[Federal Register Volume 61, Number 35 (Wednesday, February 21, 1996)]
[Notices]
[Pages 6624-6627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-3758]



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DEPARTMENT OF COMMERCE
[A-412-803]


Industrial Nitrocellulose From the United Kingdom

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to a request by the respondent, the Department of 
Commerce (the Department) is 

[[Page 6625]]
conducting an administrative review of the antidumping duty order on 
industrial nitrocellulose (INC) from the United Kingdom. The review 
covers one manufacturer/exporter of the subject merchandise to the 
United States during the period July 1, 1993 through June 30, 1994. 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 (FMV). Interested parties are 
invited to comment on these preliminary results.

EFFECTIVE DATE: February 21, 1996.

FOR FURTHER INFORMATION CONTACT:
Rebecca Trainor or Maureen Flannery, Office of Antidumping Compliance, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, D.C. 20230; telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION: 

Background

    On July 1, 1994, the Department published in the Federal Register 
(59 FR 33951) a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on INC from the United Kingdom 
(55 FR 28270). On July 29, 1994, the respondent, Imperial Chemical 
Industries PLC (ICI), requested an administrative review in accordance 
with section 751(a) of the Tariff Act of 1930, as amended (the Act), 
and section 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, 1994 (59 FR 43537), covering 
the period July 1, 1993 through June 30, 1994.

Applicable Statutes and Regulations

    The Department is conducting this review in accordance with section 
751 of the Act. Unless otherwise stated, all citations to the statutes 
and to the Department's regulations are references to the provisions as 
they existed on December 31, 1994.

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. HTS subheadings are provided for convenience and U.S. 
Customs Service purposes. The Department's written description remains 
dispositive. The scope of the antidumping order does not include 
explosive grade nitrocellulose, which as 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, 1993 through 
June 30, 1994.

United States Price

    In calculating United States price (USP), we used purchase price or 
exporter's sales price (ESP), both as defined in section 772 of the 
Act. The Department used purchase price when, prior to the date of 
importation, U.S. customers who were unrelated to the manufacturer 
purchased the merchandise through a U.S. sales agent that was related 
to the manufacturer. We determined that purchase price 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 versus U.S., 
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, U.S. Customs duties and fees, and inland freight in 
accordance with section 772(d)(2) of the Act.
    In light of the Federal Circuit's decision in Federal Mogul v. 
United States, CAFC No. 94-1097, the Department has changed its 
treatment of home market consumption taxes. Where merchandise exported 
to the United States is exempt from the consumption tax, the Department 
will add to the U.S. price the absolute amount of such taxes charged on 
the comparison sales in the home market. This is the same methodology 
that the Department adopted following the decision of the Federal 
Circuit in Zenith v. United States, 988 F. 2d 1573, 1582 (1993), and 
which was suggested by that court in footnote 4 of its decision. The 
Court of International Trade (CIT) overturned this methodology in 
Federal Mogul v. United States, 834 F. Supp. 1391 (1993), and the 
Department acquiesced in the CIT's decision. The Department then 
followed the CIT's preferred methodology, which was to calculate the 
tax to be added to U.S. price by multiplying the adjusted U.S. price by 
the foreign market tax rate; the Department made adjustments to this 
amount so that the tax adjustment would not alter a ``zero'' pre-tax 
dumping assessment.
    The foreign exporters in the Federal Mogul case, however, appealed 
that decision to the Federal Circuit, which reversed the CIT and held 
that the statute did not preclude the Department from using the 
``Zenith footnote 4'' methodology to calculate tax-neutral dumping 
assessments (i.e., assessments that are unaffected by the existence or 
amount of home market consumption taxes). Moreover, the Federal Circuit 
recognized that certain international agreements of the United States, 
in particular the General Agreement on Tariffs and Trade (GATT) and the 
Tokyo Round Antidumping Code, required the calculation of tax-neutral 
dumping assessments. The Federal Circuit remanded the case to the CIT 
with instructions to direct the Department to determine which tax 
methodology it will employ.
    The Department has determined that the ``Zenith footnote 4'' 
methodology should be used. First, as the Department has explained in 
numerous administrative determinations and court filings over the past 
decade, and as the Federal Circuit has now recognized, Article VI of 
the GATT and Article 2 of the Tokyo Round Antidumping Code required 
that dumping assessments be tax-neutral. This requirement continues 
under the new Agreement on Implementation of Article VI of the General 
Agreement on Tariffs and Trade. Second, the Uruguay Round Agreements 
Act (URAA) explicitly amended the antidumping law to remove consumption 
taxes from the home market price and to eliminate the addition of taxes 
to U.S. price, so that no consumption tax is included in the 

[[Page 6626]]
price in either market. The Statement of Administrative Action (p. 159) 
explicitly states that this change was intended to result in tax 
neutrality.
    While the ``Zenith footnote 4'' methodology is slightly different 
from the URAA methodology, in that section 772(d)(1)(C) of the pre-URAA 
law required that the tax be added to U.S. price rather than subtracted 
from home market price, it does result in tax-neutral duty assessments. 
In sum, the Department has elected to treat consumption taxes in a 
manner consistent with its longstanding policy of tax-neutrality and 
with the GATT.
    For certain ESP sales, ICI failed to provide prices to the first 
unrelated purchaser, and to provide the data requested in the 
Department's further manufacturing questionnaire. As the best 
information available, we applied to these sales the rate of 11.13 
percent, which is the highest rate from any review or the less-than-
fair-value (LTFV) investigation.

Foreign Market Value

    Based on a comparison of the volume of home market and third 
country sales, we determined that the home market was viable. 
Therefore, we calculated FMV based on home market sales in accordance 
with section 773(a)(1)(A) of the Act.
    On December 16, 1994, the petitioner alleged that many of ICI's 
home market sales were made below the cost of production (COP). We 
conducted a sales-below-cost investigation because we determined that 
the petitioner's allegation presented reasonable grounds to believe or 
suspect that ICI made sales of subject merchandise in the home market 
at prices less than the COP during the review period. In accordance 
with 19 CFR 353.51(c), we calculated COP as the sum of reported 
materials, labor, factory overhead, and general expenses, and compared 
COP to home market prices, net of price adjustments.
    As a result of our COP investigation, we found no below-cost-sales. 
We therefore did not disregard any home market sales as being below 
cost.
    We disregarded samples, given to home market customers free of 
charge, as being outside the ordinary course of trade. See Notice of 
Final Results of Antidumping Duty Administrative Reviews of Granular 
Polytrafluorethylene Resin from Japan 58 FR 50343 (Sept. 27, 1993). We 
also excluded 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 (i.e., if the sales were not made 
at ``arm's length''). We performed an analysis of related party prices 
and found that they were not at arm's length. (See Memorandum to the 
File, Nov. 13, 1995.)
    As in the LTFV investigation and the first administrative review, 
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. 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 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 and inland freight, and added U.S. packing 
costs in accordance with section 773(a)(1) of the Act. We also adjusted 
FMV for certain billing adjustments.
    When a commission was paid on a purchase price sale but not on the 
home market sale, we added to FMV the amount of the U.S. commission and 
deducted the lesser of either total home market selling expenses or the 
amount of the U.S. commission, in accordance with 19 CFR 353.56(b)(1).
    In comparing home market sales to purchase price sales, we made a 
circumstance-of-sale adjustment to FMV 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).

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

    We preliminarily determined that the following margin exists for 
the period July 1, 1993 through June 30, 1994:

------------------------------------------------------------------------
                                                                 Margin 
                    Manufacturer/Exporter                      (percent)
------------------------------------------------------------------------
Imperial Chemical Industries PLC.............................      1.48 
------------------------------------------------------------------------

    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 of this notice. 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 following deposit requirements shall be effective for all 
shipments of the subject merchandise that are 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 rates for the reviewed 
company shall be those rates established in the final results of this 
review; (2) for previously reviewed or investigated companies not 
listed above, the cash deposit rate shall 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, a prior review, or the original 
LTFV investigation, but the manufacturer is, the cash deposit rate 
shall be the rate established for the most recent period for the 
manufacture of the merchandise; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous review, the cash 
deposit rate shall be 11.13 percent, the all others rate established in 
the LTFV investigation.
    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 the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.


[[Page 6627]]

    Dated: February 12, 1996.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 96-3758 Filed 2-20-96; 8:45 am]
BILLING CODE 3510-DS-M