[Federal Register Volume 65, Number 179 (Thursday, September 14, 2000)]
[Notices]
[Pages 55508-55511]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-23689]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-815]


Sulfanilic Acid From the People's Republic of China; 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: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on sulfanilic acid 
from the People's Republic of China. The review covers exports of this 
merchandise to the United States for the period August 1, 1998, through 
July 31, 1999, and two firms: Zhenxing Chemical Industry Company 
(Zhenxing) and Yude Chemical Industry Company (Yude). The preliminary 
results of this review indicate that the two responding parties, 
Zhenxing and Yude, failed to cooperate by not acting to the best of 
their ability in responding to our requests for information. 
Consequently, we have preliminarily decided to use the single margin 
``PRC rate'' as adverse facts available with respect to Zhenxing and 
Yude, which is listed below in the ``Preliminary Results of the 
Review'' section of this notice.

EFFECTIVE DATE: September 14, 2000.

FOR FURTHER INFORMATION CONTACT: Sean Carey or Dana Mermelstein, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue N.W., Washington, DC 
20230 at (202) 482-3964 or (202) 482-1391, respectively.

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 Tariff Act) 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations codified at 19 CFR Part 351 (1999).

Background

    On August 11, 1999, the Department published in the Federal 
Register (64 FR 43649) a notice of ``Opportunity to Request 
Administrative Review'' for the August 1, 1998, through July 31, 1999, 
period of review (POR) of the antidumping duty order on Sulfanilic Acid 
from the People's Republic of China, 57 FR 37524 (August 19, 1992). In 
accordance with 19 CFR 351.213, respondents Zhenxing, Yude, PHT 
International, Inc. (PHT), and the petitioner, Nation Ford Chemical 
Company, requested a review for the aforementioned period. On October 
1, 1999, we published a notice of ``Initiation of Antidumping Review.'' 
See 64 FR 53318. The Department is now conducting this administrative 
review pursuant to section 751(a) of the Tariff Act.
    On November 12, 1999, Zhenxing and Yude, two companies which are 
described as joint ventures between Chinese companies and a U.S.-based 
company named PHT, reported in their responses to Section A 
(Organization, Accounting Practices, Markets and Merchandise) of the 
Department's questionnaire that they each had made sales of subject 
merchandise to the United States during the POR. Zhenxing and Yude 
submitted responses to Sections C and D (Sales to the United States and 
Factors of Production, respectively) on December 21, 1999. Responses to 
three supplemental questionnaires by Zhenxing and Yude were received on 
April 24, 2000 (first and second supplemental questionnaires), and June 
7, 2000. Information pertaining to surrogate values was submitted by 
petitioner and respondents on May 15, 2000, and August 10, 2000, 
respectively. Zhenxing submitted corrections to Section D regarding the 
factors of production for labor on June 29, 2000.

Scope of Review

    Imports covered by this review are all grades of sulfanilic acid, 
which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid.
    Sulfanilic acid is a synthetic organic chemical produced from the 
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is 
used as a raw material in the production of optical brighteners, food 
colors, specialty dyes, and concrete additives. The principal 
differences between the grades are the undesirable quantities of 
residual aniline and alkali insoluble materials present in the 
sulfanilic acid. All grades are available as dry, free flowing powders.
    Technical sulfanilic acid, classifiable under the subheading 
2921.42.24 of the Harmonized Tariff Schedule (HTS), contains 96 percent 
minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 percent 
maximum alkali insoluble materials. Refined sulfanilic acid, also 
classifiable under the subheading 2921.42.24 of the HTS, contains 98 
percent minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 
percent maximum alkali insoluble materials.
    Sodium salt (sodium sulfanilate), classifiable under the HTS 
subheading 2921.42.79, is a powder, granular or crystalline material 
which contains 75 percent minimum equivalent sulfanilic acid, 0.5 
percent maximum aniline based on the equivalent sulfanilic acid 
content, and 0.25 percent maximum alkali insoluble materials based on 
the equivalent sulfanilic acid content.
    Although the HTS subheadings are provided for convenience and 
customs

[[Page 55509]]

purposes, our written description of the scope of this proceeding is 
dispositive.

Period of Review

    The review period is August 1, 1998 through July 31, 1999.

Verification

    As provided in section 782(i) of the Tariff Act, we verified 
information provided by the respondents using standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities and the examination of relevant sales and financial records. 
Our verification results will be outlined in a verification report to 
be issued presently. A public version of this, and all memoranda 
generated by the Department, will be on file in the Department's 
Central Records Unit (CRU) located in room B-099 of the Department's 
main building.

Request for Revocation

    In conjunction with respondents' request for a review submitted on 
August 31, 1999, Zhenxing and Yude also requested revocation of the 
antidumping duty order on sulfanilic acid from China with respect to 
their sales of this merchandise. Respondents' request for partial 
revocation was not in accordance with 19 CFR 351.222(e) because it was 
not accompanied by a certification that Zhenxing and Yude had not sold 
the subject merchandise at less than normal value for a three-year 
period, and would not do so in the future. Furthermore, in the 1997-
1998 administrative review of sulfanilic acid from the PRC we 
determined that Zhenxing and Yude sold sulfanilic acid at less than 
normal value. See Final Results of Anitdumping Duty Administrative 
Review: Sulfanilic Acid from the People's Republic of China, 65 FR 
13366 (March 13, 2000). Finally, as discussed below, we find in the 
current review that Zhenxing and Yude had sales at less than normal 
value. See, ``Use of Facts Otherwise Available'' below. Consequently, 
we preliminarily determine that because Zhenxing and Yude did not file 
a proper request for revocation, and do not have three consecutive 
years of zero or de minimis margins on sulfanilic acid, they are not 
eligible for partial revocation of the order on sulfanilic acid under 
19 CFR 351.222(b)(1)(i).

Determination of Producers

    In the 1997-1998 review the Department determined that Zhenxing and 
Yude were separate entities and that Zhenxing was affiliated with 
Mancheng Zhenxing Chemical Factory (Mancheng) while Yude was affiliated 
with Mancheng Xinyu Chemical Factory (Xinyu). We again reviewed this 
matter in the instant review and the Department preliminarily 
determines that Mancheng and Xinyu do not exist as separate entities. 
Rather, when Mancheng and Xinyu each entered into joint venture 
agreements with PHT, the resulting joint ventures took the names 
Zhenxing and Yude, respectively. See Zhenxing's and Yude's supplemental 
questionnaire response dated April 24, 2000. Record evidence indicates 
that Zhenxing and Yude did not produce or sell any products for 
domestic consumption or export under the names Mancheng or Xinyu during 
the POR. See Zhenxing's and Yude's response to the Department's first 
and second supplemental questionnaires, dated April 24, 2000.

Separate Rates

    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in non-market economy countries a 
single rate, unless an exporter can affirmatively demonstrate an 
absence of government control, both in law (de jure) and in fact (de 
facto), with respect to exports. To establish whether a company is 
sufficiently independent to be entitled to a separate, company-specific 
rate, the Department analyzes each exporting entity in a non-market 
economy (NME) country under the test established in the Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers), as 
amplified by the Final Determination of Sales at Less Than Fair Value: 
Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 
2, 1994) (Silicon Carbide).
    Accordingly, Zhenxing and Yude both submitted responses to the 
Department's Section A questionnaire in order to obtain separate, 
company-specific rates. As a result of our preliminary determination 
that the responses are not reliable, however (see below), the 
Department is not granting separate rates to those companies and is 
assigning the rate of 85.20 as the PRC-wide rate, which also will apply 
to Zhenxing and Yude.

Use of Facts Otherwise Available

    Section 776(a)(2) of the Tariff Act provides that ``if an 
interested party or any other person (A) withholds information that has 
been requested by the administering authority; (B) fails to provide 
such information by the deadlines for the submission of the information 
or in the form and manner requested, subject to subsections (c)(1) and 
(e) of section 782; (C) significantly impedes a proceeding under this 
title; or (D) provides such information but the information cannot be 
verified as provided in section 782(i), the administering authority 
shall, subject to section 782(d), use the facts otherwise available in 
reaching the applicable determination under this title.'' The 
Department has determined that the use of facts otherwise available is 
appropriate because respondents failed to provide information by the 
deadlines established by the Department, and some of the information 
provided could not be verified. Therefore, pursuant to section 
776(a)(2)(B) and (D) of the Tariff Act, the Department will use the 
facts otherwise available to determine the appropriate antidumping 
margins for these companies in this review. We note that, after 
disregarding the untimely and unverifiable information, the remaining 
information is too incomplete to serve as a reliable basis for 
determining dumping margins for Zhenxing and Yude in this review, 
within the meaning of section 782(e).
    We preliminarily determine that the questionnaire response 
submitted by Yude is incomplete or contradictory to the point that 
serious concerns remain regarding the basic reliability of the data. 
The Department had requested on October 15, 1999, that Yude provide 
complete factors of production information. See Department's 
Antidumping Questionnaire. The deadline for such submission was 
December 21, 1999, on which day Yude submitted its factors of 
production information. See Yude's response to Sections C and D (Sales 
to the United States and Factors of Production) of the Department's 
questionnaire. The Department notified Yude on June 7, 2000, that it 
would conduct verification. See the Department's letters to Zhenxing 
and Yude with attached verification agendas. Although Yude had 
submitted on December 21, 1999 what it asserted were complete factors 
of production, Yude informed the Department on June 15, 2000, at the 
beginning of verification, that its previously submitted complete 
factors of production were incorrect and needed to be changed. This 
notification came eight months after the information was requested, six 
months after it was due and initially submitted, and not until 
verification had already commenced. The Department noted at 
verification that the changes to Yude's factors of production were of 
such significance that they constituted a new response, and declined to 
accept or verify these values. See Verification Report at 2.

[[Page 55510]]

Further, pursuant to section 782(e) of the Tariff Act, the Department 
declined to consider the new factors of production information 
proffered by Yude at verification because the information was not 
timely submitted by the deadline established by the Department. We 
preliminarily determine that Yude failed to act to the best of its 
ability in providing complete, verifiable responses to our requests for 
information and meeting our requirements because it made no effort to 
notify the Department promptly upon discovering that its factors of 
production information was incorrect.
    The Department also discovered at verification a substantial number 
of unreported sales of sulfanilic acid produced by Zhenxing and sold to 
an unaffiliated U.S. importer. The discovery of these sales 
contradicted the information submitted in Zhenxing's response to 
Section A of the Department's questionnaire, in which Zhenxing reported 
that all of its U.S. sales during the POR were to PHT. On June 20, 
2000, as part of our overall verification in this review, we reviewed 
the records of an import/export corporation (``Company B'') \1\ 
involved with sales of sulfanilic acid produced by Zhenxing and sold to 
PHT. During this portion of the verification we discovered in Company 
B's records value-added tax rebates received on export sales of 
sulfanilic acid. We made several attempts to ascertain the quantity of 
subject merchandise sold, as well as the identity of the purchaser(s). 
However, Company B could not account for the revenue received from 
these sales in its accounting records, and failed to provide the 
customer's name and final foreign destination of these sales. See 
verification report at 10 and 11. On June 22, 2000, following our 
verification of Company B and during our verification of Zhenxing, 
Zhenxing provided us, unsolicited, a number of value-added (VAT) 
invoices related to these sales through Company B which identify an 
unaffiliated U.S. importer as the purchaser of sulfanilic acid produced 
by Zhenxing. The existence of these sales could not be verified in 
Zhenxing's records, as these only reflected sales by Zhenxing to PHT in 
the United States, and not the previously unreported sales through 
Company B to the unaffiliated U.S. importer. See verification report at 
13 and 14. Accordingly, we determine that use of facts otherwise 
available pursuant to section 776(a)(2)(D) is appropriate for Zhenxing 
because Zhenxing has not acted to the best of its ability in reporting 
all of its POR sales to the United States, as the Department had 
requested.
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    \1\ This firm's identity has been accorded treatment as business 
proprietary information.
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    Section 776(b) of the Tariff Act provides that if the Department 
finds that an interested party has failed to cooperate by not acting to 
the best of its ability to comply with a request for information, the 
Department may use an inference that is adverse to the interests of 
that party in selecting from among the facts otherwise available. The 
Department determines that Yude has not complied to the best of its 
ability because it failed to meet the deadlines for requested 
information, despite having ample opportunity to update and correct its 
submission on factors of production. Yude not only failed to notify the 
Department of the need for wholesale changes in its factors of 
production when it became apparent that its original submission was 
incorrect, but it waited until verification had commenced to provide 
entirely new information.
    The Department finds that Zhenxing also did not act to the best of 
its ability because it failed to provide complete and verifiable sales 
information. It was not until the Department discovered the 
unidentified sales by Company B that it provided the unreported sales 
information. Zhenxing failed to cooperate by not acting to the best of 
its ability until confronted with this new information, thereby 
warranting the Department's use of adverse fact available in 
determining Zhenxing's rate. Even after the information regarding 
unreported sales came to light, Zhenxing was unable to provide any 
information from its records to assist in verifying the matter.
    Section 776(b) also authorizes the Department to use, as adverse 
facts available, information derived from the petition, the final 
determination, a previous administrative review, or other information 
placed on the record. The Statement of Administrative Action (SAA) 
accompanying the URAA clarifies that information from the petition and 
prior segments of the proceeding is ``secondary information.'' See 
H.Doc. 3216, 103rd Cong. 2d Sess. 870 (1994). If the Department relies 
on secondary information as facts available, section 776(c) provides 
that the Department shall, to the extent practicable, corroborate such 
information using independent sources reasonably at its disposal. The 
SAA further provides that ``corroborate'' means simply that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See id. The SAA also states that independent 
sources used for corroboration may include, for example, published 
price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See id. However, where corroboration is not practicable, 
that fact will not prevent the Department from applying an adverse 
inference and using the secondary information in question. See 19 CFR 
351.308(d).
    When making adverse inferences, the SAA authorizes the Department 
to consider the extent to which a party may benefit from its own lack 
of cooperation (SAA at 870). Because the PRC-wide rate that was 
applicable during the POR and that is applicable to current imports is 
85.20 percent, a rate derived from the petition, the Department 
determines that assigning a 85.20 percent rate will prevent non-
responding firms from benefitting from their failure to respond to the 
Department's requests for information. Anything less than the current 
cash deposit rate would effectively reward non-responding firms for not 
cooperating by not acting to the best of their ability.
    In accordance with the law, the Department, to the extent 
practicable, will corroborate secondary information by examining the 
reliability and relevance of the information used. However, in an 
administrative review the Department will not engage in updating the 
petition to reflect the prices and costs that are found during the 
current review. Rather, corroboration consists of determining that the 
significant elements used to derive a margin in a petition are reliable 
for the conditions upon which the petition is based. With respect to 
the relevance aspect of corroboration, the Department will consider the 
information reasonably at its disposal as to whether there are 
circumstances that would render a margin not relevant.
    To corroborate the LTFV rate of 85.20 percent, we examined the 
basis of the rates contained in the petition of October 8, 1991. The 
U.S. price in the petition was based on actual prices from customer 
purchase orders, invoices and price quotations for refined sulfanilic 
acid from the PRC. This U.S. price covers delivery to the customer's 
point of usage. We were able to corroborate the average unit values 
listed in the petition by comparing those values to publicly available 
information compiled by the U.S. Census Bureau and made available by 
the International Trade Commission (ITC). The ITC reports quantity and 
value by HTS numbers. Using the same HTS numbers as listed

[[Page 55511]]

in the petition (HTS 2921.42.24, 2921.42.79, and 2921.42.79), we 
divided the total quantity by the total value for the period referenced 
in the petition and noted the average unit values were very similar to 
those reported in the original petition.
    The petition also states that due to the non-market economy status 
of the PRC, the foreign market value was calculated using a factors of 
production methodology. Based on the production experience of the 
petitioners, the petition identified actual factors of production for 
subject merchandise. Such factors include: labor, raw material, energy, 
overhead, and general selling and administrative expenses. To value 
these factors of production, the petition used published costs in India 
for the above-mentioned factors as surrogate values for those in the 
PRC. See Antidumping Petition on Sulfanilic Acid from the People's 
Republic of China dated October 2, 1991, and found in the CRU. Because 
petitioners used published, publicly available data for valuing the 
major inputs, we consider these data to have probative value.
    The SAA at 870 specifically states that where ``corroboration may 
not be practicable in a given circumstance,'' the Department may 
nevertheless apply an adverse inference. The SAA at 869 emphasizes that 
the Department need not prove that the facts available are the best 
alternative information. Therefore, based on our efforts, described 
above, to corroborate information contained in the petition, and 
mindful of the legislative history discussing facts available and 
corroboration, we consider the petition margin we are assigning to non-
responding firms in this review as adverse facts available to be 
corroborated to the extent practicable.
    Finally, we note that where circumstances indicate that the 
selected margin is not appropriate as adverse facts available, the 
Department will disregard the margin and determine an appropriate 
margin. See Fresh Cut Flowers from Mexico; Preliminary Results of 
Antidumping Duty Administrative Review, 60 FR 49567 (September 26, 
1995). We have determined that there is no evidence on the record that 
would indicate that the margin from the petition is not appropriate. 
Nothing on the record of this administrative review supports a 
determination that the highest margin rate from the petition in the 
underlying investigation does not represent reliable and relevant 
information for purposes of adverse facts available. This rate has been 
used as the PRC-wide rate since the Department's Final Determination of 
Sales at Less Than Fair Value: Sulfanilic Acid from the People's 
Republic of China, 57 FR 29705 (July 6, 1992).

Preliminary Results of the Review

    We preliminarily determine to use the rate of 85.20 percent as the 
adverse facts available for the period August 1, 1998 through July 31, 
1999 for all firms which have not demonstrated that they are entitled 
to separate rates, including Zhenxing and Yude.
    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five (5) days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309, interested 
parties may submit written comments in response to these preliminary 
results. Case briefs are currently scheduled for submission within 30 
days after the date of publication of this notice, and rebuttal briefs, 
limited to arguments raised in case briefs, must be submitted no later 
than five (5) days after the time limit for filing case briefs. Parties 
who submit argument in this proceeding are requested to submit with the 
argument: (1) A statement of the issue, and (2) a brief summary of the 
argument. Case and rebuttal briefs must be served on interested parties 
in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, 
within 30 days of the date of publication of this notice, interested 
parties may request a public hearing on arguments to be raised in the 
case and rebuttal briefs. Unless the Secretary specifies otherwise, the 
hearing, if requested, will be held two days after the deadline for 
submission of rebuttal briefs. The Department will issue the final 
results of this administrative review, including its analysis of issues 
raised in any case or rebuttal brief or at a hearing, 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, upon issuance of the final results of this review, the 
following deposit rates will be effective with respect to all shipments 
of sulfanilic acid from the PRC entered, or withdrawn from warehouse, 
for consumption on or after the publication date of the final results 
of this review, as provided for by section 751(a)(2)(c) of the Tariff 
Act: (1) The cash deposit rate for reviewed companies listed above will 
be the rates for those firms established in the final results of this 
review; (2) for companies previously found to be entitled to a separate 
rate and for which no review was requested, the cash deposit rate will 
be the rate established in the most recent review of that company; (3) 
for all other PRC exporters of subject merchandise, the cash deposit 
rate will be the China-wide rate of 85.20 percent; and (4) the cash 
deposit rate for non-PRC exporters of subject merchandise from the PRC 
will be the rate 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 of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402 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 administrative review and notice are in accordance with 
sections 751(a)(1) and 771 (i)(1) of the Tariff Act.

    Dated: August 30, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-23689 Filed 9-13-00; 8:45 am]
BILLING CODE 3510-DS-P