[Federal Register Volume 68, Number 45 (Friday, March 7, 2003)]
[Notices]
[Pages 11045-11051]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5490]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-813]


Certain Preserved Mushrooms From India: 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: In response to timely requests by three manufacturer/exporters 
and the petitioner,\1\ the Department of Commerce is conducting an 
administrative review of the antidumping duty order on certain 
preserved mushrooms from India with respect to three companies. The 
period of review is February 1, 2001, through January 31, 2002.
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    \1\ The petitioner is the Coalition for Fair Preserved Mushroom 
Trade which includes the American Mushroom Institute and the 
following domestic companies: L.K. Bowman, Inc., Modern Mushroom 
Farms, Inc., Monterey Mushrooms, Inc., Mount Laurel Canning Corp., 
Mushrooms Canning Company, Southwood Farms, Sunny Dell Foods, Inc., 
and United Canning Corp.
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    We preliminarily determine that sales have been made below normal 
value. Interested parties are invited to comment on these preliminary 
results. If these preliminary results are adopted in our final results 
of administrative review, we will instruct the Customs Service to 
assess antidumping duties on all appropriate entries.

EFFECTIVE DATE: March 7, 2003.

FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Kate Johnson, 
Office 2, AD/CVD Enforcement Group I, Import Administration--Room B099, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-4136 or (202) 482-4929, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On February 19, 1999, the Department published in the Federal 
Register an amended final determination and antidumping duty order on 
certain preserved mushrooms from India (64 FR 8311).
    On February 1, 2002, the Department published a notice advising of 
the opportunity to request an administrative review of the antidumping 
duty order on certain preserved mushrooms from India (67 FR 4945). In 
response to timely requests by three manufacturers/exporters, Agro 
Dutch Foods Ltd. (Agro Dutch), Himalya International Ltd. (Himalya), 
and Weikfield Agro Products, Ltd. (Weikfield), and the petitioner, the 
Department published a notice of initiation of an administrative review 
with respect to three companies: Agro Dutch, Himalya, and Weikfield (67 
FR 14696, March 27, 2002). The period of review (POR) is February 1, 
2001, through January 31, 2002.
    On April 12, 2002, the Department issued antidumping duty 
questionnaires to the above-mentioned companies. We received responses 
to the original questionnaire during the period May through July 2002. 
We issued supplemental questionnaires in July, October, and November 
2002, and received responses during the period August through December 
2002. For Weikfield and Himalya, Section D questionnaire response data 
was removed from the record in December 2002 and January 2003, 
respectively (see December 30, 2002, Letter to Matthew P. Jaffe, 
counsel to Weikfield regarding the removal of Weikfield's Section D 
responses from the record, and January 16, 2003, Memorandum to the File 
concerning the removal of Himalya's Section D responses from the 
record). As a result of the initiation of sales below the cost of 
production (COP) investigations, discussed below, these Section D 
responses were re-submitted for the record in January (Weikfield) and 
February (Himalya) 2003.
    In October 2003, we conducted an on-site verification of Agro 
Dutch's questionnaire responses. The results of this verification are 
described in Sales and Cost of Production Verification in Chandigarh, 
India of Agro Dutch Industries, Ltd., Memorandum to the File dated 
December 10, 2002 (Agro Dutch Verification Report).
    On January 3, 2003, the Department received an allegation from the 
petitioner that Weikfield sold certain preserved mushrooms in India at 
prices below the COP. This allegation was timely because the Department 
had extended the deadline for such an allegation. On January 21, 2003, 
the Department initiated a cost investigation of Weikfield's home-
market sales of this merchandise. See Petitioner's Allegation of Sales 
Below the Cost of Production for Weikfield Agro Products Ltd., 
Memorandum to Louis Apple from Mark J. Todd dated January 21, 2003.
    On January 15, 2003, the Department received an allegation from the 
petitioner that Himalya sold certain preserved mushrooms in India at 
prices below the COP. This allegation was timely because the Department 
had extended the deadline for such an allegation. On January 29, 2003, 
the Department initiated a cost investigation of Himalya's home-market 
sales of this merchandise. See Petitioner's Allegation of Sales Below 
the Cost of Production for Himalya International Limited, Memorandum to 
Louis Apple from Aleta Habeeb dated January 29, 2003.

Scope of the Order

    The products covered by this order are certain preserved mushrooms, 
whether imported whole, sliced, diced, or as stems and pieces. The 
preserved mushrooms covered under this order are the species Agaricus 
bisporus and Agaricus bitorquis. ``Preserved mushrooms'' refer to 
mushrooms that have been prepared or preserved by cleaning, blanching, 
and sometimes slicing or cutting. These mushrooms are then packed and 
heated in containers including but not limited to cans or glass jars in 
a suitable liquid medium, including but not limited to water,

[[Page 11046]]

brine, butter or butter sauce. Preserved mushrooms may be imported 
whole, sliced, diced, or as stems and pieces. Included within the scope 
of this order are ``brined'' mushrooms, which are presalted and packed 
in a heavy salt solution to provisionally preserve them for further 
processing.
    Excluded from the scope of this order are the following: (1) All 
other species of mushroom, including straw mushrooms; (2) all fresh and 
chilled mushrooms, including ``refrigerated'' or ``quick blanched 
mushrooms''; (3) dried mushrooms; (4) frozen mushrooms; and (5) 
``marinated,'' ``acidified'' or ``pickled'' mushrooms, which are 
prepared or preserved by means of vinegar or acetic acid, but may 
contain oil or other additives.
    The merchandise subject to this order is classifiable under 
subheadings: 2003.10.0127, 2003.10.0131, 2003.10.0137, 2003.10.0143, 
2003.10.0147, 2003.10.0153 and 0711.51.0000 of the Harmonized Tariff 
Schedule of the United States \2\ (HTS). Although the HTS subheadings 
are provided for convenience and customs purposes, our written 
description of the scope of this order dispositive.
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    \2\ Prior to January 1, 2002, the HTS codes were as follows: 
2003.10.0027, 2003.10.0031, 2003.10.0037, 2003.10.0043, 
2003.10.0047, 2003.10.0053, and 0711.90.4000.
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Fair Value Comparisons

    To determine whether sales of certain preserved mushrooms by the 
respondents to the United States were made at less than normal value 
(NV), we compared constructed export price (CEP) or export price (EP), 
as appropriate, to the NV, as described in the ``Export Price/
Constructed Export Price'' and ``Normal Value'' sections of this 
notice.
    Pursuant to section 777A(d)(2) of the Tariff Act of 1930 (the Act), 
we compared the EPs of individual U.S. transactions to the weighted-
average NV of the foreign like product where there were sales made in 
the ordinary course of trade, as discussed in the ``Cost of Production 
Analysis'' section below.
    In this review, Agro Dutch did not have a viable home or third 
country market. Therefore, as the basis for NV, we used constructed 
value (CV) when making comparisons in accordance with section 773(a)(4) 
of the Act.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents covered by the description in the 
``Scope of the Order'' section, above, to be foreign like products for 
purposes of determining appropriate product comparisons to U.S. sales. 
With respect to Himalya and Weikfield, we compared U.S. sales to sales 
made in the home market within the contemporaneous window period, which 
extends from three months prior to the U.S. sale until two months after 
the sale. Where there were no sales of identical merchandise in the 
home market made in the ordinary course of trade to compare to U.S. 
sales, we compared U.S. sales to sales of the most similar foreign like 
product made in the ordinary course of trade. For Agro Dutch, where 
there were no sales of identical or similar merchandise made in the 
ordinary course of trade in the home market or a third country to 
compare to U.S. sales, we compared U.S. sales to CV. In making the 
product comparisons, we matched foreign like products based on the 
physical characteristics reported by the respondents in the following 
order: preservation method, container type, mushroom style, weight, 
grade, container solution, and label type.

Export Price/Constructed Export Price

    For Agro Dutch and Weikfield, we used EP methodology, in accordance 
with section 772(a) of the Act, because the subject merchandise was 
sold directly by the producer/exporter in India to the first 
unaffiliated purchaser in the United States prior to importation and 
CEP methodology was not otherwise indicated. With respect to Himalya, 
we calculated CEP in accordance with section 772(b) of the Act, because 
the subject merchandise was first sold by Him Infotech dba 
Transatlantic Marketing, Himalya's affiliated importer in the United 
States, after importation into the United States. We based EP and CEP 
on packed prices to unaffiliated purchasers in the United States.

Agro Dutch

    Agro Dutch reported its U.S. sales as sold on an FOB, C&F, or CIF 
basis. We made deductions from the starting price, where appropriate, 
for foreign inland freight, freight document charges, insurance, 
foreign brokerage and handling, Indian export duty (CESS), and 
international freight in accordance with section 772(c)(1) of the Act 
and 19 CFR 351.402.
    As discussed at page 20 of the Agro Dutch Verification Report, Agro 
Dutch incurred brokerage and handling expenses on all of its U.S. 
sales, but did not report this expense for certain sales due to an 
unspecified error that was discovered at verification. Because Agro 
Dutch did not provide the Department with all of the requested expense 
data, use of facts available is appropriate pursuant to section 
776(a)(2)(A) of the Act. Furthermore, because Agro Dutch withheld this 
information and was unable to provide any explanation regarding this 
omission, we find that Agro Dutch failed to cooperate by not acting to 
the best of its ability to comply with a request for information, 
within the meaning of section 776(b) of the Act. Under such 
circumstances, section 776(b) of the Act permits the Department to use 
an inference which is adverse to the party. Accordingly, we have 
applied the highest reported brokerage and handling expense amount to 
those sales where brokerage and handling was not reported, as adverse 
facts available. See Agro Dutch Sales Data Adjustments for the 
Preliminary Results, Memorandum to the File dated February 28, 2003 
(Agro Dutch Sales Memo), for the identification of this amount.

Himalya

    Himalya reported its U.S. sales as sold on an ex dock/FOB U.S. 
warehouse, ex-factory or delivered basis. We made deductions from the 
CEP starting price, where appropriate, for foreign inland freight, 
brokerage and handling expenses, international freight, marine 
insurance, U.S. duty, U.S. inland freight, and U.S. warehousing 
expenses in accordance with section 772(c)(1) of the Act and 19 CFR 
351.402. We also deducted indirect selling expenses, credit expenses, 
and inventory carrying costs pursuant to section 772(d)(1) of the Act 
and 19 CFR 351.402. We recalculated credit expenses and inventory 
carrying costs using a public-source U.S. interest rate. See February 
28, 2002 Memorandum to the File Preliminary Results Calculation 
Memorandum for Himalya International Ltd. (Himalya) for specifics as to 
why Himalya's reported U.S. interest rate data was insufficient. We 
made an adjustment for CEP profit in accordance with section 773(d)(3) 
of the Act.

Weikfield

    Weikfield reported its U.S. sales as sold on a FOB port Mumbai, 
delivered duty paid, or C&F basis. We made deductions from the starting 
price, where appropriate, for foreign inland freight, foreign inland 
and marine insurance, foreign brokerage and handling expenses, CESS, 
international freight, and U.S. duty (including U.S. brokerage and 
handling expenses) in accordance with section 772(c)(1) of the Act and 
19 CFR 351.402.
    For certain sales, Weikfield reported that it arranged export 
financing through its affiliate, Weikfield Products

[[Page 11047]]

Co. Ltd. (WPCL), under which WPCL paid Weikfield in advance for the 
shipment, less a fee, and WPCL assumed the financial risk of the sale. 
As the credit expense for these sales, Weikfield reported the amount of 
the fee paid to WPCL. However, as Weikfield and WPCL are affiliated 
parties, we believe it is appropriate to calculate imputed credit based 
on the period from shipment to the date that a member of the Weikfield 
Group first receives payment from an unaffiliated party (i.e., the 
unaffiliated bank used by the Weikfield Group). Accordingly, we have 
recalculated imputed credit to reflect the period from shipment to bank 
payment, and made a further circumstance-of-sale adjustment for the 
bank fee paid by Weikfield or WPCL, based on the information in the 
December 4, 2002, submission.

Normal Value

    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 the respondents' 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)(1)(C) of the Act.
    With regard to Himalya and Weikfield, the aggregate volume of home 
market sales of the foreign like product was greater than five percent 
of the aggregate volume of U.S. sales of the subject merchandise. 
Therefore, we determined that the home market provides a viable basis 
for calculating NV for Himalya and Weikfield.
    Agro Dutch reported that during the POR it made no home market or 
third country sales. Therefore, we determined that neither the home 
market nor any third country market was a viable basis for calculating 
NV for Agro Dutch. As a result, we used CV as the basis for calculating 
NV for this respondent, in accordance with section 773(a)(4) of the 
Act.

Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (LOT) as the EP or CEP. Sales are made at different 
LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing 
(id.); see also Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 
62 FR 61731, 61732 (November 19, 1997). In order to determine whether 
the comparison sales were at different stages in the marketing process 
than the U.S. sales, we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''), including selling functions, 
class of customer (``customer category''), and the level of selling 
expenses for each type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices \3\), we consider the 
starting prices before any adjustments. For CEP sales, we consider only 
the selling activities reflected in the price after the deduction of 
expenses and profit under section 772(d) of the Act. See Micron 
Technology, Inc. v. United States, 243 F. 3d 1301, 1314-1315 (Fed. Cir. 
2001).
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    \3\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses and 
profit for CV, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales at 
a different LOT in the comparison market, where available data make it 
practicable, we make a LOT adjustment under section 773(a)(7)(A) of the 
Act. Finally, for CEP sales only, if a NV LOT is more remote from the 
factory than the CEP LOT and there is no basis for determining whether 
the difference in LOTs between NV and CEP affects price comparability 
(i.e., no LOT adjustment was practicable), the Department shall grant 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).
    We obtained information from the respondents regarding the 
marketing stages involved in making the reported home market and U.S. 
sales, including a description of the selling activities performed for 
each channel of distribution. Company-specific LOT findings are 
summarized below.

Agro Dutch

    We compared all U.S. sales to CV, as noted above. Because Agro 
Dutch has no viable comparison market, we derived the selling expenses 
and profit from the above-cost home market sales of Himalya and 
Weikfield, as discussed below under ``Calculation of Constructed 
Value.'' Consistent with our normal practice where NV is based on CV, 
we must consider the NV LOT based on the LOT of both sets of sales used 
to derive the weighted-average selling expenses and profit in this 
case. These sales (and the resulting weighted averages) are based on 
the different customer bases, channels of distribution, and selling 
functions of Himalya and Weikfield, as described below. As we cannot 
determine a specific LOT from the two sets of sales from which we 
derived the selling expenses and profit for CV, we cannot determine 
whether there is a difference in LOT between U.S. sales and CV. 
Therefore, we made no LOT adjustment to NV.

Himalya

    Himalya sold directly to institutional customers/wholesalers/
distributors, and consumers in the home market. We examined Himalya's 
home market distribution system, including selling functions, classes 
of customers, and selling expenses, and determined that Himalya offers 
the same support and assistance to all its home market customers. 
Accordingly, all of Himalya's home market sales are made through the 
same channel of distribution and constitute one LOT.
    With regard to sales to the United States, Himalya had only CEP 
sales, through its affiliated importer, Him InfoTech dba Transatlantic 
Marketing, to wholesalers/distributors/trading companies. We examined 
Himalya's U.S. distribution system, including selling functions, 
classes of customers, and selling expenses, and determined that Himalya 
offers the same support and assistance to all its U.S. customers. 
Accordingly, all of Himalya's U.S. sales are made through the same 
channel of distribution and constitute one LOT.
    To determine whether sales in the comparison market were at a 
different LOT than CEP sales, we examined the selling functions 
performed at the CEP level, after making the appropriate deductions 
under section 772(d) of the Act, and compared those selling functions 
to the selling functions performed in the home market LOT.
    In the comparison market, Himalya sold subject merchandise directly 
to institutional customers/wholesalers/distributors and consumers. In 
the United States, Himalya sold subject merchandise to its affiliate, 
Him InfoTech dba Transatlantic Marketing, which then resold the subject 
merchandise directly to unaffiliated purchasers. Therefore, we compared 
the

[[Page 11048]]

CEP LOT to the home market LOT and concluded that most of the functions 
performed by Himalya in making the starting-price sale in the 
comparison market (e.g., order solicitation, price negotiation, 
payment, transportation arrangements) were not performed in connection 
with CEP sales (e.g., order solicitation, price negotiation, payment). 
Accordingly, different LOTs exist between comparison-market and CEP 
sales, and the comparison-market sales are made at a more advanced LOT 
than are the CEP sales.
    Because there is only one LOT in the home market, it is not 
possible to determine if there is a pattern of consistent price 
differences between the sales on which NV is based and home market 
sales at the LOT of the export transaction. Accordingly, because the 
data available do not form an appropriate basis for making a LOT 
adjustment, but the LOT in the home market is at a more advanced stage 
of distribution than the CEP LOT, we have made a CEP offset to NV in 
accordance with section 773(a)(7)(B) of the Act. The CEP offset is 
calculated as the lesser of:
    1. The indirect selling expenses on the comparison-market sale, or
    2. The indirect selling expenses deducted from the starting price 
in calculating CEP.

Weikfield

    Weikfield's home market sales are made via one of two channels of 
distribution: a) direct sales to distributors in the Indian states of 
Maharashtra and Goa (Channel 1), and b) sales to ``carrying and 
forwarding'' (C&F) agents, which perform a role similar to that of 
distributors, in the rest of India (Channel 2). We examined Weikfield's 
home market distribution system, including selling functions, classes 
of customers, and selling expenses, and determined that Weikfield 
offers the same support and assistance to all its home market customers 
except with respect to sales promotion activities.
    In Channel 1, Weikfield's affiliate WPCL engages in market 
development activities to promote Weikfield's sales of preserved 
mushrooms and further develop its market. Weikfield reports that WPCL 
participates in sales exhibitions and consumer shows, and it creates 
and supplies in-store promotions and displays (see August 23, 2002, 
supplemental questionnaire response at page S-12). For sales in 
Maharashtra, Weikfield also pays a commission to a logistics agent. In 
Channel 2, Weikfield does not undertake any sales promotion activities 
to support its sales to C&F agents. Weikfield pays its unaffiliated C&F 
agents a commission for providing logistics and distribution services 
to the ultimate customer (i.e., the C&F agent's customer).
    Although Weikfield's sales through Channel 1 involve a set of 
selling activities not performed for Channel 2 sales, we have not 
considered these sales promotion activities to be extensive enough by 
themselves to classify Channel 1 as a separate LOT from Channel 2. In 
all other areas of our analysis, including sales negotiation, freight 
and distribution services, inventory maintenance, and customer class, 
the two channels involve the same services performed by Weikfield. 
Accordingly, we consider all of Weikfield's home market sales to 
constitute one LOT. This determination is consistent with our finding 
in the 1998-2000 administrative review, in which Weikfield had a viable 
home market and a similar fact pattern with respect to its two home 
market channels of distribution, which we found to constitute the same 
LOT.
    With regard to sales to the United States, Weikfield made only EP 
sales to importers/traders. We examined Weikfield's U.S. distribution 
system, including selling functions, classes of customers, and selling 
expenses, and determined that Weikfield offers the same support and 
assistance to all its U.S. customers. Accordingly, all of Weikfield's 
U.S. sales are made through the same channel of distribution and 
constitute one LOT.
    We compared the EP LOT to the home market LOT and concluded that 
the selling functions performed for home market customers are 
sufficiently similar to those performed for U.S. customers because the 
same services are offered in both markets. Apart from the promotion 
activities conducted by WPCL in the home market, Weikfield does not 
perform different selling activities in either the U.S. or home 
markets. Weikfield's selling activities undertaken in both markets are 
limited to responding to infrequent product complaints and, in the home 
market, arranging for domestic freight on certain sales. Accordingly, 
we consider the EP and home market LOTs to be the same. Consequently, 
we are comparing EP sales to sales at the same LOT in the home market.

Cost of Production Analysis

    As stated in the ``Background'' section of this notice, based on 
timely allegations filed by the petitioner, the Department initiated 
investigations to determine whether Himalya's and Weikfield's home 
market sales were made at prices less than the COP within the meaning 
of section 773(b) of the Act.

A. Calculation of Cost of Production

    We calculated the COP on a product-specific basis, based on the sum 
of Himalya's and Weikfield's respective costs of materials and 
fabrication for the foreign like product, plus amounts for selling, 
general and administrative (SG&A) expenses, interest expense, and all 
expenses incidental to placing the foreign like product in a condition 
packed ready for shipment in accordance with section 773(b)(3) of the 
Act.
    For these preliminary results, we have implemented a change in 
practice regarding the treatment of foreign exchange gains and losses. 
The Department's previous practice was to have respondents identify the 
source of all foreign exchange gains and losses (e.g., debt, accounts 
receivable, accounts payable, cash deposits) at both a consolidated and 
unconsolidated corporate level. At the consolidated level, the current 
portion of foreign exchange gains and losses generated by debt or cash 
deposits were included in the interest expense rate computation. At the 
unconsolidated producer level, foreign exchange gains and losses on 
accounts payable were either included in the G&A rate computation, or 
under certain circumstances, in the cost of manufacturing. Gains and 
losses on accounts receivable at both the consolidated and 
unconsolidated producer levels were excluded from the COP and CV 
calculations.
    Instead of splitting apart the foreign exchange gains and losses as 
reported in an entity's financial statements, we will normally include 
in the interest expense computation all foreign exchange gains and 
losses. In doing so, we will no longer include a portion of foreign 
exchange gains and losses from two different financial statements 
(i.e., consolidated and unconsolidated producer). Instead, we will only 
include the foreign exchange gains and losses reported in the financial 
statement of the same entity used to compute each respondent's net 
interest expense rate. This approach recognizes that the key measure is 
not necessarily what generated the exchange gain or loss, but rather 
how well the entity as a whole was able to manage its foreign currency 
exposure in any one currency. As such, for these preliminary results, 
we included all foreign exchange gains or losses in the interest 
expense rate computation. We note that there may be unusual 
circumstances in certain cases which may cause the Department to 
deviate from this general practice. We

[[Page 11049]]

will address exceptions on a case-by-case basis.
    As this is a change in practice, we invite the parties to the 
proceeding to comment on this issue.
    We relied on the COP information submitted by Himalya and 
Weikfield, except for the following adjustments:
Himalya
    [sbull] We revised Himalya's fixed overhead (FOH) per-unit amounts 
to exclude certain products from both ``mushroom growing'' and 
``mushroom canning and IQF only'' asset categories in allocating the 
depreciation expense to subject merchandise.
    [sbull] We revised Himalya's G&A expense ratio calculation to 
exclude expenses related to Him Infotech dba Transatlantic Marketing, a 
separate subsidiary, and to include amortized expenses.
    [sbull] We revised the interest expense ratio calculation to 
include net foreign exchange gains.
    See Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Determination Memorandum to Neal Halper 
dated February 28, 2003, for a further discussion of these adjustments.
Weikfield
    [sbull] We revised the reported direct labor and variable overhead 
costs to reflect changes in the allocation of manufacturing costs to 
the mushroom division (PMD) during the POR.
    [sbull] We revised the reported FOH costs to include all 
depreciation costs experienced during the POR.
    [sbull] We revised the G&A expense rate calculation to include all 
depreciation costs in the costs of goods sold amount used as the 
denominator in the calculation of the rate.
    [sbull] We revised the financial expenses to exclude long-term 
financial income and the gain on debt restructuring. In addition, we 
included all depreciation costs in the costs of goods sold amount used 
as the denominator in calculating the financial expense ratio.
    See Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Determination, Memorandum to Neal 
Halper dated February 28, 2003, for a further discussion of these 
adjustments.

B. Test of Home Market Prices

    For Himalya and Weikfield, on a product-specific basis, we compared 
the weighted-average COP to the prices of home market sales of the 
foreign like product, as required by section 773(b) of the Act, in 
order to determine whether these sales were made at prices below the 
COP. For purposes of this comparison, we used COP exclusive of selling 
and packing expenses. The prices were exclusive of any applicable 
movement charges, discounts, direct and indirect selling expenses and 
packing expenses. In determining whether to disregard home market sales 
made at prices less than their COP, we examined, in accordance with 
sections 773(b)(1)(A) and (B) of the Act, whether such sales were made: 
(1) Within an extended period of time, (2) in substantial quantities; 
and (3) at prices which did not permit the recovery of all costs within 
a reasonable period of time.

C. Results of COP Test

    Pursuant to section 773(b)(2)(c) of the Act, where less than 20 
percent of a respondent's 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 POR were at prices less than the 
COP, we disregarded the below-cost sales because we determined that 
they represented ``substantial quantities'' within an extended period 
of time, and were at prices which would not permit the recovery of all 
costs within a reasonable period of time, in accordance with section 
773(b)(1) of the Act.
    The results of our cost test for Himalya indicated all sales were 
at prices above COP. We therefore retained all sales in our analysis 
and used them as the basis for determining NV.
    The results of our cost test for Weikfield indicated that for 
certain products more than twenty percent of home market sales within 
an extended period of time were at prices below COP which would not 
permit the full recovery of all costs within a reasonable period of 
time. See 773(b)(2) of the Act. In accordance, with section 773(b)(1) 
of the Act, we excluded these below-cost sales from our analysis and 
used the remaining sales as the basis for determining NV.

Price-to-Price Comparisons

    For both Himalya and Weikfield, we based NV on the price at which 
the foreign like product is first sold for consumption in the home 
market, in the usual commercial quantities and in the ordinary course 
of trade, and at the same LOT as EP or CEP, as defined by section 
773(a)(1)(B)(i) of the Act.
    Home market prices were based on either ex-factory or delivered 
prices. We reduced the starting price for discounts (Himalya and 
Weikfield) and movement expenses (Weikfield only as Himalya's sales are 
ex-factory), where appropriate, in accordance with section 773(a)(6) of 
the Act and 19 CFR 351.401. We also reduced the starting price for 
packing costs incurred in the home market, in accordance with section 
773(a)(6)(B)(i), and increased NV to account for U.S. packing expenses 
in accordance with section 773(a)(6)(A). We made circumstance-of-sale 
adjustments for credit expenses and commissions, where appropriate, 
pursuant to section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. In 
addition, we made adjustments to NV, where appropriate, for differences 
in costs attributable to differences in the physical characteristics of 
the merchandise, pursuant to section 773(a)(6)(C)(ii) of the Act and 19 
CFR 351.411. For Weikfield, we made an adjustment to NV to account for 
commissions paid in the home market but not in the U.S. market, in 
accordance with 19 CFR 351.410(e). As the offset for home market 
commissions, we applied the lesser of home market commissions or U.S. 
indirect selling expenses. See below for a discussion of the 
calculation of U.S. indirect selling expenses. Finally, for comparisons 
to CEP sales (Himalya only), we made a CEP offset pursuant to section 
773(a)(7)(B) of the Act and 19 CFR 351.412(f). We calculated the CEP 
offset as the lesser of the indirect selling expenses on the 
comparison-market sales or the indirect selling expenses deducted from 
the starting price in calculating CEP.
    Weikfield reported home market commissions paid to its affiliate, 
WPCL, and to unaffiliated parties. In its supplemental questionnaire 
response, Weikfield claims that the commissions paid to WPCL are actual 
payments resulting from specific sales and not intracompany transfers. 
Weikfield states that the commissions paid to WPCL are at a different 
rate than those commissions paid to unaffiliated parties because of the 
services provided by WPCL in procuring business for Weikfield.
    With respect to commissions paid to affiliated parties, the 
Department's practice is to treat payments to affiliated parties 
providing services that relate to the sale of merchandise as 
commissions if they are actual expenditures resulting from specific 
sales and are not intra-company transfers. The Department allows these 
expenses as direct deductions to price if they are at arm's length and 
tie directly to sales (see, e.g., Final Results of Antidumping Duty 
Administrative Review, Large Newspaper Printing Presses and Components 
Thereof, Whether

[[Page 11050]]

Assembled or Unassembled, from Germany, 66 FR 11557, (February 26, 
2001), accompanying Issues and Decision Memorandum at Comment 5).
    Based on our analysis of Weikfield's questionnaire responses in 
this review, and WPCL's sales and marketing activities in support of 
its sister company, we have rejected Weikfield's claim that the 
payments made to WPCL are arm's-length commissions. We are not 
persuaded based on the information in the questionnaire responses 
comparing the payments to WPCL to those made to unaffiliated C&F agents 
that the payments to WPCL are at arm's length. Moreover, WPCL's 
activities to promote Weikfield's preserved mushroom sales appear 
integrated with WPCL's own sales promotion efforts for its product 
line. The expenses incurred in support of these sales promotion 
activities would be incurred whether or not a specific sale is made. 
Accordingly, we have not deducted the reported commissions to WPCL from 
the home market price.
    However, we are accounting for the costs incurred in support of the 
sales promotion activities by treating them as indirect selling 
expenses. Weikfield did not report a separate amount for indirect 
selling expenses; therefore, we have calculated these expenses based on 
the consolidated Weikfield Group Financial Statement submitted as 
Exhibit S-3 to the supplemental questionnaire response (see Weikfield 
Sales Data Adjustments for the Preliminary Results, Memorandum to the 
File dated February 28, 2003). Accordingly, we made an adjustment to 
the home market price for commissions paid only to unaffiliated parties 
for home market sales.

Calculation of Constructed Value

    We calculated CV in accordance with section 773(e) of the Act, 
which indicates that CV shall be based on the sum of each respondent's 
cost of materials and fabrication for the subject merchandise, plus 
amounts for SG&A expenses, profit and U.S. packing costs. We relied on 
the submitted CV information except for the following adjustments:

Agro Dutch

    We adjusted the submitted total cost of manufacturing to include a 
recalculation of the work-in-process offset. We recalculated work in 
process by applying a ratio to total manufacturing costs that includes 
the number of days remaining in the year after all theoretically 
possible mushroom growing cycles have been completed rather than using 
a ratio, as Agro Dutch did, that includes the total number of days in 
the mushrooms cycle.
    Because Agro Dutch had no viable home or third country market, we 
derived selling expenses and profit for Agro Dutch in accordance with 
section 773(e)(2)(B)(ii) of the Act and the Statement of Administrative 
Action accompanying the URAA, H.R. Doc. No. 103-316, Vol.1 at 169-171 
(SAA). See 19 CFR 351.405(b)(2) (clarifying that under section 
773(e)(2)(B) of the Act, ``foreign country'' means the country in which 
the merchandise is produced). Under this provision, we may use an 
amount which reflects selling expenses and profit based on actual 
amounts incurred or realized by other investigated companies on home 
market sales in the ordinary course of trade of the foreign like 
product. See section 773(e)(2)(B)(ii) of the Act. As a result, we 
calculated Agro Dutch's selling expenses and profit as a weighted 
average of the selling expense and profit amounts incurred on home 
market sales by Himalya and Weikfield during the cost reporting period. 
For further details see Agro Dutch Sales Memo.

Price-to-Constructed Value Comparisons

    For Agro Dutch, we based NV on CV, in accordance with section 
773(a)(4) of the Act. For comparisons to Agro Dutch's EP sales, we made 
circumstance-of-sale adjustments by deducting from CV the weighted-
average direct selling expenses derived from Himalya's and Weikfield's 
home market data, as noted above, and adding the U.S. direct selling 
expenses, in accordance with section 773(a)(8) of the Act and section 
19 CFR 351.410.
    At verification, Agro Dutch was unable to fully reconcile the 
expenses incurred for packing materials. As described at page 24 of the 
Agro Dutch Verification Report, we found an unreconciled difference 
equal to 14.36 percent of the total cost of packing material reported 
in the questionnaire response. Pursuant to section 782(e)(2) of the 
Act, because we could not verify the reported packing material cost, we 
cannot accept the reported amount. Furthermore, in providing 
unverifiable information, Agro Dutch failed to cooperate to the best of 
its ability with respect to this expense. Because Agro Dutch provided 
the Department with information that could not be verified, use of 
facts available is appropriate pursuant to section 776(a)(2)(D) of the 
Act. Under such circumstances, section 776(b) of the Act further 
permits the Department to use an inference which is adverse to the 
party. Thus, to account for this unreconciled difference, we increased 
the reported packing material amounts by 14.36 percent. See Agro Dutch 
Sales Memo for an explanation of the methodology used to revise the 
packing material expense.

Currency Conversion

    We made currency conversions in accordance with section 773A of the 
Act based on the exchange rates in effect on the dates of the U.S. 
sales as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of this review, we preliminarily determine that the 
weighted-average dumping margins for the period February 1, 2001, 
through January 31, 2002, are as follows:

------------------------------------------------------------------------
           Manufacturer/exporter                   Percent margin
------------------------------------------------------------------------
Agro Dutch Foods, Ltd.....................  2.85
Himalya International, Ltd................  0.08 (de minimis)
Weikfield Agro Products, Ltd..............  45.21
------------------------------------------------------------------------

    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 publication. See 19 CFR 351.310(c). If 
requested, a hearing will be scheduled after determination of the 
briefing schedule.
    Interested parties who wish to request a hearing or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, Room B-099, within 30 days of the 
date of publication of this notice. Requests should contain: (1) The 
party's name, address and telephone number; (2) the number of 
participants; and (3) a list of issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in the 
respective case briefs. Case briefs from interested parties and 
rebuttal briefs, limited to the issues raised in the respective case 
briefs, may be submitted in accordance with a schedule to be 
determined. Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument (1) a statement 
of the issue and (2) a brief summary of the argument. Parties are also 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
written briefs, not later than 120 days after the date of publication 
of this notice.

[[Page 11051]]

Assessment Rates

    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. For assessment 
purposes, we do not have the actual entered values for Agro Dutch or 
Weikfield because these respondents are not the importers of record for 
the subject merchandise. Accordingly, we intend to calculate customer-
specific assessment rates by aggregating the dumping margins calculated 
for all of Agro Dutch's and Weikfield's U.S. sales examined and 
dividing the respective amount by the total quantity of the sales 
examined. With respect to Himalya, we intend to calculate importer-
specific assessment rates for the subject merchandise from Himalya by 
aggregating the dumping margins calculated for all of Himalya's U.S. 
sales examined and dividing this amount by the total entered value of 
the sales examined. To determine whether the duty assessment rates are 
de minimis, in accordance with the requirement set forth in 19 CFR 
351.106(c)(2), we will calculate customer- or importer-specific ad 
valorem ratios based on export prices.
    The Department will issue appropriate appraisement instructions 
directly to the Customs Service upon completion of this review. We will 
instruct the Customs Service to assess antidumping duties on all 
appropriate entries covered by this review if any importer- or 
customer-specific assessment rate calculated in the final results of 
this review is above de minimis (i.e., at or above 0.50 percent). See 
19 CFR 351.106(c)(1). The final results of this review shall be the 
basis for the assessment of antidumping duties on entries of 
merchandise covered by the final results of this review and for future 
deposits of estimated duties, where applicable.

Cash Deposit Requirements

    The following cash deposit requirements will be effective for all 
shipments of the subject merchandise 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 rates for the reviewed 
companies will be those established in the final results of this 
review, except if the rate is less than 0.50 percent, and therefore, de 
minimis within the meaning of 19 CFR 351.106(c)(1), in which case the 
cash deposit rate 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 
period; (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 period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 11.30 percent, the ``All 
Others'' rate made effective by the LTFV investigation (see Notice of 
Amendment of Final Determination of Sales at Less Than Fair Value and 
Antidumping Duty Order: Certain Preserved Mushrooms From India, 64 FR 
8311 (February 19, 1999)). These requirements, when imposed, shall 
remain in effect until publication of the final results of the next 
administrative review.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) 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 published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221.

    Dated: February 28, 2003.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 03-5490 Filed 3-6-03; 8:45 am]
BILLING CODE 3510-DS-P