[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44099-44105]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15337]
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DEPARTMENT OF COMMERCE
International Trade Administration
A-421-811
Purified Carboxymethylcellulose from the Netherlands; Preliminary
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to a request from petitioner Aqualon Company, a
division of Hercules Incorporated (Aqualon), a U.S. manufacturer of
purified carboxymethylcellulose (CMC), the Department of Commerce (the
Department) is conducting an administrative review of the antidumping
duty order on CMC from the Netherlands. This administrative review
covers imports of subject merchandise produced and exported by Noviant
B.V. and CP Kelco B.V. (collectively, CP Kelco). The period of review
(POR) is December 27, 2004, through June 30, 2006.
We preliminarily determine that sales of subject merchandise by CP
Kelco have been made at less than normal value (NV). If these
preliminary results are adopted in our final results, we will instruct
U.S. Customs and Border Protection (CBP) to assess antidumping duties
on appropriate entries based on the difference between the export price
(EP) or constructed export price (CEP) and NV. Interested parties are
invited to comment on these preliminary results.
EFFECTIVE DATE: August 7, 2007.
FOR FURTHER INFORMATION CONTACT: Stephen Bailey or Angelica Mendoza,
AD/CVD Operations, Office 7, Import Administration, International Trade
Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
0193 or (202) 482-3019, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 11, 2005, the Department published the antidumping duty
order on CMC from the Netherlands. See Notice of Antidumping Duty
Orders: Purified Carboxymethylcellulose from Finland, Mexico, the
Netherlands and
[[Page 44100]]
Sweden, 70 FR 39734 (July 11, 2005) (CMC Order). On July 3, 2006, the
Department published the opportunity to request an administrative
review of, inter alia, CMC from the Netherlands for the period December
27, 2004, through June 30, 2006. See Antidumping or Countervailing Duty
Order, Finding, or Suspended Investigation; Opportunity To Request
Administrative Review, 71 FR 37890 (July 3, 2006).
In accordance with 19 CFR 351.213(b)(1), Aqualon requested that the
Department conduct an administrative review of the antidumping duty
order on CMC from the Netherlands on July 27, 2006. On August 30, 2006,
the Department published in the Federal Register a notice of initiation
of this antidumping duty administrative review covering sales, entries
and/or shipments of CMC for the period December 27, 2004, through June
30, 2006, for CP Kelco and Akzo Nobel Surface Chemistry (Akzo). See
Initiation of Antidumping and Countervailing Duty Administrative
Reviews and Requests for Revocation in Part, 71 FR 51573 (August 30,
2006).
On September 11, 2006, the Department issued its antidumping duty
questionnaire to CP Kelco and Akzo.\1\ CP Kelco submitted its section A
questionnaire response (AQR) on October 16, 2006, and its sections B
and C questionnaire responses on November 21, 2006 (BCQR). On December
4 and 8, 2006, respectively, Aqualon alleged that Akzo and CP Kelco
made home market sales of CMC at prices below the cost of production
during the POR.
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\1\ As noted below, the antidumping duty review for Akzo was
rescinded on March 13, 2007.
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On December 12, 2006, Aqualon submitted comments regarding Akzo's
sections A-C questionnaire responses. On January 8, 2007, the
Department issued its first sections A-C supplemental questionnaire to
Akzo and on January 29, 2007, Akzo submitted its response.
On January 22, 2007, we initiated sales-below-cost investigations
of home market sales made by Akzo and CP Kelco. See the Department's
Memorandum to the File, from Judy Lao, Case Analyst and Nancy Decker,
Senior Accountant, titled Petitioner's Allegation of Sales Below the
Cost of Production for Noviant BV/CP Kelco BV, dated January 22, 2007
(Cost Initiation Memorandum), applicable to both Akzo and CP Kelco. As
a result, on January 22, 2007, the Department requested that both Akzo
and CP Kelco respond to section D of the Department's questionnaire. CP
Kelco submitted its section D response on February 5, 2007, including
its cost reconciliation.
On February 9, 2007, the Department issued its first sections A-C
supplemental questionnaire to CP Kelco and on March 12, 2007, CP Kelco
submitted its response (SQR). On February 12, 2007, the Department
issued a second sections A-C supplemental questionnaire to CP Kelco and
on February 26, 2007, CP Kelco submitted its response.
On February 15, 2007, Aqualon submitted a letter to the Department
requesting a rescission of the administrative review with respect to
Akzo. On March 13, 2007, the Department rescinded the administrative
review with respect to Akzo.\2\ See Purified Carboxymethylcellulose
from the Netherlands: Rescission of Antidumping Duty Administrative
Review in Part, 72 FR 11325 (March 13, 2007).
On February 27, 2007, the Department issued its third-country
selection memorandum in which Taiwan was chosen as the appropriate
third country for CP Kelco. See the Department's Memorandum to Office 7
Director Richard O. Weible, from Judy Lao and Stephen Bailey, Case
Analysts, titled Selection of Third Country Market for Noviant B.V. and
CP Kelco B.V. (collectively, CP Kelco B.V.), dated February 27, 2007
(Third Country Memorandum). Also on February 27, 2007, Aqualon
submitted comments on CP Kelco's section questionnaire response. On
March 27, 2007, Aqualon submitted comments on CP Kelco's SQR.
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\2\ The Department notes that while the rescission notice lists
both Akzo Nobel Surface Chemistry B.V. and Akzo Nobel Functional
Chemicals B.V., the Department has not made a determination on the
successor to Akzo Nobel Surface Chemistry B.V.
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On April 5, 2007, the Department extended the deadline for the
preliminary results by 120 days from April 2, 2007, until July 31,
2007. See Purified Carboxymethylcellulose from Finland, Sweden, the
Netherlands, and Mexico: Extension of Time Limits for Preliminary
Determinations of Antidumping Duty Administrative Reviews, 72 FR 16767
(April 5, 2007).
On April 6, 2007, CP Kelco submitted certain documents that were
inadvertently omitted from its March 12, 2007, SQR. Additionally on
April 6, 2007, the Department issued to CP Kelco a third sections A C
supplemental questionnaire, and on April 27, 2007, CP Kelco submitted
its response. On April 19, 2007, the Department issued to CP Kelco its
first section D supplemental questionnaire, and on May 8, 2007, CP
Kelco submitted its response. On June 8, 2007, the Department issued to
CP Kelco a fourth sections A C supplemental questionnaire, and on June
18, 2007, CP Kelco submitted its response.
On July 10, 2007, CP Kelco submitted its sales reconciliation. On
July 12, 2007, the Department requested that CP Kelco provide a revised
calculation for parent company J.M. Huber's financial expense ratio
that deducts packing and freight-out expenses from J.M. Huber's cost of
goods sold denominator. CP Kelco submitted this information on July 13,
2007. See Memorandum to the File, from Joe Welton, Accountant, titled
Phone Call with Respondent, dated July 13, 2007; see also Memorandum to
Neal Halper, Director Office of Accounting, from Gina Lee, Analyst,
titled Cost of Production and Constructed Value Calculation Adjustments
for the Preliminary Results - CP Kelco BV, dated July 31, 2007 (Cost
Memorandum) for a discussion of this issue.
On July 26, 2007, the Department issued a supplemental
questionnaire to CP Kelco requesting the actual transaction-specific
bank fees charged by CP Kelco's factoring agent, both for U.S. and
comparison market sales. We intend to consider this information in our
final results.
Period of Review
The POR is December 27, 2004, through June 30, 2006.
Scope of the Order
The merchandise covered by this order is all purified
carboxymethylcellulose (CMC), sometimes also referred to as purified
sodium CMC, polyanionic cellulose, or cellulose gum, which is a white
to off-white, non-toxic, odorless, biodegradable powder, comprising
sodium CMC that has been refined and purified to a minimum assay of 90
percent. Purified CMC does not include unpurified or crude CMC, CMC
Fluidized Polymer Suspensions, and CMC that is cross-linked through
heat treatment. Purified CMC is CMC that has undergone one or more
purification operations, which, at a minimum, reduce the remaining salt
and other by-product portion of the product to less than ten percent.
The merchandise subject to this order is currently classified in the
Harmonized Tariff Schedule of the United States at subheading
3912.31.00. This tariff classification is provided for convenience and
customs purposes; however, the written description of the scope of this
order is dispositive.
[[Page 44101]]
Successor-In-Interest
In February 2005, the Noviant group of companies (including
Noviant's Netherlands-based operation of Noviant B.V.) were merged with
the CP Kelco group of companies, with both corporate groups previously
operating as subsidiaries of the J.M. Huber Corporation (J.M. Huber).
Following the merger, the operating title of the two entities became
unified under the CP Kelco corporate title. Throughout 2005 and 2006,
each of the European Noviant production and export companies' names
were changed from ``Noviant'' to ``CP Kelco'' (i.e., Noviant B.V.
became CP Kelco B.V. in the Netherlands). Because entries have been
made under the name of the new company during the POR, the Department
must make a successorship determination in order to apply the
appropriate and necessary company-specific cash deposit and assessment
rates.
In December 2005, the shares of Noviant B.V.'s U.S. sales
affiliate, Noviant Inc., were sold in an agreement with the CP Kelco
entity's holding company, merging the U.S.-based operations of Noviant
and CP Kelco under the CP Kelco corporate title. The completed merger
of Noviant's U.S.-based operations with those of CP Kelco became
effective January 1, 2006, and the company has since operated as CP
Kelco U.S., Inc. (CP Kelco U.S.). For a further discussion of this
merger, see Memorandum to the File, from Stephen Bailey, Analyst,
titled Analysis of Data Submitted by Noviant B.V. and CP Kelco B.V.
(collectively, CP Kelco) in the Preliminary Results of the Antidumping
Duty Administrative Review of Purified Carboxymethylcellulose (CMC)
from the Netherlands, dated July 31, 2007, (Sales Analysis Memorandum),
on file in the Department's Central Records Unit (CRU) located in Room
B-099 of the main Department of Commerce Building, 14th Street and
Constitution Avenue, NW, Washington, DC. CP Kelco U.S. is a subsidiary
of CP Kelco, respondent in the current administrative review and
subsidiary of J.M. Huber.
In determining whether CP Kelco B.V. (and, therefore, CP Kelco
U.S.) is the successor to Noviant B.V. and its U.S. affiliate Noviant
Inc. for purposes of applying the antidumping duty law, the Department
examines a number of factors including, but not limited to, changes in:
(1) management, (2) production facilities, (3) suppliers, and (4)
customer base. See, e.g., Brass Sheet and Strip from Canada: Final
Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13,
1992) (Brass from Canada); Steel Wire Strand for Prestressed Concrete
from Japan; Final Results of Changed Circumstances Antidumping Duty
Administrative Review, 55 FR 28796 (July 13, 1990); and Industrial
Phosphoric Acid From Israel; Final Results of Antidumping Duty Changed
Circumstances Review, 59 FR 6944 (February 14, 1994). While examining
these factors alone will not necessarily provide a dispositive
indication of succession, the Department will generally consider one
company to have succeeded another if that company's operations are
essentially inclusive of the predecessor's operations. See Brass from
Canada at 20461. Thus, if the evidence demonstrates, with respect to
the production and sale of the subject merchandise, that the new
company is essentially the same business operation as the former
company, the Department will assign the new company the cash deposit
rate of its predecessor.
Specifically, the evidence on the record, particularly CP Kelco's
response to questions 3-9 of its SQR specifically addressing its
claimed successorship, demonstrates that, with respect to the
production and sale of the subject merchandise, CP Kelco B.V. is the
successor to Noviant B.V. We reviewed CP Kelco's organizational
structure before and after the merger and confirmed that there were
only minimal changes to management and corporate structure. For
instance, with respect to direct U.S. sales, sales are still made
through the Unified Dental Team within Huber Engineered Materials
(HEM). With respect to sales through Noviant Inc.'s successor, PC Kelco
U.S., while customer care and logistics functions were transferred from
Atlanta to Chicago, Illinois, and San Diego, California, those former
Noviant employees did not relocate; a single new customer care
representative was hired in Chicago and the existing CP Kelco U.S.
logistics staff in San Diego took over logistics functions relating to
CMC.
From a management perspective, consistent with CP Kelco's
responses, the merger of Noviant BV with CP Kelco BV is, effectively, a
name change, the primary purpose of which was to broaden the companies'
marketing scope under the unified ``CP Kelco'' name. Consequently, our
analysis of corporate management changes as a result of the merger
indicates that neither the former Noviant BV nor CP Kelco BV (as well
as the U.S. affiliates, Noviant Inc. and CP Kelco U.S.) experienced
significant shifts in senior executive management. While new management
positions were created, we found that Noviant BV's senior management
still existed within CP Kelco BV following the merger. The same holds
true for senior management of the U.S.-based entities, Noviant Inc. and
CP Kelco U.S., where we found that one senior manager left the company
following the merger. These changes, standing alone, are not
sufficiently significant to support a determination that CP Kelco's
management and organizational structure, as well as its production and
sales of the subject merchandise, are not essentially the same as those
of Noviant B.V.
Record evidence shows that CP Kelco B.V. uses the same CMC
production facilities, and maintains the same customer and supplier
relationships as Noviant B.V. See pages 8 and 12 of the SQR. For CP
Kelco's sales to Taiwan, there were no changes in selling activities
before and after the merger, as CP Kelco Singapore Pte. (CP Kelco's
Asian sales office) performs the same selling functions as its
predecessor Noviant Pte. See SQR at pages 12 and 15. Therefore, we
preliminarily find that CP Kelco B.V. is the successor to Noviant B.V.
for purposes of this proceeding, and for the application of the
antidumping law.
Fair Value Comparisons
To determine whether sales of CMC from the Netherlands to the
United States were made at less than fair value, 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, below. In
accordance with section 777A(d)(2) of the Tariff Act of 1930, as
amended (the Act), we compared the EPs and CEPs of individual U.S.
transactions to monthly weighted-average NVs.
Product Comparisons
In accordance with section 771(16) of the Act, we considered sales
of CMC covered by the description in the ``Scope of the Review''
section of this notice, supra, which were sold in the appropriate
third-country market, Taiwan, during the POR to be the foreign like
product for the purpose of determining appropriate product comparisons
to CMC sold in the United States. For our discussion of market
viability and selection of comparison market, see the ``Normal Value''
section of this notice, infra. We have relied on the following five
criteria to match U.S. sales of the subject merchandise to sales in
Taiwan of the foreign like product: grade, viscosity, degree of
substitution, particle size, and solution characteristic.
Where there were no sales of identical merchandise in the third-
country market to compare to U.S. sales, we
[[Page 44102]]
compared U.S. sales to the next most similar foreign like product on
the basis of the characteristics and reporting instructions listed in
the Department's September 11, 2006, antidumping duty questionnaire.
Export Price
In accordance with section 772 of the Act, we calculate either an
EP or a CEP, depending on the nature of each sale. Section 772(a) of
the Act defines EP as the price at which the subject merchandise is
first sold by the foreign exporter or producer before the date of
importation to an unaffiliated purchaser in the United States, or to an
unaffiliated purchaser for exportation to the United States. Section
772(b) of the Act defines CEP as the price at which the subject
merchandise is first sold (or agreed to be 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. CP Kelco classified two types of sales to the
United States: 1) sales to direct end user customers (EP sales); and 2)
sales via its U.S. affiliates, CP Kelco U.S. and HEM, to end-users and
distributors (CEP sales). For purposes of these preliminary results, we
have accepted CP Kelco's classifications and identified two additional
classifications.
We calculated EP based on prices charged to the first unaffiliated
U.S. customer. We used the sale invoice date as the date of sale.\3\ We
based EP on the packed freight on board (FOB) prices to the first
unaffiliated purchasers outside the Netherlands. We made deductions for
movement expenses in accordance with section 772(c)(2)(A) of the Act,
including foreign inland freight, and foreign brokerage and handling.
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\3\ See the Department's Sales Analysis Memorandum for a further
discussion of this issue.
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We calculated CEP based on prices charged to the first unaffiliated
U.S. customer after importation. We used the sale invoice date as the
date of sale. We based CEP on the gross unit price from CP Kelco U.S.
and HEM to their unaffiliated U.S. customers, making adjustments where
necessary for billing adjustments, pursuant to section 772(c)(1) of the
Act. Where applicable, the Department made deductions for movement
expenses (foreign inland freight, international freight, U.S. movement,
U.S. customs duty and brokerage, marine insurance and post-sale
warehousing), while adding freight revenue, in accordance with section
772(c)(2) of the Act and section 351.401(e) of the Department's
regulations. In accordance with sections 772(d)(1) and (2) of the Act,
we also deducted, where applicable, U.S. direct selling expenses,
including credit expenses, U.S. indirect selling expenses, and U.S.
inventory carrying costs incurred in the United States and the
Netherlands associated with economic activities in the United States.
We also deducted CEP profit in accordance with section 772(d)(3) of the
Act.
Normal Value
A. Home Market Viability and Comparison Market Selection
In order to determine whether there is a sufficient volume of sales
in the home market to serve as a viable basis for calculating NV (i.e.,
whether the aggregate volume of home market sales of the foreign like
product is equal to or greater than five percent of the aggregate
volume of U.S. sales), we compared respondent's volume of home market
sales of the foreign like product to the volume of U.S. sales of the
subject merchandise, in accordance with section 773(a)(1)(C) of the
Act.
Section 773(a)(1)(C)(ii) of the Act provides that the Department
may determine that home market sales are inappropriate as a basis for
determining NV if the administering authority determines that the
aggregate quantity of the foreign like product sold in the exporting
country is insufficient to permit a proper comparison with the sales of
the subject merchandise to the United States. When sales in the home
market are not viable, section 773(a)(1)(B)(ii) of the Act provides
that sales to a particular third country market may be utilized if (I)
the prices in such market are representative; (II) the aggregate
quantity of the foreign like product sold by the producer or exporter
in that third country market is five percent or more of the aggregate
quantity of the subject merchandise sold in or to the United States;
and (III) the Department does not determine that a particular market
situation in the third country market prevents a proper comparison with
the U.S. price.
CP Kelco reported, and we determined, that CP Kelco's aggregate
volume of home market sales of the foreign like product was not greater
than five percent of the aggregate volume of U.S. sales of subject
merchandise. See AQR at exhibit A-1. Therefore, because CP Kelco's
sales in the home market did not provide a viable basis for calculating
NV, we relied on sales to a third country as the basis for NV in
accordance with section 773(a)(1)(B)(ii) of the Act. The following is a
description of the Department's procedure in selecting the third
country sales used to calculate NV for sales of the foreign like
product made by CP Kelco.
In its section A response, CP Kelco provided information regarding
its sales to Taiwan, Germany, and Denmark. Upon review of the
information provided by CP Kelco, in accordance with section
773(a)(1)(c) of the Act, the Department selected Taiwan as the
appropriate comparison market. The Department found that exports of the
foreign like product to Taiwan were similar to those exported to the
United States, and that exports to Taiwan were substantially larger
than exports either to Germany or to Denmark. In addition, the
Department did not find any evidence on the record suggesting that
Taiwan would be an inappropriate third country market to select as a
comparison market. Accordingly, on February 27, 2007, the Department
selected Taiwan as the appropriate third country for comparison market
purposes. See Third Country Memorandum.\4\
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\4\ CP Kelco reported sales to Taiwan in its BCQR.
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We also used constructed value (CV) as the basis for calculating
NV, in accordance with section 773(a)(4) of the Act, for those sales
that did not have identical or similar product matches.
B. Cost of Production Analysis
On January 22, 2007, after a request from Aqualon, the Department
initiated a sales-below-cost investigation of CP Kelco because Aqualon
provided a reasonable basis to believe or suspect that CP Kelco is
selling CMC in Taiwan at prices below its cost of production (COP).
Based on the Department's findings, there is a reasonable basis to
believe or suspect that CP Kelco is selling CMC in Taiwan at prices
below COP. Therefore, pursuant to section 773(b)(1) of the Act, we
examined whether CP Kelco's sales in Taiwan were made at prices below
the COP. See Cost Initiation Memorandum.
C. Calculation of Cost of Production
In accordance with section 773(b)(3) of the Act, we calculated the
weighted-average COP for each model based on the sum of CP Kelco's
material and fabrication costs for the foreign like product, plus
amounts for selling expenses, general and administrative (G&A)
expenses, financial expenses and packing costs.
We relied on the COP information provided by CP Kelco except for
the following adjustment. We added depreciation expense, and deducted
packing and freight costs incurred by CP
[[Page 44103]]
Kelco's parent company J.M. Huber, from the cost of goods sold
denominator to generate a revised cost of goods sold used in CP Kelco's
financial expense ratio calculation. See Cost Memorandum.
D. Test of Comparison Market Prices
We compared CP Kelco's weighted-average COP figures to that
company's Taiwan sales prices of the foreign like product, as required
under section 773(b) of the Act, to determine whether sales to Taiwan
had been made at prices below COP. On a product-specific basis, we
compared COP to Taiwan prices, less any applicable movement charges,
billing adjustments, taxes, and discounts and rebates.
In determining whether to disregard Taiwan sales made at prices
below the COP, we examined, in accordance with sections 773(b)(1)(A)
and (B) of the Act, whether such sales were made in substantial
quantities within an extended period of time, and whether such sales
were made at prices which permitted the recovery of all costs within a
reasonable period of time in the normal course of trade. Pursuant to
section 773(b)(2)(C) of the Act, where less than 20 percent of CP
Kelco's Taiwan sales of a given model were made at prices below the
COP, we did not disregard any below-cost sales of that model because we
determined that the below-cost sales were not made within an extended
period of time in ``substantial quantities.'' Where 20 percent or more
of CP Kelco's Taiwan sales of a given model were at prices less than
COP, we disregarded the below-cost sales because: (1) they were made
within an extended period of time in ``substantial quantities,'' in
accordance with sections 773(b)(2)(B) and (C) of the Act, and (2) based
on our comparison of prices to the weighted-average COPs for the POR,
they were at prices which would not permit the recovery of all costs
within a reasonable period of time, as described in section
773(b)(2)(D) of the Act.
E. Results of Cost Test
Our sales below cost test for CP Kelco revealed that for Taiwan
sales of certain models, less than 20 percent of the sales of those
models were made at prices below the COP. We therefore retained all
such sales in our analysis and used them as the basis for determining
NV. Our cost test also indicated that for certain models, more than 20
percent of Taiwan sales of those models were sold at prices below COP
within an extended period of time and were at prices which would not
permit the recovery of all costs within a reasonable period of time.
Thus, in accordance with section 773(b)(1) of the Act, we excluded
these below-cost sales from our analysis and used the remaining above-
cost sales as the basis for determining NV.
F. Price-to-Price Comparisons
We used the sale invoice date as the date of sale.\5\ We calculated
NV based on prices to unaffiliated customers and matched U.S. sales to
NV. We made deductions, where appropriate, for foreign inland freight
and international freight pursuant to section 773(a)(6)(B) of the Act.
In addition, we made adjustments for differences in cost attributable
to differences in physical characteristics of the merchandise, pursuant
to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, as well as
for differences in circumstances of sale (COS) as appropriate, in
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR
351.410. Finally, we deducted third country packing costs and added
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of
the Act.
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\5\ See the Department's Sales Analysis Memorandum for a further
discussion of this issue.
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G. Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Act, we based NV on CV
if we were unable to find a contemporaneous comparison market match for
the U.S. sale. We calculated CV based on the cost of materials and
fabrication employed in producing the subject merchandise, selling,
general and administrative (SG&A) expenses, financial expense, and
profit including the adjustment as described in the COP section above.
In accordance with section 773(e)(2)(A) of the Act, we based SG&A
expenses, interest, and profit on the amounts CP Kelco incurred and
realized in connection with the production and sale of the foreign like
product in the ordinary course of trade for consumption in Taiwan. For
selling expenses, we used weighted-average Taiwan selling expenses.
Where appropriate, we made COS adjustments to CV in accordance with
section 773(a)(8) of the Act and 19 CFR 351.410.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP transaction. The LOT in
the comparison market is the LOT of the starting-price sales in the
comparison market or, when NV is based on CV, the LOT of the sales from
which we derive SG&A expenses and profit. With respect to U.S. price
for EP transactions, the LOT is also that of the starting-price sale,
which is usually from the exporter to the importer. For CEP, the LOT is
that of the constructed sale from the exporter to the importer.
To determine whether comparison market sales are at a different LOT
from U.S. sales, we examined stages in the marketing process and
selling functions along the chain of distribution between the producer
and the unaffiliated customer. If the comparison market sales are at
different LOTs, and the difference affects 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, the Department makes an LOT adjustment in
accordance with section 773(a)(7)(A) of the Act. For CEP sales, we
examine stages in the marketing process and selling functions along the
chain of distribution between the producer and the customer. We analyze
whether different selling activities are performed, and whether any
price differences (other than those for which other allowances are made
under the Act) are shown to be wholly or partly due to a difference in
LOT between the CEP and NV. Under section 773(a)(7)(A) of the Act, we
make an upward or downward adjustment to NV for LOT if the difference
in LOT involves the performance of different selling activities and is
demonstrated to affect price comparability, based on a pattern of
consistent price differences between sales at different LOTs in the
country in which NV is determined. Finally, if the NV LOT is at a more
advanced stage of distribution than the LOT of the CEP, but the data
available do not provide an appropriate basis to determine an LOT
adjustment, we reduce NV by the amount of indirect selling expenses
incurred in the foreign comparison market on sales of the foreign like
product, but by no more than the amount of the indirect selling
expenses incurred for CEP sales. See section 773(a)(7)(B) of the Act
(the CEP offset provision).
In analyzing differences in selling functions, we determine whether
the LOTs identified by the respondent are meaningful. See Antidumping
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19,
1997). If the claimed LOTs are the same, we expect that the functions
and activities of the seller should be similar. Conversely, if a party
claims that LOTs are different for different groups of sales, the
functions and activities of the seller should be dissimilar. See
Porcelain-on-
[[Page 44104]]
Steel Cookware from Mexico: Final Results of Administrative Review, 65
FR 30068 (May 10, 2000) and Accompanying Issues and Decision Memorandum
at Comment 6. In the present review, CP Kelco claimed an LOT
adjustment. See CP Kelco's BCQR at page B-25. In order to determine
whether the comparison market 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''),\6\
including selling functions, class of customer (customer category), and
the level of selling expenses for each type of sale.
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\6\ The marketing process in the United States and third country
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 respondent's sales occur somewhere along
this chain. In performing this evaluation, we considered CP Kelco's
narrative response to properly determine where in the chain of
distribution the sale occurs.
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CP Kelco reported two LOTs in the third country market, Taiwan,
with two channels of distribution to two classes of customers: (1)
direct sales from the plant to end users (LOT 1 and Channel 1), and (2)
direct sales from the plant to distributors (LOT 4 and Channel 2).
Based on our review of evidence on the record, we find that third
country market sales to both customer categories and through both
channels of distribution were substantially similar with respect to
selling functions and stages of marketing. CP Kelco performed the same
selling functions for sales in both third country market channels of
distribution, including sales forecasting, order input/processing,
advertising, warranty service, freight and delivery services, etc. See
CP Kelco's AQR at exhibit A-5; CP Kelco's SQR at exhibit A-34.
Additionally, as explained on pages A-18 and A-19 of CP Kelco's AQR,
for sales to end users and through distributors, CP Kelco Singapore Pte
takes orders directly from the customer, and enters the order in the
Oracle 11i ERP (Oracle) system for production (or from stock for sales
through distributors). Accordingly, we preliminarily find that CP Kelco
had only one LOT for its third country market sales.
CP Kelco reported one EP LOT and one CEP LOT each with its own
separate channel of distribution in the United States, and with two
classes of customers for CEP sales: (1) direct sales to end users of
merchandise (EP sales of LOT 1 and Channel 5), and (2) sales through
U.S. affiliates (CEP sales) to end users and distributors of
merchandise (LOT 4 with Channel 1 to end users and Channel 2 to
distributors). In reviewing CP Kelco's questionnaire responses, we
preliminarily find that CP Kelco has a total of four channels of
distribution for its U.S. sales: (1) direct sales to end users of
merchandise produced to order, (2) direct sales to end users of
merchandise sold from inventory, (3) sales through U.S. affiliates (CP
Kelco U.S. and HEM) to end users and distributors of merchandise
produced to order, and (4) sales through U.S. affiliates (CP Kelco U.S.
and HEM) from warehouse stock maintained by each company to end users
and distributors of merchandise. Therefore, we preliminarily find that
there are two channels of distribution for EP sales, and two channels
of distribution for CEP sales. See CP Kelco's AQR at pages A-19-A-24.
We reviewed the selling functions and services performed by CP
Kelco in the U.S. market for EP sales, as described by CP Kelco in its
questionnaire responses. We find that the selling functions and
services performed by CP Kelco on direct sales for both U.S. channels
of distribution relating to the EP LOT (i.e., sales of merchandise
produced to order to unaffiliated end users and sales of merchandise
from stock to unaffiliated end users) are similar. In particular, for
sales produced to order and pulled from stock, CP Kelco's customer care
personnel process all orders, which are entered into the Oracle system.
Additionally, sales invoices are issued by CP Kelco's plant directly to
the customer, and CP Kelco's logistics department arranges for freight
and delivery to CP Kelco's unaffiliated U.S. customers. Other services
provided within both channels of CP Kelco' EP sales include: sales
forecasting, procurement/sourcing services, order/input processing,
etc. See CP Kelco's AQR at pages A-23-A-24. Accordingly, because these
selling functions are substantially similar for these two channels of
distribution, we preliminarily determine that there is one EP LOT in
the U.S. market.
For CEP sales, we consider only the selling activities reflected in
the price after the deduction of expenses and CEP profit under section
772(d) of the Act. See Micron Technology Inc. v. United States, 243
F.3d 1301, 1314-1315 (Fed. Cir. 2001). We reviewed the selling
functions and services performed by CP Kelco on CEP sales for both
channels of distribution relating to the CEP LOT, as described by CP
Kelco in its questionnaire responses, after these deductions. We have
determined that the selling functions performed by CP Kelco on all CEP
sales are similar because CP Kelco provides almost no selling functions
to either U.S. affiliate in support of either channel of distribution.
CP Kelco reported that the only services it provided for the CEP sales
were packaging, order input/processing services, and very limited
freight and delivery and sales/marketing support services. See CP
Kelco's SQR at exhibit A-34. Accordingly, because the selling functions
provided by CP Kelco on sales to affiliates in the United States are
substantially similar, we preliminarily determine that there is one CEP
LOT in the U.S. market.
We then examined the selling functions performed by CP Kelco on its
EP sales in comparison with the selling functions performed on CEP
sales (after deductions). We found that CP Kelco performs an additional
layer of selling functions on its direct sales to unaffiliated U.S.
customers which are not performed on its sales to affiliates (e.g.,
sales forecasting, strategic/economic planning, engineering services,
advertising, sales promotion, inventory maintenance, market research,
after-sales support services, technical assistance, etc.). See CP
Kelco's SQR at exhibit A-34. Because these additional selling functions
are significant, we find that CP Kelco's direct sales to unaffiliated
U.S. customers (EP sales) are at a different LOT than its CEP sales.
Next, we examined the third country market and EP sales. CP Kelco's
third country market and EP sales were both made to end users and
distributors. In both cases, the selling functions performed by CP
Kelco were almost identical for both markets. Other than distributor
training, which was only performed for third country sales made through
distributors, and re-packing services, which were mainly provided on
U.S. sales, in both markets CP Kelco provided the following services:
sales forecasting, strategic and economic planning, sales promotion,
market research, procurement/sourcing services, order/input processing,
technical assistance, after-sales services, etc. See CP Kelco's SQR at
exhibit A-34. Because the selling functions and channels of
distribution are substantially similar, we preliminarily determine that
the third country market LOT is the same as the EP LOT. It was,
therefore, unnecessary to make an LOT adjustment for comparison of
third country market and EP prices.
According to section 773(a)(7)(B) of the Act, a CEP offset is
appropriate when the LOT in the home market or third country market is
at a more advanced stage than the LOT of the CEP sales and there is no
basis for
[[Page 44105]]
determining whether the difference in LOTs between NV and CEP effects
price comparability. CP Kelco reported that it provided minimal selling
functions and services for the CEP LOT and that, therefore, the third
country market LOT is more advanced than the CEP LOT. Based on our
analysis of the channels of distribution and selling functions
performed by CP Kelco for sales in the third country market and CEP
sales in the U.S. market (i.e., sales support and activities provided
by CP Kelco on sales to its U.S. affiliates), we preliminarily find
that the third country market LOT is at a more advanced stage of
distribution when compared to CEP sales because CP Kelco provides many
selling functions in the third country market at a higher level of
service (i.e., sales forecasting, strategic/economic planning, sales
promotion, inventory maintenance, direct sales personnel, market
research, technical assistance, after-sales service, etc.) as compared
to selling functions performed for its CEP sales (i.e., CP Kelco
reported that the only services it provided for the CEP sales were
packaging, order input/processing services, and very limited freight
and delivery and sales/marketing support services). See CP Kelco's SQR
at exhibit A-34. Thus, we find that CP Kelco's third country market
sales are at a more advanced LOT than its CEP sales. There was only one
LOT in the third country market, no data available to determine the
existence of a pattern of price differences, and we do not have any
other information that provides an appropriate basis for determining a
LOT adjustment; therefore, we applied a CEP offset to NV for CEP
comparisons.
To calculate the CEP offset, we deducted the third country market
indirect selling expenses from NV for third country market sales that
were compared to U.S. CEP sales. As such, we limited the third country
market indirect selling expense deduction by the amount of the indirect
selling expenses deducted in calculating the CEP as required under
section 772(d)(1)(D) of the Act.
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 U.S. sales, as certified by the Federal Reserve Bank.
Preliminary Results of Review
As a result of our review, we preliminarily determine the weighted-
average dumping margin for the period December 27, 2004, through June
30, 2006, to be as follows:
------------------------------------------------------------------------
Manufacturer / Exporter Margin (percent)
------------------------------------------------------------------------
Noviant B.V. and CP Kelco B.V....................... 24.50
------------------------------------------------------------------------
The Department will disclose calculations performed in connection
with these preliminary results of review within five days of the date
of publication of this notice in accordance with 19 CFR 351.224(b).
Interested parties may submit case briefs and/or written comments no
later than 30 days after the date of publication of these preliminary
results of review. See 19 CFR 351.309(c)(ii). Rebuttal briefs and
rebuttals to written comments, limited to issues raised in the case
briefs and comments, may be filed no later than five days after the
time limit for filing case briefs. See 19 CFR 351.309(d). Parties who
submit argument in these proceedings 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. See 19 CFR 351.309(c)(2). An
interested party may request a hearing within 30 days after the
publication of the preliminary results. See 19 CFR 351.310(c). Any
hearing, if requested, will be held two days after the scheduled date
for submission of rebuttal briefs. See 19 CFR 351.310(d). The
Department will issue the final results of these preliminary results,
including the results of our analysis of the issues raised in any such
written comments or at a hearing, within 120 days of publication of
these preliminary results, pursuant to section 751(a)(3)(A) of the Act.
Assessment Rates
Upon completion of this review the Department shall determine, and
CBP shall assess, antidumping duties on all appropriate entries.
Pursuant to 19 CFR 351.212(b)(1), the Department calculates an
assessment rate for each importer of the subject merchandise covered by
the review. The Department intends to issue assessment instructions to
CBP 15 days after the date of publication of the final results of
review.
The Department clarified its ``automatic assessment'' regulation on
May 6, 2003. See Antidumping and Countervailing Duty Proceedings:
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This
clarification will apply to entries of subject merchandise during the
POR produced by CP Kelco and for which CP Kelco did not know another
company would export its merchandise to the United States. In such
instances, we will instruct CBP to liquidate unreviewed entries at the
all-others rate if there is no rate for the intermediate company(ies)
involved in the transaction.
Cash Deposit Requirements
The following cash 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 of the
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) the cash deposit rate for the reviewed
company will be the rate listed in the final results of review; (2) for
previously investigated companies not listed above, the cash deposit
rate will continue to be the company-specific rate published for the
most recent period; (3) if the exporter is not a firm covered in this
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 period for the manufacturer of the merchandise; and
(4) the cash deposit rate for all other manufacturers or exporters will
continue to be the ``all others'' rate of 14.57 percent, which is the
``all others'' rate established in the LTFV investigation. See CMC
Order. These deposit requirements, when imposed, shall remain in effect
until further notice.
Notification to Importers
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) 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.
We are issuing and publishing this notice in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: July 31, 2007.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
[FR Doc. E7-15337 Filed 8-6-07; 8:45 am]
BILLING CODE 3510-DS-S