[Federal Register Volume 59, Number 91 (Thursday, May 12, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-11587]
[[Page Unknown]]
[Federal Register: May 12, 1994]
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DEPARTMENT OF COMMERCE
[A-412-803]
Industrial Nitrocellulose From the United Kingdom; Preliminary
Results of Antidumping Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of Antidumping Duty
Administrative Review: Industrial Nitrocellulose from the United
Kingdom.
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SUMMARY: In response to a request by one manufacturer/exporter, the
Department of Commerce is conducting an administrative review of the
antidumping duty order on industrial nitrocellulose from the United
Kingdom. The review covers one manufacturer/exporter of the subject
merchandise to the United States during the period July 1, 1992 through
June 30, 1993. The review indicates the existence of dumping margins
during the period.
As a result of this review, we have preliminarily determined to
assess antidumping duties equal to the differences between United
States price and foreign market value. Interested parties are invited
to comment on these preliminary results.
EFFECTIVE DATE: May 12, 1994.
FOR FURTHER INFORMATION CONTACT: Rebecca Trainor, Breck Richardson or
Maureen Flannery, Office of Antidumping Compliance, Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, NW., Washington, DC
20230; telephone: (202) 482-4733.
SUPPLEMENTARY INFORMATION:
Background
On July 7, 1993, the Department of Commerce (the Department)
published in the Federal Register (58 FR 36391) a notice of
``Opportunity to Request an Administrative Review'' of the antidumping
duty order on industrial nitrocellulose (INC) from the United Kingdom.
On July 29, 1993, the respondent, Imperial Chemical Industries PLC
(ICI), requested to be reviewed in accordance with section 751(a) of
the Tariff Act of 1930, as amended (the Tariff Act), and Sec. 353.22(a)
of the Department's regulations (19 CFR 353.22(a)). We published the
notice of initiation of the antidumping duty administrative review on
August 24, 1993 (58 FR 44653), covering the period July 1, 1992 through
June 30, 1993. We have now conducted the review in accordance with
section 751 of the Tariff Act.
Scope of the Review
This review covers 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. It is used as a film-former in coatings,
lacquers, furniture finishes, and printing inks. INC is currently
classifiable under Harmonized Tariff Schedule (HTS) item number
3912.20.00. The HTS subheadings are provided for convenience and U.S.
Customs Service purposes. The written description remains dispositive.
The scope of the antidumping order does not include explosive grade
nitrocellulose, which has a nitrogen content of greater than 12.2
percent.
This review covers sales by ICI of INC from the United Kingdom
entered into the United States during the period July 1, 1992 through
June 30, 1993.
Verification
We verified the questionnaire responses of ICI's affiliate, Nobel's
Explosives Company Ltd. (Nobel's) from February 7, 1994 to February 11,
1994, at Nobel's manufacturing facility in Stevenston, Scotland. We
verified the responses of ICI's U.S. affiliate, ICI Americas Inc.
(ICIA) from February 21, 1994 to February 25, 1994 at ICIA's offices in
Valley Forge, Pennsylvania.
United States Price
The Department used purchase price (PP), as defined in section 772
of the Tariff Act, in calculating U.S. price (USP) when the merchandise
was purchased, or agreed to be purchased, prior to the date of
importation, from the producer of the merchandise through a related
sales agent in the United States by unrelated U.S. purchasers. We
determined that PP was the most appropriate determinant of USP for
these sales based on the following factors:
(1) The merchandise was shipped directly from the manufacturer to
the unrelated buyer without being introduced into the inventory of the
respondent's related U.S. selling agent;
(2) This was the customary commercial channel for sales of this
merchandise between the parties involved; and
(3) The respondent's related sales agent acted mainly as a
processor of sales-related documentation and communication links with
the unrelated U.S. customer.
Where all the above elements are met, we regard the routine selling
functions of the exporter as merely having been relocated
geographically from the country of exportation to the United States,
where the sales agent performs them. Whether these functions take place
in the United States or abroad does not change the substance of the
functions themselves. See Outokumpu Copper Rolled Products v. United
States, 829 F.Supp. 1371, 1378 (CIT 1993).
We calculated purchase price based on packed delivered prices. We
made deductions for ocean freight, marine insurance, brokerage and
handling, and U.S. Customs duties and fees, in accordance with section
772(d)(2) of the Tariff Act. We adjusted ICI's reported U.S. interest
rate to correct a minor error in the interest calculation found at
verification.
We used the best information available (BIA) for marine insurance.
At verification we discovered that ICI had failed to report that it
obtains marine insurance from a related company. Further, company
officials did not demonstrate that marine insurance rates were at arm's
length. In the absence of a second company involved in either this
review or the less-than-fair-value (LTFV) investigation from which, as
BIA, marine insurance rates might be selected, we calculated a
percentage of unit price based on publicly-available data as reported
in the administrative review of INC from Brazil. See Industrial
Nitrocellulose from Brazil: Preliminary Results of Antidumping Duty
Administrative Review, (58 FR 27537) May 10, 1993.
We made an addition to USP for value-added taxes (VAT) in
accordance with section 772(d)(1)(C) of the Tariff Act. In making our
adjustment for VAT, we followed the instructions of the United States
Court of International Trade (CIT) in Federal Mogul Corp. and the
Torrington Co. v. United States, 834 F.Supp. 1391 (CIT 1993). The
Department added to USP the result of multiplying the foreign market
tax rate by the price of the United States merchandise at the same
point in the chain of commerce that the foreign market tax was applied
to foreign market sales.
The Department also adjusted the tax amount calculated for USP and
the amount of tax included in foreign market value (FMV). We deducted
the portions of the foreign market tax and the USP tax that are the
result of expenses that are included in the foreign market price used
to calculate foreign market tax and in the USP used to calculate the
USP tax. Because these expenses are later deducted to calculate FMV and
USP, these adjustments are necessary to prevent our new methodology for
calculating the USP tax from creating dumping margins where no margins
would exist if no taxes were levied upon foreign market sales.
We disagree with ICI's claim that certain sales, that were sold to
a related party and further processed in the United States before sale
to the first unrelated party, were PP sales.
We used BIA for these exporter's sales price (ESP) sales, because
ICI failed to answer the Department's further manufacturing
questionnaire for these sales and to provide prices to the first
unrelated purchaser. ICI stated that it was either impossible or
extremely difficult to answer the questionnaire, and, instead, provided
a small amount of financial and manufacturing information for the
related company responsible for the ESP sales.
At verification, we explored with ICI the reasons it provided for
not responding to the further manufacturing questionnaire. We were told
that providing the specific further processing information requested by
the Department would take an excessive amount of time. We reviewed
documentation that demonstrated that the production of the further
processed product involves a series of steps. At each intermediary
step, chemicals and compounds are combined to produce new compounds
that will be mixed with other compounds in the next step. As a result,
to determine the amount of INC used in the final product, and to
determine which products use INC, would require a complicated trace
back through multiple intermediary steps. (See Report on Verification
of Imperial Chemical Industries PLC and ICI Americas Inc., March 24,
1994, 26-27.) However, our verification established that ICI had the
documentation needed to fulfill the Department's request for further
processing information. ICI's claim appears to be based solely on the
time and resources that would be required to provide the requested
information. We, therefore, conclude that it would not have been
impossible for ICI to have answered the further manufacturing
questionnaire, and that doing so would have been no less burdensome for
ICI than for respondents in other cases who are asked to answer further
manufacturing questionnaires. (See Final Results of Antidumping Duty
Administrative Reviews and Revocation in Part of an Antidumping Duty
Order; Antifriction Bearings (Other Than Tapered Roller Bearings) and
Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore,
Sweden, Thailand and the United Kingdom, (59 FR 39729) July 26, 1993.)
Since ICI could have, but did not, provide the data, we have used
non-cooperative BIA for these sales. There were no other firms involved
in the LTFV investigation or in this first review. We have therefore
used ICI's rate from the final determination in the LTFV investigation
as BIA for these particular sales.
Foreign Market Value
In accordance with section 773(a)(1)(A) of the Tariff Act, we
calculated FMV based on home market sales. We did not include sales to
related parties in calculating FMV. Under 19 CFR 353.45, the Department
may disregard transactions between related parties if the price does
not fairly reflect the usual price at which sales are made to unrelated
parties. We performed an analysis of related party prices and found
that they were not at arm's length. (See Memorandum to the File, April
15, 1994.)
As in the LTFV investigation, product comparisons were made on the
basis of the following criteria: nitrogen percentage, viscosity rating,
wetting agent type, cellulose source, physical form, and wetting agent
percentage. (See Final Determination of Sales at Less Than Fair Value:
Industrial Nitrocellulose from the United Kingdom, 55 FR 21055 (May 22,
1990). Where there were no sales of identical merchandise in the home
market with which to compare merchandise sold in the United States,
sales of the most similar merchandise were compared on the basis of the
characteristics described above. In those instances, we made
adjustments for differences in the physical characteristics of the
merchandise in accordance with section 773(a)(4)(C) of the Tariff Act.
We calculated FMV based on packed and either delivered or ex-works
prices to unrelated customers in the United Kingdom. We made deductions
for home market packing, inland freight, and rebates, and added U.S.
packing costs in accordance with section 773(a)(1) of the Tariff Act.
When a commission was paid on a PP sale but not on the home market
sale, we added the amount of the commission to the FMV and then
deducted from FMV the lesser of either total home market indirect
selling expenses or the U.S. commission amount, in accordance with 19
CFR 353.56(b)(1).
As a result of verification, we adjusted home market indirect
selling expenses, packing, and credit costs which had been incorrectly
or inappropriately quantified. Although we were able to verify ICI's
home market packing expenses for the period December 1, 1992-June 30,
1993, we were unable to verify ICI's claimed home market packing costs
for the July 1, 1992-November 30, 1992 portion of the period of review
(POR). (See Report on Verification of Imperial Chemical Industries PLC
and ICI Americas Inc., March 24, 1994, 9-12, and Memorandum from Case
Analyst to the File, April 15, 1994.) We used BIA for all home market
packing expenses for sales made between July 1, 1992 and November 30,
1992. Because respondents claimed that drums were reused once during
this five-month period, as BIA we have used the verified packing costs
for the latter part of the POR (adjusted as described below) and
divided that amount by two, to account for the reuse of packing drums
during the first half of the POR.
During the verification of ICI, the Department discovered that the
costs of at least some of the drums purchased in May 1993 were
overstated. A number of purchases of steel drums were made during that
month. At one point during the month, the price of the drums increased.
Rather than determining an average price, ICI selected the higher price
as representative for the entire month of May. From the information
provided at verification, we could not determine how many drums were
purchased at the lower price and how many were purchased at the higher
price.
Therefore, as BIA for all May 1993 home market sales, we have used
the lower price for packing cost.
In comparing home market sales to PP sales, we made a circumstance-
of-sale adjustment for differences in credit terms by deducting home
market credit expenses and adding U.S. credit expenses, in accordance
with 19 CFR 353.56(a)(2). We have used BIA for the home market interest
rate for the purposes of calculating credit and inventory carrying
expenses. ICI does not incur short-term credit costs associated with
INC in either the U.S. or the home market. ICI was unable to
satisfactorily support at verification its reported claim of what its
home market credit costs would have been if short-term debt had existed
during the POR. In the U.S. market, ICI established that, if short-term
debt existed, it would have been financed using a particular United
Kingdom-based interest rate. For the purposes of calculating home
market credit and inventory carrying costs, we have therefore used the
same United Kingdom-based interest rate as used for U.S. credit.
Currency Conversion
We made currency conversions based on the official exchange rates
in effect on the date of the U.S. sales as certified by the Federal
Reserve Bank.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following margin exists for the period July 1, 1992 through June 30,
1993:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
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Imperial Chemical Industries PLC............................ 5.79
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Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 days of publication. Any hearing, if
requested, will be held 44 days after the date of publication of this
notice, or the first workday thereafter. Interested parties may submit
case briefs within 30 days of the date of publication of this notice.
Rebuttal briefs, which must be limited to issues raised in the case
briefs, may be filed not later than 37 days after the date of
publication. See 19 CFR 353.38. The Department will publish a notice of
final results of this administrative review, which will include the
results of its analysis of issues raised in any such comments.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and FMV may vary from the percentages stated
above. The Department will issue appraisement instructions on each
exporter directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication 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, as
provided for by section 751(a)(1) of the Tariff Act: (1) The cash
deposit rates for the reviewed companies will be those established in
the final results of this administrative review; (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 the 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) the cash deposit rate
for all other manufacturers or exporters will be the ``all others''
rate established in the final notice of the LTFV investigation of this
case, in accordance with the CIT's decisions in Floral Trade Council v.
United States, 822 F.Supp. 766 (CIT 1993), and Federal Mogul
Corporation and the Torrington Company v. United States, 839 F.Supp.
864 (CIT 1993). The all others rate is 11.13 percent. 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 353.26 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 subsequent assessment
of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: May 5, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-11587 Filed 5-11-94; 8:45 am]
BILLING CODE 3510-DS-P