[Federal Register Volume 69, Number 150 (Thursday, August 5, 2004)]
[Notices]
[Pages 47409-47412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17936]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-825]


Sebacic Acid From The People's Republic of China: Preliminary 
Results of Antidumping Duty Administrative Review and Notice of Partial 
Recision

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on sebacic acid from The People's 
Republic of China (PRC) in response to a request by SST Materials, Inc. 
d/b/a Genesis Chemicals, Inc., a domestic producer of the subject 
merchandise. The period of review is July 1, 2002, through June 30, 
2003. We have preliminarily determined that Guangdong Chemicals Import 
and Export Corporation (Guangdong) has sold subject merchandise at less 
than normal value. If these preliminary results are adopted in our 
final results of administrative review, we will instruct Customs and 
Border Protection (CBP) to assess antidumping duties on entries subject 
to this review by these exporters.

DATES: Effective Date: August 5, 2004.

FOR FURTHER INFORMATION CONTACT: John Conniff, AD/CVD Enforcement, 
Group II, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1009.

SUPPLEMENTARY INFORMATION:

Background

    On July 2, 2003, the Department of Commerce (the Department) 
published in the Federal Register a notice of ``Opportunity to Request 
an Administrative Review'' of the antidumping duty order on sebacic 
acid from the PRC covering the period July 1, 2002, through June 30, 
2003. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity to Request Administrative Review, 
68 FR 50750 (July 2, 2003).
    On July 31, 2003, in accordance with 19 CFR 351.213(b)(1), SST 
Materials, Inc. d/b/a Genesis Chemicals, Inc. (Genesis), a domestic 
producer of the subject merchandise, requested an administrative review 
of Tianjin Chemical Import and Export Corporation (Tianjin) and 
Guangdong.
    On August 13, 2003, the Department issued antidumping 
questionnaires to Guangdong and Tianjin.\1\ On August 20, 2003, 
Guangdong and Tianjin submitted a request that the Department decline 
to initiate the administrative review, because Genesis did not properly 
file its request. Specifically, Genesis did not serve its request for 
an administrative review on either Guangdong or Tianjin. On August 22, 
2003, we afforded Genesis an opportunity to remedy the deficiencies in 
its filing. See memorandum from Michael Strollo to Louis Apple entitled 
``Sebacic Acid from The People's Republic of China: Initiation of an 
Administrative Review,'' dated August 22, 2003; see also memorandum to 
the file from Patrick Connolly entitled ``Sebacic Acid from The 
People's Republic of China: Service of Request for Administrative 
Review on Respondents,'' dated August 25, 2003. On August 22, 2003, we 
published a notice of initiation of this administrative review. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in

[[Page 47410]]

Part, 68 FR 50750 (Aug. 22, 2003). On August 26, 2003, Genesis 
submitted a letter to the Department certifying that it had remedied 
the procedural deficiencies in its original filing.
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    \1\ Section of A of the questionnaire requests general 
information concerning a company's corporate structure and business 
practices, the merchandise under this review that it sells, and the 
manner in which it sells that merchandise in all of its markets. 
Section B requests a complete listing of all home market sales, or, 
if the home market is not viable, of sales in the most appropriate 
third-country market (this section is not applicable to respondents 
in non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the factors 
of production of the merchandise under investigation. Section E 
requests information on further manufacturing.
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    We received timely responses from Guangdong to sections A, C, and D 
of the initial antidumping questionnaire and associated supplemental 
questionnaires, and we received a timely certification from Tianjin 
that all of its exports of sebacic acid were manufactured by Hungshui 
Donfeng Chemical Co. (Hengshui), and thus were excluded from the 
antidumping duty order. For further information, see the Tianjin/
Hengshui: Partial Recision of Review section below.
    On March 15, 2004, the Department extended the time period for the 
preliminary results in this review. See Sebacic Acid from The People's 
Republic of China: Extension of Time Limit for Preliminary Results in 
Antidumping Duty Administrative Review, 69 FR 12127 (Mar. 15, 2004).

Tianjin/Hengshui: Partial Recision of Review

    The Department previously revoked, in part, the antidumping duty 
order on sebacic acid from The PRC, with respect to Tianjin's sales of 
subject merchandise produced by Hengshui. See Sebacic Acid From The 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Determination To Revoke Order in Part 
(Sebacic Acid Sixth Review Final), 67 FR 69719, 69720 (Nov. 19, 2002). 
As noted above, on August 13, 2003, the Department issued an 
antidumping questionnaire to Tianjin, and on September 29, 2003, 
Tianjin submitted a certification that all of its exports of sebacic 
acid were manufactured by Hengshui, and thus were excluded from the 
antidumping duty order. Therefore, in accordance with 19 CFR 
351.213(d)(3) and consistent with our practice, we are rescinding this 
review of the antidumping duty order on sebacic acid from the PRC for 
the period of July 1, 2002, through June 30, 2003 with respect to 
subject merchandise exported to the United States by Tianjin.
    On February 10, 2004, Genesis alleged that, subsequent to the 
revocation of the order, Tianjin resumed dumping sebacic acid in the 
United States with respect to its U.S. sales of sebacic acid produced 
by Hengshui. Accordingly, Genesis requested that the Department 
reinstate the antidumping duty order on exports of this merchandise. On 
February 17, 2004, Tianjin submitted a letter to the Department in 
which it argued that Genesis' request should be rejected because: (1) 
it is outside the scope of the 2002-2003 administrative review; and (2) 
it was untimely filed in that segment of the proceeding. Tianjin argued 
that Genesis' allegation should instead be considered in the context of 
a changed circumstances review, pursuant to 19 CFR 351.216.
    On June 25, 2004, the Department initiated a changed circumstances 
review of the antidumping duty order on sebacic acid from the PRC to 
consider whether the Department should reinstate the order with respect 
to subject merchandise produced by Hengshui and exported to the United 
States by Tianjin. See Sebacic Acid From The People's Republic of 
China: Notice of Initiation of Changed Circumstances Review, 69 FR 
39906 (July 1, 2004) (Sebacic CCR Intitiation). Accordingly, this issue 
will not be addressed in this administrative review.

Scope of Review

    The products covered by this order are all grades of sebacic acid, 
a dicarboxylic acid with the formula 
(CH2)8(COOH)2, which include but are not limited 
to CP Grade (500ppm maximum ash, 25 maximum APHA color), Purified Grade 
(1000ppm maximum ash, 50 maximum APHA color), and Nylon Grade (500ppm 
maximum ash, 70 maximum ICV color). The principal difference between 
the grades is the quantity of ash and color. Sebacic acid contains a 
minimum of 85 percent dibasic acids of which the predominant species is 
the C10 dibasic acid. Sebacic acid is sold generally as a 
free-flowing powder/flake. Sebacic acid has numerous industrial uses, 
including the production of nylon 6/10 (a polymer used for paintbrush 
and toothbrush bristles and paper machine felts), plasticizers, esters, 
automotive coolants, polyamides, polyester castings and films, inks and 
adhesives, lubricants, and polyurethane castings and coatings. Sebacic 
acid is currently classifiable under subheading 2917.13.00.30 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 scope of this proceeding is dispositive.

Separate Rates

    It is the Department's policy to assign all exporters of the 
merchandise subject to review in non-market-economy (NME) countries a 
single rate, unless an exporter can demonstrate an absence of 
government control, both in law and in fact, with respect to its 
exports to the United States. To establish whether an exporter is 
sufficiently independent of government control to be entitled to a 
separate rate, the Department analyzes the exporter in light of the 
criteria established in the Final Determination of Sales at Less Than 
Fair Value: Sparklers from The People's Republic of China, 56 FR 20588 
(May 6, 1991) (Sparklers), as amplified by Final Determination of Sales 
at Less Than Fair Value: Silicon Carbide from The People's Republic of 
China, 59 FR 22585 (May 2, 1994) (Silicon Carbide). Evidence 
supporting, though not requiring, a finding of de jure absence of 
government control over export activities includes: (1) An absence of 
restrictive stipulations associated with an individual exporter's 
business and export licenses; (2) any legislative enactments 
decentralizing control of companies; and (3) any other formal measures 
by the government decentralizing control of companies. With respect to 
evidence of a de facto absence of government control, the Department 
considers the following four factors: (1) Whether the respondent sets 
its own export prices independently from the government and other 
exporters; (2) whether the respondent can retain the proceeds from its 
export sales; (3) whether the respondent has the authority to negotiate 
and sign contracts; and (4) whether the respondent has autonomy from 
the government regarding the selection of management. See Silicon 
Carbide, 59 FR at 22587; see also Sparklers, 56 FR at 20589.
    With respect to Guangdong, in our final results for the most 
recently completed review period (i.e., July 1, 2000, through June 30, 
2001), the Department determined there was both de jure and de facto 
absence of government control of this company's export activities and 
determined that it warranted a company-specific dumping margin. See 
Sebacic Acid Sixth Review Final, 67 FR 69719. For this review, 
Guangdong has responded to the Department's request for information 
regarding separate rates. We have found that the evidence on the record 
is consistent with the final results in the Sebacic Acid Sixth Review 
Final and continues to demonstrate an absence of both de jure and de 
facto government control with respect to its exports in accordance with 
the criteria identified in Sparklers and Silicon Carbide.

Export Price

    We calculated export price (EP) in accordance with section 772(a) 
of the Tariff Act of 1930, as amended (the Act) because the subject 
merchandise was sold directly to the first unaffiliated purchaser in 
the United States prior to importation and constructed export

[[Page 47411]]

price methodology was not otherwise warranted. As appropriate, we 
calculated EP based on packed, free-on-board, PRC-port prices to 
unaffiliated purchasers in the United States. We deducted from the 
starting price amounts for foreign inland truck freight and foreign 
brokerage and handling. As these movement services were provided by NME 
suppliers, we valued them using surrogate values from Indian suppliers. 
For further discussion of our use of surrogate data in an NME 
proceeding, as well as the selection of India as the appropriate 
surrogate country, see the ``Normal Value'' section of this notice, 
below.
    For foreign inland freight, we obtained publicly-available 
information which was published in the October 2002 through March 2003 
editions of Chemical Weekly. For foreign brokerage and handling 
expenses, we used a publicly summarized version of the average value 
for brokerage and handling expenses reported in Final Determination of 
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products from India, 67 FR 50406 (Oct. 3, 2001), and used in the 2000-
2001 administrative review of freshwater crawfish tail meat from the 
PRC. See the memorandum to the file from Mathew Renkey and Adina 
Teodorescu dated September 30, 2002, and entitled ``Administrative 
Review of Freshwater Crawfish Tail Meat from The People's Republic of 
China: Factor Values Memorandum,'' the relevant portion of which we 
have placed on the record of this review, and which is on file in the 
Central Records Unit (CRU), Room B-099 of the main Commerce building. 
We inflated the per kilogram price (in rupees) to the POR using 
wholesale price index (WPI) data from the International Monetary Fund 
(IMF). For further discussion, see the memorandum to the file from 
Gregory Kalbaugh entitled ``Preliminary Valuation of Factors of 
Production for the Preliminary Results of the 2002-2003 Administrative 
Review of Sebacic Acid from The People's Republic of China,'' dated 
July 30, 2004 (FOP Memo), which is on the record of this review and is 
on file in the CRU.

Normal Value

A. Surrogate Country

    Section 773(c)(4) of the Act requires the Department to value an 
NME producer's factors of production, to the extent possible, in one or 
more market economy countries that: (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. See March 9, 2004, 
Surrogate Country Selection Memorandum from Ronald Lorentzen to Louis 
Apple entitled ``Administrative Review of Sebacic Acid from The 
People's Republic of China: Surrogate Country Selection,'' which is on 
the record of this review and is on file in the CRU.
    For purposes of the most recent segment of this proceeding, we 
found that India is a producer of oxalic acid, a product comparable to 
sebacic acid. See Sebacic Sixth Review. For purposes of the preliminary 
results, we continue to find that India is a significant producer of 
oxalic acid. See the July 30, 2004, memorandum to the file from Greg 
Kalbaugh entitled ``Oxalic Acid Production in India During the Period 
of Review,'' which is on the record of this review and is on file in 
the CRU. Accordingly, as India is at a level of economic development 
comparable to that of the PRC, and a significant producer of a product 
comparable to the subject merchandise, we find that India fulfills both 
statutory requirements for use as a surrogate country and have 
continued to use India as the surrogate country in this administrative 
review. Accordingly, we have calculated NV using Indian values for the 
PRC producers' factors of production. We have obtained and relied upon 
publicly available information wherever possible.

B. Factors of Production

    In accordance with 19 CFR 351.408(c)(1), the Department will 
normally use publicly available information to value factors of 
production. However, the Department's regulations also provide that 
where a producer purchases an input from a market economy supplier and 
pays for it in market economy currency, the Department employs the 
actual price paid for the input to the market economy supplier to 
calculate the factors-based NV. Id.; see also Lasko Metal Products v. 
United States, 43 F. 3d 1442, 1445-1446 (Fed. Cir. 1994).
    In accordance with section 773(c) of the Act, we calculated NV 
based on factors of production reported by Guangdong for the POR. To 
calculate NV, the reported per-unit factor quantities were multiplied 
by publicly available Indian surrogate values. Factors of production 
include, but are not limited to: (1) Hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital cost, including 
depreciation. In examining surrogate values, we selected, where 
possible, the publicly available value which was: (1) An average non-
export value; (2) representative of a range of prices within the POR or 
most contemporaneous with the POR; (3) product-specific; and (4) tax-
exclusive. For a more detailed explanation of the methodology used in 
calculating various surrogate values, see the FOP Memo.
    In selecting the surrogate values, we considered the quality, 
specificity, and contemporaneity of the data. Where appropriate, we 
adjusted surrogate values to reflect inflation up to the POR using the 
WPI published by the IMF. In accordance with this methodology, we 
valued the factors of production as follows:
    To value caustic soda, cresol, phenol, sulfuric acid, and zinc 
oxide, we obtained information from the Indian publication Chemical 
Weekly. Where necessary, we adjusted the values reported in Chemical 
Weekly to exclude sales and excise taxes. To value activated carbon, 
inner polyethylene bags, woven plastic bags, jumbo plastic bags, and 
bag closing thread, we obtained import prices from the Government of 
India's Department of Commerce Import/Export Data for the period April 
2002 through March 2003. To value steam coal, we obtained import prices 
from the Monthly Statistics of the Foreign Trade of India (MSFTI), and 
contained in the World Trade Atlas for the period April 2002 through 
March 2003.
    Consistent with the methodology employed in Sebacic Acid Sixth 
Review, we have determined that fatty acid and glycerine are by-
products. Because they are by-products, we subtracted the sales revenue 
of fatty acid and glycerine, from the estimated production costs of 
sebacic acid. This treatment of by-products is also consistent with 
generally accepted accounting principles. See Cost Accounting: A 
Managerial Emphasis (1991) at pages 539-544. To value fatty acid, we 
used data published in Government of India's Department of Commerce 
Import/Export Data. To value glycerine, we used data published in 
Chemical Weekly.
    We also allocated a by-product credit for glycerine to the 
production cost for the co-product capryl alcohol. We deducted a by-
product credit for glycerine from sebacic acid based on the ratio of 
the value of sebacic acid to the total value of both sebacic acid and 
capryl alcohol.
    Consistent with the methodology employed in the previous 
administrative review, we have determined that capryl alcohol is a co-
product and have allocated the factor inputs based on the relative 
surrogate

[[Page 47412]]

values for this product and sebacic acid. See Sebacic Acid Sixth 
Review. Additionally, we have used the production times necessary to 
complete each production stage of sebacic acid as a basis for 
allocating the amount of labor, energy usage, and factory overhead 
among the co-product(s). This treatment of co-products is consistent 
with generally accepted accounting principles. See Cost Accounting: A 
Managerial Emphasis (1991) at pages 528-533. To value capryl alcohol, 
we used data published in Government of India's Department of Commerce 
Import/Export Data.
    To value electricity, we used data from the International Energy 
Agency's Key World Energy Statistics 2003 report. For further 
discussion, see the FOP Memo.
    We made adjustments to account for freight costs between the 
suppliers and the respective manufacturing facilities for each of the 
factors of production identified above. In accordance with our 
practice, for inputs for which we used cost-insurance-freight import 
values from India, we calculated a surrogate freight cost using the 
shorter of the reported distances either from the closest PRC ocean 
port to the factory or from the domestic supplier to the factory. See 
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate From The People's Republic of China, 62 FR 
61964, 61977 (Nov. 20, 1997); see also Sigma Corp. v. United States, 
117 F.3d 1401, 1407-1408 (Fed. Cir. 1997).
    For truck freight, we obtained publicly-available information which 
was published in the October 2002 through March 2003 editions of 
Chemical Weekly. See the FOP Memo. To value rail freight, we relied 
upon price quotes obtained from Indian rail freight companies in 
November 1999. These quotes were used in the investigation of bulk 
aspirin from the PRC and the 1999-2000 administrative review of tapered 
roller bearings from the PRC. See Notice of Preliminary Determination 
of Sales at Less Than Fair Value: Bulk Aspirin From The People's 
Republic of China, 65 FR 116, 119 (Jan. 3, 2000); and Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, From The People's 
Republic of China: Preliminary Results of 1999-2000 Administrative 
Review, Partial Rescission of Review, and Notice of Intent Not To 
Revoke Order in Part, 66 FR 35937, 35941 (July 10, 2001). We averaged 
these quotes, then inflated this average to the POR using the WPI data 
published by IMF.
    We valued labor based on a regression-based wage rate, in 
accordance with 19 CFR 351.408(c)(3). This information is available on 
the Department's Web site at http://www.ia.ita.doc.gov/wages/01wages/01wages.html.
    To value factory overhead, selling, general, and administrative 
expenses, and profit, we obtained data from the Reserve Bank of India 
Bulletin.

Preliminary Results of Review

    We preliminarily determine that the following margin exists for the 
period July 1, 2002, through June 30, 2003:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Guangdong Import and Export Corporation.................            1.73
------------------------------------------------------------------------

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within five days of the 
date of publication of this notice. Interested parties may request a 
hearing within 30 days of the publication. Any hearing, if requested, 
will be held 44 days after the publication of this notice, or the first 
workday thereafter. Interested parties may submit case briefs not later 
than 30 days after the date of publication of this notice. Rebuttal 
briefs, limited to issues raised in the case briefs, may be filed not 
later than 35 days after the date of publication of this notice. The 
Department will publish a notice of the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such written briefs, within 120 days of the 
publication of these preliminary results.
    The Department will determine and CBP shall assess antidumping 
duties on all appropriate entries. The Department will issue 
appropriate appraisement instructions directly to CBP upon completion 
of this review. The final results of this review shall be the basis for 
the assessment of antidumping duties on entries of merchandise covered 
by this review and for future deposits of estimated duties.
    For assessment purposes, we do not have the information to 
calculate an estimated entered value. Accordingly, we have calculated 
importer-specific duty assessment rates for the merchandise by 
aggregating the dumping margins calculated for all U.S. sales and 
dividing this amount by the total quantity of those sales. To determine 
whether the duty assessment rates were de minimis, in accordance with 
the requirement set forth in 19 CFR 351.106(c)(2), we calculated 
importer-specific ad valorem ratios based on the EPs.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this administrative review for 
all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for 
Guangdong will be that established in the final results of this 
administrative review; (2) for a company covered by the antidumping 
duty order, previously found to be entitled to a separate rate and for 
which no review was requested, the cash deposit rate will be the rate 
established in the most recent review of that company; (3) the cash 
deposit rate for all other PRC exporters (i.e., all other exports 
except those of sebacic acid produced by Hengshui and exported by 
Tianjin) will be 243.40 percent, the PRC-wide rate established in the 
LTFV investigation; (4) the cash deposit rate for a non-PRC exporter of 
subject merchandise from the PRC will be the rate applicable to the PRC 
supplier of that exporter; and (5) as we have revoked the order, in 
part, with respect to sebacic acid produced by Hengshui and exported by 
Tianjin, no cash deposit is required for such merchandise. These 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative review.

Notification of Interested Parties

    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) of the Act.

    Dated: July 29, 2004.
Jeffrey A. May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 04-17936 Filed 8-4-04; 8:45 am]
BILLING CODE 3510-DS-P