[Federal Register Volume 64, Number 152 (Monday, August 9, 1999)]
[Notices]
[Pages 43152-43157]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20447]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-475-818]


Notice of Preliminary Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Pasta From Italy

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

SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on certain pasta (pasta) from 
Italy. This review covers shipments to the United States by seven 
respondents during the period of review (POR) July 1, 1997, through 
June 30, 1998.
    We preliminarily find that, for certain respondents, sales of the 
subject merchandise have been made below normal value. If these 
preliminary results are adopted in the final results, we will instruct 
the Customs Service to assess antidumping duties on the subject 
merchandise exported by these companies.
    For three respondents, we preliminarily find that sales of the 
subject merchandise have not been made below normal value. If these 
preliminary results are adopted in the final results, we will instruct 
the Customs Service not to assess antidumping duties on the subject 
merchandise exported by this company.

EFFECTIVE DATE: August 9, 1999.

FOR FURTHER INFORMATION CONTACT: John Brinkmann, Office of AD/CVD 
Enforcement, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
5288.

SUPPLEMENTARY INFORMATION:

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. 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 
(1998).

Case History

    On July 24, 1996, the Department published in the Federal Register 
the antidumping duty order on certain pasta from Italy (61 FR 38547). 
On July 1, 1998, we published in the Federal Register the notice of 
``Opportunity to Request an Administrative Review'' of this order, for 
the period July 1, 1997 through June 30, 1998 (63 FR 35909).
    In accordance with 19 CFR 351.213(b), on July 31, 1998, Borden, 
Inc., Hershey Pasta and Grocery Group, Inc.,\1\ and Gooch Foods, Inc. 
(the petitioners) requested a review of the following producers and 
exporters of pasta from Italy: Pastificio Antonio Pallante (Pallante); 
Arrighi S.p.A. Industrie Alimentari (Arrighi); Barilla Alimentari 
S.R.L. (Barilla); N. Puglisi & F. Industria Paste Alimentare S.p.A. 
(Puglisi); La Molisana Industrie Alimentari S.p.A. (La Molisana); 
Pastificio Fratelli Pagani S.p.A. (Pagani); and Rummo S.p.A. Molino e 
Pastificio (Rummo). The petitioners subsequently withdrew their request 
for a review of Arrighi, Barilla and Pagani prior to initiation. In 
addition, the following producers and/or exporters of pasta from Italy 
requested an administrative review in accordance with 19 CFR 
351.213(b)(2): Rummo; La Molisana; Puglisi; Pallante; F.lli De Cecco di 
Filippo Fara S. Martino S.p.A. (De Cecco); Pastificio Maltagliati 
S.p.A. (Maltagliati); Riscossa F.lli Mastromauro S.r.l. (Riscossa); 
Commercio-Rappresentanze-Export S.r.l. (Corex); Pastificio Fabianelli 
S.p.A. (Fabianelli); Industria Alimentari Colavita S.p.A. (Indalco); 
and F. Divella Molina e Pastificio (Divella). On August 27, 1998, we 
published the notice of initiation of this antidumping duty 
administrative review covering the period of July 1, 1997 through June 
30, 1998 (Notice of Initiation, 63 FR 45796). After initiation, 
Divella, Fabianelli, Indalco, and Riscossa withdrew their requests for 
review. See Partial Rescission of Antidumping Duty Administrative 
Review section, below.
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    \1\ Effective January 1, 1999, Hershey Pasta and Grocery Group, 
Inc., became New World Pasta, Inc.
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    Because the Department had disregarded sales that failed the cost 
test during the preceding review of De Cecco, La Molisana, Puglisi and 
Rummo, pursuant to section 773(b)(2)(A)(ii) of the Act, we had 
reasonable grounds to believe or suspect that sales by these companies 
of the foreign like product under consideration for the determination 
of normal value in this review may have been made at prices below the 
cost of production (COP). Therefore, we initiated cost investigations 
on these four companies at the time we initiated the antidumping 
review.
    On September 1, 1998, we issued an antidumping questionnaire \2\ to 
all of the companies subject to review. After several extensions, the 
respondents submitted their responses to sections A through C (or D, 
where applicable) of the questionnaire by November 5, 1998.
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    \2\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under review that it sells, and the sales of the 
merchandise in all of its markets. Sections B and C of the 
questionnaire request comparison market sales listings and U.S. 
sales listings, respectively. Section D requests additional 
information about the cost of production of the foreign like product 
and constructed value of the merchandise under review.
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    On November 12, 1998, the petitioners alleged that Corex and 
Maltagliati had sold the foreign like product at prices below the COP. 
On December 22, 1998, we initiated a sales-below-cost investigation 
with respect to both companies. On December 14, 1998, the petitioners 
also alleged that Pallante had also sold the foreign like product at 
prices below the COP. We initiated a sales below cost investigation 
with respect to Pallante on January 4, 1999. All the companies 
submitted their COP responses by February 2, 1999.
    The Department issued its supplemental section A questionnaires in 
November 1998, and supplemental sections B and C questionnaires in

[[Page 43153]]

January 1999. Supplemental section D questionnaires were issued in 
February 1999. Responses to all supplemental questionnaires were 
received by March 23, 1999.
    We verified the sales and cost information submitted by Rummo from 
April 12 through April 20, 1999 and May 17 through 19, 1999. From April 
22 through April 30, 1999, we verified the sales and cost information 
submitted by Maltagliati.
    On March 12, 1999, the Department published a notice postponing the 
preliminary results of this review until June 30, 1999 (64 FR 12287). 
On June 16, 1999, the Department published a notice further postponing 
the preliminary results of this review until August 2, 1999 (64 FR 
32213).

Partial Rescission of Antidumping Duty Administrative Review

    On September 25, 1998, Divella and Fabianelli withdrew their 
requests for a review. Indalco withdrew its request for a review on 
September 29, 1998. Riscossa withdrew its request on November 17, 1998. 
Because there were no other requests for reviews of these companies, 
and because the companies' letters withdrawing their requests for 
review were timely filed, we are rescinding the review with respect to 
these companies in accordance with 19 CFR 351.213(d)(1).

Scope of Review

    Imports covered by this review are shipments of certain non-egg dry 
pasta in packages of five pounds (2.27 kilograms) or less, whether or 
not enriched or fortified or containing milk or other optional 
ingredients such as chopped vegetables, vegetable purees, milk, gluten, 
diastases, vitamins, coloring and flavorings, and up to two percent egg 
white. The pasta covered by this scope is typically sold in the retail 
market, in fiberboard or cardboard cartons, or polyethylene or 
polypropylene bags of varying dimensions.
    Excluded from the scope of this review are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione (IMC), by Bioagricoop Scrl, by QC&I International 
Services, by Ecocert Italia or by Consorzio per il Controllo dei 
Prodotti Biologici.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheading is provided for convenience and 
customs purposes, the written description of the merchandise subject to 
the order is dispositive.

Scope Rulings

    The Department has issued the following scope rulings to date:
    (1) On August 25, 1997, the Department issued a scope ruling that 
multicolored pasta, imported in kitchen display bottles of decorative 
glass that are sealed with cork or paraffin and bound with raffia, is 
excluded from the scope of the antidumping and countervailing duty 
orders. See Memorandum from Edward Easton to Richard Moreland, dated 
August 25, 1997.
    (2) On July 30, 1998, the Department issued a scope ruling, finding 
that multipacks consisting of six one-pound packages of pasta that are 
shrink-wrapped into a single package are within the scope of the 
antidumping and countervailing duty orders. See letter from Susan H. 
Kuhbach, Acting Deputy Assistant Secretary for Import Administration, 
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., 
dated July 30, 1998.
    (3) On October 23, 1997, the petitioners filed an application 
requesting that the Department initiate an anti-circumvention 
investigation against Barilla, an Italian producer and exporter of 
pasta. On October 5, 1998, the Department issued its final 
determination that, pursuant to section 781(a) of the Act, 
circumvention of the antidumping duty order is occurring by reason of 
exports of bulk pasta from Italy produced by Barilla which subsequently 
are repackaged in the United States into packages of five pounds or 
less for sale in the United States. See Anti-circumvention Inquiry of 
the Antidumping Duty Order on Certain Pasta From Italy: Affirmative 
Final Determination of Circumvention of the Antidumping Duty Order, 63 
FR 54672 (October 13, 1998).
    (4) On October 26, 1998, the Department self-initiated a scope 
inquiry to determine whether a package weighing over five pounds as a 
result of allowable industry tolerances may be within the scope of the 
antidumping and countervailing duty orders. On May 24, 1999 we issued a 
final scope ruling finding that, effective October 26, 1998, pasta in 
packages weighing or labeled up to (and including) five pounds four 
ounces is within the scope of the antidumping and countervailing duty 
orders. See Memorandum From John Brinkmann to Richard Moreland, dated 
May 24, 1999.

Verification

    As provided in section 782(i) of the Act, we verified sales and 
cost information provided by Maltagliati and Rummo. We used standard 
verification procedures, including on-site inspection of the 
manufacturers' facilities and examination of relevant sales and 
financial records. Our verification results are outlined in the 
verification reports placed in the case file.

Comparisons to Normal Value

    To determine whether sales of certain pasta from Italy were made in 
the United States at less than fair value, we compared the export price 
(EP) or constructed export price (CEP) to the normal value (NV). We 
first attempted to compare contemporaneous sales of products sold in 
the U.S. and comparison markets that were identical with respect to the 
following characteristics: pasta shape; type of wheat; additives; and 
enrichment. However, we did not find any comparison market sales of 
merchandise that were identical in these respects to the merchandise 
sold in the United States. Accordingly, we compared U.S. products with 
the most similar merchandise sold in the comparison market based on the 
characteristics listed above, in that order of priority. Where there 
were no appropriate comparison market sales of comparable merchandise, 
we compared the merchandise sold in the United States to constructed 
value (CV), in accordance with section 773 (a)(4) of the Act.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. We 
calculated EP where the merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation and 
CEP was not otherwise warranted based on the facts on our record. We 
calculated CEP where sales to the first unaffiliated purchaser took 
place after importation. We based EP and CEP on the packed CIF, ex-
factory, FOB, or delivered prices to the first unaffiliated customer 
in, or for exportation to, the United States. Where appropriate, we 
reduced these prices to reflect discounts and rebates.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including inland 
freight from plant or warehouse to port of exportation, foreign 
brokerage handling and loading

[[Page 43154]]

charges, export duties, international freight, marine insurance, U.S. 
duties, and U.S. inland freight expenses (freight from port to the 
customer). In addition, where appropriate, we increased the EP and CEP 
by the amount of the countervailing duties paid that were attributable 
to an export subsidy, in accordance with section 772(c)(1)(C).
    For CEP, in accordance with section 772(d)(1) of the Act, where 
appropriate, we deducted from the starting price those selling expenses 
that were incurred in selling the subject merchandise in the United 
States, including direct selling expenses (advertising, credit costs, 
warranties, and commissions paid to unaffiliated sales agents). In 
addition, we deducted indirect selling expenses that related to 
economic activity in the United States. These expenses include certain 
indirect selling expenses incurred in the exporting country and the 
indirect selling expenses of affiliated U.S. distributors. We also 
deducted from CEP an amount for profit in accordance with section 772 
(d)(3) and (f) of the Act.
    Certain respondents reported the resale of subject merchandise 
purchased in Italy from unaffiliated producers. Where an unaffiliated 
producer of the subject pasta knew at the time of the sale that the 
merchandise was destined for the United States, the relevant basis for 
the export price would be the price between that producer and the 
respondent. See Dynamic Random Access Memory Semiconductors of One 
Megabit or Above From the Republic of Korea: Final Results of 
Antidumping Duty Administrative Review, Partial Rescission of 
Administrative Review and Notice of Determination Not to Revoke Order, 
63 FR 50867, 50876 (September 23, 1998). In this review, the 
unaffiliated producers knew or had reason to know at the time of sale 
that the ultimate destination of the merchandise was the United States 
because virtually all enriched pasta is sold to the United States. 
Accordingly, such transactions were disregarded for purposes of our 
analysis.
    Consistent with our methodology in prior reviews (Notice of Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review: Certain Pasta From Italy, 64 FR 6615, 6617 (February 10, 
1999)), when respondents purchased pasta from other producers and we 
were able to identify resales of this merchandise to the United States, 
we excluded sales of the purchased pasta from the margin calculation. 
Where the purchased pasta was commingled with the respondent's 
production and we could not identify the resales, we examined both 
sales of produced pasta and resales of purchased pasta. Inasmuch as the 
percentage of pasta purchased by any single respondent was an 
insignificant part of its U.S. sales data base, we included the sales 
of commingled purchased pasta in our margin calculations.

Normal Value

A. Selection of Comparison Markets

    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 each respondent's volume of home market sales of the 
foreign like product to the volume of their U.S. sales of the subject 
merchandise. Pursuant to sections 773(a)(1)(B) and (C) of the Act, 
because, with the exception of Corex, each respondent'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 for all 
producers, except Corex.
    Corex reported that it made no home market sales during the POR. 
Therefore, in accordance with section 773(a)(1)(B)(ii) of the Act, we 
have based NV on the price at which the foreign like product was first 
sold for consumption in the respondent's largest third-country market, 
Sweden, which had an aggregate sales quantity greater than five percent 
of the aggregate quantity sold in the United States.

B. Cost of Production Analysis

    Before making any comparisons to normal value, we conducted a COP 
analysis, pursuant to section 773(b) of the Act, to determine whether 
the respondents' comparison market sales were made below the cost of 
production. We calculated the COP based on the sum of the cost of 
materials and fabrication for the foreign like product, plus amounts 
for selling, general, and administrative expenses (SG&A) and packing, 
in accordance with section 773(b)(3) of the Act. We relied on the 
respondents' information as submitted, except in the specific instances 
discussed below.

Corex

    We reclassified certain expenses reported as indirect selling 
expenses as G&A and revised Corex's G&A ratio. See Memorandum from 
Cindy Robinson to John Brinkmann dated August 2, 1999 (Corex Analysis 
Memo).

Maltagliati

    For semolina cost we used the weighted-average cost of semolina, 
adjusted for loss in processing, found at verification. We also 
recalculated G&A to include payments Maltagliati made to an affiliate 
for financial services. See Memorandum from Constance Handley to John 
Brinkmann dated August 2, 1999 (Maltagliati Analysis Memo).

Rummo

    We recalculated G&A to include rental and amortization expenses 
found at verification. See Memorandum from James Kemp to John Brinkmann 
dated August 2, 1999 (Rummo Analysis Memo).

Test of Comparison Market Prices

    As required under section 773(b) of the Act, we compared the 
weighted-average COP for each respondent to their comparison market 
sales of the foreign like product, to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. We 
determined the net comparison market prices for the below-cost test by 
subtracting from the gross unit price any applicable movement charges, 
discounts, rebates, direct and indirect selling expenses, and packing 
expenses.

Results of COP Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product during the 12 month period were at prices less than the 
COP, we determined such sales to have been made in ``substantial 
quantities'' within an extended period of time in accordance with 
section 773(b)(2) (B) and (C) of the Act. In such cases, because we 
compared prices to POR-average costs, we also determined that such 
sales were not made at prices which would permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act. Therefore, for purposes of this administrative 
review, we disregarded the below-cost sales and used the remaining 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act.
    For one company, Corex, we found that all comparison market sales 
were below the COP.

[[Page 43155]]

Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on ex-works, FOB or delivered prices to 
comparison market customers. We made deductions from the starting price 
for handling, loading, inland freight, warehousing, inland insurance, 
discounts, and rebates. In accordance with section 773(a)(6) (A) and 
(B) of the Act, we deducted comparison market packing costs and added 
U.S. packing costs. In addition, we made circumstance of sale (COS) 
adjustments for direct expenses, including imputed credit expenses, 
advertising, warranty expenses, commissions, bank charges and interest 
revenue, in accordance with section 773(a)(6)(C)(iii) of the Act.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act. We based this adjustment on the difference 
in the variable costs of manufacturing for the foreign like product and 
subject merchandise, using POR-average costs.
    We also made adjustments, in accordance with 19 CFR 351.410(e), for 
indirect selling expenses incurred on comparison market or U.S. sales 
where commissions were granted on sales in one market but not in the 
other (the ``commission offset''). Specifically, where commissions were 
granted in the U.S. market but not in the comparison market, we made a 
downward adjustment to normal value for the lesser of (1) The amount of 
the commission paid in the U.S. market, or (2) the amount of indirect 
selling expenses incurred in the comparison market. If commissions were 
granted in the comparison market but not in the U.S. market, we made an 
upward adjustment to normal value following the same methodology.
    Sales of pasta purchased by the respondents from unaffiliated 
producers and resold in the comparison market were treated in the same 
manner described above in the ``Export Price and Constructed Export 
Price'' section of this notice.

Normal Value Based on Constructed Value

    For Corex, we could not determine the NV based on comparison market 
sales because there were no contemporaneous sales of a comparable 
product in the ordinary course of trade. Therefore, we compared the EP 
to CV. In accordance with section 773(e) of the Act, we calculated CV 
based on the sum of the cost of manufacturing of the product sold in 
the United States, plus amounts for SG&A expenses, profit, and U.S. 
packing costs. We calculated Corex's CV based on the methodology 
described in the ``Cost of Production Analysis'' section of this 
notice, above.
    Because there were no above-cost comparison market sales and hence 
no actual company-specific profit data available for Corex's sales of 
the foreign like product to the comparison market, we calculated profit 
expenses in accordance with section 773(e)(2)(B)(i) of the Act. Section 
773(e)(2)(B)(i) states that SG&A and profit may be determined on the 
basis of the actual amounts incurred and realized by the specific 
exporter or producer being examined in the investigation or review, in 
connection with the production and sale, for consumption in the foreign 
country, of merchandise that is in the same general category of 
products as the subject merchandise. In this case, for CV profit, we 
used Corex's 1997 financial statement profit margin. For SG&A, we have 
used Corex's actual expenses incurred in Italy on comparison market 
sales because this data reflects Corex's actual experience in selling 
the foreign like product. (See Final Determination of Sales at Less 
Than Fair Value: Certain Preserved Mushrooms from Chile, 63 FR 56613, 
56615 (October 22, 1998)).
    For price-to-CV comparisons, we made adjustments to CV for COS 
differences, in accordance with section 773(a)(8) of the Act and 19 CFR 
351.410. We made COS adjustments by deducting direct selling expenses 
incurred on comparison market sales and adding U.S. direct selling 
expenses.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
as the U.S. EP and CEP sales, to the extent practicable. When there 
were no sales at the same level of trade, we compared U.S. sales to 
comparison market sales at a different level of trade. When NV is based 
on CV, the level of trade is that of the sales from which we derive 
SG&A expenses and profit.
    To determine whether comparison market sales were at different 
levels of trade we examined stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated (or arm's length) customers. If the comparison-market 
sales were at a different level of trade and the differences affected 
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 made a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act.
    Finally, if the NV level was more remote from the factory than the 
CEP level and there was no basis for determining whether the difference 
in levels between NV and CEP affected price comparability, we granted a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. 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).
    For a detailed description of our level-of-trade methodology and 
company-specific level of trade findings for these preliminary results, 
see the August 2, 1999, 97/98 Administrative Review of Pasta from Italy 
and Turkey: Level of Trade Findings Memoranda on file in the Import 
Administration's Central Records Unit (Room B-099) of the main Commerce 
building. The company-specific level of trade analysis is included in 
the analysis memorandum for each company.
    The U.S. Court of International Trade (CIT) has held that the 
Department's practice of determining LOTs for CEP transactions after 
CEP deductions is an impermissible interpretation of section 772(d) of 
the Act. See Borden, Inc., v. United States, 4 F. Supp.2d 1221, 1241-42 
(CIT March 26, 1998) (Borden); see also, Micron Technology, Inc. v. 
United States, Court No. 96-06-01529, Slip Op. 99-02 at 8-15 (CIT, 
January 28, 1999). The Department believes, however, that its practice 
is in full compliance with the statute and that these CIT decisions do 
not contain persuasive statutory analysis. On June 4, 1999, the CIT 
entered final judgment in Borden on the LOT issue. See Borden, Inc., v. 
United States, Court No. 96-08-01970, Slip Op. 99-50 (CIT, June 4, 
1999). The government is considering an appeal of Borden. The Micron 
case is on remand to the Department for application of the Borden LOT 
decision in the underlying administrative proceeding. Consequently, the 
Department has continued to follow its normal practice of adjusting CEP 
under section 772(d) prior to starting a LOT analysis, as articulated 
in the Department's regulations at Sec. 351.412.

Company-Specific Issues

Corex

    We recalculated the indirect selling expense ratio based on 
information

[[Page 43156]]

submitted in January 21, 1999 section D response. See Corex Analysis 
Memo.

Maltagliati

    We made corrections to both the U.S. and home market databases 
based on our verification findings. Specifically, we recalculated 
credit, inventory carrying costs, home market freight from plant to 
customer, home market commissions and U.S. bank charges, and indirect 
selling expenses and advertising in both markets. In addition, certain 
allocated expenses, including inland freight from plant to warehouse 
for U.S. sales, warehousing expense for U.S. sales, were reported 
correctly in the narrative portion of the response, but not in the 
database. We have incorporated the correct amount for those expenses 
into the database.
    In addition, Maltagliati included a small quantity of sales in its 
database which it described as ``free pasta but billed to parent at 
full price.'' At verification, we determined that these transactions 
involved Maltagliati providing pasta to affiliated companies to give 
away as gifts. We have determined that these sales were outside the 
ordinary course of trade and removed them from our calculation of 
normal value. See Maltagliati Analysis Memo.

La Molisana

    La Molisana claimed a level of trade adjustment on the basis of 
different selling activities associated with their La Molisana (``LM'') 
brand and private label (``PL'') products sold in both the home market 
and the United States. Consistent with the first review, we found that 
different brands are not an appropriate basis for establishing 
different levels of trade. See Notice of Final Results and Partial 
Rescission of Antidumping Duty Administrative Review: Certain Pasta 
From Italy, 64 FR 6615, 6624 (February 10, 1999) (Comment 10A).

Pallante

    We recalculated home market warranty expenses, advertising, and 
imputed credit expenses. We recalculated inventory carrying costs for 
the U.S. and home market based on the cost of manufacture. See 
Memorandum from Dennis McClure to John Brinkmann dated August 2, 1999 
(Pallante Analysis Memo).

Rummo

    We recalculated U.S. credit expenses, based on the corrected pay-
dates which Rummo supplied at verification. We also removed warehousing 
expenses and certain advertising expenses from indirect selling 
expenses incurred in the United States and treated them as a movement 
expenses and direct advertising expenses, respectively. Indirect 
selling expenses incurred in the United States were recalculated to 
reflect this change and to include other applicable expenses found at 
verification. We disallowed two home market billing adjustments because 
we were unable to tie the adjustments claimed to the sales made during 
the POR. See Rummo Analysis Memo.

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve. 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 the 
Department's 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 that 
a fluctuation exists, we substitute the benchmark for the daily rate.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following percentage weighted-average margins exist for the period July 
1, 1997 through June 30, 1998:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Corex......................................................         0.00
De Cecco...................................................        10.48
La Molisana................................................        18.38
Maltagliati................................................        19.19
Pallante...................................................         3.44
Puglisi....................................................        10.19
Rummo......................................................         2.99
------------------------------------------------------------------------
\1\ Deminimus.

    We will disclose the calculations used in our analysis to parties 
to this proceeding within five days of the publication date of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the date of publication of this notice. See 
19 CFR 351.310(c). Any hearing, if requested, will be held 44 days 
after the date of publication, or the first workday thereafter. 
Interested parties may submit case briefs within 30 days of the date of 
publication of this notice. Parties who submit case briefs in this 
proceeding should provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 7 days after the date of filing of case briefs. The 
Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such written comments, within 120 days from the 
publication of these preliminary results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of the subject merchandise. Upon 
completion of this review, the Department will instruct the U.S. 
Customs Service to assess antidumping duties on appropriate entries by 
applying the assessment rate to the entered value of the merchandise. 
If these preliminary results are adopted in our final results, we will 
instruct the U.S. Customs Service not to assess antidumping duties on 
Corex's, De Cecco's or Puglisi's entries of the merchandise subject to 
the review.

Cash Deposit Requirements

    To calculate the cash-deposit rate for each producer and/or 
exporter included in this administrative review, we divided the total 
dumping margins for each company by the total net value for that 
company's sales during the review period.
    Furthermore, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of certain pasta from Italy entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rates 
for the companies listed above 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) 
for previously reviewed or investigated companies not listed above, the 
cash deposit rate will continue to be the company-specific rate 
published for the most recent final results in which that manufacturer 
or exporter participated; (3) if the exporter is not a firm covered in 
this review, a prior review, or the original less-than-fair-value 
(LTFV) investigation, but the manufacturer is, the cash deposit rate 
will be the rate established for the most recent final results for the 
manufacturer of the merchandise; and (4) 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 11.26

[[Page 43157]]

percent, the ``All Others'' rate established in the LTFV investigation. 
See Notice of Antidumping Duty Order and Amended Final Determination of 
Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 38547 
(July 24, 1996).
    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 351.402 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) and 777(i)(1) of the Act.

    Dated: August 2, 1999.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration
[FR Doc. 99-20447 Filed 8-6-99; 8:45 am]
BILLING CODE 3510-DS-P