[Federal Register Volume 63, Number 44 (Friday, March 6, 1998)]
[Notices]
[Pages 11209-11211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-5867]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-791-802]


Furfuryl Alcohol From the Republic of South Africa; 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.

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SUMMARY: In response to a request by the respondent, Illovo Sugar Ltd., 
the Department of Commerce is conducting an administrative review of 
the antidumping duty order on furfuryl alcohol from the Republic of 
South Africa. The review covers one manufacturer/exporter of the 
subject merchandise to the United States. The period of review is June 
1, 1996, through May 31, 1997.
    We preliminarily find that sales have not been made below normal 
value. If these preliminary results are adopted in our final results of 
administrative review, we will instruct the U.S. Customs Service not to 
assess antidumping duties on the subject merchandise exported by this 
company.
    Interested parties are invited to comment on the preliminary 
results. Parties who submit case briefs in this proceeding are 
requested to provide, for each comment: (1) a statement of the issue; 
and (2) a brief summary of the argument.

EFFECTIVE DATE: March 6, 1998.

FOR FURTHER INFORMATION CONTACT: Michelle Frederick or Kris Campbell, 
AD/CVD Enforcement Group I, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, Washington, D.C. 20230; telephone: (202) 482-0186 
or 482-3813, respectively.

SUPPLEMENTARY INFORMATION:

The 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 of Commerce's (the 
Department's) regulations are to the regulations last codified at 19 
CFR Part 353 (April 1, 1997).

Background

    On June 21, 1995, the Department published in the Federal Register 
(60 FR 32302) the antidumping duty order on furfuryl alcohol from the 
Republic of South Africa. On June 11, 1997, the Department published a 
notice of ``Opportunity to Request an Administrative Review'' (62 FR 
31786) of this antidumping duty order for the period June 1, 1996, 
through May 31, 1997. On June 27, 1997, we received a timely request 
for review from Illovo Sugar Ltd. (ISL). On August 1, 1997, we 
published the notice of initiation of this review (62 FR 41339).
    We issued a questionnaire to ISL on August 5, 1997, followed by a 
supplemental questionnaire on January 8, 1998. On August 29, 1997, the 
petitioner requested that the Department determine whether the 
respondent absorbed antidumping duties.

Scope of Review

    The merchandise covered by this order is furfuryl alcohol 
(C4H3OCH2OH). Furfuryl alcohol is a 
primary alcohol and is colorless or pale yellow in appearance. It is 
used in the manufacture of resins and as a wetting agent and solvent 
for coating resins, nitrocellulose, cellulose acetate, and other 
soluble dyes. The product subject to this order is classifiable under 
subheading 2932.13.00 of the Harmonized Tariff Schedule of the United 
States (HTSUS). Although the HTSUS subheading is provided for 
convenience and customs purposes, our written description of the scope 
of this proceeding is dispositive.

Fair Value Comparisons

    We compared the constructed export price (CEP) to the normal value 
(NV), as described in the Constructed Export Price and Normal Value 
sections of this notice. Pursuant to section 777A(d)(2) of the Act, we 
compared the CEPs of individual transactions to contemporaneous monthly 
weighted-average prices of sales of the foreign like product. We were 
able to match all subject merchandise sold during the POR to identical 
merchandise sold in the home market.

Constructed Export Price

    For sales to the United States, we calculated a CEP as defined in 
section 772(b) of the Act because we determined that ISL is affiliated 
with its exclusive U.S. agent, Harborchem, and because the subject 
merchandise was sold to unaffiliated U.S. purchasers after the date of 
importation. Our finding that ISL and Harborchem are affiliated is 
consistent with our findings in the less-

[[Page 11210]]

 than-fair-value (LTFV) investigation and the first administrative 
review. See Final Determination of Sales at Less Than Fair Value: 
Furfuryl Alcohol from the Republic of South Africa, 60 FR 22550, 22552 
(Comment 1) (May 8, 1995), and Notice of Final Results of Antidumping 
Duty Review: Furfuryl Alcohol from the Republic of South Africa, 62 FR 
61084, 61087-88 (Comment 5) (November 14, 1997) (1994-96 Final 
Results). We reviewed the information submitted on the record of this 
segment of the proceeding (e.g., Exhibit A-4 of the September 9, 1997 
response) and found that the facts that led to this finding in the 
above-cited segments have not changed. For example, this evidence 
indicates that ISL and Harborchem have an exclusive distributor 
agreement and routinely coordinate marketing and sales activity, 
including pricing, with respect to sales to U.S. customers.
    We calculated CEP based on f.o.b. and delivered prices to 
unaffiliated purchasers in the United States. We made deductions, where 
applicable, for foreign inland movement expenses, (including foreign 
warehousing and warehousing insurance), domestic brokerage and 
handling, ocean freight, marine insurance, U.S. brokerage and handling, 
U.S. inland freight expenses (offset by freight revenue), U.S. 
warehousing and insurance, and quality testing,1 in 
accordance with section 772(c)(2)(A) of the Act.
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    \1\ Consistent with the 1994-96 Final Results (62 FR 61084, 
61091 (Comment 9)), we have determined that quality testing expenses 
incurred by ISL are movement expenses that the company incurs upon 
the arrival of the subject merchandise at the U.S. port of entry. 
The testing is performed at the time the product is unloaded from 
the maritime vessel in order to detect any impurities that may have 
entered the product while in transit.
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    We also deducted direct selling expenses and indirect selling 
expenses associated with commercial activity in the United States in 
accordance with section 772(d)(1) of the Act. These include credit 
expenses, inventory carrying costs, and other indirect selling 
expenses.
    Finally, we deducted an amount of profit allocated to direct, 
indirect, and imputed selling expenses associated with commercial 
activity in the United States in accordance with section 772(d)(3) of 
the Act. For a further discussion of the calculation of this profit 
amount, see Memorandum from Michelle Frederick and Constance Handley to 
the File: Preliminary Results of 1996-97 Administrative Review of 
Furfuryl Alcohol from South Africa (March 2, 1998).
    No other adjustments to CEP were claimed or allowed.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared ISL's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise. 
Pursuant to section 773(a)(1) of the Act, because ISL's aggregate 
volume of home market sales of the foreign like product was greater 
than five percent of its aggregate volume of U.S. sales of the subject 
merchandise, we determined that the home market was viable.
    We based NV on the price at which the foreign like product was 
first sold for consumption in South Africa, in the usual commercial 
quantities, in the ordinary course of trade, and at the same level of 
trade as the CEP,2 in accordance with section 
773(a)(1)(B)(i) of the Act. We made deductions from the starting price 
for home market packing and movement expenses in accordance with 
sections 773(a)(6)(B)(i) and (ii) of the Act. Pursuant to section 
773(a)(6)(C)(iii) of the Act, we made a circumstance-of-sale (COS) 
adjustment to NV by deducting home market credit expenses.
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    \2\ As noted below, we found that all home market and CEP sales 
were made at the same level of trade.
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    No other adjustments to NV were claimed or allowed.

Level of Trade/CEP Offset

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade as the U.S. sales. The NV level of trade is 
that of the starting-price sales in the comparison market. For CEP 
sales, such as those made by ISL in this review, the U.S. level of 
trade is the level of the constructed sale from the exporter to the 
importer.
    To determine whether NV sales are at a different level of trade 
than that of the U.S. sales, we examine stages in the marketing process 
and selling functions along the chain of distribution between the 
producer and the unaffiliated customer. If the comparison-market sales 
are at a different level of trade and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 
Finally, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP-offset provision). See 
Notice of Final Determination of Sales at Less Than Fair Value: Certain 
Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732 
(November 19, 1997).
    In implementing these principles in this review, we obtained 
information from ISL about the marketing stage involved in the reported 
U.S. and home market sales, including a description of the selling 
activities performed by ISL for each channel of distribution. In 
identifying levels of trade for CEP and home market sales, we 
considered the selling functions reflected in the CEP, after the 
deduction of expenses and profit under section 772(d) of the Act, and 
those reflected in the home market starting price before making any 
adjustments. We expect that, if claimed levels of trade are the same, 
the functions and activities of the seller should be similar. 
Conversely, if a party claims that levels of trade are different for 
different groups of sales, the functions and activities of the seller 
should be dissimilar.
    The record evidence before us in this review indicates that the 
home market and CEP levels of trade have not changed from the 1994-96 
Review.3 Although in this review, as in prior segments of 
the proceeding, ISL claimed entitlement to a CEP offset, we determined 
that for ISL there was one home market level of trade and one U.S. 
level of trade (i.e., the CEP level of trade), and that ISL's CEP level 
of trade was equivalent to the level of trade for the home market. ISL 
has claimed that ``a different level of trade must exist'' 4 
because the level-of-trade analysis does not consider the selling 
activities of Harborchem (the affiliated U.S. distributor). However, we 
find that the selling activities performed by ISL with respect to its 
home market and CEP sales 5 are not sufficiently different 
to constitute separate levels of trade. In both markets, ISL's selling 
activities consist primarily of order processing, marketing assistance, 
and technical support (including quality control

[[Page 11211]]

reports provided by ISL to Harborchem with respect to U.S. sales).
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    \3\ See 62 FR 61084, 61089-90 (Comment 7).
    \4\ ISL February 6, 1998, supplemental response at 26.
    \5\ ISL's home market and U.S. selling activities are detailed 
at pages 24-26 of its September 9, 1998, response and at page 25 of 
its February 6, 1998, response, respectively.
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    ISL claims that there is a qualitative difference in the amount of 
selling activities provided, since its home market sales significantly 
outnumber its shipments to Harborchem. However, as we stated in the 
1994-96 Final Results, while we examine selling functions on both a 
qualitative and quantitative basis, our examination is not contingent 
on the number of customers nor on the number of sales for which the 
activity is performed.6
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    \6\ 62 FR 61084, 61090 (Comment 7).
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    Accordingly, having determined that ISL's sales in the home market 
were at a level of trade that does not constitute a more advanced stage 
of distribution than the level of trade of the CEP, we did not make a 
CEP offset to NV.

Absorption of Antidumping Duties

    On August 29, 1997, the petitioner requested that the Department 
determine whether antidumping duties have been absorbed by ISL. Since 
the preliminary assessment rate for the review is zero, we 
preliminarily determine that ISL has not absorbed antidumping duties.

Currency Conversion

    We made currency conversions based on the exchange rates in effect 
on the dates of the U.S. sales as certified by the Federal Reserve Bank 
of New York. Section 773A(a) of the Act directs the Department to use a 
daily exchange rate in order to convert foreign currencies into U.S. 
dollars, unless the daily rate involves a ``fluctuation.'' In 
accordance with our practice, we have determined as a general matter 
that a fluctuation exists when the daily exchange rate differs from a 
benchmark by 2.25 percent. The benchmark is defined as the rolling 
average of rates for the past 40 business days. When we determine a 
fluctuation exists, we substitute the benchmark for the daily rate. See 
Policy Bulletin 96-1 Currency Conversions, 61 FR 9434 (March 8, 1996).

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period June 1, 1996--May 31, 1997:

------------------------------------------------------------------------
                                                                Margin  
                   Manufacturer/exporter                      (percent) 
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Illovo Sugar Ltd...........................................         0.00
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    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 ten days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. The Department will issue a notice of the final results of 
this administrative review, which will include the results of its 
analysis of issues raised in any such briefs, within 120 days from the 
publication of these preliminary results.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. If these 
preliminary results are adopted in our final results, we will instruct 
the Customs Service not to assess antidumping duties on the merchandise 
subject to review. Upon completion of this review, the Department will 
issue appraisement instructions directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of furfuryl alcohol from the Republic of South Africa 
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)(2)(c) of the Act: (1) the cash deposit rate 
for ISL will be the rate established in the final results of this 
review, except, if the rate is less than 0.5 percent and, therefore, de 
minimis, the cash deposit will be zero; (2) if the exporter is not a 
firm covered in this review, the previous review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (3) if neither the exporter nor the manufacturer 
is a firm covered in this or any previous review conducted by the 
Department, the cash deposit rate will be 11.55 percent, the ``All 
Others'' rate established in the LTFV investigation.
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: March 2, 1998.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 98-5867 Filed 3-5-98; 8:45 am]
BILLING CODE 3510-DS-P