01-5773. Coumarin From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping duty administrative review.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on coumarin from the People's Republic of China (PRC). The review covers exports of this merchandise to the United States for the period February 1, 1999, through January 31, 2000, and two firms: Netchem, Inc. (Netchem) and Jiangsu Native Produce Import & Export Corporation (Jiangsu). The preliminary results of this review indicate that both Netchem and Jiangsu failed to cooperate. Consequently, we have preliminarily determined that Jiangsu is part of the PRC entity, and have used adverse facts available to determine the margins for the PRC entity and Netchem.

EFFECTIVE DATE:

March 8, 2001.

FOR FURTHER INFORMATION CONTACT:

Elfi Blum or Abdelali Elouaradia, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230, at [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

 

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Tariff Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (1999).

Background

On February 14, 2000, the Department published in the Federal Register (65 FR 7348-03) a notice of “Opportunity to Request Administrative Review” for the period February 1, 1999, through January 31, 2000. In accordance with 19 CFR 351.213, on February 21, 2000, Netchem requested a review of itself, and, on February 29, 2000, the petitioner, Rhodia Inc., requested a review of Jiangsu, for the aforementioned period. On March 30, 2000, we published a notice of “Initiation of Antidumping Review.” See 65 FR 16875-01. The Department is now conducting this administrative review pursuant to section 751(a) of the Tariff Act.

On May 2, 2000, and July 28, 2000, we issued questionnaires to Jiangsu and Netchem, respectively. On July 31, 2000, Jiangsu submitted a letter stating that it was withdrawing its request to be reviewed. On August 2, 2000, the Department confirmed with Jiangsu's counsel that Jiangsu had not requested a review, and that the intent of the letter was to notify the Department that Jiangsu would no longer be participating in the review. See Memorandum to File through Maureen Flannery from Mark Hoadley: Coumarin from the People's Republic of China, Jiangsu's Native Import & Export Corp. (Jiangsu), Letter of July 31, 2000, dated August 4, 2000.

Netchem filed its section A response on September 5, 2000, and its sections C and D response on September 12, 2000. Upon the Department's verbal inquiry regarding verification, Netchem informed the Department by telephone on November 14, 2000 that the producer in China had gone bankrupt. On November 20, 2000, the Department issued a supplemental questionnaire for sections A through D to clarify deficient information in the response and to obtain information not yet provided. On the same day, the Department sent a separate letter to Netchem, referencing the November 14 conversation, and asking for clarification regarding which company had gone bankrupt, what the role of the company was in the production and sale of subject merchandise, who had provided Netchem with the necessary information for questionnaire responses, and the current owner and location of source documents. This letter also asked Netchem to confirm the dates for verification in China and Canada. Netchem submitted its response to the November 20 letter on December 1, 2000, indicating that the director of the producing company had provided Netchem with information pertaining to factors of production. Netchem further stated that there were no original documents available. On December 8, 2000, the Department received Netchem's supplemental questionnaire response. Again, Netchem stated that it was unable to provide the information pertaining to the producer of its subject merchandise due to the bankruptcy of the Chinese producer.

Scope of Review

The product covered by this order is coumarin. Coumarin is an aroma chemical with the chemical formula C sub9 H sub6 O sub2 that is also known by other names, including 2H-1-benzopyran-2-one, 1,2-benzopyrone, cis-o-coumaric acid lactone, coumarinic anhydride, 2-Oxo-1,2-benzopyran, 5,6-benzo-alpha-pyrone, ortho-hydroxyc innamic acid lactone, cis-ortho-coumaric acid anhydride, and tonka bean camphor. All forms and variations of coumarin are included within the scope of the order, such as coumarin in crystal, flake, or powder form, and “crude” or unrefined coumarin (i.e. prior to purification or crystallization). Excluded from the scope of this order are ethylcoumarins (C sub11 H sub10 O sub2) and methylcoumarins (C sub10 H sub8 O sub2). Coumarin is classifiable under subheading 2932.21.0000 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 review is dispositive.

Period of Review

The review period is February 1, 1999 through January 31, 2000.

Separate Rates

It is the Department's standard policy to assign all exporters of the merchandise subject to review in non-market economy (NME) countries a single rate, unless an exporter can affirmatively demonstrate an absence of government control, both in law (de jure) and in fact (de facto), with respect to exports. To establish whether a company is sufficiently independent to be entitled to a separate, company-specific rate, the Department analyzes each exporting entity in an NME country under the test established in the Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991), as amplified by the Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). Because Jiangsu failed to cooperate, the Department is not granting a separate rate to Jiangsu.

Use of Facts Otherwise Available

Pursuant to sections 776(a)(1) of the Tariff Act, (1) if necessary information is not available on the record, or (2) if an interested party or any other person (A) withholds information that has been requested by the administering authority, (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, (C) significantly impedes a proceeding under the antidumping statute, or (D) provides such information, but the information cannot be verified as provided in section 782(i) of the Act, the administering authority shall, subject to section 782(d) of the Act, use the facts otherwise available in reaching the applicable determination.

Although Netchem provided the Department with some information, that information was too incomplete and too deficient for the Department to conduct a margin analysis. In addition, upon requests by the Department for further information, in accordance with section 782(d), Netchem repeatedly stated, verbally and in writing, that its supplier in the PRC went bankrupt, and that it would be unable to obtain any missing information pertaining to the supplier. Netchem further insisted that there were no source documents used to answer to the Department's questionnaire, but that the data was supplied by a former company official of the supplier. As a result, information necessary to conduct a margin analysis is not available on the record, and some of the limited information that is on the record cannot be verified in accordance with section 782(e)(2) of the Tariff Act. Therefore, pursuant to section 776(a)(1) and section 776(a)(2)(D), the Department must resort to facts otherwise available in reaching the applicable determination.

Jiangsu's withdrawal of its participation in the review deprives the Department of the information necessary to conduct its margin analysis and also constitutes a refusal to provide information necessary to conduct the Department's antidumping analysis, pursuant to sections 776(a)(1) and (2)(A) of the Tariff Act. Moreover, Jiangsu's withdrawal significantly impedes the review process. See section 776(a)(2)(C) of the Tariff Act. Therefore, the Department must resort to facts otherwise available in reaching the applicable determination. Absent any response on the record from Jiangsu, sections 782(d) and (e) do not apply.

Use of Adverse Facts Available

Section 776(b) of the Tariff Act further provides that, in selecting from among the facts otherwise available, the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with a request for information (see also the Statement of Administrative Action (SAA), accompanying the URAA, H.R. Doc. No. 316, Vol. 1, 103rd Cong., 2d Sess. (1994), at 870). On three different occasions the Department asked Netchem in writing to provide the information necessary to conduct the margin analysis, namely, with the original questionnaire (issued on July 28, 2000), with the supplemental questionnaire (issued on November 20, 2000), and in a separate letter (issued on November 20, 2000).

In response to the Department's inquiry regarding verification, Netchem informed the Department by telephone on November 14, 2000, that its producer in China had gone bankrupt. See Department's letter to Netchem dated November 20, 2000. Based on this information, we issued a letter on November 20, 2000, asking for clarification regarding which company had gone bankrupt, what the role of the company was in the production and sale of subject merchandise, who had provided Netchem with the necessary information for questionnaire responses, and the current location of source documents. This letter also asked Netchem to confirm the dates for verification in China and Canada. In its response, Netchem provided the name of the company that went bankrupt, stated Netchem's intent to contact that company for a copy of the official documents, provided the names of Netchem's producer and supplier, named the individual providing the information for the questionnaire response, and stated that there are no original documents to support the claim that the supplier is bankrupt, or any other information pertaining to the supplier. The supplemental questionnaire response was still so highly deficient that we were unable to conduct an analysis based on the factor information provided. In its supplemental questionnaire, the Department asked three questions pertaining to organizational structure of Netchem's supplier. However, Netchem did not answer these questions, stating that it needed further clarification or that the supplier was bankrupt and therefore the information was unavailable. With respect to section D, factors of production, Netchem again did not provide an answer to six out of nine questions, other than to restate its assertion that the supplier is bankrupt and that the information is not available. Netchem also failed to satisfy the Department's request to provide a narrative response to each question issued in the original questionnaire. Rather, the company merely cross-referenced other sections of its response. Therefore, the Department has determined that Netchem has not complied with its responsibility to provide the information necessary to conduct a margin analysis.

Section 782(d) of the Tariff Act states that if the administering authority determines that a response to a request for information under this title does not comply with the request, the administering authority shall promptly inform the person submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that person with an opportunity to remedy or explain the deficiency in light of the time limits established for the completion of investigations or reviews under this title. If that person submits further information in response to such deficiency and either (1) the administering authority finds that such response is not satisfactory, or (2) such response is not submitted within the applicable time limits, then the administering authority may, subject to subsection (e), disregard all or part of the original and subsequent responses. As discussed above, the Department requested Netchem to submit information necessary to conduct its margin analysis on three separate occasions; however, in each instance, Netchem's response was insufficient, failing to provide, for example, conversion factors used to calculate the reported amounts of water and ethyl alcohol, the quantity of by-products, and calculation worksheets demonstrating how Netchem's supplier calculated the reported usage for each source of energy to produce one unit of subject merchandise. Netchem, by not providing the Department with the necessary factor information to conduct a margin analysis, as described above, repeatedly failed to respond satisfactorily to the Department's request for information within the meaning of section 782(d)(1) of the Tariff Act. For Netchem to state that its supplier of subject merchandise went bankrupt is not sufficient, as there is no evidence that the responsive information is unavailable. The limited information available on the record is so deficient that it cannot serve as a reliable basis for reaching the applicable determination, and cannot be used without undue difficulties. Furthermore, this information cannot be verified since there are no source documents, as stated by Netchem. Therefore, the Department declines to consider in its determination the information submitted by Netchem, in accordance with sections 782(e)(2), (e)(3), and (e)(5) of the Tariff Act.

Jiangsu's withdrawal from this review constitutes a refusal to participate in the review, and demonstrates that Jiangsu failed to cooperate by not acting to the best of its ability to comply with the Department's request for information.

Pursuant to section 776(b) of the Act, the Department has determined that an adverse inference is warranted with respect to both companies, Netchem and Jiangsu, because they have failed to cooperate by not acting to the best of their ability, as discussed above.

When making adverse inferences, the SAA authorizes the Department to consider the extent to which a party may benefit from its own lack of cooperation (SAA at 870). Because the PRC-wide rate that was the cash deposit rate applicable during the period of review and that is applicable to current imports is 160.80 percent, a rate derived from the petition, the Department determines that assigning a 160.80 percent rate will prevent non-responding firms from benefitting from their failure to respond to the Department's requests for information. Anything less than the current cash deposit rate would effectively reward non-responding firms for not cooperating by not acting to the best of their ability.

Corroboration

Section 776(c) of the Act provides that, when the Department relies on secondary information in using the facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. The SAA defines secondary information as “information derived from the petition that gave rise to the investigation or review, the final determination concerning the subject merchandise, or any previous review” (see SAA at 870). In addition, the SAA clarifies that “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value (see id.). The SAA also states that independent sources used to corroborate may include, for example, published price lists, official import statistics and customs data, as well as information obtained from interested parties during the particular investigation (see id.).

To corroborate the less-than-fair-value (LTFV) rate of 160.80 percent, we examined the basis of the rates contained in the petition of December 30, 1993, as revised in the final LTFV determination (59 FR 66895; December 28, 1994). The U.S. price in the petition, as amended, was based on average unit prices derived from U.S. Census import statistics, and on price lists from U.S. importers of coumarin. We were able to corroborate the average unit values listed in the amended petition by comparing those values to publicly available information compiled by the U.S. Census Bureau and made available by the International Trade Commission (ITC). The ITC reports quantity and value by HTSUS numbers. Using the same HTSUS number as listed in the petition (HTSUS 2932.21.000), we divided the total value by the total quantity for the periods referenced in the concurrence memorandum to the final antidumping duty determination for coumarin from the PRC, and noted the average unit values were very similar to those reported in the petition, as amended. See Memorandum to File through Louis Apple from David J. Goldberger: Coumarin from the PRC; Alleged Margin Calculation Worksheet, of January 18, 1994, on file in the Central Records Unit, located in Room B-099 main Department of Commerce Building.

The petition also states that, due to the NME status of the PRC, the foreign market value was calculated using a factors of production methodology. Based on the production experience of the petitioner, which it states is comparable to the PRC production process, the petition identified actual factors of production for subject merchandise. Such factors include: materials; labor; energy; utilities; overhead; general, selling and administrative expenses; profit; and packing. The petition relied, where possible, on publicly available information for India as surrogate values for the above-mentioned factors in the PRC. Where such information was not available, the petition relied on petitioner's own cost experience. See Initiation of Antidumping Duty Investigation: Coumarin From the People's Republic of China, 59 FR 3841-01 (January 27, 1994). Further, in the Final Determination of Sales at Less Than Fair Value: Coumarin From the People's Republic of China, 59 FR 66895-01 (December 28, 1994) (Final Determination), the Department revised the PRC-wide margin from the petition to reflect changes in the surrogate values of almost all inputs, including the most significant raw material for producing coumarin, as determined during the investigation. The source for this information was publicly available Indian and Indonesian import statistics. For detailed information, refer to Concurrence Memorandum: Final Antidumping Duty Determination; Coumarin from the People's Republic of China (PRC), December 19, 1994, at 5, 8-9. Because petitioners used published, publicly available data for valuing inputs, and these data were revised by the Department with publicly available information, as stated above, we consider these data to have probative value.

The SAA specifically states that where “corroboration may not be practicable in a given circumstance,” the Department may apply an adverse inference. See SAA at 870. Based on our efforts, described above, to corroborate information contained in the petition, as revised in the Final Determination, and mindful of the legislative history discussing facts available and corroboration, we consider the revised petition margin that we are assigning as adverse facts available in this review to be corroborated to the extent practicable. Furthermore, nothing on the record of this administrative review supports a determination that the highest margin rate from the petition in the underlying investigation, as revised, does not represent reliable and relevant information for purposes of adverse facts available. This rate has been used as the PRC-wide rate since the Department's Final Determination.

Preliminary Results of the Review

As a result of our review, we preliminarily determine the dumping margins for Netchem and the PRC entity, based on total adverse facts available for the period February 1, 1999 through January 31, 2000, to be as follows:

Manufacturer/exporter	Margin (percent)
Netchem, Inc	160.80
PRC-wide Rate	160.80

Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five (5) days after the date of publication of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Case briefs are currently scheduled for submission within 30 days after the date of publication of this notice, and rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five (5) days after the time limit for filing case briefs. Parties who submit argument in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the deadline for submission of rebuttal briefs. The Department plans to issue the final results of this administrative review, including its analysis of issues raised in any case or rebuttal brief or at a hearing, not later than 120 days after the date of publication of this notice.

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. Upon completion of this review, the Department will issue appraisement instructions directly to the Customs Service.

Furthermore, upon issuance of the final results of this review, the following deposit rates will be effective with respect to all shipments of coumarin from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this review, as provided for by section 751(a)(2)(c) of the Tariff Act: (1) The cash deposit rate for reviewed companies listed above will be the rates for those firms established in the final results of this review; (2) for companies previously found to be entitled to a separate rate and for which no review was requested, the cash deposit rate will be the rate established in the most recent review of that company; (3) for all other PRC exporters of subject merchandise, the cash deposit rate will be the PRC-wide rate of 160.80 percent; and (4) for non-PRC exporters of subject merchandise from the PRC not covered by this review, or by the LTFV investigation, or a previous review, the cash deposit rate will be the rate applicable to the PRC supplier of that exporter. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification of Interested Parties

This notice serves as a preliminary reminder to importers of their responsibility under section 351.402(f)(2) of the Department's regulations 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 administrative review and notice are in accordance with sections 751(a)(1) and 771 (i)(1) of the Tariff Act. Effective January 20, 2001, Bernard T. Carreau is fulfilling the duties of the Assistant Secretary for Import Administration.

Dated: February 28, 2001.

Bernard T. Carreau,

Deputy Assistant Secretary, Import Administration.