[Federal Register Volume 67, Number 175 (Tuesday, September 10, 2002)]
[Notices]
[Pages 57376-57379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22993]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-703]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review: Granular Polytetrafluoroethylene Resin From Italy

AGENCY: Import Administration, International Trade Administration, 
Department Commerce.
SUMMARY: In response to requests by the respondent, Ausimont SpA and 
Ausimont USA (Ausimont), and the petitioner, E.I. DuPont de Nemours & 
Company (DuPont), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
granular polytetrafluoroethylene (PTFE) resin from Italy. The period of 
review (POR) is August 1, 2000, through July 31, 2001.
    We preliminarily determine 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 and NV.

EFFECTIVE DATE: September 10, 2002.

FOR FURTHER INFORMATION CONTACT: Vicki Schepker or Constance Handley, 
at (202) 482-1756 or (202) 482-0631, respectively; AD/CVD Enforcement 
Office V, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street & Constitution 
Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act. In addition, unless

[[Page 57377]]

otherwise indicated, all citations to the Department's regulations are 
to 19 CFR Part 351 (2001).

Case History

    On August 30, 1988, the Department published in the Federal 
Register the antidumping duty order on granular PTFE resin from Italy 
(53 FR 33163). On August 1, 2001, the Department issued a notice of 
opportunity to request the 13th administrative review of this order, 
for the period August 1, 2000, through July 31, 2001. See Antidumping 
or Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 66 FR 39729 (August 1, 
2001). Pursuant to this notice, on August 30 and 31, 2001, the 
petitioner and Ausimont, respectively, requested that the Department 
conduct an administrative review. We published the notice of initiation 
of this antidumping duty administrative review on October 1, 2001. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 66 FR 49924 (October 1, 
2001).
    We issued an antidumping questionnaire to Ausimont on October 17, 
2001, followed by a supplemental questionnaire on August 8, 2002. 
Included in that questionnaire was a reiteration of the Department's 
previous request that Ausimont report its production costs on a POR-
basis. It also included instructions regarding the reporting of what 
Ausimont claims are sales of ``off-spec'' merchandise. We received 
timely responses to the antidumping questionnaire and section C of the 
supplemental questionnaire.\1\
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    \1\ Due to issues involving the timing of the supplemental 
questionnaire, we granted Ausimont an extension until September 16, 
2002, to respond to sections B and D of the supplemental 
questionnaire. The information in the response to the supplemental 
questionnaire may result in changes to our analysis in the final 
results of the review.
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Scope of the Review

    The product covered by this order is granular PTFE resin, filled or 
unfilled. This order also covers PTFE wet raw polymer exported from 
Italy to the United States. See Final Affirmative Determination; 
Granular Polytetrafluoroethylene Resin from Italy, 58 FR 26100 (April 
30, 1993). This order excludes PTFE dispersions in water and fine 
powders. During the period covered by this review, such merchandise was 
classified under item number 3904.61.00 of the Harmonized Tariff 
Schedule of the United States (HTS). We are providing this HTS number 
for convenience and U.S. Customs purposes only. The written description 
of the scope remains dispositive.

Fair Value Comparisons

    We compared the constructed export price (CEP) to the NV, as 
described in the Constructed Export Price and Normal Value sections of 
this notice. Pursuant to section 777A(d)(2) of the Act, we compared the 
CEPs of individual transactions to contemporaneous monthly weighted-
average prices of sales of the foreign like product.
    We first attempted to compare contemporaneous sales of products 
sold in the United States and the comparison market that were identical 
with respect to the following characteristics: type, filler, percentage 
of filler, and grade. Where we were unable to compare sales of 
identical merchandise, we compared U.S. sales with comparison market 
sales of the most similar merchandise.

Constructed Export Price

    For all sales to the United States, we calculated CEP, as defined 
in section 772(b) of the Act, because all sales to unaffiliated parties 
were made after importation of the subject merchandise into the United 
States through the respondent's affiliate, Ausimont USA. We based CEP 
on the packed, delivered prices to unaffiliated purchasers in the 
United States, net of billing adjustments. We adjusted these prices for 
movement expenses, including international freight, marine insurance, 
brokerage and handling in the United States, U.S. inland freight, 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 
selling expenses incurred by the affiliated seller in connection with 
economic activity in the United States. These expenses include credit, 
inventory carrying costs, and indirect expenses incurred by Ausimont 
USA.
    With respect to sales involving imported wet raw polymer that was 
further manufactured into finished PTFE resin in the United States, we 
deducted the cost of such further manufacturing in accordance with 
section 772(d)(2) of the Act.\2\
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    \2\ We note that on November 21, 2001, Ausimont requested that 
the Department apply the ``special rule'' in accordance with section 
772(e) of the Act. Under the special rule, where the value added to 
the merchandise by an affiliate is likely to exceed substantially 
the value of the subject merchandise, the administering authority 
may determine the constructed export price using the price of 
identical or similar subject merchandise sold by the exporter or 
producer to an unaffiliated person, provided that the administering 
authority determines that the use of such sales is appropriate. On 
November 29, 2001, we rejected Ausimont[quot]s request, noting that, 
as in the previous review (where the same issue had been raised) the 
administrative burden of applying Section 772(d)(2) of the Act in 
this case is relatively low, and the proportion of the 
respondent[quot]s further-manufactured sales relative to total sales 
is sufficiently high to raise concerns about the accuracy of the 
dumping margin that would result from application of the special 
rule. See Letter from the Department of Commerce to Ausimont, dated 
November 29, 2001, including Memorandum from Magd Zalok to Holly 
Kuga, Acting Deputy Assistant Secretary for Import Administration, 
dated December 9, 1999, on file in the Central Records Unit (CRU).
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    Finally, we made an adjustment for the profit allocated to the 
above-referenced selling and further manufacturing expenses, in 
accordance with section 772(d)(3) of the Act.

Normal Value

A. Selection of Comparison Markets
    In order to determine whether there was a sufficient volume of 
sales of granular PTFE resin in the home market to serve as a viable 
basis for calculating NV, we compared Ausimont's volume of home market 
sales of the foreign like product to the volume of U.S. sales of the 
subject merchandise, in accordance with section 773(a) of the Act. 
Because the aggregate volume of home market sales of the foreign like 
product was greater than five percent of the respective aggregate 
volume of U.S. sales for the subject merchandise, we determined that 
the home market provided a viable basis for calculating NV. Therefore, 
in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on 
the prices at which the foreign like product was first sold for 
consumption in the exporting country, in the usual commercial 
quantities and in the ordinary course of trade.
B. Cost of Production Analysis
    Because we disregarded below-cost sales in the calculation of the 
final results of the 12th administrative review, we had reasonable 
grounds to believe or suspect that home market sales of the foreign 
like product by Ausimont had been made at prices below the cost of 
production (COP) during the period of this review. Therefore, pursuant 
to section 773(b)(1) of the Act, we initiated a COP investigation 
regarding home market sales.
    Initially, Ausimont calculated its model-specific costs of 
production on a calendar year basis. On August 8, 2002, we issued a 
supplemental questionnaire requesting that Ausimont report its costs on 
a POR basis.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated the 
model-

[[Page 57378]]

specific, weighted-average COP, by model, based on the sum of the cost 
of materials and fabrication for the foreign like product, plus amounts 
for general and administrative expenses, interest expenses, selling 
expenses, and packing costs.
2. Test of Home Market Sales Prices
    We compared the adjusted weighted-average COP to the home market 
sales of the foreign like product, as required under section 773(b) of 
the Act, in order to determine whether these sales had been made at 
prices below the COP within an extended period of time (i.e., a period 
of one year) in substantial quantities and whether such prices were 
sufficient to permit the recovery of all costs within a reasonable 
period of time.
    On a model-specific basis, we compared the COP to home market 
prices, less any rebates, discounts, applicable movement charges, and 
direct and indirect selling expenses (which were also deducted from 
COP).
3. Results of the COP Test
    We disregarded below-cost sales where 20 percent or more of the 
respondent's sales of a given product were made at prices below the 
COP. We determined such sales were made within an extended period of 
time in substantial quantities in accordance with sections 773(b)(2)(B) 
and (C) of the Act and at prices which would not permit recovery of all 
costs within a reasonable time period, in accordance with section 
773(b)(2)(D) of the Act.
C. Calculation of NV Based on Comparison-Market Prices 3
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    \3\ As discussed in the Case History section above, in our 
August 8, 2002, supplemental questionnaire, we requested that 
Ausimont report all sales of what the company referred to as ``off-
spec'' merchandise. In a letter of clarification dated August 16, 
2002, we further requested that Ausimont include documentation to 
support the claim that the product sold was in fact ``off-spec.'' In 
its August 29, 2002, response to our requests, Ausimont reported 
sales of ``off-spec'' merchandise, but failed to provide adequate 
supporting documentation regarding the product sold. As such, we are 
unable to determine if these sales are, in fact, sales of ``off-
spec'' merchandise. Furthermore, Ausimont failed to report the 
actual product codes for these sales and we are unable to compare 
them to home market sales of identical or similar products. As a 
result, we are comparing the U.S. sales of ``off-spec'' merchandise 
to constructed value (CV). To calculate the CV for these sales, we 
have chosen the highest cost of production for any product and added 
amounts for selling expenses, profit and U.S. packing. In accordance 
with section 773(e)(2)(A) of the Act, we used the actual amounts 
incurred and realized by the respondent in connection with the 
production and sale of the foreign like product, in the ordinary 
course of trade, for consumption in the comparison market to 
calculate selling expenses and profit.
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    We determined home market prices net of price adjustments (i.e., 
early payment discounts and rebates). Where applicable, we made 
adjustments for packing and movement expenses, in accordance with 
sections 773(a)(6)(A) and (B) of the Act. In order to adjust for 
differences in packing between the two markets, we deducted home market 
packing costs from NV and added U.S. packing costs. We also made 
adjustments for differences in costs attributable to differences in 
physical characteristics of the merchandise, pursuant to section 
773(a)(6)(C)(ii) of the Act, and for other differences in the 
circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Act (i.e., differences in credit expenses). 
Finally, we made a CEP-offset adjustment to the NV for indirect selling 
expenses pursuant to section 773(a)(7)(B) of the Act as discussed in 
the Level of Trade/CEP Offset section below.

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 at the same level of trade 
in the comparison market as the level of trade of the U.S. sales. The 
NV level of trade is that of the starting-price sales in the comparison 
market. For CEP sales, such as those made by Ausimont in this review, 
the U.S. level of trade is the level of the constructed sale from the 
exporter to the importer.
    To determine whether NV sales are at a different level of trade 
than that of the U.S. sales, we examine stages in the marketing process 
and selling functions along the chain of distribution between the 
producer and the unaffiliated customer. If the comparison-market sales 
are at a different level of trade and the difference affects price 
comparability, as manifested in a pattern of consistent price 
differences between the sales on which NV is based and comparison-
market sales at the level of trade of the export transaction, we make a 
level-of-trade adjustment under section 773(a)(7)(A) of the Act. 
Finally, if the NV level is more remote from the factory than the CEP 
level and there is no basis for determining whether the difference in 
the levels between NV and CEP affects price comparability, we adjust NV 
under section 773(a)(7)(B) of the Act (the CEP-offset provision). See, 
e.g., Industrial Nitrocellulose From the United Kingdom; Notice of 
Final Results of Antidumping Duty Administrative Review, 65 FR 6148, 
6151 (February 8, 2000) (Industrial Nitrocellulose).
    In implementing these principles in this review, we obtained 
information from Ausimont about the marketing involved in the reported 
U.S. sales and in the home market sales, including a description of the 
selling activities performed by Ausimont for each channel of 
distribution. In identifying levels of trade for CEP and for home 
market sales, we considered the selling functions reflected in the CEP, 
after the deduction of expenses and profit under section 772(d) of the 
Act, and those reflected in the home market starting price before 
making any adjustments. We expect that, if claimed levels of trade are 
the same, the functions and activities of the seller should be similar. 
Conversely, if a party claims that levels of trade are different for 
different groups of sales, the functions and activities of the seller 
should be dissimilar.
    The record evidence in this review indicates that the home market 
and the CEP levels of trade have not changed from the 1999-00 
review,\4\ the most recently completed review in this case. As 
explained below, we determined in this review that, as in the prior 
review, there was one home market level of trade and one U.S. level of 
trade (i.e., the CEP level of trade).
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    \4\ See Notice of Final Results of Antidumping Duty 
Administrative Review; Granular Polytetrafluoroethylene Resin From 
Italy, 67 FR 1960 (January 15, 2002), and Granular 
Polytetrafluoroethylene Resin from Italy; Preliminary Results of 
Antidumping Duty Administrative Review, 66 FR 46996 (September 10, 
2001).
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    In the home market, Ausimont sold directly to fabricators. These 
sales primarily entailed selling activities such as technical 
assistance, engineering services, research and development, technical 
programs, and delivery services. Given this fact pattern, we found that 
all home market sales were made at a single level of trade. In 
determining the level of trade for the U.S. sales, we only considered 
the selling activities reflected in the price after making the 
appropriate adjustments under section 772(d) of the Act. See, e.g., 
Industrial Nitrocellulose at 6150. The CEP level of trade involves 
minimal selling functions such as invoicing and the occasional exchange 
of personnel between Ausimont SpA and its U.S. affiliate. Given this 
fact pattern, we found that all U.S. sales were made at a single level 
of trade.
    Based on a comparison of the home market level of trade and this 
CEP level of trade, we find the home market sales to be at a different 
level of trade from, and more remote from the factory than, the CEP 
sales. Section 773(a)(7)(A) of the Act directs us to make an adjustment 
for difference in levels of trade where such differences affect price 
comparability. However, we were

[[Page 57379]]

unable to quantify such price differences from information on the 
record. Because we have determined that the home-market level of trade 
is more remote from the factory than the CEP level of trade, and 
because the data necessary to calculate a level-of-trade adjustment are 
unavailable, we made a CEP-offset adjustment to NV pursuant to section 
773(a)(7)(B) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A of the Act, based on exchange rates in effect on the date 
of the U.S. sale, as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
following weighted-average margin exists for the period August 1, 2000, 
through July 31, 2001:

------------------------------------------------------------------------
                                                      Weighted-average
           Exporter/[chyph]manufacturer               margin percentage
------------------------------------------------------------------------
Ausimont SpA......................................                  3.87
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    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 44 days after the date of publication, or the first 
working day thereafter. Interested parties may submit case briefs and/
or written comments no later than 30 days after the date of publication 
of these preliminary results of review. Rebuttal briefs and rebuttals 
to written comments, limited to issues raised in such briefs or 
comments, may be filed no later than 37 days after the date of 
publication. Parties who submit arguments are requested to submit with 
the argument (1) a statement of the issue, (2) a brief summary of the 
argument, and (3) a table of authorities. We encourage parties 
submitting written comments to provide the Department with an 
additional copy of the public version of any such comments on diskette. 
The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, within 120 days of publication of these 
preliminary results.

Assessment

    Upon completion of this administrative review, the Department will 
determine, and the Customs Service shall assess, antidumping duties on 
all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we 
have calculated an exporter/importer (or customer)-specific assessment 
rate for merchandise subject to this review. The Department will issue 
appropriate assessment instructions directly to the Customs Service 
within 15 days of publication of the final results of review. If these 
preliminary results are adopted in the final results of review, we will 
direct the Customs Service to assess the resulting assessment rates 
against the entered customs values for the subject merchandise on each 
of the importer's/customer's entries during the review period.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of granular PTFE resin from Italy 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 cash deposit rate for Ausimont will be 
the rate established in the final results of administrative review; (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 a company-
specific 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 review, the cash deposit rate will be 46.46 percent, 
the ``all others'' rate established in the LTFV investigation. See 53 
FR 26090 (July 11, 1988).
    These cash deposit requirements, 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 administrative review and notice are in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: September 3, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-22993 Filed 9-9-02; 8:45 am]
BILLING CODE 3510-DS-S