[Federal Register Volume 62, Number 130 (Tuesday, July 8, 1997)]
[Notices]
[Pages 36488-36490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-17776]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-791-802]
Furfuryl Alcohol From the Republic of South Africa; Preliminary
Results of Antidumping Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of antidumping duty
administrative review.
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SUMMARY: In response to requests by the respondent, Illovo Sugar Ltd.
(ISL), and the petitioner, QO Chemicals Inc., the Department of
Commerce (the Department) is conducting an administrative review of the
antidumping duty order on furfuryl alcohol from the Republic of South
Africa (South Africa). The review covers one manufacturer/exporter of
the subject merchandise to the United States. The period of review
(POR) is December 16, 1994, through May 31, 1996.
We have preliminarily found that sales have been made below normal
value (NV). If these preliminary results are adopted in our final
results of administrative review, we will instruct U.S. Customs to
assess antidumping duties equal to the difference between the
constructed export price (CEP) and the normal value (NV). Interested
parties are invited to comment on these preliminary results. Parties
who submit case briefs in this proceeding should provide a summary of
the arguments not to exceed five pages and a table of statutes,
regulations, and cases cited.
EFFECTIVE DATE: July 8, 1997.
FOR FURTHER INFORMATION CONTACT: Michelle Frederick or Scott Oudkirk,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue,
Washington, D.C. 20230; telephone: (202) 482-0186 or 482-2336,
respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreement Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the provisions codified at 19 CFR part 353, as of April 1, 1996.
Background
On June 21, 1995, the Department published in the Federal Register
(60 FR 32302) the antidumping duty order on furfuryl alcohol from South
Africa. On June 6, 1996, the Department published a notice of
``Opportunity to Request an Administrative Review'' (61 FR 28840) of
this antidumping duty order for the period December 16, 1994, through
May 31, 1996. On June 10, 1996, ISL requested that the Department
conduct an administrative review of its sales of subject merchandise
during the POR. On June 28, 1996, Petitioner also requested an
administrative review of ISL's POR sales. We issued a questionnaire to
ISL on July 23, 1996, followed by supplemental questionnaires on March
14, 1997, and May 9, 1997. We published a notice of postponement of the
deadline for the preliminary results on January 24, 1997 (62 FR 3660)
due to complex legal and methodological issues.
Scope of Review
The merchandise covered by this order is furfuryl alcohol
(C4H3OCH2OH). Furfuryl alcohol is a
primary alcohol, and is colorless or pale yellow in appearance. It is
used in the manufacture of resins and as a wetting agent and solvent
for coating resins, nitrocellulose, cellulose acetate, and other
soluble dyes. The product subject to this order is classifiable under
subheading 2932.13.00 of the Harmonized Tariff Schedule of the United
States (HTSUS). Although the HTSUS subheading is provided for
convenience and customs purposes, our written description of the scope
of this proceeding is dispositive.
Constructed Export Price
For sales to the United States, we used CEP as defined in section
772(b) of the Act, because we determined that ISL is affiliated with
its exclusive U.S. agent, Harborchem, and because the subject
merchandise was sold to unaffiliated U.S. purchasers after the date of
importation. Our finding that ISL and Harborchem are affiliated is
consistent with our finding in the Less Than Fair Value (LTFV)
Investigation. See Final Determination of Sales at Less Than Fair
Value: Furfuryl Alcohol from
[[Page 36489]]
the Republic of South Africa, 60 FR 22550, 22552 (May 8, 1995). The
facts that led to this finding in the Investigation have not changed.
Moreover, contrary to comments submitted by Petitioner, we do not
interpret the definition of ``Affiliated Persons'' (section 771(33) of
the Act) to preclude a finding of affiliation through agency.
We calculated CEP based on f.o.b. and c.i.f. prices to unaffiliated
purchasers in the United States. We made deductions, where applicable,
for foreign inland movement expenses, including foreign warehousing and
warehousing insurance, domestic brokerage and handling, ocean freight,
marine insurance, and U.S. brokerage and handling in accordance with
section 772(c)(2)(A) of the Act.
We deducted direct selling expenses and indirect selling expenses
associated with commercial activity in the United States in accordance
with section 772(d)(1) of the Act. We deducted a percentage for profit
attributable to direct, indirect, and imputed selling expenses incurred
in the United States in accordance with section 772(d)(3) of the Act.
For a further discussion of the calculation of this profit amount, see
the Analysis Memorandum to the File dated June 30, 1997.
ISL requested that we disregard certain U.S. sales from our
analysis that it claims, based on a first-in, first-out accounting
methodology, entered prior to the suspension of liquidation. We
preliminarily determine that the description provided by ISL of the
methodology used to tie pre-order entries to post-order sales, as
described at pages 80-81 of ISL's April 10, 1997, response, does not
sufficiently link POR sales to specific pre-suspension entries. We
therefore have not excluded these sales. See Final Results of
Antidumping Duty Administrative Review: Industrial Belts and Components
and Parts Thereof, Whether Cured or Uncured, From Italy, 57 FR 8295
(March 9, 1992).
No other adjustments to CEP were claimed or allowed.
Normal Value
We determined that the quantity of foreign like product ISL sold in
the exporting country was sufficient to permit a proper comparison with
the sales of the subject merchandise to the United States, pursuant to
section 773(a) of the Act. ISL had sales in its home market that were
greater than five percent of the U.S. market. Further, based on the
information on the record, we did not find the existence, as alleged by
Petitioner, of a fictitious home market or of a particular market
situation within the meaning of sections 773(a)(2) or 773(a)(1)(C)(iii)
of the Act, respectively. See Memorandum from Michelle Frederick and
Scott Oudkirk to Acting Deputy Assistant Secretary: Petitioner's
contention that the Department should not determine normal value using
home market sales due to a fictitious home market or a particular
market situation, June 30, 1997. Therefore, in accordance with section
773(a)(1)(B)(i) of the Act, we based NV on the price at which the
foreign like product was first sold for consumption in South Africa.
Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of
individual transactions to the monthly weighted-average price of sales
of the foreign like product. We compared CEP sales to sales in the home
market of identical merchandise. We used the purchase order date as the
home market date of sale because, except in an extremely limited number
of sales primarily involving events beyond the parties' control (e.g.,
railway strikes), that was the date on which the essential terms, price
and quantity, were set. See 19 CFR 351.401(i) of the Department's
revised regulations (62 FR 27296, 27411 (May 19, 1997)) for a concise
description of our practice regarding date of sale.
We based NV on the price at which the foreign like product is first
sold for consumption in the exporting country, in the usual commercial
quantities, in the ordinary course of trade and at the same level of
trade (LOT) as the CEP, in accordance with section 773(a)(1)(B)(i) of
the Act. We made adjustments, where appropriate, for rebates. We
adjusted for home market packing and movement expenses in accordance
with section 773(a)(6)(B) (i) and (ii) of the Act. Pursuant to section
773(a)(6)(C)(iii) of the Act, we made a circumstance-of-sale (COS)
adjustment to NV by deducting home market credit expenses. Prices were
reported net of value-added taxes (VAT) and, therefore, no adjustment
for VAT was necessary.
ISL stated that it granted quantity discounts based on its home
market price list and requested that we either apply the quantity
discount granted on home market sales above eight metric tons to all
undiscounted home market sales below eight metric tons or,
alternatively, that we match home market sales to U.S. sales based on
the quantity bands as shown on the price list. We have not adopted
either suggestion because we have determined that ISL did not adhere
sufficiently to its home market price list, which is the basis for the
discount, during the POR. See the Analysis Memorandum to the File,
dated June 30, 1997, for our analysis regarding ISL's adherence to its
price list.
No other adjustments to NV were claimed or allowed.
Level of Trade (LOT)/CEP Offset
As set forth in section 773(a)(1)(B)(i) of the Act and in the
Statement of Administrative Action (SAA) accompanying the URAA at 829-
831, to the extent practicable, the Department will calculate NV based
on sales at the same LOT as the U.S. sales. When the Department is
unable to find sales of the foreign like product in the comparison
market at the same LOT as the U.S. sale, the Department may compare the
U.S. sale to sales at a different LOT in the comparison market.
When CEP is applicable, as is the situation in this case, section
773(a)(7)(B) of the Act establishes that a CEP ``offset'' may be made
when two conditions exist: (1) NV is established at a LOT which
constitutes a more advanced stage of distribution than the LOT of the
CEP; and (2) the data available do not provide an appropriate basis for
a level-of-trade adjustment.
Our practice is to determine that sales are made at different
levels of trade if they are made at different marketing stages (or
their equivalent). Substantial differences in selling activities are a
necessary, but not sufficient, condition for determining that there is
a difference in the stage of marketing. See Notice of Final Results:
Antidumping Duty Administrative Review of Antifriction Bearings from
France et al., 62 FR 2081, 2105 (January 15, 1997). See also 19 CFR
351.412 of the Department's revised regulations (62 FR 27296, 27414-
27415 (May 19, 1997)) for a concise description of this practice.
In implementing these principles in this review, we obtained
information about the marketing stage involved in the reported home
market and U.S. sales, including a description of the selling
activities performed by ISL for each channel of distribution. ISL
claimed that the LOT of the CEP was different than the LOT of its home
market sales. ISL claimed one LOT and one channel of distribution with
regard to its sales to its U.S. affiliate, Harborchem. For its home
market, ISL claimed only one channel of distribution, from ISL to end
users, which it claimed to be at a more advanced stage of distribution
than the LOT of the CEP (i.e., the sales from ISL to Harborchem) based
on the selling functions performed for the particular markets.
In order to determine whether the selling activities involved in
the CEP
[[Page 36490]]
and the home market sales differed substantially, we reviewed the
selling activities associated with the CEP and those associated with
home market sales. For CEP sales, we considered only the selling
activities reflected in the price after the deduction of expenses and
profit under section 772(d) of the Act.
In this review, we preliminarily determine that the selling
functions performed by ISL for the home market did not differ
substantially from those performed by ISL for CEP sales, and that ISL's
home market LOT therefore does not constitute a more advanced stage of
distribution than the LOT of the CEP. ISL's assertion that the selling
functions it performs for its home market LOT differ from the selling
functions it performs for the LOT of the CEP rests on claims that: (1)
ISL's visits to the U.S. agent to help market the merchandise to U.S.
customers are fundamentally different from marketing calls in the home
market; (2) ISL does not perform ``multiple delivery inventory
tracking'' for its U.S. agent but does so for home market customers;
(3) ISL's prices to the U.S. agent are based on expected sales to
unaffiliated customers whereas prices to home market customers are
based on price lists; and (4) ISL provides quality control reports to
the U.S. agent, while it provides technical services to home market
customers in the form of reports and technical advice in the use of
furfuryl alcohol. We do not deem the above four claims to constitute
substantially different selling activities that meet the necessary
condition for determining that there is a difference in the stage of
marketing.
In view of the fact that we preliminarily determine that ISL's
sales to the home market were at a LOT that does not constitute a more
advanced stage of distribution than the LOT of the CEP, we did not make
a CEP ``offset'' pursuant to section 773(a)(7)(B) of the Act.
Reimbursement of Antidumping Duties
19 CFR 353.26 requires the deduction from U.S. price (now the
export price or constructed export price) of antidumping duties that a
producer or reseller pays directly on behalf of the importer or
reimburses to the importer. This regulation applies when the importer
is an affiliated party and when the importer is unaffiliated. See Final
Results of Antidumping Duty Administrative Review: Color Television
Receivers from the Republic of Korea, 61 FR 4408, 4410-11 (Feb. 6,
1996). That interpretation is consistent with both the plain language
of the regulation and the regulatory history. See, e.g., 19 CFR 353.41
(defining United States price as the purchase price or the exporter's
sales price). See also 19 CFR 351.402(f) of the Department's revised
regulations (62 FR 27296, 27411 (May 19, 1997)) for a concise
description of our practice of applying the reimbursement regulation to
both affiliated and unaffiliated parties. Further, the reimbursement
provision can apply to a first review even though assessment has not
yet occurred. See Final Results of Administrative Review: Certain Cold-
Rolled Carbon Steel Flat Products from the Netherlands, 61 FR 48465,
48470 (September 13, 1996).
Applying these principles to this proceeding, we preliminarily
determine that ISL has reimbursed Harborchem for antidumping duties in
this review period. Accordingly, in determining the duties to be
assessed for this period, we have made a downward adjustment to CEP to
reflect the reimbursement. Due to the proprietary nature of the
information relating to this issue, we have discussed our findings in
more detail in the proprietary Analysis Memorandum to the File, dated
June 30, 1997.
Preliminary Results of Review
As a result of this review, we preliminarily determine that the
following margin exists for the period December 16, 1994, through May
31, 1996:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
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Illovo Sugar Ltd........................................... 2.34
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Parties to the proceeding may request disclosure within five days
of the date of publication of this notice. Any interested party may
request a hearing within ten days of publication. Any hearing, if
requested, will be held 44 days after the publication of this notice,
or the first workday thereafter. Interested parties may submit case
briefs within 30 days of the date of publication of this notice.
Parties who submit arguments in this proceeding are requested to submit
with each argument: (1) A statement of the issues, and (2) a brief
summary of the arguments. Rebuttal briefs, which must be limited to
issues raised in the case briefs, may be filed not later than 37 days
after the date of publication. The Department will issue a notice of
the final results of this administrative review, which will include the
results of its analysis of issues raised in any such briefs, within 120
days from the publication of these preliminary results.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. The Department
will issue appraisement instructions directly to the Customs Service.
The final results of this review shall be the basis for the assessment
of antidumping duties on entries of merchandise covered by the
determination and for future deposits of estimated duties. For duty
assessment purposes, we calculated an assessment rate by aggregating
the dumping margins calculated for all U.S. sales and dividing this
amount by the total entered value subject merchandise sold. This rate
will be used for the assessment of antidumping duties on the relevant
entries of subject merchandise during the POR. Furthermore, the
following deposit requirements will be effective upon completion of the
final results of this administrative review for all shipments of
furfuryl alcohol from the Republic of South Africa entered, or
withdrawn from warehouse, for consumption on or after the publication
date of the final results of this administrative review, as provided by
section 751(a)(1) of the Act: (1) The cash deposit rate for ISL will be
the rate established in the final results of administrative review; (2)
if the exporter is not a firm covered in this review or the original
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 reviews, the cash deposit
rate will be 11.55 percent, the ``all others'' rate established in the
LTFV investigation (60 FR 32302, June 21, 1995).
This notice serves as a preliminary reminder to importers of their
responsibility to file a certificate regarding the reimbursement of
antidumping duties prior to liquidation of the relevant entries during
this review period. Failure to comply with this requirement could
result in the Secretary's presumption that reimbursement of antidumping
duties occurred and the subsequent assessment of double antidumping
duties.
This administrative review and notice are in accordance with
sections 751(a)(1) and 751(d) of the Act (19 U.S.C. 1675(a)(1)), 19 CFR
353.22, and 19 CFR 353.25.
Dated: June 30, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-17776 Filed 7-7-97; 8:45 am]
BILLING CODE 3510-DS-P