[Federal Register Volume 77, Number 149 (Thursday, August 2, 2012)]
[Notices]
[Pages 46024-46030]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-18904]


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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 and Preliminary 
Intent To Rescind

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

SUMMARY: In response to requests from petitioner Aqualon Company, a 
unit of Hercules Incorporated and a U.S. manufacturer of purified 
carboxymethylcellulose, and Akzo Nobel Functional Chemicals B.V. (Akzo 
Nobel), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on purified 
carboxymethylcellulose (purified CMC) from the Netherlands. This 
administrative review covers imports of subject merchandise produced 
and exported by Akzo Nobel and exported by CP Kelco B.V. (CP Kelco) 
during the period of review of July 1, 2010, through June 30, 2011.
    We preliminarily determine that sales of subject merchandise by 
Akzo Nobel were not made at less than normal value during the period of 
review and CP Kelco had no shipments of subject merchandise during the 
period of review. If these preliminary results are adopted in our final 
results of administrative review, we will issue appropriate assessment 
instructions to U.S. Customs and Border Protection (CBP). Interested 
parties are invited to comment on these preliminary results. Parties 
who submit argument in this review are requested to submit with the

[[Page 46025]]

argument: (1) A statement of the issues; (2) a brief summary of the 
argument; and (3) a table of authorities.

DATES: Effective Date: August 2, 2012.

FOR FURTHER INFORMATION CONTACT: Dena Crossland 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-
3362 or (202) 482-3019, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 11, 2005, the Department published the antidumping duty 
order on purified CMC from the Netherlands.\1\ On July 1, 2011, the 
Department published its notice of opportunity to request an 
administrative review of this order for the period July 1, 2010, 
through June 30, 2011.\2\
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    \1\ See Notice of Antidumping Duty Orders: Purified 
Carboxymethylcellulose from Finland, Mexico, the Netherlands and 
Sweden, 70 FR 39734 (July 11, 2005) (CMC Order).
    \2\ See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity To Request Administrative 
Review, 76 FR 38609 (July 1, 2011).
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    Pursuant to 19 CFR 351.213(b)(1), Aqualon Company (Aqualon), a unit 
of Hercules Incorporated, petitioner in this proceeding, filed a July 
29, 2011, request that the Department conduct an administrative review 
of the sales of subject merchandise from Akzo Nobel and CP Kelco during 
the period of review. Also, pursuant to 19 CFR 351.213(b)(2), on July 
29, 2011, Akzo Nobel requested a review of its sales of subject 
merchandise made during the period of review.
    On August 26, 2011, the Department published a notice of initiation 
of this administrative review, covering exports, sales, and/or entries 
of purified CMC from Akzo Nobel and CP Kelco in the Federal 
Register.\3\
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    \3\ See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 76 FR 
53404 (August 26, 2011).
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    The Department issued its antidumping duty questionnaire to Akzo 
Nobel and CP Kelco on September 19, 2011. On October 11, 2011, CP Kelco 
timely submitted a letter, in which it certified that it did not have 
any sales or exports during the period of review. Akzo Nobel responded 
to the questionnaire on October 21, 2011 (section A questionnaire 
response (section A response)), on November 9, 2011 (sections B and C 
questionnaire responses (section B response and section C response)), 
and on November 16, 2011 (section D questionnaire response (section D 
response)).\4\
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    \4\ Because we disregarded Akzo Nobel sales in the 2009-2010 
administrative review that were made at prices below the cost of 
production, in accordance with section 773(b)(2)(A)(ii) of the 
Tariff Act of 1930, as amended (the Act), we requested on September 
19, 2011, that Akzo Nobel respond to section D of the Department's 
questionnaire.
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    Akzo Nobel responded to a supplemental questionnaire concerning 
sections A through C of the Department's questionnaire on December 21, 
2011. Akzo Nobel responded to supplemental questionnaires concerning 
section D of the Department's questionnaire on February 24, 2012, May 
4, 2012, June 7, 2012, and June 26, 2012.
    On March 13, 2012, the Department extended the deadline for the 
preliminary results of review from April 1, 2012, until July 30, 
2012.\5\
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    \5\ See Purified Carboxymethylcellulose From Finland and the 
Netherlands: Extension of Time Limit for Preliminary Results of 
Antidumping Duty Administrative Reviews, 77 FR 14733 (March 13, 
2012).
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    On May 25, 2012, the Department received a targeted dumping 
allegation from petitioner concerning Akzo Nobel. Specifically, 
petitioner stated that it conducted its own targeted dumping analysis 
of Akzo Nobel's U.S. sales using the Department's targeted dumping 
methodology as applied in Nails and Wood Flooring.\6\ Based on their 
own analysis, petitioner argued that the Department should conduct a 
targeted dumping analysis and employ monthly average-to-transaction 
comparisons, in place of monthly average-to-average comparisons, 
without offsets should the Department find that the record supports its 
allegation of targeted dumping.\7\
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    \6\ See Certain Steel Nails from the People's Republic of China: 
Final Determination of Sales at Less Than Fair Value and Partial 
Affirmative Determination of Critical Circumstances, 73 FR 33977 
(June 16, 2008) and Certain Steel Nails from the United Arab 
Emirates: Notice of Final Determination of Sales at Less Than Fair 
Value, 73 FR 33985 (June 16, 2008) (collectively, ``Nails''). 
Petitioner stated that it used the most recent version of the Nails 
programming language as detailed in Multilayered Wood Flooring From 
the People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, 76 FR 64318 (October 18, 2011) (Wood Flooring), and 
accompanying Issues and Decision Memorandum at Comment 4.
    \7\ See Petitioner's Allegation of Targeted Dumping, dated May 
25, 2012.
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    In response to petitioner's targeted dumping allegation, Akzo Nobel 
argued that the Department does not have the statutory authority to 
apply a targeted dumping analysis in an administrative review.\8\ Akzo 
Nobel further argued that petitioner's targeted dumping allegation does 
not provide sufficient grounds for using a comparison methodology 
different than the Department's average-to-average comparison 
methodology. Additionally, Akzo Nobel contended that even if the 
Department decided to conduct a targeted dumping analysis, it may not 
use one standard deviation to find a pattern of price differences 
because its use is arbitrary, or in the alternative, statistically 
inaccurate.
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    \8\ See Akzo Nobel Functional Chemicals B.V. targeted dumping 
comments, dated June 15, 2012.
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    In response to Akzo Nobel's rebuttal comments, petitioner submitted 
comments on June 28, 2012. Citing 19 CFR 351.414(c)(l), as amended by 
the Final Modification for Reviews,\9\ petitioner argued that contrary 
to Akzo Nobel's claim the Department has the statutory authority to 
conduct a targeted dumping analysis in this administrative review. 
Specifically, petitioner argued that in 19 CFR 351.414(c)(l) the 
Department made clear that ``{i{time} n an investigation or review, the 
Secretary will use the average-to-average method unless the Secretary 
determines another method is appropriate in a particular case.'' 
(emphasis added). According to petitioner, that language was clearly 
intended to give the Department the discretion to use the same criteria 
that the Department examines in original investigations pursuant to 
section 777A(d)(1)(A) and (B) of the Act to determine whether 
appropriate circumstances exist.
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    \9\ See Antidumping Proceedings: Calculation of the Weighted-
Average Dumping Margin and Assessment Rate in Certain Antidumping 
Duty Proceedings; Final Modification, 77 FR 8101 (February 14, 2012) 
(Final Modification for Reviews).
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    For purposes of these preliminary results the Department did not 
conduct a targeted dumping analysis. In calculating the preliminary 
weighted-average dumping margin for the mandatory respondent, the 
Department applied the calculation methodology adopted in Final 
Modification for Reviews. In particular, the Department compared 
monthly weighted-average constructed export prices with monthly 
weighted-average normal values and granted offsets for non-dumped 
comparisons in the calculation of the weighted-average dumping margins. 
Application of this methodology in these preliminary results affords 
parties an opportunity to meaningfully comment on the Department's 
implementation of this recently adopted methodology in the context of 
this administrative review. The Department intends to continue to 
consider, pursuant to 19 CFR 351.414(c), whether another method is 
appropriate in this administrative review in light of parties' pre-
preliminary comments and any

[[Page 46026]]

comments on the issue that parties may include in their case and 
rebuttal briefs.

Preliminary Determination of No Shipments

    In its response to the Department's antidumping questionnaire, CP 
Kelco stated that it had no sales of subject merchandise during the 
period of review. We later confirmed with (CBP) that this company had 
no entries of purified CMC from the Netherlands during the period of 
review. See Memorandum to the File regarding No Shipments Inquiries for 
CP Kelco B.V., dated July 24, 2012. Because the evidence on the record 
indicates that CP Kelco did not have any entries of subject merchandise 
to the United States during the period of review, we preliminarily 
determine that it had no reviewable transactions during this period.
    Our past practice concerning no-shipment respondents was to rescind 
the administrative review if the respondent certified that it had no 
shipments and we confirmed the certified statement through an 
examination of CBP data.\10\ We would then instruct CBP to liquidate 
any entries of merchandise produced by the respondent at the deposit 
rate in effect on the date of entry. However, in our May 6, 2003, 
``automatic assessment'' clarification, we explained that, where 
respondents in an administrative review demonstrated that they had no 
knowledge of sales through resellers to the United States, we would 
instruct CBP to liquidate such entries at the all-others rate 
applicable to the proceeding. See Antidumping and Countervailing Duty 
Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 
2003) (Assessment Policy Notice). Because ``as entered'' liquidation 
instructions do not alleviate the concerns which the Assessment Policy 
Notice was intended to address, instead of rescinding the review with 
respect to CP Kelco, we find it appropriate to complete the review and 
issue liquidation instructions to CBP concerning entries for this 
company following the final results of the review. If we continue to 
find that CP Kelco had no reviewable transactions of subject 
merchandise in the final results, we will instruct CBP to liquidate any 
existing entries of merchandise produced by CP Kelco but exported by 
other parties at the all-others rate.\11\
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    \10\ See 19 CFR 351.213(d)(3); see also Certain Large Diameter 
Carbon and Alloy Seamless Standard, Line, and Pressure Pipe (Over 
41/2 Inches) From Japan: Final Results of Antidumping Duty 
Administrative Review, 77 FR 27428, 27430 (May 10, 2012).
    \11\ See, e.g., Magnesium Metal From the Russian Federation: 
Preliminary Results of Antidumping Duty Administrative Review, 75 FR 
26922, 26923 (May 13, 2010), unchanged in Magnesium Metal From the 
Russian Federation: Final Results of Antidumping Duty Administrative 
Review, 75 FR 56989 (September 17, 2010).
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Period of Review

    The period of review is July 1, 2010, through June 30, 2011.

Scope of the Order

    The merchandise covered by this order is all purified 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.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
purified CMC that are covered by the description included in the 
``Scope of the Order'' section above and that was produced and sold by 
Akzo Nobel in the Netherlands during the period of review to be foreign 
like product for the purpose of determining appropriate product 
comparisons to purified CMC sold by the respondent in the United 
States. For our discussion of home market viability, see the ``Normal 
Value'' section of this notice below.
    In comparing the U.S. sales with the sales of the foreign like 
product in the comparison market, we used the following methodology. If 
sales of an identical comparison-market model were reported, we 
compared the constructed export prices of the U.S. sales to the 
weighted-average, comparison-market prices of all sales that passed the 
cost of production test of the identical product during the relevant or 
contemporary month. See sections 771(16) and (35) of the Act; see also 
section 773(b)(1) of the Act. If there were no contemporaneous sales of 
an identical model, we identified sales of the most similar comparison-
market model. See section 771(16) of the Act. To determine the most 
similar model, we matched the physical characteristics of the foreign 
like product, as reported by Akzo Nobel, to the characteristics of the 
subject merchandise in the following order of importance: (1) Grade, 
(2) viscosity, (3) degree of substitution, (4) particle size, and (5) 
solution characteristics. Where there were no sales of identical or 
similar foreign like product in the ordinary course of trade with which 
to compare to a U.S. sale, we made product comparisons using 
constructed value.

Normal Value Comparisons

    To determine whether sales of purified CMC from the Netherlands to 
the United States were made at less than normal value, we compared 
constructed export price to the normal value, as described in the 
``Constructed Export Price'' and ``Normal Value'' sections of this 
notice below. In these preliminary results, the Department applied the 
weighted-average dumping margin calculation methodology adopted in 
Final Modification for Reviews. In particular, we compared monthly 
weighted-average constructed export prices with monthly weighted-
average normal values and granted offsets for non-dumped comparisons in 
the calculation of the weighted-average dumping margin.

Date of Sale

    As stated at 19 CFR 351.40l(i), the Department normally will use 
the respondent's invoice date as the date of sale unless another date 
better reflects the date upon which the exporter or producer 
established the material terms of sale. Akzo Nobel reported the invoice 
date as the date of sale for the home market and one of the U.S. market 
channels of distribution (i.e., U.S. market Channel 2) because the date 
of invoice reflects the date on which the material terms of sale were 
finalized. For Akzo Nobel's other U.S. market channel of distribution 
(i.e., U.S. market Channel 1), Akzo Nobel reported the date of shipment 
as the date of sale as this date preceded the invoice date in 
accordance with the Department's practice.\12\ For more information, 
see

[[Page 46027]]

Memorandum to the File, from Dena Crossland, International Trade 
Analyst, through Angelica Mendoza, Program Manager, entitled ``Analysis 
of Data Submitted by Akzo Nobel Functional Chemicals B.V. (Akzo Nobel) 
in the Preliminary Results of the 2010-2011 Administrative Review of 
the Antidumping Duty Order on Purified Carboxymethylcellulose (purified 
CMC) from the Netherlands,'' dated July 30, 2012 (Akzo Nobel 
Preliminary Analysis Memo). Consistent with 19 CFR 351.401(i) and Akzo 
Nobel's response, the Department has preliminarily determined to use 
invoice date as the date of sale except in those circumstances where 
shipment date preceded invoice date. In such instances and consistent 
with the Department's practice, the Department preliminarily determines 
to use shipment date.
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    \12\ Normally, the Department considers invoice date as the date 
of sale in accordance with 19 CFR 351.401(i). However, it is the 
Department's practice to use shipment date as the date of sale when 
shipment date precedes invoice date. See Certain Cold-Rolled and 
Corrosion-Resistant Carbon Steel Flat Products From Korea: Final 
Results of Antidumping Duty Administrative Reviews, 63 FR 13170, 
13172-73 (March 18, 1998); see also Stainless Steel Sheet and Strip 
in Coils From the Republic of Korea; Final Results and Rescission of 
Antidumping Duty Administrative Review in Part, 72 FR 4486 (January 
31, 2007), and accompanying Issues and Decision Memorandum at 
Comments 4 and 5.
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Constructed Export Price

    In accordance with section 772(b) of the Act, constructed export 
price 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.
    For purposes of this review, Akzo Nobel classified all of its 
export sales of purified CMC to the United States as constructed export 
price (CEP) sales. During the period of review, Akzo Nobel made sales 
in the United States through its U.S. affiliate, AN-US, which sold the 
merchandise to unaffiliated customers in the United States. The 
Department calculated CEP based on packed prices to the first 
unaffiliated customer in the United States. We made deductions from the 
starting price, net of discounts, for movement expenses (domestic 
foreign inland freight and warehousing expenses, domestic inland 
insurance, domestic brokerage and handling expenses, international 
freight, marine insurance, U.S. inland insurance, brokerage and 
handling expenses incurred in the United States, U.S. warehousing 
expenses, U.S. inland freight, and U.S. customs duties) in accordance 
with section 772(c)(2)(A) of the Act and 19 CFR 351.401(e). In 
addition, because Akzo Nobel reported CEP sales in accordance with 
section 772(d)(l) of the Act, we deducted from the starting price 
credit expenses and indirect selling expenses, including inventory 
carrying costs, incurred in the Netherlands and the United States and 
associated with economic activities in the United States.
    In accordance with section 772(d)(3) of the Act, we deducted an 
amount for CEP profit.

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 normal 
value (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 Akzo Nobel's volume of 
home market sales of the foreign like product to the volume of U.S. 
sales of the subject merchandise, consistent with section 773(a)(1)(C) 
of the Act.
    Pursuant to section 773(a)(1)(B) of the Act and 19 CFR 351.404(b), 
because Akzo Nobel'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,\13\ we determined that 
the home market was viable. Thus, we based normal value on Akzo Nobel's 
home market sales made in the usual commercial quantities and in the 
ordinary course of trade.
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    \13\ See Akzo Nobel's section A response at A-2 and Tab 1.
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B. Cost of Production Analysis

    In the last administrative review of the order, the Department 
determined that Akzo Nobel sold purified CMC at prices below the cost 
of producing the merchandise and, as a result, we excluded such sales 
from the calculation of normal value.\14\ Therefore, pursuant to 
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to 
believe or suspect that Akzo Nobel's sales of purified CMC under 
consideration for the determination of normal value in the instant 
review may have been made at prices below the cost of production. 
Pursuant to section 773(b)(l) of the Act, we have conducted a cost of 
production investigation of Akzo Nobel's sales in the comparison 
market.
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    \14\ See Purified Carboxymethylcellulose from the Netherlands; 
Preliminary Results of Antidumping Duty Administrative Review, 76 FR 
36519, 36521-36522 (June 22, 2011) unchanged in Purified 
Carboxymethylcellulose From the Netherlands: Final Results of 
Antidumping Duty Administrative Review, 76 FR 66687 (October 27, 
2011).
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C. Calculation of Cost of Production

    We have preliminarily relied upon the cost of production 
information provided by Akzo Nobel in its May 4, 2012, section D 
submission. In accordance with section 773(b)(3) of the Act, we 
calculated the weighted-average cost of production for each foreign 
like product based on the sum of Akzo Nobel's material and fabrication 
costs for the product, plus amounts for selling, general, and 
administrative (SG&A) expenses, as well as packing costs. Based on the 
review of record evidence, Akzo Nobel did not appear to experience 
significant changes in its cost of manufacturing during the period of 
review. Therefore, we followed our normal methodology of calculating an 
annual weighted-average cost.

D. Test of Comparison Market Prices

    As required under section 773(b) of the Act, we compared Akzo 
Nobel's weighted-average cost of production figures to its comparison-
market sales prices (net of certain discounts, any applicable movement 
expenses, direct and indirect selling expenses, and packing) of the 
foreign like product in order to determine whether sales in the 
comparison market had been made at prices below cost of production. In 
determining whether to disregard such sales, we examined, in accordance 
with sections 773(b)(1)(A) and (B) of the Act, whether such sales were 
made within an extended period of time in substantial quantities and 
whether the sales were made at prices which would not permit the 
recovery of all costs within a reasonable period of time.

E. Results of Cost Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the sales of a given product were at prices less than the 
cost of production, we did not disregard any of the below-cost sales of 
that product because they were not made in substantial quantities. 
However, where 20 percent or more of the respondent's comparison-market 
sales of a model were made at prices below the cost of production, we 
disregarded these sales because they were made: (1) In substantial 
quantities within the period of review (i.e., within an extended period 
of time), in accordance with sections 773(b)(2)(B) and (C) of the 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 Act. We used the remaining comparison-market sales, if such sales

[[Page 46028]]

existed and were made in the ordinary course of trade, as the basis for 
determining normal value, in accordance with section 773(b)(1) of the 
Act.
    In the current review, we found sales by Akzo Nobel made below the 
cost of production for 20 percent or more of certain models and, 
therefore, we disregarded these below-cost sales from our margin 
calculations. See Akzo Nobel Preliminary Analysis Memo.

F. Price-to-Price Comparisons

    We calculated normal value based on prices to unaffiliated 
customers in the comparison market. We decreased price, as appropriate, 
for certain discounts. We made deductions, where appropriate, for 
foreign inland freight and international freight pursuant to section 
773(a)(6)(B) of the Act. In addition, when comparing sales of similar 
merchandise to U.S. sales, we made adjustments to normal value 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, as appropriate (i.e., credit), in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. We also made an adjustment, where appropriate, for a 
constructed export price offset, in accordance with section 
773(a)(7)(B) of the Act. See the ``Level of Trade'' section below. 
Finally, we deducted comparison-market packing costs and added U.S. 
packing costs to normal value, in accordance with sections 773(a)(6)(A) 
and (B) of the Act.

G. Price-to-Constructed-Value Comparisons

    Section 773(a)(4) of the Act provides that, if we are unable to 
find a contemporaneous comparison-market match of identical or similar 
merchandise for a U.S. sale, then we base normal value on constructed 
value. Section 773(e) of the Act provides that constructed value shall 
be based on the sum of the cost of materials and fabrication employed 
in producing the merchandise, SG&A expenses, profit, and expenses 
associated with packing the merchandise for shipment to the United 
States. We calculated the cost of materials and fabrication based on 
the methodology described above in the ``Calculation of Cost of 
Production'' section. In accordance with section 773(e)(2)(A) of the 
Act, we based SG&A expenses (as adjusted above) and profit on the 
amounts incurred and realized by Akzo Nobel in connection with the 
production and sale of the foreign like product, in the ordinary course 
of trade, for consumption in the foreign country. See 19 CFR 
351.405(b)(1).

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine normal value based on sales in the 
comparison market at the same level of trade as the export price or 
constructed export price transaction. The level of trade in the 
comparison market is the level of trade of the starting-price sales in 
the comparison market or, when normal value is based on constructed 
value, the level of trade of the sales from which we derive SG&A 
expenses and profit. See 19 CFR 351.412(c). For constructed export 
price transactions, the level of trade is that of the constructed sale 
from the exporter to the importer. Id.
    To determine whether comparison market sales are at a different 
level of trade from U.S. sales, we examine 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 levels of trade, and the difference affects 
price comparability, as manifested in a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison market sales at the level of trade of the export 
transaction, the Department makes a level-of-trade adjustment in 
accordance with section 773(a)(7)(A) of the Act. For constructed export 
price 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 level of trade between the constructed 
export price and normal value. See section 773(a)(7)(A) of the Act.
    Under section 773(a)(7)(A) of the Act, we make an upward or 
downward adjustment to normal value for level of trade if the 
difference in level of trade 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 levels of trade in the country in which normal value is 
determined. Finally, if the normal-value level of trade is at a more 
advanced stage of distribution than the level of trade of the 
constructed export price, but the data available do not provide an 
appropriate basis to determine a level-of-trade adjustment, we reduce 
normal value by the amount of indirect selling expenses incurred in the 
comparison market on sales of the foreign like product, but by no more 
than the amount of the indirect selling expenses incurred for 
constructed export price sales. See section 773(a)(7)(B) of the Act 
(the CEP-offset provision).
    In analyzing differences in selling functions, we determine whether 
the levels of trade identified by the respondent are meaningful. See 
Antidumping Duties: Countervailing Duties, 62 FR 27296, 27371 (May 19, 
1997). If the claimed levels of trade are the same, we expect that the 
functions and activities of the seller should be similar. Conversely, 
if a party claims that levels of trade 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 Decision Memorandum at Comment 6.
    In the present review, Akzo Nobel claimed that a constructed export 
price offset was required because the constructed export price level of 
trade was less advanced than levels of trade in the comparison 
market.\15\ 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''),\16\ including selling functions, class of customer 
(customer category), and the level of selling functions for each type 
of sale.
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    \15\ See Akzo Nobel's section C response at C-45.
    \16\ The marketing process in the United States and comparison 
market begins with the producer and extends to the sale to the final 
user or customer. The chain of distribution involved in the two 
markets may have many or few links, and respondent's sales occur 
somewhere along this chain. In performing this evaluation, we 
considered respondent's narrative responses to properly determine 
where in the chain of distribution the sale occurs.
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    Akzo Nobel reported one level of trade in the home market, the 
Netherlands, with one channel of distribution to two classes of 
customers: (1) Direct sales from the warehouse located near the Akzo 
Nobel manufacturing plant to end users, and (2) direct sales from the 
warehouse located near the Akzo Nobel manufacturing plant to 
distributors.\17\ Based on our review of evidence on the record, we 
find that the home market sales to both customer categories

[[Page 46029]]

through the one channel of distribution were substantially similar with 
respect to selling functions and stages of marketing. Akzo Nobel 
performed the same selling functions for sales in a single home market 
channel of distribution, including sales forecasting, strategic 
planning, advertising, distributor training, packing, warehousing, 
inventory management, order processing, market research, providing 
guarantees, after sales services, freight and delivery, and 
invoicing.\18\ Each of these selling functions was identical in the 
intensity of their provision or only differed minimally, the exception 
being that Akzo Nobel provided sales/marketing support and technical 
assistance to a different degree of involvement to different customer 
types.\19\ Thus, after considering all of the above, we preliminarily 
find that Akzo Nobel had only one level of trade for its home market 
sales.
---------------------------------------------------------------------------

    \17\ See Akzo Nobel's section A response at A-15 and A-16; see 
also Akzo Nobel's section B response at B-9.
    \18\ See Akzo Nobel's section A response at A-17 through A-21 
and Tab 9.
    \19\ See Akzo Nobel's section A response at Tab 9. See also 
Preliminary Analysis Memo.
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    Akzo Nobel reported one constructed export price level of trade, 
with two separate channels of distribution in the United States. 
Channel 1 sales were made to order for two classes of customers, i.e., 
end users and distributors.\20\ The U.S. customer orders merchandise 
from Akzo Nobel's U.S. affiliate, AN-US, and the merchandise is shipped 
directly to the U.S. customer from Akzo Nobel.\21\ Further, the 
customer is invoiced by AN-US, and the title passed directly from AN-US 
to the unaffiliated customer in the United States. Channel 2 sales were 
also made to two classes of customers, i.e., end users and 
distributors, from inventory.\22\ Specifically, the U.S. customer 
orders merchandise from AN-US, which is shipped out of a stock of 
materials maintained at AN-US's unaffiliated warehouses.\23\ Upon 
examining Akzo Nobel's questionnaire responses, we preliminarily find 
that it has two channels of distribution for its constructed export 
price sales in the United States.\24\
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    \20\ See id. at A-16.
    \21\ See id. at A-15.
    \22\ See id. at A-16.
    \23\ See id. at A-15.
    \24\ See id. at A-15 through A-16, A-24 through A-27, and Tab 8; 
and section C response at C-9.
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    For constructed export price sales, we consider only the selling 
activities reflected in the price after the deduction of expenses and 
constructed export price profit under section 772(d) of the Act. See 
Micron Tech. Inc. v. United States, 243 F.3d 1301, 1314-15 (Fed. Cir. 
2001). We reviewed the selling functions and services performed by Akzo 
Nobel on constructed export price sales as described in its 
questionnaire and supplemental questionnaire responses, after these 
deductions. We found that selling functions performed by Akzo Nobel to 
its U.S. affiliate in support of the constructed export price sales 
were almost identical regardless of class of customers or channel of 
trade. Akzo Nobel reported that it provided services to both Channel 1 
and Channel 2, including strategic planning, packing, warehousing, 
inventory management, order processing, and logistics for freight and 
delivery, although Akzo Nobel provided a different degree of service to 
these channels for delivery, warehousing, and inventory management.\25\ 
As a result of our analysis, we found that selling functions performed 
by Akzo Nobel for both channels are at the same level.
---------------------------------------------------------------------------

    \25\ See Akzo Nobel's section A response at Tab 9.
---------------------------------------------------------------------------

    Next, we compared the stages in the marketing process and selling 
functions along the chain of distribution for home market and 
constructed export price sales. Akzo Nobel's home market and 
constructed export price sales were both made to end users and 
distributors. We found that Akzo Nobel performs an additional layer of 
selling functions at a greater degree of involvement in the home market 
than it provided on constructed export price Channel 1 and Channel 2 
sales (e.g., sales forecasting, strategic planning, advertising, 
distributor training, market research, technical assistance, sales and 
marketing support, after sales service, and invoicing).\26\ Because 
these additional selling functions are significant, we find that Akzo 
Nobel's constructed export price sales are at a different level of 
trade than its home market sales.
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    \26\ See id. at A-17 through A-21 and Tab 9.
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    According to section 773(a)(7)(B) of the Act, a CEP offset is 
appropriate when the level of trade in the home market is at a more 
advanced stage than the level of trade of the constructed export price 
sales and there is no basis for determining whether the difference in 
levels of trade between normal value and constructed export price 
affects price comparability. Akzo Nobel reported that it provided 
minimal selling functions and services for the constructed export price 
level of trade and that, therefore, the home market level of trade is 
more advanced than the constructed export price level of trade. Based 
on our analysis of the channels of distribution and selling functions 
performed by Akzo Nobel for sales in the home market and constructed 
export price sales in the U.S. market (i.e., sales support and 
activities provided by Akzo Nobel for sales to its U.S. affiliate), we 
preliminarily find that the home market level of trade is at a more 
advanced stage when compared to constructed export price sales because 
Akzo Nobel provides many selling functions in the home market at a 
different level of service (i.e., sales forecasting, advertising, 
distributor training, market research, sales and marketing support, 
etc.) as compared to selling functions performed for its constructed 
export price sales (i.e., Akzo Nobel reported that the only services it 
provided for the constructed export price sales were logistics for 
freight and delivery, packing, warehousing, inventory management, order 
processing, providing guarantees, and limited strategic planning and 
technical assistance).\27\ Thus, we find that Akzo Nobel's home market 
sales are at a more advanced level of trade than its constructed export 
price sales. As there was only one level of trade in the home market, 
there were 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 level-of-trade 
adjustment; therefore, we applied a constructed export price offset to 
normal value for constructed export price comparisons.
---------------------------------------------------------------------------

    \27\ See id. at Tab 9.
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    To calculate a CEP offset for Akzo Nobel, we deducted the 
comparison market indirect selling expenses from normal value for sales 
that were compared to U.S. constructed export price sales. We limited 
the deduction by the amount of the indirect selling expenses deducted 
in calculating the constructed export price under section 772(d)(1)(D) 
of the Act. See section 773(a)(7)(B) of the Act.

Currency Conversion

    We made foreign-currency conversions into U.S. dollars in 
accordance with section 773A(a) of the Act and 19 CFR 351.415 based on 
exchange rates in effect on the dates of the U.S. sales, as certified 
by the Federal Reserve Bank. See Import Administration Web site at: 
http://ia.ita.doc.gov/exchange/index.html.

Preliminary Results of Review

    We preliminarily determine that, for the period July 1, 2010, 
through June 30, 2011, the following dumping margin exists:

[[Page 46030]]



------------------------------------------------------------------------
                                                            Weighted-
                 Manufacturer/Exporter                   average  margin
                                                             (percent)
------------------------------------------------------------------------
Akzo Nobel Functional Chemicals B.V....................            0.00
------------------------------------------------------------------------

Disclosure and Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309(c)(1)(ii), 
interested parties may submit written comments in response to these 
preliminary results. Interested parties may submit case briefs to the 
Department no later than 30 days after the publication of these 
preliminary results. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, the 
content of which is limited to the issues raised in the case briefs, 
must be filed within five days from the deadline date for the 
submission of case briefs. See 19 CFR 351.309(d)(1) and (2).
    Parties who submit arguments in this proceeding are requested to 
submit with the argument: (1) A statement of the issues; (2) a brief 
summary of the argument; and (3) a table of authorities. See 19 CFR 
351.309(c)(2). Case and rebuttal briefs must be served on interested 
parties in accordance with 19 CFR 351.303(f). Executive summaries 
should be limited to five pages total, including footnotes.
    Within 30 days of the date of publication of this notice, 
interested parties may request a public hearing on arguments raised in 
the case and rebuttal briefs, pursuant to 19 CFR 351.310(c). Unless the 
Department specifies otherwise, the hearing, if requested, will be held 
two days after the date for submission of rebuttal briefs. See 19 CFR 
351.310(d)(1). Parties will be notified of the time and location of the 
hearing. Written argument and hearings requests should be 
electronically submitted to the Department via IA ACCESS.\28\
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    \28\ See generally 19 CFR 351.303.
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    The Department will publish the final results of the administrative 
review, including the results of its analysis of issues addressed in 
any case or rebuttal brief, no later than 120 days after publication of 
the preliminary results, unless extended. See section 751(a)(3)(A) of 
the Act; 19 CFR 351.213(h).

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. In accordance with 19 CFR 
351.212(b)(1), we have calculated, whenever possible, an exporter/
importer (or customer)-specific assessment rate or value for 
merchandise subject to this review as described below.
    For CEP sales, we divide the total dumping margins for the reviewed 
sales by the total entered value of those reviewed sales for each 
importer. We will direct CBP to assess the resulting percentage margin 
against the entered customs values for the subject merchandise on each 
of that importer's period of review entries. See 19 CFR 351.212(b).
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. This clarification will apply to entries of subject 
merchandise during the period of review produced by companies in these 
preliminary results of review for which the reviewed companies did not 
know their merchandise was destined for the United States. In such 
instances, we will instruct U.S. Customs and Border Protection to 
liquidate unreviewed entries at the all-others rate if there is no rate 
for the intermediate company(ies) involved in the transaction. For a 
full discussion of this clarification, see Assessment Policy Notice.
    We intend to issue liquidation instructions to CBP 15 days after 
publication of the final results of this review. We will instruct CBP 
to assess antidumping duties on all appropriate entries covered by this 
review if any importer-specific assessment rate calculated in the final 
results of this review is above de minimis. Pursuant to 19 CFR 
351.106(c)(2), we will instruct CBP to liquidate without regard to 
antidumping duties any entries for which the assessment rate is de 
minimis. The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the final results of this review and for future deposits of estimated 
duties, where applicable. See section 751(a)(2)(C) of the Act.

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)(2)(C) of the Act: (1) The cash deposit rate for the company 
listed above will be that established in the final results of this 
review, except if the rate is less than 0.50 percent and, therefore, de 
minimis within the meaning of 19 CFR 351.106(c)(1), in which case the 
cash deposit rate will be zero; (2) for previously reviewed or 
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 in 
the 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 
investigation. See CMC Order, 70 FR at 39735. These deposit 
requirements, when imposed, shall remain in effect until further 
notice.

Notification to Importers

    This notice also serves as a 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 Department'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 25, 2012.
Paul Piquado,
Assistant Secretary for Import Administration.
[FR Doc. 2012-18904 Filed 8-1-12; 8:45 am]
BILLING CODE 3510-DS-P