In addition, our Preliminary Determination clearly stated that the by-product offset would be taken from normal value. “Where applicable, we deducted from each respondent's normal value the value of byproducts sold during the POI.”^[2] See Preliminary Determination, 68 FR at 4994. However, given the conflicting statements on the record, the fact that this is our normal practice, and that there was no explanation in the Preliminary Determination regarding the change, we agree that deducting the by-products from the total normal value represents an error. Therefore, for this amended preliminary determination, we are deducting each Mandatory Respondent's byproduct offset from the cost of manufacturing and not from normal value. We note that the Department will carefully revisit all aspects of this issue in the final determination.

The correction of this error in combination with the correction of the other errors would result in a margin of for 38.09% for Nam Viet and 31.45% for Agifish, while the margins of the remaining Mandatory Respondents do not change significantly, as noted below. This is more than five percentage points different from and more than 25 percent of the weighted-average dumping margin calculated in the Preliminary Determination. Accordingly, the error regarding the correction of the byproduct offset alleged by the Mandatory Respondents is a significant ministerial error within the meaning of 19 CFR 351.224(g) for Nam Viet and Agifish.

We note that the correction of this error does not fulfill the requirement of a significant ministerial error within the meaning of 19 CFR 351.224(g) for CATACO and Vinh Hoan. Therefore, we are not amending our Preliminary Determination with regard to CATACO's and Vinh Hoan's byproduct offset. For a more detailed analysis, please see the company-specific analysis memorandums.

Comment 3: Agifish's Fish Waste Offset

Agifish argues that the Department incorrectly calculated Agifish's factor input for fish waste re-introduced in the production of the subject merchandise. Agifish asserts that rather than using the total amount of fish waste re-introduced in the company's first two production stages, the Department used only the amount of fish waste re-introduced at one of the production stages. According to Agifish, the Department's error drastically reduced the fish waste to subject merchandise ratio. Agifish argues that this is an apparent inadvertent ministerial error because the Department, in calculating dumping margins for the other three mandatory Mandatory Respondents, used the amount of fish waste reported for all production stages.

Department's Position

We agree with Agifish that the Department incorrectly calculated Agifish's factor input for fish waste re-introduced in the production of the subject merchandise. Specifically, on January 17, 2003, Agifish submitted supplementary information indicating the amount of fish waste generated and sent to make fish feed which is re-introduced into the production process. Based on the factors of production data, we noted that the amount of fish waste generated and sent to make fish feed that Agifish indicated in its January 17, 2003 response was significantly lower than the actual amount used to make fish feed during the POI. Therefore, for the Preliminary Determination, we capped the amount of the fish waste offset at the actual amount of fish waste re-introduced as fish feed during the POI.

We note, however, that in capping the offset as described above, the Department neglected to give Agifish credit for a byproduct described in the calculation database as “fish flour.” As the claim for this byproduct exists in the database and as there was no information on the record at the time of the preliminary determination casting doubt on the appropriateness of this claim, the Department will grant this claim. In order to value the fish flour byproduct, the Department is applying the surrogate value for fish flour. We note that the Department will revisit all aspects of this issue in the final determination.

The correction of this error in combination with the correction of the other errors would result in a margin of 31.45% for Agifish. This is more than five percentage points different from and more than 25 percent of the weighted-average dumping margin calculated in the Preliminary Determination. Accordingly, the error regarding the correction of the fish waste offset alleged by Agifish is a significant ministerial error within the meaning of 19 CFR 351.224(g).

Therefore, we are amending our Preliminary Determination with regard to Agifish's fish waste offset. For a more detailed analysis, please see the company-specific analysis memorandums.

Comment 4: CATACO's Coal Consumption Ratio

CATACO argues that the Department incorrectly calculated CATACO's coal consumption ratio in the Preliminary Determination. According to CATACO, the coal consumption ratio used by the Department includes coal used in both the farming and processing stages. CATACO argues that the Department should apply CATACO's coal consumption ratio specific to only the processing stage of the production process.

Department's Position

We agree with CATACO. In our Preliminary Determination, we used a coal consumption ratio that was slightly higher than the coal consumption ratio that CATACO reported for the processing stage. Specifically, the coal consumption ratio we used in the Preliminary Determination included the amount of coal used in a stage preceding the processing stage. Consequently, the coal consumption used by the Department in the Preliminary Determination was overstated. Therefore, we have replaced the coal consumption ratio used in the Preliminary Determination with the correct coal consumption ratio reported by CATACO that is specific to only the processing stage of the production process. We note that the Department will revisit all aspects of this issue in the final determination.

However, we note that the correction of this error in combination with the other alleged errors does not change the margin by a significant amount as required by 19 CFR 351.224(g). Therefore, we are not amending our Preliminary Determination with regard to CATACO's coal consumption ratio.

Ministerial Error Allegations from the Petitioners

Comment 1: Agifish's and Vinh Hoan's Fish Oil Offset

The Petitioners argue that the Department erred in calculating Agifish's and Vinh Hoan's fish oil by-product offset. The Petitioners note that the Department stated that, in accordance with its policy, it would only grant byproducts credits for the amount of fish oil generated and sold by the Mandatory Respondents. See Memorandum from Alex Villanueva to the File regarding the Analysis of the Preliminary Determination of Certain Frozen Fish Fillets from the Socialist Republic of Vietnam: Agifish, dated January 24, 2003 at 3, and Memorandum from Lisa Shishido to the File regarding the Analysis of the Preliminary Determination of Certain Frozen Fish Fillets from the Socialist Republic of Vietnam: Vinh Hoan, dated January 24, 2003 at 3. According to the Petitioners, both Agifish and Vinh Hoan sold more fish oil during the POI than they actually generated during the POI. Therefore, the Petitioners argue, based on the Department's stated policy, the Department should only have granted byproduct credits for the amount of fish oil both generated and sold during the POI, which was smaller than the amount of fish oil sold.

Department's Position

We agree with the Petitioners that the Department erred in calculating Agifish's and Vinh Hoan's fish oil byproduct offset. The Petitioners correctly note that the Department stated that, in accordance with our practice, we would only grant byproducts credits for the amount of fish oil generated and sold by the Respondent companies. Both Agifish's and Vinh Hoan's January 17, 2003 supplemental responses revealed that the amount of fish oil sold during the POI was significantly more than the total amount of fish oil generated during the same period. In our Preliminary Determination, we did not cap the amount of the fish oil byproduct offset at the amount of fish oil generated and sold during the POI. Therefore, we have recalculated the amount of fish oil byproduct offset used in the Preliminary Determination and capped that offset at the amount of fish oil generated and sold during the POI. For a more detailed explanation, please see Agifish's and Vinh Hoan's analysis memorandums. We note that the Department will revisit all aspects of this issue in the final determination.

The correction of this error in combination with the correction of the other errors would result in a margin of 31.45% for Agifish. This is more than five percentage points different from and more than 25 percent of the weighted-average dumping margin calculated in the Preliminary Determination. Accordingly, the error regarding the correction of the fish oil offset alleged by Agifish is a significant ministerial error within the meaning of 19 CFR 351.224(g).

However, the correction of this error in combination with the correction of the other errors would not result in a significant ministerial error within the meaning of 19 CFR 351.224(g) for Vinh Hoan. Accordingly, we are not amending our Preliminary Determination with regard to Vinh Hoan's fish oil offset.

Comment 2: Nam Viet's International Freight Expense

The Petitioners argue that to value freight costs incurred by Nam Viet, on sales shipped by non-market economy carriers, the Department calculated the average rate incurred on shipments made by the market economy carriers. However, the Petitioners argue, in making the calculation, the Department incorrectly included sales values which did not incur freight costs in the denominator of its average. According to the Petitioners, by including these sales, the Department understated the ocean freight costs to be applied to those sales which were shipped on non-market economy carriers.

Department's Position:

We agree with the Petitioners that, when valuing freight costs incurred by Nam Viet on sales shipped by non-market economy carriers, the Department incorrectly included sales which did not incur freight costs in calculating the average rate incurred on shipments made by the market economy carriers. Consequently, the average freight rate used by the Department in the Preliminary Determination was understated. Therefore, we have recalculated the average freight costs used in the Preliminary Determination, excluding those sales made by Nam Viet that were identified as FOB sales. We note that the Department will revisit all aspects of this issue in the final determination.

The correction of this error in combination with the other errors would result in a margin of 38.09% for Nam Viet. This is more than five percentage points different from and more than 25 percent of the weighted-average dumping margin calculated in the Preliminary Determination. Accordingly, the error regarding the correction of freight costs alleged by the Petitioners is a significant ministerial error within the meaning of 19 CFR 351.224(g). Therefore, we are amending our Preliminary Determination with regard to Nam Viet's average freight costs. For a more detailed analysis, please see the company-specific analysis memorandums.

As a result, we are amending the Preliminary Determination of the antidumping duty investigation of certain frozen fish fillets from the Socialist Republic of Vietnam to reflect the correction of the above-cited ministerial errors. The revised final weighted-average dumping margins are as follows:

The weighted-average dumping margins are as follows:

Certain Frozen Fish Fillets From Vietnam

Producer/manufacturer/exporter	Prelim margin	Amended prelim margin
Agifish	61.88	31.45
Vinh Hoan	37.94	37.94
Nam Viet	53.96	38.09
CATACO	41.06	41.06
Afiex	49.16	36.76
CAFATEX	49.16	36.76
Da Nang	49.16	36.76
Mekonimex	49.16	36.76
QVD	49.16	36.76
Viet Hai	49.16	36.76
Vietnam-Wide Rate	63.88	63.88

Suspension of Liquidation

We will instruct U.S. Customs Service to continue to require a cash deposit or the posting of a bond equal to the weighted-average amount by which the NV exceeds EP, as indicated above. With respect to Nam Viet and the parties receiving the Vietnam-wide rate, the Department will direct the U.S. Customs Service to continue to suspend liquidation of all entries of certain frozen fish fillets from Vietnam that are entered, or withdrawn from warehouse, for consumption on or after November 2, 2002, the date which is 90 days prior to the date of publication in the Federal Register of our original preliminary determination in this investigation in accordance with section 733(d) of the Act . With respect to Agifish, Vinh Hoan and CATACO, the Department will direct the U.S. Customs Service to continue to suspend liquidation of all entries of certain frozen fish fillets from Vietnam that are entered, or withdrawn from warehouse, for consumption on or after the date of publication in the Federal Register of our original preliminary determination in this investigation (i.e., January 31, 2003) in accordance with section 733(d) of the Act.

We note that the effective date of the suspension of liquidation for Afiex, CAFAEX, Da Nang, Mekonimex, QVD and Viet Hai continues to be January 31, 2003, because we have not determined whether critical circumstances exists for these companies. As noted in our preliminary determination, we will publish our preliminary critical circumstances decision with respect to Afiex, CAFATEX, Da Nang, Mekonimex, QVD and Viet Hai at a later date. Therefore, with respect to Afiex, CAFATEX, Da Nang, Mekonimex, QVD and Viet Hai, the Department will direct the U.S. Customs Service to continue to suspend liquidation of all entries of certain frozen fish fillets from Vietnam that are entered, or withdrawn from warehouse, for consumption on or after the date of publication in the Federal Register of our original preliminary determinations in these investigations (i.e., January 31, 2003) in accordance with section 733(d) of the Act. These instructions to be issued to the U.S. Customs Service following publication of this amended preliminary determination will remain in effect until further notice.

International Trade Commission Notification

In accordance with section 735(d) of the Act, we have notified the International Trade Commission (“ITC”) of our amended preliminary determination.

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

Dated: February 26, 2003.

Susan Kuhbach,

Acting Assistant Secretary for Import Administration.

Footnotes

1.  The petitioners have included this tariff classification code because they believe that the merchandise under investigation is entering the United States under this classification based on previous uses of the term ‘sole’ to describe Vietnamese basa and tra.

2.  Period of Investigation.