[Federal Register Volume 63, Number 68 (Thursday, April 9, 1998)]
[Notices]
[Pages 17364-17366]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-9432]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-428-803]


Industrial Nitrocellulose from Germany; 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 of industrial nitrocellulose from Germany.

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SUMMARY: In response to a request from the petitioner, Hercules 
Incorporated, the Department of Commerce is conducting an 
administrative review of the antidumping duty order on industrial 
nitrocellulose from Germany. The period of review is July 1, 1996 
through June 30, 1997. This review covers imports of industrial 
nitrocellulose from one producer, Wolff Walsrode AG.
    We have preliminarily found that sales of subject merchandise have 
been made below normal value. If these preliminary results are adopted 
in our final results, we will instruct the Customs Service to assess 
antidumping duties based on the difference between the export price or 
constructed export price and normal value.
    Interested parties are invited to comment on these preliminary 
results. Parties who submit arguments are requested to submit with the 
argument (1) a statement of the issue and (2) a brief summary of the 
argument. We will issue the final results not later than 120 days from 
the date of publication of this notice.

EFFECTIVE DATE: April 9, 1998.

FOR FURTHER INFORMATION CONTACT:
Todd Peterson or Zev Primor, AD/CVD Enforcement Office 4, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230; telephone (202) 482-4195, and 482-4114, respectively.

SUPPLEMENTARY INFORMATION: 

The Applicable Statute and Regulations

    Unless otherwise indicated, 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 (URAA). In addition, unless otherwise 
indicated, all citations to the Department of Commerce's (the 
Department's) regulations refer to the regulations codified at 19 CFR 
Part 351, (62 FR 27296, May 19, 1997).

Background

    On July 10, 1990, the Department published in the Federal Register 
(55 FR 28271) the antidumping duty order on industrial nitrocellulose 
(INC) from Germany. On July 21, 1997, the Department published in the 
Federal Register (62 FR 38973) a notice of opportunity to request an 
administrative review of this antidumping duty order. On July 30, 1997, 
in accordance with 19 CFR 351.213(b), the petitioner and domestic 
producer of the subject merchandise, Hercules Incorporated, requested 
that the Department conduct an administrative review of Wolff Walsrode 
AG's (WWAG's) imports of subject merchandise to the United States. We 
published the notice of initiation of this review on August 28, 1997 
(62 FR 45621).

Verification

    As provided in section 782(i)(3) of the Act, we verified the data 
provided by the respondent using standard verification procedures, 
including on-site inspection of the manufacturer's facilities, the 
examination of relevant sales and financial records, and selection of 
original documentation containing relevant information. Our 
verification results are outlined in the public versions of the 
verification reports.

Scope of the Review

    Imports covered by this review are shipments of INC from Germany. 
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 as a 
nitrogen content of greater than 12.2 percent. INC is currently 
classified under Harmonized Tariff Schedule (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 review period is July 1, 1996 
through June 30, 1997.

Product Comparisons

    We calculated monthly, weighted-average, normal values (NVs). Where 
possible, we compared U.S. sales to sales of identical merchandise in 
Germany. When identical merchandise

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was not sold during the relevant contemporaneous period, we compared 
U.S. sales to sales of the next most similar foreign like product (see 
section 771(16) (B) and (C) of the Act).

Export Price and Constructed Export Price

    For sales to the United States, we used export price (EP) or 
constructed export price (CEP) as defined in sections 772(a) and 772(b) 
of the Act, as appropriate. In accordance with sections 772(a) and (c) 
of the Act, we calculated an EP where the merchandise was sold by the 
producer outside the United States directly to the first unaffiliated 
purchaser in the United States prior to importation. In accordance with 
sections 772(b), (c) and (d) of the Act, we calculated a CEP for those 
sales made by affiliated U.S. resellers that took place after 
importation into the United States. For sales made prior to 
importation, we considered the following factors to determine whether 
to treat the sales as EP or CEP: (1) Whether the merchandise was 
shipped directly from the manufacturer to the unaffiliated U.S. 
customer; (2) whether this was the customary commercial channel between 
the parties involved; and (3) whether the function of the U.S. 
affiliate was limited to that of a processor of sales-related 
documentation and a communications link with the unrelated buyer. The 
facts indicate that the activities of the U.S. affiliate were ancillary 
to these sales (e.g., arranging transportation or customs clearance, 
invoicing), and therefore, we treated transactions as EP sales. The 
record in this case indicates that WWAG has correctly classified a 
portion of its U.S. sales as EP sales. For these sales the unaffiliated 
U.S. customer communicated directly with WWAG in Germany in placing its 
order. Wolff Walsrode U.S. (WWUS) acted only as processor of sales-
related documentation.
    In accordance with sections 782(b), (c) and (d) of the Act, we 
calculated a CEP for those sales made by affiliated U.S. resellers that 
took place after importation into the United States. EP and CEP sales 
were based on the packed C&F, delivered, CIF duty paid, or ex-dock duty 
paid price to unaffiliated purchasers, in, or for exportation to, the 
United States. As appropriate, we made deductions for discounts and 
rebates, including early payment discounts. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act; 
these included foreign inland freight, foreign brokerage and handling, 
ocean freight, marine insurance, U.S. customs brokerage, U.S. customs 
duties, harbor maintenance fees, merchandise processing fees, and U.S. 
inland freight expenses (freight from port to warehouse and freight 
from warehouse to the customer). We also added U.S. freight revenue to 
gross unit price.
    For CEP sales, in accordance with section 772(d)(1) of the Act, we 
deducted those selling expenses associated with economic activities 
occurring in the United States, including commissions paid on sales 
made by unrelated parties, direct selling expenses (credit costs and 
warranty expenses), inventory carrying costs, and indirect selling 
expenses, where applicable. We also deducted an amount for CEP profit 
in accordance with section 772(d)(3) of the Act.

Normal Value

    We compared the aggregate quantity of home market and U.S. sales 
and determined that the quantity of the company's sales in its home 
market was more than five percent of the quantity of its sales to the 
U.S. market. Consequently, pursuant to section 773(a)(1)(B) of the Act, 
we based NV on home market sales.
    Section 773(a)(1)(B) of the Act provides that normal value shall be 
based on the price at which the foreign like product is sold in the 
usual commercial quantities and in the ordinary course of trade.
    We made adjustments for differences in packing in accordance with 
section 773(a)(6)(A) and 773(a)(6)B(i) of the Act. We also made 
adjustments for movement expenses, consistent with section 773(a)(6)(B) 
of the Act, for inland freight. In addition, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Act, as well as for differences in circumstances of sale (COS) 
in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. For comparisons to EP, we made COS adjustments by deducting 
direct selling expenses incurred on home market sales and adding U.S. 
direct selling expenses. For comparisons to CEP, we made COS 
adjustments by deducting direct selling expenses incurred on home 
market sales and adding any direct selling expenses associated with 
U.S. sales not deducted under the provisions of section 772(d)(1) of 
the Act. Because WWAG paid commissions on part of its U.S. sales, in 
calculating NV, we offset these commissions using the weighted-average 
amount of indirect selling expenses incurred on home market sales for 
the comparison product, up to the amount of the U.S. commissions. See 
19 CFR 351.410(e).

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 EP or CEP sales. The NV level of trade 
is that of the starting-price sales in the comparison market or, when 
NV is based on CV, that of the sales from which we derive selling, 
general and administrative expenses (SG&A) and profit. For EP, the 
level of trade is also the level of the starting-price sale, which is 
usually from exporter to importer. For CEP, it is the level of the 
construction sale from the exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than EP or CEP, 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, for CEP sales, 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 (November 19, 1997).
    In the present case, there are two channels of distribution in the 
U.S. market. The first channel, direct (EP) sales, are sales of full 
container load shipments that travel directly from WWAG to the U.S. 
customer. The second channel involves (CEP) sales from inventory 
maintained by WWUS in a warehouse.
    In the home market, WWAG also has two different distribution 
channels. The first type of sales are direct sales to primarily end-
users where the product is delivered from the plant's storage warehouse 
to customer. The second home market distribution channel are those 
sales where delivery is made from independent, off-site warehouses, 
primarily for geographic and logistical reasons. There are no 
functional differences in marketing processes and

[[Page 17366]]

selling functions along the chain of distribution between those sales 
shipped directly from the plant and sales from the warehouse. 
Therefore, we determine that the two home market channels of 
distribution comprise a single level of trade.
    Based on analysis of the different types of selling functions 
listed by respondent, relevant classes of customers, and selling 
expenses for both types of sales in the home and U.S. markets, the 
Department preliminarily determines that EP sales and home market sales 
are made at the same level of trade. For these sales, WWAG performs 
similar selling functions in both markets. However, the Department 
preliminarily determines that CEP sales are made at a different level 
of trade than EP sales and the home market sales.
    In calculating CEP, certain adjustments are made pursuant to 
Section 772(c) and (d) of the Act. Specifically, Section 772(d) states 
that the price used to establish constructed export price are adjusted 
to remove expenses incurred by WWAG and WWUS in selling subject 
merchandise in the United States including inventory management, 
freight arrangements, and invoice processing to name a few. Therefore, 
when selling functions for CEP sales are compared with selling 
functions for home market sales, home market sales (NV) are more remote 
from factory than CEP sales (i.e., that NV is at a more advance level 
of trade than CEP). Therefore a level of trade adjustment is warranted 
when comparing NV to CEP sales.
    Section 773(a)(7)(B) states that a CEP offset is granted when NV is 
compared to CEP and NV is determined to be at a more advanced level of 
trade than the CEP, but the data available do not provide an 
appropriate basis to determine whether the difference in level of trade 
affects price comparability. See 19 CFR 351.412(f).
    In the present case, as there is no level in the home market 
comparable to the CEP level and only one level of trade in the home 
market, the data does not exist to quantity a level of trade 
adjustment. As a result, the Department has preliminarily determined to 
grant WWAG an adjustment to NV in the form of a CEP offset.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on the rates certified by the Federal Reserve Bank. See 
Change in Policy Regarding Currency Conversions, 61 FR 9434 (March 8, 
1996).

Preliminary Results of the Review

    As a result of this review, we preliminarily determine that the 
following margin exists for the period July 1, 1996, through June 30, 
1997:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
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Wolff Walsrode AG (WWAG)....................................        6.58
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    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Interested parties may also 
request a hearing within ten days of publication. If requested, a 
hearing will be held as early as convenient for the parties but not 
later than 44 days after the date of publication or the first work day 
thereafter. Interested parties may submit case briefs not later than 30 
days after the date of publication of this notice. Rebuttal briefs, 
which must be limited to issues raised in the case briefs, may be filed 
not later than 37 days after the date of publication of this notice. 
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. In accordance 
with the methodology in Final Results of Antidumping Duty 
Administrative Review and Partial Termination of Administrative Review: 
Circular Welded Non-Alloy Steel Pipe from the Republic of Korea (62 FR 
55574, October 27, 1997), we calculated exporter/importer-specific 
assessment values by dividing the total dumping duties due for each 
importer by the number of tons used to determine the duties due. We 
will direct Customs to assess the resulting per-ton dollar amount 
against each ton of the merchandise entered by these importers during 
the review period.
    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of industrial nitrocellulose from Germany entered, or 
withdrawn from warehouse, for consumption on or after the publication 
date of the final results of this administrative review, as provided by 
section 751(a)(1) of the Act: (1) The case deposit rate for the 
reviewed company will be the rate established in the final results of 
this administrative review (except no cash deposit will be required 
where weighted-average margin is de minimis, i.e., less than 0.5 
percent); (2) for merchandise exported by manufacturers or exporters 
not covered in this review but covered in the original less-than-fair-
value (LTFV) investigation or a previous review, the cash deposit will 
continue to be the most recent rate published in the final 
determination or final results for which the manufacturer or exporter 
received an individual rate; (3) if the exporter is not a firm covered 
in this review, a previous review, or the original investigation, but 
the manufacturer is, the cash deposit rate will be the rate established 
for the most recent period for the manufacturer of the merchandise; and 
(4) if neither the exporter nor the manufacturer is a firm covered in 
this or any previous reviews or the original investigation, the cash 
deposit rate will be 3.84 percent, the ``all others'' rate established 
in the LTFV investigation.
    This notice serves as a preliminary reminder to importers of their 
responsibility to file a certificate regarding the reimbursement of 
antidumping duties prior to liquidation of the relevant entries during 
this review period. Failure to comply with this requirement could 
result in the Secretary's presumption that reimbursement of antidumping 
duties occurred and the subsequent assessment of double antidumping 
duties.
    This administrative review and notice are in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: April 2, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary, Import Administration.
[FR Doc. 98-9432 Filed 4-8-98; 8:45 am]
BILLING CODE 3510-DS-M