[Federal Register Volume 68, Number 152 (Thursday, August 7, 2003)]
[Notices]
[Pages 47020-47031]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-20180]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818]


Notice of Preliminary Results and Partial Rescission of 
Antidumping Duty Administrative Review and Intent Not to Revoke in 
Part: For the Sixth Administrative Review of the Antidumping Duty Order 
on Certain Pasta from Italy

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

[[Page 47021]]


ACTION: Notice of preliminary results and partial rescission of 
antidumping duty administrative review and intent not to revoke in 
part.

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SUMMARY: In response to requests by interested parties, the Department 
of Commerce (``the Department'') is conducting an administrative review 
of the antidumping duty order on certain pasta (``pasta'') from Italy 
for the period of review (``POR'') July 1, 2001 through June 30, 2002.
    We preliminarily determine that during the POR, Pastificio Garofalo 
S.p.A. (``Garofalo''), IAPC Italia S.r.l. (``IAPC''), and Industria 
Alimentare Colavita, S.p.A. (``Indalco'') and its affiliate Fusco 
S.r.l. (``Fusco'') (collectively ``Indalco''), P.A.M. S.p.A. (``PAM''), 
Molino e Pastificio Tomasello S.r.l. (``Tomasello''), and Pastificio 
Zaffiri S.r.l. (``Zaffiri''), sold subject merchandise at less than 
normal value (``NV''). If these preliminary results are adopted in the 
final results of this administrative review, we will instruct the 
Bureau of Customs and Border Protection (``BCBP'') to assess 
antidumping duties equal to the difference between the export price 
(``EP'') or constructed export price (``CEP'') and NV.
    We preliminarily determine that during the POR, Pastificio Guido 
Ferrara (``Ferrara''), Pastificio Antonio Pallante S.r.l. 
(``Pallante'') and its affiliate Industrie Alimertari Molisane s.r.l 
(``IAM'') (collectively ``Pallante''), Pastificio F.LLI Pagani S.p.A. 
(``Pagani'') and Rummo S.p.A. Molino e Pastificio (``Rummo'') did not 
make sales of the subject merchandise at less than NV (i.e., sales were 
made at ``zero'' or de minimis dumping margins). If these preliminary 
results are adopted in the final results of this administrative review, 
we will instruct the BCBP to liquidate appropriate entries without 
regard to antidumping duties. Furthermore, two companies, F. Divella 
S.P.A. (``Divella'') and Labor S.r.l.(``Labor''), timely withdrew their 
requests for review of the antidumping order. Because the requests were 
timely and there were no other requests for review of the companies, we 
are rescinding the review for these two companies. See 19 CFR 
351.213(d)(i).
    Finally, we preliminarily intend not to revoke the antidumping duty 
order with respect to subject merchandise produced and also exported by 
Pagani because its sales were not made in commercial quantities. See 19 
CFR 351.222 (e)(ii)) and ``Intent Not to Revoke'' section of this 
notice.
    Interested parties are invited to comment on these preliminary 
results and partial recission. Parties who submit comments in this 
segment of the proceeding should also submit with them: (1) A statement 
of the issues; and (2) a brief summary of the comments. Further, 
parties submitting written comments are requested to provide the 
Department with an electronic version of the public version of any such 
comments on diskette.

EFFECTIVE DATE: August 7, 2003.

FOR FURTHER INFORMATION CONTACT: Alicia Kinsey or Carrie Farley, AD/CVD 
Enforcement, Office 6, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
4793 or (202) 482-0395, respectively.

SUPPLEMENTARY INFORMATION:

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (``the Act'') by 
the Uruguay Round Agreement Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations codified at 19 CFR part 351 (2001).

Case History

    On July 24, 1996, the Department published in the Federal Register 
the antidumping duty order on pasta from Italy; see Notice of 
Antidumping Duty Order and Amended Final Determination of Sales at Less 
Than Fair Value: Certain Pasta From Italy (61 FR 38547). On July 1, 
2002, we published in the Federal Register the notice of ``Opportunity 
to Request Administrative Review'' of this order (67 FR 44172).
    On July 31, 2002, we received requests for review from 
petitioners,\1\ and from individual Italian exporters/producers of 
pasta, in accordance with 19 CFR 351.213(b)(2). There were requests 
made for thirteen Italian companies. In addition, on July 31, 2002, 
Pagani requested that the Department revoke the antidumping duty order 
with respect to it. See ``Intent Not to Revoke'' section of this 
notice.
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    \1\ New World Pasta Company; Dakota Growers Pasta Company; 
Borden Foods Corporation; and American Italian Pasta Company.
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    On August 27, 2002, we published the notice of initiation of this 
antidumping duty administrative review covering the period July 1, 
2001, through June 30, 2002, listing these thirteen companies as 
respondents: Divella, Ferrara, Garofalo, IAPC, Indalco, IAM, Labor, 
Pagani, Pallante, PAM, Rummo, Tomasello and Zaffiri.\2\ See Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Requests for Revocation in Part, 67 FR 55000 (August 27, 2002) 
(Initiation Notice).
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    \2\ Although the Department initiated this review on thirteen 
companies, included within that number were companies known to be 
affiliated, namely, Pallante/IAM and Indalco/Fusco. After accounting 
for known affiliated parties, this review covers twelve companies.
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    On August 29, 2002, we sent questionnaires to the twelve companies.
    On October 2, 2002, Divella and Labor withdrew their requests for 
administrative review of the antidumping duty order.
    During the most recently completed segments of the proceeding in 
which the following companies participated, the Department disregarded 
sales that failed the cost test: Indalco, Pagani, Pallante, PAM and 
Rummo.\3\ Pursuant to section 773(b)(2)(A)(ii) of the Act, we had 
reasonable grounds to believe or suspect that sales by these companies 
of the foreign like product under consideration for the determination 
of NV in this review were made at prices below the cost of production 
(``COP''). Therefore, we initiated cost investigations of these 
companies, and instructed the companies to fill out sections A-D \4\ 
upon issuance of the initial questionnaire. The companies submitted 
their section D responses on the following dates: Pagani on October 21, 
2002; Indalco on October 28, 2002; Pallante on October 28, 2002; PAM on 
November 5, 2002; and Rummo on January 24, 2003.
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    \3\ The fourth administrative review was the most recently 
completed review for Pallante, PAM, and Rummo. See Notice of Final 
Results of Antidumping Duty Administrative Review, Partial 
Rescission of Antidumping Duty Administrative Review and Revocation 
of Antidumping Duty Order in Part: Certain Pasta From Italy, 67 FR 
300 (January 3, 2002). The most recently completed review that 
Pagani participated in was the fifth administrative review. See 
Notice of Final Results of Antidumping Duty Administrative Review 
and Determination Not to Revoke in Part: Certain Pasta from Italy, 
68 FR 6882 (February 11, 2003). The first administrative review was 
the most recent segment of the proceeding in which Indalco 
participated. See Notice of Final Results and Partial Rescission of 
Antidumping Duty Administrative Review: Certain Pasta From Italy, 64 
FR 6615 (February 10, 1999).
    \4\ Section A: Organization, Accounting Practices, Markets and 
Merchandise;
    Section B: Comparison Market Sales;
    Section C: Sales to the United States;
    Section D: Cost of Production and Constructed Value.
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    After several extensions, the respondents submitted their responses 
to the appropriate sections of the questionnaire during the months of 
October and November 2002. In its

[[Page 47022]]

initial release of the antidumping questionnaire, the Department did 
not require Ferrar, Garofalo, IAPC, Tomasello, or Zaffiri to respond to 
section D of the questionnaire.
    As stated in its questionnaire response, IAPC filed a Section D 
response because some of its U.S. sales had no contemporaneous 
comparison market matches during the appropriate window period. See 
IAPC's response to the Section D questionnaire (November 4, 2002). 
Although IAPC had a viable comparison market, for those sales which did 
not have a comparison market match, we used constructed value (``CV'').
    In November 2002, petitioners submitted cost allegations against 
Ferrara, Garofalo, Tomasello, and Zaffiri. We determined that 
petitioners' cost allegations provided a reasonable basis to initiate a 
COP investigation, and as a result, we initiated cost investigations of 
these four companies. See the company-specific COP initiation 
memoranda, dated December 13, 2002, in the case file in the Central 
Records Unit, main Commerce building, room B-099 (``the CRU''). Also on 
December 13, 2002, we informed these four companies that they were 
required to respond to the section D of the antidumping questionnaire. 
See December 13, 2002, letters from the Department to these respondents 
requiring section D questionnaire responses, in the CRU. On January 27, 
2003, we received responses to the section D questionnaires from the 
above-mentioned companies.
    On March 27, 2003, the Department published an extension of 
preliminary results of this review, extending its preliminary results 
until July 31, 2003. See Certain Pasta from Italy: Extension of 
Preliminary Results of Antidumping Duty Administrative Reviews, 68 FR 
14945 (March 27, 2003).
    During the months of February, March, April, and May of 2003, the 
Department issued supplemental, second supplemental, and third 
supplemental questionnaires to each respondent, as applicable.
    We conducted verification of the sales information as follows: (1) 
Indalco/Fusco from June 12 through June 25, 2003; (2) PAM from May 12 
through May 16, 2003; (3) Rummo and Rummo USA from June 3 through June 
11, 2003; (4) Tomasello from June 2 through June 6, 2003; and (5) 
Zaffiri from June 9 through June 13, 2003. We verified the cost 
information submitted by: (1) Indalco/Fusco from May 5 through May 9, 
2003; (2) Rummo from May 26 through May 30; (3) Tomasello from May 19 
through May 23, 2003; and (4) Zaffiri from May 12 through May 16, 2003. 
The Department did not verify PAM's cost information. However, on May 
21, 2003, the Department sent PAM a second supplemental section D 
questionnaire. PAM's response was originally due on June 4, 2003. At 
PAM's request, the Department granted PAM an extension until June 18, 
2003, to submit its response to the second supplemental section D 
questionnaire. On June 18, 2003, PAM submitted its response. The 
Department, in reviewing PAM's response, discovered that PAM had 
included untimely filed new factual information in the response.
    On July 1, 2003, the Department rejected PAM's second supplemental 
section D questionnaire response because it contained untimely filed 
new factual information. PAM was requested to re-submit the response 
without this information. See The Department's Letter to David Craven, 
counsel for PAM, dated July 1, 2003, in the CRU. On July 2, 2003, PAM 
asked for an extension to re-submit its June 18, 2003, response to the 
second supplemental section D questionnaire and requested that the 
Department reconsider its rejection of the untimely filed new factual 
information. The Department granted PAM's request for an extension and 
subsequently further extended PAM's time to re-submit the response upon 
being informed by PAM that it was experiencing difficulties delivering 
the submission. See July 9, 2003, Memorandum to the File from Lyman 
Armstrong to Eric B. Greynolds, Program Manager, regarding an 
additional extension for the removal of untimely filed new factual 
information, in the CRU. On July 21, 2003, the Department informed PAM 
that at PAM's request, it had reconsidered its July 1, 2003, rejection 
of PAM's untimely new factual information, and that it continued to 
determine not to accept PAM's untimely filed new factual information. 
See July 21, 2003 letter to PAM; see also July 21, 2003, Memorandum to 
the File from Nancy Decker, Senior Accountant, through Michael Martin, 
Program Manager, available in the CRU.

Affiliations

    Petitioners have alleged that because Garofalo and Pastificio 
Antonio Amato & C. S.p.A. (``Amato''), a pasta company, were found to 
be affiliated pursuant to section 771(33) of the Act in the fifth 
review, they should be determined to be affiliated for this review and 
collapsed, in accordance with 19 CFR 351.401(f).
    Section 771(33) of the Act considers the following persons to be 
affiliated: members of a family; any officer or director of an 
organization and the organization; partners; employer and employee; 
persons directly or indirectly owning, controlling, or holding with the 
power to vote five percent or more of outstanding stock or shares of an 
organization and the organization; two or more persons directly or 
indirectly controlling, controlled by, or under common control with, 
any person; and any person who controls any other person and that 
person. As further provided in section 771(33) of the Act, ``A person 
shall be considered to control another person if the person is legally 
or operationally in a position to exercise restraint or direction over 
the other person.'' Section 351.401(f)(1) of the Department's 
regulations states that in an antidumping proceeding, the Department 
``will treat two or more affiliated producers as a single entity where 
those producers have production facilities for similar or identical 
products that would not require substantial retooling of either 
facility in order to restructure manufacturing priorities and the 
Secretary concludes that there is a significant potential for the 
manipulation of price or production.'' Paragraph two of that section 
goes on to state that in identifying a significant potential for 
manipulation, the Department may consider:
    [sbull] The level of common ownership;
    [sbull] The extent to which managerial employees or board members 
of one firm sit on the board of directors of an affiliated firm; and
    [sbull] Whether operations are intertwined, such as through the 
sharing of sales information, involvement in production and pricing 
decisions, the sharing of facilities or employees, or significant 
transactions between affiliated producers.
    In the previous review, we found that Garofalo and Amato were 
affiliated pursuant to 771(33) of the Act, but that there was no common 
control, and consequently, a significant potential to manipulate 
products or prices did not exist to justify collapsing the two 
companies. See Petitioners' November 5, 2002 Submission, Attachment 1, 
July 31, 2002 Memorandum to Melissa G. Skinner, Director, Office of AD/
CVD Enforcement VI, ``Whether to Collapse Garofalo and Amato in the 
Preliminary Results'' (``Garofalo Collapsing Memo''), the public and 
proprietary versions of which are on file in the CRU. See also Notice 
of Final Results of Antidumping Duty Administrative Review and 
Determination Not to Revoke in Part: Certain Pasta from Italy, 68 FR 
6882 (February 11, 2003).

[[Page 47023]]

    In the current review, petitioners have provided no new information 
or argument on the relationship between Garofalo and Amato, nor has the 
Department discovered new information during the course of this review. 
Consequently, the Department's analysis from the previous review, which 
is contained in the Garofalo Collapsing Memo that the petitioners 
placed on the record in this review, is adopted in its entirety. For 
the reasons set forth in the Garofalo Collapsing Memo, the Department 
determines that Garofalo and Amato are affiliated pursuant to section 
771(33) of the Act and 19 CFR 351.102(a), but lack common control, so 
that a significant potential to manipulate products or prices does not 
exist and it is not appropriate to collapse the two companies under 
section 351.401(f) of the Department's regulations.
    In Indalco's April 30, 2003, second supplemental questionnaire 
response, Indalco presented the Department with evidence that Indalco 
and Fusco are affiliated by means of common ownership and common board 
of directors, and therefore should be collapsed. Because both companies 
have production facilities which would not require substantial 
retooling for producing similar or identical products, and there is a 
significant potential for the manipulation of prices or production, as 
demonstrated by the level of common ownership, the commonality of the 
board of directors and the intertwined operations of the companies, 
there is sufficient record evidence supporting a finding that Indalco 
and Fusco should be collapsed in the preliminary results.
    On the basis of this information, and because nothing we reviewed 
at the verification of these companies caused us to revise our 
position, the Department has preliminarily determined to collapse 
Indalco and Fusco pursuant to section 351.401(f)(1) of the Department's 
regulations. For a more detailed discussion on the Department's 
decision to collapse Indalco and Fusco, see the May 14, 2003, 
Memorandum to Melissa Skinner from Eric Greynolds, Re: Whether to 
Collapse Industri Alimentare Colavita S.p.A. (``Indalco'') and Fusco 
S.r.l. (``Fusco''), in the case file in the CRU.
    On December 19, 2002, petitioners alleged that Rummo and one of its 
U.S. customers were affiliated under section 771(33) of the Act and 
section 351.102(b) of the Department's regulations. As noted above, the 
Act and the Department's regulations direct the Department to find 
affiliation between two parties when one party is able to control 
another party. The statute provides that control can be established if 
one person is legally or operationally able to ``exercise restraint or 
direction'' over the other. Section 351.102(b) of the regulations 
contains a list of factors to be considered by the Department in 
determining whether control exists: corporate or family groupings, a 
franchise or joint venture agreement, debt financing, or a close-
supplier relationship. The Department, however, may not find control 
based on these factors unless the relationship has the potential to 
impact decisions concerning the production, pricing or cost of the 
subject merchandise.
    Specifically, petitioners cite four factors as evidence that Rummo 
is affiliated with its U.S. customer: (1) Warehouse and distribution 
arrangements; (2) sales process and sample U.S. sales documents 
demonstrating joint sales operations and common control over 
inventories; (3) Rummo's financial statements including an amount for a 
note receivable; and (4) a product brochure submitted in the 
questionnaire response providing information connecting the customer 
and Rummo. Although the petitioners have not specifically classified 
the bases for their claim, their allegations appear to be premised upon 
debt financing and a close-supplier relationship. See July 31, 2003 
Memorandum from the Team to Melissa G. Skinner, through Eric Greynolds, 
regarding Whether Rummo S.p.A. Molino e Pastificio (Rummo) and one of 
its U.S. customers are Affiliated for the Preliminary Results.
    On January 3, 2003, Rummo disputed petitioners' affiliation 
arguments. Respondents argue that petitioners failed to prove that 
affiliation exists through control between Rummo and its U.S. customer. 
Specifically, respondents claim that petitioners did not allege that 
Rummo has a ``close-supplier'' relationship with its U.S. customer. 
Respondents argue that petitioners' argument of a ``supplier/buyer'' 
relationship is an attempt to circumvent the ``close-supplier'' 
relationship threshold identified by the Statement of Administrative 
Action accompanying H.R. 5110, H.R. Doc. No. 316, Vol. 1, 103d Congr., 
2d Sess. 911-955 (1994) (``SAA''). See SAA at 838.
    With respect to the petitioners' allegation of debt financing, we 
find that the outstanding note receivable from the U.S. customer does 
not demonstrate that the companies are engaged in joint operations. The 
information on the record does not demonstrate that either company was 
providing financial support to the other during the POR. The record 
shows that the note receivable was given prior to the POR and was being 
repaid during the POR. Furthermore, we disagree with petitioners' 
argument that the outstanding note receivable indicates joint 
operations during the POR, as the financial statements show that the 
note receivable was being repaid rather than providing new debt 
financing.
    The SAA describes ``close-supplier'' relationships as those ``in 
which the supplier or buyer becomes reliant upon the other.'' See SAA 
at 838; see also Notice of Final Determination of Sales at Less Than 
Fair Value: Melamine Institutional Dinnerware Products from Indonesia, 
62 FR 1719, 1725 (Jan. 13, 1997). The evidence that petitioners refer 
to does not support a relationship in which one party is reliant upon 
the other. Rummo's sample sales documents do not demonstrate common 
control over inventories or an exclusive distributor relationship with 
the U.S. customer. Notably, Rummo USA provided evidence in its 
questionnaire response that it had customers in the U.S. market, other 
than the one that petitioners are alleging are affiliated. The evidence 
before the Department refutes petitioners' claim that Rummo and its 
customer have an exclusive distributor relationship.
    We also find petitioners' argument that the U.S. customer has 
control over Rummo USA's inventory to be inaccurate and therefore not 
persuasive. For instance, Rummo's verification report at page 6, shows 
that Rummo USA and not its U.S. customer is in charge of: (1) Invoicing 
and billing; and (2) reordering when Rummo USA's warehouses' inventory 
is low. Rummo USA orders a product from Rummo when it needs more. See 
July 30, 2003, Memorandum to Eric B. Greynolds, Re: Verification of the 
Sales Response of Rummo S.p.A. Molino e Pastificio (Rummo) and Rummo 
USA Inc. (Rummo USA) in the Sixth Administrative Review of the 
Antidumping Duty Order of Certain Pasta from Italy (``Rummo's 
Verification Report''). Furthermore, as explained in Rummo's 
Verification Report, Rummo had to request that information pertaining 
to other customer's sales not be forwarded to the U.S. customer. If the 
U.S. customer had control over Rummo USA's warehousing and inventory 
there would be no reason for Rummo USA to make such a request to its 
freight company. Rummo USA and the U.S. customer are not engaged in 
joint warehousing or the joint marketing of pasta; we therefore find 
that the U.S. customer does not have control over Rummo USA's 
inventory.

[[Page 47024]]

    We also disagree with petitioners' argument that Rummo USA and its 
U.S. customer have a warehouse and distribution agreement. During 
verification, we found that Rummo sends pasta to two types of 
warehouses: (1) Locations where Rummo USA rents space; and (2) direct 
containers. An official explained that for direct sales, Rummo ships to 
the customer's determined location, which Rummo provided in Appendix A-
3 of its October 21, 2002 questionnaire response. Because the direct 
sales to the U.S. customer go to the company's designated location and 
Rummo USA rents its own warehouse space to hold its own inventory, we 
find that Rummo USA and its U.S. customer are not involved in joint 
warehousing.
    Lastly, we find that Rummo's brochure which petitioners referenced 
as evidence of Rummo and its U.S. customer's exclusive importer/
distributor relationship is outdated and, therefore, not persuasive in 
finding an exclusive importer/distributor relationship between Rummo 
and its U.S. customer during the POR. Rummo reported in its March 17, 
2003 supplemental questionnaire response that, ``copies provided in the 
October 21, 2002 submission were in fact filed in a previous 
administrative review,'' thus the brochure was not current for this 
POR.
    The facts before the Department do not support a finding ``in which 
the supplier or buyer becomes reliant upon the other.'' Neither Rummo 
nor Rummo USA are in a position to control its U.S. customer and this 
customer is similarly not in a position to exercise control over Rummo 
or Rummo USA. As such, the relationship between the companies is not a 
``close-supplier'' relationship. Therefore, we preliminarily find that 
Rummo and its U.S. customer are not affiliated companies, as defined by 
771(33) of the Act or section 351.102(b) of the regulations.

Partial Rescission

    On October 2, 2002, Divella and Labor withdrew their requests for a 
review within 90 days of the publication of the Initiation Notice. 
Because the letters withdrawing the requests were timely filed, and 
because there were no other requests for review of Divella and Labor, 
we are rescinding the review with respect to Divella and Labor in 
accordance with 19 CFR 351.213(d)(1).

Scope of Review

    Imports covered by this review are shipments of certain non-egg dry 
pasta in packages of five pounds four ounces or less, whether or not 
enriched or fortified or containing milk or other optional ingredients 
such as chopped vegetables, vegetable purees, milk, gluten, diastasis, 
vitamins, coloring and flavorings, and up to two percent egg white. The 
pasta covered by this scope is typically sold in the retail market, in 
fiberboard or cardboard cartons, or polyethylene or polypropylene bags 
of varying dimensions.
    Excluded from the scope of this review are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione, by Bioagricoop Scrl, by QC&I International Services, by 
Ecocert Italia, by Consorzio per il Controllo dei Prodotti Biologici, 
or by Associazione Italiana per l'Agricoltura Biologica.
    The merchandise subject to review is currently classifiable under 
item 1902.19.20 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). Although the HTSUS subheading is provided for convenience 
and customs purposes, the written description of the merchandise 
subject to the order is dispositive.

Scope Rulings and AntiCircumvention Inquiries

    The Department has issued the following scope rulings to date:
    (1) On August 25, 1997, the Department issued a scope ruling that 
multicolored pasta, imported in kitchen display bottles of decorative 
glass that are sealed with cork or paraffin and bound with raffia, is 
excluded from the scope of the antidumping and countervailing duty 
orders. See Memorandum from Edward Easton to Richard Moreland, dated 
August 25, 1997, in the CRU.
    (2) On July 30, 1998, the Department issued a scope ruling, finding 
that multipacks consisting of six one-pound packages of pasta that are 
shrink-wrapped into a single package are within the scope of the 
antidumping and countervailing duty orders. See Letter from Susan H. 
Kuhbach, Acting Deputy Assistant Secretary for Import Administration, 
to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., 
dated July 30, 1998, which is available in the CRU.
    (3) On October 23, 1997, the petitioners filed an application 
requesting that the Department initiate an anti-circumvention 
investigation of Barilla, an Italian producer and exporter of pasta. 
The Department initiated the investigation on December 8, 1997 (62 FR 
65673). On October 5, 1998, the Department issued its final 
determination that Barilla's importation of pasta in bulk and 
subsequent repackaging in the United States into packages of five 
pounds or less constitutes circumvention, with respect to the 
antidumping duty order on pasta from Italy pursuant to section 781(a) 
of the Act and 19 CFR 351.225(b). See Anti-circumvention Inquiry of the 
Antidumping Duty Order on Certain Pasta from Italy: Affirmative Final 
Determination of Circumvention of the Antidumping Duty Order, 63 FR 
54672 (October 13, 1998).
    (4) On October 26, 1998, the Department self-initiated a scope 
inquiry to determine whether a package weighing over five pounds as a 
result of allowable industry tolerances is within the scope of the 
antidumping and countervailing duty orders. On May 24, 1999, we issued 
a final scope ruling finding that, effective October 26, 1998, pasta in 
packages weighing or labeled up to (and including) five pounds four 
ounces is within the scope of the antidumping and countervailing duty 
orders. See Memorandum from John Brinkmann to Richard Moreland, dated 
May 24, 1999, which is available in the CRU.
    (5) On April 27, 2000, the Department self-initiated an anti-
circumvention inquiry to determine whether Pagani's importation of 
pasta in bulk and subsequent repackaging in the United States into 
packages of five pounds or less constitutes circumvention, with respect 
to the antidumping and countervailing duty orders on pasta from Italy 
pursuant to section 781(a) of the Act and 19 CFR 351.225(b). See 
Certain Pasta from Italy: Notice of Initiation of Anticircumvention 
Inquiry of the Antidumping and Countervailing Duty Orders, 65 FR 26179 
(May 5, 2000).
    (6) On July 30, 2003, we issued a preliminary finding on the anti-
circumvention inquiry; however, the notice has not yet been published 
in the Federal Register. See Anti-circumvention Inquiry of the 
Antidumping and Countervailing Duty Orders on Certain Pasta from Italy: 
Affirmative Preliminary Determinations of Circumvention of Antidumping 
and Countervailing Duty Orders.

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the sales and cost information provided by Indalco/Fusco, Rummo, 
Tomasello, and Zaffiri, and the sales information provided by PAM. We 
used standard verification procedures, including on-

[[Page 47025]]

site inspection of the manufacturers' facilities and examination of 
relevant sales and financial records. Our verification results are 
detailed in the company-specific verification reports placed in the 
case file in the CRU. We made certain minor revisions to certain sales 
and cost data based on verification findings. See the company-specific 
verification reports and calculation memoranda, in the CRU.

Adverse Facts Available

    In accordance with section 776(a)(2) of the Act, the Department has 
determined that the use of facts available is appropriate for purposes 
of determining the preliminary antidumping duty margins for the subject 
merchandise sold by PAM. Section 776(a)(2) of the Act provides:

    If an interested party (A) withholds information that has been 
requested by the administrating authority; (B) fails to provide such 
information by the deadlines for the submission of the information 
or in the form and the manner requested, subject to subsections 
(c)(1) and (e) of section 782; (C) significantly impedes a 
proceeding under this title; or (D) provides such information but 
the information cannot be verified as provided in section 782(i), 
the administering authority shall, subject to section 782(d), use 
the facts otherwise available in reaching the applicable 
determination under this title.

    Moreover, section 776(b) of the Act provides that;

    If the administering authority finds that an interested party 
has failed to cooperate by not acting to the best of its ability to 
comply with a request for information from the administering 
authority, the administering authority, in reaching the applicable 
determination under this title, may use an inference that is adverse 
to the interests of the party in selecting from among the facts 
otherwise available.

    PAM failed to provide significant home market sales information 
that was requested by the Department. The Department gave PAM many 
opportunities to report a complete home market sales database. 
Specifically, the Department issued to PAM two supplemental 
questionnaires in addition to the initial sections A-C of the 
questionnaire, and granted PAM's requests for extensions for each 
questionnaire response due date. Despite these opportunities, the 
Department discovered at verification that PAM failed to report at 
least two-thirds of the home market sales it was required to report. 
Prior to verification, the Department had no way of knowing such data 
was missing. In addition to the detailed instructions given in the 
questionnaires issued to PAM, PAM has participated in previous reviews 
of this order in which the Department verified PAM's sales information, 
and is therefore aware of the Department's reporting requirements. See 
Certain Pasta from Italy: Final Results of Antidumping Duty 
Administrative Review, Partial Recision of Antidumping Administrative 
Review, and Revocation of Antidumping Duty Order in Part, 66 FR 300 
(January 3, 2002); see also Certain Pasta from Italy: Final Results of 
Antidumping Administrative Review and Determination to Revoke the 
Antidumping Duty Order in Part, 65 FR 77853 (December 13, 2000). For 
the reasons set forth in the following sections, we have determinated 
that PAM's failure to report a significant portion of its home market 
sales warrants the use of facts otherwise available. Because the 
Department finds that PAM failed to cooperate by not acting to the best 
of its ability in complying with the Department's requests for a 
complete home market sales database, the Department is using an 
inference that is adverse to PAM.

PAM Verification Failure

    On May 2, 2003, the Department issued a verification outline for 
PAM. As noted therein, the verification of PAM's questionnaire response 
was set for May 12 through May 16, 2003. Thereafter, from May 12 
through May 16, 2003, the Department conducted a verification of PAM's 
questionnaire response at the company's headquarters in Gragnano, 
Italy. At the verification, as provided in the May 2, 2003 verification 
outline, the Department's verifiers required PAM to reconcile the total 
reported quantity and value of its home market sales to its financial 
records and to demonstrate the completeness of its reported home market 
sales database. In its verification outline, the Department requested 
that PAM prepare specific worksheets and have available certain records 
which the verifiers intended to use to ensure that PAM properly 
reported all of its home market sales of subject merchandise. See the 
May 2, 2003 letter from the Department to PAM, transmitting PAM's 
verification outline, available in the CRU (``As part of this review, 
we must ensure that all sales of the subject merchandise were properly 
included in, or excluded from, your sales listings.''). The Department 
also informed PAM in the letter transmitting the verification outline 
that:

    Please note that verification is not intended to be an 
opportunity for submission of new factual information. New 
information will be accepted at verification only when: (1) The need 
for that information was not evident previously; (2) the information 
makes minor corrections to information already on the record; or (3) 
the information corroborates, supports, or clarifies information 
already on the record.

See PAM's verification outline (emphasis in original).
    At verification, it became apparent to the Department's verifiers 
that PAM had failed to prepare most of the material requested by the 
Department in the verification outline. Although PAM provided invoices 
and other source documents, company officials had not prepared adequate 
supporting documentation in advance, such as the worksheets requested 
by the Department, to demonstrate how the total reported quantity and 
value of sales reconciled to the company's financial statements or 
accounting records. Despite this lack of preparation, during the course 
of the verification, the verifiers afforded PAM officials the 
opportunity to reconcile the total reported quantity and value of the 
company's home market sales to its financial records.\5\ See the July 
28, 2003, Memorandum to the File: Verification of PAM's Sales Response 
(``PAM's Sales Verification Report''). After discussions with company 
officials, and in the absence of prepared worksheets, the verifiers 
requested that the officials provide for review, a sales listings and 
records so that the Department could reconcile the total quantity and 
value reported in the U.S. and home market sales databases. PAM 
provided: (1) The VAT sales book for the months of October 2001 and May 
2002 and the total of all invoices issued during the same period; (2) 
the VAT receipts for October 2001 and May 2002; and (3) a chart showing 
a breakout of the subject and non-subject merchandise sold during these 
two months. See PAM's Sales Verification Report at Exhibit 14.
---------------------------------------------------------------------------

    \5\ Consistent with the instructions accompanying the 
verification outline, PAM did notify the Department of certain minor 
corrections to its databases prior to the start of verification.
---------------------------------------------------------------------------

    Using this information, the Department was able to reconcile PAM's 
sales for the months of October 2001 and May 2002 to its financial 
statement. However, the verifiers noticed a large discrepancy between 
the numbers of sales reported in the home market database and the 
number of sales reported in VAT sales while checking invoices from the 
VAT sales account for the month of May 2002. Company officials were 
initially unsure as to the cause of this discrepancy, but did determine 
the source of the mistake. According to company officials there are 
several types of invoices used in PAM's computerized accounting system.

[[Page 47026]]

Company officials stated that a particular type of invoice used in this 
review was not used in the prior review in which PAM participated, 
specifically those invoices issued by PAM for merchandise sold from a 
non-PAM warehouse. As the program which instructs PAM's accounting 
system to extract this information when reporting PAM's quantity and 
value of home market sales was not modified from the previous review, 
the sales associated with this new invoice type were not reported. See 
PAM's Sales Verification Report at page 18.
    The verifiers reviewed a company generated list showing all 
invoices issued by PAM for merchandise sold from non-PAM warehouses for 
the month of May 2002, and noted that these sales were not reported to 
the Department. In addition, we noted that there were several of these 
invoices that were not included in this list, but appeared to reference 
subject merchandise sold in the home market. These missing invoices 
were all to one customer. When asked why PAM did not report these 
sales, company officials stated they thought that because the sales 
were outside of the ordinary course of trade, PAM was not required to 
report the invoices. PAM's failure to report these sales is contrary to 
the explicit instructions set forth in the initial questionnaire sent 
to PAM. See the General Instructions to the Department's August 29, 
2003 Antidumping Duty Questionnaire at page G-7, number 13 (``You must 
report all sales, including those sales which you believe are outside 
the ordinary course of trade. If you claim that some sales are outside 
the ordinary course of trade, you should then identify those sales. You 
must include a complete explanation in your narrative why you consider 
those sales to be outside the ordinary course of trade.'') (emphasis 
added). Combining the sales to this customer and the FP invoices, PAM 
failed to report approximately two-thirds of its home market sales to 
the Department. See PAM's Sales Verification Report at page 18 and 19 
(emphasis added).
    The Department's antidumping analysis is based fundamentally on an 
evaluation of a respondent's home market and U.S. selling practices. 
Thus, complete and accurate reporting of home market sales is central 
to determining accurate dumping margins. The Department verified that 
only one-third of PAM's home market sales were reported. Therefore, the 
Department's ability to calculate PAM's dumping margin using the data 
reported by PAM has been severely compromised. Such a small sample may 
not provide a reasonable approximation of PAM's actual sales practice 
in the home market. Not only may these sales not be representative, but 
any allocated expenses calculated by PAM for these sales are incorrect, 
because allocated expenses are calculated by dividing the total 
expenditure on a particular item by total sales. As PAM's total sales 
figure is incorrect, all of PAM's allocated expenses, including 
expenses such as direct and indirect selling expenses, in the home 
market are significantly overstated. Therefore, the data on the record 
cannot be used to calculate the actual percentage of sales at less than 
fair value.
    PAM could not establish the completeness of its reported home 
market sales database. As noted above, the Department discovered at 
verification that PAM had failed to report approximately two-thirds of 
its home market sales, despite the Department's requests for such 
information. Given this significant omission from its home market 
database, we consider that PAM withheld information requested by the 
Department, and attempted to provide such information after the 
Department discovered the omission, but the information could not be 
verified. Consequently, the Department has determined to use facts 
otherwise available, consistent with section 776(a) of the Act. Put 
simply, PAM failed verification.

Application of Adverse Facts Available

    As noted above, the record in this review demonstrates that PAM 
failed to report sales information representing approximately two-
thirds of its home market sales during the POR. Therefore, pursuant to 
section 776(a)(2)(A) and (D) of the Act, we have relied upon facts 
available in reaching our preliminary results for PAM. The Department 
has determined that PAM has not acted to the best of its ability in 
failing to report approximately two-thirds of its home market sales in 
this review, because, (1) the Department issued clear instructions 
requiring this information in its initial questionnaire; (2) PAM had 
the opportunity to provide the information in responding to two 
supplemental questionnaires, all of the deadlines of which were 
extended at PAM's request by the Department; (3) the Department had 
instructed PAM to report all sales, including those claimed to be 
outside the ordinary course of trade; and (4) PAM has successfully 
participated in previous reviews. Moreover, the fact that the 
Department readily obtained general information regarding the existence 
of such sales at verification adds support to our determination that 
PAM did not act to the best of its ability in reporting its home market 
sales.
    PAM had the ability to report these sales; however, it failed to do 
so. Therefore, pursuant to section 776(b)(3) of the Act, we have used 
an adverse inference in selecting facts available margins for PAM. See 
Reiner Brach GmbH & Co. v. United States, 206 F. Supp. 2d 1323, 1333, 
1336 (Court of International Trade 2002) (CIT). The CIT upheld the 
Department's determination to apply facts otherwise available and apply 
an adverse inference resulting from Reiner Brach's failure to provide 
all information regarding home market sales. The court noted, among 
other things, that ``Reiner Brach failed to provide information 
regarding home market sales of similar merchandise despite the clear 
language of the questionnaire asking for information on ``all sales'' 
of the foreign like product.'' See also Acciai Speciali Terni v. United 
States, 142 F. Supp. 2d 969, 994 (CIT 2001). The CIT affirmed the 
Department's application of adverse facts available occasioned by the 
respondent's failure to timely report 84 U.S. sales. The court noted 
that the respondent ``has made no allegations that it could not provide 
the additional U.S. sales. It claims that the omission was inadvertent; 
inadvertence is not the same as inability.'' Accordingly, we have based 
PAM's preliminary margin on the highest margin upheld during the 
proceeding: 45.49 percent. See World Finer Foods Inc. v. U.S., 120 F. 
Supp. 2d 1131, 1134 (CIT 2000).

Corroboration of Secondary Information Used As Adverse Facts Available

    Section 776(c) of the Act provides that when the Department selects 
from among the facts otherwise available and relies on ``secondary 
information,'' the Department shall, to the extent practicable, 
corroborate that information from independent sources reasonably at the 
Department's disposal. The SAA states that to corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information to be used. However, 
unlike other types of information, such as input costs or selling 
expenses, there are no independent sources for calculated dumping 
margins. The only source for margins is administrative determinations. 
Thus, in an administrative review, if the Department chooses as total 
adverse facts available a calculated dumping margin from a prior 
segment of the proceeding, it is not

[[Page 47027]]

to question the reliability of the margin for that time period. See 
Grain-Oriented Electrical Steel from Italy: Preliminary Results of 
Antidumping Duty Administrative Review, 61 FR 36551, 36552 (July 11, 
1996). With respect to the relevance aspect of corroboration, however, 
the Department will consider information reasonably at its disposal to 
determine whether a margin continues to have relevance. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin.
    For example, in Fresh Cut Flowers from Mexico: Final Results of 
Antidumping Administrative Review, 61 FR 6812 (February 22, 1996), the 
Department disregarded the highest margin in that case as adverse best 
information available (the predecessor to facts available) because the 
margin was based on another company's uncharacteristic business expense 
resulting in an unusually high margin. Similarly, the Department does 
not apply a margin that has been discredited. See D & L Supply Co. v. 
United States, 113 F.3d 1220, 1221 (Fed. Cir. 1997) (the Department 
will not use a margin that has been judicially invalidated); see also 
Borden Inc. v. United States, 4 F Supp 2d 1221, 1246-48 (CIT 1998) (the 
Department may not use an uncorroborated petition margin that is high 
when compared to calculated margins for the period of review). None of 
these unusual circumstances are present here. Accordingly, for PAM we 
have resorted to adverse facts available and have used the highest 
margin upheld in this proceeding as the margin for these preliminary 
results because there is no evidence on the record indicating that such 
a margin is not appropriate as adverse facts available.

Use of Partial Facts Available

    Sections 776(a)(2)(A), (B) and (D) of the Act, provide for the use 
of facts available when an interested party withholds information that 
has been requested by the Department, when an interested party fails to 
provide the information requested in a timely manner and in the form 
required, or provides such information but the information cannot be 
verified.
    From June 12, through June 26, 2003, the Department conducted a 
verification of Indalco's questionnaire response at the company's 
headquarters in Ripalimosani, Italy. At verification, the Department's 
verifiers asked Indalco to present minor changes, if any, to its 
questionnaire response resulting from verification preparation. The 
Department notified Indalco of these requirements in its verification 
agenda dated, May 21, 2003. See the May 21, 2003 letter from the 
Department to Indalco, transmitting the verification outline. At the 
onset of verification, Indalco submitted a list of minor errors to the 
Department as Exhibit 1. Although, there were several errors with its 
selling expenses, Indalco did not bring these errors to the 
Department's attention until after Indalco's submission of minor 
corrections. Specifically, Indalco used fiscal year 2001, instead of 
POR, expenses to compute its direct and indirect selling and 
advertising ratios. For a more detailed discussion see Memorandum to 
Eric Greynolds, from Mark Young and Tipten Troidl, Re: Verification of 
the Sales Response of Industria Alimentare Colavita, S.p.A. 
(``INDALCO'') and Fusco S.r.l. (``Fusco'') in the 01/02 Administrative 
Review of the Antidumping Duty Order of Certain Pasta from Italy, 
(``Indalco/Fusco Verification Report''), which is available in the CRU.
    While the Department granted Indalco's requests for additional time 
to respond to the questionnaires, and Indalco did appear to cooperate 
to the best of its ability, Indalco did not submit the information in 
the form and manner requested by the Department.
    As long recognized by the CIT, the burden is on the respondent, not 
the Department, to create a complete and accurate record. See Pistachio 
Group of Association Food Industries v. United States, 641 F. Supp. 31, 
39-40 (CIT 1987). Therefore, in accordance with section 776(a)(2) of 
the Act, we are applying partial facts otherwise available in 
calculating Indalco's dumping margin. However, because Indalco did 
cooperate to the best of its ability, we are not making any adverse 
inferences, for the reasons noted above. As a result of these 
miscalculations, as facts available, the Department will use the 
information verified and collected at verification to calculate 
Indalco's selling expenses.

Product Comparisons

    In accordance with section 771(16) of the Act, we first attempted 
to match contemporaneous sales of products sold in the United States 
and comparison markets that were identical with respect to the 
following characteristics: (1) Pasta shape; (2) type of wheat; (3) 
additives; and (4) enrichment. When there were no sales of identical 
merchandise in the home market to compare with U.S. sales, we compared 
U.S. sales with the most similar product based on the characteristics 
listed above, in descending order of priority. When there were no 
appropriate comparison market sales of comparable merchandise, we 
compared the merchandise sold in the United States to CV, in accordance 
with section 773(a)(4) of the Act.
    For purposes of the preliminary results, where appropriate, we have 
calculated the adjustment for differences in merchandise based on the 
difference in the variable cost of manufacturing (``VCOM'') between 
each U.S. model and the most similar home market model selected for 
comparison.

Comparisons to Normal Value

    To determine whether sales of certain pasta from Italy were made in 
the United States at less than NV, we compared the EP or CEP to the NV, 
as described in the ``Export Price and Constructed Export Price'' and 
``Normal Value'' sections of this notice. In accordance with section 
777A(d)(2) of the Act, we calculated monthly weighted-average prices 
for NV and compared these to individual U.S. transactions. See the 
company-specific verification reports and calculation memoranda, 
available in the CRU.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. We 
calculated EP when the merchandise was sold by the producer or exporter 
outside of the United States directly to the first unaffiliated 
purchaser in the United States prior to importation and when CEP was 
not otherwise warranted based on the facts on the record. We calculated 
CEP for those sales where a person in the United States, affiliated 
with the foreign exporter or acting for the account of the exporter, 
made the sale to the first unaffiliated purchaser in the United States 
of the subject merchandise. We based EP and CEP on the packed cost-
insurance-freight (``CIF''), ex-factory, free-on-board (``FOB''), or 
delivered prices to the first unaffiliated customer in, or for 
exportation to, the United States. When appropriate, we reduced these 
prices to reflect discounts and rebates.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including inland 
freight from plant or warehouse to port of exportation, foreign 
brokerage, handling and loading charges, export duties, international 
freight, marine insurance, U.S. duties, and U.S. inland freight 
expenses (freight

[[Page 47028]]

from port to the customer). In addition, when appropriate, we increased 
EP or CEP as applicable, by an amount equal to the countervailing duty 
rate attributed to export subsidies in the most recently completed 
administrative review, in accordance with section 772(c)(1)(C) of the 
Act.
    For CEP, in accordance with section 772(d)(1) of the Act, when 
appropriate, we deducted from the starting price those selling expenses 
that were incurred in selling the subject merchandise in the United 
States, including direct selling expenses (advertising, cost of credit, 
warranties, and commissions paid to unaffiliated sales agents). In 
addition, we deducted indirect selling expenses that related to 
economic activity in the United States. These expenses include certain 
indirect selling expenses incurred by affiliated U.S. distributors. We 
also deducted from CEP an amount for profit in accordance with sections 
772(d)(3) and (f) of the Act.
    Pagani and Zaffiri reported the resale of subject merchandise 
purchased in Italy from unaffiliated producers. In its April 23, 2003 
supplemental response at page 23, Zaffiri amended its response and 
reported that its purchased pasta should actually be considered pasta 
that it toll produced with its unaffiliated supplier. Zaffiri argues 
that this pasta should be considered toll produced because it provided 
its unaffiliated supplier with packing materials and then the supplier 
would invoice Zaffiri for the semolina cost, the conversion cost, and 
the packing cost. Because Zaffiri does not control the production of 
this pasta, nor does it own or hold title to a significant input for 
this pasta (i.e., semolina), we preliminarily determine that this pasta 
is, in fact, pasta purchased from an unaffiliated supplier.
    In those situations in which an unaffiliated producer of the 
subject pasta knew at the time of the sale that the merchandise was 
destined for the United States, the relevant basis for the EP would be 
the price between that producer and the respondent. See Dynamic Random 
Access Memory Semiconductors of One Megabit or Above From the Republic 
of Korea: Final Results of Antidumping Duty Administrative Review, 
Partial Rescission of Administrative Review and Notice of Determination 
Not to Revoke Order, 63 FR 50867, 50876 (September 23, 1998). In the 
instant review, we determined that it was reasonable to assume that the 
unaffiliated producers knew or had reason to know at the time of sale 
that the ultimate destination of the merchandise was the United States 
because virtually all enriched pasta is sold to the United States. See 
Notice of Preliminary Results and Partial Recission of Antidumping Duty 
Administrative Review and Intent to Revoke Antidumping Duty Order in 
Part: Certain Pasta from Italy, 65 FR 4867, 4869 (August 8, 2000). 
Accordingly, consistent with our methodology in prior reviews (see 
id.), when a respondent purchased pasta from other producers and we 
were able to identify resales of this merchandise to the United States, 
we excluded these sales of the purchased pasta from the margin 
calculation for that respondent. Where the purchased pasta was 
commingled with the respondent's production and the respondent could 
not identify the resales, we examined both sales of produced pasta and 
resales of purchased pasta. Inasmuch as the percentage of pasta 
purchased by any single respondent was an insignificant part of its 
U.S. sales database, we included the sales of commingled purchased 
pasta in our margin calculations.

Normal Value

A. Selection of Comparison Markets

    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 
each respondent's volume of home market sales of the foreign like 
product to the volume of its U.S. sales of the subject merchandise. 
Pursuant to sections 773(a)(1)(B) and 773(a)(1)(C) of the Act, because 
each respondent, with the exception of IAPC, had an aggregate volume of 
home market sales of the foreign like product that was greater than 
five percent of its aggregate volume of U.S. sales of the subject 
merchandise, we determined that the home market was viable for all 
producers except IAPC.
    Because IAPC did not have an aggregate volume of home market sales 
of the foreign like product that was greater than five percent of its 
aggregate volume of U.S. sales of the subject merchandise, the 
Department determined, in accordance with section 773(a)(1)(c) of the 
Act and section 351.404(b)(2) of the Department's regulations to use a 
third-country market, the United Kingdom, as IAPC's comparison market. 
We compared IAPC's volume of third country sales in the United Kingdom 
of the foreign like product to the volume of its U.S. sales of the 
subject merchandise. Pursuant to sections 773(a)(1)(B)(ii) and 
773(a)(1)(C) of the Act, because IAPC had an aggregate volume of third-
country sales of the foreign like product that was greater than five 
percent of its aggregate volume of U.S. sales of the subject 
merchandise, we determined that, in accordance with section 
351.404(c)(ii) of the Department's regulations, the third-country 
market of the United Kingdom was viable for IAPC.

B. Arm's-Length Test

    The Department may calculate NV based on a sale to an affiliated 
party only if it is satisfied that the price to the affiliated party is 
comparable to the price at which sales are made to parties not 
affiliated with the exporter or producer; i.e., sales at arm's-length. 
See 19 CFR 351.403(c). Sales to affiliated customers for consumption in 
the home market which were determined not to be at arm's-length were 
excluded from our analysis. Garofalo reported sales of the foreign like 
product to an affiliated end-user customer and an affiliated reseller. 
To test whether these sales were made at arm's-length, we compared the 
prices of sales of comparison products to affiliated and unaffiliated 
customers, net of all movement charges, direct selling expenses, 
discounts, and packing. Pursuant to 19 CFR 351.403(c) and in accordance 
with our practice, when the prices to the affiliated party were, on 
average, between 98 and 102 percent of the prices to unaffiliated 
parties, we determined that the sales made to the affiliated party were 
at arm's-length. See Antidumping Proceedings: Affiliated Party Sales in 
the Ordinary Course of Trade, 67 FR 53339 (August 15, 2002); see also 
Notice of Preliminary Determination of Sales at Less Than Fair Value, 
Postponement of the Final Determination, and Negative Preliminary 
Determination of Critical Circumstances: Prestressed Concrete Steel 
Wire Strand from Thailand 68 FR 42373, 42375-6 (July 17, 2003). We 
included in our NV calculations those sales to affiliated customers 
that passed the arm's-length test. See 19 CFR 351.403; Antidumping 
Duties; Countervailing Duties; Final Rule, 62 FR at 27295 (May 19, 
1997).

C. Cost of Production Analysis

1. Calculation of COP
    Before making any comparisons to NV, we conducted a COP analysis of 
Ferrara, Garofalo, Indalco, Pagani, Pallante, Rummo, Tomasello, and 
Zaffiri, pursuant to section 773(b) of the Act, to determine whether 
the respondents' comparison market sales were made below the COP. We 
calculated the COP based on the sum of the cost of materials and 
fabrication for

[[Page 47029]]

the foreign like product, plus amounts for selling, general, and 
administrative expenses (``SG&A'') and packing, in accordance with 
section 773(b)(3) of the Act. We relied on the respondents' information 
as submitted, except in instances where we used data with minor 
revisions based on verification findings for Indalco, Rummo, Tomasello, 
and Zaffiri. See the company-specific calculation memoranda on file in 
the CRU, for a description of any changes that we made.
2. Test of Comparison Market Prices
    As required under section 773(b)(2) of the Act, we compared the 
weighted-average COP to the per-unit price of the comparison market 
sales of the foreign like product, to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. We 
determined the net comparison market prices for the below-cost test by 
subtracting from the gross unit price any applicable movement charges, 
discounts, rebates, direct and indirect selling expenses (also 
subtracted from the COP), and packing expenses.
3. Results of COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of 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 were at prices less than the COP, we determined such 
sales to have been made in ``substantial quantities.'' See section 
773(b)(2)(c) of the Act. The sales were made within an extended period 
of time in accordance with section 773(b)(2)(B) of the Act, because 
they were made over the course of the POR. In such cases, because we 
compared prices to POR-average costs, we also determined that such 
sales were not made at prices which would permit recovery of all costs 
within a reasonable period of time, in accordance with section 
773(b)(2)(D) of the Act. Therefore, for purposes of this administrative 
review, we disregarded the below-cost sales and used the remaining 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act. Specifically, we are preliminarily disregarding 
below-cost sales made by Ferrara, Garofalo, Indalco, Pagani, Pallante, 
Rummo, Tomasello, and Zaffiri. See the company-specific calculation 
memoranda on file in the CRU, for our calculation methodology and 
results.

D. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on ex-works, FOB or delivered prices to 
comparison market customers. We made deductions from the starting 
price, when appropriate, for handling, loading, inland freight, 
warehousing, inland insurance, discounts, and rebates. We added 
interest revenue. In accordance with sections 773(a)(6)(A) and (B) of 
the Act, we added U.S. packing costs and deducted comparison market 
packing, respectively. In addition, we made circumstance of sale 
(``COS'') adjustments for direct expenses, including imputed credit 
expenses, advertising, warranty expenses, commissions, bank charges, 
and billing adjustments, in accordance with section 773(a)(6)(C)(iii) 
of the Act.
    We also made adjustments, in accordance with 19 CFR 351.410(e), for 
indirect selling expenses incurred on comparison market or U.S. sales 
where commissions were granted on sales in one market but not in the 
other, the ``commission offset.'' Specifically, where commissions are 
incurred in one market, but not in the other, we will limit the amount 
of such allowance to the amount of the other selling expenses incurred 
in the one market or the commissions allowed in the other market, 
whichever is less.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and section 19 CFR 351.411 of the 
Department's regulations. We based this adjustment on the difference in 
the variable cost of manufacture (``VCOM'') for the foreign like 
product and subject merchandise, using POR-average costs.
    Sales of pasta purchased by the respondents from unaffiliated 
producers and resold in the comparison market were treated in the same 
manner described above in the ``Export Price and Constructed Export 
Price'' section of this notice.

E. Calculation of Normal Value Based on Constructed Value

    For IAPC, when we could not determine the NV based on comparison 
market sales because there were no contemporaneous sales of a 
comparable product, we compared the EP to CV. In accordance with 
section 773(e) of the Act, we calculated CV based on the sum of the 
cost of manufacturing (``COM'') of the product sold in the United 
States, plus amounts for SG&A expenses, profit, and U.S. packing costs. 
In accordance with section 773(e)(2)(A) of the Act, we based SG&A 
expenses and profit on the amounts incurred by IAPC in connection with 
the production and sale of the foreign like product in the comparison 
market.
    For price-to-CV comparisons, we made adjustments to CV for COS 
differences, in accordance with section 773(a)(8) of the Act and 19 CFR 
351.410. We made COS adjustments by deducting direct selling expenses 
incurred on comparison market sales and adding U.S. direct selling 
expenses.

F. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
(``LOT'') as the EP and CEP sales, to the extent practicable. When 
there were no sales at the same LOT, we compared U.S. sales to 
comparison market sales at a different LOT. When NV is based on CV, the 
NV LOT is that of the sales from which we derive SG&A expenses and 
profit.
    Pursuant to section 351.412 of the Department's regulations, to 
determine whether comparison market sales were at a different LOT, we 
examined stages in the marketing process and selling functions along 
the chain of distribution between the producer and the unaffiliated (or 
arm's-length) customers. If the comparison-market sales are at a 
different LOT and the differences affect price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison-market sales at the LOT of 
the export transaction, we make a LOT adjustment under section 
773(a)(7)(A) of the Act.
    Finally, if the NV LOT is more remote from the factory than the CEP 
LOT and there is no basis for determining whether the differences in 
LOT between NV and CEP affected price comparability, we 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, 61732-33 
(November 19, 1997). Specifically in this review, we did not make an 
LOT adjustment for any respondent. However, we are preliminarily 
granting a CEP offset for IAPC and Rummo.
    For a detailed description of our LOT methodology and a summary of

[[Page 47030]]

company-specific LOT findings for these preliminary results, see the 
company-specific verification reports and calculation memoranda, all on 
file in the CRU.

G. Company-Specific Issues

    We relied on the respondents' information as submitted, except in 
instances where, based on verification findings, we made minor 
modifications to the calculation of NV and EP or CEP. See the company-
specific calculation memoranda on file in the CRU.
Currency Conversion
    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve.
Intent Not To Revoke
    On July 31, 2002, Pagani submitted a letter to the Department 
requesting, pursuant to 19 CFR 351.222(e), revocation of the 
antidumping duty order with respect to its sales of the subject 
merchandise. Pagani submitted along with its revocation request a 
certification stating that: (1) The company sold subject merchandise at 
not less than NV during the POR, and that in the future it would not 
sell such merchandise at less than NV (see 19 CFR 351.222(e)(1)(i)); 
(2) the company sold the subject merchandise to the United States in 
commercial quantities during each of the past three years (see 19 CFR 
351.222(e)(1)(ii)); and (3) the company agrees to immediate 
reinstatement of the order, if the Department concludes that the 
company, subsequent to revocation, has sold the subject merchandise at 
less than NV (see 19 CFR 351.222(b)(1)(iii)). Petitioners did not 
comment on the issue of revocation.
    The Department ``may revoke, in whole or in part'' an antidumping 
duty order upon completion of a review under section 751(d) of the Act. 
While Congress has not specified the procedures that the Department 
must follow in revoking an order, the Department has developed a 
procedure for revocation that is described in 19 CFR 351.222. The 
regulation requires that exporters or producers covered by the order 
and desiring revocation submit the following: (1) A certification that 
the company has sold the subject merchandise at not less than NV in the 
current review period and that the company will not sell at less than 
NV in the future; (2) a certification that the company sold the subject 
merchandise for at least three consecutive years in commercial 
quantities; and (3) an agreement to immediate reinstatement of the 
order if the Department concludes that the company, subsequent to the 
revocation, has sold subject merchandise at less than NV. See 19 CFR 
351.222(e)(1).
    Upon receipt of such a request, the Department will consider the 
following in determining whether to revoke the order in part: (1) 
Whether the producer or exporter requesting revocation has sold subject 
merchandise at not less than NV for a period of at least three 
consecutive years; (2) whether the continued application of the 
antidumping duty order is otherwise necessary to offset dumping; and 
(3) whether the producer or exporter requesting revocation in part has 
agreed in writing to the immediate reinstatement of the order, as long 
as any exporter or producer is subject to the order, if the Department 
concludes that the exporter or producer, subsequent to revocation, sold 
the subject merchandise at less than NV. See 19 CFR 351.222(b)(2).
    Pagani submitted the required certifications and agreements. 
However, after applying the criteria outlined in section 351.222(b) of 
the Department's regulations, and considering the evidence on the 
record, we have preliminarily determined that one of the Department's 
requirements for revocation has not been met. While we preliminarily 
find that Pagani has demonstrated three consecutive years of sales at 
not less than NV, we also preliminarily find that, based on Pagani's 
U.S. shipment data, its sales to the United States have not been made 
in commercial quantities during all three review periods at issue, in 
accordance with sections 351.222(d) and 351.222(e)(1)(ii) of the 
Department's regulations.
    In particular, data on the record indicate that the amount of 
subject merchandise sold in the U.S. market by Pagani during the fourth 
and fifth review periods is small in quantity relative to Pagani's 
total U.S. sales volume during the period of investigation (``POI''). 
With respect to the sixth review period, we recognize that Pagani's 
volume of sales to the United States has substantially increased. 
However, because Pagani did not make sales in commercial quantities 
during the fourth and fifth review periods, Pagani did not satisfy the 
regulatory requirement to sell commercial quantities in each of the 
three years forming the basis of this revocation request. We conclude 
that Pagani's sales during the fourth and fifth PORs do not provide any 
meaningful information concerning Pagani's normal commercial practice. 
Consequently, we find that Pagani's shipments during these PORs are not 
a reasonable basis for finding commercial quantities.\6\
---------------------------------------------------------------------------

    \6\ Pagani's history of subject merchandise pasta sales is as 
follows: Pagani's 4th POR sales of subject pasta were 0.94 percent 
of its POI sales of subject pasta. Pagani's 5th POR sales of subject 
pasta were 1.06 percent of its POI sales of subject pasta. Pagani's 
6th POR sales of subject pasta were 17.63 percent of its POI sales 
of subject pasta.
---------------------------------------------------------------------------

    Therefore, we have determined that the requirements for revocation 
have not been met because Pagani has not made sales to the United 
States in commercial quantities during the fourth or fifth segment of 
this proceeding.\7\ Based on our examination of these facts, we find 
that, consistent with Department practice, we do not have a sufficient 
basis to conclude that the de minimis dumping margin calculated for 
Pagani for the fourth, fifth, or sixth administrative review is 
reflective of the company's normal commercial experience. See e.g., 
Final Results of Antidumping Duty Administrative Review: Silicon Metal 
from Brazil, 65 FR 7497, 7498 (February 15, 200) (``Silicon Metal from 
Brazil'') (finding that because sales and volume figures were so small 
the Department could not conclude that the reviews reflected what the 
company's normal commercial experience would be absent an antidumping 
duty order). Because Pagani has not met the commercial quantities 
requirement, we have not examined the issue as to whether the 
antidumping duty order is necessary to offset future dumping (see 
Silicon Metal from Brazil, at 7505). For a more detailed discussion, 
see Memorandum to Melissa Skinner through Eric Greynolds from the Team, 
Re: Commercial Quantities, issued simultaneously with this notice.
---------------------------------------------------------------------------

    \7\ As we noted in Pure Magnesium from Canada; Final Results of 
Antidumping Duty Administrative Review and Determination Not To 
Revoke Order In Part, 64 FR 12977, 12979 (March 16, 1999) (``Pure 
Magnesium from Canada''), sales in commercial quantities is a 
threshold requirement that must be met by parties seeking 
revocation. We also note that while the regulation requiring sales 
in commercial quantities may have developed from the unreviewed 
intervening year regulation, its application in all revocation cases 
based on the absence of dumping is reasonable and mandated by the 
regulations. The application of this requirement to all such cases 
is reflected not only in the provision for unreviewed intervening 
years (see 19 CFR 351.222 (d)(1)), but also in the new general 
requirement that parties seeking revocation certify to sales in 
commercial quantities in each of the years on which revocation is to 
be based. See 19 CFR 351.222(e)(1)(ii). This requirement ensures 
that the Department's revocation determination is based upon a 
sufficient breadth of information regarding a company's normal 
commercial practice. See Pure Magnesium from Canada, 64 FR at 12979.
---------------------------------------------------------------------------

    Based on the foregoing analysis, we have preliminarily determined 
that Pagani has not met one of the threshold

[[Page 47031]]

requirements for revocation (i.e., sales in commercial quantities 
during the three consecutive PORs). We therefore preliminarily intend 
not to revoke the order, with respect to pasta produced and also 
exported by Pagani, if these preliminary findings are affirmed in our 
final results.
Preliminary Results of Review
    As a result of our review, we preliminarily determine that the 
following percentage weighted-average margins exist for the period July 
1, 2001, through June 30, 2002:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Ferrara....................................................         0.18
Garofalo...................................................         1.44
IAPC.......................................................         0.52
Indalco....................................................        17.25
Pagani.....................................................         0.20
Pallante...................................................         0.12
PAM........................................................        45.49
Rummo......................................................         0.05
Tomasello..................................................         8.47
Zaffiri....................................................         6.36
All Others.................................................        11.26
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding in accordance with 19 CFR 351.224(b). An interested party 
may request a hearing within 30 days of publication of these 
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, 
ordinarily will be held 44 days after the date of publication, or the 
first working day thereafter. Interested parties may submit case briefs 
no later than 30 days after the date of publication of these 
preliminary results of review. Rebuttal briefs limited to issues raised 
in such briefs, may be filed no later than 35 days after the date of 
publication. Parties who submit arguments are requested to submit with 
the argument (1) a statement of the issue, and (2) a brief summary of 
the argument. Further, parties submitting written comments are 
requested to provide the Department with an additional copy of the 
public version of any such comments on diskette. The Department will 
issue the final results of this administrative review, which will 
include the results of its analysis of issues raised in any such 
comments, or at a hearing, if requested, within 120 days of publication 
of these preliminary results.
Assessment Rate
    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of the subject merchandise. Upon 
issuance of the final results of this administrative review, if any 
importer-specific assessment rates calculated in the final results are 
above de minimis (i.e., at or above 0.5 percent), the Department will 
issue appraisement instructions directly to the BCBP to assess 
antidumping duties on appropriate entries by applying the assessment 
rate to the entered value of the merchandise. For assessment purposes, 
we calculated importer-specific assessment rates for the subject 
merchandise by aggregating the dumping margins for all U.S. sales to 
each importer and dividing the amount by the total entered value of the 
sales to that importer. Where appropriate, to calculate the entered 
value, we subtracted international movement expenses (e.g., 
international freight) from the gross sales value.
Cash Deposit Requirements
    To calculate the cash deposit rate for each producer and/or 
exporter included in this administrative review, we divided the total 
dumping margins for each company by the total net value for that 
company's sales during the review period, with the exception of PAM, 
whose margin is based on AFA.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
certain pasta from Italy entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided by section 
751(a)(2)(C) of the Act: (1) The cash deposit rates for the companies 
listed above will be the rates established in the final results of this 
review, except if the rate is less than 0.5 percent and, therefore, de 
minimis, the cash deposit 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 
final results in which that manufacturer or exporter participated; (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 final results for the manufacturer of the merchandise; 
and (4) if neither the exporter nor the manufacturer is a firm covered 
in this or any previous review conducted by the Department, the cash 
deposit rate will be 11.26 percent, the ``All Others'' rate established 
in the LTFV investigation. See Notice of Antidumping Duty Order and 
Amended Final Determination of Sales at Less Than Fair Value: Certain 
Pasta from Italy, 61 FR 38547 (July 24, 1996).
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.
Notification to Importers
    This notice 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 is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2003.
Joseph A. Spetrini,
Acting Assistant Secretary for Grant Aldonas, Under Secretary.
[FR Doc. 03-20180 Filed 8-6-03; 8:45 am]
BILLING CODE 3510-DS-P