[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]
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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.
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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.
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\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.
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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