[Federal Register Volume 68, Number 200 (Thursday, October 16, 2003)]
[Notices]
[Pages 59584-59585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-26209]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-803]


Notice of Preliminary Results of Antidumping Duty Changed 
Circumstances Review: Industrial Nitrocellulose from the United Kingdom

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

ACTION: Notice of Preliminary Results of Antidumping Duty Changed 
Circumstances Review.

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SUMMARY: On May 8, 2003, the Department of Commerce (the Department) 
initiated a changed circumstances review of the antidumping duty order 
on industrial nitrocellulose (INC) from the United Kingdom in order to 
determine whether Troon Investments Limited (TIL) is the successor-in-
interest to Imperial Chemical Industries, PLC (ICI). See Notice of 
Initiation of Antidumping Duty Changed Circumstances Review: Industrial 
Nitrocellulose from the United Kingdom, 68 FR 27015 (May 19, 2003). TIL 
purchased Nobel's Explosives Company, Ltd.'s (NEC) INC business. NEC is 
a wholly-owned subsidiary of ICI. We preliminarily determine that TIL 
is the successor-in-interest to ICI for purposes of determining 
antidumping duty liability. Interested parties are invited to comment 
on these preliminary results.

EFFECTIVE DATE: October 16, 2003.

FOR FURTHER INFORMATION CONTACT: Michele Mire or Howard Smith, AD/CVD 
Enforcement, Office 4, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-4711 
and (202) 482-5193, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 10, 1990, the Department published in the Federal Register 
(55 FR 28270) the antidumping duty order on INC from the United 
Kingdom. On March 28, 2003, TIL requested that the Department conduct a 
changed circumstances review of the antidumping duty order on INC from 
the United Kingdom claiming that it is the successor-in-interest to 
ICI, and, as such, it is entitled to receive the same antidumping 
treatment accorded to ICI. On April 11, 2003, Green Tree Chemical 
Technologies, Inc., the sole U.S. producer of INC and the petitioner in 
this proceeding, notified the Department that it opposes TIL's request 
to be considered the successor-in-interest to ICI. On July 18, 2003, 
and August 14, 2003, at the request of the Department, TIL submitted 
additional information and documentation pertaining to its changed 
circumstances request.

Scope of Review

    Imports covered by this review are shipments of INC from the United 
Kingdom. INC is a dry, white amorphous synthetic chemical with a 
nitrogen content between 10.8 and 12.2 percent, and is produced from 
the reaction of cellulose with nitric acid. INC is used as a film-
former in coatings, lacquers, furniture finishes, and printing inks. 
The scope of this order does not include explosive grade 
nitrocellulose, which has a nitrogen content of greater than 12.2 
percent.
    INC is currently classified under Harmonized Tariff Schedule of the 
United States (HTSUS) item number 3912.20.0000. While the HTSUS 
classification is provided for convenience and customs purposes, the 
written description remains dispositive as to the scope of the product 
coverage.

Preliminary Results of Changed Circumstances Review

    In making a successor-in-interest determination, the Department 
examines several factors including, but not limited to, changes in: (1) 
management; (2) production facilities; (3) supplier relationships; and 
(4) customer base. See Brass Sheet and Strip from Canada: Final Results 
of Antidumping Duty Administrative Review, 57 FR 20460, 20462 (May 13, 
1992) (Canadian Brass). While no one single factor, or combination of 
factors, will necessarily prove to be dispositive, the Department will 
generally consider a new company to be the successor-in-interest to its 
predecessor company if its resulting operations are essentially the 
same as those of its predecessor. See, e.g., Canadian Brass at 20460, 
and Final Results of Changed Circumstances Antidumping Duty 
Administrative Review: Industrial Nitrocellulose From Korea, 65 FR 
2115, 2116 (January 13, 2000). Therefore, if there is evidence 
demonstrating that, with respect to the production and sale of subject

[[Page 59585]]

merchandise, a new company essentially operates as the same business 
entity as the former company, the Department will assign the new 
company the cash deposit rate of its predecessor.
    In its March 28, 2003, request for a changed circumstances review, 
TIL advised the Department that, on December 31, 2002, it purchased 
NEC's (a wholly owned subsidiary of ICI) INC and energetic technologies 
businesses. TIL notes that the energetic technologies business is 
unrelated to INC. NEC was the sole producer of INC in the United 
Kingdom, and therefore, the only respondent in prior administrative 
reviews. TIL was formed to acquire NEC's INC and energetic technologies 
businesses.
    According to TIL, the transfer of ownership of the INC business 
resulted in no material changes in the management, production 
facilities, suppliers of raw materials, or customers of NEC's former 
INC business. While the managing director of NEC's INC business has 
been replaced, TIL states that all of the other management personnel of 
the former entity are now employed by TIL. See TIL's March 28, 2003 
submission to the Department at 5. Also, TIL notes that it operates the 
factory formerly operated by NEC using the same equipment and 
production process used by NEC. Furthermore, TIL reports that it uses 
the suppliers of raw materials used by NEC (and currently plans no 
changes to those suppliers) and sells to the former customers of NEC, 
in the United States and the United Kingdom, on the same basis as NEC 
sold to these customers. See TIL's July 18, 2003 questionnaire response 
at 4-5. TIL notes that there have been no changes in the customer base 
since the acquisition and none are currently anticipated. See TIL's 
March 28, 2003 submission to the Department at 7. Moreover, TIL points 
out that since the acquisition, there have been no changes in INC sales 
personnel, no material changes in the marketing of INC in the United 
States and the United Kingdom, and no systemic modifications in INC 
selling prices in either the U.S. or U.K. market. See id.
    In its April 11, 2003, submission, the petitioner contends that the 
change in ownership of the INC business has resulted in a change in the 
business' cost of capital (which affects the Department's interest 
expense calculation), management, and sales distribution channels. 
Specifically, the petitioner points out that, recently, in addressing 
whether NEC's cost of production should include its interest expenses 
or those of its parent, the Department found that NEC's parent, ICI, 
``determined the capital structure of its group companies involved in 
the production of the subject merchandise.'' See Industrial 
Nitrocellulose From the United Kingdom; Final Results of Antidumping 
Duty Administrative Review, 67 FR 77747 (December 19, 2002) and 
accompanying Issues and Decision Memorandum. Thus, the petitioner 
concludes that the cost of capital for the new entity will differ from 
that of its predecessor. In addition to different capital costs, the 
petitioner points out that, under TIL, the managing director of the INC 
business is not the managing director formerly employed by NEC. The 
petitioner finds this significant because it is the managing director 
who has decision-making authority. Further, the petitioner states that 
with new ownership and senior management, there can be no assurance 
that pricing will have the same objectives or follow the same pattern 
as when NEC was owned by ICI. Finally, the petitioner claims that the 
sales structure changed after TIL acquired the INC business. 
Specifically, the petitioner notes that NEC's U.S. affiliate, ICI 
Americas, Inc., carried out many sales functions for NEC. Based on the 
foregoing, the petitioner contends that TIL should not be allowed to 
take advantage of ICI's current cash deposit rate.
    As noted above, in determining whether a new company's operations 
are essentially the same as those of its predecessor, the Department 
examines whether there have been changes in management, production 
facilities, supplier relationships, or the customer base. Our review of 
the record indicates that the change in ownership of the INC business 
has not resulted in changes to the production facilities or production 
processes used to manufacture INC, nor has it resulted in material 
changes in supplier relationships or customer base. Although TIL 
replaced the managing director of the INC business, there is no 
indication that this action resulted in significant changes to the INC 
operations. Furthermore, while the petitioner expressed concern over a 
possible difference between the cost of capital for the new entity and 
its predecessor, the record indicates that many of the significant 
factors that affect costs, with the possible exception of those that 
affect capital costs, have not changed (e.g., no changes in production 
process, suppliers of raw materials, and management and sales 
personnel). Finally, even though there has been a change in the legal 
entity performing U.S. selling functions (i.e., ICI Americas Inc. has 
ceased performing selling functions), with respect to U.S. sales of 
INC, the record indicates that there have been no significant changes 
in the order process, movement of INC from the United Kingdom, customer 
base, or sales terms, and no systematic price changes. See TIL's July 
18, 2003 submission at 6. Thus, the record shows that TIL's operations 
are essentially the same as those of its predecessor. Therefore, we 
preliminarily determine that TIL is the successor-in-interest to ICI 
and should receive the same antidumping duty cash deposit rate as ICI, 
i.e., 3.06 percent. As a result, if these preliminary results are 
adopted in our final results of this changed circumstances review, we 
will instruct the U.S. Bureau of Customs and Border Protection to 
suspend shipments of subject merchandise made by TIL at ICI's cash 
deposit rate (i.e., 3.06 percent). Until that time, the cash deposit 
rate assigned to TIL's entries is the rate in effect at the time of 
entry (i.e., the ``all others'' rate).

Public Comment

    Any interested party may request a hearing within 30 days of 
publication of this notice. See 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the date of publication of this 
notice, or the first working day thereafter. Interested parties may 
submit case briefs and/or written comments no later than 30 days after 
the date of publication of this notice. See 19 CFR 351.309(c)(ii). 
Rebuttal briefs and rebuttals to written comments, which must be 
limited to issues raised in such briefs or comments, may be filed no 
later than 37 days after the date of publication of this notice. See 19 
CFR 351.309(d). Parties who submit arguments are requested to submit 
with the argument (1) a statement of the issue, (2) a brief summary of 
the argument, and (3) a table of authorities.
    Consistent with 19 CFR 351.216(e), we will issue the final results 
of this changed circumstances review no later than 270 days after the 
date on which this review was initiated. We are issuing and publishing 
this determination and notice in accordance with sections 751(b)(1) and 
777(i)(1) of the Act and 19 CFR 351.216.

    Dated: October 9, 2003.
Jeffrey May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-26209 Filed 10-15-03; 8:45 am]
BILLING CODE 3510-DS-S