[Federal Register Volume 69, Number 208 (Thursday, October 28, 2004)]
[Notices]
[Pages 62861-62866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2900]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-560-817]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Bottle-Grade Polyethylene Terephthalate (PET) Resin From 
Indonesia

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

SUMMARY: We preliminarily determine that bottle-grade polyethylene 
terephthalate (``PET'') resin from Indonesia is being, or is likely to 
be, sold in the United States at less than fair value, as provided in 
section 733(b) of the Tariff Act of 1930, as amended.
    Interested parties are invited to comment on this preliminary 
determination. If this investigation proceeds normally, we will make 
our final determination within 75 days of this preliminary 
determination.

EFFECTIVE DATE: October 28, 2004.

FOR FURTHER INFORMATION CONTACT: Andrew McAllister or Scott Holland, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-1174 or (202) 482-1279, 
respectively.

SUPPLEMENTARY INFORMATION:

Background

    Since the initiation of this investigation (Notice of Initiation of 
Antidumping Duty Investigations: Bottle-Grade Polyethylene 
Terephthalate (PET) Resin from India, Indonesia, Taiwan, and Thailand, 
69 FR 21082 (April 20, 2004) (``Initiation Notice'')), the following 
events have occurred:
    On May 10, 2004, we solicited comments from interested parties 
regarding the criteria to be used for model-matching purposes. We 
received comments on our proposed matching criteria from the United 
States PET Resin Producers Coalition (``the petitioner'') and P.T. 
Indorama Synthetics Tbk (``Indorama'') on May 17, and May 20, 2004, 
respectively.
    On May 24, 2004, we asked the petitioner for clarification of its 
model-matching comments and its response was provided to the Department 
of Commerce (``the Department'') on May 26, 2004. On June 9, 2004, the 
Department adopted the model match criteria and hierarchy for this 
proceeding. See Memorandum to Susan Kuhbach, ``Selection of Model 
Matching Criteria for Purposes of the Antidumping Duty Questionnaire,'' 
dated June 9, 2004, which is on file in the Central Records Unit 
(``CRU'') in room B-099 of the main Department building. On May 19, 
2004, the United States International Trade Commission (``ITC'') 
preliminarily determined that there is a reasonable indication that 
imports of PET resin from Indonesia are materially injuring the United 
States PET resin industry (see ITC Investigation Nos. 701-TA-439-440 
and 731-TA-1077-1080 (Preliminary) 69 FR 28948 (May 19, 2004)).
    On June 4, 2004, we selected the three largest producers/exporters 
of PET resin from Indonesia (Indorama, P.T. Polypet Karyapersada 
(``Polypet''), and P.T. SK Keris (``SK Keris'')) as the mandatory 
respondents in this proceeding. For further discussion, see Memorandum 
to Susan Kuhbach, ``Issuance of Questionnaire to Respondents,'' dated 
June 4, 2004 (``Respondent Selection Memorandum''), which is on file in 
the Department's CRU. We subsequently issued the antidumping 
questionnaire to Indorama, Polypet, and SK Keris on June 9, 2004.\1\
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    \1\ Section A of the questionnaire requests general information 
concerning the company corporate structure and business practices, 
the merchandise under investigation 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 cases). Section C requests a complete listing of 
U.S. sales. Section D requests information on the cost of production 
of the foreign like product and the constructed value of the 
merchandise under investigation. Section E requests information on 
further manufacturing.
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    On June 25, 2004, the Department received a response from Polypet 
to section A of the Department's original questionnaire. On July 14, 
2004, the Department rejected Polypet's section A response because it 
was improperly filed. See letter from Judith Wey Rudman to Polypet, 
dated July 14, 2004. Specifically, its submission lacked certain 
markings and specifications required by the Department to ensure proper 
filing. Furthermore, the submission was neither properly bracketed nor 
marked as either a public or proprietary version. The Department also 
noted that Polypet did not include the correct number of copies of the 
public and proprietary versions of the submission, and that the 
required certificates of service and accuracy were not correctly filed 
with its submission. Additionally, the submission was not served on the 
other interested parties in this proceeding.
    The Department received the revised section A and original sections 
B and C of the response on July 21, 2004, but again rejected the 
submission due to deficiencies in the treatment of business proprietary 
information. See letter from Judith Wey Rudman to Polypet, dated July 
29, 2004. First, we noted that the responses continued to be improperly 
bracketed under 19 CFR 351.304(b)(1) of the Department's regulations. 
Second, a ``clear and compelling'' explanation for Polypet's request to 
exempt certain information from disclosure under an administrative 
protective order (``APO'') was not provided in its cover letter, as 
required by 19 CFR 351.304(b)(2)(i). Third, the responses did not 
contain a summary of bracketed information in the public version of 
Polypet's response, as required by 19 CFR 351.304(c)(1). Finally, 
Polypet did not provide the Department with a copy of the business 
proprietary version served on parties with APO access.
    The Department received the revised sections A-C response from 
Polypet on August 5, 2004. On August 11, 2004, we called Polypet to 
explain that the August 5, 2004, submission failed to incorporate the 
instructions set forth in the Department's July 29, 2004, letter. See 
Memo to the File, ``Telephone Conversation with Polypet,'' dated August 
11, 2004. On August 12, 2004, the Department rejected as improperly 
filed Polypet's August 5, 2004, sections A-C submission. See letter 
from Julie H. Santoboni to Polypet, dated August 12,

[[Page 62862]]

2004. In that letter, the Department also notified Polypet that it had 
until August 23, 2004, to file a proper submission, including an 
explanation for its request for proprietary treatment, appropriate 
bracketing of business proprietary information, and service of the 
proprietary and correctly summarized public versions of its submission 
on parties included on the APO service list. The Department advised 
Polypet that failure to file a response in accordance with the 
Department's regulations might lead to the use of adverse facts 
available under section 776 of the Tariff Act of 1930 (``the Act'') and 
section 351.308 of the Department's regulations for the preliminary 
determination, as well as the final determination.
    The Department received Polypet's revised sections A-C response on 
August 24, 2004. On August 31, 2004, we spoke with Polypet's chief 
executive officer and explained that the Department was rejecting 
Polypet's latest submission. See Memo to the File, ``Telephone 
Conversation with Polypet,'' dated August 31, 2004. On August 31, 2004, 
we again rejected Polypet's response citing the company's failure to 
bracket certain business proprietary information in accordance with the 
Department's regulations. Specifically, Polypet did not agree to 
release certain sales information under an APO to interested parties in 
this proceeding. Moreover, Polypet again did not provide a clear and 
compelling explanation of the need to withhold such information from 
disclosure under an APO. We informed Polypet that the Department was 
unable to further extend the deadline for filing the questionnaire 
responses because, due to statutorily mandated deadlines that govern 
the investigation, there was no longer sufficient time to evaluate a 
properly filed response, follow up with supplemental questions, and 
conduct a margin analysis by the October 20, 2004, preliminary 
determination. Moreover, the petitioner would not have adequate time to 
conduct its own analysis and submit comments on Polypet's factual 
submission. See letter from Susan Kuhbach to P.T. Polypet Karyapersada, 
dated August 31, 2004. On September 15, 2004, at the request of 
Polypet, a meeting was held with Department officials and a 
representative of Polypet to discuss the rejection by the Department of 
Polypet's questionnaire response. See Memorandum to the File, dated 
September 15, 2004.
    In July 2004, the Department received responses to sections A, B, 
and C of the Department's original questionnaire from Indorama. The 
Department did not receive a response to the questionnaire from SK.
    On July 30, 2004, pursuant to 19 CFR 351.205(e), the petitioner 
made a timely request to postpone the preliminary determination. We 
granted this request and postponed the preliminary determination until 
no later than October 20, 2004. See Notice of Postponement of 
Preliminary Antidumping Duty Determinations: Bottle-Grade Polyethylene 
Terephthalate (PET) Resin from India, Indonesia, Taiwan, and Thailand, 
69 FR 48842 (August 11, 2004).
    On August 10, 2004, the petitioner made an allegation of sales 
below the cost of production (``COP'') against sales of PET resin from 
Indonesia with respect to Indorama. On August 25, 2004, pursuant to 
section 773(b) of the Act, the Department initiated a cost 
investigation of Indorama's Indonesian sales of PET resin. See 
Memorandum to Susan Kuhbach, ``United States PET Resin Producers 
Coalition's Allegation of Sales Below the Cost of Production for P.T. 
Indorama Synthetics Tbk,'' dated August 25, 2004, which is on file in 
the CRU. Also, on August 25, 2004, the Department informed Indorama 
that it was required to respond to section D of the Department's 
questionnaire. The Department received Indorama's response to section D 
of the Department's questionnaire on September 13, 2004.
    The Department issued supplemental questionnaires for sections A, 
B, and C in August and September 2004, and received responses from 
Indorama in August, September, and October 2004. A supplemental section 
D questionnaire was issued on September 21, 2004, and Indorama's 
response was received on October 5, 2004.
    On October 12, 2004, the petitioner submitted comments with respect 
to the upcoming preliminary determination.

Postponement of Final Determination

    Pursuant to section 735(a)(2) of the Act, a final determination may 
be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination under section 733(b), a request can be made 
by the petitioner. On October 6, 2004, the petitioner requested that 
the Department postpone its final determination until not later than 
135 days after the date of the publication of the preliminary 
determination in the Federal Register in the event of a negative 
determination or de minimis margins. In accordance with 735(a)(2) of 
the Act and 19 CFR 351.210(b)(2)(i) and (ii) of the Department's 
regulations, (1) because our preliminary determination is affirmative, 
and (2) the Department has not received a request for postponement from 
exporters or producers who account for a significant proportion of 
exports of the subject merchandise, we are not granting the 
petitioner's request to postpone the final determination.

Scope of Investigation

    The merchandise covered by this investigation is bottle-grade 
polyethylene terephthalate (``PET'') resin, defined as having an 
intrinsic viscosity of at least 0.68 deciliters per gram but not more 
than 0.86 deciliters per gram. The scope includes bottle-grade PET 
resin that contains various additives introduced in the manufacturing 
process. The scope does not include post-consumer recycle (``PCR'') or 
post-industrial recycle (``PIR'') PET resin; however, included in the 
scope is any bottle-grade PET resin blend of virgin PET bottle-grade 
resin and recycled PET (``RPET''). Waste and scrap PET are outside the 
scope of the investigation. Fiber-grade PET resin, which has an 
intrinsic viscosity of less than 0.68 deciliters per gram, is also 
outside the scope of the investigations.
    The merchandise subject to these investigations is properly 
classified under subheading 3907.60.0010 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''); however, merchandise 
classified under HTSUS subheading 3907.60.0050 that otherwise meets the 
written description of the scope is also subject to these 
investigations. Although the HTSUS subheadings are provided for 
convenience and customs purposes, the written description of the 
merchandise under investigation is dispositive.

Scope Comments

    In accordance with our regulations, we set aside a period of time 
for parties to raise issues regarding product coverage and encouraged 
all parties to submit comments within 20 calendar days of publication 
of the Initiation Notice.
    We received no comments from the interested parties.

Period of Investigation

    The period of investigation (``POI'') is January 1, 2003, through 
December 31, 2003. This period corresponds to the four most recent 
fiscal quarters prior to

[[Page 62863]]

the filing of the petition on March 24, 2004.

Use of Facts Otherwise Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information requested by the Department, fails to provide 
such information by the deadline or in the form or manner requested, 
significantly impedes a proceeding, or provides information which 
cannot be verified, the Department shall use, subject to sections 
782(d) and (e) of the Act, facts otherwise available in reaching the 
applicable determination. Section 782(d) of the Act provides that if 
the Department determines that a response to a request for information 
does not comply with the Department's request, the Department shall 
promptly inform the responding party and provide an opportunity to 
remedy the deficient submission. Section 782(e) of the Act further 
states that the Department shall not decline to consider submitted 
information if all of the following requirements are met: (1) The 
information is submitted by the established deadline; (2) the 
information can be verified; (3) the information is not so incomplete 
that it cannot serve as a reliable basis for reaching the applicable 
determination; (4) the interested party has demonstrated that it acted 
to the best of its ability; and (5) the information can be used without 
undue difficulties.
    Section 776(a)(2)(B) of the Act requires the Department to use 
facts otherwise available when a party does not provide the Department 
with information by the established deadline or in the form and manner 
requested by the Department. In applying facts otherwise available, 
section 776(b) of the Act provides that the Department may use an 
inference adverse to the interests of a party that has failed to 
cooperate by not acting to the best of its ability to comply with the 
Department's requests for information. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value and Final Negative 
Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from 
Brazil, 67 FR 55792, 55794-96 (August 30, 2002). Adverse inferences are 
appropriate ``to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
Statement of Administrative Action accompanying the Uruguay Round 
Agreements Act, H.R. Rep. No. 103-316, at 870 (1994) (``SAA''). 
Furthermore, ``affirmative evidence of bad faith on the part of a 
respondent is not required before the Department may make an adverse 
inference.'' See Antidumping Duties; Countervailing Duties; Final Rule, 
62 FR 27355 (May 19, 1997) and Nippon Steel v. U.S., 337 F.3d 1373 
(Fed. Cir. 2003).
    Where the Department applies adverse facts available (``AFA'') 
because a respondent failed to cooperate by not acting to the best of 
its ability to comply with a request for information, section 776(b) of 
the Act authorizes the Department to rely on information derived from 
the petition, a final determination, a previous administrative review, 
or other information placed on the record. See also 19 CFR 351.308(c); 
SAA at 829-831.
    As explained in the ``Background'' section of this notice, SK Keris 
did not respond to our June 9, 2004, antidumping questionnaire. 
Pursuant to 776(a) of the Act, in reaching our preliminary 
determination, we have used total facts available for SK Keris because 
it is a mandatory respondent and did not respond to our June 9, 2004, 
antidumping questionnaire. Moreover, because SK Keris failed to 
respond, in whole, or in part, to our request for information and thus 
did not put forth its maximum effort as required by the questionnaire, 
we have found that it failed to cooperate to best to its ability. 
Therefore, pursuant to 776(b) of the Act, we have used an adverse 
inference in selecting from the facts available the margin for this 
company. See Memorandum from Susan Kuhbach to Jeffery May, 
``Preliminary Determination of Polyethylene Terephthalate (``PET'') 
Resin from Indonesia: Corroboration Memorandum,'' dated October 20, 
2004 (``Corroboration Memorandum'').
    Regarding Polypet, the Department rejected its questionnaire 
responses because Polypet failed to meet the filing requirements of the 
statute and the Department's regulations. Specifically, the company 
failed to serve parties on the APO service list with a proper business 
proprietary version of the questionnaire response. Additionally, 
Polypet repeatedly filed questionnaire responses with double brackets, 
without providing a clear and compelling reason why the information 
could not be released under an APO. Despite our repeated attempts to 
allow Polypet to correct for the filing deficiencies, the company 
failed to do so. See ``Background'' section, above. Therefore, in 
accordance with section 776(a) of the Act and section 351.308(c) of the 
Department's regulations, in reaching our preliminary determination, we 
have used total facts available for Polypet because the information 
necessary to calculate a margin for Polypet is not on the record. See 
Corroboration Memorandum.
    The Department also finds that Polypet did not cooperate to the 
best of its ability because it did not seek our guidance in its 
attempts to provide us with acceptable responses and it ignored the 
instructions we provided the company on how to file its response. 
Moreover, Polypet did not put forth its maximum effort to answer the 
questionnaire and therefore, pursuant to 776(b) of the Act, we have 
used an adverse inference in selecting from the facts available for the 
margin for Polypet.
    Because there are no prior administrative reviews and no other 
information has been placed on the record, as AFA, we are assigning 
Indorama and SK Keris the higher of: (1) The highest margin listed in 
the notice of initiation; or (2) the margin calculated for any 
respondent in this investigation. For AFA, we have selected the margin 
from the petition, since the margin derived from information in the 
petition exceeds the margin calculated for the remaining mandatory 
respondent. When using facts otherwise available, section 776(c) of the 
Act provides that, when the Department relies on secondary information 
(such as the petition), it must, to the extent practicable, corroborate 
that information from independent sources that are reasonably at its 
disposal. The SAA clarifies that ``corroborate'' means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870.
    Our analysis of the petitioner's methodology for calculating the 
export price (``EP'') and normal value (``NV'') in the petition is 
discussed in the initiation notice. See Initiation Notice. To 
corroborate the petitioner's EP and NV calculations, we compared the 
prices and expenses used to the source documents upon which the 
petitioner's methodology was based as well as information submitted in 
Indorama's questionnaire response.
    As discussed in the Corroboration Memorandum, we found that the EP 
and NV information in the petition was reasonable and, therefore, we 
preliminarily determine that the information has probative value. 
Accordingly, we find that the highest margin based on that information, 
27.61 percent, is corroborated within the meaning of 776(c) of the Act. 
Therefore, for the preliminary determination, we have applied a margin 
of 27.61 percent to SK Keris and Polypet. Because these are preliminary 
margins, the Department will consider all margins on the record at the 
time of the final

[[Page 62864]]

determination for the purpose of determining the most appropriate 
margin for these companies.

Fair Value Comparisons

    To determine whether sales of PET resin from Indonesia to the 
United States were made at less than fair value (``LTFV''), we compared 
the EP and constructed export price (``CEP'') to the NV, as described 
in the ``Export Price and Constructed Export Price'' and ``Normal 
Value'' sections of this notice, below. In accordance with section 
777A(d)(1)(A)(i) of the Act, we compared POI weighted-average EPs and 
CEPs to NVs. Any specific changes to the EP, CEP, or NV calculations 
are discussed in the October 20, 2004, calculation memorandum for 
Indorama, which is on file in the CRU (``Calculation Memorandum'').

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced and sold by the respondent in the home market during 
the POI that fit the description in the ``Scope of Investigation'' 
section of this notice to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. We compared 
U.S. sales to sales of identical merchandise made in the home market, 
where possible. Where there were no sales of identical merchandise in 
the home market made in the ordinary course of trade to compare to U.S. 
sales, we compared U.S. sales to sales of the most similar foreign like 
product made in the ordinary course of trade.
    We have relied on four criteria to match U.S. sales of subject 
merchandise to comparison-market sales of the foreign like product: (1) 
Intrinsic viscosity; (2) blend; (3) copolymer/homopolymer; and (4) 
additives.

Date of Sale

    In its questionnaire responses, Indorama reported home market sales 
using invoice date as the date of sale. For U.S. sales with selling 
terms of free on board (FOB'') and cost, insurance and freight 
(``CIF''), Indorama reported the invoice date as the date of sale. For 
U.S. sales with selling terms of delivered duties paid (``DDP''), 
Indorama reported the sales contract date as the date of sale, because 
of the time lag between sales contract date (where the quantity and 
price were established) and the invoice date. Based on the description 
of the sales process provided by Indorama, we have used invoice date as 
the date of sale for all sales, with the exception of U.S. DDP sales. 
For U.S. DDP sales, we preliminarily determine that price and quantity 
(i.e., the material terms of sale) are established at the time of the 
sales contract. Therefore, in accordance with 19 CFR 351.401(i), we 
have relied on the sales contract date for U.S. DDP sales.

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, as defined in sections 772(a) and 772(b) of the Act, respectively. 
Section 772(a) of the Act defines EP as the price at which the subject 
merchandise is first sold before the date of importation by the 
producer or exporter outside of the United States to an unaffiliated 
purchaser in the United States or to an unaffiliated purchaser for 
exportation to the United States, as adjusted under subsection 722(c) 
of the Act.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation by or for the account of the producer or 
exporter of such merchandise or by a seller affiliated with the 
producer or exporter, to a purchaser not affiliated with the producer 
or exporter, as adjusted under subsections 772(c) and (d) of the Act.
    We calculated EP and CEP, as appropriate, based on the prices 
charged to the first unaffiliated customer in the United States. We 
classified certain sales as EP sales because they were made outside the 
United States by the exporter or producer to unaffiliated customers in 
the United States prior to the date of importation. We also found that 
the respondent made CEP sales during the POI. These sales are properly 
classified as CEP sales because these sales were made to unaffiliated 
customers after importation into the United States.
    We based EP on the DDP, CIF, or FOB price to unaffiliated 
purchasers in the United States. We identified the starting price, 
where appropriate, by accounting for rebates, where applicable. We made 
deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act. These included, where appropriate, foreign 
inland freight (plant to port), international freight, marine 
insurance, U.S. brokerage and handling, U.S. inland freight from port 
to warehouse, U.S. warehousing expense, U.S. inland freight from 
warehouse to unaffiliated customer. See Calculation Memorandum.
    We based CEP on the DDP price to unaffiliated purchasers in the 
United States. We identified the starting price, by accounting for 
rebates, where applicable. We made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These included, where 
appropriate, foreign inland freight (plant to port), international 
freight, marine insurance, U.S. brokerage and handling, U.S. inland 
freight from port to warehouse, U.S. warehousing expense, U.S. inland 
freight from warehouse to unaffiliated customer. In accordance with 
section 772(d)(1) of the Act, we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (commissions and credit expenses), 
and inventory carrying costs. Where applicable, we made an adjustment 
for profit in accordance with section 772(d)(3) of the Act.

Normal Value

A. Selection of Comparison Market

    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate), that the time of the sales reasonably 
corresponds to the time of the sale used to determine EP or CEP, and 
that there is no particular market situation that prevents a proper 
comparison with the EP or CEP. The statute contemplates that quantities 
(or value) will normally be considered insufficient if they are less 
than five percent of the aggregate quantity (or value) of sales of the 
subject merchandise to the United States. Because Indorama's aggregate 
volume of home market sales of the foreign like product was greater 
than five percent of its aggregate volume of U.S. sales for the subject 
merchandise, we preliminarily determine that the home market was 
viable.
    In deriving NV, we made adjustments as detailed in the 
``Calculation of Normal Value Based on Home Market Prices'' and 
``Calculation of Normal Value Based on Constructed Value'' sections, 
below.

B. Cost of Production Analysis

    As noted above, based on our analysis of an allegation made by the 
petitioner on August 10, 2004, we found that there were reasonable 
grounds to believe or suspect that sales of PET resin in the home 
market were made at prices below the COP. Accordingly, pursuant to 
section 773(b)(2)(A)(i) of the Act, we initiated a company-specific 
sales-below-cost investigation to determine whether sales of PET resin 
were made at prices below the COP.

[[Page 62865]]

1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for general and 
administrative (``G&A'') expenses, interest expenses, and home market 
packing costs.
    We relied on COP information submitted by Indorama in its cost 
questionnaire responses, except for the following adjustments:
    We recalculated the G&A expense rate based upon Indorama's 
unconsolidated income statement. See Cost Analysis Memorandum from 
Trinette Ruffin to Neal Halper, dated October 20, 2004 (``Indorama's 
Cost Analysis Memorandum''). We also recalculated the net financial 
expense rate based upon Indorama's consolidated income statement. See 
Indorama's Cost Analysis Memorandum.
2. Test of Home Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP for Indorama to its home market sales of PET resin, as 
required under section 773(b) of the Act, in order to determine whether 
the sale prices were below the COP. The prices were adjusted for any 
applicable billing adjustments, rebates, movement charges, and indirect 
selling expenses. In determining whether to disregard home market sales 
made at prices less than the COP, we examined whether such sales were 
made (1) within an extended period of time in substantial quantities, 
and (2) at prices which did not permit the recovery of all costs within 
a reasonable period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(1), where less than 20 percent of the 
respondent's sales of a given product are at prices less than the COP, 
we do not disregard any below-cost sales of that product, because we 
determine that in such instances the below-cost sales were not made in 
``substantial quantities.'' Where 20 percent or more of a respondent's 
sales of a given product are at prices less than the COP, we determine 
that the below-cost sales represent ``substantial quantities'' within 
an extended period of time, in accordance with section 773(b)(1)(A) of 
the Act. In such cases, we also determine whether such sales were made 
at prices which would not permit recovery of all costs within a 
reasonable period of time, in accordance with section 773(b)(1)(B) of 
the Act. If so, we disregard the below-cost sales.
    We found that, because less than 20 percent of Indorama's home 
market sales within an extended period of time were made at prices 
below the COP, we are not excluding any sales as the basis for 
determining NV, in accordance with section 773(b)(1) of the Act.

C. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP or CEP. Sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales, we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''),\2\ including selling 
functions,\3\ class of customer (``customer category''), and the level 
of selling expenses for each type of sale.
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    \2\ The marketing process in the United States and home market 
begins with the producer and extends to the sale to the final user 
or customer. The chain of distribution between the two may have many 
or few links, and the respondents' sales occur somewhere along this 
chain. In performing this evaluation, we considered each 
respondent's narrative response to properly determine where in the 
chain of distribution the sale occurs.
    \3\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of these preliminary results, we 
have organized the common selling functions into four major 
categories: sales process and marketing support, freight and 
delivery, inventory and warehousing, and quality assurance/warranty 
services.
---------------------------------------------------------------------------

    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices \4\), we consider the starting prices 
before any adjustments. For CEP sales, we consider only the selling 
expenses reflected in the price after the deduction of expenses and 
profit under section 772(d) of the Act. See Micron Technology, Inc. v. 
United States, 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001).
---------------------------------------------------------------------------

    \4\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A and 
profit for CV, where possible.
---------------------------------------------------------------------------

    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the EP 
or CEP, the Department may compare the U.S. sale to sales at a 
different LOT in the comparison market. In comparing EP or CEP sales at 
a different LOT in the comparison market, where available data make it 
practicable, we make an LOT adjustment under section 773(a)(7)(A) of 
the Act. Finally, for CEP sales only, if an NV LOT is more remote from 
the factory than the CEP LOT and we are unable to make an LOT 
adjustment, the Department shall grant a CEP offset, as provided in 
section 773(a)(7)(B) of the Act. See Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate 
from South Africa, 62 FR 61731 (November 19, 1997).
    We obtained information from Indorama regarding the marketing 
stages involved in making the reported home market and U.S. sales, 
including a description of the selling activities performed by Indorama 
for each channel of distribution. Indorama reported that it sells to 
different types of customers in the home market, and to end users and 
traders to the United States. Indorama reported a single LOT in the 
home market and has not requested an LOT adjustment. We examined the 
information reported by Indorama and found that home market sales to 
all customer categories were identical with respect to sales process, 
freight services, warehouse/inventory maintenance, advertising 
activities, technical service, and warranty service. Accordingly, we 
preliminarily find that Indorama had only one LOT for its home market 
sales.
    Indorama made both EP and CEP sales to the United States during the 
POR. Both the EP and CEP sales were made through the same channel of 
distribution (i.e., sales from the manufacturer directly to the 
customer). The EP and CEP selling activities do not differ from the 
home market selling activities. Therefore, we find that the U.S. LOT is 
similar to the home market LOT and an LOT adjustment or a CEP offset is 
not necessary. See section 773(a)(7)(A) of the Act.

D. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on ex-factory or delivered prices to 
unaffiliated customers. We identified the correct starting price, where 
appropriate, by accounting for billing adjustments and rebates. We made 
adjustments for differences in packing in accordance with sections 
773(a)(6)(A) and 773(a)(6)(B)(i) of the Act. We also made adjustments 
for the following movement expenses, where appropriate, in accordance 
with section 773(a)(6)(B)(ii) of the Act: foreign inland freight (from 
plant to customer) expenses and inland

[[Page 62866]]

insurance expenses. In addition, where appropriate, we made adjustments 
under section 773(a)(6)(C)(iii) of the Act for differences in 
circumstances of sale for imputed credit expenses and imputed inventory 
carrying costs. We also made adjustments, in accordance with 19 CFR 
351.410(e), for indirect selling expenses incurred in the comparison 
market or on U.S. sales where commissions were granted on sales in one 
market but not in the other (the commission offset).

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act based on the exchange rates in effect on the 
dates of the home market sales and U.S. sales, where appropriate, as 
certified by the Federal Reserve.

Verification

    As provided in section 782(i) of the Act, we will verify all 
information to be used in making our final determination.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, we are directing 
U.S. Customs and Border Protection (``CBP'') to suspend liquidation of 
all imports of subject merchandise from Indonesia, except imports of 
subject merchandise produced and exported by Indorama which has a de 
minimis rate, that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will instruct CBP to require a cash deposit or the 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the EP or CEP, as indicated in the chart below. These 
suspension-of-liquidation instructions will remain in effect until 
further notice. The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                               Weighted-average margin
           Exporter/manufacturer                     percentage
------------------------------------------------------------------------
P.T. Indorama Synthetics Tbk..............  0.74 (de minimis)
P.T. Polypet Karyapersada.................  27.61
P.T. SK Keris.............................  27.61
All Others................................  18.65
------------------------------------------------------------------------

All Others

    All companies that we examined have either a de minimis margin or 
rates based on total AFA. Therefore, for purposes of determining the 
all-others rate and pursuant to section 735(c)(5)(B) of the Act, we 
have calculated a simple average of the three margin rates we have 
determined in the investigation.

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination or 45 days after our final determination 
whether these imports are materially injuring, or threaten material 
injury to, the U.S. industry.

Disclosure

    We will disclose the calculations used in our analysis to parties 
in this proceeding in accordance with 19 CFR 351.224(b).

Public Comment

    Case briefs for this investigation must be submitted to the 
Department no later than 50 days after the date of publication of this 
preliminary determination or one week after the issuance of the last 
verification report, whichever is later. Rebuttal briefs must be filed 
five days after the deadline for submission of case briefs. A list of 
authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes.
    Section 774 of the Act provides that the Department will hold a 
public hearing to afford interested parties an opportunity to comment 
on arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. If a request for a hearing 
is made in this investigation, the hearing will tentatively be held two 
days after submission of the rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 
20230. Parties should confirm by telephone the time, date, and place of 
the hearing 48 hours before the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs.
    If this investigation proceeds normally, we will make our final 
determination within 75 days of this preliminary determination.
    This determination is published pursuant to sections 733(f) and 
777(i) of the Act.

    Dated: October 20, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-2900 Filed 10-27-04; 8:45 am]
BILLING CODE 3510-DS-P