[Federal Register Volume 68, Number 32 (Tuesday, February 18, 2003)]
[Notices]
[Pages 7768-7772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-3853]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-001]


Potassium Permanganate 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 in the Antidumping Duty 
Administrative Review of Potassium Permanganate from the People's 
Republic of China.

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SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on potassium 
permanganate from the People's Republic of China (PRC) in response to a 
request by Groupstars Chemical LLC (Groupstars LLC), a U.S. importer of 
potassium permanganate. The review covers potassium permanganate 
(subject merchandise) exported to the United States by Groupstars LLC's 
affiliated PRC exporter, Groupstars Chemical Co., Ltd. (collectively 
Groupstars). The Department has preliminarily determined that 
Groupstars sold subject merchandise during the period of review (POR) 
at prices below normal value (NV). If the preliminary results are 
adopted in our final results of review, we will instruct the U.S. 
Customs Service (Customs) to assess antidumping duties on all 
appropriate entries. The Department invites interested parties to 
comment on these preliminary results.

EFFECTIVE DATE: February 18, 2003.

FOR FURTHER INFORMATION CONTACT: John Conniff or Drew Jackson, AD/CVD 
Enforcement, Office 4, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, D.C. 20230; telephone (202) 482-
1009 and (202) 482-4406, respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

    The POR is January 1, 2001 through December 31, 2001.

Background

    On January 31, 1984, the Department published in the Federal 
Register (49 FR 3897) the antidumping duty order on potassium 
permanganate from the PRC. On January 30, 2002, in response to the 
Department's notice of ``Opportunity to Request an Administrative 
Review,'' Groupstars LLC requested that the Department conduct an 
administrative review of its supplier, Groupstars Chemical Co., Ltd. 
See Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 67 FR 56 
(January 2, 2002).
    On February 26, 2002, the Department published a notice of 
initiation of an antidumping duty administrative review covering 
Groupstars' sales of potassium permanganate during the period January 
1, 2001 through December 31, 2001. See the notice Initiation of 
Antidumping and Countervailing Duty Administrative Reviews, 67 FR 
8780.\1\
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    \1\ Although Groupstars Chemical LLC is the company listed in 
the notice of initiation, as noted above, Groupstars Chemical LLC is 
the U.S. importer of subject merchandise while Groupstars Chemical 
Co. Ltd. is the PRC exporter of the subject merchandise.

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[[Page 7769]]

    On March 1, 2002, the Department issued its antidumping 
questionnaire to Groupstars. Groupstars responded to the Department's 
questionnaire on April 3, 2002 and April 10, 2002. Additionally, 
Groupstars submitted responses to the Department's July, August, 
October, and November 2002 supplemental questionnaires during August, 
September, October, and November 2002, respectively. On March 7, 2002 
and August 23, 2002, interested parties submitted publicly available 
information and comments for the Department's consideration in valuing 
factors of production (FOP) in this administrative review.
    Pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as 
amended (the Act), the Department may extend the deadline for 
completion of the preliminary results of an administrative review if it 
determines that it is not practicable to complete the preliminary 
results of a review within the statutory time limit of 245 days. On 
August 16, 2002, in accordance with the Act, the Department extended 
the time limit for the preliminary results of this review until January 
31, 2003. See Potassium Permanganate From the People's Republic of 
China: Extension of Time Limit for Preliminary Results of Antidumping 
Duty Administrative Review, 67 FR 54408 (August 22, 2002).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    Imports covered by this review are shipments of potassium 
permanganate, an inorganic chemical produced in free-flowing, 
technical, and pharmaceutical grades. During the review period, 
potassium permanganate was classifiable under item 2841.61.0000 of the 
Harmonized Tariff Schedule of the United States (HTSUS).\2\
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    \2\ The scope reflects the correct HTSUS subheading currently in 
effect. The HTSUS number in the Department's two previous reviews 
was incorrect.
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    Although the HTSUS subheading is provided for convenience and 
customs purposes our written description of the scope of the order is 
dispositive.

Verification

    As provided in section 782(i) of the Act, we verified sales and FOP 
information provided by Groupstars using standard verification 
procedures, including on-site inspection of the manufacturer's 
facilities, examination of relevant sales and financial records, and 
selection of relevant source documentation as exhibits. Our 
verification findings are detailed in the report. See Memorandum from 
John Conniff and Drew Jackson to the file regarding ``Verification of 
Groupstars Chemical Co. Ltd's responses in the Antidumping Duty 
Administrative Review of Potassium Permanganate from the People's 
Republic of China,'' dated January 31, 2003 (Verification Report), the 
public version of which is on file in the Central Records Unit (CRU), 
room B-099 of the main Commerce building.

Separate Rates Determination

    In proceedings involving nonmarket economy (NME) countries, the 
Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. It is the Department's 
policy to assign all exporters of merchandise subject to investigation 
in a NME country this single rate, unless an exporter can demonstrate 
that it is sufficiently independent so as to be entitled to a separate 
rate. Groupstars provided the separate rates information requested by 
the Department and reported that its export activities are not subject 
to government control.
    We examined the separate rates information provided by Groupstars 
in order to determine whether it is eligible for a separate rate. The 
Department's separate rates test, which is used to determine whether an 
exporter is independent from government control, does not consider, in 
general, macroeconomic/border-type controls, e.g., export licenses, 
quotas, and minimum export prices, particularly if these controls are 
imposed to prevent dumping. The test focuses, rather, on controls over 
the investment, pricing, and output decision-making process at the 
individual firm level. See Certain Cut-to-Length Carbon Steel Plate 
from Ukraine: Final Determination of Sales at Less than Fair Value, 62 
FR 61754, 61757 (November 19, 1997); Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review, 62 FR 61276, 
61279 (November 17, 1997).
    To establish whether a firm is sufficiently independent from 
government control of its export activities so as to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise under a test arising out of 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). In accordance with the separate rates criteria, the 
Department assigns separate rates in NME cases only if the respondents 
can demonstrate the absence of both de jure and de facto governmental 
control over export activities.
1. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) an absence of restrictive stipulations associated with an 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
See Sparklers, 56 FR at 20508 (May 6, 1991).
    Groupstars submitted a copy of its business licenses in its 
questionnaire response. We examined Groupstars' business license at 
verification and found no inconsistencies with its statement regarding 
the absence of restrictive stipulations associated with its business 
license. See memorandum from John Conniff and Drew Jackson to the file 
regarding PRC Verification of Groupstars Chemical Co. Ltd's responses 
in the Antidumping Duty Administrative Review of Potassium Permanganate 
from the People's Republic of China (PRC Verification Report). 
Furthermore, Groupstars submitted copies of PRC legislation 
demonstrating the statutory authority for establishing the de jure 
absence of government control over companies. Thus, we believe that the 
evidence on the record supports a preliminary finding of absence of de 
jure governmental control based on: (1) an absence of restrictive 
stipulations associated with the business licenses of Groupstars; and 
(2) the applicable legislative enactments decentralizing control of PRC 
companies.
2. Absence of De Facto Control
    The Department typically considers four factors in evaluating 
whether a respondent is subject to de facto governmental control of its 
export functions: (1) whether the export prices are set by, or are 
subject to, the approval of a governmental agency; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent

[[Page 7770]]

has autonomy from the government in making decisions regarding the 
selection of management; and (4) whether the respondent retains the 
proceeds of its export sales and makes independent decisions regarding 
the disposition of profits or financing of losses. See Silicon Carbide, 
at 22586-87; see also Notice of Final Determination of Sales at Less 
Than Fair Value: Furfuryl Alcohol From the People's Republic of China, 
60 FR 22544, 22545 (May 8, 1995).
    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide, at 22587. Therefore, the Department has determined 
that an analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.
    Groupstars reported that it determines prices for sales of the 
subject merchandise based on market principles, the cost of the 
merchandise, and profit. Moreover, Groupstars stated that it negotiates 
prices directly with its customers. Also, Groupstars claims that its 
prices are not subject to review or guidance from any governmental 
organization. In addition, the record indicates that Groupstars has the 
authority to negotiate and sign contracts and other agreements. 
Further, Groupstars claims that its negotiations are not subject to 
review or guidance from any governmental organization. Finally, there 
is no evidence on the record to suggest that there is any governmental 
involvement in the negotiation of Groupstars' contracts.
    Furthermore, Groupstars reported that it has autonomy in making 
decisions regarding the selection of management. Groupstars indicated 
that its selection of management is not subject to review or guidance 
from any governmental organization and there is no evidence on the 
record to suggest that there is any governmental involvement in the 
selection of the management of Groupstars.
    Finally, Groupstars reported that it retains the proceeds of its 
export sales, and its management determines how to use profits. 
Groupstars stated that it operates in accordance with market principles 
and calculates profits and losses in a normal commercial manner. There 
is no evidence on the record to suggest that there is any governmental 
involvement in Groupstars' decisions regarding the disposition of 
profits or financing of losses.
    Therefore, we find that the evidence on the record, including the 
verification findings, which are consistent with the separate rates 
information reported by Groupstars, supports a preliminary finding of 
absence of de facto governmental control based on record statements and 
supporting documentation showing that: (1) Groupstars sets its own 
export prices independent of the government and without the approval of 
a government authority; (2) Groupstars has the authority to negotiate 
and sign contracts and other agreements; (3) Groupstars has adequate 
autonomy from the government regarding the selection of management; and 
(4) Groupstars retains the proceeds from its sales and makes 
independent decisions regarding the disposition of profits or financing 
of losses.
    The evidence placed on the record of this review by Groupstars 
demonstrates an absence of government control, both in law and in fact, 
with respect to its exports of the merchandise under review, in 
accordance with the criteria identified in Sparklers and Silicon 
Carbide. Therefore, for the purposes of these preliminary results, we 
are granting a separate rate to Groupstars.

Fair Value Comparisons

    To determine whether Groupstars' sales of subject merchandise were 
made at prices less than NV, we compared the constructed export price 
(CEP) to NV, as described in the Constructed Export Price and Normal 
Value sections of this notice, below.

Constructed Export Price

    In accordance with section 772(b) of the Act, the Department 
calculated a CEP for all sales by Groupstars to the United States 
because the first sale to an unaffiliated purchaser occurred after the 
subject merchandise was imported into the United States. We calculated 
CEP based on the packed prices from Groupstars LLC to the first 
unaffiliated U.S. customer. In accordance with section 772(c) of the 
Act, we deducted from the starting price, where appropriate, movement 
charges including foreign inland freight, foreign brokerage and 
handling, ocean freight, marine insurance, U.S. Customs duties, U.S. 
brokerage and handling, U.S. inland freight, and U.S. warehousing 
charges. Foreign inland freight, foreign brokerage and handling, and 
ocean freight, were provided by NME vendors, and thus, we based the 
deductions for these movement charges on the surrogate values 
identified in the ``Normal Value'' section of this notice below. 
Groupstars' shipments of subject merchandise were insured through a 
market-economy marine insurance provider and the provider was paid 
using a market-economy currency. Therefore, pursuant to 19 CFR 
351.408(c)(1), we used the actual price paid for marine insurance as a 
deduction from the starting price. In accordance with 772(d)(1) of the 
Act, we deducted from the starting price those selling expenses that 
related to economic activity in the United States. In accordance with 
section 772(d)(3) of the Act, we deducted from the starting price an 
amount for profit. For additional information regarding these 
adjustments, see the calculation memorandum from Drew Jackson to the 
File dated January 31, 2003 which is in the CRU public file 
(Calculation Memorandum).

Normal Value

    For exports from NME countries, section 773(c)(1) of the Act 
provides that the Department shall determine NV using a FOP methodology 
if: (1) the subject merchandise is exported from a NME country, and (2) 
available information does not permit the calculation of NV using home-
market prices, third-country prices, or constructed value pursuant to 
section 773(a) of the Act. Section 351.408 of the Department's 
regulations sets forth the methodology used by the Department to 
calculate the NV of merchandise exported from NME countries. In every 
case conducted by the Department involving the PRC, the PRC has been 
treated as a NME. Because none of the parties to this proceeding 
contested such treatment, we calculated NV in accordance with section 
773(c)(3) and (4) of the Act and section 351.408(c) of the Department's 
regulations.
    In accordance with section 773(c)(3) of the Act, the FOP utilized 
in producing potassium permanganate include, but are not limited to: 
(1) hours of labor required; (2) quantities of raw materials employed; 
(3) amounts of energy and other utilities consumed; and (4) 
representative capital costs, including depreciation. In accordance 
with section 773(c)(4) of the Act, the Department valued the FOP, to 
the extent possible, using the costs of the FOP in a market economy 
that is (1) at a level of economic development comparable to the PRC, 
and (2) a significant producer of comparable merchandise. We determined 
that India is comparable to the PRC in terms of per capita gross 
national product and the national distribution of labor. Furthermore, 
India is a significant producer of comparable merchandise. See 
Memorandum from Jeffrey May,

[[Page 7771]]

Director, Office of Policy, to Holly Kuga, Senior Office Director, AD/
CVD Enforcement, dated February 28, 2002, which is in the CRU public 
file.
    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we attempted to value the FOP using surrogate values 
that were in effect during the POR. However, when we were unable to 
obtain surrogate values in effect during the POR, we adjusted the 
values, as appropriate, to account for inflation or deflation between 
the effective period and the POR. We calculated the inflation or 
deflation adjustments for all factor values, except labor, using the 
wholesale price indices (WPI) for India as published in the 
International Monetary Fund's (IMF) publication, International 
Financial Statistics. We valued the FOP as follows:
    (1) We valued the following materials using available Indian import 
data from the publication Monthly Statistics of the Foreign Trade of 
India, Volume II--Imports (Indian Import Statistics) for the period 
January through December 2001: manganese ore, potassium hydroxide, 
limestone, silicon dioxide, salt, pallets, steel drums, polyethylene 
bags, woven plastic bags and coal.\3\ See Memorandum from Drew Jackson 
to the File Regarding Surrogate Values Used for the Preliminary Results 
of the Administrative Review of Potassium Permanganate from the 
People's Republic of China (Surrogate Value Memorandum), dated January 
31, 2003, which is in the CRU public file.
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    \3\ For some of the FOP, we were unable to find Indian import 
statistics for March 2001. We will attempt to find the March 2001 
statistics for the final results of review.
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    (2) We valued plastic drums using 2001 data found on the Economic 
Times of India website.
    (3) We valued electricity using 2000-2001 data from the Annual 
Report on the Working of State Electricity Boards & Electricity 
Departments, published in June 2001 by the Power and Energy Division of 
the Planning Commission of the Government of India.
    (4) We valued water using the Indian value reported in the 
publication Second Water Utilities Data Book (1997), published by the 
Asian Development Bank.
    (5) We valued labor using a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3). This rate is identified on the 
Import Administration's web site under ``Expected Wages of Selected NME 
Countries.'' See http://ia.ita.doc.gov/wages.
    (6) We derived ratios for factory overhead, selling, general and 
administrative (SG&A) expenses, and profit using 1992-1993 information 
reported in the Reserve Bank of India Bulletin of January 1997. There 
is no information on the record regarding the factory overhead, SG&A 
expenses, and profit for Indian producers of potassium permanganate. 
However, the Reserve Bank of India Bulletin maintains data for an 
Indian industry group that includes companies that process and 
manufacture chemicals. Therefore, we have used this source to value 
factory overhead, SG&A expenses, and profit for the preliminary 
results. Using the information from the Reserve Bank of India Bulletin, 
we were able to calculate factory overhead as a percentage of direct 
materials, labor, and energy expenses; SG&A expenses as a percentage of 
the total cost of manufacturing; and profit as a percentage of the sum 
of the total cost of manufacturing and SG&A expenses.
    (7) We used the following sources to value ocean, truck, and rail 
freight services. Truck and rail freight services were incurred to 
transport the finished product to the port and direct materials, 
packing materials, and coal from the suppliers of the inputs to 
Groupstars:
    Truck Freight: We valued truck freight services using the 1999 rate 
quotes reported by Indian freight companies and used in the less than 
fair value investigation of bulk aspirin from the PRC. See Notice of 
Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From 
the People's Republic of China, 65 FR 33805 (May 25, 2000).
    Rail Freight: We valued rail freight services using July 1999-2000 
rates published in the Reserve Bank of India Bulletin in July 2001.
    Ocean Freight: We valued ocean freight services using the regional 
rates calculated in the Final Determination of Sales at Less Than Fair 
Value: Brake Drums and Brake Rotors from the People's Republic of 
China, 62 FR 9160 (February 28,1997).
    (8) We valued foreign brokerage and handling using the average of 
the foreign brokerage and handling expenses reported in the public 
versions of the U.S. sales listing submitted in the antidumping duty 
review of Certain Stainless Steel Wire Rod from India: Final Results of 
the Administrative and New Shipper Review, 64 FR 856 (January 6, 1999).
    For further discussion of the surrogate values used in this review, 
see the Surrogate Value Memorandum.

Use of Partial Facts Available

    Pursuant to section 776(a)(2)(D) of the Act, the Department may use 
facts available when an interested party provides information but the 
information cannot be verified. In the instant review, Groupstars was 
unable to substantiate the consumption quantity reported for pallets. 
See PRC Verification Report. Therefore, the Department has resorted to 
the use of facts available with respect to this factor. Specifically, 
as facts available, the Department calculated the consumption quantity 
of pallets by dividing the total number of pallets purchased by 
Groupstars during the POR by the total quantity of subject merchandise 
exported during the POR. For further details, see the Calculation 
Memorandum.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average percentage dumping margin exists for the 
period January 1, 2001 through December 31, 2001:

------------------------------------------------------------------------
                Exporter/Manufacturer                   Margin (percent)
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Groupstars Chemical Co., Ltd.........................             13.31%
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    The Department will disclose to parties to this proceeding the 
calculations performed in reaching the preliminary results within 10 
days of the date of announcement of the preliminary results. Interested 
parties may request a hearing within 30 days of publication of the 
preliminary results. See 19 CFR 351.310(c). Interested parties may 
submit written comments (case briefs) in accordance with 19 CFR 
351.309(c)(1)(ii) and rebuttal comments (rebuttal briefs), which must 
be limited to issues raised in the case briefs in accordance with 19 
CFR 351.309(d). Case briefs must be submitted within 30 days after the 
date of publication of this notice. Rebuttal briefs must be submitted 
within five days after the time limit for filing case briefs. 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. Further, the Department requests that parties 
submitting written comments provide the Department with a diskette 
containing the public version of those comments. We will issue a 
memorandum identifying the date of a hearing, if one is requested. The 
Department will issue the final results of this administrative review, 
including the results of our analysis of the issues raised by the 
parties in their comments, within 120 days of publication of the 
preliminary results.

[[Page 7772]]

    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
this review and for future deposits of estimated duties.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and Customs shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), we 
calculated importer-specific assessment rates for merchandise subject 
to this review. We divided the total dumping margin (calculated as the 
difference between NV and CEP) for the importer by the total entered 
value of the reviewed sales. Where the importer-specific assessment 
rate is above de minimis, we will direct Customs to assess the 
resulting ad valorem rate against the entered value of the entry of the 
subject merchandise by that importer during the POR. The Department 
will issue appropriate assessment instructions directly to Customs 
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 Customs to assess the resulting assessment rates, calculated as 
described above, on each of the importer's entries during the review 
period.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of potassium permanganate from the PRC 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 the reviewed 
company named above will be the rate for that firm established in the 
final results of this administrative review; (2) for any previously 
reviewed PRC or non-PRC exporter with a separate rate not covered in 
this review, the cash deposit rate will be the company-specific rate 
established for the most recent period; (3) for all other PRC 
exporters, the cash deposit rates will be the PRC-wide rate in effect; 
and (4) the cash deposit rates for non-PRC exporters of subject 
merchandise from the PRC will be the rates 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 to Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) 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.
    We are issuing and publishing this determination in accordance with 
sections section 751(a)(1) and 777(i)(1) of the Act.

    Dated: January 31, 2003.
Bernard T. Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-3853 Filed 2-14-03; 8:45 am]
BILLING CODE 3510-DS-S