[Federal Register Volume 59, Number 66 (Wednesday, April 6, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8262]
[[Page Unknown]]
[Federal Register: April 6, 1994]
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DEPARTMENT OF COMMERCE
[A-588-832]
Preliminary Determination of Sales at Less Than Fair Value and
Postponement of Final Determination: Antidumping Duty Investigation of
Color Negative Photographic Paper and Chemical Components Thereof From
Japan
Agency: Import Administration, International Trade Administration,
Commerce.
EFFECTIVE DATE: April 6, 1994.
FOR FURTHER INFORMATION CONTACT: Bill Crow, Office of Antidumping
Investigations, Import Administration, U.S. Department of Commerce,
14th Street and Constitution Avenue, NW., Washington, DC 20230;
telephone (202) 482-0116.
Preliminary Determination
We preliminarily determine that color negative photographic paper
and chemical components thereof (CNPP) from Japan are being, or are
likely to be, sold in the United States at less than fair value, as
provided in section 733 of the Tariff Act of 1930, as amended (the
Act). The estimated margins are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on September 20, 1993
(58 FR 50331, September 27, 1993), the following events have occurred.
On October 15, 1993, the International Trade Commission (ITC)
issued an affirmative preliminary injury determination.
On November 15, 1993, the Department presented an antidumping duty
questionnaire for CNPP to Fuji Photo Film, Company, Ltd., hereinafter
referred to as ``Fuji'' or ``respondent'' (see February 28, 1994,
memorandum to the file). Respondent submitted sales questionnaire
responses in December 1993 and January 1994. The Department issued
supplemental sales questionnaires in February 1994. Respondent
submitted the responses to these supplemental questionnaires in
February and March 1994.
On December 14, 1993, respondent submitted a statement in support
of the Department postponing the preliminary determination in this
investigation. On December 23, 1993, petitioner requested that the
Department postpone the preliminary determination until March 29, 1994,
pursuant to 19 CFR 353.15(c) (1993). The Department granted this
request on January 6, 1994 (59 FR 1927, January 13, 1994).
On March 2, 1994, petitioner submitted an allegation that critical
circumstances exist with respect to imports of CNPP from Japan. On
March 4, 1994, the Department sent respondent a critical circumstances
questionnaire. Respondent submitted responses to the Department's
critical circumstances questionnaire on March 18, 1994.
On March 8, 1994, in accordance with 19 CFR 353.20(b), respondent
requested that, in the event of an affirmative preliminary
determination, the Department postpone the final determination.
Scope of Investigation
For purposes of this investigation, color negative photographic
paper is all sensitized, unexposed silver-halide color negative
photographic paper, whether in master rolls, smaller rolls or sheets.
Chemical components include sensitized (whether chemically or
spectrally) and unsensitized emulsions, couplers, and coupler
dispersions used in making color negative photographic paper.
Unsensitized silver-halide emulsions consist of silver-halide
microcrystals dispersed in a gelatin and water matrix after preparation
and washing to remove soluble salts. Unsensitized emulsions are
naturally sensitive to blue and ultraviolet light, but cannot
efficiently convert light to form a color image without further
processing. Sensitized emulsions have been treated to increase their
sensitivity across the entire spectrum and/or treated by the addition
of spectral sensitizing dyes to make the emulsions selectively
sensitive to specific wavelengths of light. A coupler is a colorless,
water-insoluble chemical capable of reacting with a silver-halide
development product to form a dye. A coupler dispersion consists of a
coupler dispersed in a water-gel solution, and may contain organic
solvents, chemicals to stabilize the coupler and other substances.
Specifically excluded from this investigation are all paper and
chemical products not used in the silver halide process which are used
in other imaging technologies. Products outside the scope include toner
and developer chemicals used in electrostatic or indirect imaging
processes (e.g., xerography), products used in laser printing, and
instant photography products.
Also excluded from the scope of the investigation is paper that is
designed exclusively for use in graphic arts proofing equipment and
does not exceed 160 microns in thickness, and emulsions classified
under subheading 3707.10.0000 of the Harmonized Tariff Schedule of the
United States (HTSUS) that are used in the manufacture of monochrome
graphic arts film or paper that are not used in the production of color
negative photographic paper.
The color negative photographic paper subject to this investigation
is currently classifiable under HTSUS subheadings 3703.10.3030 and
3703.20.3030. Emulsions are currently classifiable under HTSUS
subheadings 3707.10.0000 and 3707.90.3000. Couplers and coupler
dispersions are currently classifiable under HTSUS subheadings
3707.90.3000, 3707.90.6000, 2933.19.3000, 2933.90.2500 and
2934.90.2000. Although the HTSUS subheadings are provided for
convenience and customs purposes, our written description of the scope
of this investigation is dispositive.
To avoid suspension of liquidation of non-subject chemicals, those
items entered under the HTSUS subheadings listed above, which are not
for use in the color negative photographic paper production process,
must be accompanied by an importer's declaration to the Customs Service
to that effect.
In order to be excluded from the suspension of liquidation ordered
in this notice, all sensitized (whether chemically or spectrally) and
unsensitized emulsions, couplers, and coupler dispersions entered into
the United States must be accompanied by an importer's declaration to
the Customs Service to the effect that they are not for use in the
color negative photographic paper production process and will not be
used in the color negative photographic paper production process.
On February 18, 1994, petitioner and respondent submitted comments
on whether the chemical components are in the same class or kind of
merchandise as color negative photographic paper. Petitioner argues
that the subject merchandise constitutes one class or kind of
merchandise, whereas respondent argues that the merchandise included in
the scope of investigation constitutes two classes or kinds of
merchandise. We determined that color negative photographic paper and
the chemical components constitute one class or kind of merchandise
(see March 24, 1994, decision memorandum from Richard W. Moreland to
Barbara R. Stafford). We based our determination on the criteria set
forth in Diversified Products v. United States, 572 F. Supp. 883 (1983)
and Kyowa Gas Chemical Industry Co., Ltd. v. United States, 582 F.
Supp. 887 (1984).
Period of Investigation
The period of investigation (POI) is March 1, 1993, through August
31, 1993.
Such or Similar Comparisons
In this investigation, we have only examined sales of color
negative photographic paper; we have not examined sales of chemical
components because respondent did not make such sales during the POI
(see October 22, 1993, memorandum from James Maeder to David Binder).
We have determined for purposes of the preliminary determination that
the color negative photographic paper covered by this investigation
comprise a single category of ``such or similar'' merchandise.
Respondent reported products that are identical according to the
Department's matching criteria, but have minor cost differences based
on the emulsions contained in each product. For purposes of the
preliminary determination, we are treating these products as identical
and are making no adjustments for differences in merchandise between
the products as claimed by respondent in accordance with 19 CFR 353.57.
This is because respondent failed to provide a narrative description
for its adjustments for differences in merchandise that explains the
exact nature, source, and size of each difference. We have instructed
the respondent to submit a thorough description of its adjustments for
differences in merchandise so that these adjustments can be considered
for use in the final determination (see February 23, 1994, decision
memorandum from Richard W. Moreland to Barbara R. Stafford).
Fair Value Comparisons
To determine whether sales of CNPP from Japan to the United States
were made at less than fair value, we compared the United States price
(USP) to the foreign market value (FMV), as specified in the ``United
States Price'' and ``Foreign Market Value'' sections of this notice.
United States Price
We based USP on exporter's sales price (ESP), in accordance with
section 772(c) of the Act, because the subject merchandise was sold to
the first unrelated purchaser after importation into the United States.
On March 22, 1994, respondent submitted clarifications regarding
its response to section C of the Department's questionnaire regarding
U.S. sales. Respondent requested that the Department consider backup
calculations for reported ocean freight charges, and U.S. short-term
interest rates. In this submission, Fuji also provided clarification
concerning certain Fuji-Hunt (a U.S. entity related to Fuji) delivery
expenses and certain Fuji-Hunt indirect selling expenses. This
submission was received too late to be used for purposes of the
preliminary determination; however, we will consider this submission in
our final determination.
Based on information submitted by respondent, we reclassified a
certain movement expense as revenue, and added it to the U.S. gross
unit price. We added, where appropriate, freight revenue to the U.S.
gross price, before adjusting for freight costs.
We made deductions, where appropriate, for discounts and rebates,
and the following movement charges: foreign brokerage, foreign inland
freight, ocean freight, marine insurance, U.S. brokerage and handling,
U.S. broker's commission, U.S. duty, and several U.S. inland freight
charges including inland freight insurance. For certain inland freight
charges applicable to sales made through Fuji-Hunt, as minor charge-
specific best information available (BIA), the Department increased the
reported charges to account for missing values. Additionally, we
deducted commissions and direct selling expenses which include
advertising, credit expenses, and a combination of promotional expenses
which constitute other direct selling expenses. We recalculated U.S.
imputed credit using the reported dates of shipment and payment because
the amounts reported by the respondent did not consistently reflect the
method described in the questionnaire response. We then adjusted the
U.S. price for additional product preparation performed by certain
parties after exportation. The preparation performed by certain parties
was treated as a component of total packing costs which were deducted
from USP.
We also deducted indirect selling expenses which include those
indirect selling expenses that Fuji-USA (Fuji's principal related U.S.
entity) incurred in its general sales activities, those indirect
selling expenses that Fuji-Hunt incurred in its sales and marketing
activities, foreign and U.S. pre-sale warehousing expenses, inventory
carrying costs, premiums for product liability insurance, and indirect
selling expenses incurred in Japan.
For purposes of the preliminary determination, we are accepting
respondent's treatment of Fuji-USA's commissions paid to an unrelated
party and Fuji-Hunt's commissions as direct selling expenses and
commissions paid to Fuji-USA's employees as indirect selling expenses
pending the receipt of additional information to be used for the final
determination. We treated all advertising costs as direct selling
expenses because respondent reported that all advertising is directed
at their customers' customers.
We made an adjustment to U.S. price for the consumption tax paid on
the comparison sales in Japan. In Federal-Mogul Corporation and The
Torrington Company v. United States, Slip Op. 93-194 (CIT, October 7,
1993), the Court of International Trade (CIT) prohibited us from
applying a purely tax-neutral margin calculation methodology.
Accordingly, we made our tax methodology conform to the instructions of
the CIT, and adjusted U.S. price for taxes by multiplying the home
market tax rate by the price of the U.S. merchandise at the point in
the chain of commerce of the U.S. merchandise that is analogous to the
point in the home market chain of commerce at which the foreign
government applies the home market consumption tax.
In this investigation, the tax levied on the subject merchandise in
the home market is three percent. We calculated the appropriate tax
adjustment to be three percent of the price of the U.S. merchandise net
of discounts reflected on the invoice at the time of sale (which, in
this case, is the point in the chain of commerce of the U.S.
merchandise that is analogous to the point in the home market chain of
commerce at which the foreign government applies the home market
consumption tax). We then added this amount to the U.S. price. We also
calculated the amount of the tax adjustment that was due solely to the
inclusion of expenses in the original tax base that are later deducted
from the price to calculate USP (i.e., three percent of the sum of any
adjustments, expenses and charges that were deducted from the price of
the U.S. merchandise). We deducted this amount after all other
additions and deductions had been made. By making this additional tax
adjustment, we avoid a distortion that would cause the creation of a
dumping margin even when pre-tax dumping is zero.
The Department instructed respondent to report by April, 1, 1994, a
revised sales listing for sales of further manufactured merchandise.
Since respondent will submit this sales information too late to be
included in our preliminary analysis, and because respondent's first
submission was too deficient to use for purposes of this preliminary
determination, we have not included further manufacturing sales in our
analysis (see March 24, 1994, decision memorandum from Richard W.
Moreland to Barbara R. Stafford).
Foreign Market Value
We compared the volume of home market sales of subject merchandise
to the volume of third country sales to determine whether there was a
sufficient volume of sales in the home market to serve as a viable
basis for calculating FMV. We found that the home market was viable for
sales of CNPP.
The Department excluded from its analysis certain sales of control
paper, hobby paper, crystal paper, and softech paper, because these
sales were made outside of the ordinary course of trade due to the
nature of the products and were made in insignificant quantities. We
omitted error entries and inventory adjustment entries because these
entries are not sales of CNPP, and because respondent did not directly
tie these entries to the relevant sales in the CNPP database.
Additionally, we dropped cancellation transactions from the sales
database, as respondent has stated that it cannot identify the original
transaction to which a specific cancellation entry applies. We also
excluded certain low-priced sales of CNPP because, despite a specific
request to do so, respondent did not adequately explain the nature of,
or circumstances surrounding, these low-priced sales.
We used the Department's current related party test, which
considers differences in the level of trade, to determine whether sales
to related customers were made on an arm's-length basis. For purposes
of the preliminary determination, we considered a party as related to
respondent whenever respondent had substantial ownership in, or
contractual agreements constituting business control over, the party.
See Appendix II to the Final Determination of Sales at Less Than Fair
Value: Certain Cold-Rolled Carbon Steel Flat Products from Argentina
(58 FR 37077, July 9, 1993) for more information on the Department's
related party test. We did not include in our analysis any sales to
related customers that we determined were not at arm's length.
We calculated FMV based on delivered prices, inclusive of packing.
We made deductions for inland freight, rebates and discounts, and
direct selling expenses, including promotional and advertising
expenses, credit expenses, warranty and guaranty expenses, and interest
for guarantee deposits, where applicable. For those rebate programs
where respondent did not identify in the database which customer
actually received the rebate, we made no adjustment. We disallowed any
rebate not established before the filing of the petition. For one
expense claimed as a rebate, we determined that the expense, although
viewed as a direct selling expense for CNPP, was overstated through a
misallocation of the costs; consequently we did not make any adjustment
for this expense, but will consider doing so subsequent to verification
and further explanation. With regard to one promotional program
reported as a direct selling expense, we did not make an adjustment to
FMV because respondent failed to report the expense properly.
We treated all advertising costs as direct selling expenses because
respondent reported that all advertising is directed at the customers'
customers. We deducted home market packing costs and added U.S. packing
costs in accordance with section 773(a)(1) of the Act. Where
respondent's reported total packing costs in Japan for certain
transactions for certain packing forms omitted a particular packing
processing charge, we added, as minor charge-specific BIA, the reported
average charge.
We made the following deductions from FMV in accordance with 19 CFR
353.56. We calculated home market credit expenses using the reported
dates of shipment and payment. Where no payment had been received we
used the average credit period for home market sales.
We deducted from FMV the weighted-average home market indirect
selling expenses, including inventory carrying costs, warehousing
expenses, product liability premiums, technical service expenses, and
two promotional minilab programs, up to the amount of indirect selling
expenses incurred on U.S. sales. We reclassified these two promotional
programs as indirect selling expenses. While respondent had reported
these as direct selling expenses, we have preliminarily determined that
respondent has not directly tied them to specific sales of CNPP. We
also reclassified technical expenses as indirect selling expenses
because respondent's documentation illustrates that these expenses
relate to general long-term assistance, rather than customer- or sales-
specific expenses. We offset commissions paid to unrelated parties in
the United States by the amount of indirect selling expenses incurred
in the home market by respondent, capped by the sum of U.S. commissions
and indirect selling expenses incurred, both in Japan and the United
States, for U.S. sales.
For purposes of the preliminary determination, we have treated all
movement expenses as direct selling expenses. Therefore, in accordance
with the decision in Ad Hoc Committee of AZ-NM-TX-FL Producers of Gray
Portland Cement v. United States, Slip Op. 93-1239 (Fed. Cir., January
5, 1994), we made a circumstance-of-sale adjustment for home market
movement expenses. We recalculated indirect selling expenses incurred
in the home market by reallocating certain rebates and promotional
programs as indirect selling expenses rather than as charges or direct
selling expenses, respectively, because we found that respondent
misclassified these expenses. We classified product liability expenses
as indirect selling expenses because respondent's explanations
demonstrate that its liability policy is general in nature and not tied
to specific sales.
We included in FMV the amount of the consumption tax collected in
the Japanese home market. We also calculated the amount of the tax that
was due solely to the inclusion of expenses in the original tax base
that are later deducted from home market price to calculate FMV (i.e.,
three percent of the sum of any adjustments, expenses, charges, and
offsets that were deducted from the home market price). We deducted
this amount from the FMV after all other additions and deductions were
made. By making this additional tax adjustment, we avoid a distortion
that would cause the creation of a dumping margin even when pre-tax
dumping is zero. In addition, we calculated a re-adjustment of the
amount of tax to take into account the amount of packing expenses added
to FMV (i.e., three percent of the packing expenses).
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the dates of the U.S. sales as certified by the Federal
Reserve Bank.
Verification
As provided in section 776(b) of the Act, we will verify the
information used in making our final determination.
Critical Circumstances
On March 2, 1994, petitioner alleged that ``critical
circumstances'' exist with respect to imports of CNPP and chemical
components thereof from Japan. We preliminarily find that critical
circumstances do not exist with respect to imports of CNPP from Japan,
in accordance with section 733(e)(1) of the Act. To determine whether
or not there have been massive imports of CNPP (one of the criteria in
a critical circumstances analysis) we compared the export volume for
the six months subsequent to the filing of the petition to that for the
six months prior to the filing of the petition. We found that exports
of this merchandise from respondent during the period subsequent to
receipt of the petition had decreased. Unless we find that imports of
the subject merchandise were massive, we do not need to determine
whether there is a history of dumping in the United States or elsewhere
or whether there is knowledge that the exporter was selling the
merchandise at less than its fair value.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of CNPP from
Japan, as defined in the ``Scope of Investigation'' section of this
notice, that are entered, or withdrawn from warehouse, for consumption
on or after the date of publication of this notice in the Federal
Register.
The Customs Service shall require a cash deposit or posting of a
bond equal to the estimated preliminary dumping margin, as shown below.
The suspension of liquidation will remain in effect until further
notice.
------------------------------------------------------------------------
Margin
Producer/manufacturer/exporter percentage
------------------------------------------------------------------------
Fuji Photo Film Co. Ltd.................................... 360.95
All Others................................................. 360.95
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination.
If our final determination is affirmative, the ITC will determine
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry before the later of 120 days after the
date of this preliminary determination or 45 days after our final
determination.
Postponement of Final Determination
On March 8, 1994, in accordance with 19 CFR 353.20(b), the sole
respondent requested that, in the event of an affirmative
determination, the Department postpone the final determination. We find
no compelling reason to deny the request. Accordingly, we are
postponing the date of the final determination until not later than 135
days after the date of publication of this notice.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies may be submitted by any interested
party to the Assistant Secretary for Import Administration no later
than June 30, 1994, and rebuttal briefs no later than July 8, 1994. We
request that parties in this case provide an executive summary of no
more than 2 pages in conjunction with case briefs on the major issues
to be addressed. Further, briefs should contain a table of authorities.
Citations to Commerce determinations and court decisions should include
the page number where cited information appears. In preparing the
briefs, please begin each issue on a separate page. In accordance with
19 CFR 353.38(b), we will hold a public hearing, if requested, to give
interested parties an opportunity to comment on arguments raised in
case or rebuttal briefs. Tentatively, the hearing will be held on July
15, 1994, at 10 a.m. at the U.S. Department of Commerce, room 3708,
14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties
should confirm the time, date, and place of the hearing 48 hours before
the scheduled time.
Interested parties who wish to request a hearing must submit a
written request to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, room B-099, within ten days of the
publication of this notice in the Federal Register. Requests should
contain:
(1) The party's name, address, telephone number;
(2) The number of participants; and
(3) A list of the issues to be discussed. In accordance with 19 CFR
353.38(b), oral presentations will be limited to the issues raised in
the briefs.
This determination is published pursuant to section 733(f) of the
Act (19 U.S.C. 1673b(f)) and 19 CFR 353.15(a)(4).
Dated: March 29, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-8262 Filed 4-5-94; 8:45 am]
BILLING CODE 3510-DS-P
