[Federal Register Volume 63, Number 152 (Friday, August 7, 1998)]
[Notices]
[Pages 42366-42368]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21229]



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DEPARTMENT OF COMMERCE

International Trade Administration
[A-412-803]


Industrial Nitrocellulose From the United Kingdom; 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; Industrial Nitrocellulose from the United 
Kingdom.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on industrial 
nitrocellulose (INC) from the United Kingdom in response to a request 
by petitioner, Hercules Incorporated. This review covers exports of 
subject merchandise to the United States during the period July 1, 1996 
through June 30, 1997.
    We have preliminarily determined that sales have been made below 
normal value (NV). If these preliminary results are adopted in our 
final results, we will instruct the U.S. Customs Service to assess 
antidumping duties based on the difference between the constructed 
export price (CEP) and the NV. Interested parties are invited to 
comment on these preliminary results. Parties who submit comments are 
requested to submit with each comment (1) a statement of the issue and 
(2) a brief summary of the comment.

EFFECTIVE DATE: August 7, 1998.

FOR FURTHER INFORMATION CONTACT: Gideon Katz or Maureen Flannery, AD/
CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-
5255 or (202) 482-3020.

Applicable Statute 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 stated, all 
citations to the Department's regulations are references to the 
regulations as codified at 19 CFR Part 351 (62 FR 27296, May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

    The Department published in the Federal Register the antidumping 
duty order on INC from the United Kingdom on July 10, 1990 (55 FR 
28270). On July 21, 1997, we published in the Federal Register (62 FR 
38973) a notice of opportunity to request an administrative review of 
the antidumping duty order on INC from the United Kingdom covering the 
period July 1, 1996 through June 30, 1997.
    In accordance with 19 CFR 351.221, petitioner requested that we 
conduct an administrative review of sales of subject merchandise made 
by respondent, Imperial Chemical Industries PLC (ICI). We published a 
notice of initiation of this antidumping duty administrative review on 
August 28, 1997 (62 FR 45622). Under section 751(a)(3)(A) of the Act, 
the Department may extend the deadline for completion of administrative 
reviews if it determines that it is not practicable to complete the 
review within the established time limit. The Department published a 
notice of extension of the time limit for the preliminary results in 
this case on February 17, 1998. See Industrial Nitrocellulose from the 
United Kingdom: Notice of Extension of Time Limits for Preliminary 
Results of Antidumping Administrative Review, 63 FR 7756 (February 17, 
1998). The Department is conducting this administrative review in 
accordance with section 751(a) of the Act.

Scope of the Review

    This review covers shipments of INC from the United Kingdom. INC is 
a dry, white, amorphous synthetic chemical with a nitrogen content 
between 10.8 and 12.2 percent, which is produced from the reaction of 
cellulose with nitric acid. It is used as a film-former in coatings, 
lacquers, furniture finishes, and printing inks. INC is currently 
classifiable under Harmonized Tariff Schedule (HTS) item number 
3912.20.00. Although HTS subheadings are provided for convenience and 
Customs purposes, the written description of the scope of this order 
remains dispositive. The scope of the antidumping order does not 
include explosive grade nitrocellulose, which has a nitrogen content of 
greater than 12.2 percent.
    This review covers sales of the subject merchandise manufactured by 
ICI and entered into the United States during the period July 1, 1996 
through June 30, 1997.

Verification

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

Constructed Export Price

    Respondent reported U.S. sales as export price (EP) sales, claiming 
that, although an affiliated U.S. company, ICI Americas Inc. (ICIA), 
was involved in the sales process, ICIA's role involved no more than 
processing paperwork, and that all of ICI's U.S. sales were actually 
made in the United Kingdom.
    We examined the facts of this case in light of the statute and our 
past practice regarding EP and CEP sales and have preliminarily 
determined that respondent's U.S. sales are properly classified as CEP 
sales. Section 772(b) of the Act defines CEP as ``the price at which 
the subject merchandise is first sold (or agreed to be sold) in the 
United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise or by a seller 
affiliated with the producer or exporter, to a purchaser not affiliated 
with the producer or exporter, as adjusted * * *.'' (emphasis added).
    Section 772(a) of the Act defines EP as ``the price at which the 
subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of the subject 
merchandise outside of the United States to an unaffiliated purchaser 
in the United States or to an unaffiliated purchaser for exportation to 
the United States, as adjusted * * *.''
    When sales are made prior to importation through an affiliated or 
unaffiliated U.S. sales agent to an unaffiliated customer in the United 
States, our practice is to examine several criteria in order to 
determine whether the sales are EP sales. Those criteria are: (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. selling agent was limited to that of a ``processor 
of sales-related documentation'' and a ``communications link'' with the 
unaffiliated U.S. buyer. Where all three criteria are met, indicating 
that the activities of the U.S. selling agent are ancillary to the 
sale, the Department has classified the sales as EP sales. Where one or 
more of these conditions are not

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met, indicating that the U.S. sales agent is substantially involved in 
the U.S. sales process, the Department has classified the sales in 
question as CEP sales. See, e.g., Certain Cold-Rolled and Corrosion-
Resistant Carbon Steel Flat Products From Korea: Final Results of 
Antidumping Duty Administrative Reviews, 63 FR 13170 (March 18, 1998) 
wherein the Department determined that where a U.S. affiliate is 
involved in making a sale, it normally considers the sale to be a CEP 
transaction unless the record demonstrates that the U.S. affiliate's 
involvement in making the sale is incidental or ancillary (see, also, 
Viscose Rayon Staple Fiber from Finland: Final Results of Antidumping 
Duty Administrative Review, 63 FR 32820 (June 16, 1998)).
    In the instant review, the fact that the subject merchandise was 
shipped directly from ICI to the unaffiliated U.S. customers and that 
this was the customary commercial channel between these parties is not 
disputed. However, ICI contracted a U.S. selling agent whose duties 
included sales solicitation and price negotiation. Discussion of these 
two functions in a public notice is not possible due to their 
proprietary nature. See U.S. Verification Report.
    Because of ICI's agent's involvement in sales solicitation and 
price negotiation, we determine that ICI's U.S. selling agent is 
substantially involved in the sales process for INC. As indicated by 
our analysis of the third factor listed above, in this case, the 
function of the U.S. selling agent is not limited to that of a 
``processor of sales-related documentation'' and a ``communications 
link'' with the unaffiliated U.S. buyer. See U.S. Steel Group v. United 
States, CIT Slip Op. 98-96 (July 7, 1998) (upholding the Department's 
CEP determination in Certain Cut-to-Length Carbon Steel Plate from 
Germany: Final Results of Antidumping Administrative Review, 62 FR 
18390, which was largely based on the Department's discovery at 
verification that the U.S. importer was authorized to negotiate sales 
terms without prior approval from the exporter/producer).
    Therefore, ICI's U.S. sales process does not satisfy all of the 
three criteria for EP treatment. Accordingly, we determine that ICI's 
U.S. sales are properly treated as CEP transactions. We calculated CEP 
as defined in section 772(b) of the Act. We based CEP on the packed, 
delivered prices to unaffiliated purchasers in the United States. We 
made adjustments for rebates. We made deductions for movement expenses, 
including international freight, other U.S. transportation expenses, 
marine insurance, brokerage and handling, and U.S. customs duties, in 
accordance with section 772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act, we deducted 
commissions for selling INC in the United States, credit expenses, and 
indirect selling expenses. Finally, we made an adjustment for the 
profit allocated to selling expenses incurred in the United States, in 
accordance with section 772(d)(3) of the Act.

Normal Value

    Based on a comparison of the aggregate quantity of home market and 
U.S. sales, we determined that the quantity of foreign like product 
sold in the home market was sufficient to permit a proper comparison 
with the sales of the subject merchandise to the United States, 
pursuant to section 773(a) of the Act. Therefore, in accordance with 
section 773(a)(1)(B)(i) of the Act, we based NV on the price (exclusive 
of value-added tax (VAT)) at which the foreign like product was first 
sold for consumption in the home market, in the usual commercial 
quantities and in the ordinary course of trade, and at the same level 
of trade as the CEP sale.
    Under 19 CFR 351.403(c), we excluded sales to one affiliated 
customer in calculating NV because we determined that sales to this 
customer were not made at arm's length prices (i.e., at prices 
comparable to prices at which the firm sold identical merchandise to 
unaffiliated customers).
    We based NV on packed, delivered prices to unaffiliated purchasers 
in the home market. We made adjustments, where applicable, in 
accordance with section 773(a)(6) of the Act. Where applicable, we made 
adjustments to home market price for billing adjustments, rebates, 
discounts, and inland freight. We also made a deduction for home market 
credit, pursuant to section 773(a)(6)(C)(iii) of the Act. We deducted 
home market indirect selling expenses, up to the amount of U.S. 
commissions. In order to adjust for differences in packing between the 
two markets, we increased home market price by U.S. packing costs and 
reduced it by home market packing costs. Prices were reported net of 
VAT and, therefore, no deduction for VAT was necessary.
    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the United Kingdom at 
the same level of trade (LOT) as the CEP transactions. The NV LOT is 
that of the starting-price sales in the comparison market. The U.S. LOT 
is the level of the constructed sale from the exporter to the importer.
    To evaluate LOTs, we examined information regarding the 
distribution systems in both the U.S. and Canadian markets, including 
the selling functions, classes of customer, and selling expenses for 
each respondent. We determined that in this case the NV LOT was 
identical to the CEP LOT.

Price-to-Price Comparisons

    Pursuant to section 777A(d)(2), we compared the CEPs of individual 
transactions to the monthly weighted-average prices of sales of the 
foreign like product.

Preliminary Results of the Review

    As a result of our comparison of CEP and NV, we preliminarily 
determine that the following weighted-average dumping margin exists:

------------------------------------------------------------------------
                                                                 Margin 
          Manufacturer/exporter                  Period        (percent)
------------------------------------------------------------------------
Imperial Chemical Industries PLC.........     7/1/96-6/30/97      16.48 
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    Parties to the proceeding may request disclosure within 5 business 
days of the date of publication of this notice. Any interested party 
may request a hearing within 30 days of publication. Pursuant to 19 CFR 
351.310, any hearing, if requested, will be held 2 days after the date 
rebuttal briefs are due, 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 5 days 
after the time limit for filing the case brief. The Department will 
publish a notice of final results of this administrative review, which 
will include the results of its analysis of issues raised in any such 
comments, not later than 120 days after the date of publication of this 
notice.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Upon completion 
of this review, the Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of INC from the United Kingdom entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(c) of the Act: (1) the cash deposit 
rate for the reviewed

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company will be the rate established in the final results of this 
review; (2) for merchandise exported by manufacturers or exporters not 
covered in this review but covered in the original investigation of 
sales at less than fair value (LTFV) or a previous review, the cash 
deposit will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
or a 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 (4) 
for all other producers and/or exporters of this merchandise, the cash 
deposit rate shall be 11.13 percent, the ``all others'' rate 
established in the LTFV investigation (55 FR 21058, May 22, 1990).
    These deposit rates, when imposed, shall remain in effect until 
publication of the final results of the next administrative review.
    This notice also serves as a preliminary reminder to importers of 
their responsibility to file a certificate regarding the reimbursement 
of antidumping duties prior to liquidation of the relevant entries 
during this review period. Failure to comply with this requirement 
could result in the Secretary's presumption that reimbursement of 
antidumping duties occurred and the subsequent assessment of double 
antidumping duties.
    This determination is issued and published in accordance with 
sections 751(a)(1) of the Act (19 U.S.C. 1675(a)) and 19 CFR 351.213.

    Dated: July 30, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-21229 Filed 8-6-98; 8:45 am]
BILLING CODE 3510-DS-P