[Federal Register Volume 62, Number 240 (Monday, December 15, 1997)]
[Notices]
[Pages 65667-65673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-32690]


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

DEPARTMENT OF COMMERCE

International Trade Administration
A-570-802


Industrial Nitrocellulose From the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review

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

ACTION: Notice of final results of antidumping duty administrative 
review.

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

SUMMARY: On August 8, 1997, the Department of Commerce (the Department) 
published the preliminary results of its administrative review of the 
antidumping duty order on industrial nitrocellulose (INC) from the 
People's Republic of China (PRC). This review covers one producer/
exporter, China North Industries Guangzhou Corporation (CNIGC), and 
entries of the subject merchandise into the United States during the 
period July 1, 1995 through June 30, 1996.
    We gave interested parties an opportunity to comment on our 
preliminary results. On September 8, 1997, we received case briefs from 
respondent and petitioner. On September 15, 1997, we received rebuttal 
comments from both parties. We rejected respondent's September 8, 1997 
case brief because it contained new information. Respondent resubmitted 
its case brief on November 14, 1997. On November 21, 1997, we placed on 
the record new data concerning the price of steel drums in Indonesia. 
On November 25, 1997, respondents submitted comments on this data. 
Based on our analysis of the comments received, we have changed the 
margin from that presented in our preliminary results of review.

EFFECTIVE DATE: December 15, 1997.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Maureen Flannery, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC 20230; telephone: (202) 482-0666 and (202) 482-3020, 
respectively.
    Applicable Statutes and Regulations: Unless otherwise stated, all 
citations to the statute are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the 
Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act. In 
addition, unless otherwise indicated, all citations to the Department's 
regulations are to the regulations as codified at 19 CFR part 353 
(April 1, 1996).

SUPPLEMENTARY INFORMATION:

Background

    On August 8, 1997, the Department published in the Federal Register 
(62 FR 42747) the preliminary results of the administrative review of 
the antidumping duty order on INC from the PRC (55 FR 28267, July 10, 
1990). The preliminary results indicated the existence of a dumping 
margin. As we explained in the preliminary results, we did not grant 
CNIGC a separate rate. However, because U.S. import statistics indicate 
that CNIGC was the only exporter of the subject merchandise to the 
United States during the review period, we based the PRC-wide rate on 
the information submitted by CNIGC for this review. See, Memorandum to 
the File from Rebecca Trainor, dated July 23, 1997, on file in room B-
099 of the Commerce Department. We received comments and rebuttal 
comments from the petitioner and the respondent. The Department has now 
completed this administrative review in accordance with section 751 of 
the Act.

Scope of the Review

    Imports covered by this review are shipments of industrial 
nitrocellulose (INC) from the PRC. INC is a dry, white, amorphous 
synthetic chemical with a nitrogen content between 10.8 and 12.2 
percent, and 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) 
subheading 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.
    The period of review (POR) is July 1, 1995 through June 30, 1996.

Changes From the Preliminary Results

    1. In the preliminary results we valued steel packing drums using 
the Monthly Statistics of the Foreign Trade of India: Imports, Volume 
II (Indian import statistics) for the period of April 1995 through 
March 1996, and April through June 1996. For the final results, we have 
valued steel drums using Indonesian prices contained in a facsimile 
from the American embassy in Jakarta, placed on the record for the 
investigation of furfuryl alcohol from the PRC. See Comment 4, and 
Final Determination of Sales at Less than Fair Value; Furfuryl Alcohol 
from the People's Republic of China, 60 FR 22544 (May 8, 1995) 
(Furfuryl Alcohol).
    2. In the preliminary results, we incorrectly converted the water 
usage rate reported by respondent from tons to kilograms. We also 
assigned a separate surrogate value to water. For the final results, we 
have corrected the conversion error, and have not assigned a separate 
surrogate value to water, as it is included in the factory overhead 
value we have used. See Comment 6.
    3. For the distance between packing materials suppliers and the INC 
factory in the preliminary results, we used the average distance 
between the supplier and factory for all other materials. For the final 
results, we have used the actual distances between packing materials 
suppliers and the respondent's factory, which we requested from 
respondent on November 5, 1997. See Comment 5.
    4. In the preliminary results, we applied an Indonesian factory 
overhead rate which we obtained from the record for Furfuryl Alcohol. 
For selling, general and administrative (SG&A) expenses and profit 
rates, we used Indonesian data which we obtained from the record for 
Certain Carbon Steel Butt-Weld Pipe Fittings from the People's Republic 
of China, 57 FR 21058 (May 18, 1992)(Pipe Fittings). For the final 
results, we have used data obtained from the financial statements of 
six Indian chemical-producing companies. See Comment 7.

Analysis of Comments Received

    We gave interested parties an opportunity to comment on the 
preliminary results. We received case briefs and rebuttal briefs from 
petitioner and respondent.
    Comment 1: Surrogate country selection: Respondent argues that the 
Department should use India instead of Indonesia as the primary 
surrogate country in this review because: (1) The volume of Indonesian 
exports of the subject merchandise were very small, unlike the volume 
of India's exports; (2)

[[Page 65668]]

like India, and unlike Indonesia, China does not import cotton linters 
and; (3) the lack of Indonesian surrogate value information for several 
factors sent the Department back to India anyway, as the ``secondary'' 
surrogate country. Respondent states that the Department should use 
either data from the secondary surrogate country, India, for factory 
overhead, SG&A and profit values, or use India as the primary surrogate 
country and resort to Indonesian values only for cotton linters, since 
there is no Indian data on cotton linters.
    Department's Position: We agree with respondent in part. We have 
continued to use Indonesia as the surrogate country for the purposes of 
valuing all of the raw material inputs. We have also used Indonesian 
data as surrogate values for packing materials. However, as we discuss 
in Comment 7, we have determined that Indian data is the best 
information we have with which to value factory overhead, SG&A and 
profit.
    In choosing the surrogate country, we first determined that both 
India and Indonesia were at a level of economic development comparable 
to the PRC, and that both are significant producers of the subject 
merchandise. See Memorandum to Maureen Flannery from David Mueller, 
dated January 29, 1997, and Memorandum to the File dated March 24, 
1997, on file in Room B-099 of the Commerce Department. Although India 
is a larger exporter of INC, we chose Indonesia as the surrogate 
country because we could obtain price data from Indonesian sources for 
all of the factors of production except for steel drums. This was not 
true of India, from where no data was available for cotton linters, one 
of the primary raw materials.
    Thus, contrary to respondent's assertion, the only surrogate value 
for which we preliminarily resorted to Indian data was for steel drums. 
We note that for the final results, we valued steel drums using an 
Indonesian source. (See Comment 4.) Our preference is to value all 
factors of production in a single surrogate country, when possible. See 
section 351.408(c)(2) of the Antidumping Duties; Countervailing Duties; 
Final Rule, 62 FR 27296 (May 19, 1997) (Final Rule) (``Except for 
labor, as provided in paragraph (d)(3) of this section, the Secretary 
normally will value all factors in a single surrogate country.'') 
1 However, we were unable to obtain the most reliable data 
from just one country for this review, and have relied upon Indian data 
for factory overhead, SG&A and profit. We have continued to use 
Indonesia as the primary surrogate country, however, because we can 
value all other inputs in this country. This not true for India.
---------------------------------------------------------------------------

    \1\ Although this administrative review is not being conducted 
under these new regulations, these regulations serve as a 
restatement of the Department's interpretation of the Act. Id. at 
27378.
---------------------------------------------------------------------------

    Furthermore, that China does not import cotton linters is 
irrelevant to our surrogate country selection. In using surrogate 
values, our goal is to substitute market-economy prices for non-market-
economy (NME) prices. We use import data for no other reason than that 
they are a reliable source of market prices, not because the inputs may 
have been imported in the respondent country. In this case, we were 
unable to value all factors in a single country; however, our use of 
Indonesia as the primary surrogate country is consistent with this 
principle.
    Comment 2: Surrogate Value for Cotton Linters: Petitioner argues 
that the Indonesian import statistics that the Department used to value 
cotton linters are flawed in several respects, and advocates that the 
Department use U.S. export data to either China, India or Indonesia 
(see Comment 3). However, petitioner asserts that, if the Department 
must use unit values related to a surrogate country, the Department 
should use certain surrogate unit values petitioner has identified from 
Indonesia or India. First, petitioner contends, the Indonesian import 
statistics are not reliable, because the amount of cotton linter 
imports they report are almost 15 times less than the amount that the 
U.S. Census reports were exported to Indonesia by the United States 
alone in 1995. Furthermore, the 1996 Indonesian statistics show no 
imports from any country at all, in contradiction with U.S. export 
figures that show that the United States exported 92,006 kg. to 
Indonesia in the second half of the POR (January through June 1996).
    Secondly, petitioner claims that the unit value for cotton linters 
derived from the Indonesian import statistics is aberrationally low, 
compared to the unit value derived from U.S. export figures. Petitioner 
asserts that it is the Department's normal practice to disregard prices 
for factors of production inputs which are aberrational, and cites 
Final Results of Antidumping Duty Administrative Review; Heavy Forged 
Hand Tools, Finished or Unfinished, With or Without Handles, From the 
People's Republic of China (Hand Tools), 60 FR 49251, 49252 (September 
22, 1995).
    Third, petitioner claims the 1995 Indonesian import statistics show 
imports of cotton linters into Indonesia for only one month in the 
review period (August). Moreover, petitioner argues, Indonesian import 
statistics show no imports of cotton linters for 1996. Therefore, 
petitioner argues it is inappropriate for the Department to use figures 
based on one month of the POR and only one month of a 24-month period 
because the Indonesian import statistics do not provide an accurate 
portrayal of the import price for cotton linters over the entire review 
period. Petitioner also notes that the Department routinely seeks to 
use surrogate values ``from a time period that is contemporaneous to 
the period of investigation or the period of review.'' Hand Tools, 60 
FR at 49253.
    Fourth, petitioner asserts that the Indonesian import statistics 
reflect imports from Batam, which it claims is a separate customs zone 
of Indonesia. Because Batam is not a separate country from Indonesia, 
petitioner reasons, the data recorded in the Indonesian import 
statistics regarding cotton linter imports do not reflect true imports, 
and thus are not eligible for use as a basis for determining a market-
economy price for cotton linters.
    Finally, petitioner states that, because the unit values reflected 
in the import statistics are low, they may represent internal transfer 
prices. Moreover, they may represent a single transaction at a single 
port from a single supplier. Petitioner points out that the Department 
disregarded respondents' data for similar reasons in Final 
Determination of Sales at Less Than Fair Value; Brake Drums and Brake 
Rotors from the People's Republic of China, 62 FR 9160 (February 28, 
1997) (Brake Drums and Rotors).
    Respondent claims that the Indonesian import statistics do not 
underreport the volume of imports of cotton linters. Respondent points 
out that the import data record imports entered for consumption in 
Indonesia, while the U.S. export data include all exports sent into 
free trade zones in Indonesia including those which are re-exported 
without ever entering the Indonesian domestic market. Moreover, just 
because U.S. export data show shipments of U.S. cotton linters to 
China, India and Indonesia at a wide range of prices, this does not 
mean that those prices were actually paid in those countries, which is 
what the statute requires. Thus, respondent concludes, there can be no 
meaningful comparison of the two sets of data.
    Respondent further argues that import data are inherently more 
reliable than export data. While there is little incentive for accuracy 
on the part of the providers of export data according to

[[Page 65669]]

respondent, import data is compiled by customs officials who use the 
value of the imported merchandise to determine the customs duties to be 
paid on the merchandise. Moreover, understating import values would 
subject an importer to civil or criminal fines and penalties. 
Respondent notes that there are no similar consequences from 
inaccurately or negligently reporting U.S. export data. Therefore, it 
is the U.S. export data that should be called into question.
    Assuming the accuracy of the U.S. export data, respondent states 
that the fact that the United States exports cotton linters at a wide 
range of prices that are different from the Indonesian import values 
does not discredit the latter.
    Respondent argues that it is irrelevant that import data used by 
the Department were based on imports into Indonesia during only one 
month of the review period, because the data nonetheless constitute a 
surrogate value that was paid during the review period. Moreover, 
respondent argues, it does not detract from their accuracy.
    Contrary to petitioner's assertion, respondent argues that the 
Indonesian import values are true import values, as Batam is a free 
trade zone. As such, the majority of products sent to Batam from 
outside Indonesia are not entered into the Indonesian market for 
consumption, but are re-exported. Those that do enter for consumption 
are recorded as imports and are assessed customs duties. Therefore, the 
imports into Indonesia through the Batam free trade zone fairly 
represent the value of cotton linters in Indonesia.
    Respondent states that there is no evidence that the Indonesian 
import values represent internal transfer prices or that they represent 
a single transaction. Furthermore, the total imported quantity of 42 
tons is not so small that the Department should assume that it 
constitutes a single transaction.
    Department's Position: We find no evidence that the Indonesian 
import data for cotton linters are aberrational or unreliable, or that 
they represent a single transaction. The data cover imports into 
Indonesia from January to November 1995, and report 42 tons of cotton 
linters, not an insignificant amount. When appropriate, we compare 
surrogate value data to other available market-economy data to test the 
reliability of the data we intend to use in the factor analysis. See, 
e.g. Hand Tools. In this case, as petitioner and respondent have 
acknowledged, there is no other available data from countries with 
comparable economies with which to compare the Indonesian prices. Thus, 
we have no basis on which to conclude that the Indonesian import data 
is aberrational. Other than Indonesian import statistics or U.S. export 
data (see Comment 3), the only price data that we have been able to 
locate for cotton linters are import statistics from the United States 
and Canada. Such comparisons are not meaningful here, however, because 
all that they tell us is that cotton linters imported into Indonesia 
are priced lower than those imported into two countries with very 
different economies. Absent evidence that the Indonesian values are 
aberrational, to reject the Indonesian price simply because it is ``too 
low'' could be an overly subjective assumption. See Final Determination 
of Sales at Less Than Fair Value: Certain Helical Spring Lock Washers 
from the People's Republic of China, 58 FR 48833 (September 20, 1993) 
(``We agree that rejecting certain Indian import values simply because 
those are `too high' is potentially overly subjective, but would add 
that so is rejecting certain values simply because they are `too low.' 
'')
    With respect to petitioner's assertion that the Indonesian import 
data are unreliable because they do not comport with United States 
export data, it stands to reason that all of the merchandise entering 
Batam would not appear as imports in the Indonesian import statistics, 
because Batam is a free trade zone and a bonded area. As such, it is 
entirely reasonable to assume that a large proportion of imported goods 
are re-exported from Batam, without ever entering the Indonesian 
customs area.
    Moreover, if the Batam prices were not ``true'' imports, as 
petitioner suggests, then they must represent domestic prices in 
Indonesia, which are also suitable to use as a surrogate value.
    Comment 3: Use of U.S. Export Data: Petitioner contends that 
instead of Indonesian import data, the Department should value cotton 
linters based on U.S. export statistics for merchandise exported to the 
PRC during the review period. Petitioner argues that unit values 
derived from U.S. export values: (1) Provide the most realistic figure 
for cotton linters; (2) are based on publicly available information; 
(3) come from a reliable source; (4) represent a large volume of U.S. 
exports to China; and (5) is on the record of this proceeding. 
Petitioner emphasizes that these export values are the most accurate 
prices available because they are based on actual prices paid by 
Chinese importers for cotton linters during the POR.
    Petitioner claims that it is the Department's longstanding practice 
to use actual market-economy purchase prices instead of surrogate 
values if such market-economy prices exist for material inputs. 
Therefore, the Department should not have looked to any surrogate value 
for cotton linters at all. Petitioner maintains that there is ample 
evidence that the Department routinely uses actual prices paid by PRC 
importers to U.S. suppliers. Petitioner argues that in a non-market 
economy such as the PRC, the Department's practice calls for using a 
combination of surrogate values and actual market-economy prices when 
the latter are available. Petitioner cites the following determinations 
as evidence of the Department's practice of using actual prices: Final 
Determination of Sales at Less Than Fair Value; Bicycles from the 
People's Republic of China (Bicycles), 61 FR 19026, 19029 (April 30, 
1996) and Final Determination of Sales at Less Than Fair Value; 
Coumarin from the People's Republic of China (Coumarin), 59 FR 66895, 
66897 (December 28, 1994). Petitioner also cites Lasko Metal Products, 
Inc. v. United States, 43 F.3d 1442 (Fed. Cir. 1994), to support its 
contention that using actual prices paid to U.S. suppliers by Chinese 
importers conforms with the antidumping statute's intent to determine 
margins as accurately as possible and to use the ``best information 
available'' to it.
    The petitioner contends that, if the Department determines that it 
must use unit values relating to a surrogate country, the Department 
should use a price derived from U.S. export data for cotton linters 
exported to either India or Indonesia during the review period, which 
petitioner claims are more reliable than the Indonesian import data the 
Department used for the preliminary results. Petitioner notes that both 
countries were determined to be surrogate market-economy countries and 
both countries produced INC. Petitioner also notes the Department's 
reluctance to use export figures is based on existence of subsidies and 
other distorting schemes. However, petitioner argues U.S. export 
statistics are the most reliable official indicators of market-economy 
prices. Moreover, petitioner cites to Saccharin from the People's 
Republic of China, 59 FR 58818 (November 15, 1995), and Coumarin from 
the People's Republic of China, 59 FR 66895 (December 28, 1994) as 
examples where the Department used export statistics as a reliable 
indicator of price and to test the reliability of import figures. 
Finally, petitioner notes that when prices in both countries used for 
comparison (Indonesia and India) were found aberrational, the 
Department used

[[Page 65670]]

the median export price to arrive at a surrogate value.
    Respondent argues that it would be illegal to use U.S. export 
values to China as a surrogate value for cotton linters, and 
petitioner's interpretation of the court's decision in Lasko and the 
Department's decisions in Bicycles and Coumarin are inapposite. 
Respondent points out that the Department declines to use surrogate 
values for inputs only when the manufacturer under investigation has 
purchased those inputs from a market-economy country. Respondent also 
notes that it does not use imported cotton linters to make the subject 
merchandise; therefore, there are no actual costs paid to market-
economy countries in this case. Respondent argues that petitioner's 
suggested methodology is neither the intent of the law, nor of Lasko, 
which affirmed the Department's use of actual market-economy prices 
paid by an NME producer. Respondent further objects that petitioner's 
proposal to add its own freight rates to U.S. export values would 
further distort surrogate values.
    Respondent further contends that the use of U.S. export prices 
would contravene section 773(c)(4) of the Act requiring the Department 
to value NME producers' factors of production using the prices of the 
factors in one or more market-economy countries that are (A) at a level 
of economic development comparable to that of the NME country, and (B) 
significant producers of comparable merchandise, as the United States 
is much more economically developed than Indonesia.
    Respondent contends that, for all of the reasons noted above, the 
Department should not use U.S. export data for exports to India or 
Indonesia, as petitioner suggests, but should use Indian import 
statistics. However, if the Department chooses to use export values, 
the Department should calculate a value that relates most closely to 
the market of Indonesia, the Department's chosen surrogate country.
    Department's Position: As discussed in Comment 2, we have continued 
to use the Indonesian import price to value cotton linters. We do not 
consider the use of U.S. export data to be an appropriate option in 
this case, when we have an import price for a surrogate country that is 
both a significant producer and at a level of economic development 
comparable to the PRC. Furthermore, the Indonesian import prices are 
derived from a range of countries, and thus are a better indicator of 
domestic market prices than would be prices from a single country, the 
United States. That the imports reflected in the Indonesian import 
statistics may come from Batam, a free trade zone, does not contradict 
this, because merchandise re-exported from Batam into Indonesia would 
have originated from a number of different countries.
    Petitioner misinterprets Lasko and the Department's practice, 
articulated in Bicycles and Coumarin, with respect to using market-
economy prices instead of surrogate values in certain instances. In 
these cases and many others, we have established the practice of using 
actual prices instead of surrogate values when respondents have 
purchased certain inputs from market-economy suppliers and paid for 
them in a market-economy currency. In Lasko at 1446, the CIT affirmed 
this practice, which we recently codified in Section 351.408(c)(1) of 
the Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27413 (May 19, 1997) (`` However, where a factor is purchased from a 
market economy supplier and paid for in a market economy currency, the 
Secretary normally will use the price paid to the market economy 
supplier.'') In the present case, the respondent specifically stated in 
its questionnaire response that it purchases cotton linters only from 
PRC suppliers. Thus, there is no basis in this case for deviating from 
the surrogate value methodology used in the preliminary determination 
to value cotton linters.
    Comment 4: Surrogate Value for Steel Drums: Respondent contends 
that the Department's calculated surrogate value for steel drums is an 
unreliable measure of iron drum costs. Respondent argues that the HTS 
category that the Department used in the preliminary results is a 
basket category, containing a variety of different products besides the 
galvanized iron sheet drums it used during the review period, as 
evidenced by the fact that unit values varied from country to country 
by up to 2843%. Respondent claims that the Department's valuation 
results in a per-drum dollar amount of $141.25, a figure that is 
excessive and aberrational.
    Respondent adds that the Department generally rejects HTS-derived 
values that are aberrational compared to other available data, and 
cites Chrome-Plated Lug Nuts from the People's Republic of China; Final 
Results of Antidumping Duty Administrative Review, 61 FR 58514, 58517-
518 (November 15, 1996) (Lug Nuts), in which the Department rejected 
steel values from a basket HTS category as aberrational compared to 
other available data. Respondent also cites the April 22, 1996 Factors 
Valuation Memorandum from the Bicycles Team to the File, Bicycles, at 
22, in which the Department used an export value for one of the 
chemical inputs because the import value had been deemed aberrational 
in another case.
    Instead of the weighted average value of all steel drum imports 
into India, which the Department used in the preliminary results, 
respondent suggests that the Department use only the collected data on 
imports of steel drums into India from Indonesia. Respondent claims 
that this value would be appropriate, because it is based on two 
surrogate country values, and would be more reasonable than the $141.25 
per drum figure used in the preliminary results.
    Petitioner contends that the Department was correct in calculating 
the average unit value for steel drums, in keeping with its preference 
for using average non-export values. Petitioner cites Lug Nuts and 
Final Determination of Sales at Less Than Fair Value; Polyvinyl Alcohol 
from the People's Republic of China, 61 FR 14057 (March 29, 1996). 
Petitioner points out that respondent suggested both the source and the 
HTS number that the Department ultimately used in the preliminary 
results, but now is suggesting that the Department distort the 
statistics by valuing steel drums based on imports from just one 
country--Indonesia. Petitioner claims that to value steel drums based 
on imports from only one of the several countries listed in the Indian 
import statistics would undermine the Department's purpose in 
calculating a surrogate unit value--namely to determine a price that 
would be paid by an average Indian importer of steel drums--and result 
in a skewed unit value. Petitioner also objects to respondent's 
suggested methodology because it would cover only one month of the 
review period, even though statistics for the full POR were available 
from the same source respondent used. Petitioner also alleges that 
respondent distorted relevant information by creating a table showing 
imports of steel drums into India from only Indonesia and Singapore, 
and excluding imports from the United States, which accounted for 90% 
of all steel drums imported into India. Thus, petitioner advocates that 
the Department adhere to its preliminary weighted-average unit value, 
based on all Indian imports, and covering the entire review period.
    Petitioner states that there is ample precedent for the 
Department's use of basket categories without finding that they lead to 
aberrational results. Moreover, the Department has used various steel 
drum subheadings, including the one used in the

[[Page 65671]]

preliminary results, in recent investigations.
    Department's Position: As noted above, for the final results we 
have used an Indonesian steel drum price used in the less than fair 
value (LTFV) investigation of furfuryl alcohol from the PRC, adjusted 
for inflation. These data are superior to the Indian import statistics 
that we used in the preliminary results, because they are from the 
primary surrogate country and are for drums of approximately the same 
size as those used by respondent to pack a chemical product. These new 
data are better than the basket category provided in the Indian import 
statistics because they better approximate the cost of the input used 
by respondent.
    We placed these data on the record of this review after the 
preliminary results. See Memorandum to the File from R. Trainor dated 
November 21, 1997, on file in room B-099 of the Commerce Department. We 
received comments from respondent supporting the use of the Indonesian 
data as more reasonably reflecting the market price of steel drums in a 
country that the Department has determined to be an accurate surrogate 
country in this review. We received no comments on the new data from 
petitioner.
    Comment 5: Packing Distances: Petitioner argues that since 
respondent did not report shipping distances between packing materials 
suppliers and the factory, the Department should use as facts available 
the highest freight rate and the longest of all reported distances, 
instead of the simple average of all reported distances, which the 
Department used in the preliminary results.
    Department's Position: As we stated above, for the final results we 
have used the actual distances between CNIGC's packing suppliers and 
its factory. On November 5, 1997, we requested that the respondent 
provide this information for the final results because we had not 
requested it in our questionnaires. Petitioners were provided an 
opportunity to submit comments regarding this data but did not comment.
    Comment 6: Water Valuation: Respondent states that the Department 
miscalculated water usage in the preliminary results, because of a 
misunderstanding of the questionnaire response. Respondent contends 
that the Department understood the response to report water usage on 
the basis of tons used to produce one kilogram of subject merchandise, 
when in fact, it reported water usage in tons of water needed to 
produce a ton of subject merchandise. Thus, no conversion from tons to 
kilograms was necessary.
    Respondent also argues that, in past cases, the Department has 
recognized that water used in the production process is included as 
part of factory overhead, and is not separately valued as a raw 
material input. Respondent notes that water itself is not a component 
of the final product, and cites Final Determination of Sales at Less 
Than Fair Value; Saccharin From the People's Republic of China, 59 FR 
58818, 58824 (November 15, 1994) (Saccharin). Thus, the Department 
should not assign a separate factor value to water for the final 
results.
    Department's Position: We agree with respondent that we incorrectly 
converted the water usage rate to kilograms in the preliminary results, 
and have corrected this error for the final results.
    We have not assigned a separate surrogate value to water for the 
final results, because the overhead value we have used, derived from 
the financial statements of six Indian chemical-producing companies, 
includes water in factory overhead, along with power and fuel. See 
Comment 7.
    Comment 7: Factory Overhead, SG&A and Profit: Respondent objects to 
the Indonesian data the Department used in the preliminary results for 
factory overhead, SG&A, and profit as being outdated, unreliable, and 
non-industry specific. Instead, respondent contends, the Department 
should rely on data from the April 1995 Reserve Bank of India Bulletin 
(RBIB), which the Department has used numerous times in the past, and 
which represent Indian metal and chemical industries.
    Respondent argues that the Department should not rely on the data 
submitted by the petitioner, because these data, which consist of 
excerpts from the financial statements of several Indian companies, (1) 
do not represent an appropriate industry sector for comparison to the 
nitrocellulose industry; (2) were selectively hand-picked by petitioner 
to result in high ratios; and (3) do not allow any judgment as to 
whether the companies they represent are normally operative companies, 
or if their overhead, SG&A, and profit were abnormally high, because 
petitioner did not submit the complete financial statement for each 
company. Respondent points out that, although petitioner states that 
there are three plants producing nitrocellulose in India, it did not 
submit financial statements from any of them.
    Finally, respondent claims that, in petitioner's SG&A, overhead and 
profit calculations, stores and spares consumed should be included in 
the category of ``Raw Materials, Labor, and Energy'' instead of in 
factory overhead.
    Petitioner denies that it was selective in choosing the Indian 
financial data to place on the record. Petitioner states that it chose 
these companies because it was unable to obtain the financial 
statements of the three Indian INC producers. Furthermore, the six 
companies were identified in the Disclosure, Inc. database as the 
Indian publicly-traded companies manufacturing products within the SIC 
category that includes subject merchandise, and for which FY 1996 
annual reports were available.
    Petitioner contends that, although none of the six companies for 
which petitioner submitted annual reports manufacture the subject 
merchandise, they represent a narrower category of merchandise than do 
the RBIB data submitted by respondent, which cover the processing and 
manufacture of ``metals, chemicals, and products thereof.'' 
Furthermore, petitioner argues, respondent provides no support for its 
assertion that the RBIB industrial group is representative of the INC 
industry in India, or that the Indian companies upon which the data are 
based include Indian INC manufacturers. Petitioner argues that the data 
it submitted are more contemporaneous as well as being more industry-
specific than the RBIB data submitted by respondent.
    In response to CNIGC's claim that stores and spares consumed should 
be included in the category of ``Raw Materials, Labor, and Energy,'' 
petitioner argues that it is the Department's practice to include 
stores and spares consumed as an overhead element, and cites the 
February 28, 1997 final analysis memorandum for the 1994-95 
administrative review of Sebacic Acid From the People's Republic of 
China, 62 FR 10530 (March 7, 1997).
    Department's Position: We agree that the surrogate SG&A, overhead 
and profit information we used in the preliminary results was not 
current and not specific to the nitrocellulose industry. We requested 
more appropriate data from the U.S. embassy in Jakarta, Indonesia, but 
were unable to obtain complete data in time for these final results. 
Therefore, we have used the information provided by petitioner, 
obtained from the financial statements of six Indian chemical-producing 
companies. Although we have used the RBIB data in other cases, as 
respondent points out, we have determined that the data submitted by 
petitioner is preferable in this case, because it represents the 
overhead, SG&A and profit ratios of

[[Page 65672]]

several companies that manufacture products of the same SIC 
classification as the subject merchandise. The RBIB ratios, on the 
other hand, are derived from companies involved in the more general 
category of ``chemicals and metals'' industries.
    Regardless of whether petitioner ``selectively hand-picked'' the 
information it provided on the record, this information is nonetheless 
more representative of the experience of Indian producers of comparable 
merchandise than is the RBIB data. Petitioner provided available data 
from Indian companies identified with an SIC code of 2821, which 
includes cellulose nitrate resins. Furthermore, rather than being 
uniformly high, the data reflect a wide range of overhead, SG&A and 
profit figures. Petitioners submitted the relevant pages of the 
financial statements, and there is no evidence on the record that these 
companies' overhead, SG&A and profit are abnormally high.
    Finally, we agree with petitioner that stores and spares consumed 
should be included in overhead, as we have done in past cases. See, 
Memorandum to the File; Certain Helical Spring Lockwashers from the 
People's Republic of China: Factor Values Used for the Preliminary 
Results, dated July 3, 1997.
    Comment 8: Separate rate for CNIGC: CNIGC argues that the 
Department should grant it a separate rate. CNIGC argues that the 
Department's decision in the preliminary results was based on analysis 
done for a separate antidumping investigation with an entirely 
different record. GNIGC alleges that information from the Brake Drums 
and Rotors investigation (63 FR 42748) was inserted into this record 
without notice to counsel on March 26, 1997. Notwithstanding, CNIGC 
argues that verification reports from Brake Drums and Rotors inserted 
into this record nevertheless satisfies the Department's requirements 
of de jure and de facto independence from government control to warrant 
a separate rate. CGIGC states that the focus of the separate rates 
analysis is not on whether there might be a general ``relationship'' 
between the company and the government, but rather on whether there is 
operational independence with regard to export sales.
    Respondent argues that, in Brake Drums and Rotors, the Department 
based its decision that there is a de facto relationship between the 
company and government on two pieces of evidence. The first was an 
outdated company brochure from 1992 when CNIGC was still a branch of 
China North Industries Corporation (NORINCO). Respondent claims that it 
does not know why the brochure was given to the Department, but 
speculates that company personnel provided it in an effort to be 
helpful during verification. As further proof that the brochure was 
outdated, respondent notes that it was printed before the company's 
name was changed from China North Industries Guangzhou Branch to China 
North Industries Guangzhou Corporation, as supported by the company's 
pre-1993 and post-1993 business licences. Respondent also provides a 
chronology of the company's telephone numbers to show that the brochure 
predates the review period. CNIGC asserts that the agreement separating 
it from NORINCO makes it clear that the two entities are completely 
separate, with only the somewhat similar name suggesting their common 
past. CNIGC alleges that the Department's verification in Brake Drums 
and Rotors found no evidence contrary to their assertion that there can 
be no relationship between itself and NORINCO with respect to any of 
the relevant factors examined by the Department.
    The second piece of evidence used in the brake drums and rotors 
case to deny separate rates was the fact that national NORINCO 
maintains an office in the same building as CNIGC. Respondent claims 
that many other companies, including a major bank, have offices in that 
same building. The fact that NORINCO maintains an office there does not 
translate into control over pricing, contractual powers, management 
selection, or disposition of profits.
    Department's Position: In Brake Drums and Rotors, we found that 
this same respondent, CNIGC, had satisfied the Department's criteria 
for establishing freedom from de jure government control. However, we 
found that other evidence supported the conclusion that, de facto, 
CNIGC had not completely severed its ties with NORINCO, its former 
parent company which, the evidence showed, was controlled by the PRC 
government. We have placed this information on the record of this 
review. See, Memorandum to the File; Industrial Nitrocellulose from the 
People's Republic of China: Information for the Separate Rates 
Determination, dated March 26, 1997.
    The fact that respondent would weight the evidence differently does 
not alter the fact that there is substantial evidence to support the 
Department's determination. Respondent has not provided any further 
evidence which indicates that the factual circumstances have changed 
and we do not find any basis on the record of this review on which to 
overturn our decision. We have, therefore, not granted CNIGC a separate 
rate in this review.

Final Results of Review

    As a result of our review, we have determined that the following 
margin exists for the period July 1, 1995 through June 30, 1996.

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
------------------------------------------------------------------------
PRC-wide rate..............................................         0.00
------------------------------------------------------------------------

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and NV may vary from the percentage 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of this notice of final results of review for all 
shipments of INC from the PRC entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(1) of the Act: for all PRC exporters, the cash deposit rate will 
be the PRC-wide rate established in these final results of 
administrative review; and (2) the cash deposit rates for non-PRC 
exporters of subject merchandise from the PRC will be the rates 
applicable to the PRC supplier of that exporter. These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification to Interested Parties

    This notice serves as a reminder to importers of their 
responsibility under section 353.26 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 notice also serves as a reminder to parties subject to 
administrative protective order (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 353.34(d). Timely written notification of 
return/destruction of APO materials or conversion to judicial 
protective order is hereby requested.

[[Page 65673]]

Failure to comply with the regulations and the terms of an APO is a 
sanctionable violation.
    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.

    Dated: December 8, 1997.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-32690 Filed 12-12-97; 8:45 am]
BILLING CODE 3510-DS-P