[Federal Register Volume 59, Number 102 (Friday, May 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13093]
[[Page Unknown]]
[Federal Register: May 27, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-307-809]
Notice of Preliminary Determination of Sales at Less Than Fair
Value: Phthalic Anhydride From Venezuela
May 20, 1994.
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: May 27, 1994.
FOR FURTHER INFORMATION CONTACT: Kimberly Hardin, Office of Antidumping
Investigations, Import Administration, U.S. Department of Commerce,
14th Street and Constitution Avenue, NW., Washington, DC 20230;
telephone (202) 482-0371.
PRELIMINARY DETERMINATION: We preliminarily determine that phthalic
anhydride (PA) from Venezuela is being, or is likely to be, sold in the
United States at less than fair value, as provided in section 733 of
the Tariff Act of 1930 (the Act), as amended. The estimated margins are
shown in the ``Suspension of Liquidation'' section of this notice.
Scope of Investigation
The product covered by this investigation is PA, an aromatic
synthetic organic chemical usually produced from a primary
petrochemical called orthoxylene, although it is sometimes produced
from naphthalene. PA is predominately used in the production of
plasticizers, unsaturated polyester resins, and alkyd resins, which in
turn are generally used to produce plastics and paints. This
investigation covers PA sold in either flaked or molten form.
PA is classifiable under subheading 2917.35.00 of the Harmonized
Tariff Schedule of the United States (HTSUS). The HTSUS subheading is
provided for convenience and customs purposes. Our written description
of the scope of this investigation is dispositive.
Period of Investigation (POI)
The period of investigation is May 1, 1993, to October 31, 1993.
Case History
Since the notice of initiation on November 12, 1993 (58 FR 60847,
November 18, 1993), the following events have occurred.
On November 12, 1993, we sent a cable to the U.S. consulate in
Caracas requesting a list of all known producers and exporters of the
subject merchandise and information about the producer/exporter named
in the petition.
On November 26, 1994, we presented an Antidumping Survey to
Oxidaciones Organicas, C.A. (Oxidor). Oxidor was named in the petition
as the primary producer/exporter of PA from Venezuela. On December 6,
1994, Oxidor submitted its response to the Department's Antidumping
Survey.
On December 1, 1993, the International Trade Commission (ITC)
issued an affirmative preliminary determination (USITC Publication
2709, December 1993).
On December 20, 1993, we issued an antidumping questionnaire to
Oxidor. We presented the questionnaire to Oxidor at its facility in
Caracas, Venezuela, on January 4, and 5, 1994.
On January 5, 1994, Oxidor requested a one-week extension of time
in which to respond to Section A, the general information section, of
the Department's antidumping questionnaire. On January 6, 1994, we
granted the extension. On January 18, 1994, we received Oxidor's
Section A questionnaire response.
On January 18, 1994, Oxidor requested a three-week extension of
time in which to respond to Sections B (sales in the home market or to
third countries) and C (sales to the United States) of the
questionnaire. On January 19, 1994, we granted Oxidor a partial
extension of two weeks for the responses to these sections of the
questionnaire.
On January 21, 1994, Oxidor submitted corrections to its Section A
questionnaire response.
On February 7, 1994, we received Oxidor's Sections B and C
questionnaire response. On February 8, 1994, Oxidor submitted one
corrected page to its Section C questionnaire response.
On February 14, 1994, petitioners requested an 11-day postponement
of the preliminary determination.
On February 15, 1994, we issued a deficiency letter to Oxidor
regarding its response to Sections A, B, and C of the questionnaire.
On February 22, 1994, Oxidor objected to petitioners' request for
an 11-day postponement of the preliminary determination. On February
23, 1994, petitioners requested a 50-day postponement of the
preliminary determination in order to permit full consideration of
whether Oxidor made home market sales at prices below the cost of
production (COP).
On February 25, 1994, Oxidor requested an extension of time in
which to respond to the Department's Section A, B, and C deficiency
letter. On February 25, 1994, we granted the extension.
On March 2, 1994, petitioners submitted an allegation of sales
below COP using company-specific data previously reported by Oxidor.
On March 10, 1994, we published, in the Federal Register, a notice
announcing the postponement of the preliminary determination until not
later than May 20, 1994, pursuant to petitioners' request.
On March 11, 1994, Oxidor submitted comments concerning
petitioners' request for a COP investigation. On March 14, 1994,
petitioners submitted a response to Oxidor's comments concerning the
COP allegation.
On March 15, 1994, we received Oxidor's Sections A, B, and C
deficiency response. On March 16, 1994, Oxidor submitted corrections to
its deficiency response.
On March 17, 1994, Oxidor submitted further comments concerning
petitioners' COP allegation. On March 28, 1994, petitioners responded
to Oxidor's March 17, 1994 submission. On April 5, 1994, we initiated a
COP investigation. On April 6, 1994, we issued a Section D
questionnaire to Oxidor. On May 4, 1994, Oxidor requested an extension
of time to respond to Section D of the questionnaire. On May 6, 1994,
we granted the extension. On May 10, 1994, Oxidor submitted its
response to Section D of the questionnaire.
Fair Value Comparisons
To determine whether sales of PA from Venezuela 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
For sales by Oxidor directly from Venezuela to the United States,
we based USP on purchase price, in accordance with section 772(b) of
the Act, because the subject merchandise was sold to unrelated
purchasers in the United States prior to importation and because
exporter's sales price methodology was not otherwise indicated.
We calculated purchase price based on packed prices to unrelated
customers. In accordance with section 772(d)(2)(A) of the Act, we made
deductions, where appropriate, for foreign inland freight, foreign
inland insurance, foreign brokerage and handling (which Oxidor reported
as commission expenses), ocean freight and other miscellaneous handling
fees.
We made an adjustment to USP for the tax paid on the comparison
sales in Venezuela. In this investigation, there is one tax, the
Impuesto al Valor Agregado (IVA), which is a value-added tax (VAT),
levied on sales of the subject merchandise in the home market,
beginning on October 1, 1993. Sales invoiced prior to October 1, 1993,
are not subject to the IVA. The IVA is a fixed percentage rate tax of
ten percent of the gross unit price. We have only performed the tax
calculations on U.S. sales invoiced on or after October 1, 1993,
compared to home market sales invoiced on or after October 1, 1993.
(See ``Concurrence Memorandum: Preliminary Determination in the
Antidumping Duty Investigation of Phthalic Anhydride from Venezuela,''
dated May 17, 1994, on file in room B-099 of the main Commerce
Department Building, 14th and Constitution, NW., Washington, DC 20230.)
On October 7, 1993, the Court of International Trade (CIT), in
Federal-Mogul Corp. and The Torrington Co. v. United States, Slip Op.
93-194 (CIT, October 7, 1993), rejected the Department's methodology
for calculating an addition to USP under section 772(d)(1)(C) of the
Act to account for taxes that the exporting country would have assessed
on the merchandise had it been sold in the home market. The CIT held
that the addition to USP under section 772(d)(1)(C) of the Act should
be the result of applying the foreign market tax rate to the price of
the United States merchandise at the same point in the chain of
commerce that the foreign market tax was applied to foreign market
sales. Federal-Mogul, Slip Op. 93-194 at 12.
The Department has changed its methodology in accordance with the
Federal-Mogul decision, and has applied this new methodology in making
the preliminary determination in this investigation. We have added to
USP the product of the foreign market tax rate and the price of the
United States merchandise at the same point in the chain of commerce
that the foreign market tax was applied to foreign market sales. We
have also deducted from the USP and the FMV those portions of the
foreign market tax and the USP tax adjustment attributable to expenses
included in the foreign market and United States bases of the tax if
those expenses are later deducted to calculate FMV and USP. These
adjustments to the foreign market tax and the USP tax adjustment are
necessary to prevent the methodology for calculating the USP tax
adjustment from creating antidumping duty margins where no margins
would exist if no taxes were levied upon foreign market sales.
This margin creation effect is due to the fact that the basis for
calculating both the amount of tax included in the price of the foreign
market merchandise and the amount of the USP tax adjustment include
many expenses that are later deducted when calculating USP and FMV.
After these deductions are made, the tax included in FMV and the USP
tax adjustment still reflect the inclusion of these expenses in the
bases. Thus, a margin may be created that is not dependent upon a
difference between USP and FMV, but is the result of the price of the
United States merchandise containing greater expenses than the price of
the foreign market merchandise. This adjustment to avoid the margin
creation effect is in accordance with the United States Court of
Appeals' holding that the application of the USP tax adjustment under
section 772(d)(1)(C) of the Act should not create an antidumping duty
margin if pre-tax FMV does not exceed USP. Zenith Electronics Corp. v.
United States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the
CIT has specifically held that an adjustment should be made to mitigate
the impact of expenses that are deducted from FMV and USP upon the USP
tax adjustment and the amount of tax included in FMV. Daewoo
Electronics Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT,
1991). However, the mechanics of the Department's adjustments to the
USP tax adjustment and the foreign market tax amount as described above
are not identical to those suggested in Daewoo.
Foreign Market Value
In order to determine whether there were sufficient sales of PA in
the home market to serve as a viable basis for calculating FMV, we
compared the volume of home market sales of PA to the volume of third
country sales of PA in accordance with section 773(a)(1)(B) of the Act.
Based on this comparison, we determine that Oxidor had a viable home
market with respect to sales of PA during the POI.
Petitioners alleged that Oxidor was selling in the home market at
prices below COP. Based on petitioners' allegation, we initiated a COP
investigation, and requested data on Oxidor's production costs.
Oxidor's cost data was not submitted in time to be considered for the
preliminary determination. However, Oxidor's submitted cost data will
be examined at verification and will be analyzed for purposes of our
final determination.
In accordance with 19 CFR 353.58, we compared U.S. sales to home
market sales made at the same level of trade, where possible.
We calculated FMV based on packed ex-factory prices charged to
related and unrelated customers in the home market. For purposes of the
preliminary determination, we included arm's-length sales to related
customers, pursuant to 19 CFR 353.45.
In light of the Court of Appeals of the Federal Circuit's (CAFC)
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),
the Department no longer can deduct home market movement charges from
FMV pursuant to its inherent power to fill in gaps in the antidumping
statute. We instead will adjust for those expenses under the
circumstance-of-sale provision of 19 CFR 353.56 and the exporter's
sales price offset provision of 19 CFR 353.56(b) (1) and (2), as
appropriate.
Accordingly, in the present case, we deducted post-sale home market
movement charges from FMV under the circumstance-of-sale provision of
19 CFR 353.56. This adjustment included home market inland freight and
inland insurance. Pursuant to 19 CFR 353.56(a)(2), we made
circumstance-of-sale adjustments, were appropriate, for differences in
credit expenses and warehousing expenses.
We deducted home market packing costs and added U.S. packing costs,
in accordance with section 773(a)(1) of the Act.
As discussed above, the IVA was only levied on sales in the home
market invoiced on or after October 1, 1993. Therefore, we calculated
two FMVs, one covering the period May-September, 1993, and one covering
October, 1993, of the POI, to account for the application of the IVA
tax only on sales invoiced on or after October 1, 1993. See
``Concurrence Memorandum'' for further details. We also calculated the
amount of the tax that was due solely to the inclusion of price
deductions in the original tax base (i.e., the sum of any amounts that
were deducted from the tax base). This amount was deducted from the FMV
after all other additions and deductions had been made. By making the
additional tax adjustments, we avoid a distortion that would create a
dumping margin even when pre-tax dumping is zero.
Currency Conversion
Because certified exchange rates from the Federal Reserve were
unavailable, we made currency conversions based on the official monthly
exchange rates in effect on the dates of the U.S. sales as certified by
the International Monetary Fund. Oxidor has requested that we use a
currency conversion methodology different from the Department's normal
practice given the sustained increase in the bolivar/U.S. dollar
exchange rate during the POI. We have disallowed Oxidor's alternate
currency conversion methodologies as Oxidor has not met the
requirements of currency conversion using the ``Special Rule'' in 19
CFR 353.60(b). See ``Concurrence Memorandum'' for further details.
Verification
As provided in section 776(b) of the Act, we will verify the
information used in making our final determination.
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 phthalic
anhydride from Venezuela, 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 the posting of a bond equal to the estimated preliminary dumping
margins, as shown below. The suspension of liquidation will remain in
effect until further notice. The weighted-average dumping margins are
as follows:
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter percent
------------------------------------------------------------------------
Oxidor C.A.................................................... 3.03
All Others.................................................... 3.03
------------------------------------------------------------------------
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 imports of the subject merchandise are
materially injuring, or threaten material injury to, the U.S. industry,
before the later of 120 days after the date of the preliminary
determination or 45 days after our final determination.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary for Import Administration no later than July 8, 1994, and
rebuttal briefs no later than July 13, 1994. 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
18, 1994, at 1:30 p.m. at the U.S. Department of Commerce, room 3708,
14th Street and Constitution Avenue, NW., Washington, DC 20230. Parties
should confirm by telephone 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. Request should
contain: (1) The party's name, address, and 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 presentation will be limited
to 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: May 20, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-13093 Filed 5-26-94; 8:45 am]
BILLING CODE 3510-DS-P
