[Federal Register Volume 62, Number 92 (Tuesday, May 13, 1997)]
[Notices]
[Pages 26283-26286]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12506]


-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration
[A-475-703]


Granular Polytetrafluoroethylene Resin From Italy; 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.

-----------------------------------------------------------------------

SUMMARY: In response to a request by the petitioner, the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on granular polytetrafluoroethylene (PTFE) resin 
from Italy. This review covers one manufacturer/exporter of the subject 
merchandise to the United States for the period August 1, 1995, through 
July 31, 1996.
    We have preliminarily determined that dumping margins exist for the 
respondent. Interested parties are invited to comment on these 
preliminary results. 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.

EFFECTIVE DATE: May 13, 1997.

FOR FURTHER INFORMATION CONTACT: Chip Hayes or Richard Rimlinger, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230; telephone: (202) 482-4733.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    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 Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the current regulations, as amended by the interim regulations 
published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On August 30, 1988, the Department published in the Federal 
Register (53 FR 33163) the antidumping duty order on granular PTFE 
resin from Italy. On August 12, 1996, the Department published a notice 
of ``Opportunity to Request Administrative Review'' of the antidumping 
duty order for the period of August 1, 1995 through July 31, 1996 (61 
FR 41768). We received a timely request for review from the petitioner, 
E. I. DuPont de Nemours & Company. On September 17, 1996, the 
Department initiated a review of Ausimont S.p.A. (61 FR 48882).

Scope of the Review

    The product covered by this review is granular PTFE resins, filled 
or unfilled. This order also covers PTFE wet raw polymer exported from 
Italy to the United States. See Granular Polytetrafluoroethylene Resin 
from Italy; Final Determination of Circumvention of Antidumping Duty 
Order, 58 FR 26100 (April 30, 1993). This order excludes PTFE 
dispersions in water and fine powders. During the period covered by 
this review, such merchandise was classified under item number 
3904.61.00 of the Harmonized Tariff Schedule (HTS). We are providing 
this HTS number for convenience and Customs purposes only. The written 
description of the scope remains dispositive.
    The review covers one Italian manufacturer/exporter of granular 
PTFE resin, Ausimont S.p.A., and the period August 1, 1995 through July 
31, 1996.

Constructed Export Price

    The Department calculated constructed export price (CEP) as defined 
in section 772(b) of the Act because all sales to unrelated parties 
were made after importation of the subject merchandise into the United 
States. We based CEP on the packed, delivered prices to unrelated 
purchasers in the United States (the starting price). We made 
deductions for movement expenses, in accordance with section 
772(c)(2)(A) of the Act, including international freight, marine 
insurance, brokerage and handling, U.S. inland freight, other 
transportation expenses, and U.S. customs duties.
    In accordance with section 772(d)(1) of the Act and the Statement 
of Administrative Action (SAA) accompanying the URAA (at 823-824), we 
also adjusted the starting price by deducting selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses assumed on behalf of the buyer and 
U.S. indirect selling expenses. Finally, we made an adjustment for an 
amount of profit allocated to these expenses, in accordance with 
section 772(d)(3) of the Act and as described in section 772(f).
    For sales of granular PTFE resin finished in the United States from 
PTFE wet raw polymer imported from Italy, we determined that the 
special rule for merchandise with value added after importation under 
section 772(e) of the Act did not apply because the value added in the 
United States by the affiliated person did not exceed substantially the 
value of the subject merchandise. Therefore, for subject merchandise 
further manufactured in the United States, we used the starting price 
of the subject merchandise and deducted the costs of further 
manufacturing to determine the CEP for such merchandise in accordance 
with section 772(d)(2) of the Act. We deducted the costs of further 
manufacturing in the United States and that portion of the profit on 
sales of further-manufactured merchandise attributable to the 
additional manufacturing. No other adjustments were claimed or allowed.

[[Page 26284]]

Normal Value

    In order to determine whether there was a sufficient volume of 
sales of granular PTFE resin in the home market to serve as a viable 
basis for calculating normal value (NV), we compared respondent'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) of the Act. Because the aggregate volume of home market sales of 
the foreign like product for Ausimont was greater than five percent of 
the respective aggregate volume of U.S. sales for the subject 
merchandise, we determined that the home market provides a viable basis 
for calculating NV for Ausimont. Therefore, in accordance with section 
773(a)(1)(B)(i) of the Act, we based NV on the prices 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.
    We calculated NV on a monthly weighted-average basis. Where 
possible, we compared U.S. sales to sales of identical merchandise in 
Italy. When there were no identical sales of the foreign like product 
available for matching purposes, we based NV on contemporaneous sales 
of the most similar foreign like product, in accordance with section 
771(16) of the Act. Because filled and unfilled resins generally are 
not similar in terms of their physical characteristics, we compared, 
whenever possible, home market sales of filled resins to U.S. sales of 
filled resins and home market sales of unfilled resins with U.S. sales 
of unfilled resins. We matched filled resins sold in the two markets 
according to the amounts and types of fillers and the percentages of 
fillers in the products sold based upon the information provided in 
Ausimont's questionnaire response.
    Where applicable, we made adjustments for packing and movement 
expenses, in accordance with sections 773(a)(6) (A) and (B) of the Act. 
In order to adjust for differences in packing between the two markets, 
we deducted home market packing costs from NV and added U.S. packing 
costs. We also made adjustments for differences in costs attributable 
to differences in physical characteristics of the merchandise, pursuant 
to section 773(a)(6)(C)(ii) of the Act, and for other differences in 
the circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act. These COS adjustments included deductions 
for home market rebates and credit.
    In accordance with section 773(a)(4) of the Act, we used 
constructed value (CV) as the basis for NV when there were no 
comparable sales of the foreign like product in the home market. We 
calculated CV in accordance with section 773(e) of the Act. We included 
the cost of materials and fabrication, selling, general and 
administrative (SG&A) expenses, and profit. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A expenses and profit on the 
amounts incurred and realized by Ausimont in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade for consumption in Italy. For selling expenses, we used the 
weighted-average home market selling expenses. We included U.S. packing 
pursuant to section 773(e)(3) of the Act. Where appropriate, we made 
adjustments to CV, in accordance with section 773(a)(8) of the Act, for 
differences in the COS. Specifically, we made COS adjustments by 
deducting home market direct selling expenses. We also made a CEP-
offset adjustment to NV for indirect selling expenses pursuant to 
section 773(a)(7)(B) of the Act as discussed below.

Level of Trade

    As instructed by section 773(a)(1)(A) of the Act and the SAA at 
829-31, we determine, to the extent practicable, NV for sales at the 
same level of trade as the U.S. sales (either export price or CEP). 
When there are no sales at the same level of trade, we compare U.S. 
sales to home market (or, if appropriate, third-country) sales at a 
different level of trade, and adjust NV, if appropriate. The NV level 
of trade is that of the starting-price sales in the home market. When 
NV is based on CV, the level of trade is that of the sales from which 
we derive selling, SG&A and profit.
    As the Department explained in Gray Portland Cement and Clinker 
from Mexico: Final Results of Antidumping Duty Administrative Review, 
62 FR 17148, 17156 (April 9, 1997), for both export price and CEP, the 
relevant transaction for the level-of-trade analysis is the sale (or 
constructed sale) from the exporter to the importer. While the starting 
price for CEP is that of a subsequent resale to an unaffiliated buyer, 
the construction of the CEP results in a price that would have been 
charged if the importer had not been affiliated. We calculate the CEP 
by removing from the first resale to an independent U.S. customer the 
expenses under section 772(d) of the Act and the profit associated with 
these expenses. These expenses represent activities undertaken by the 
affiliated importer. As such, they occur after the transaction between 
the exporter and the importer for which we construct CEP. Because the 
expenses deducted under section 772(d) represent selling activities in 
the United States, the deduction of these expenses normally yields a 
different level of trade for the CEP than for the later resale (which 
we use for the starting price). Movement charges, duties and taxes 
deducted under section 772(c) do not represent activities of the 
affiliated importer, and we do not remove them to obtain the CEP level 
of trade.
    To determine whether home market sales are at a different level of 
trade than U.S. sales, we examine whether the home market sales are at 
different stages in the marketing process than the U.S. sales. The 
marketing process in both markets begins with goods being sold by the 
producer and extends to the sale to the final user, regardless of 
whether the final user is an individual consumer or an industrial 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. In the United States, the respondent's sales are 
generally to an importer, whether independent or affiliated. We review 
and compare the distribution systems in the home market and U.S. export 
markets, including selling functions, class of customer, and the extent 
and level of selling expenses for each claimed level of trade. Customer 
categories such as distributor, original equipment manufacturer (OEM), 
or wholesaler are commonly used by respondents to describe levels of 
trade, but, without substantiation, they are insufficient to establish 
that a claimed level of trade is valid. An analysis of the chain of 
distribution and of the selling functions substantiates or invalidates 
the claimed levels of trade. If the claimed levels are different, the 
selling functions performed in selling to each level should also be 
different. Conversely, if levels of trade are nominally the same, the 
selling functions performed should also be the same. Different levels 
of trade necessarily involve differences in selling functions, but 
differences in selling functions, even substantial ones, are not alone 
sufficient to establish a difference in the levels of trade. A 
different level of trade is characterized by purchasers at different 
stages in the chain of distribution and sellers performing 
qualitatively or quantitatively different functions in selling to them.
    When we compare U.S. sales to home market sales at a different 
level of trade,

[[Page 26285]]

we make a level-of-trade adjustment if the difference in levels of 
trade affects price comparability. We determine any effect on price 
comparability by examining sales at different levels of trade in a 
single market, the home market. Any price effect must be manifested in 
a pattern of consistent price differences between home market sales 
used for comparison and sales at the equivalent level of trade of the 
export transaction. To quantify the price differences, we calculate the 
difference in the average of the net prices of the same models sold at 
different levels of trade. Net prices are used because any difference 
will be due to differences in level of trade rather than other factors. 
We use the average difference in net prices to adjust NV when NV is 
based on a level of trade different from that of the export sale. If 
there is no pattern of consistent price differences, the difference in 
levels of trade does not have a price effect and, therefore, no 
adjustment is necessary.
    The statute also provides for an adjustment to NV when NV is based 
on a level of trade different from that of the CEP if the NV level is 
more remote from the factory than the CEP and there is no basis to 
determine whether the difference in levels of trade between CEP and NV 
affects the comparability of their prices. This latter situation might 
occur where there is no home market level of trade equivalent to the 
U.S. sales level or where there is an equivalent home market level but 
the data are insufficient to support a conclusion on price effect. This 
adjustment, the CEP offset, is identified in section 773(7)(B) and is 
the lower of the following:
     The indirect selling expenses on the home market sale, or
     The indirect selling expenses deducted from the starting 
price used to calculate CEP.
    The CEP offset is not automatic each time we use CEP. The CEP 
offset is made only when the level of trade of the home market sale is 
more advanced than the level of trade of the U.S. (CEP) sale and there 
is not an appropriate basis for determining whether there is an effect 
on price comparability.
    We requested information about the selling functions associated 
with each phase of marketing, or the equivalent, in each of Ausimont's 
markets. Ausimont claimed one channel of distribution and one level of 
trade for sales to its U.S. affiliate, Ausimont U.S.A., Inc., and only 
one channel of distribution and one level of trade for its home-market 
sales to fabricators.
    To determine whether Ausimont's CEP and NV sales were at the same 
level of trade, we reviewed information in Ausimont's questionnaire 
response regarding the selling functions and marketing processes 
associated with both categories of sales.
    The evidence of record establishes that all sales in the home 
market are at a single level of trade. In the home market, Ausimont 
sold directly to fabricators. These sales entailed selling functions 
such as inventory maintenance, technical advice, strategic and economic 
planning, market research, computer assistance, personnel training, 
engineering services, advertising, and freight and delivery services.
    The U.S. subsidiary's sales entailed selling functions such as 
inventory maintenance, technical advice, strategic and economic 
planning, market research, computer assistance, personnel training, 
engineering services, advertising, and freight and delivery services. 
Although sales through Ausimont U.S.A. to the first unaffiliated party 
in the United States were made at a marketing stage similar to 
Ausimont's home-market sales and entailed essentially the same selling 
functions as described above, we are using the CEP methodology in 
making price comparisons. In determining the level of trade for the 
U.S. sales, we only considered the selling activities reflected in the 
price after making the appropriate adjustments under section 772(d) of 
the Act. (See, e.g., Certain Stainless Wire Rods From France: Final 
Results of Antidumping Administrative Review, 61 FR 47874, 47879-80 
(Sept. 11, 1996).)
    After deducting expenses for selling functions which the U.S. 
subsidiary provides, the CEP still contains indirect selling expenses 
which Ausimont S.p.A provides. Based on a comparison of the home market 
and this CEP level of trade, we find significantly different levels of 
selling functions in each price. Further, based on the distribution 
phase at which the home-market transactions take place and the nature 
of the selling functions they entail, we find the home market sales to 
be at a different level of trade from and more remote from the factory 
than the CEP sales.
    As noted above, all Ausimont's home market sales were at a single 
level of trade which is different from the CEP level of trade. Section 
773(a)(7)(A) of the Act directs us to make an adjustment for difference 
in levels of trade where such differences affect price comparability. 
However, we were unable to quantify such price differences from 
information on the record. Because we have determined that the home-
market level of trade is more remote from the factory than the CEP 
level of trade but the data necessary to calculate a level-of-trade 
adjustment are unavailable, we made a CEP-offset adjustment to NV 
pursuant to section 773(a)(7)(B) of the Act.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average dumping margin exists:

------------------------------------------------------------------------
     Manufacturer/exporter             Period          Margin (percent) 
------------------------------------------------------------------------
Ausimont S.p.A................    08/01/95-07/31/96                 6.83
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five 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, or the 
first workday thereafter. Case briefs and/or written comments from 
interested parties may be submitted not later than 30 days after the 
date of publication. Rebuttal briefs and rebuttals to written comments, 
limited to issues raised in the case briefs and comments, may be filed 
not later than 37 days after the date of publication. 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. The Department will issue the final results of the 
administrative review, including the results of its analysis of issues 
raised in any such written comments or at a hearing, within 120 days of 
issuance of these preliminary results.
    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. Individual differences 
between USP and NV may vary from the percentage stated above.
    The Department will issue appraisement instructions directly to 
Customs. The final results of this review shall be the basis for the 
assessment of

[[Page 26286]]

antidumping dumping duties on entries of merchandise covered by the 
determination and for future deposits of estimated duties.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of PTFE resin from Italy 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 Ausimont will be 
the rate established in the final results of administrative review; (2) 
for merchandise exported by manufacturers or exporters not covered in 
this review but covered in the original less than fair value (LTFV) 
investigation or a previous review, the cash deposit will continue to 
be the most recent rate published in the final determination or final 
results for which the manufacturer or exporter received a company-
specific rate; (3) if the exporter is not a firm covered in this 
review, a previous review, or the original investigation, but the 
manufacturer is, the cash deposit rate will be that established for the 
manufacturer of the merchandise in the final results of this review or 
the LTFV investigation; and (4) if neither the exporter nor the 
manufacturer is a firm covered in this or any previous review, the cash 
deposit rate will be 46.46 percent, the ``all others'' rate established 
in the LTFV investigation (50 FR 26019, June 24, 1985).
    This notice also serves as a preliminary reminder to importers of 
their responsibility 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 19 CFR 353.22 
(1996).

    Dated: May 5, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-12506 Filed 5-12-97; 8:45 am]
BILLING CODE 3510-DS-P