[Federal Register Volume 68, Number 61 (Monday, March 31, 2003)]
[Notices]
[Pages 15433-15436]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-7687]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-831]


Notice of Initiation of Countervailing Duty Investigation: Allura 
Red from India

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

EFFECTIVE DATE: March 31, 2003.

FOR FURTHER INFORMATION CONTACT: Sean Carey at (202) 482-3964, or Adina 
Teodorescu at (202) 482-4052; Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Initiation of Investigation

The Petition

    On March 4, 2003, the Department of Commerce (the Department) 
received a petition filed in proper form by Sensient

[[Page 15434]]

Technologies Corporation (petitioner). See Allura Red from India: 
Petition for the Imposition of Antidumping and Countervailing Duties 
(Petition). The Department received information supplementing the 
petition, on March 17, March 18, and March 19, 2003. See Response to 
the Department's Supplemental Questions Regarding the Antidumping and 
Injury Portions of the Petition Regarding Allura Red from India (March 
17, 2003) (AD/Injury Supplemental #1); Response to Department's 
Supplemental Questions Regarding the Subsidy Portion of the Petition 
Regarding Allura Red from India (March 18, 2003) (CVD Supplemental); 
Response to the Department's Supplemental Questions Regarding the 
Antidumping and Injury Portions of the Petition Regarding Allura Red 
from India (March 19, 2003) (AD/Injury Supplemental #2).
    In accordance with section 702(b)(1) of the Act, petitioner alleges 
that manufacturers, producers, or exporters of Allura Red in India 
receive countervailable subsidies within the meaning of section 701 of 
the Act.
    The Department finds that petitioner filed this petition on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(C) of the Act and has demonstrated sufficient 
industry support with respect to the antidumping and countervailing 
duty investigations that it is requesting the Department to initiate. 
See Determination of Industry Support for the Petition, below.

Period of Investigation

    In accordance with 19 CFR 351.204 (b)(2), the anticipated period of 
investigation (POI) is January 1, 2002, through December 31, 2002.

Scope of Investigation

    This investigation covers Allura Red coloring, also known as Food, 
Drug and Cosmetic (FD&C) Red No. 40, defined as synthetic red coloring 
containing not less than 85 percent of the disodium salt of 6-hydroxy-
5-{(2-methoxy-5-methyl-4-sulfophenyl)azo{time} -2-naphthalenesulfonic 
acid, whether or not certified for human consumption at the time of 
entry into the United States. The product definition covers all forms 
and variations of Allura Red, such as powders, press cakes, extrudates, 
liquid, or granules, but excludes lake pigments formed from Allura Red. 
This investigation does not cover colors of animal, vegetable, or 
mineral origin, also known as ``natural colors.''
    Allura Red is currently classifiable in the Harmonized Tariff 
Schedule United States (HTSUS) under subheading 3204.12.5000, a basket 
category. The tariff classification is provided for convenience and 
Customs purposes. The written description of the scope of this 
proceeding is dispositive.
    As discussed in the preamble to the Department's regulations, we 
are setting aside a time period for parties to raise issues regarding 
product coverage. See Antidumping Duties; Countervailing Duties; Final 
Rule, 62 FR 27296, 27323 (May 19, 1997). The Department encourages all 
parties to submit such comments within 20 days of publication of this 
notice. Comments should be addressed to Import Administration's Central 
Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230. The period of scope 
consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with parties prior to 
the issuance of the preliminary determination.

Consultations

    In accordance with Article 13.1 of the Agreement on Subsidies and 
Countervailing Measures and section 702(b)(4)(A)(ii) of the Act, on 
March 5, 2003, we invited the Government of India (GOI) to hold 
consultations with us regarding the countervailing duty petition. The 
GOI declined our offer for consultations. See Memorandum to the File 
from Dana S. Mermelstein: Allura Red from India: Petition for the 
Imposition of Countervailing Duties; Contacts with the Indian Embassy 
Regarding Consultations, dated March 24, 2003.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that the Department's industry support determination, which is 
to be made before the initiation of the investigation, be based on 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (1) At least 25 
percent of the total production of the domestic like product; and (2) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. See section 702(c)(4)(A). Moreover, 
section 702(c)(4)(D) of the Act provides that, if the petition does not 
establish support of domestic producers or workers accounting for more 
than 50 percent of the total production of the domestic like product, 
the Department shall either poll the industry or rely on other 
information in order to determine if there is support for the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The United States International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding domestic like product (see section 771(10) of the Act), they 
do so for different purposes and pursuant to their separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the like product, such differences 
do not render the decision of either agency contrary to the law.\1\
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    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefore from Japan: Final Determination: 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    In this petition, petitioner does not offer a definition of 
domestic like product distinct from the scope of the investigation. 
Thus, based on our analysis of the information presented to the 
Department by petitioner, and the information obtained and received 
independently by the Department, we have determined that there is a 
single domestic like product, which is defined in the Scope of 
Investigation section above, and have analyzed industry support in 
terms of this domestic like product.
    Finally, the Department has determined that, pursuant to section

[[Page 15435]]

702(c)(4)(A) of the Act, the petition contains adequate evidence of 
industry support and, therefore, polling is unnecessary. See 
Countervailing Duties Investigation Initiation Checklist: Allura Red 
from India, Industry Support section, March 24, 2003 (CVD Initiation 
Checklist), on file in the Central Records Unit, room B-099 of the main 
Department of Commerce building.
    We determine, based on information provided in the petition, that 
petitioner has demonstrated industry support representing over 50 
percent of total production of the domestic like product, consisting of 
petitioner and another U.S. producer of Allura Red, Noveon, Inc. 
Therefore, the domestic producers or workers who support the petitions 
account for at least 25 percent of the total production of the domestic 
like product, and the requirements of section 732(c)(4)(A)(i) of the 
Act are met. Furthermore, because the Department received no opposition 
to the petition, the domestic producers or workers who support the 
petition account for more than 50 percent of the production of the 
domestic like product produced by that portion of the industry 
expressing support for or opposition to the petition. Thus, the 
requirements of section 702(c)(4)(A)(ii) are also met. Accordingly, the 
Department determines that the petition was filed on behalf of the 
domestic industry within the meaning of section 702(b)(1) of the Act. 
See CVD Initiation Checklist.

Injury Test

    Because India is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) applies to this 
investigation. Accordingly, the ITC must determine whether imports of 
the subject merchandise from India materially injure, or threaten 
material injury to, a U.S. industry.

Allegations of Subsidies

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition, on behalf of an industry, that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a), and (2) is 
accompanied by information reasonably available to petitioners 
supporting the allegations.
    We are initiating an investigation of the following programs 
alleged in the petition to have provided countervailable subsidies to 
manufacturers, producers and exporters of the subject merchandise in 
India (a full description of each program is provided in the CVD 
Initiation Checklist):
A. Government of India (GOI) Programs
1. Pre-Shipment and Post-Shipment Export Financing
2. Income Tax Exemption Scheme
3. Advance Licenses
4. GOI Loan Guarantees
5. Export Promotion Capital Goods Scheme (EPCGS)
6. Market Access Initiative (MAI)
7. The Duty Entitlement Passbook Scheme (DEPB)/ Post-Export Credits
8. Exemption of Export Credit from Interest Taxes
9. Re-discounting of Export Bills Abroad (EBR)
10. Special Imprest Licenses
B. Programs in the State of Maharashtra
1. Sales Tax Incentives
2. Capital Incentive Scheme
3. Electricity Duty Exemption Scheme
4. Waiving of Loan Interest by SICOM Limited
C. Program in the State of Uttar Pradesh
Capital Incentive Scheme
    We are not including in our investigation the following programs 
alleged to be benefitting producers and exporters of the subject 
merchandise in India. The full discussion of our bases for not 
initiating on these programs is set forth in the CVD Initiation 
Checklist:
A. Government of India (GOI) Programs
1. Special Import Licenses (SILs)
2. Export Processing Zones/Export-Oriented Units Program
3. Income Tax Exemption Scheme (Sections 10A and 10B)
4. Duty Drawback on Excise Taxes
5. Import Duty Exemptions on Capital Equipment Purchases
6. Programs Operated by the Small Industries Development Bank of India
7. Supply of Raw Materials at Subsidized Prices
B. Program in the State of Gujarat
Infrastructure Assistance Scheme
C. Program in the State of Orissa
Subsidies Provided by the State of Orissa
D. Program in the State of Madhya Pradesh
Regional Benefits to New Facilities in Madhya Pradesh

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that the U.S. industry producing the domestic 
like product is being materially injured, or threatened with material 
injury, by reason of subsidized imports from India of the subject 
merchandise. Petitioner contends that the industry's injured condition 
is evident in the reduced levels of production and capacity 
utilization, decline in profits, decline in research and development, 
decreased U.S. market share, lost sales and revenue, and price 
suppression and depression. The allegations of injury and causation are 
supported by relevant evidence including lost sales and pricing 
information. We have assessed the allegations and supporting evidence 
regarding material injury and causation, and have determined that these 
allegations are properly supported by accurate and adequate evidence 
and meet the statutory requirements for initiation. See CVD Initiation 
Checklist.

Initiation of Countervailing Duty Investigation

    Based on our examination of the petition on Allura Red and 
petitioner's responses to our requests for supplemental information 
clarifying the petition, we have found that the petition meets the 
requirements of section 702(b) of the Act. Therefore, in accordance 
with section 702(b) of the Act, we are initiating a countervailing duty 
investigation to determine whether manufacturers, producers, or 
exporters of Allura Red from India receive countervailable subsidies. 
Unless the deadline is extended, we will make our preliminary 
determination no later than 65 days after the date of this initiation.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the petition has been provided to the 
representatives of the government of India. We will attempt to provide 
a copy of the public version of the petition to each exporter named in 
the petition, as provided for under 19 CFR 351.203(c)(2).

International Trade Commission Notification

    Pursuant to section 702(d) of the Act, we have notified the ITC of 
our initiation.

Preliminary Determination by the ITC

    The ITC will determine, no later than April 18, 2003, whether there 
is a reasonable indication that imports of Allura Red from India are 
materially injuring, or threatening material injury to, a U.S. 
industry. A negative ITC determination will result in the investigation 
being terminated; otherwise, this investigation will proceed according 
to statutory and regulatory time limits.

[[Page 15436]]

    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: March 24, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-7687 Filed 3-28-03; 8:45 am]
BILLING CODE 3510-DS-P