[Federal Register Volume 61, Number 160 (Friday, August 16, 1996)]
[Notices]
[Pages 42585-42589]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20891]
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DEPARTMENT OF COMMERCE
[A-588-839]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Sodium Azide from Japan
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 16, 1996.
FOR FURTHER INFORMATION CONTACT: William Crow or Magd Zalok, Office of
AD/CVD Enforcement II, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202)
482-0116 or (202) 482-4162, respectively.
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act) are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Rounds Agreements Act.
Preliminary Determination
We preliminarily determine that there is a reasonable basis to
believe or suspect that sodium azide from Japan is being, or is likely
to be, sold in the United States at less than fair value (LTFV), as
provided in section 733 of the Act. The estimated margins of sales at
LTFV are shown in the ``Suspension of Liquidation'' section of this
notice.
Case History
Since the initiation of this investigation, the following events
have occurred (Notice of Initiation of Antidumping Duty Investigations:
Sodium Azide from Japan, 61 FR 4959, (February 9, 1996) (Initiation
Notice):
On March 8, 1996, the United States International Trade Commission
(ITC) issued an affirmative preliminary injury determination in this
case (see ITC Investigation No. 731-TA-740).
On March 20, 1996, we determined the appropriate recipients of the
AD questionnaire (see the March 20, 1996 Memorandum to the file through
David L. Binder) and issued the complete questionnaire to Masuda
Chemical Corporation (Masuda), Nippon Carbide Industries Co. Ltd.
(NCI), and Toyo
[[Page 42586]]
Kasei Koygo Co., Ltd. (TKK). Also, on April 1, 1996, the Department
instructed respondents to report the date of sale based on the date of
invoice as recorded in the responding companies' records in the
ordinary course of business, according to the Department's amended date
of sale practice. (See the April 1, 1996, letters to respondents from
David L. Binder.)
We received Masuda's questionnaire responses to section A (dealing
with general corporate information), as well as sections B and C
(dealing with home market and U.S. market sales information), on April
19 and May 31, 1996, respectively.
On May 9, 1996, American Azide Corporation, the petitioner in this
investigation, requested that the Department postpone the preliminary
determination. Consequently, the Department postponed the preliminary
determination until no later than August 13, 1996. (61 FR 26878 May 29,
1996). The petitioner also submitted an allegation on June 21, 1996,
that Masuda had made home market sales below cost of production (COP)
during the POI. On July 17, 1996, the Department initiated an
investigation of home market sales below cost (see the July 17, 1996,
memorandum from the Team to Gary Taverman), and issued a letter to
Masuda instructing it to respond to section D of the March 20, 1996,
questionnaire.
On August 7, 1996, Masuda requested an extension until September
16, 1996, to respond to section D. The Department granted Masuda an
extension to respond to the section D questionnaire until no later than
September 5, 1996. Because of the filing date of the cost allegation we
will be unable to address it until the final determination.
Facts Available for TKK and NCI
A. TKK
We did not receive a response from TKK to the Department's
questionnaire. Section 776(a)(2) of the Act provides that if an
interested party withholds information that has been requested by the
Department, fails to provide such information in a timely manner or in
the form or manner requested, significantly impedes a determination
under the antidumping statute, or provides such information but the
information cannot be verified, the Department shall use facts
otherwise available in reaching the applicable determination. Because
TKK failed to submit the information that the Department had
specifically requested, it is necessary to use of facts otherwise
available for TKK.
Section 776(b) provides that adverse inferences may be used against
a party that has failed to cooperate by not acting to the best of its
ability to comply with requests for information (see also the Statement
of Administrative Action (SAA) accompanying the URAA, clarifies that
the petition is secondary information). See SAA, published in H. Doc.
103-316, 103d Cong., 2d Sess. At 870. Again, TKK's failure to provide
any information to the Department demonstrates that TKK has failed to
cooperate in this investigation. Thus, the Department has determined
that, in selecting from among the facts otherwise available, an adverse
inference is warranted. As facts otherwise available, we are assigning
to TKK the highest margin in the petition, 65.80 percent.
Section 776(c) provides that when the Department relies on
secondary information in using the facts otherwise available it must,
to the extent practicable, corroborate that information. When analyzing
the petition, the Department reviewed all of the data the petitioner
had submitted and the assumptions that petitioner made in calculating
estimated dumping margins. In accordance with section 776(c) of the
Act, the Department attempted to corroborate the petition information
by comparing the petition information on export price to U.S. Customs
data. This source records prices based on the HTSUS subheading
2850.00.50.00 and confirms that the prices contained in the petition
have probative value. Moreover, we compared the petitioner's estimated
home market prices on which the normal value in the petition was based
to home market prices available on the record of this investigation. We
found that the estimated normal value in the petition has probative
value. (See Memorandum dated August 8, 1996 from the team to Gary
Taverman.)
B. NCI
On April 10, 1996, NCI responded to the Department's questionnaire
by stating that it made no sales of sodium azide in the United States
during the POI. NCI, however, stated that it made a shipment of sample
sales of the subject merchandise during the POI. In response to our
request for information on the sample sales, NCI submitted a letter on
April 17, 1996, providing argument and data to support its contention
that the date of sale for a sample sale which it claimed to be the only
possible sale of subject merchandise, was on a date preceding the POI.
On May 31, 1996, the Department requested additional information
from NCI concerning possible ``likely sales,'' as defined in 19 CFR
353.2(t), made during the POI. On June 10, 1996, NCI submitted its
response that ``it clearly could not have been involved with any likely
sales during the period of investigation,'' and stating that ``NCI has
determined that it cannot justify incurring further costs at this time.
Accordingly, NCI can no longer respond to the Department's requests for
information.'' On July 11, 1996, the Department contacted NCI's counsel
to request clarification on its refusal to further cooperate in this
investigation. As recorded in the July 31, 1996, memorandum to the file
from Jennifer Stagner, counsel for NCI declined to continue to
participate in the investigation. Counsel for NCI confirmed that NCI
would not permit the Department to conduct verification of its claim
that there were no sales, nor likely sales, of subject merchandise to
the United States during the POI.
The verification of NCI's response was material to the Department's
ability to confirm that it did not need to include NCI as a respondent
in this investigation. Therefore, the Department finds that, because
NCI has stated that it will not respond to any additional requests for
information nor permit verification, it has failed to cooperate to the
best of its ability to comply with our request for information.
Accordingly, for purposes of the preliminary determination the
application of section 776(b) is warranted. In this case, the petition
is the only information on the record which could form the basis for a
dumping calculation for NCI (see the Facts Available for TKK section
above for detail on corroborating the information in the petition).
Therefore, the Department has based the margins for NCI on information
in the petition. As facts otherwise available, we are assigning to NCI
the highest margin in the petition, 65.80 percent. We note, however,
that since NCI has responded sufficiently to the Department's
questionnaires, the Department's decision as to whether adverse facts
available should be used for NCI may be revisited for purposes of the
final determination in the event NCI allows the Department to collect
any necessary additional information and conduct verification.
Postponement of Final Determination
On August 7, 1996, Masuda requested that, pursuant to section
735(a)(2)(A) of the Act, in the event of an affirmative preliminary
determination in this investigation, the Department postpone
[[Page 42587]]
its final determination until not later than 135 days after the
publication of the affirmative preliminary determination in the Federal
Register. In accordance with 19 CFR 353.20(b), inasmuch as our
preliminary determination is affirmative, the respondent accounts for a
significant proportion of exports of the subject merchandise, and there
are no compelling reasons for denying the request, we are granting
respondent's request and postponing the final determination. Suspension
of liquidation will be extended accordingly. See Preliminary
Determination of Sales at Less Than Fair Value: Large Newspaper
Printing Presses and Components thereof, whether Assembled or
Unassembled, from Japan, (61 FR 8029 March 1, 1996).
Scope of Investigation
The product covered by this investigation is sodium azide
(NaN3) regardless of use, and whether or not combined with silicon
oxide (SiO2) or any other inert flow assisting agent. The
merchandise under investigation is currently classifiable under item
2850.00.50.00 of the Harmonized Tariff Schedule of the United States
(HTSUS). Although the HTSUS subheading is provided for convenience and
customs purposes, our written description of the scope of this
investigation is dispositive.
Period of Investigation
The period of investigation is January 1, through December 31,
1995.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondent, covered by the description in the
Scope of Investigation section, above, and sold in the home market
during the POI, to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. In addition, in this
case we found all home market merchandise to be identical to the U.S.
merchandise. (See the March 20, 1996, Memorandum to the file through
David L. Binder.)
Classification of Grinding Costs
For purposes of the preliminary determination, we have rejected
Masuda's classification of grinding costs as direct selling expenses
subject to a circumstance-of-sale adjustment. We have determined that
grinding costs represent a production cost and should be included in
the calculation of the costs associated with physical differences in
merchandise. However, as explained below, the Department will consider
whether to make a ``quantity adjustment'' for differences in grinding
costs under 19 CFR 353.55 for the final determination.
Quantity Adjustment
The Department's regulations provide that ``the Secretary will make
a reasonable allowance for any difference in quantities, to the extent
that the Secretary is satisfied that the amount of any price
differential is wholly or partly due to that difference in
quantities.'' See 19 CFR 353.55(a). The Department's position is that
``to be eligible for a quantity based adjustment, a respondent must
demonstrate a clear and direct correlation between price differences
and quantities sold or costs incurred. See Brass Sheet and Strip from
the Federal Republic of Germany, Final Results of Antidumping Duty
Administrative Review, (56 FR 60087 November 27, 1991); see also Brass
Sheet and Strip from the Netherlands, (53 FR 2341 June 22, 1988). In
the case of a claim based on cost differences, the respondent must
provide evidence of savings which are specifically attributable to the
purchase of materials or provision of services at a discount due to the
quantity purchased. In the instant case, Masuda has indicated that the
cost of grinding provided by a third party are lower when larger
quantities are processed. However, Masuda has not provided sufficient
evidence that there is a clear and direct correlation between price
differences and quantities sold or costs incurred; the grinding cost
data provided by Masuda is not evidence per se of specific discounts
due to quantities purchased. Accordingly, for this preliminary
determination, we have not made a quantity adjustment. However, if
Masuda provides additional, timely, and verifiable information on this
claimed adjustment, we will reconsider it for the final determination.
Technical Services
Masuda reported a technical service expense as a direct selling
expense, claiming that the Department has previously allowed claims for
services rendered for assisting the customer in solving problems with
products purchased during the POI. We believe that the information on
the record does not sufficiently substantiate Masuda's claim.
Therefore, for purposes of the preliminary determination, we are
rejecting Masuda's classification of this cost as a direct selling
expense. However, we will request additional information regarding this
expense, which will be analyzed, verified, and considered for the final
determination.
Level of Trade
As set forth in section 773(a)(1)(B)(i) of the Act and in the SAA
accompanying the Uruguay Round Agreements Act, at 829-831, to the
extent practicable, the Department will calculate normal values based
on sales at the same level of trade as the U.S. sales. When the
Department is unable to find sales in the comparison market at the same
level of trade as the U.S. sale(s), the Department may compare sales in
the U.S. and foreign markets at different levels of trade. See also,
Final Determination of Sales at Less Than Fair Value: Certain Pasta
from Italy (61 FR 30326, June 14, 1996) (Pasta from Italy).
In accordance with section 773(a)(7)(A) of the Act, if sales at
different levels of trade are compared, the Department will adjust the
normal value to account for the difference in level of trade if two
conditions are met. First, there must be differences between the actual
selling functions performed by the seller at the level of trade of the
U.S. sale and the level of trade of the normal value sale. Second, the
differences must affect price comparability as evidenced by a pattern
of consistent price differences between sales at the different levels
of trade in the market in which normal value is determined.
In implementing this provision, the Department's first task was to
obtain information about the selling activities of the producers/
exporters. Information relevant to level of trade comparisons and
adjustments was requested in our supplemental questionnaire. We asked
the respondent to establish any claimed levels of trade based on the
selling functions provided to each proposed customer group, and to
document and explain any claims for a level of trade adjustment.
Our review of these submissions shows that Masuda has identified
levels of trade based on its selling activities by customer categories.
In order to confirm whether separate levels of trade actually existed
within or between the U.S. and home markets, we reviewed the selling
functions attributable to the customer categories claimed by Masuda.
Pursuant to section 773(a)(1)(B)(i) of the Act, and the SAA at 827, in
identifying levels of trade for directly observed (i.e., not
constructed) export price and normal value sales, we considered the
selling functions reflected in the starting price, before any
adjustments.
We examined certain selling functions indicated in the August 8,
1996, memorandum from Jennifer Stagner to the file. In addition to the
selling
[[Page 42588]]
functions reported by Masuda for each claimed level of trade, we
considered all types of selling functions reported in all sections of
the response. Where possible, we further examined whether the selling
function was performed on a substantial portion of sales. In analyzing
the record evidence, we examined selling functions in aggregate. (See,
Notice of Proposed Rulemaking and Request for Public Comments, (61 FR
7307, 7348 February 27, 1996) (Proposed Regulations).
We preliminarily determined that there is one U.S. level of trade
and two home market levels of trade, one of which is identical in
aggregate selling functions to that found in the United States. We
compared sales at the sole level of trade in the U.S. market to sales
at the identical home market level of trade. We found matches for each
U.S. sale at the same level of trade. Therefore, we did not need to
compare sales at the next most similar level of trade and determine
whether a level of trade adjustment was appropriate.
Fair Value Comparisons
To determine whether sales of sodium azide by Masuda to the United
States were made at less than fair value, we compared the export price
(EP) to the Normal Value (NV), as described in the ``Export Price'' and
``Normal Value'' sections of this notice. In accordance with section
777A(d)(1)(A)(i), we calculated weighted-average EPs for comparisons to
weighted-average NVs.
Export Price
We calculated EP, in accordance with subsections 772(a) and (c) of
the Act, where the subject merchandise was first sold in Japan to an
unaffiliated purchaser prior to importation and CEP was not otherwise
warranted based on the facts of record.
We calculated EP based on prices to the unaffiliated trading
companies in Japan. Where appropriate, we made deductions from the
starting price (gross unit price) for foreign inland freight.
For all U.S. sales, Masuda reported the sale of subject merchandise
to an unaffiliated trading company in Japan. Section 772(a) of the Act
defines the export price as the price at which the subject merchandise
is first sold (or agreed to be sold) by the producer to an unaffiliated
purchaser for exportation to the United States. Where the respondent
producer of the merchandise under investigation knew at the time of the
sale to the trading company that the merchandise was destined for the
United States, the export price would be the price between the
respondent and the unaffiliated trading company. Masuda has stated that
it knew or had reason to know at the time of sale that the ultimate
destination of the merchandise was the United States because the
manufacture and packing of sodium azide is to the exact specifications
of the ultimate U.S. market end-users. Therefore, we determined that
Masuda's U.S. export price is the price to the unaffiliated trading
company.
We recalculated Masuda's credit expenses to account for missing
data in the reported interest rate calculation. As facts available, we
applied the single highest reported monthly interest rate to those
months in the POI for which no rate was reported because the
information on the record indicated that the highest rate was the most
appropriate estimate of the missing data. We then recalculated a simple
average interest rate for the entire year. Because the U.S. sales were
denominated in Yen, we calculated interest expenses by applying the
average yen interest rate reported by Masuda.
The Department explained its policy in selecting the interest rate
applicable in calculating imputed credit expenses in the Final
Determination of Sales at LTFV: Oil Country Tubular Goods from Austria,
(60 FR 33551, 33555 June 28, 1995) (OCTG from Austria):
A company selling in a given currency (such as sales denominated
in dollars) is effectively lending to its purchasers in the currency
in which its receivables are denominated (in this case, in dollars)
for the period from shipment of its goods until the date it receives
payment from its purchaser. Thus, when sales are made in, and future
payments are expected in, a given currency, the measure of the
company's extension of credit should be based on an interest rate
tied to the currency in which its receivables are denominated. Only
then does establishing a measure of imputed credit recognize both
the time value of money and the effect of currency fluctuations on
repatriating revenue.
Since Masuda receives payment from Japanese trading companies in
Yen, its receivables are denominated in Yen, and therefore the
applicable interest rate should be a Yen rate. We also added duty
drawback to EP in accordance with section 772(c)(B) of the Act.
Normal Value
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV,
we compared Masuda'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. Since Masuda's
aggregate volume of home market sales of the foreign like product was
greater than five percent of its aggregate volume of U.S. sales for the
subject merchandise, we determined that the home market was viable for
Masuda. Therefore, we have based NV on home market sales.
Masuda requested that the Department exclude certain sales in the
home market during the POI, claiming that these sales were made outside
the ordinary course of trade. According to Masuda, the sales in
question were made in smaller quantities than other home market sales,
at substantially higher than average prices, and for testing purposes.
For this preliminary determination, we have rejected Masuda's request
because, generally, it is the Department's practice to include in its
analysis sales for testing purposes. See Color Picture Tubes From
Korea: Final Results of Administrative Review, (56 FR 19084 April 25,
1991); Kerr-
McGee Chemical Corp v. U.S., 739 F.S. 613 (CIT 1990). Moreover, we
found that other home market sales in Masuda's database had unit prices
higher than (and quantities comparable to) those of the sales which
Masuda has sought to exclude from the margin calculations.
We calculated NV based on prices to unaffiliated customers. Where
appropriate we made deductions from the starting price (gross price)
for foreign inland freight, in accordance with section 773(a)(6)(B)(ii)
of the Act. In addition, we adjusted for differences in circumstances
of sale for imputed credit expenses. We recalculated Masuda's credit
expenses to account for missing data in the reported interest rate
calculation. As facts available, we applied the highest reported
monthly interest rate to those months in the POI for which no rate was
reported and then re-calculated a simple average interest rate for the
entire year. (See the Export Price section for further detail on the
facts available related to the interest rate).
Currency Conversion
Section 773A(a) of the Act directs the Department to convert
foreign currencies based on the dollar exchange rate in effect on the
date of sale of the subject merchandise, except if it is established
that a currency transaction on forward markets is directly linked to an
export sale. When a company demonstrates that a sale on forward markets
is directly linked to a particular export sale in order to minimize its
exposure to exchange rate losses, the Department will use the rate of
exchange in the forward currency sale agreement.
Section 773A(a) also directs the Department to use a daily exchange
rate
[[Page 42589]]
in order to convert foreign currencies into U.S. dollars, unless the
daily rate involves a ``fluctuation.'' It is the Department's practice
to find that a fluctuation exists when the daily exchange rate differs
from the benchmark rate by 2.25 percent. The benchmark is defined as
the rolling average of rates for the past 40 business days. When we
determined a fluctuation existed, we substituted the benchmark for the
daily rate, in accordance with established practice. Further, section
773A(b) directs the Department to allow a 60-day adjustment period when
a currency has undergone a sustained movement. A sustained movement has
occurred when the weekly average of actual daily rates exceeds the
weekly average of benchmark rates by more than five percent for eight
consecutive weeks. (For an explanation of this method, see, Policy
Bulletin 96-1: Currency Conversions, 61 FR 9434, March 8, 1996.). Such
an adjustment period is required only when a foreign currency is
appreciating against the U.S. dollar.
Verification
As provided in section 782(i) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d) of the Act, we are directing the
Customs Service to suspend liquidation of all entries of sodium azide
from Japan, that are entered, or withdrawn from warehouse for
consumption, on or after the date of publication of this notice in the
Federal Register. We are also instructing the Customs Service to
require a cash deposit or the posting of a bond equal to the weighted-
average amount by which the normal value exceeds the export price, as
indicated in the chart below. These suspension of liquidation
instructions will remain in effect until further notice.
------------------------------------------------------------------------
Weighted-
average
Exporter/manufacturer margin
percentage
------------------------------------------------------------------------
Masuda..................................................... 29.50
NCI........................................................ 65.80
TKK........................................................ 65.80
All Others................................................. 29.50
------------------------------------------------------------------------
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 before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
Case briefs or other written comments in at least ten copies must
be submitted to the Assistant Secretary for Import Administration no
later than November 20, 1996, and rebuttal briefs, no later than
November 27, 1996. A list of authorities used and an executive summary
of issues should accompany any briefs submitted to the Department. Such
summary should be limited to five pages total, including footnotes. In
accordance with section 774 of the Act, we will hold a public hearing,
if requested, to afford interested parties an opportunity to comment on
arguments raised in case or rebuttal briefs. Tentatively, the hearing
will be held on November 29, 1996, the time and place to be determined,
at the U.S. Department of Commerce, 14th Street and Constitution
Avenue, N.W., Washington, D.C. 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, or to participate
if one is requested, 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. Requests
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. Oral presentations will be limited to issues raised in the
briefs. If this investigation proceeds normally, we will make our final
determination by 135 days after the publication of this notice in the
Federal Register.
This determination is published pursuant to section 733(d) of the
Act.
Dated: August 9, 1996.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 96-20891 Filed 8-15-96; 8:45 am]
BILLING CODE 3510-DS-P
