[Federal Register Volume 63, Number 68 (Thursday, April 9, 1998)]
[Notices]
[Pages 17364-17366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9432]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-428-803]
Industrial Nitrocellulose from Germany; 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 of industrial nitrocellulose from Germany.
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SUMMARY: In response to a request from the petitioner, Hercules
Incorporated, the Department of Commerce is conducting an
administrative review of the antidumping duty order on industrial
nitrocellulose from Germany. The period of review is July 1, 1996
through June 30, 1997. This review covers imports of industrial
nitrocellulose from one producer, Wolff Walsrode AG.
We have preliminarily found that sales of subject merchandise have
been made below normal value. If these preliminary results are adopted
in our final results, we will instruct the Customs Service to assess
antidumping duties based on the difference between the export price or
constructed export price and normal value.
Interested parties are invited to comment on these preliminary
results. Parties who submit arguments are requested to submit with the
argument (1) a statement of the issue and (2) a brief summary of the
argument. We will issue the final results not later than 120 days from
the date of publication of this notice.
EFFECTIVE DATE: April 9, 1998.
FOR FURTHER INFORMATION CONTACT:
Todd Peterson or Zev Primor, AD/CVD Enforcement Office 4, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C.
20230; telephone (202) 482-4195, and 482-4114, respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department of Commerce's (the
Department's) regulations refer to the regulations codified at 19 CFR
Part 351, (62 FR 27296, May 19, 1997).
Background
On July 10, 1990, the Department published in the Federal Register
(55 FR 28271) the antidumping duty order on industrial nitrocellulose
(INC) from Germany. On July 21, 1997, the Department published in the
Federal Register (62 FR 38973) a notice of opportunity to request an
administrative review of this antidumping duty order. On July 30, 1997,
in accordance with 19 CFR 351.213(b), the petitioner and domestic
producer of the subject merchandise, Hercules Incorporated, requested
that the Department conduct an administrative review of Wolff Walsrode
AG's (WWAG's) imports of subject merchandise to the United States. We
published the notice of initiation of this review on August 28, 1997
(62 FR 45621).
Verification
As provided in section 782(i)(3) of the Act, we verified the data
provided by the respondent using standard verification procedures,
including on-site inspection of the manufacturer's facilities, the
examination of relevant sales and financial records, and selection of
original documentation containing relevant information. Our
verification results are outlined in the public versions of the
verification reports.
Scope of the Review
Imports covered by this review are shipments of INC from Germany.
INC is a dry, white, amorphous synthetic chemical with a nitrogen
content between 10.8 and 12.2 percent, and is produced from the
reaction of cellulose with nitric acid. INC is used as a film-former in
coatings, lacquers, furniture finishes, and printing inks. The scope of
this order does not include explosive grade nitrocellulose, which as a
nitrogen content of greater than 12.2 percent. INC is currently
classified under Harmonized Tariff Schedule (HTS) subheading
3912.20.00. While the HTS item number is provided for convenience and
Customs purposes, the written description remains dispositive as to the
scope of the product coverage. The review period is July 1, 1996
through June 30, 1997.
Product Comparisons
We calculated monthly, weighted-average, normal values (NVs). Where
possible, we compared U.S. sales to sales of identical merchandise in
Germany. When identical merchandise
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was not sold during the relevant contemporaneous period, we compared
U.S. sales to sales of the next most similar foreign like product (see
section 771(16) (B) and (C) of the Act).
Export Price and Constructed Export Price
For sales to the United States, we used export price (EP) or
constructed export price (CEP) as defined in sections 772(a) and 772(b)
of the Act, as appropriate. In accordance with sections 772(a) and (c)
of the Act, we calculated an EP where the merchandise was sold by the
producer outside the United States directly to the first unaffiliated
purchaser in the United States prior to importation. In accordance with
sections 772(b), (c) and (d) of the Act, we calculated a CEP for those
sales made by affiliated U.S. resellers that took place after
importation into the United States. For sales made prior to
importation, we considered the following factors to determine whether
to treat the sales as EP or CEP: (1) Whether the merchandise was
shipped directly from the manufacturer to the unaffiliated U.S.
customer; (2) whether this was the customary commercial channel between
the parties involved; and (3) whether the function of the U.S.
affiliate was limited to that of a processor of sales-related
documentation and a communications link with the unrelated buyer. The
facts indicate that the activities of the U.S. affiliate were ancillary
to these sales (e.g., arranging transportation or customs clearance,
invoicing), and therefore, we treated transactions as EP sales. The
record in this case indicates that WWAG has correctly classified a
portion of its U.S. sales as EP sales. For these sales the unaffiliated
U.S. customer communicated directly with WWAG in Germany in placing its
order. Wolff Walsrode U.S. (WWUS) acted only as processor of sales-
related documentation.
In accordance with sections 782(b), (c) and (d) of the Act, we
calculated a CEP for those sales made by affiliated U.S. resellers that
took place after importation into the United States. EP and CEP sales
were based on the packed C&F, delivered, CIF duty paid, or ex-dock duty
paid price to unaffiliated purchasers, in, or for exportation to, the
United States. As appropriate, we made deductions for discounts and
rebates, including early payment discounts. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Act;
these included foreign inland freight, foreign brokerage and handling,
ocean freight, marine insurance, U.S. customs brokerage, U.S. customs
duties, harbor maintenance fees, merchandise processing fees, and U.S.
inland freight expenses (freight from port to warehouse and freight
from warehouse to the customer). We also added U.S. freight revenue to
gross unit price.
For CEP sales, in accordance with section 772(d)(1) of the Act, we
deducted those selling expenses associated with economic activities
occurring in the United States, including commissions paid on sales
made by unrelated parties, direct selling expenses (credit costs and
warranty expenses), inventory carrying costs, and indirect selling
expenses, where applicable. We also deducted an amount for CEP profit
in accordance with section 772(d)(3) of the Act.
Normal Value
We compared the aggregate quantity of home market and U.S. sales
and determined that the quantity of the company's sales in its home
market was more than five percent of the quantity of its sales to the
U.S. market. Consequently, pursuant to section 773(a)(1)(B) of the Act,
we based NV on home market sales.
Section 773(a)(1)(B) of the Act provides that normal value shall be
based on the price at which the foreign like product is sold in the
usual commercial quantities and in the ordinary course of trade.
We made adjustments for differences in packing in accordance with
section 773(a)(6)(A) and 773(a)(6)B(i) of the Act. We also made
adjustments for movement expenses, consistent with section 773(a)(6)(B)
of the Act, for inland freight. In addition, we made adjustments for
differences in cost attributable to differences in physical
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii)
of the Act, as well as for differences in circumstances of sale (COS)
in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR
351.410. For comparisons to EP, we made COS adjustments by deducting
direct selling expenses incurred on home market sales and adding U.S.
direct selling expenses. For comparisons to CEP, we made COS
adjustments by deducting direct selling expenses incurred on home
market sales and adding any direct selling expenses associated with
U.S. sales not deducted under the provisions of section 772(d)(1) of
the Act. Because WWAG paid commissions on part of its U.S. sales, in
calculating NV, we offset these commissions using the weighted-average
amount of indirect selling expenses incurred on home market sales for
the comparison product, up to the amount of the U.S. commissions. See
19 CFR 351.410(e).
Level of Trade/CEP Offset
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade as the EP or CEP sales. The NV level of trade
is that of the starting-price sales in the comparison market or, when
NV is based on CV, that of the sales from which we derive selling,
general and administrative expenses (SG&A) and profit. For EP, the
level of trade is also the level of the starting-price sale, which is
usually from exporter to importer. For CEP, it is the level of the
construction sale from the exporter to the importer.
To determine whether NV sales are at a different level of trade
than EP or CEP, we examine stages in the marketing process and selling
functions along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different level of trade, and the difference affects price
comparability, as manifested in a pattern of consistent price
differences between the sales on which NV is based and comparison-
market sales at the level of trade of the export transaction, we make a
level of trade adjustment under section 773(a)(7)(A) of the Act.
Finally, for CEP sales, if the NV level is more remote from the factory
than the CEP level and there is no basis for determining whether the
difference in the levels between NV and CEP affects price
comparability, we adjust NV under section 773(a)(7)(B) of the Act (the
CEP offset provision). See Notice of Final Determination of Sales at
Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from
South Africa, 62 FR 61731 (November 19, 1997).
In the present case, there are two channels of distribution in the
U.S. market. The first channel, direct (EP) sales, are sales of full
container load shipments that travel directly from WWAG to the U.S.
customer. The second channel involves (CEP) sales from inventory
maintained by WWUS in a warehouse.
In the home market, WWAG also has two different distribution
channels. The first type of sales are direct sales to primarily end-
users where the product is delivered from the plant's storage warehouse
to customer. The second home market distribution channel are those
sales where delivery is made from independent, off-site warehouses,
primarily for geographic and logistical reasons. There are no
functional differences in marketing processes and
[[Page 17366]]
selling functions along the chain of distribution between those sales
shipped directly from the plant and sales from the warehouse.
Therefore, we determine that the two home market channels of
distribution comprise a single level of trade.
Based on analysis of the different types of selling functions
listed by respondent, relevant classes of customers, and selling
expenses for both types of sales in the home and U.S. markets, the
Department preliminarily determines that EP sales and home market sales
are made at the same level of trade. For these sales, WWAG performs
similar selling functions in both markets. However, the Department
preliminarily determines that CEP sales are made at a different level
of trade than EP sales and the home market sales.
In calculating CEP, certain adjustments are made pursuant to
Section 772(c) and (d) of the Act. Specifically, Section 772(d) states
that the price used to establish constructed export price are adjusted
to remove expenses incurred by WWAG and WWUS in selling subject
merchandise in the United States including inventory management,
freight arrangements, and invoice processing to name a few. Therefore,
when selling functions for CEP sales are compared with selling
functions for home market sales, home market sales (NV) are more remote
from factory than CEP sales (i.e., that NV is at a more advance level
of trade than CEP). Therefore a level of trade adjustment is warranted
when comparing NV to CEP sales.
Section 773(a)(7)(B) states that a CEP offset is granted when NV is
compared to CEP and NV is determined to be at a more advanced level of
trade than the CEP, but the data available do not provide an
appropriate basis to determine whether the difference in level of trade
affects price comparability. See 19 CFR 351.412(f).
In the present case, as there is no level in the home market
comparable to the CEP level and only one level of trade in the home
market, the data does not exist to quantity a level of trade
adjustment. As a result, the Department has preliminarily determined to
grant WWAG an adjustment to NV in the form of a CEP offset.
Currency Conversion
We made currency conversions in accordance with section 773A of the
Act based on the rates certified by the Federal Reserve Bank. See
Change in Policy Regarding Currency Conversions, 61 FR 9434 (March 8,
1996).
Preliminary Results of the Review
As a result of this review, we preliminarily determine that the
following margin exists for the period July 1, 1996, through June 30,
1997:
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Margin
Manufacturer/exporter (percent)
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Wolff Walsrode AG (WWAG).................................... 6.58
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Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Interested parties may also
request a hearing within ten days of publication. If requested, a
hearing will be held as early as convenient for the parties but not
later than 44 days after the date of publication or the first work day
thereafter. Interested parties may submit case briefs not later than 30
days after the date of publication of this notice. Rebuttal briefs,
which must be limited to issues raised in the case briefs, may be filed
not later than 37 days after the date of publication of this notice.
The Department will issue a notice of the final results of this
administrative review, which will include the results of its analysis
of issues raised in any such briefs, within 120 days from the
publication of these preliminary results.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. In accordance
with the methodology in Final Results of Antidumping Duty
Administrative Review and Partial Termination of Administrative Review:
Circular Welded Non-Alloy Steel Pipe from the Republic of Korea (62 FR
55574, October 27, 1997), we calculated exporter/importer-specific
assessment values by dividing the total dumping duties due for each
importer by the number of tons used to determine the duties due. We
will direct Customs to assess the resulting per-ton dollar amount
against each ton of the merchandise entered by these importers during
the review period.
Furthermore, the following deposit requirements will be effective
upon completion of the final results of this administrative review for
all shipments of industrial nitrocellulose from Germany entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of this administrative review, as provided by
section 751(a)(1) of the Act: (1) The case deposit rate for the
reviewed company will be the rate established in the final results of
this administrative review (except no cash deposit will be required
where weighted-average margin is de minimis, i.e., less than 0.5
percent); (2) for merchandise exported by manufacturers or exporters
not covered in this review but covered in the original less-than-fair-
value (LTFV) investigation or a previous review, the cash deposit will
continue to be the most recent rate published in the final
determination or final results for which the manufacturer or exporter
received an individual rate; (3) if the exporter is not a firm covered
in this review, a previous review, or the original investigation, but
the manufacturer is, the cash deposit rate will be the rate established
for the most recent period for the manufacturer of the merchandise; and
(4) if neither the exporter nor the manufacturer is a firm covered in
this or any previous reviews or the original investigation, the cash
deposit rate will be 3.84 percent, the ``all others'' rate established
in the LTFV investigation.
This notice serves as a preliminary reminder to importers of their
responsibility 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 777(i)(1) of the Act.
Dated: April 2, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary, Import Administration.
[FR Doc. 98-9432 Filed 4-8-98; 8:45 am]
BILLING CODE 3510-DS-M
