[Federal Register Volume 64, Number 3 (Wednesday, January 6, 1999)]
[Notices]
[Pages 848-851]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-242]
[[Page 848]]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-122-047]
Elemental Sulphur From Canada: 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 of elemental sulphur from Canada.
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SUMMARY: The Department of Commerce (``the Department'') is conducting
an administrative review of the antidumping duty order on elemental
sulphur from Canada in response to requests from the petitioner,
Freeport-McMoRan Sulphur, Inc. (``Freeport''), and the respondent,
Husky Oil, Ltd. (``Husky''). The period of review (``POR'') is from
December 1, 1996 through November 30, 1997.
We preliminarily determine that respondent, Husky, has sold subject
merchandise at not less than normal value (``NV'') during the POR.
Husky has requested revocation from the order, but, as explained in the
Revocation section below, we preliminarily determine that Husky has not
met the threshold requirements to be considered for revocation. If
these preliminary results are adopted in our final results of this
administrative review, we will instruct the U.S. Customs Service not to
assess antidumping duties on suspended entries.
We invite interested parties to comment on these preliminary
results. Parties who submit arguments in this segment of the proceeding
should also submit with each argument (1) a statement of the issue and
(2) a brief summary of the argument.
EFFECTIVE DATE: January 6, 1999.
FOR FURTHER INFORMATION CONTACT: Brandon Farlander or Rick Johnson,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th and Constitution Avenue, N.W., Washington,
D.C. 20230; telephone: (202) 482-0182 or (202) 482-3818, 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 Agreements Act (``URAA''). In addition,
unless otherwise indicated, all citations to the Department's
regulations are to the regulations codified at 19 CFR part 351, 62 FR
27296 (May 19, 1997).
Background
On December 17, 1973, the Department of the Treasury published in
the Federal Register (38 FR 34655) the antidumping finding on elemental
sulphur from Canada. On December 5, 1997, the Department published in
the Federal Register (62 FR 64353) a notice of opportunity to request
an administrative review of this antidumping finding for the period
December 1, 1996 through November 31, 1997.
On December 31, 1997, in accordance with 19 CFR 351.213(b),
Freeport requested that we conduct an administrative review of Husky
and any other company that exported Husky-produced sulphur to the
United States during the POR. Also, on December 31, 1997, Husky
requested that we conduct an administrative review and further
requested that the Department revoke the antidumping order as to Husky.
We published a notice of initiation of this antidumping duty
administrative review on January 26, 1998 (63 FR 3702). On June 26,
1998, petitioner submitted a request that the deadline for the
preliminary results in this review be extended by 75 days in order to
develop the administrative record with respect to revocation. On July
29, 1998, the Department published in the Federal Register an extension
of the deadline for the preliminary results of review to November 1,
1998 (63 FR 40391). On August 19, 1998, the Department published in the
Federal Register a further extension of the deadline for the
preliminary results of review to December 31, 1998 (63 FR 44420). The
Department is conducting this administrative review in accordance with
section 751 of the Act. As outlined below, we preliminarily determine a
de minimis margin of 0.37 percent for Husky, but that Husky has not met
the threshold requirement to be considered for revocation.
Verification
As provided in section 782(i) of the Act, from September 23, 1998
to October 2, 1998, we verified sales and cost information provided by
Husky, using standard verification procedures, including an examination
of relevant sales and financial records, and selection of original
documentation containing relevant information. Our verification results
are outlined in the public versions of the verification reports and are
on file in the Central Records Unit (``CRU'') located in room B-099 of
the main Department of Commerce Building, 14th Street and Constitution
Avenue, N.W., Washington, D.C. For changes to Husky's costs based on
verification findings, see Calculation of CV section below.
Scope of the Review
Imports covered by this review are shipments of elemental sulphur
from Canada. This merchandise is classifiable under Harmonized Tariff
Schedule (``HTS'') subheadings 2503.10.00, 2503.90.00, and 2802.00.00.
Although the HTS subheadings are provided for convenience and for U.S.
Customs purposes, the Department's written description of the scope of
this order remains dispositive. The POR is December 1, 1996 through
November 30, 1997.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products covered by the Scope of the Review section above, which were
produced and sold by the respondent in the home market during the POR,
to be foreign like products for purposes of determining appropriate
product comparisons to U.S. sales. For all of Husky's U.S. sales, there
were identical sales in the home market on which to base comparisons.
Level of Trade
In accordance with section 773(a)(1)(B) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (``LOT'') as the EP or CEP transaction. The NV
LOT is that of the starting-price sales in the comparison market or,
when NV is based on constructed value (``CV''), that of the sales from
which we derive selling, general and administrative (``SG&A'') expenses
and profit. For EP, the LOT is also the level of the starting-price
sale, which is usually from the exporter to the importer. For CEP, it
is the level of the constructed sale from the exporter to the
affiliated importer.
To determine whether NV sales are at a different LOT than EP or CEP
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 a
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 an
[[Page 849]]
LOT adjustment under section 773(a)(7)(A) of the Act. Finally, for CEP
sales (which we note is not the case for Husky), if the NV level is
more remote from the factory than the CEP level and there is no basis
for determining whether the differences in the levels between NV and
CEP sales affect price comparability, we adjust NV under section
773(A)(7)(B) of the Act (the CEP offset provision). See Notice of Final
Determination of Sales at Less Than Fair Value: Certain Carbon Steel
Plate from South Africa, 62 FR 61731 (November 19, 1997).
In the present review, Husky did not request a LOT adjustment or
CEP offset. To ensure that no such adjustment was necessary, in
accordance with the principles discussed above, we examined information
regarding the distribution systems in both the United States and
Canadian markets, including the selling functions, classes of customer,
and selling expenses.
In the home market, Husky reported that it sold through one sales
channel: to end-users. The selling functions associated with this
channel included inventory maintenance, freight and delivery
arrangements, and credit services. Hence, we preliminarily determine
that there is one LOT in the home market.
In the U.S. market, Husky reported two sales channels: (1) To end-
users; and (2) to resellers. Husky's U.S. sales through the second
sales channel were made via a Canadian reseller. Husky knows that sales
through this channel are destined for the U.S. market, hence, Husky
classifies all its sales in the reseller sales channel as U.S. sales.
We examined the selling functions performed for each of the two U.S.
sales channels. Both sales channels involved inventory maintenance,
freight and delivery arrangements, and credit services. Based on the
above information, we preliminarily determine that there is one LOT in
the United States.
Based on our analysis of the selling functions performed for sales
in the home market and EP sales in the U.S. market, we preliminarily
determine that there is not a significant difference in the selling
functions performed in the U.S. and home markets and that these sales
are made at the same LOT. Therefore, an LOT adjustment is not
appropriate.
Fair Value Comparisons
To determine whether sales of subject merchandise to the United
States were made at less than fair value, we compared the EP to the NV.
In accordance with section 777A(d)(2), we calculated monthly weighted-
average prices for NV and compared these to individual EP transactions.
Export Price
For calculation of the price to the United States, we used EP, in
accordance with section 772(a) of the Act, because Husky's subject
merchandise was sold to the first unaffiliated purchaser in either
Canada (shipped directly from the producer to the U.S. purchaser) or
the United States prior to importation, and use of the CEP methodology
was not otherwise warranted. We calculated EP based on free on board
(f.o.b.) plant or delivered prices to unrelated customers. We made
deductions to the starting price for movement expenses (inland freight,
brokerage and handling, and tank car leasing expenses) pursuant to
section 772(c)(2) of the Act. For a further explanation of how we
calculated EP, see Memorandum to the File: Analysis Memorandum for the
Preliminary Results of Review, December 31, 1998 (``Analysis Memo'').
Because Husky invoices its customers, in all cases, after shipment, we
have used Husky's shipment date as the date of sale for the United
States in accordance with 19 CFR 351.401(i).
Normal Value
We compared the aggregate volume of Husky's home market sales of
the foreign like product and U.S. sales of the subject merchandise to
determine whether the volume of the foreign like product Husky sold in
Canada was sufficient, pursuant to section 773(a)(1)(C) of the Act, to
form a basis for NV. Because Husky's volume of home market sales of the
foreign like product was greater than five percent of its U.S. sales of
subject merchandise, in accordance with section 773(a)(1)(B)(i) of the
Act, we have based the determination of NV upon Husky's home market
sales of the foreign like product. Moreover, there is no evidence on
the record indicating a particular market situation in the exporting
country that would not permit a proper comparison of home market and
U.S. prices. See section 773(a)(1)(C)(iii) of the Act. Thus, we based
NV on the prices at which the foreign like product was first sold for
consumption in Canada, in the usual commercial quantities, in the
ordinary course of trade, and at the same LOT as the EP sales.
After testing home market viability and whether home market sales
were at below-cost prices, we calculated NV as noted in the ``Price-to-
Price Comparisons'' and ``Price-to-CV Comparison'' sections of this
notice.
Cost of Production (``COP'') Analysis
Because the Department determined, in the most recently completed
review, that Husky made sales in the home market at prices below the
cost of producing the subject merchandise (see, e.g., Notice of
Preliminary Results of Review: Elemental Sulphur from Canada, 62 FR 969
(January 7, 1997)), the Department determines in this review that there
are reasonable grounds to believe or suspect that Husky made sales in
the home market at prices below the cost of producing the merchandise.
See section 773(b)(2)(A)(ii) of the Act. As a result, the Department
initiated a cost of production inquiry in this case on February 2,
1998, to determine whether Husky made home market sales during the POR
at prices below their respective COPs within the meaning of section
773(b) of the Act.
We conducted the COP analysis described below.
A. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated COP
based on the sum of Husky's cost of materials and fabrication for the
foreign like product, plus amounts for home market selling, general and
administrative expenses (``SG&A''), interest expenses, and packing
costs. We used home market sales and COP information provided by Husky
in its questionnaire responses. We made the following changes to
Husky's reported costs based on our verification findings: (1) We
included ``interest on subordinated shareholders' loans'' and
``Dividends on Class C shares'' in the calculation of the financial
expense ratio (Husky omitted these costs from its calculation of COP
and CV); (2) we revised the reported cost of sales (``COS'') figure
used in the calculation of the financial expense ratio to exclude
several costs used in Husky's calculation of the financial expense
ratio; (3) we included certain miscellaneous and non-operating expense
items in the calculation of the general and administrative (``G&A'')
expense ratio; and (4) we revised the reported COS figure used in the
calculation of the G&A ratio to exclude several costs. See Memorandum
to the File, ``Preliminary Cost Calculations for Husky Oil, Ltd.'',
dated December 31, 1998 and the Cost Verification Report, dated
December 1, 1998.
B. Test of Home Market Prices
We compared the POR-long weighted average COP for Husky, adjusted
where appropriate (see above), to its home
[[Page 850]]
market sales of the foreign like product as required under section
773(b) of the Act. In determining whether to disregard home market
sales made at prices less than the COP, we examined whether: (1) Within
an extended period of time, such sales were made in substantial
quantities; and (2) such sales were made at prices which permitted the
recovery of all costs within a reasonable period of time.
C. Results of the COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of a respondent's sales of a given product within an extended
period of time are at prices less than the COP, we do not disregard any
below-cost sales of that product because the below-cost sales are not
made in ``substantial quantities.'' Where 20 percent or more of a
respondent's sales of a given product during the extended period are at
prices less than the COP, we determine such sales to have been made in
``substantial quantities.'' See section 773(b)(2)(C)(i) of the Act. The
extended period of time for this analysis is the POR. See section
773(b)(2)(B) of the Act. Because each individual price was compared
against the POR-long weighted average COP, any sales that were below
cost were also at prices which did not permit cost recovery within a
reasonable period of time. See section 773(b)(2)(D). We compared the
COP for liquid sulphur to the reported home market prices less any
applicable movement charges. Pursuant to section 773(b)(2)(C) of the
Act, we concluded that Husky's below cost sales were made in
substantial quantities because the volume of these sales represented
more than 20 percent of the volume of sales under consideration for the
determination of NV. We also concluded that these below-cost sales were
made within an extended period of time (i.e., within the POR) within
the meaning of section 773 of the Act. See Statement of Administrative
Action (``SAA''), accompanying the Uruguay Round Agreements Act, at
832.
D. Calculation of CV
In accordance with section 773(e)(1) of the Act, we calculated
Husky's CV based on the sum of Husky's cost of materials, fabrication,
SG&A, interest expenses and profit. We calculated the COPs included in
the calculation of CV as noted above in the ``Calculation of COP''
section of this notice. In accordance with section 773(e)(2)(A) of the
Act, we based SG&A and profit on the amounts incurred and realized by
Husky in connection with the production and sale of the foreign like
product in the ordinary course of trade, for consumption in Canada.
Price-to-Price Comparisons
We based NV on the home market prices to unaffiliated purchasers
(Husky made no sales to affiliated parties). Home market prices were
based on ex-factory or delivered prices. We made adjustments, where
applicable, for movement expenses in accordance with section
773(a)(6)(B) of the Act. We also made adjustments for differences in
circumstances of sale (``COS'') in accordance with 773(a)(6)(C)(iii) of
the Act and 19 CFR 351.410 by deducting home market direct selling
expenses (credit) and adding U.S. direct selling expenses (credit).
Price-to-CV Comparisons
In accordance with section 773(a)(4) of the Act, we based NV on CV
if we were unable to find suitable home market sales of the foreign
like product. We made adjustments to CV in accordance with section
773(a)(8) of the Act. For comparisons to EP, we made COS adjustments by
deducting home market direct selling expenses and adding U.S. direct
selling expenses.
Revocation
As noted, Husky has requested revocation pursuant to 19 CFR
351.222, which, at subsection (d), authorizes the Department to treat
unreviewed intervening years as reviewed periods for purposes of its
revocation analysis. However, the Department's policy is not to apply
this regulation retroactively to include periods subject to review
under earlier versions of the regulations. As we explained in a recent
administrative review of the countervailing duty order on agricultural
tillage tools from Brazil, ``[a]lthough section 351.222(d) of the
Department's regulations provides that the Secretary may revoke the
order in part when there are unreviewed years in the period upon which
revocation is based, the regulations do not provide for the application
of this provision retroactively to review periods that would have been
controlled by the Department's pre-Uruguay Round regulations.'' See
June 11, 1998 Letter from Barbara Tillman, Director, Office of CVD/AD
Enforcement VI, to Randolph J. Stayin, Barnes & Thornburg. See also
Certain Agricultural Tillage Tools From Brazil; Preliminary Results of
Countervailing Duty Administrative Review, 63 FR 37532, 37533 (July 13,
1998) (``The Department considered Marchesan's revocation request and
determined that the company did not meet the requirements to be
considered for revocation from the countervailing duty order.'')
(affirmed in final results at 63 FR 52685). Likewise, in Frozen
Concentrated Orange Juice From Brazil; Final Results of Antidumping
Duty Administrative Review, 63 FR 26145, 26146 (May 12, 1998), the
Department declined to apply new section 351.222 retroactively to
include periods that would have been reviewed under pre-URAA regulatory
authority in its revocation analysis.
Because the Department does not apply section 351.222(d) of the new
regulations retroactively, any unreviewed periods that apply to the
three-consecutive-year revocation requirement must be periods reviewed
under Part 351. Husky's 1995-96 POR thus cannot be considered the
second of three consecutive PORs in this revocation analysis.
Therefore, because Husky has not satisfied the threshold requirement
that revocation be based upon sales ``at not less than normal value for
a period of at least three consecutive years,'' we do not reach the
additional criteria for revocation enumerated at 19 CFR 351.222 (b)(2)
(ii) and (iii).
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
following weighted-average dumping margin exists for the period
December 1, 1996 through November 30, 1997:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
Husky Oil, Ltd............................................. 0.37
------------------------------------------------------------------------
The Department will disclose calculations performed in connection
with this preliminary determination within five days of the date of
publication of this notice. Any interested party may request a hearing
within 30 days of publication. Case briefs from interested parties may
be submitted not later than 30 days after the date of publication of
this notice in the Federal Register; rebuttal briefs may be submitted
not later than five days thereafter. Any hearing, if requested, will be
held 2 days after the scheduled date for submission of rebuttal briefs.
Issues raised in the hearing will be limited to those raised in the
case briefs. The Department will publish the final results of this
administrative review, including its analysis of issues raised in any
written comments or at a hearing, not later than 120 days after the
date of publication of this notice.
Upon issuance of the final results of this review, the Department
shall determine, and the U.S. Customs Service shall assess, antidumping
duties
[[Page 851]]
on all appropriate entries. If these preliminary results are adopted in
our final results, we will instruct Customs not to assess antidumping
duties on the merchandise subject to review. Upon completion of this
review, the Department will issue appraisement instructions directly to
the Customs Service. If applicable, we will calculate an importer-
specific ad valorem duty assessment rate based on the ratio of the
total amount of antidumping duties calculated for the examined sales
made during the POR to the total customs value of the sales used to
calculate those duties. This rate will be assessed uniformly on all
entries of that particular importer made during the POR. This is
equivalent to dividing the total amount of antidumping duties, which
are calculated by taking the difference between statutory NV and
statutory EP, by the total statutory EP value of the sales compared,
and adjusting the result by the average difference between EP and
Customs value for all merchandise examined during the POR.
Furthermore, the following deposit requirements will be effective
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 these administrative reviews, as provided by section
751(a)(1) of the Act: (1) For Husky, no deposit will be required; (2)
if the exporter is not a firm covered in this review, a prior 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) the cash deposit rate
for all other manufacturers will be the ``all others'' rate made
effective by the final results of the 1993-94 administrative review of
these orders (see 1992-93 and 1993-94 Final Results). These deposit
requirements shall remain in effect until publication of the final
results of the next administrative review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: December 30, 1998.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-242 Filed 1-5-99; 8:45 am]
BILLING CODE 3510-DS-P