2011-15648. Purified Carboxymethylcellulose from the Netherlands; Preliminary Results of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests from petitioner Aqualon Company, a unit of Hercules Incorporated and a U.S. manufacturer of purified carboxymethylcellulose, and Akzo Nobel Functional Chemicals B.V., the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on purified carboxymethylcellulose (CMC) from the Netherlands. This administrative review covers imports of subject merchandise produced and exported by Akzo Nobel Functional Chemicals B.V. during the period of review (POR) of July 1, 2009, through June 30, 2010.

We preliminarily determine that sales of subject merchandise by Akzo Nobel Functional Chemicals B.V. were made at less than normal value during the period of review. If these preliminary results are adopted in our final results of administrative review, we will issue appropriate assessment instructions to U.S. Customs and Border Protection (CBP). Interested parties are invited to comment on these preliminary results. Parties who submit argument in this review are requested to submit with the argument: (1) A statement of the issues; (2) a brief summary of the argument; and (3) a table of authorities.

DATES:

Effective Date: June 22, 2011.

FOR FURTHER INFORMATION CONTACT:

Dena Crossland or David Cordell, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On July 11, 2005, the Department published the antidumping duty order on CMC from the Netherlands. See Notice of Antidumping Duty Orders: Purified Carboxymethylcellulose from Finland, Mexico, the Netherlands, and Sweden, 70 FR 39734 (July 11, 2005) (CMC Order). On July 1, 2010, the Department published an opportunity to request an administrative review of this order for the period July 1, 2009, through June 30, 2010. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 75 FR 38074 (July 1, 2010).

Pursuant to 19 CFR 351.213(b)(1), Aqualon Company (Aqualon), petitioner in this proceeding, filed a July 26, 2010, request that the Department conduct an administrative review of the sales of subject merchandise from Akzo Nobel Functional Chemicals B.V. (ANFC) and CP Kelco B.V. (CP Kelco) during the POR. On July 27, 2010, CP Kelco requested a review of its sales of subject merchandise and, on July 30, 2010, ANFC requested a review of its sales of subject merchandise made during the POR. On August 18, 2010, CP Kelco withdrew its request for an administrative review of its sales of subject merchandise during the POR. Additionally, on August 18, 2010, Aqualon withdrew its request for an administrative review with respect to CP Kelco.

On August 31, 2010, the Department published a notice of initiation of this administrative review, covering exports, sales, and/or entries of purified CMC from ANFC in the Federal Register. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Deferral of Initiation of Administrative Review, 75 FR 53274 (August 31, 2010).

The Department issued its antidumping duty questionnaire to ANFC on September 28, 2010. ANFC responded to the questionnaire on November 2, 2010 (section A questionnaire response (AQR), and on November 17, 2010 (sections B and C questionnaire responses (BQR and CQR)).

On December 7, 2010, Aqualon filed a request for a sales-below-cost investigation of ANFC, in which it alleged that ANFC had made home market sales of purified CMC at prices below the cost of production (COP) during the POR. After reviewing the allegation, the Department initiated a cost investigation of ANFC on January 20, 2011, and requested that the company respond to section D of the questionnaire. ANFC filed its section D questionnaire response (DQR) on February 17, 2011.

ANFC responded to supplemental questionnaires concerning sections A through C of the Department's questionnaire on March 7, 2011, April 25, 2011, and May 19, 2011. ANFC responded to supplemental questionnaires concerning section D of the Department's questionnaire on April 18, 2011, May 9, 2011, May 17, 2011, and May 19, 2011.

On April 1, 2011, the Department extended the deadline for the preliminary results of review from April 2, 2011, until June 16, 2011. See Purified Carboxymethylcellulose From the Netherlands; Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review, 76 FR 18156 (April 1, 2011).

Period of Review

The POR is July 1, 2009, through June 30, 2010.

Scope of the Order

The merchandise covered by this order is all purified CMC, sometimes also referred to as purified sodium CMC, polyanionic cellulose, or cellulose gum, which is a white to off-white, non-toxic, odorless, biodegradable powder, comprising sodium CMC that has been refined and purified to a minimum assay of 90 percent. Purified CMC does not include unpurified or crude CMC, CMC Fluidized Polymer Suspensions, and CMC that is cross-linked through heat treatment. Purified CMC is CMC that has undergone one or more purification operations, which, at a minimum, reduce the remaining salt and other by-product portion of the product to less than ten percent. The merchandise subject to this order is currently classified in the Harmonized Tariff Schedule of the United States at subheading 3912.31.00. This tariff classification is provided for convenience and Customs purposes; however, the written description of the scope of this order is dispositive.

Date of Sale

For its home market sales, ANFC reported its date of sale to be the invoice date, which coincided with the loading and shipment date of the merchandise. It stated that, until the time that the merchandise is loaded, changes can occur in the material terms of sale. See ANFC's BQR at B-11. Similarly, for its warehouse sales in the United States (constructed export price (CEP) Channel 2 sales), ANFC reported the date of sale to be the invoice date, which is the date that merchandise is loaded for shipment from the warehouse and, because material changes can take place prior to loading, the invoice date is the date on which the terms of sale are set. See ANFC's CQR at C-11 and C-12. However, for sales in which the product was shipped directly from the Netherlands to the United States (CEP Channel 1 sales), ANFC reported the date of shipment as the date of sale as this date preceded the invoice date. See ANFC's CQR at C-12. In its description of the sales process for these sales, ANFC stated that material terms, such as the quantity or price of the merchandise, could change prior to invoicing from ANFC's U.S. affiliate to the U.S. customer. See ANFC's AQR at A-28, A-29, and A-31; see also ANFC's supplemental questionnaire response, dated March 7, 2011, at 7 and Tabs 2-3. We noted that the unaffiliated customer is not invoiced by AN-US until the customer receives the merchandise from the Netherlands. See ANFC's AQR at A-28 and A-29.

Normally, the Department considers invoice date as the date of sale in accordance with 19 CFR 351.401(i). However, it is the Department's practice to use shipment date as the date of sale when shipment date precedes invoice date. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170, 13172-73 (March 18, 1998); see also Stainless Steel Sheet and Strip in Coils from the Republic of Korea; Final Results and Rescission of Antidumping Duty Administrative Review in Part, 72 FR 4486 (January 31, 2007), and the accompanying Issues and Decision Memorandum at Comments 4 and 5.

Although ANFC asserts that material terms of sale for its direct sales to the United States may change between the time of shipment of the goods from the Netherlands and the issuance of an invoice by AN-US, we find that the quantity and price for these sales are established at the time the merchandise was shipped from the Netherlands. See ANFC's CQR at C-11 and C-12. Therefore, we preliminarily determine that invoice date is the appropriate date of sale for ANFC's home market and U.S. sales, except for ANFC's U.S. sales in which shipment occurred prior to invoice date. Consistent with past segments of this preceding and the Department's practice, we used the shipment date as the date of sale for those sales.

Fair Value Comparisons

To determine whether sales of purified CMC from the Netherlands to the United States were made at less than fair value, we compared the CEP of each sale to the normal value, as described in the “Constructed Export Price” and “Normal Value” sections of this notice below. In accordance with section 777A(d)(2) of the Tariff Act of 1930, as amended (the Act), we compared the CEPs of individual U.S. transactions to monthly weighted-average normal values.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all purified CMC that fit the description in the “Scope of the Order” section above and that was produced and sold by ANFC in the Netherlands during the POR to be foreign like product for the purpose of determining appropriate product comparisons to purified CMC sold by the respondent in the United States. For our discussion of home market viability, see the “Normal Value” section of this notice below. We compared the U.S. sales with the sales of the foreign like product in the comparison market.

Specifically, in making our comparisons, we used the following methodology. If sales of an identical comparison-market model were reported, we compared the CEPs of the U.S. sales to the weighted-average, comparison-market prices of all sales that passed the COP test of the identical product during the relevant or contemporary month. See sections 771(16) and (35) of the Act; see also section 773(b)(1) of the Act. If there were no contemporaneous sales of an identical model, we identified sales of the most similar comparison-market model. See section 771(16) of the Act. To determine the most similar model, we matched the physical characteristics of the foreign like product, as reported by ANFC, to the characteristics of the subject merchandise in the following order of importance: (1) Grade, (2) viscosity, (3) degree of substitution, (4) particle size, and (5) solution characteristics. Where there were no sales of identical or similar foreign like product in the ordinary course of trade with which to compare to a U.S. sale, we made product comparisons using constructed value.

Constructed Export Price

In accordance with section 772 of the Act, we calculate either an export price or a CEP, depending on the nature of each sale. Section 772(b) of the Act defines CEP as the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise, or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter.

ANFC classified all of its sales to the United States as sales made through its U.S. affiliate, AN-US, to end-users and distributors (i.e., CEP sales). For purposes of these preliminary results, we have accepted this classification.

We calculated CEP based on prices charged to the first unaffiliated U.S. customer. As discussed in the “Date of Sale” section above, we used invoice date as the date of sale for CEP sales, except in instances where the date of shipment preceded the invoice date. We based CEP on the gross unit price to the first unaffiliated U.S. customer, making adjustments where necessary for billing adjustments. See 19 CFR 351.401(c). Where applicable, and pursuant to sections 772(c)(2)(A) and (d)(1) of the Act, the Department made deductions for movement expenses, including deductions for domestic foreign inland freight and warehousing expenses, domestic inland insurance, domestic brokerage and handling expenses, international freight, marine insurance, U.S. inland insurance, brokerage and handling expenses incurred in the United States, U.S. warehousing expenses, U.S. inland freight, and U.S. customs duties.

In accordance with section 772(d)(1) of the Act, we also deducted, where applicable, U.S. direct selling expenses (i.e., credit expenses) and indirect selling expenses and inventory carrying costs incurred in the Netherlands and the United States and associated with economic activities in the United States.

We deducted an amount for CEP profit in accordance with section 772(d)(3) of the Act.

Normal Value

A. Home Market Viability and Comparison Market Selection

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating normal value (i.e., whether the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared ANFC's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act.

A review of the record shows that ANFC's home market sales were viable, for purposes of comparing them to U.S. sales. See ANFC's AQR at A-3 and Exhibit 1. Thus, we based normal value on ANFC's home market sales made in the usual commercial quantities and in the ordinary course of trade.

B. Cost of Production Analysis

Based on Aqualon's cost allegation, the Department had reasonable grounds to believe or suspect that ANFC made below-cost sales of the foreign like product. See section 773(b)(2)(A)(i) of the Act. Therefore, the Department initiated a cost investigation of ANFC on January 20, 2011, and requested that ANFC file a response to section D of the antidumping duty questionnaire on that date.

C. Calculation of Cost of Production

We have preliminarily relied upon the COP information provided by ANFC in its section D submission, except as noted below. In accordance with section 773(b)(3) of the Act, we calculated the weighted-average COP for each foreign like product based on the sum of ANFC's material and fabrication costs for the product, plus amounts for selling, general, and administrative (SG&A) expenses, as well as packing costs. Based on the review of record evidence, ANFC did not appear to experience significant changes in its cost of manufacturing during the POR. Therefore, we followed our normal methodology of calculating an annual weighted-average cost. We relied on the COP data provided in ANFC's May 17, 2011, submission, except for the following instances:

During the POR, ANFC stated that it purchased two major inputs, mono-chloroacetic acid (MCA) and caustic soda, from a home market affiliated company.^[1] Section 773(f)(3) of the Act (the major input rule) states:

If, in the case of a transaction between affiliated persons involving the production by one of such persons of a major input to the merchandise, the administering authority has reasonable grounds to believe or suspect that an amount represented as the value of such input is less than the cost of production of such input, then the administering authority may determine the value of the major input on the basis of the information available regarding such cost of production, if such cost is greater than the amount that would be determined for such input under paragraph (2).

Paragraph 2 of section 773(f) of the Act (transactions disregarded) states:

A transaction directly or indirectly between affiliated persons may be disregarded if, in the case of any element of value required to be considered, the amount representing that element does not fairly reflect the amount usually reflected in sales of merchandise under consideration in the market under consideration. If a transaction is disregarded under the preceding sentence and no other transactions are available for consideration, the determination of the amount shall be based on the information available as to what the amount would have been if the transaction had occurred between persons who are not affiliated.

In accordance with the major input rule, and as stated in Stainless Steel Sheet and Strip in Coils From Mexico; Preliminary Results of Antidumping Duty Administrative Review, 73 FR 45708, 45714 (August 6, 2008), unchanged in Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review, 74 FR 6365 (February 9, 2009), it is the Department's normal practice to use all three elements of the major input rule (i.e., transfer price, COP, and market price) where available. In accordance with section 773(f)(3) of the Act (the major input rule), we evaluated transactions between ANFC and its affiliate using the transfer price, COP and market price of MCA and caustic soda. For the preliminary results, we adjusted ANFC's reported costs to reflect the highest of these three values for ANFC's affiliated purchases of MCA and caustic soda. For further discussion of these adjustments, see Calculation Memo.

We adjusted ANFC's and its affiliate's general and administrative (G&A) expense calculation for certain non-operating income and expense items in accordance with the Department's practice of including in G&A certain non-operating amounts which relate to the general operations of the company as a whole. See Magnesium Metal from the Russian Federation: Notice of Final Determination of Sales at Less Than Fair Value, 70 FR 9041 (February 24, 2005), and accompanying Issues and Decision Memorandum at Comment 10. We did not allow certain non-operating income to offset the reported G&A expenses because ANFC did not support why they were appropriate reductions to the reported G&A expenses. We excluded net foreign exchange gains and losses from ANFC's reported G&A expense calculation because these are accounted for elsewhere in the COP calculation, specifically in the net financial expense rate. For further discussion of these adjustments, see Calculation Memo.

D. Test of Comparison Market Prices

As required under section 773(b) of the Act, we compared ANFC's weighted-average COP figures to its comparison-market sales prices (net of certain discounts, any applicable movement expenses, direct and indirect selling expenses, and packing) of the foreign like product in order to determine whether sales in the comparison market had been made at prices below COP. In determining whether to disregard such sales, we examined, in accordance with sections 773(b)(1)(A) and (B) of the Act, whether such sales were made within an extended period of time in substantial quantities and whether the sales were made at prices which would not permit the recovery of all costs within a reasonable period of time.

E. Results of Cost Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of the sales of a given product were at prices less than the COP, we did not disregard any of the below-cost sales of that product because they were not made in substantial quantities. However, where 20 percent or more of the respondent's comparison-market sales of a model were made at prices below the COP, we disregarded these sales because they were made: (1) In substantial quantities within the POR (i.e., within an extended period of time), in accordance with sections 773(b)(2)(B) and (C) of the Act; and (2) at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. We used the remaining comparison-market sales, if such sales existed and were made in the ordinary course of trade, as the basis for determining normal value, in accordance with section 773(b)(1) of the Act.

In the current review, we found sales by ANFC made below the COP for 20 percent or more of certain models and, therefore, we disregarded these below-cost sales from our margin calculations. See ANFC's Preliminary Analysis Memorandum at page 11.

F. Price-to-Price Comparisons

We calculated normal value based on prices to unaffiliated customers in the comparison market. In this market, we used invoice date as the date of sale except where shipment preceded invoice date, in which cases we used shipment date as date of sale. See 19 CFR 351.401(i). We decreased price, as appropriate, for certain discounts. We made deductions, where appropriate, for foreign inland freight and international freight pursuant to section 773(a)(6)(B) of the Act. In addition, when comparing sales of similar merchandise to U.S. sales, we made adjustments to normal value for differences in cost attributable to differences in physical characteristics of the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, as well as for differences in circumstances of sale, as appropriate (i.e., credit), in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also made an adjustment, where appropriate, for a CEP offset, in accordance with section 773(a)(7)(B) of the Act. See the “Level of Trade” section below. Finally, we deducted comparison-market packing costs and added U.S. packing costs to normal value, in accordance with sections 773(a)(6)(A) and (B) of the Act.

G. Price-to-Constructed-Value Comparisons

Section 773(a)(4) of the Act provides that, if we are unable to find a contemporaneous comparison-market match of identical or similar merchandise for a U.S. sale, then we base normal value on constructed value. Section 773(e) of the Act provides that constructed value shall be based on the sum of the cost of materials and fabrication employed in producing the merchandise, SG&A expenses, profit, and expenses associated with packing the merchandise for shipment to the United States. We calculated the cost of materials and fabrication based on the methodology described above in the “Calculation of Cost of Production” section. In accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses (as adjusted above) and profit on the amounts incurred and realized by ANFC in connection with the production and sale of the foreign like product, in the ordinary course of trade, for consumption in the foreign country. See 19 CFR 351.405(b)(1).

Level of Trade

In accordance with section 773(a)(1)(B)(i) of the Act, to the extent practicable, we determine normal value based on sales in the comparison market at the same level of trade as the export price or CEP transaction. The level of trade in the comparison market is the level of trade of the starting-price sales in the comparison market or, when normal value is based on constructed value, the level of trade of the sales from which we derive SG&A expenses and profit. See 19 CFR 351.412(c). For CEP, the level of trade is that of the constructed sale from the exporter to the importer. Id.

To determine whether comparison market sales are at a different level of trade from U.S. sales, 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 different levels of trade, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which normal value is based and comparison market sales at the level of trade of the export transaction, the Department makes a level-of-trade adjustment in accordance with section 773(a)(7)(A) of the Act. For CEP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the customer. We analyze whether different selling activities are performed, and whether any price differences (other than those for which other allowances are made under the Act) are shown to be wholly or partly due to a difference in level of trade between the CEP and normal value. See section 773(a)(7)(A) of the Act.

Under section 773(a)(7)(A) of the Act, we make an upward or downward adjustment to normal value for level of trade if the difference in level of trade involves the performance of different selling activities and is demonstrated to affect price comparability, based on a pattern of consistent price differences between sales at different levels of trade in the country in which normal value is determined. Finally, if the normal-value level of trade is at a more advanced stage of distribution than the level of trade of the CEP, but the data available do not provide an appropriate basis to determine a level-of-trade adjustment, we reduce normal value by the amount of indirect selling expenses incurred in the comparison market on sales of the foreign like product, but by no more than the amount of the indirect selling expenses incurred for CEP sales. See section 773(a)(7)(B) of the Act (the CEP-offset provision).

In analyzing differences in selling functions, we determine whether the levels of trade identified by the respondent are meaningful. See Antidumping Duties: Countervailing Duties, 62 FR 27296, 27371 (May 19, 1997). If the claimed levels of trade are the same, we expect that the functions and activities of the seller should be similar. Conversely, if a party claims that levels of trade are different for different groups of sales, the functions and activities of the seller should be dissimilar. See Porcelain-on-Steel Cookware from Mexico: Final Results of Antidumping Duty Administrative Review, 65 FR 30068 (May 10, 2000), and accompanying Issues and Decision Memorandum at Comment 6.

In the present review, ANFC claimed that a CEP offset was required because the CEP level of trade was less advanced than levels of trade in the comparison market. See ANFC's CQR at C-54 and C-55. In order to determine whether the comparison market sales were at different stages in the marketing process than the U.S. sales, we reviewed the distribution system in each market (i.e., the “chain of distribution”),^[2] including selling functions, class of customer (customer category), and the level of selling functions for each type of sale.

ANFC reported one level of trade in the home market, the Netherlands, with one channel of distribution to two classes of customers: (1) Direct sales from the warehouse located near the ANFC manufacturing plant to end users, and (2) direct sales from the warehouse located near the ANFC manufacturing plant to distributors. See ANFC's AQR at A-17; see also ANFC's BQR at B-10. Based on our review of evidence on the record, we find that the home market sales to both customer categories through the one channel of distribution were substantially similar with respect to selling functions and stages of marketing. ANFC performed the same selling functions for sales in a single home market channel of distribution, including sales forecasting, strategic planning, advertising, distributor training, packing, warehousing, inventory management, order processing, direct sales crew, market research, providing guarantees, after sales services, freight and delivery, and invoicing. See ANFC's AQR at A-19 through A-23 and Tab 9. Each of these selling functions was identical in the intensity of their provision or only differed minimally, the exception being that ANFC provided sales/marketing support and technical assistance to a different degree of involvement to different customer types. See ANFC's AQR at Tab 9. See also Preliminary Analysis Memorandum. Thus, after considering all of the above, we preliminarily find that ANFC had only one LOT for its home market sales.

ANFC reported one CEP LOT, with two separate channels of distribution in the United States. CEP Channel 1 sales were made to order for two classes of customers, i.e., end users and distributors. See ANFC's AQR at A-17. The U.S. customer orders merchandise from ANFC's U.S. affiliate, AN-US, and the merchandise is shipped directly to the U.S. customer from ANFC. Id. Further, the customer is invoiced by AN-US, and the title passed directly from the AN-US to the unaffiliated customer in the United States. CEP Channel 2 sales were also made to two classes of customers, i.e., end users and distributors, from inventory. Id. Specifically, the U.S. customer orders merchandise from AN-US, which is shipped out of a stock of materials maintained at AN-US's unaffiliated warehouses. Id. Upon examining ANFC's questionnaire responses, we preliminarily find that it has two channels of distribution for its CEP sales in the United States. See ANFC's AQR at A-16 through A-17, A-27 through A-29, and Tab 8; and CQR at C-10.

For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and CEP profit under section 772(d) of the Act . See Micron Tech. Inc. v. United States, 243 F.3d 1301, 1314-15 (Fed. Cir. 2001). We reviewed the selling functions and services performed by ANFC on CEP sales as described in its questionnaire and supplemental questionnaire responses, after these deductions. We found that selling functions performed by ANFC to its U.S. affiliate in support of the CEP sales were almost identical regardless of class of customers or channel of trade. ANFC reported that it provided services to both CEP channels including strategic planning, packing, warehousing, inventory management, order processing, and logistics for freight and delivery. See ANFC's AQR at Tab 9. ANFC reported that the only services it provided for the CEP Channel 1 sales to a different degree of performance comparatively to the degree of performance provided for Channel 2 sales were logistics for freight and delivery, warehousing, and inventory management. Id. Therefore, we found that selling functions performed by ANFC for both channels are at the same level.

Next, we compared the stages in the marketing process and selling functions along the chain of distribution for home market and CEP sales. ANFC's home market and CEP sales were both made to end users and distributors. We found that ANFC performs an additional layer of selling functions at a greater degree of involvement in the home market than it provided on CEP Channel 1 and Channel 2 sales (e.g., sales forecasting, strategic planning, advertising, distributor training, market research, technical assistance, sales and marketing support, after sales service, and invoicing). See ANFC's AQR at A-19 through A-23 and Tab 9. Because these additional selling functions are significant, we find that ANFC's CEP sales are at a different level of trade than its home market sales.

According to section 773(a)(7)(B) of the Act, a CEP offset is appropriate when the level of trade in the home market is at a more advanced stage than the level of trade of the CEP sales and there is no basis for determining whether the difference in levels of trade between normal value and CEP affects price comparability. ANFC reported that it provided minimal selling functions and services for the CEP level of trade and that, therefore, the home market level of trade is more advanced than the CEP level of trade. Based on our analysis of the channels of distribution and selling functions performed by ANFC for sales in the home market and CEP sales in the U.S. market (i.e., sales support and activities provided by ANFC for sales to its U.S. affiliate), we preliminarily find that the home market level of trade is at a more advanced stage when compared to CEP sales because ANFC provides many selling functions in the home market at a different level of service (i.e., sales forecasting, advertising, distributor training, market research, sales and marketing support, etc.) as compared to selling functions performed for its CEP sales (i.e., ANFC reported that the only services it provided for the CEP sales were logistics for freight and delivery, packing, warehousing, inventory management, order processing, providing guarantees, and limited strategic planning and technical assistance). See ANFC's AQR at Tab 9. Thus, we find that ANFC's home market sales are at a more advanced level of trade than its CEP sales. As there was only one level of trade in the home market, there were no data available to determine the existence of a pattern of price differences, and we do not have any other information that provides an appropriate basis for determining a level-of-trade adjustment; therefore, we applied a CEP offset to normal value for CEP comparisons.

To calculate a CEP offset for ANFC, we deducted the comparison market indirect selling expenses from normal value for sales that were compared to U.S. CEP sales. We limited the deduction by the amount of the indirect selling expenses deducted in calculating the CEP under section 772(d)(1)(D) of the Act. See section 773(a)(7)(B) of the Act.

Currency Conversion

We made foreign-currency conversions into U.S. dollars in accordance with section 773A(a) of the Act and 19 CFR 351.415 based on exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank. See Import Administration Web site at: http://ia.ita.doc.gov/​exchange/​index.html.

Preliminary Results of Review

We preliminarily determine that, for the period July 1, 2009, through June 30, 2010, the following dumping margin exists:

Manufacturer/exporter	Weighted-average margin (percent)
Akzo Nobel Functional Chemicals	B.V. 3.24

Disclosure and Public Comment

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 days after the date of publication of this notice. Pursuant to 19 CFR 351.309(c)(1)(ii), interested parties may submit written comments in response to these preliminary results. Interested parties may submit case briefs to the Department no later than 30 days after the publication of these preliminary results. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days from the deadline date for the submission of case briefs. See 19 CFR 351.309(d)(1) and (2).

Parties who submit arguments in this proceeding are requested to submit with the argument: (1) A statement of the issues; (2) a brief summary of the argument; and (3) a table of authorities. See 19 CFR 351.309(c)(2). Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Executive summaries should be limited to five pages total, including footnotes. Furthermore, we request that parties, when submitting briefs and rebuttal briefs, provide the Department with a copy of the public versions of the briefs on diskette.

Within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments raised in the case and rebuttal briefs, pursuant to 19 CFR 351.310(c). Unless the Department specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs. See 19 CFR 351.310(d)(1). Parties will be notified of the time and location of the hearing.

The Department will publish the final results of the administrative review, including the results of its analysis of issues addressed in any case or rebuttal brief, no later than 120 days after publication of the preliminary results, unless extended. See section 751(a)(3)(A) of the Act; 19 CFR 351.213(h).

Assessment Rates

The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated, whenever possible, an exporter/importer (or customer)-specific assessment rate or value for merchandise subject to this review as described below.

For CEP sales, we divide the total dumping margins for the reviewed sales by the total entered value of those reviewed sales for each importer. We will direct CBP to assess the resulting percentage margin against the entered customs values for the subject merchandise on each of that importer's POR entries. See 19 CFR 351.212(b).

The Department clarified its “automatic assessment” regulation on May 6, 2003. This clarification will apply to entries of subject merchandise during the POR produced by companies in these preliminary results of review for which the reviewed companies did not know their merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

We intend to issue liquidation instructions to CBP 15 days after publication of the final results of this review. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis. Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP to liquidate without regard to antidumping duties any entries for which the assessment rate is de minimis. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of this review and for future deposits of estimated duties, where applicable. See section 751(a)(2)(C) of the Act.

Cash Deposit Requirements

The following cash-deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise 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)(2)(C) of the Act: (1) The cash deposit rate for the company listed above will be that established in the final results of this review, except if the rate is less than 0.50 percent and, therefore, de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review or in the 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) the cash-deposit rate for all other manufacturers or exporters will continue to be the all-others rate of 14.57 percent, which is the all-others rate established in the investigation. See CMC Order, 70 FR at 39735. These deposit requirements, when imposed, shall remain in effect until further notice.

Notification to Importers

This notice also serves as a reminder to importers of their responsibility under 19 CFR 351.402(f)(2) 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 Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: June 16, 2011.

Christian Marsh,

Acting Deputy Assistant Secretary for Import Administration.

Footnotes

1.  See ANFC's DQR at D-7. For further discussion of these inputs, Memorandum from Christopher Zimpo, Accountant, to Neal M. Halper, Director, Office of Accounting, regarding “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results—Akzo Nobel Functional Chemicals B.V.,” dated June 16, 2011 (Calculation Memo), at pages 1-2 and Attachment 1.

2.  The marketing process in the United States and comparison market begins with the producer and extends to the sale to the final user or customer. The chain of distribution involved in the two markets may have many or few links, and respondent's sales occur somewhere along this chain. In performing this evaluation, we considered respondent's narrative responses to properly determine where in the chain of distribution the sale occurs.