[Federal Register Volume 64, Number 151 (Friday, August 6, 1999)]
[Notices]
[Pages 42908-42911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20345]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-412-803]
Industrial Nitrocellulose From the United Kingdom; 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.
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summary: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on industrial
nitrocellulose (INC) from the United Kingdom in response to a request
by the petitioner, Hercules Incorporated. This review covers one
manufacturer/exporter of the subject merchandise to the United States
during the period of July 1, 1997 through June 30, 1998. Based on our
analysis, the Department has preliminarily determined that a dumping
margin exists for the manufacturer/exporter during the period of review
(POR). If these preliminary results are adopted in our final results of
administrative review, we will instruct the United States Customs
Service (Customs) to assess antidumping duties as appropriate.
Interested parties are invited to comment on these preliminary results.
Parties who submit comments in this proceeding are requested to submit
with each comment (1) a statement of the issue, and (2) a brief summary
of the comment.
Effective date: August 6, 1999.
[[Page 42909]]
for further information contact: Thomas F. Futtner or Ron Trentham, AD/
CVD Enforcement, Group II, Office 4, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
and Constitution Avenue, NW., Washington, DC 20230; telephone: (202)
482-3814 and (202) 482-6320, respectively.
Applicable Statute and Regulations
Unless otherwise stated, all citations to the Tariff Act of 1930,
as amended (``the Act''), are references to the provisions as of
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (``URAA''). In addition, unless
otherwise indicated, all citations to the Department's regulations
refer to the regulations codified in 19 CFR Part 351 (April 1998).
supplementary information:
Background
On July 10, 1990, the Department published in the Federal Register
(55 FR 28270) the antidumping duty order on INC from the United
Kingdom. On July 1, 1998, the Department published a notice of
``Opportunity to Request an Administrative Review'' of this antidumping
duty order for the period of July 1, 1997 through June 30, 1998 (63 FR
35909).
In accordance with 19 CFR 351.221, the petitioner requested that
the Department conduct an administrative review of sales of subject
merchandise made by respondent, Imperial Chemical Industries PLC (ICI).
We published a notice of initiation of this antidumping duty
administrative review on August 27, 1998. See initiation of Antidumping
and Countervailing Duty Administrative Reviews and Requests for
Revocation in Part, 63 FR 45796, August 27, 1998.
Under Section 751(a) of the Act, the Department may extend the
deadline for completion of an administrative review if it determines
that it is not practicable to complete the review within the
established time limit. On April 6, 1999, the Department published in
the Federal Register a notice extending the time for the preliminary
results from April 2, 1999, until July 31, 1999. See Industrial
Nitrocellulose From the United Kingdom: Notice of Extension of
Preliminary Results of Antidumping Duty Administrative Review, 64 FR
16707, April 6, 1999.
Scope of the Review
Imports covered by this review are shipments of INC from the United
Kingdom. INC is a dry, white, amorphous, synthetic chemical with a
nitrogen content between 10.8 and 12.2 percent, which 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 has a nitrogen content of greater than 12.2
percent. INC is currently classified under Harmonized Tariff System
(HTS) item number 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.
Fair Value Comparisons
To determine whether sales of INC from the United Kingdom to the
United States were made at less than fair value (LTFV), we compared the
constructed export price (CEP) to the normal value (NV), as described
in the ``Constructed Export Price'' and ``Normal Value'' sections of
this notice, below. When making produce comparisons in accordance with
section 771(16) of the Act, we considered all products as covered by
the ``Scope of Review'' section of this notice, above, that were sold
by the respondent in the home market in the ordinary course of trade
during the POR for purposes of determining appropriate product
comparisons to U.S. sales. Where there were no sales of the identical
or the most similar merchandise made in the home market that were
suitable for comparison, we compared U.S. sales to sales of the next
most similar foreign like product, based on the characteristics listed
in Section B and C of our antidumping questionnaire.
Constructed Export Price
ICI initially reported U.S. sales as export price (EP) sales.
However, in a previous segment of this proceeding, the Department
determined that ICI's U.S. sales were CEP transactions. See Industrial
Nitrocellulose From the United Kingdom; Notice of Final Results of
Antidumping Duty Administrative Review, 64 FR 6609, February 10, 1999.
In response to the Department's supplemental questionnaire of February
17, 1999, ICI reported all of its U.S. sales as CEP transactions.
In calculating price to the United States price for ICI, the
Department used CEP, as defined in section 772(b) of the Act because
all sales to the first unaffiliated purchaser in the United States took
place after importation. We calculated CEP based on packed, factory
prices to unaffiliated customers in the United States. We made
deductions from the starting price, where appropriate, for rebates,
international freight, marine insurance, U.S. brokerage and handling,
U.S. inland freight, U.S. duties, and direct and indirect selling
expenses to the extent that they were associated with economic activity
in the United States. These included credit expenses and commissions as
applicable, in accordance with sections 772(c)(2) and 772(d)(1) of the
Act. Finally, we made an adjustment for CEP profit in accordance with
sections 772(d)(3) and 772(f) of the Act.
For INC that was imported by a U.S. affiliate of ICI and then
further processed into lacquer, sealer, and primer products before
being sold to unaffiliated parties in the United States, we determined
that the special rule for merchandise with value added after
importation under section 772(e) of the Act applied. Where appropriate,
in accordance with Section 772(d)(2) of the Act, the Department also
deducts from CEP the cost of any further manufacture or assembly in the
United States, except where the special rule provided in Section 772(e)
of the Act is applied. Section 772(e) of the Act provides that, where
the subject merchandise is imported by an affiliated person and the
value added in the United States by the affiliated person is likely to
exceed substantially the value of the subject merchandise, we shall
determine the CEP for such merchandise using the price of identical or
other subject merchandise sold in the United States if there is a
sufficient quantity of sales to provide a reasonable basis for
comparison. If there is not a sufficient quantity of such sales or if
we determine that using the price of identical or other subject
merchandise is not appropriate, we may use any other reasonable basis
to determine the CEP.
To determine whether the value added is likely to exceed
substantially the value of the subject merchandise, we estimated the
value added, pursuant to Sec. 351.401(c)(2) of the Department's
regulations, based on the difference between the averages of the prices
charged to the first unaffiliated purchaser for the merchandise as sold
in the United States and the averages of the prices paid for the
subject merchandise by the affiliated person. Based on this analysis,
we determined that the estimated value added in the United States by
ICI's U.S. affiliate accounted for at least 65 percent of the price
charged to the first unaffiliated customer for the merchandise as sold
in the United States. Therefore, in accordance with Sec. 351.402(c)(2),
we determined that the value added is likely to exceed substantially
the value of the subject merchandise. We also
[[Page 42910]]
determined that there was a sufficient quantity of sales of identical
merchandise available in the U.S. market to provide a reasonable basis
for comparison and that the use of such sales is appropriate in
accordance with 772(e). Accordingly, for purposes of determining
dumping margins for these sales, we have used the weighted-average
dumping margins calculated on sales of identical merchandise sold to
unaffiliated persons in the United States. See Sec. 351.402(c)(3).
Discussion of the information which the Department used in making these
determinations is not possible due to its proprietary nature. For a
complete discussion, see Memorandum on Whether to Determine the
Constructed Export Price for Certain Further-Manufactured Sales Sold by
Imperial Chemical Industries PLC (ICI) in the United States During the
Period of Review Under Section 772(e) of the Act dated July 31, 1999.
Level of Trade
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 (LOT) as the EP or CEP transactions. The NV LOT
is that of the starting-price sales in the comparison market or, when
NV is based on constructed value (CV), that of the sales from which we
derive selling, general and administrative (SG&A) expenses and profit.
For EP, the U.S. LOT is also the level of the starting-price sale,
which is usually from the exporter to the importer. For CEP, it is the
level of the constructed sale from the exporter to the importer. See
Notice of Final Determination of Sales at Less Than Fair Value: Certain
Cut-to-Length Steel Plate from South Africa, 62 FR 61731 (November 19,
1997) (Carbon Steel Plate).
To evaluate the LOT, we examined information regarding the
distribution systems in both the U.S. and U.K. markets, including the
selling functions, classes of customer, and selling expenses for the
respondent. Customer categories such as distributors, retailers, or
end-users are commonly used by petitioners and respondents to describe
different LOT's but, without substantiation, they are insufficient to
establish that a claimed LOT is valid. An analysis of the chain of
distribution and the selling functions substantiates or invalidates the
claimed LOTs.
Our analysis of the marketing process in both the home market and
the United States begins with goods being sold by the producer and
extends to the sale of the final user. The chain of distribution
between the producer and the final user may have many or few links, and
each respondent's sales occur somewhere along this chain. We review and
compare the distribution systems in the home market and the United
States, including selling functions, class of customer, and the extent
and level of selling expenses for each claimed LOT.
Unless we find that there are different selling functions for sales
to the U.S. and home market sales, we will not determine that there are
different LOTs. Different LOTs necessarily involve differences in
selling functions, but differences in selling functions, even
substantial ones, are not sufficient alone to establish a difference in
the LOTs. Differences in LOTs are characterized by purchasers at
different stages in the chain of distribution and sellers performing
qualitatively different functions in selling to them. If the
comparison-market sale is at a different LOT, 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 LOT of the export transaction, we make a
LOT 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).
ICI did not claim a LOT adjustment. Nevertheless, we evaluated
whether a LOT adjustment was necessary by examining the ICI's
distribution system, including selling functions, classes of customers,
and selling expenses. In reviewing ICI's home market distribution
channels, we found that the POR sales of the merchandise under review
in the comparison market were made at only one LOT. With respect to
U.S. sales, after making deductions to the CEP sales pursuant to
section 772(d) of the Act, we found the selling activities performed by
ICI for the CEP sales to its affiliate were limited to order processing
and arranging transportation. Therefore, we found that the selling
functions performed at the CEP LOT were sufficiently different from the
selling functions performed at the NV LOT (i.e., sales solicitation,
price negotiation, customer visits, advertising, technical support,
invoicing, and billing adjustment) to consider these to be different
LOTs. We, therefore, evaluated whether the difference in LOT affected
price comparability. The effect on price comparability must be
demonstrated by a pattern of consistent price differences between sales
at the two relevant LOTs in the comparison market. Because there was
only one home market LOT, we were unable to determine whether there was
a pattern of consistent price differences based on home market sales of
subject merchandise.
The Statement of Administrative Action (SAA) provides that, ``if
information on the same products and company is not available, the LOT
adjustment may also be based on sales of other products by the same
company. In the absence of any sales, including those in recent time
periods, to different LOTs by the exporter or producer under
investigation, the Department may further consider the selling expenses
of other producers in the foreign market for the same product or other
products.'' See SAA at 830. In accordance with the SAA, we have
considered alternative sources of information to make the necessary LOT
adjustment, but we did not have information on the record that would
allow us to examine or apply these alternative methods for calculating
a LOT adjustment. Therefore, we do not have an appropriate basis to
determine a LOT adjustment.
Because we have found that all of the comparison sales in the home
market were at a more advanced LOT than the sales to the United State,
we were unable to qualify a LOT adjustment based on a pattern of
consistent price differences, in accordance with section 773(a)(7)(B)
of the Act. Therefore, we have preliminarily determined to grant a CEP
offset to ICI. See Memorandum Regarding industrial Nitrocellulose from
the United Kingdom-Level of Trade Analysis-Imperial Chemical
Industries, PLC, August 2, 1999.
Normal Value
1. Home-Market Viability
In order to determine whether there was a sufficient volume of
sales of INC in the home market to serve as a viable basis for
calculating normal value, we compared ICI'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)(B) of the Act.
Because the aggregate volume of home market sales of the foreign like
product by ICI was greater than five percent of the respective
aggregate volume of U.S. sales of the subject merchandise, we
determined that the home market provides a viable basis for calculating
NV for ICI's home market sales.
2. Arm's-Length Transactions
Sales to an affiliated customer in the home market which were
determined
[[Page 42911]]
not to be at arm's length were excluded from our analysis. To test
whether these sales were made at arm's length, we compared the prices
of sales of comparison products to affiliated and unaffiliated
customers, net of all movement charges, direct selling expenses,
discounts, and packing. Pursuant to section 351.403 of the Department's
regulations, where prices to the affiliated party were on average less
than 99.5 percent of the price to unaffiliated parties, we determined
that the sales made to the affiliated party were not at arm's length.
Therefore, we disregarded all sales to that home market customer. See
19 CFR 351.403(c) and Preamble to the Department's regulations, 62 FR
at 27355.
Price-to-Price Comparisons
In accordance with section 773(a)(1)(B)(i) of the Act, we based NV
on the price at which the foreign like product was first sold for
consumption in the exporting country in the usual commercial quantities
and in the ordinary course of trade and, to the extent practicable, at
the same LOT as the CEP sale. In accordance with section 773(a)(6) of
the Act, where applicable, we made adjustments to home market prices
for discounts and movement expenses (inland freight). Under section
773(a)(6)(C)(iii) of the Act, the Department adjusts for differences in
circumstances of sales (COS) between the home market and CEP
transactions in the United States. We reduced home market prices by an
amount for home market credit pursuant to section 351.410(c) of the
Department's regulations. We also made adjustments for indirect selling
expenses incurred in the comparison market or U.S. sales where
commissions were granted on sales in one market but not in the other
(the commission offset), pursuant to section 351.410(e). In addition,
based on our determination as the ICI's LOT (see ``Level of Trade''
section of this notice), we made a CEP offset adjustment pursuant to
section 773(a)(7)(B) of the Act. See Carbon Steel Plate, 62 FR at
61732. To adjust for differences in packing between the two markets, we
deducted HM packing costs and added U.S. packing costs under section
773(a)(6) of the Act. In addition, we made adjustments, where
appropriate, for differences in costs attributable to physical
differences of the merchandise (DIFMER) pursuant to section
773(a)(6)(C)(ii) of the Act.
Preliminary Results of Review
As a result of this review, we preliminarily determine that the
following weighted-average dumping margin exists for the period
covering July 1, 1997 through June 30, 1998:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Imperioal Chemical Industries PLC.......................... 19.87
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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 5 days of the date of publication of
this notice. Any interested party participating in the proceeding may
request a hearing within 30 days of the date of publication of this
notice. A hearing, if requested, will be held two days after the date
the rebuttal briefs are filed or the first business day thereafter.
Parties who submit arguments in this proceeding are requested to submit
with each argument: (1) a statement of the issue and (2) a brief
summary of the argument. Interested parties may submit case briefs
within 30 days of the date of publication of this notice. Rebuttal
briefs, which are limited to issues raised in the case briefs, may be
filed not later than seven days after the case briefs are filed.
The Department will publish a notice of the final results of this
administrative review, which will include the results of its analysis
of the issues raised in any written comments or at the hearing, within
120 days from the publication of these preliminary results.
Upon issuance of the final results of this review, the Department
shall determine, and Customs shall assess, antidumping duties on all
appropriate entries. The Department will issue appraisement
instructions directly to Customs. We have calculated importer-specific
ad valorem duty assessment rates for the subject merchandise based on
the ratio of the total amount of importer-specific antidumping duties
calculated for the examined sales to the total entered value of the
sales used to calculate those duties. These rates will be assessed
uniformly on all entries made by particular importers during the POR.
Furthermore, the following cash deposit requirements will be
effective upon completion of the final results of this administrative
review for all shipments of INC from the United Kingdom 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 cash deposit rate for the
reviewed company will be the rate established in the final results of
this administrative review; (2) for exporters not covered in this
review, but covered in the original LTFV investigation or a previous
review, the cash deposit rate will continue to be the company-specific
rate published in the most recent period; (3) if the exporter is not a
firm covered in this review, a previous review, or the original LTFV
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 LTFV
investigation, the cash deposit rate will be 11.13 percent, the ``all-
others'' rate established in the LTFV investigation. See 55 FR 21058,
May 22, 1990. These deposit requirements, when imposed, shall remain in
effect until publication of the final results of the next
administrative review.
This notice serves as a preliminary reminder to importers of their
responsibility under 19 CFR 351.402(f) of the Department's regulations
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 this notice are in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: August 2, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-20345 Filed 8-5-99; 8:45 am]
BILLING CODE 3510-DS-M
