[Federal Register Volume 62, Number 45 (Friday, March 7, 1997)]
[Notices]
[Pages 10530-10540]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5711]
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DEPARTMENT OF COMMERCE
[A-570-825]
Sebacic Acid From the People's Republic of China; Final Results
of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On September 3, 1996, the Department of Commerce (the
Department) published the preliminary results of its administrative
review of the antidumping duty order on sebacic acid from the People's
Republic of China (PRC). This review covers shipments of this
merchandise to the United States during the period July 13, 1994
through June 30, 1995. We gave interested parties an opportunity to
comment on our preliminary results. Based upon our analysis of the
comments received we have changed the results from those presented in
the preliminary results of review.
EFFECTIVE DATE: March 7, 1997.
FOR FURTHER INFORMATION CONTACT: Elizabeth Patience or Jean Kemp,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, NW.,
Washington, DC 20230; telephone (202) 482-3793.
APPLICABLE STATUTE AND REGULATIONS: Unless otherwise indicated, all
citations to the statute are references to the provisions effective
January 1, 1995, the
[[Page 10531]]
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 the Department's regulations are
to the current regulations, as amended by the interim regulations
published in the Federal Register on May 11, 1995 (60 FR 25130).
SUPPLEMENTARY INFORMATION:
Background
On September 3, 1996, the Department published in the Federal
Register (61 FR 46440) the preliminary results of its administrative
review of the antidumping duty order on sebacic acid from the PRC (59
FR 35909, July 14, 1994). We gave interested parties an opportunity to
comment on our preliminary results and, at the request of respondents
and the petitioner, held a public hearing on November 5, 1996. We
received written comments from Tianjin Chemicals Import and Export
Corporation (Tianjin), Guangdong Chemicals Import and Export
Corporation (Guangdong) and Sinochem International Chemicals Company,
Ltd. (SICC) (collectively, respondents); and from the petitioner, Union
Camp Corporation. On October 29, 1996, after case and rebuttal briefs
were filed, respondents submitted ``newly discovered'' information
regarding sebacic acid production in India. Due to the importance of
this issue in this case, we accepted the submission over petitioner's
argument that it was untimely. We subsequently gave both parties an
opportunity to submit additional information regarding the production
of sebacic acid in India. On November 13, 1996 and November 21, 1996,
both parties submitted information and rebuttal comments regarding this
issue. We have now completed the administrative review in accordance
with section 751 of the Act.
Scope of the Review
The products covered by this order are all grades of sebacic acid,
a dicarboxylic acid with the formula (CH2)8(COOH)2, which include but
are not limited to CP Grade (500ppm maximum ash, 25 maximum APHA
color), Purified Grade (1000ppm maximum ash, 50 maximum APHA color),
and Nylon Grade (500ppm maximum ash, 70 maximum ICV color). The
principal difference between the grades is the quantity of ash and
color. Sebacic acid contains a minimum of 85 percent dibasic acids of
which the predominant species is the C10 dibasic acid. Sebacic acid is
sold generally as a free-flowing powder/flake.
Sebacic acid has numerous industrial uses, including the production
of nylon \6/10\ (a polymer used for paintbrush and toothbrush bristles
and paper machine felts), plasticizers, esters, automotive coolants,
polyamides, polyester castings and films, inks and adhesives,
lubricants, and polyurethane castings and coatings.
Sebacic acid is currently classifiable under subheading
2917.13.00.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheading is provided for convenience and
customs purposes, our written description of the scope of this
proceeding remains dispositive.
This review covers the period July 13, 1994, through June 30, 1995,
and four exporters of Chinese sebacic acid.
Analysis of Comments Received
Comment 1
Respondents assert that certain sales treated by the Department in
its preliminary results as sales by Sinochem Jiangsu Import and Export
Corporation (Jiangsu), another company subject to this antidumping duty
order, should be considered SICC sales. According to respondents, SICC
was acting as a sales agent for Jiangsu. In its capacity as sales
agent, SICC negotiated the sale price with the U.S. importer, set the
price of the sales, arranged the shipment of the merchandise to the
U.S. importer, and purchased the cargo transportation insurance. In
addition, the U.S. importer sent the purchase order to SICC rather than
Jiangsu. Citing Sulfanilic Acid from the People's Republic of China:
Final Results and Partial Recission of Antidumping Duty Administrative
Review, 61 FR 53702 (October 15, 1996) (Sulfanilic Acid) and Final
Determination of Sales at Not Less Than Fair Value; Canned Mushrooms
from the People's Republic of China, 48 FR 45445 (October 5, 1983)
(Canned Mushrooms), respondents argue that a margin should be
calculated for these sales based on SICC's data as the exporter rather
than assigning Jiangsu's 243 percent rate to these sales.
In the alternative, respondents argue that, if the Department
determines that these sales were Jiangsu sales, these sales should be
removed from the calculation of SICC's rate.
Respondents assert that in prior cases, such as Manganese Sulfate
from China, 60 FR 52155 (October 5, 1995) (Manganese Sulfate), and
Polyvinyl Alcohol from the People's Republic of China, 61 FR 14057
(March 29, 1996) (Polyvinyl Alcohol from the PRC), where the Department
has determined that certain sales were made by another exporter, it has
dropped those sales from the U.S. sales base of the respondent
exporter.
Respondents contend that SICC has cooperated with the Department in
each stage of this review and that SICC's dealings with Jiangsu are an
accepted way of doing business in China. Respondents assert that SICC
and U.S. importers are being punished because SICC fully disclosed its
business dealings to the Department. Respondents argue that the
Department is including these sales into SICC's dumping margin so as to
curb circumvention by Chinese exporters. Respondents assert that
Commerce's actions should reflect the remedial intention on the
statute. According to respondents, the remedial purpose of the statute
is not served by applying the country-wide rate to SICC's sales in this
case and the Department has exceeded its authority by doing so.
Petitioner supports the Department's treatment of the Jiangsu sales
exported by SICC. Petitioner argues that respondents' reliance on
Sulfanilic Acid to support its argument that SICC is the seller is
misplaced. In that case, the Department decided that two producers were
the proper respondents because the producers established the price with
the U.S. importer, not the trading company through which the sales were
made. The trading company's role was limited to processing paperwork.
Petitioner argues that the same fact pattern does not exist in the
present case. Petitioner notes that Jiangsu is not a producer of
sebacic acid but is an export trading company that received its own
dumping margin in the LTFV investigation.
Petitioner also argues that respondents incorrectly rely on Canned
Mushrooms. Petitioner contends that there is no discussion in that case
on how to value sales that an exporter misrepresents as its own so that
another exporter can avoid a larger dumping margin. Petitioner contends
that Manganese Sulfate is not applicable because in that case it was
clear from documents on the record that the trading company in question
did not have any knowledge at the time the sale was made that the sale
was destined for the United States. Petitioner also notes that a
similar situation existed in Polyvinyl Alcohol from the PRC where the
Department excluded certain sales of an exporter because, at the time
the sales were made, the exporter did not know that the sales were
destined for the United States.
[[Page 10532]]
Petitioner replies that because these two sales were blatant and
admitted attempts to circumvent the antidumping duty order, the
Department correctly valued these two sales with the country-wide
dumping margin of 243.40 percent. Petitioner argues SICC received a
commission from Jiangsu for acting as Jiangsu's sales agent.
Petitioner contends that, unlike in Manganese Sulfate and Polyvinyl
Alcohol from the PRC, in the instant case both SICC and Jiangsu knew
that the two sales were destined for the United States. Petitioner
argues in order to enforce the antidumping duty statute, the Department
must assign the country-wide rate to the two Jiangsu sales. Petitioner
contends that SICC clearly attempted to circumvent the antidumping duty
laws by cooperating with Jiangsu by acting as a sales agent for two
sales of sebacic acid to a U.S. importer. Consequently, petitioner
maintains the Department was justified in using the country-wide
antidumping rate for those two sales. See 19 U.S.C. Section 1677e(b).
Department Position
We disagree with respondents. It was clear from statements made by
SICC officials at verification that SICC considered these sales to be
Jiangsu's sales. See SICC Verification Report at 6-7. Therefore, it is
not appropriate to calculate a margin on these sales based on SICC's
data as the exporter. However, because SICC reported these sales as
their own in the questionnaire responses and played a significant role
in the sale of this merchandise, including identifying itself as the
exporter on U.S. Customs documentation and accepting and subsequently
converting payment for Jiangsu, the Department has included these two
sales in the calculation of SICC's margin.
However, we disagree with petitioner's and respondents''
characterization of our treatment of these sales as punitive use of
facts available to ``punish'' an uncooperative respondent. Our use of
the rate of 243 percent was not punitive. Because these are Jiangsu
sales, we applied the rate that Jiangsu would have received on the
sales to the United States. That the rate is 243 percent is reflective
only of Jiangsu's failure to respond to the Department's questionnaire
and the Department's application of the country-wide rate to Jiangsu
consistent with its normal practice. See Preliminary Results, 61 FR
46442.
In this review, SICC knowingly engaged in sales to the United
States of another respondent's material, according to statements by
SICC at verification, as an attempt to assist Jiangsu in avoiding
posting of Jiangsu's higher antidumping duty cash deposits. Therefore,
it is appropriate and consistent with the remedial nature of the
statute, to apply the Jiangsu rate to these transactions in calculating
SICC's rate. SICC's margin should reflect any dumping on sales in which
it is the exporter of record. Respondents'' reliance on Asociacion
Columbiana de Exportadores de Flores v. United States, 717 F.Supp. 834,
837 (1989), C.J. Tower and Sons v. United States, 71 F.2d 438 (CCPA
1934), and Helwig v. United States, 188 U.S. 605 (1903) is misplaced.
The Department has assigned the Jiangsu rate to the Jiangsu sales
reported by, and entered into the United States by SICC. The
Department's determination to do so is a direct result of the actions
taken by SICC and Jiangsu and should not be characterized as punitive.
Respondents' reliance on Sulfanilic Acid is misguided. In that
case, the Department rejected petitioner's argument that a trading
company should be designated the respondent and not the producers of
the subject merchandise. The trading company's role was limited to
processing paperwork. In the instant case, SICC received a commission
on the sales, accepted payment for the sales, converted this payment to
Chinese currency, and claimed that it was the exporter of the
merchandise to the U.S. Customs Service. SICC's role, therefore, was
much more extensive than simply processing paperwork. SICC's role in
making the sales, in combination with its agreement with Jiangsu to
sell the merchandise to Jiangsu's U.S. customer at prices and terms set
by Jiangsu, led to the Department's determination in this case to
include the Jiangsu sales in SICC's margin calculation.
Respondents' reference to Canned Mushrooms is similarly misplaced.
In that case, petitioner was arguing that the Department should
calculate purchase price using respondent's prices to PRC customers
instead of prices to US customers. The Department disagreed and based
purchase price on the prices which respondent sells the product to US
customers. This decision is not relevant to the current discussion of
sales by one exporter made through another in order to reduce payment
of cash deposits and antidumping duties.
Additionally, the facts of Manganese Sulfate and Polyvinyl Alcohol
from the PRC are readily distinguishable from this case. In contrast to
the companies in these cases, Jiangsu and SICC both knew the subject
merchandise was being shipped to the United States. The agreement
between SICC and Jiangsu identified the U.S. customer and outlined
which party was responsible for export-related charges as well as which
party was responsible for obtaining payment from the U.S. customer. See
SICC Verification Report at 6.
Comment 2
Petitioner argues that India should not be used as the surrogate
country for valuing factors of production in this review because there
is no production of sebacic acid or a comparable product in India.
Petitioner contends that it would be inconsistent with the statute to
use India as a surrogate because: (1) India is not a producer of
sebacic acid; and (2) there is no evidence on the record to support
that India is a producer of a comparable product. Petitioner argues
that there is no evidence on the record to support the Department's
conclusion that oxalic acid (1) is produced in India or (2) is
comparable to sebacic acid. Petitioner states that while it is true
that both oxalic and sebacic acid are dicarboxylic acids, oxalic acid
has two carbon atoms and sebacic acid has ten carbon atoms, giving the
two acids completely different properties and uses. Petitioner contends
that the inputs for the two acids are very different. Additionally,
petitioner argues that the commercial values of imported sebacic acid
is nearly 20 times greater than the imported Indian value for oxalic
acid.
Petitioner suggests that the Department should value the factors of
production based on either U.S. or Japanese values, the only two market
economies in which sebacic acid is produced using the caustic fusion
process. See Natural Bristle Paint Brushes and Brush Heads from China,
50 FR 52812 (Dec. 26, 1985) (Natural Bristle Paint Brushes) (the
Department used a U.S. import price as the foreign market value for
certain paint brushes because there was no comparable product in the
surrogate country).
Respondents maintain that the Department has the option to choose
as a surrogate a country that does not produce the same, or even
comparable, merchandise if there is no country that meets both criteria
in the statute (i.e., comparable level of economic development and
producer of comparable merchandise). Otherwise, respondents contend, if
Union Camp is correct, no country in the world meets the statutory
criteria as a surrogate country.
On October 29, 1996, respondents submitted a letter from an Indian
chemical company offering to sell
[[Page 10533]]
sebacic acid. Respondents argue that this is evidence that sebacic acid
is produced in India. However, respondents argue that even if sebacic
acid is not produced in India, oxalic acid is produced in India.
Respondents maintain that many of the inputs required to produce
sebacic acid, including castor oil, also are produced in India and
exported to China. Respondents contend that interchangeableness is not
needed to make a product comparable. Respondents state that both oxalic
and sebacic acids are used in the rubber manufacturing industry.
Additionally, respondents quote the International Trade Commission,
stating that sebacic acid has physical characteristics similar to those
of other dicarbolic acids in the chemical series. See Sebacic Acid from
the People's Republic of China, Inv. No. 731-TA-653 (Preliminary),
USITC Pub. 2676 (1993) at I-4-4.
Respondents argue that petitioner's reference to the 1985 Natural
Bristle Paint Brushes case is inappropriate because it was decided
before the nonmarket economy statute was amended in 1988 to provide for
a factors of production approach. Respondents state that since 1988,
the Commerce Department has never used the United States or Japan as a
surrogate country in an antidumping case involving China because they
are not at a comparable level of economic development.
Department Position
In valuing factors of production, the Department used surrogate
values from India. In accordance with section 773(c)(4) of the Act, the
Department chose India as its surrogate because it was most comparable
to the PRC in terms of overall economic development based on per capita
gross national product (GNP), the national distribution of labor, and
growth rate in per capita GNP, and because it was a significant
producer of comparable merchandise (oxalic acid).
The statute and the regulations instruct the Department to value
factors of production in an appropriate surrogate country. The
Department rarely departs from use of a surrogate value from a country
comparable to the NME in terms of overall economic development. See
Final Determination of Sales at Less Than Fair Value: Beryllium Metal
and High Beryllium Alloys from the Republic of Kazakstan, 62 FR 2648
(January 17, 1997). Surrogate values from countries at a similar level
of development are considered to be the most appropriate and comparable
for valuation of the factors in the similarly situated nonmarket
economy country. While the Department may use values from the United
States or other countries not at a comparable level of development for
individual factors, its practice is to do so only if it cannot find
those values in a comparable economy that produce comparable
merchandise. Use of the United States, Japan or other country not on
the list of recommended surrogate countries proposed by the
Department's Office of Policy is the last and least suitable option
specifically because surrogate values from countries not at a level of
economic development comparable to that of the nonmarket economy are
not considered representative of the nonmarket economy country's costs
and prices. See Memorandum from David Mueller to Laurie Parkhill,
Serbacic (sic) Acid from the People's Republic of China: Nonmarket
Economy Status and Surrogate Country Selection, March 4, 1996.
The fact that sebacic acid is produced in the United States or
Japan does not make either an appropriate surrogate. A U.S. or Japanese
value in this case is not representative of a PRC value because neither
the U.S. nor Japan are at a level of economic development comparable to
that of the PRC. Moreover, the Department has concluded that using
values from India is appropriate because India is at a comparable level
of development and is a significant producer of comparable
merchandise--oxalic acid. Though sebacic acid and oxalic acid may have
different end uses, both are dicarboxylic acids and both are used in
the rubber manufacturing industry. See Petitioner's Brief at Exhibit 1,
October 10, 1997. Many of the inputs used to produce sebacic acid are
also used to produce oxalic acid (e.g., sodium hydroxide). See
Petitioner's Brief at Exhibit 1, October 10, 1997. U.S. import
statistics for the POR indicate that India is a significant producer of
oxalic acid. See Memorandum to the File from Elizabeth Patience and N.
Gerald Zapiain, Analysis Memorandum for the Final Results of the 1994/
1995 Review, February 24, 1997 (Final Analysis Memorandum). In
addition, a cable from the U.S. embassy in Bombay, submitted during the
LTFV investigation, identifies 15 Indian producers and nine exporters
of oxalic acid, which also indicates that India is a significant
producer of oxalic acid. See Final Analysis Memorandum.
Petitioner's argument that we should value factors of production
based on either U.S. or Japanese values because they are the only
countries which use the caustic fusion process to produce sebacic acid
is irrelevant. According to the ITC report from the LTFV investigation,
Chinese producers do not use caustic oxidation to produce sebacic acid.
See Sebacic Acid from the People's Republic of China, Inv. No. 731-TA-
653 (Preliminary), USITC Pub. 2676 (1993) at II-7. Therefore, we are
not concerned with finding the identical production process in our
chosen surrogate country.
Finally, the documents submitted by interested parties on October
29, 1996, November 13, 1996, and November 21, 1996, did not
conclusively demonstrate that sebacic acid was produced in India during
the period of review (POR). Therefore, these documents were not a basis
for our decision to use India as the surrogate country for this review.
Comment 3
Petitioner argues that the Department should value capryl alcohol
consistent with the CIT's decision in Union Camp v. United States, Slip
Op. 96-123 at 8, 10 (August 5, 1996). Specifically, petitioner argues
that the Department should value capryl alcohol (octanol-2) based on an
appropriate cost of crude octanol-2 rather than the Indian selling
price for refined octanol-1.
Petitioner argues neither of the two surrogate prices for capryl
alcohol submitted by respondent is appropriate. Petitioner contends
that the first value, Rs 76/kg, from Indian Chemical Weekly, must be a
value for octanol-1, not octanol-2, because sebacic acid is not
produced in India. Petitioner contends that because sebacic acid is not
produced in India, octanol-2 must not be produced in India, since
octanol-2 is a subsidiary product of sebacic acid production.
Moreover, petitioner rejects respondents' second surrogate price
for 98 percent pure capryl alcohol, $0.68/lb., from the Chemical
Marketing Reporter, because it is the same as Union Camp's offering
price for refined capryl alcohol. Petitioner contends that crude capryl
alcohol, the subsidiary product of the sebacic acid process, must be
further processed to achieve the 98 percent purity. The Chemical
Marketing Reporter reported the market value of octanol-1 at $0.925/lb.
during the POR. Petitioner argues that the U.S. value of octanol-1
during the POR was 36 percent higher than the U.S. value of refined
capryl alcohol and that the value difference between octanol-1 and
crude capryl alcohol is even larger.
Petitioner concludes that because octanol-1 is not comparable to
octanol-2 either chemically or commercially, the Department should not
use octanol-1 as a surrogate value for octanol-2. Petitioner contends
that Union Camp and all three respondents treat octanol-
[[Page 10534]]
2 as a by-product. However, because the Department used an overvalued
publicly available, published value in its preliminary results, the
Department determined octanol-2 to be of such a significant value in
relation to sebacic acid that it categorized it as a co-product rather
than a by-product. Petitioner contends that using octanol-1 values
distorts the by-product/co-product analysis and results in artificially
lower margins for the respondents. Petitioner offers its own by-product
credit value for crude capryl alcohol, $0.15/lb., as the best available
surrogate price for the subsidiary product. However, petitioner states
that if the Department chooses to use the $0.68/lb price, it should
make adjustments for input costs incurred in converting crude capryl
alcohol to refined capryl alcohol. Petitioner supplies such a
calculation where the resulting value is $0.1544/lb.
Respondents argue that the Department should reject petitioner's
submission of surrogate value information in its case brief as it is
untimely and petitioner had opportunities prior to the publication of
the preliminary results to submit this information. Respondents
maintain that the surrogate value of $0.15/lb. is unverified and that
there is no support on the record of this review that these internal
costs represent actual market prices in the United States. Respondents
argue the Department should use the Indian publicly available,
published value of Rs 76/kg value they submitted for the period of
review rather than the surrogate value of Rs 56/kg that was used in the
less-than-fair-value investigation.
Respondents contend that comparing the $0.68/lb. octanol-2 price
from the Chemical Marketing Reporter, to the internal Union Camp price
of $0.15/lb. supports respondents' argument that Union Camp's internal
costs do not reflect the market price of these chemicals. Respondents
maintain that Union Camp's internal cost should not be used as it is
not from an appropriate surrogate country and the value is not a
published or public figure. Respondents contend that use of unverified,
internal costs does not provide respondents with greater certainty and
predictability in the administration of the antidumping law.
Respondents maintain that use of such internal costs give the Chinese
respondents no opportunity to determine their dumping margins.
Additionally, respondents contest petitioner's assertion that the
CIT held that octanol-1 and octanol-2 are not comparable products.
Respondents maintain that the Court held that there was not substantial
evidence on the record of the LTFV investigation to support the
Department's determination in the LTFV investigation that the two
products are comparable.
Respondents argue that the term octanol does not necessarily mean
octanol-2. Respondents maintain that octanol is a generic term, which
includes all isomers having eight carbon atoms and one alcohol
functional group. Thus, respondents contend, the term ``octanol'' in
the Indian Chemical Weekly does not necessarily refer only to octanol-
1, but could also include octanol-2. Respondents maintain that there is
no evidence on the record of this review, and Union Camp has made no
effort to find evidence, that octanol-2 is not sold in India.
Respondents argue that petitioner made no effort to provide
publicly available, published values during the course of this review.
Therefore, respondents maintain that the Department should not reward
petitioner for its decision not to submit surrogate value information
by using petitioner's late-submitted internal value for octanol-2.
Respondents contend that, pursuant to 19 CFR 353.37, the Department is
justified in using the Indian surrogate value for octanol in the Indian
Chemical Weekly as the best information available.
Moreover, respondents argue that the Department should not use
petitioner's proposed calculation for adjusting the Chemical Marketing
Reporter octanol-2 value for additional costs. Respondents maintain
that the Chinese factorie' factors of production already include the
labor and energy used to produce the subsidiary products. According to
Zhong He's March 8, 1996 submission to the Department, Zhong He is
unable to separate these factors from those used to produce sebacic
acid. Additionally, the verification report indicates that the Workshop
No. 2 (where sebacic acid is produced) production report includes all
the consumption of raw materials, and records the production of sebacic
acid and each of the three subsidiary products.
Respondents provide additional statements by Mr. Hoegl of Ivanhoe
Industries to state that petitioner's conversion of capryl alcohol to
refined capryl alcohol should possibly be higher than $0.15/lb. Mr.
Hoegl states that the co-product of the distillation process, methyl
hexyl ketone, has a market value of approximately $2.50/lb. Therefore,
Mr. Hoegl argues, the value of the crude capryl alcohol stream is much
greater than $0.15/lb. and ``may even be higher than the published
$0.68/lb. price for refined capryl alcohol.''
Department Position
In valuing factors of production, the Department's practice is to
rely, to the extent possible on publicly available information. The
Department prefers to use publicly available information because: (1)
It alleviates difficulties in obtaining, and concerns about the quality
of, cable data from embassies and consulates (previously often used as
sources for surrogate values); (2) it allows interested parties an
opportunity to actively submit and comment on surrogate value data; (3)
the establishment of a clear surrogate values hierarchy, with a
preference for surrogate values from a single country based on publicly
available information, increases the certainty and predictability of
the outcome of the Department's factor valuations; (4) the
methodological framework helps to focus comments made by petitioner and
respondent in the case and rebuttal briefs and reduces miscellaneous
submissions throughout the course of proceedings regarding the
appropriateness of various surrogate values; and (5) it alleviates the
administrative burden on U.S. embassies and consulates caused by
requests for large amounts of data. See Final Determination of Sales at
Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings from
the People's Republic of China, 57 FR 21058, 21062 (May 18, 1992). In
determining which surrogate value to use for valuing each factor of
production, therefore, the Department selects, where possible, publicly
available information which is: (1) An average non-export value; (2)
representative of a range of prices within the period of review if
submitted by an interested party, or most contemporaneous with the POR;
(3) product-specific; and (4) tax-exclusive.
In this review, the Department was unable to locate an Indian value
for octanol-2. In addition, the Department specifically asked
interested parties to submit any publicly available, published values
for octanol-2. Neither the petitioner, Union Camp, nor the respondents
were able to locate an Indian value, specifically for octanol-2. As a
result, the Department used an Indian price for octanol-1 as a
surrogate value for octanol-2 as the best available information after
the Department concluded that, for purposes of factor valuation,
octanol-1 was comparable to octanol-2. We find that octanol-1 and
capryl alcohol (octanol-2) share very similar molecular formulae though
they are not identical products. Since product-specific price
information is not
[[Page 10535]]
available from our recommended surrogate countries, we must rely on the
price of the closest product we could obtain to value capryl alcohol.
Additionally, we agree with respondents that it is not clear from the
Indian Chemical Weekly whether their listed price for ``octanol''
refers to octanol-1, octanol-2, or a combination of the two products.
Union Camp's statements that octanol-1 is derived from a process
entirely unrelated to the sebacic acid process and that octanol-1 is a
high-priced petrochemical are not necessarily dispositive on the issue
of the comparability of octanol-1 and octanol-2 for purposes of factor
valuation. In a nonmarket economy case, the Department may need to
value anywhere from 10 to hundreds of factors of production; in this
case we needed to value approximately 25. If we were required to find
an exact match for each factor, the administrative burden would be
enormous and, in many instances, the task would be impossible.
Therefore, although we strive to locate exact surrogate matches in our
preferred surrogate country, we often are unable to do so. In those
instances, the Department's practice is to use the most comparable
surrogate match that meets our publicly available information criteria
in an appropriate surrogate country.
There is no basis in the statute or legislative history to suggest
that the Department is required to research or consider the production
process or use for each factor so as to locate a surrogate match with
an identical or even similar production process or use. In valuing
factors of production, the Department is attempting to assign a market-
economy value, i.e., a price or a cost, to some non-market economy
factor, e.g., 50 kilograms of chemical ``x'', 12 nuts and bolts, 3
plastic bags, 7 hours of labor. The Department does not delve into
intricacies of the production and use of every potential surrogate
precisely because production and use are not necessarily relevant to
valuation of factors of production. The Department foremost is
concerned about assigning an appropriate surrogate value to a specific
factor of production. As a result, the Department will consider
rejecting a potential surrogate where it has evidence that a possible
surrogate value does not reasonably reflect the ``value'' of the
factor. For example, if the Department had evidence that a surrogate
price was significantly higher than other potential surrogate prices
for a particular factor, the Department might find that it was not
reasonable to use that particular price as a surrogate value.
Similarly, the Department is not required to consider
interchangeableness in determining whether to use a particular
surrogate to value a factor of production. The CIT's opinion in Union
Camp suggests that because octanol-1 and octanol-2 are not
``interchangeable'' they are not comparable for factor valuation
purposes. If interchangeableness were a prerequisite, however, the
Department would have extreme difficulty in valuing factors of
production. The Department would be required to locate precise matches
between surrogates and factors --an impracticable if not virtually
impossible task given the amount of data the Department would have to
collect and analyze for each factor. The very nature of chemicals, in
particular, is such that a small difference in grade or a change in
molecular structure would preclude ever finding two different chemicals
comparable for purposes of factor valuation. In this case, for example,
the Department recognizes that octanol-1 and octanol-2 are two
different products, and, hence not interchangeable.
Interchangeableness, however, is not the test for comparability for
factor valuation.
As stated in Comment 2 above, the statutue and the regulations
instruct the Department to value factors of production in an
appropriate surrogate country. In addition to the United States and
Japan not being appropriate surrogate countries in this case, there is
no evidence on the record that octanol-2 is sold in either country. The
only U.S. value on the record for octanol-2 is the internal accounting
cost Union Camp assigns to octanol-2. The Department normally would not
consider using such a value because it is not a value from an
appropriate surrogate country and the value is not a public or
published figure. As explained above, the Department's practice is to
use public, published figures because, among other reasons, it
increases the certainty and predictability of the outcome of the
Department's factor valuations in NME cases and it affords all
interested parties an opportunity to submit and comment on surrogate
value data. Use of an unpublished, internal cost from a country not on
the list of recommended surrogates is contrary to the Department's
established practice. See Magnesium Corp. versus United States, 938 F.
Supp. 885 (CIT 1996) (``It is Commerce's standard practice to disregard
petitioners' costs because they are not `an appropriate benchmark by
which to test the accuracy of surrogate country values.' '') Our
preference is for values from the selected surrogate country.
Additionally, there is no conclusive evidence on the record of this
review that respondents' octanol-1 value is not a reasonable substitute
for octanol-2 in our calculations, given the limited public and
published data from India available to the Department. Therefore, we
are using the Rs 76/kg value from the Indian Chemical Weekly as a
surrogate value for capryl alcohol as the best information available to
the Department.
Comment 4
The verification report for Zhong He includes the statement that
``Zhong He began producing sebacic acid for outside parties in January
1995.'' Petitioner interprets this to mean that SICC's six reported
sales occurring prior to January 1995 could not have been manufactured
by Zhong He. Petitioner argues that because SICC apparently misreported
the manufacturer of its sebacic acid for six sales during the POR, the
Department should assign the country-wide rate of 243.40 percent to
these six sales as best information available.
Respondents argue that the sentence quoted in petitioner's brief
refers to Zhong He's toll production of sebacic acid using Indian
castor oil which had been purchased and imported by certain parties.
This toll production began in January 1995. Respondents maintain that
prior to and after January 1995, Zhong He produced sebacic acid from
castor oil which it had purchased from Chinese castor oil producers.
Respondents contend that during verification the Department traced 1994
sales of sebacic acid from Zhong He to SICC. Respondents maintain that
there is no indication on the record of this review that SICC did not
use Zhong He as a supplier for these sales to the United States.
Department Position
We agree with respondents. The statement in the verification report
refers to Zhong He's tolling operation in which it accepted castor oil
from outside parties in exchange for sebacic acid. It is this operation
that did not begin until January 1995. We verified that Zhong He had
produced and sold sebacic acid to SICC throughout the administrative
review period. See Memorandum to the File from Elizabeth Patience and
Rebecca Trainor: Verification of the Response of Tianjin Zhong He
Chemical Plant With Regard to the Factors of Production of Sebacic
Acid, August 26, 1996.
[[Page 10536]]
Comment 5
Respondents contend that the surrogate values used in our
calculations of their antidumping duty margins should be valued on a
tax-exclusive basis. Respondents state that our source for values for
caustic soda, cresol, sulfuric acid, sodium chloride and zinc oxide,
Chemical Weekly, indicated that these values were tax-inclusive.
Respondents point to number of recent cases involving the PRC in which
we excluded taxes from the surrogate values used in our calculations.
See, e.g., Sulfanilic Acid From the People's Republic of China; Final
Results and Partial Rescission of Antidumping Duty Administrative
Review, 61 FR 53702 (October 15, 1996).
Petitioner argues that if the Department excludes Indian taxes from
the valuation of the factors of production, it should include any
Chinese taxes applied to such factors of production in China.
Petitioner maintains that PRC taxes that are not rebated upon export do
affect PRC sales to the United States.
Department Position
We agree with respondents that the surrogate values used to value
the raw materials and by-products should be exclusive of taxes. See,
e.g., Sulfanilic Acid. The issues of Chemical Weekly used to determine
the surrogate values of all by-products and raw materials in the
preliminary results of this review, state that the prices reported for
these inputs are inclusive of Excise and Maharshtra taxes. Accordingly,
we have adjusted the surrogate values of all raw materials and by-
products to exclude taxes for the final results of review. To adjust
the prices to exclude taxes, we have used the Central Excise Tariff of
India, 1994-95, and the Bombay Sales Tax Act of 1959. These documents
show that the tax rates are 20 percent and 4 percent, respectively. See
Memorandum to the File from Karin Price, Analysis for the final results
of the 1994/1995 administrative review of sulfanilic acid from the
People's Republic of China--Yude Chemical Industry Company and Zhenxing
Chemical Industry Company, October 7, 1996 and Final Analysis
Memorandum.
We disagree with petitioner that PRC taxes should replace Indian
taxes in our calculations. The normal value being calculated (by
applying Indian surrogate values to the PRC factors) is a surrogate for
material costs in the PRC for comparison to U.S. sales of Chinese
merchandise. Therefore, Indian value-added taxes, which do not affect
PRC sales to the United States, should be removed from such surrogate
costs. Alternatively, PRC taxes should not be used because they are not
based on market economy considerations. They are also not relevant to
the value of material inputs in India. In constructing a market-based
cost for merchandise exported to the United States, we must recognize
that virtually all countries of the world employ indirect tax rebate
schemes to prevent double-taxation from placing their exports at an
unfair competitive disadvantage in world markets.
Comment 6
Respondents argue that the Department understated the cost of
manufacturing and overstated factory overhead and SG&A percentages.
Respondents note that, in determining surrogate values for overhead,
SG&A expenses, and profit, the Department used data contained in the
April 1995 Reserve Bank of India Bulletin. In making its calculation,
respondents argue that the Department arbitrarily and without
explanation allocated 50 percent of the expenses in three categories,
``provident fund,'' ``salaries, wages and bonuses,'' and ``employees,
welfare expenses,'' to SG&A expenses and 50 percent to the cost of
manufacture. As a result, the cost of manufacturing is understated and
the overhead rate, SG&A rate, and profit rate are overstated. They
contend that 100 percent of these three categories should be applied to
the cost of manufacture, consistent with Polyvinyl Alcohol from the PRC
and Sulfanilic Acid.
Department Position
We agree with respondents that 100 percent of these labor
categories should be included in the cost of manufacturing. In the
absence of any information to the contrary, it makes sense that most of
these expenses are costs of manufacturing rather than to SG&A expenses.
In addition, we note that in Polyvinyl Alcohol from the PRC, although
we did not use information from the Reserve Bank of India Bulletin as
surrogate values for overhead, SG&A expenses and profit, we compared
expenses from this source to values from financial statements from
Indian producers and, as a result, in each instance, we allocated 100
percent of these labor-cost categories to the cost of manufacturing. We
have also reexamined our classification of other categories in the
Reserve Bank of India Bulletin, and have determined that several
categories were misclassified in the preliminary results of review.
This has been corrected for the final results. See Final Analysis
Memorandum.
Comment 7
Petitioner argues that the Department should not have valued
overhead as a percentage of cost of manufacture. Instead, petitioner
contends that overhead should have been calculated as a percentage of
raw materials, labor, power and fuel, the three surrogate value
categories used in the factors of production. See Valuation Memorandum:
Final Antidumping Duty Determination: Polyvinyl Alcohol from the PRC at
2 and Attachment 5 (March 22, 1996).
Petitioner contends that ``Stores and Spares Consumed'' is more
properly categorized as an overhead expense rather than a cost of
manufacture as they are indirect materials and should be treated as a
part of factory overhead. See Memorandum from Manganese Metal Team to
Barbara R. Stafford re: Antidumping Investigation of Manganese Metal
from the PRC: Major Final Determination Issues, October 16, 1995 at 7.
Petitioner contends that the new overhead ratio should be 20.18
percent.
Moreover, petitioner contends that the Department improperly
omitted ``Other expenses'' and ``Other provisions'' from its
calculation of SG&A. Petitioner maintains that these expenses are
integral to, and should be included in the calculation of SG&A
expenses. See Valuation Memorandum: Preliminary Antidumping Duty
Determination: Polyvinyl Alcohol from the PRC at 7 and Attachment 9
(October 2, 1995). Petitioner argues that if the Department excludes
these expenses then it must adjust the profit calculation upward by the
same amount. Petitioner states that profit in the Reserve Bank of India
Bulletin equals revenue minus costs (including other expenses and other
provisions). Therefore, petitioner concludes, all costs associated with
the reported profit must be included as overhead or SG&A, or the profit
must be increased by the value of any costs that are excluded.
Department Position
We agree with petitioner that the category for stores and spares
consumed should be classified as an overhead expense. Additionally, we
have included the categories ``Other Expenses'' and ``Other
Provisions'' as SG&A expenses, consistent with Sulfanilic Acid. We have
made adjustments to our calculations for these categories in our final
results. However, we disagree with petitioner's argument that overhead
should be valued as a percentage of raw materials, labor, power and
fuel. Instead, we calculated
[[Page 10537]]
overhead, less power and fuel, as a percentage of cost of manufacture,
consistent with Sulfanilic Acid.
Comment 8
Respondents contend that the Department did not properly adjust for
Hengshui Chemical factory's use of both purchased and self-produced
castor oil in the production of sebacic acid. Respondents maintain that
the Department double-counted amounts for raw material and energy
inputs consumed by Hengshui in the production of castor oil.
Respondents propose two methods to account for the castor oil produced
by Hengshui. One method is to not add amounts for the inputs consumed
in castor oil production. Alternatively, respondents recommend a
methodology which they argue more accurately reflects Hengshui's
operations and Department practice. See Polyvinyl Alcohol from the PRC.
Moreover, respondents argue that the Department used the incorrect
value for castor seed in Hengshui's constructed value calculation. The
Department used a value of Rs 9.36/kg for castor seed. Respondents
contend the value should be Rs 9.23/kg.
Petitioner contends that the Department incorrectly deducted the
value of castor seed cake as a by-product credit from the foreign
market value calculation of sebacic acid because Hengshui produces some
of its own castor oil. Petitioner contends that this is an incorrect
adjustment because castor seed cake is a by-product of the castor oil
process, not the sebacic acid process. Petitioner maintains that the
by-product adjustment should be an adjustment to the price of castor
oil and not to the value of sebacic acid.
Department Position
We agree with respondents and petitioner and have revised our
calculations to accurately reflect Hengshui's production of castor oil
consistent with Polyvinyl Alcohol from the PRC. See Final Analysis
Memorandum. Additionally, we have used the Rs 9.23/kg value for castor
seeds for our final results calculations.
Comment 9
Respondents argue that the Department failed to deduct amounts for
the by-products glycerine and castor seed cake in our calculations of
constructed value. Respondents maintain that analysis memorandum and
notice of preliminary results, we indicated that we would be deducting
these values but in the calculation worksheets attached to the analysis
memorandum, no deduction was made. See Preliminary Results, 61 FR 46440
and Memorandum from Case Analyst to the File: Analysis Memorandum;
August 27, 1996.
Department Position
We agree with respondents and deducted these amounts in our
calculations for the final results of review.
Comment 10
Respondents maintain that the Department was incorrect in
individually valuing a separate value for water. They contend that the
Indian overhead number used in our calculations already includes a
value for water. See, e.g., Polyvinyl Alcohol from the PRC.
Petitioner argues that the Department correctly treated water as an
input in the sebacic acid process rather than an overhead expense.
Petitioner maintains that respondents' reported water consumption
factors indicate that water is a significant factor in the production
of sebacic acid that varies directly with output. Petitioner contends
that the cost of water for each company is greater than the costs for
certain other factors of production so water should likewise be
separately valued. Petitioner argues, using examples from Indian
chemical companies' annual reports, that Indian chemical companies
typically account for water as a direct cost in the same manner as
power and fuel. According to petitioner, this treatment of water as a
direct expense contradicts the Department's past practice of presuming
that it is ``normal'' practice to include water as an overhead item and
the Department's past statement that there was nothing in the Reserve
Bank of India Bulletin financial statement to indicate that water is
not included in overhead. See, e.g., Final Determination of Sales at
Less Than Fair Value: Disposable Pocket Lighters from the People's
Republic of China, 60 FR 22359, 22367-68 (May 5, 1995).
The Department was unable to locate a contemporaneous value for
water in India or Pakistan so chose to adjust the Pakistani value used
in the LTFV investigation. Petitioner offers the value for water from
the Water Utilities Data Book, Asian and Pacific Region, Asian
Development Bank (November 1993). Petitioner maintains that the
Department should use an average of the Indian water values reported,
adjusted for inflation, as a more appropriate surrogate value than the
value for Pakistani water.
Department Position
We agree with respondents. Consistent with Department practice, we
have presumed that the overhead value from the Reserve Bank of India
Bulletin includes an expense for water. Therefore, consistent with
Sulfanilic Acid and Polyvinyl Alcohol from the PRC we have not valued
water as a separate production input.
Comment 11
Respondents note that the Department only verified one of three
respondents in this review, Zhong He Chemical Factory. Accordingly,
respondents contend that it was inappropriate for the Department, in
our preliminary results, to use the weights of bags at Zhong He in our
calculations of all three companies in place of the values originally
reported to the Department. Respondents contend that the Department
should not assign the packing bag weights, revised from information
gained at verification of Zhong He, to the other factories. Respondent
argues that there is no evidence that the packing bag weights that they
submitted for Tianjin and Guangdong were incorrect.
Petitioner contends that the Department correctly used the verified
weights of Zhong He's plastic bags as the weight for Handan's and
Hengshui's plastic bags. Petitioner points out that the Department
found at verification that Zhong He had under-reported the weight of
its plastic bags. Petitioner also points to the fact that Handan
reported the same weight as Zhong He and that Hengshui reported even
lighter weights for plastic bags. Petitioner argues that the
Department, using the facts available, correctly replaced the weights
of the plastic bags reported by Handan and Hengshui with the verified
weights.
Department Position
We agree with respondents. Each responding company submitted
differing weights for its packing bags, indicating that each company
uses different bags for packing. Therefore, for our final results, we
have used the revised Zhong He packing bag weights for Zhong He only.
For Handan and Hengshui, we have used packing bag weights reported on
March 22, 1996.
Comment 12
Respondents maintain that the value we used from Chemical Weekly
for caustic soda is based on a 100 percent purity value. Respondents
contend that the three responding factories all use caustic soda of
considerably less than 100 percent purity. Therefore, respondents
maintain that to properly value the caustic soda used by the three
[[Page 10538]]
factories, the Department should multiply the Chemical Weekly price
(exclusive of tax) by the purity percentage for each factory. See
Polyvinyl Alcohol from the PRC.
Department Position
We agree with respondents and have adjusted for caustic soda purity
levels.
Comment 13
Petitioner states that the Department incorrectly used a value for
Indian oxalic acid, instead of sebacic acid, in our by-product/co-
product analysis. Additionally, petitioner argues that the Department
erroneously misplaced the decimal point in calculating the actual value
of oxalic acid. Petitioner concludes that correcting this error shows
that oxalic acid should not serve as a surrogate for sebacic acid
because of the relative value of oxalic acid compared to the values for
the three subsidiary products. Petitioner also protests the use of an
oxalic acid value based on imports from the PRC to India. Petitioner
argues that it is inconsistent with Department practice to use a value
from an NME as a surrogate value. Due to these concerns, petitioner
contends that the Department should use the import value of sebacic
acid from Japan into India rather than the Indian oxalic acid value
from the PRC.
Respondents contend that the Department should not use the Japanese
sebacic acid value, as suggested by petitioner. Respondents cite the
Chemical Marketing Reporter and a fax from Ivanhoe Industries, a U.S.
importer of subject merchandise, to argue that the Japanese value does
not reflect the actual price of normal sebacic acid in India. According
to the Chemical Marketing Reporter, the U.S. price for sebacic acid is
between $2.04 to $2.05 per pound. However, using the Indian import
price for sebacic acid from Japan indicates that the price is almost
$5.00/lb. for the Japanese imports into India. According to John Hoegl
of Ivanhoe Industries, the sebacic acid from Japan is a special
repurified grade, which is higher in quality than either Chinese or
Union Camp products, and is sold at premium prices to specific end
users.
Department Position
We agree with petitioner in part. It is inconsistent with
Department practice to use a surrogate value from a non-market economy
country (e.g., PRC). Additionally, we agree with respondents that the
Indian import value from Japan overstates the value of the product.
Therefore, we selected the Indian import value for sebacic acid from
the United States as our surrogate value for sebacic acid to determine
whether the subsidiary products are by-products or co-products.
Comment 14
Petitioner contends that if Zhong He used benzene sulfuric acid in
its production of sebacic acid, as the Department found at
verification, the Department must include a value for benzene sulfuric
acid in its factors of production calculation.
Department Position
We agree with petitioner. However, as neither petitioner nor Zhong
He provided a publicly available value for benzene sulfuric acid, we
have used an average value for benzene from Indian Chemical Weekly,
contemporaneous with the POR.
Comment 15
The Department derived the value of caustic soda from the Indian
Chemical Weekly. Petitioner states that the selected values indicate a
price of Rs 9.50/kg for the weeks between October 25, 1994 and February
1, 1995. Petitioner also states that no other prices are given for 1995
until April 12, 1995, when the price for caustic soda (lye) is reported
as Rs 21.50/kg. Petitioner argues that the Department failed to factor
this increase in the caustic soda price. Petitioner maintains that the
Department should average the two values and use the price of Rs 15.5/
kg in its calculations.
Respondents argue that the Chemical Weekly price of Rs 9.5 was from
five months (October, November, and December 1994; January and February
1995), whereas the price of Rs 21.5 was only documented for one month,
April 1995. Therefore, respondents contend that an average accounting
for the months each value was reported should be used, i.e., Rs 11.50/
kg. Respondents argue that this price should then be converted to a
tax-exclusive basis and multiplied by the purity percentage applicable
to each factory.
Department Position
We examined all copies of the Indian Chemical Weekly for the POR
available to the Department. We found 27 values for caustic soda (lye)
between October 19, 1994 and June 28, 1995. A simple average of these
values is Rs 14.59/kg. We have used this value in our calculations.
Comment 16
The Department based the price of zinc oxide upon the published
market prices reported in Chemical Weekly. See, Final Analysis
Memorandum. Respondents provided market price information for zinc
oxide on March 28, 1995. Petitioner argues that the price for zinc
oxide reported on four other dates in Chemical Weekly are significantly
higher than the Rs 48/kg figure submitted by respondents. Petitioner
maintains that the Department should use the higher price of Rs 75/kg
as the surrogate price for zinc oxide as it represents a wider range
over the POR rather than one price for one date during the POR.
Department Position
We agree with petitioner in part and have revised our surrogate
value for zinc oxide. We have used an average of all reported values
for zinc oxide in the POR for our final results.
Comment 17
Petitioner contends that the value for coal used by the Department
in its calculations is not contemporaneous with the POR. Petitioner
contends the Department should use the steam coal value of Rs 1461.87/
mt from the Polyvinyl Alcohol from the PRC investigation because it is
contemporaneous to the POR and publicly available information.
Respondents argue that the alternative proposed by petitioner
should be rejected because it is less representative than the Gazette
of India data, used in the preliminary results. Respondents argue that
the Polyvinyl Alcohol from the PRC value was based on the average value
from only two Indian companies. Respondents argue alternatively, the
Gazette of India data, based on all but five Indian states, is much
more representative than the Polyvinyl Alcohol from the PRC data
because the former is basically an average for the entire country while
the latter is from just two companies (selected by petitioner) which
may be located in high cost areas. Respondents also argue that the
Polyvinyl Alcohol from the PRC values should be rejected because the
tax and freight status of these prices is unknown, thereby prohibiting
the Department from making appropriate adjustments to these coal
values.
Department Position
We agree with respondents. Consistent with Sulfanilic Acid, we used
the Gazette of India data in our final results calculations. As we did
in our preliminary results, we are adjusting the June 16, 1994 coal
value to account for inflation.
[[Page 10539]]
Comment 18
In the Analysis Memorandum the Department stated that it used an
electricity value from the July 1995 Current Energy Scene in India.
However, in the Memo to the File, the Department included different
electricity values from ``State-wise Electricity Rates for Different
Categories of Consumers'' from India's Energy Sector, Centre for
Monitoring Indian Economy (July 1995). This publication includes three
values for electricity, one each for small, medium and large
industries. Petitioner contends that the Department should use the
value for medium industries, Rs 1.92/kwh, rather than the Rs 0.732/kwh
used in the preliminary results of review. Petitioner maintains that
the medium industry rate is applicable because all respondents reported
using more than 14,600/kwh/month (medium industries) but less than
2,190,000/kwh/month (large industries).
Department Position
We agree with petitioner and have used the electricity value for
medium industries in our calculations for the final results.
Comment 19
Petitioner maintains that, for Hengshui, the Department used an
incorrect freight rate for plastic bags. Petitioner contends that the
Department used a freight rate of Rs 250 rather than the correct rate
of Rs 750 listed in the freight calculation charts.
Department Position
We agree with petitioner and have used the rate of Rs 750 in our
calculations for the final results.
Comment 20
In its preliminary results, the Department used ocean freight
information provided by respondents from common rates tariff filed by
Nippon Yusen Kaisha with the Federal Maritime Commission for rates from
China to New York. Petitioner contends that this rate does not include
appropriate delivery destination and fuel adjustment factor charges.
Therefore, petitioner argues that the Department should use the rate
from the LTFV investigation because it does include these charges and
more accurately reflects ocean freight charges.
Respondents contend that the Department should exclude the delivery
destination charge of $485.00 except for shipments to inland
destinations. Respondents suggest that the Department check directly
with the Federal Maritime Commission or a freight company to determine
the freight rates for this product.
Department Position
We contacted the Federal Maritime Commission to request additional
information about the ocean freight charge respondents submitted for
this review. In addition to the $1705 charge respondents reported, our
research indicates that a $485 delivery destination charge and a $62
fuel adjustment factor should be included as ocean freight expenses as
they are assessed on all shipments. We chose to use the sum of these
charges ($2252) in our final results, rather than the rate used in the
LTFV investigation as the new figure is contemporaneous with the POR.
Comment 21
Petitioner contends that the Department failed to adjust the
foreign brokerage and handling expense for inflation.
Department Position
We agree with petitioner and have adjusted foreign brokerage and
handling for inflation in our calculations of the final results.
Comment 22
Petitioner maintains that if the Department insists on categorizing
capryl alcohol as a co-product rather than a by-product, the Department
should allocate capryl alcohol based on its value relative to sebacic
acid rather than its quantity relative to sebacic acid. Petitioner
contends that allocations based on quantity can lead to significant
distortions. Petitioner argues that sebacic acid and capryl alcohol
have significantly different revenue-producing powers. Therefore,
citing the Final Determination of Sales at Less Than Fair Value:
Polyvinyl Alcohol from Taiwan, 61 FR 14064, 14071 (March 29, 1996)
(Polyvinyl Alcohol from Taiwan), petitioner contends that the co-
product allocation should be based on value rather than volume.
Department Position
Consistent with Polyvinyl Alcohol from Taiwan we based our
determination of co-products and by-products on their value relative to
sebacic acid rather than their volume. Although that case was a market
economy case, in both that case and the present case, sebacic acid has
a significantly higher per-unit value than any of the subsidiary
products. Therefore, production costs should be allocated to the co-
products based upon their relative sales values. As in Polyvinyl
Alcohol from Taiwan, we found that basing the allocation of costs
solely on production volume ignores the vastly different revenue-
producing powers of joint products (i.e., sebacic acid and the co-
products). See Final Analysis Memorandum.
Final Results of Review
As a result of our review of the comments received, we have changed
the results from those presented in our preliminary results of review.
Therefore, we determine that the following margins exist as a result of
our review:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp........ 7/13/94-6/30/95 0
Guangdong Chemicals I/E Corp...... 7/13/94-6/30/95 13.54
Sinochem International Chemicals
Corp............................. 7/13/94-6/30/95 70.54
PRC Rate.......................... 7/13/94-6/30/95 243.40
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between U.S. price and normal value may vary from the
percentages stated above. The Department will issue appraisement
instructions directly to the Customs Service.
Furthermore, the following cash deposit requirements will be
effective upon publication of these final results for all shipments of
sebacic acid from the PRC entered, or withdrawn from warehouse, for
consumption on or after the publication date, as provided for by
section 751(a)(1) of the Act: (1) For Tianjin, Guangdong, and SICC,
which have separate rates, the cash deposit rates will be the company-
specific rates stated above; (2) for the company which
[[Page 10540]]
did not respond to our questionnaire (Jiangsu), and for all other PRC
exporters, the cash deposit rate will be the PRC rate stated above; (3)
for non-PRC exporters of subject merchandise from the PRC, the cash
deposit rate will be the rate applicable to the PRC supplier of that
exporter.
These deposit rates shall remain in effect until publication of the
final results of the next administrative review.
Notification of Interested Parties
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 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.
This notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification
of the return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.
Dated: February 28, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-5711 Filed 3-6-97; 8:45 am]
BILLING CODE 3510-DS-P
