[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44106-44112]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-15343]



[[Page 44106]]

-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

(A-405-803)


Purified Carboxymethylcellulose from Finland; Notice of 
Preliminary Determination of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from Aqualon Company, a division of 
Hercules Inc., (Petitioner) and respondents Noviant OY, CP Kelco OY; 
Noviant Inc., and CP Kelco U.S. Inc. (collectively, CP Kelco), the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on purified carboxymethylcellulose 
(CMC) from Finland. The review covers exports of the subject 
merchandise to the United States produced by CP Kelco. The period of 
review (POR) is December 27, 2004, through June 30, 2006.
    We preliminarily find that CP Kelco made sales at less than normal 
value during the POR. If these preliminary results are adopted in our 
final results of this review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties based on differences 
between the export price (EP) or constructed export price (CEP) and 
normal value (NV).

EFFECTIVE DATE: August 7, 2007.

FOR FURTHER INFORMATION CONTACT: Tyler Weinhold or Robert James, 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-
1121 or (202) 482-0649, respectively.

SUPPLEMENTARY INFORMATION:

Background

    The Department published the antidumping duty order on CMC from 
Finland on
    July 11, 2005. See Notice of Antidumping Duty Orders: Purified 
Carboxymethylcellulose from Finland, Mexico, the Netherlands, and 
Sweden, 70 FR 39734 (July 11, 2005). On July 3, 2006, the Department 
published the notice of opportunity to request an administrative review 
of CMC from Finland 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).
    On July 26, 2006, petitioners requested a review of all producers 
of CMC, including Noviant OY for the period December 27, 2004 through 
June 30, 2006 (the POR). CP Kelco requested an administrative review of 
sales by CP Kelco and various affiliates for the same period. On July 
27, 2006, Petitioner modified its request to include producer CP Kelco 
OY as well as producer Noviant OY. On August 30, 2006, the Department 
published in the Federal Register a notice of initiation of this 
antidumping duty administrative review. 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 standard 
antidumping duty questionnaire to CP Kelco. CP Kelco submitted its 
response to section A of the Department's antidumping duty 
questionnaire on October 17, 2006 (CP Kelco's October 17, 2006 section 
A questionnaire response). CP Kelco submitted its response to sections 
B and C of the Department's questionnaire on November 21, 2006 (CP 
Kelco's November 21, 2006 sections B and C response).
    On December 8, 2006, Petitioner alleged that during the POR, CP 
Kelco made sales of foreign like product at prices below the cost of 
production in the home market. On February 5, 2007, the Department 
initiated an investigation to determine whether CP Kelco's sales of CMC 
were made at prices below CP Kelco's cost of production. See Memorandum 
from Tyler Weinhold to Richard Weible, Director, Office 7, AD/CVD 
Enforcement, Regarding Petitioner's Allegation of Sales Below the Cost 
of Production for Noviant CMC OY and CP Kelco OY, dated February 5, 
2007. The preliminary results of this investigation are discussed in 
the ``Normal Value'' section of this notice, below. On February 6, 
2007, the Department sent a letter to CP Kelco requesting that the 
company respond to section D of the Department's antidumping 
questionnaire (cost of production). CP Kelco submitted its section D 
response on February 27, 2007.
    On February 23, 2007, the Department issued a supplemental 
questionnaire for sections A, B, and C, to which CP Kelco responded on 
April 5, 2007 (CP Kelco's April 5, 2007 supplemental questionnaire 
response). On April 3, 2007, the Department issued a supplemental 
questionnaire for sections A, B, and C, to which CP Kelco responded on 
May 15, 2007 (CP Kelco's May 15, 2007 supplemental questionnaire 
response). On April 6, 2007, the Department issued a supplemental 
questionnaire for section D, to which CP Kelco responded on April 30, 
2007.
    Because it was not practicable to complete this review within the 
normal time frame, on April 5, 2007, the Department published in the 
Federal Register a notice of the extension for the preliminary results 
of this review. 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). This extension established the deadline 
for these preliminary results as July 31, 2007.
    From April 23 through 25, 2007, the Department conducted 
verification of U.S. sales made through CP Kelco U.S. Inc. and Noviant 
U.S., Inc. (collectively CP Kelco U.S.). See the Verification section, 
below. From May 14 through May 18, 2007, the Department conducted a 
verification of CP Kelco's EP and home market (HM) sales. From May 21 
through May 25, 2007, the Department conducted verification of CP 
Kelco's costs of production.
    On June 7, 2007, the Department issued a fourth supplemental 
questionnaire for sections A, B, and C, to which CP Kelco responded on 
June 18, 2007 (CP Kelco's June 18, 2007, supplemental questionnaire 
response). At the request of the Department, on June 29, 2007 CP Kelco 
submitted new home market and U.S. sales databases to address revisions 
to the reporting methodology for viscosity and degree of substitution 
for certain products. CP Kelco also submitted a new cost of production 
database on June 29, 2007 to address these revisions and to correct a 
minor error involving the calculation of packing costs disclosed at the 
May 21 through May 25, 2007, cost of production verification. See 
Memorandum to the File, from Joseph Welton and Theresa Deeley, 
regarding ``Verification of the Cost Response of CP Kelco OY in the 
Antidumping Duty Administrative Review of Carboxymethylcellulose from 
Finland,'' dated July 3, 2007.

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

[[Page 44107]]

purified to a minimum assay of 90 percent. CMC does not include 
unpurified or crude CMC, CMC Fluidized Polymer Suspensions, and CMC 
that is cross-linked through heat treatment. 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 
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 the order is dispositive.

Verification

    As mentioned above in the ``Background'' section of this notice, 
from April 23 through 25, 2007, the Department conducted verification 
of U.S. sales made through CP Kelco U.S. From May 14 through 18, 2007, 
the Department conducted verification of CP Kelco's EP and HM sales. 
From May 21 through May 25, 2007 the Department conducted verification 
of CP Kelco's costs of production. As provided in section 782(i) of the 
Tariff Act of 1930, as amended (the Tariff Act), we verified sales and 
costs of production information provided by CP Kelco, using standard 
verification procedures such as the examination of relevant sales and 
financial records. Our verification results are outlined in the public 
and proprietary versions of our CEP, HM/EP, and costs of production 
verification reports, which are on file in the Central Records Unit 
(CRU) in room B-099 of the main Department building. See Memorandum to 
the File, from the Tyler Weinhold and Patrick Edwards, regarding 
``Sales Verification of Sections A-C Questionnaire Responses submitted 
by CP Kelco OY, Noviant OY, CP Kelco U.S. Inc. And Noviant Inc. 
(collectively, CP Kelco) in the Antidumping Duty Administrative Review 
of Purified Carboxymethylcellulose from Finland - Verification of 
United States Affiliates CP Kelco U.S. Inc. and Noviant U.S. Inc. 
(Collectively, CP Kelco U.S.)'' dated July 31, 2007 (the CEP 
Verification Report); Memorandum to the File, from Tyler Weinhold and 
Mark Flessner, regarding ``Sales Verification of Sections A-C 
Questionnaire Responses submitted by CP Kelco OY, Noviant OY, CP Kelco 
U.S. Inc. and Noviant Inc. in the Antidumping Duty Administrative 
Review of Purified Carboxymethylcellulose (CMC) from Finland'' (the 
Home Market and EP Verification Report); and Memorandum to the File, 
from Joseph Welton and Theresa Deeley, regarding ``Verification of the 
Cost Response of CP Kelco OY in the Antidumping Duty Administrative 
Review of Carboxymethylcellulose from Finland'' dated July 31, 2007.

Successor-In-Interest

    On February 9, 2006, Noviant OY, the respondent in this review, was 
purchased by a holding company within the CP Kelco group. Prior to the 
purchase, Noviant OY changed its name to CP Kelco OY and began to 
operate under that trade name. On January 1, 2006, Noviant Inc., 
Noviant OY's affiliated U.S. importer/reseller merged with CP Kelco 
U.S. Inc. The resulting corporation is named CP Kelco U.S. Inc., and 
has operated and done business under that trade name since the merger. 
Because entries have been made under the names of both Noviant OY and 
CP Kelco OY during the POR, the Department must make a successorship 
determination in order to apply the appropriate and necessary company-
specific cash deposit rates.
    In determining whether CP Kelco OY is the successor to Noviant OY 
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 7759 (March 5, 1990) (unchanged in final 
results of 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. 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.
    The evidence on the record indicates that CP Kelco OY is the 
successor to Noviant OY. See, e.g., CP Kelco's October 17, 2006, 
section A questionnaire response at pages 7, 8, 10, and 11; CP Kelco's 
April 5, 2007, supplemental questionnaire response at pages 3, 4, 6 to 
10, 16 and 43 through 54 and Exhibits A-20, A-21, A-22, A-23, A-33 and 
A-35; and the Home Market and EP Verification Report at Verification 
Exhibit 6. Specifically, the evidence shows CP Kelco OY has the same 
customers and suppliers, uses the same production facilities, and sells 
material under the same product names and commercial brands as did 
Noviant OY. See, e.g., CP Kelco's October 17, 2006, Section A 
questionnaire response at Exhibits A-8, A-14, and A-16, CP Kelco's 
April 5, 2007, supplemental questionnaire response at Exhibits A-24, A-
28, and A-29, and the Home Market and EP Verification Report at pages 8 
and 9 and Verification Exhibit 6. We also reviewed CP Kelco OY's and 
Noviant OY's organizational structures and officers before and after 
the merger and confirmed there were only minimal changes. See the Home 
Market and EP Verification Report at Verification Exhibit 6. See also, 
the CEP Verification Report at page 8, Verification Exhibit 2, and 
pages 229 of Verification Exhibit 3.
    CP Kelco's responses and information obtained during the 
Department's verifications confirmed that the purchase of Noviant OY 
had little effect on the company's operations in Finland, other than 
the resulting name change from Noviant OY to CP Kelco OY. The primary 
purpose of the acquisition was to unify CP Kelco's and Noviant's 
international marketing and sales forces and to broaden Noviant OY's 
marketing scope worldwide under the unified ``CP Kelco'' name.
    We found CP Kelco continued to market the same products under the 
same product names and commercial brands as a result of the merger. 
See, e.g., CP Kelco's October 17, 2006, section A questionnaire 
response at Exhibits A-9, A-14, and A-16, and the Home Market and EP 
Verification Report at pages 18 through 20.
    CP Kelco operates entirely out of the same production facility as 
Noviant OY. See, e.g., CP Kelco's October 17, 2006, section A 
questionnaire response at page A-7, CP Kelco's April 5, 2007, 
supplemental questionnaire response at page 52 and Exhibits A-24, and 
the Home Market and EP Verification Report at pages 6 and Verification 
Exhibit 3. We found no pattern of significant changes in CP Kelco's 
suppliers as a result of the merger. See, e.g., CP Kelco's April 5, 
2007, supplemental questionnaire response at pages 52 through 54, and 
the Home Market and EP Verification Report at

[[Page 44108]]

pages 6 and 9 through 12 and Verification Exhibit 3.
    We found that there were no significant changes in CP Kelco's Home 
Market or U.S. sales processes. See, e.g., CP Kelco's November 21, 
2006, sections B and C questionnaire response at Exhibits B-2, and C-2, 
CP Kelco's April 5, 2007, supplemental questionnaire response at pages 
45 through 51 and the HM and EP Verification Report at pages 14 through 
18. We found no pattern of significant changes in CP Kelco's U.S. or HM 
customers. See, e.g., CP Kelco's October 17, 2006, section A 
questionnaire response at Exhibits A-8, CP Kelco's November 21, 2006, 
sections B and C questionnaire response at Exhibits B-2, and C-2, CP 
Kelco's April 5, 2007, supplemental questionnaire response at page 54 
and Exhibits A-28, and A-29.
    We found no significant changes in CP Kelco's home market sales 
personnel. See, e.g. the HM and EP Verification Report at pages 14 
through 18. With respect to sales through Noviant Inc.'s successor, CP 
Kelco U.S., while customer care and logistics functions were 
transferred from Atlanta, Georgia, 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. See, e.g., the CEP Verification Report at 
pages 6 through 8.
    Our analysis of corporate management changes as a result of the 
merger indicates that neither the Noviant OY/CP Kelco OY nor the U.S. 
affiliates, Noviant Inc. and CP Kelco U.S. experienced significant 
shifts in senior executive management. See CP Kelco's April 5, 2007, 
supplemental questionnaire response at pages 43 through 45 and 52, the 
Home Market Verification Report at pages 4 through 6 and Exhibit 4 and 
the CEP Verification Report at pages 5 to 8, and Exhibits 2 through 4. 
We found that, with one exception, senior managers in place at Noviant 
OY prior to the merger with CP Kelco OY are still in place following 
the acquisition of Noviant OY. The same holds true for senior 
management of the U.S.-based entities, Noviant Inc. and CP Kelco U.S., 
where we found that only one senior manager left the company following 
the merger.
    Despite these changes, CP Kelco OY's management staff is 
substantially the same as Noviant Oy's. In addition, evidence on the 
record shows that CP Kelco OY uses the same CMC production facilities 
and suppliers as used by Noviant OY. Evidence on the record also shows 
that CP Kelco OY also provides CMC to the same customers and has the 
same sales processes as Noviant OY. Therefore, we preliminarily find CP 
Kelco OY is the successor to Noviant OY for purposes of this 
proceeding, and for the application of the antidumping law.

Use of Facts Available

    Section 776(a)(1) of the Tariff Act of 1930, as Amended (The Tariff 
Act) provides that the Department will, subject to section 782(d) of 
the Tariff Act, use the facts otherwise available in reaching a 
determination if ``necessary information is not available on the 
record.'' In accordance with section 776(a)(1) of the Tariff Act, for 
these preliminary results we find it necessary to use partial facts 
available in those instances where the respondent did not provide 
certain information necessary to conduct our analysis.
    CP Kelco reported in its questionnaire responses that it 
``factors'' its accounts receivables through an affiliated financial 
institution (i.e., sells the rights to the outstanding payments of its 
unpaid invoices to that financial institution). See, e.g., November 21, 
2006, sections B and C questionnaire response at pages B-13 and C-13 
and CP Kelco's April 5, 2007 supplemental questionnaire response at 
pages 78, 79, and 80, and at exhibits B-20, B-21, B-22, B-23, and B-24. 
As a result of our review of the factoring process during the 
verifications in Finland, and Atlanta, Georgia, we found that CP Kelco 
incurred transaction expenses on its factored sales in both the U.S. 
and home markets. These expenses are fees charged by the affiliated 
financial institution to CP Kelco for purchasing its accounts 
receivable and remitting payment to CP Kelco at an earlier date than 
payment would have been received from the invoiced customer. For a 
further description and analysis of CP Kelco's factoring methodology, 
see Memorandum from Tyler Weinhold to the File Regarding Analysis of 
Data Submitted by Noviant Inc., CP Kelco U.S. Inc., Noviant OY Inc., 
and CP Kelco OY Inc., (collectively, CP Kelco) in the Preliminary 
Results of the 2004-2006 Administrative Review of the Antidumping Duty 
Order on Purified Carboxymethylcellulose (CMC) from Finland (A-405-
803), dated July 31, 2007 (the Preliminary Analysis Memorandum). We 
preliminarily determine that normal value and net U.S. price should be 
adjusted for these expenses. However, because we did not ask CP Kelco 
to provide this information on a transaction-specific basis, there is 
not sufficient information on the record to make a transaction-specific 
adjustment for these factoring charges.
    Pursuant to section 776(a)(1) of the Tariff Act, it is appropriate 
to use the facts otherwise available to make this adjustment. The 
methodology used to make these adjustments is discussed in the EP, CEP, 
and NV sections of this notice, below. We find that CP Kelco reported 
all information requested to the best of its ability. Therefore, we 
have not made an adverse inference in our use of partial facts 
available. We intend to ask CP Kelco to report its actual factoring 
expenses on a transaction-specific basis in a later submission, and we 
intend to consider this information in our final results.

Fair Value Comparisons

    To determine whether sales of CMC in the United States were made at 
less than fair value, we compared U.S. price to NV, as described in the 
``Export Price,'' ``Constructed Export Price,'' and ``Normal Value'' 
sections of this notice. In accordance with section 777A(d)(2) of the 
Tariff Act, we calculated monthly weighted-average NVs and compared 
these to individual U.S. transactions. Because we determined CP Kelco 
made both EP and CEP sales during the POR, we used both EP and CEP as 
the basis for U.S. price in our comparisons. These calculations are 
described in further detail in the Preliminary Analysis Memorandum.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act, we considered 
all products produced by CP Kelco covered by the description in the 
``Scope of the Order'' section, above, and sold in the HM during the 
POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. We relied on five 
characteristics to match U.S. sales of subject merchandise to 
comparison sales of foreign like product (listed in order of priority): 
1) grade; 2) viscosity; 3) degree of substitution; 4) particle size; 
and 5) solution gel characteristics. See The Department's September 27, 
2006, antidumping duty questionnaire at Appendix 5. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the next most similar foreign like 
product on the basis of these product characteristics and the reporting 
instructions listed in the Department's September 11, 2005, 
questionnaire. Because there were sales of identical or similar 
merchandise in the home market suitable for comparison to each U.S. 
sale, we did

[[Page 44109]]

not compare any U.S. sales to constructed value (CV).

Export Price

    Section 772(a) of the Tariff Act defines EP as ``the price at which 
the subject merchandise is first sold (or agreed to be sold) before the 
date of importation by the producer or exporter of subject merchandise 
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 section 772(c). In accordance with 
section 772(a) of the Tariff Act, we used EP for a number of CP Kelco's 
U.S. sales. We have preliminarily found that these sales are properly 
classified as EP sales because these sales were made before the date of 
importation and were sales directly to unaffiliated U.S. customers.
    We based EP on the packed, delivered duty paid or free-on-board 
(FOB)-warehouse prices to unaffiliated customers in the United States. 
We made adjustments for price or billing adjustments and discounts, 
where applicable. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Tariff Act, which included, 
where appropriate, foreign inland freight, international freight, 
marine insurance, and U.S. brokerage and handling. We also reduced 
movement expenses, where appropriate, by the amount of certain freight 
revenue paid by the customer. We made adjustments for direct expenses 
(credit expenses) in accordance with section 772(c)(2)(A) of the Tariff 
Act.
    Based upon our findings at verification, we also made a deduction 
from EP for the factoring charges incurred by CP Kelco on its U.S. 
accounts receivable. See the ``Facts Available'' section, above. For 
the EP sales examined at verification, we used CP Kelco's verified 
factoring charges to represent this expense. There was not enough 
information on the record to calculate a transaction-specific 
adjustment for CP Kelco's other EP sales upon which CP Kelco incurred 
factoring charges (i.e., the sales not examined at verification). 
Therefore, for the remaining EP sales upon which CP Kelco incurred 
factoring charges, we based the deduction upon the average ratio of 
factoring charges to the invoice value incurred by CP Kelco on both the 
EP and CEP sales examined at verification. However, we only made this 
adjustment for those EP sales for which CP Kelco reported a factoring 
date (those sales which were factored).

Constructed Export Price

    In accordance with section 772(b) of the Tariff Act, CEP is ``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,'' as adjusted under 
sections 772(c) and (d) of the Tariff Act. In accordance with section 
772(b) of the Tariff Act, we used CEP for a number of CP Kelco's U.S. 
sales because CP Kelco sold merchandise to affiliate CP Kelco U.S. in 
the United States which, in turn, sold subject merchandise to 
unaffiliated U.S. customers. See the ``Successor-In-Interest'' section, 
above. We have preliminarily found that these U.S. sales are properly 
classified as CEP sales because they occurred in the United States and 
were made through CP Kelco's U.S. affiliate, CP Kelco U.S., to 
unaffiliated U.S. customers.
    We based CEP on the packed, delivered duty paid or FOB warehouse 
prices to unaffiliated purchasers in the United States. We made 
adjustments for price or billing errors and early payment discounts, 
where applicable. We also made deductions for movement expenses in 
accordance with section 772(c)(2)(A) of the Tariff Act, which included, 
where appropriate, foreign inland freight, foreign brokerage and 
handling, international freight, marine insurance, customs duties, U.S. 
brokerage, U.S. inland freight, and U.S. warehousing expenses. We also 
reduced movement expenses, where appropriate, by the amount of certain 
freight revenue paid by the customer. In accordance with section 
772(d)(1) of the Tariff Act, we deducted those selling expenses 
associated with economic activities occurring in the United States, 
including direct selling expenses (credit costs), inventory carrying 
costs, and indirect selling expenses. We also made an adjustment for 
profit in accordance with section 772(d)(3) of the Tariff Act.
    Based upon our findings at verification, we made a deduction from 
CEP for the factoring charges incurred by CP Kelco on its U.S. accounts 
receivable. See the ``Facts Available'' section, above. For the CEP 
sales examined at verification, we used CP Kelco's verified factoring 
charges to represent this expense. There was not enough information of 
the record to calculate a transaction-specific adjustment for CP 
Keloc's other CEP sales upon which CP Kelco incurred factoring charges 
(i.e., the sales not examined at verification). Therefore, for the 
remaining home market sales upon which CP Kelco incurred factoring 
charges, we based the deduction upon the average ratio of factoring 
charges to the invoice value incurred by Kelco on both the EP and CEP 
sales examined at verification. However, we only made this adjustment 
for those sales for which CP Kelco reported a factoring date (those 
sales which were factored).

Normal Value

A. Selection of Comparison Market
    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., the aggregate volume of home market sales of the foreign like 
product was equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared the 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) of the 
Tariff Act. As CP Kelco'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 of the subject merchandise, we determined the home 
market was viable. Therefore, we have based NV on home market sales in 
the usual commercial quantities and in the ordinary course of trade.
B. Cost of Production Analysis
    As explained above in the Background section of this notice, on 
December 8, 2006, Petitioner alleged that CP Kelco made sales of the 
foreign like product at prices below the cost of production in the home 
market during the POR. The Department found there were reasonable 
grounds to believe or suspect that sales in the home market were made 
at prices below the cost of production. Therefore, pursuant to section 
773(b)(1) of the Tariff Act, we initiated a cost investigation on 
February 5, 2007, to determine whether CP Kelco's sales made during the 
POR were at prices below its COP. See Memorandum from Tyler Weinhold to 
Richard Weible, Director, Office 7, AD/CVD Enforcement, Regarding 
Petitioner's Allegation of Sales Below the Cost of Production for 
Noviant CMC OY and CP Kelco OY, dated February 5, 2007.
C. Calculation of Cost of Production (COP)
    In accordance with section 773(b)(3) of the Tariff Act, we 
calculated the weighted-average COP for each model

[[Page 44110]]

based on the sum of CP Kelco's materials and fabrication costs for the 
foreign like product, plus an amount for home market selling expenses, 
general and administrative (G&A) expenses, financial expenses, and 
packing costs. We relied on the COP data submitted by CP Kelco, except 
for the changes noted below.
    1. Under section 773 (f)(3) of the Tariff Act (i.e., the ``Major 
Input Rule''), we increased CP Kelco's reported cost of manufacturing 
based on the difference between its affiliated supplier's cost of steam 
and the net transfer price charged to CP Kelco after deducting revenues 
received from selling excess steam.
    2. We revised CP Kelco's reported G&A expense ratio to include 
goodwill amortization costs as recognized in CP Kelco's normal books 
and records. We also revised the cost of goods sold denominator of the 
G&A expense ratio based on the verified packing costs.
    3. We revised the cost of goods sold denominator of the reported 
financial expense ratio of parent company JM Huber to include JM 
Huber's depreciation expenses, and to deduct packing and freight costs.
    See Memorandum to Neal Halper from Joe Welton, Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results - CP Kelco OY, dated July 31, 2007.
D. Test of Home Market Prices
    We compared the weighted-average COP of CP Kelco's home market 
sales to home market sales prices of the foreign like product (net of 
billing adjustments, discounts, any applicable movement expenses, 
direct and indirect selling expenses, and packing), as required under 
section 773(b) of the Tariff Act in order to determine whether these 
sales had been made at prices below the COP. In determining whether to 
disregard home market sales made at prices below the COP, we examined, 
in accordance with sections 773(b)(1)(A) and (B) of the Tariff Act, 
whether such sales were made in substantial quantities within an 
extended period of time, and whether such sales were made at prices 
which would permit recovery of all costs within a reasonable period of 
time.
E. Results of the Cost Test
    Pursuant to section 773(b)(2)(C) of the Tariff Act, where less than 
20 percent of CP Kelco's sales of a given model were at prices less 
than the COP, we did not disregard any below-cost sales of that model 
because these below-cost sales were not made in substantial quantities. 
Where 20 percent or more of CP Kelco's home market sales of a given 
model were at prices less than the COP, we disregarded the below-cost 
sales because such sales were made: (1) within an extended period of 
time and in ``substantial quantities'' within the POR, in accordance 
with section 773(b)(2)(B) and (C) of the Tariff Act, and (2) at prices 
which would not permit recovery of all costs within a reasonable period 
of time, in accordance with section 773(b)(2)(D) of the Tariff Act 
(i.e., the sales were made at prices below the weighted-average per-
unit COP for the POR). In this review, we have disregarded such sales 
from our margin calculation. We used the remaining sales as the basis 
for determining NV, if such sales existed, in accordance with section 
773(b)(1) of the Tariff Act.
F. Price-to-Price Comparisons
    We calculated NV based on prices to unaffiliated customers. We made 
adjustments for billing adjustments, early payment discounts, and 
rebates, where appropriate. We made deductions, where appropriate, for 
foreign inland freight, pursuant to section 773(a)(6)(B) of the Tariff 
Act. We offset inland freight for any freight revenue (revenue received 
from customers for invoice items covering transportation expenses). In 
addition, when comparing sales of similar merchandise, we made 
adjustments for differences in cost (i.e., DIFMER), where those 
differences were attributable to differences in physical 
characteristics of the merchandise pursuant to section 773(a)(6)(C)(ii) 
of the Tariff Act and 19 CFR 351.411. We also made adjustments for 
differences in circumstances of sale (COS) in accordance with section 
773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS 
adjustments for imputed credit expenses. We also made an adjustment, 
where appropriate, for the CEP offset in accordance with section 
773(a)(7)(B) of the Tariff Act. See ``Level of Trade and CEP Offset'' 
section below. Finally, we deducted home market packing costs and added 
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of 
the Tariff Act.
    Based upon our findings at verification, we also made a deduction 
from NV for the factoring charges incurred by CP Kelco on its home 
market accounts receivable in accordance with. See the ``Facts 
Available'' section, above. For those home market sales transactions 
examined at verification, we used the actual factoring charges incurred 
by CP Kelco to represent this expense. There was not enough information 
of the record to calculate a transaction-specific adjustment for CP 
Keloc's other home market sales upon which CP Kelco incurred factoring 
charges (i.e., the sales not examined at verification). Therefore, for 
the remaining home market sales upon which CP Kelco incurred factoring 
charges, we based the deduction upon the average ratio of factoring 
charges to the invoice value incurred by Kelco on the home market sales 
examined at verification. However, we only made this adjustment for 
those sales for which CP Kelco reported a factoring date (those sales 
which were factored).
G. Constructed Value (CV)
    In accordance with section 773(a)(4) of the Tariff Act, we base NV 
on CV if we are unable to find a contemporaneous comparison market 
match of such or similar merchandise for the U.S. sale. Section 773(e) 
of the Tariff Act provides that CV shall be based on the sum of the 
cost of materials and fabrication employed in making the subject 
merchandise, selling, general, and administrative (SG&A) expenses, 
profit, and U.S. packing costs. We calculated the cost of materials and 
fabrication for CP Kelco based on the methodology described in the COP 
section of this notice. In accordance with section 773(e)(2)(A) of the 
Tariff Act, we based SG&A expenses and profit on the amounts incurred 
and realized by the respondent in connection with the production and 
sale of the foreign like product in the ordinary course of trade, for 
consumption in the foreign country. However, for these preliminary 
results, we did not base NV on CV in any instances.

Level of Trade and CEP Offset

    In accordance with section 773(a)(1)(B) of the Tariff Act, to the 
extent practicable, we base NV on sales made in the comparison market 
at the same level of trade (LOT) as the export transaction. The NV LOT 
is based on the starting price of sales in the home market or, when NV 
is based on CV, on the LOT of the sales from which SG&A expenses and 
profit are derived. With respect to CEP transactions in the U.S. 
market, the CEP LOT is defined as the level of the constructed sale 
from the exporter to the importer. See section 773(a)(7)(A) of the 
Tariff Act.
    To determine whether NV sales are at a different LOT than CEP 
sales, we examine stages in the marketing process and selling functions 
along the chain of distribution between the producer and the customer. 
See 19 CFR 351.412(c)(2). If the comparison-market sales are at a

[[Page 44111]]

different LOT, 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, we make a LOT adjustment under section 
773(a)(7)(A) of the Tariff Act. For CEP sales, if the NV level is more 
remote from the factory than the CEP level and there is no basis for 
determining whether the difference in the levels between NV and CEP 
affects price comparability, we adjust NV under section 773(a)(7)(B) of 
the Tariff Act (the CEP offset provision). See, e.g., Final 
Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes 
From Canada, 67 FR 8781 (February 26, 2002) and accompanying Issues and 
Decisions Memorandum at Comment 8; see also Certain Hot-Rolled Flat-
Rolled Carbon Quality Steel Products from Brazil; Preliminary Results 
of Antidumping Duty Administrative Review, 70 FR 17406, 17410 (April 6, 
2005) (unchanged in final results of review, 70 FR 58683 (October 7, 
2005)). 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 Tariff Act. See Micron Technology, Inc. v. 
United States, 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001). We expect 
that if the claimed LOTs are the same, the functions and activities of 
the seller should be similar. Conversely, if a party claims that the 
LOTs are different for different groups of sales, the functions and 
activities of the seller should be dissimilar. See Porcelain-on-Steel 
Cookware from Mexico: Final Results of Antidumping Duty Administrative 
Review, 65 FR 30068 (May 10, 2000) and accompanying Issues and 
Decisions Memorandum at Comment 6.
    CP Kelco reported that it had sold CMC to end-users and 
distributors in the home market and to end-users and distributors in 
the United States. For the home market, CP Kelco identified two 
channels of distribution in the home market and the U.S. market: end 
users (channel 1) and distributors (channel 2). See CP Kelco's November 
21, 2006, sections B and C questionnaire response at page B-10. These 
channels of distribution correspond to CP Kelco's two end user and 
distributor customer categories reported in each market. In the home 
market, CP Kelco claimed two levels of trade, level 1 (end users) and 
level 4 (distributors), corresponding to its end user and distributor 
channels of distribution and customer categories. See, e.g., CP Kelco's 
November 21, 2006, sections B and C questionnaire response at page B-
20. As described above, CP Kelco made both direct (EP) sales of subject 
merchandise to U.S. customers and sales of subject merchandise through 
its affiliate, CP Kelco U.S. (CEP sales). CP Kelco reported that its EP 
U.S. sales to both end users and distributors were made at the same 
level of trade as home market end-user sales, level of trade 1. See id. 
However, CP Kelco reported that its CEP sales were made at a separate 
level of trade, level of trade 2.
    We obtained information from CP Kelco regarding the marketing 
stages involved in making its reported foreign market and U.S. sales. 
CP Kelco provided a table listing all selling activities performed, and 
comparing the levels of trade among each channel of distribution, 
customer categories and levels of trade for both markets. See CP 
Kelco's April 5, 2007, supplemental questionnaire at Exhibit A-27. We 
reviewed the intensity to which all selling functions were performed 
for each home market channel of distribution and customer category and 
between CP Kelco's EP and home market channels of distribution and 
customer categories. For certain activities, such as sales forecasting, 
advertizing, procurement/sourcing services, order input/processing, 
paying commissions, and providing warranty services, CP Kelco described 
the level of performance as identical across CP Kelco's home market 
end-user and distributor channels of distribution. See id. For several 
other functions, the level of performance was identical between the 
home market end-user sales and EP sales. These were strategic/economic 
planning, engineering services, distributor/dealer training, packing, 
inventory maintenance, and maintaining direct sales personnel. See id. 
For several other selling functions, the level of performance was 
identical between the home market distributor sales and EP sales. These 
were sales promotion, sales/marketing support, and providing 
guarantees. See id. Also, for the ``provide freight and delivery'' 
selling function CP Kelco reported that the level of performance was 
identical for home market end-user and distributor sales. For several 
other functions, CP Kelco reported only small differences between the 
home market end-user and distributor channels of distribution. These 
were personnel training/exchange, sales promotion, packing, sales/
marketing support, and market research. See id. For certain other 
functions, CP Kelco reported that only small differences existed 
between the home market end-user channel of distribution and U.S. EP 
sales. These were sales promotion, sales/marketing support and 
providing after sales service. See id. Finally, CP Kelco reported that 
only small differences existed between the home market distributor 
channel of distribution and U.S. EP sales for personnel training and 
exchange and market research. See id. While we find differences in the 
levels of intensity performed for some of these functions among the 
home market end-user and distributor channels of distribution and EP 
sales, such differences are minor and do not establish distinct, 
multiple levels of trade in Finland. Based on our analysis of all of CP 
Kelco's home market selling functions, we find all home market sales 
were made at the same LOT, and that U.S. EP sales were made at this 
same level of trade, the NV and EP LOT.
    We then compared the NV LOT, based on the selling activities 
associated with the transactions between CP Kelco OY and its customers 
in the home market, to the CEP LOT, which is based on the selling 
activities associated with the transaction between CP Kelco OY and its 
affiliated importer, CP Kelco U.S. Our analysis indicates the selling 
functions performed for home market customers are either performed at a 
higher degree of intensity or are greater in number than the selling 
functions performed for CP Kelco U.S. For example, in comparing CP 
Kelco's selling activities, we find most of the reported selling 
functions performed in the home market are not a part of CEP 
transactions (e.g., personnel training and exchange, engineering 
services, advertising, sales promotion, market research, technical 
assistance, providing rebates, providing cash discounts, paying 
commissions, providing warranty service, providing guarantees, 
providing after-sales services, and performing repacking). For those 
selling activities performed for both home market sales and CEP sales 
(e.g., sales processing, strategic/economic planning, distributor/
dealer training, procurement/sourcing services, inventory maintenance, 
order input/processing, maintaining direct sales personnel, sales/
marketing support, and providing freight and delivery services), CP 
Kelco reported that it performed each activity at a higher level of 
intensity in the home market. We note that CEP sales from CP Kelco OY 
to CP Kelco U.S. generally occur at the beginning of the distribution 
chain, representing essentially a logistical transfer of inventory. In 
contrast, all sales in the home market occur closer to the end of the 
distribution chain and

[[Page 44112]]

involve smaller volumes and more customer interaction which, in turn, 
require the performance of more selling functions. Based on the 
foregoing, we conclude that the NV and EP LOT is at a more advanced 
stage than the CEP LOT.
    Because we found the home market and U.S. CEP sales were made at 
different LOTs, we examined whether a LOT adjustment or a CEP offset 
may be appropriate in this review. As we found only one LOT in the home 
market, it was not possible to make a LOT adjustment to home market 
sales, because such an adjustment is dependent on our ability to 
identify a pattern of consistent price differences between the home 
market sales on which NV is based and home market sales at the LOT of 
the export transaction. See 19 CFR 351.412(d)(1)(ii). Furthermore, we 
have no other information that provides an appropriate basis for 
determining a LOT adjustment. Because the data available do not form an 
appropriate basis for making a LOT adjustment, and because the NV and 
EP LOT is at a more advanced stage of distribution than the CEP LOT, we 
have made a CEP offset to NV in accordance with section 773(a)(7)(B) of 
the Tariff Act.

Currency Conversions

    CP Kelco reported certain U.S. sales prices and certain U.S. and HM 
expenses and adjustments in both U.S. dollars and euros. Therefore, we 
made euro-U.S. dollar currency conversions, where appropriate, based on 
the exchange rates in effect on the dates of the U.S. sales, as 
certified by the Federal Reserve Board, in accordance with section 
773A(a) of the Tariff Act.

Preliminary Results of Review

    As a result of our review, we preliminarily find the following 
weighted-average dumping margin exists for the period December 27, 
2004, through June 30, 2006:

------------------------------------------------------------------------
                                                       Weighted Average
               Manufacturer / Exporter                      Margin
                                                         (percentage)
------------------------------------------------------------------------
CP Kelco............................................               5.70%
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within thirty 
days of publication. See 19 CFR 351.310(c). Any hearing, if requested, 
will be held 37 days after the date of publication, or the first 
business day thereafter, unless the Department alters the date pursuant 
to 19 CFR 351.310(d).

Comments

    Interested parties may submit case briefs no later than 30 days 
after the date of publication of these preliminary results of review. 
Rebuttal briefs, limited to issues raised in the case briefs, may be 
filed no later than 35 days after the date of publication of this 
notice. Parties who submit arguments 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. Further, 
parties submitting written comments should provide the Department with 
an additional copy of the public version of any such comments on 
diskette. The Department will issue final results of this 
administrative review, including the results of our analysis of the 
issues in any such written comments or at a hearing, within 120 days of 
publication of these preliminary results.

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. Upon completion of this 
administrative review, pursuant to 19 CFR 351.212(b), the Department 
will calculate an assessment rate on all appropriate entries. CP Kelco 
has reported entered values for all of its sales of subject merchandise 
to the U.S. during the POR. Therefore, in accordance with 19 CFR 
351.212(b)(1), we will calculate importer-specific duty assessment 
rates on the basis of the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
the examined sales of that importer. These rates will be assessed 
uniformly on all entries the respective importers made during the POR 
if these preliminary results are adopted in the final results of 
review. Where the assessment rate is above de minimis, we will instruct 
CBP to assess duties on all entries of subject merchandise by that 
importer. The Department will issue appropriate appraisement 
instructions directly to CBP within fifteen days of publication of the 
final results of review.

Cash Deposit Requirements

    Furthermore, the following deposit requirements will be effective 
upon completion of the final results of this administrative review for 
all shipments of CMC from Finland 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 
Tariff Act:
    1) The cash deposit rate for CP Kelco OY and Noviant OY will be the 
rate established in the final results of review; 2) if the exporter is 
not a firm covered in this review or the 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 3) if neither the exporter nor the manufacturer is 
a firm covered in this or any previous review conducted by the 
Department, the cash deposit rate will be the ``all others'' rate of 
6.65 percent from the LTFV investigation. See Notice of Antidumping 
Duty Orders: Purified Carboxymethylcellulose from Finland, Mexico, the 
Netherlands and Sweden, 70 FR 39734 (July 11, 2005). 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) 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 Tariff Act.

    Dated: July 27, 2007.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E7-15343 Filed 8-6-07; 8:45 am]
BLLING CODE 3510-DS-S