[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) 
------------------------------------------------------------------------
Imperial Chemical Industries PLC............................       5.79 
------------------------------------------------------------------------


    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