# Industrial Nitrocellulose from the United Kingdom; Final Results of Antidumping Administrative Review

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URL: https://www.frixlaw.com/law-library/documents/fr%3A94-31797

## Record

- **Collection:** Federal Register
- **Document type:** Uncategorized Document
- **Published:** December 28, 1994

## Text

DEPARTMENT OF COMMERCE
[A-412-803]

Industrial Nitrocellulose from the United Kingdom; Final Results
of Antidumping Administrative Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative
Review.

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

SUMMARY: On May 12, 1994, the Department of Commerce (the Department)
published the preliminary results of its administrative review of the
antidumping duty order on industrial nitrocellulose from the United
Kingdom. The period of review is July 1, 1992 through June 30, 1993.
We gave interested parties an opportunity to comment on our
preliminary results. Based on our analysis of the comments received, we
have changed the results from those in our preliminary results of
review.

EFFECTIVE DATE: December 28, 1994.

FOR FURTHER INFORMATION CONTACT: Rebecca Trainor or Maureen Flannery of
the Office of Antidumping Compliance, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington D.C. 20230; telephone
(202) 482-4733.

SUPPLEMENTARY INFORMATION:

Background

On May 12, 1994, the Department published in the Federal Register
(59 FR 24684) the preliminary results of this administrative review of
the antidumping duty order on industrial nitrocellulose from the United
Kingdom (55 FR 28270, July 10, 1990). The preliminary results indicated
the existence of dumping margins for the respondent in this review.
Imperial Chemicals Industries PLC (ICI), the sole manufacturer and
exporter in this review, and petitioner, The Aqualon Company, submitted
case and rebuttal briefs. The Department has now completed this
administrative review in accordance with section 751 of the Tariff Act
of 1930, as amended (the Act). The changes in our calculations based on
these comments are addressed below.

Scope of Review

This review covers shipments of industrial nitrocellulose (INC)
from the United Kingdom. INC is a dry, white, amorphous synthetic
chemical with a nitrogen content between 10.8 and 12.2 percent, which
is produced from the reaction of cellulose with nitric acid. It is used
as a film-former in coatings, lacquers, furniture finishes, and
printing inks. INC is currently classifiable under Harmonized Tariff
Schedule (HTS) item number 3912.20.00. The HTS subheadings are provided
for convenience and U.S. Customs Service purposes. The written
description remains dispositive. The scope of the antidumping order
does not include explosive grade nitrocellulose, which has a nitrogen
content of greater than 12.2 percent.
The review period is July 1, 1992 through June 30, 1993. This
review covers sales of INC from the United Kingdom by one company, ICI.

Analysis of the Comments Received

We invited interested parties to comment on the preliminary
results. We received case and rebuttal briefs from ICI, the U.K.
manufacturer, and the petitioner, The Aqualon Company.

Comment 1:

ICI claims that officials from the Department misinterpreted a
comment made by counsel for ICI at the U.S. sales verification. In an
April 30, 1994 memorandum to the file, the Department indicated that
counsel stated that, given the amount of work that would be required in
answering the further processing questionnaire and for other reasons,
the entity in the United States that further processed nitrocellulose
would probably not want to put forth the effort to answer the
questionnaire. ICI contends that, even though the further-processing
entity had no incentive to do so, it made a concerted effort to
communicate and work with the Department, and to provide the Department
with as much information as possible, ``within its limited
capability.'' ICI further states that the point counsel was attempting
to make at verification was that ICI itself could not supply any
further-manufacturing information.

Department's Position:

We have determined that use of BIA for ICI's sales that involve
further manufacturing is appropriate. ICI did not respond to the
further-processing questionnaire, and we have concluded that ICI could
have provided the requested information. Our decision to resort to BIA
is based on this lack of response, not on any alleged statement by
counsel to ICI.
On January 27, 1994, we requested that ICI respond to the
Department's further-processing questionnaire with respect to sales to
a company that further processed nitrocellulose into ink. In a letter
dated February 15, 1994, ICI indicated that it would not respond to the
further-processing questionnaire, claiming that it was impossible to
provide the requested information. At verification, we discussed the
further-processing questionnaire with an official from the company that
further processed ICI nitrocellulose. This official had indicated in
previous submissions, and at the verification as well, that it was
impossible to determine the amounts of nitrocellulose contained in a
particular product.
In reviewing the materials that the official presented at the
verification, we were only able to determine that it would be
difficult, not impossible, to trace the product formulae back to
determine whether, and how much, nitrocellulose is contained in a given
product. The official also noted that product data were maintained on
different computer systems that were not linked, thus creating a
problem in retrieving the information requested by the Department. No
explanation was given of why that information could not be downloaded
from the individual systems and then uploaded together onto a single
system. ICI's reasons for not responding to the further-processing
questionnaire apparently concern the time that would have been required
to provide the requested information, rather than the impossibility of
providing a response. As stated in the preliminary results, we
concluded that it would not have been impossible for ICI to answer the
further-processing questionnaire.

Comment 2:

ICI argues that the Department's use of non-cooperative best
information available (BIA) for sales it made to a company that further
processed nitrocellulose is unjustified and unsupported by fact or law.
ICI cites Allied-Signal Aerospace Co. v. United States, 996 F.2d. 1185
(Fed. Cir. 1993), to support its argument that, in order to apply the
first tier of BIA, the Department must conclude that the respondent
refused to cooperate with the Department or otherwise significantly
impeded the review. See also 19 U.S.C. Sec. 1677e; 19 C.F.R.
Sec. 353.37.
ICI claims that it substantially cooperated with the Department to
the extent possible given the further-processing entity's limited
resources and given that the information submitted with regard to the
further-processing entity demonstrates that no dumping resulted from
sales of the further-processed product.
ICI contends that the non-cooperative BIA rate should be distinct
from the cooperative rate. The cooperative rate, ICI argues, should be
based on verified information on the record. ICI suggests that, as
cooperative BIA, the Department should use the average dumping rate of
all reported sales from ICI to the further-processing entity during the
period when the two companies were related, or at the very least, a
margin not exceeding the average margin for sales made to unrelated
customers during the period of review.
Petitioner argues that the record supports the Department's
conclusion that ICI made a calculated business decision not to
cooperate with the Department on this issue. Petitioner is unconvinced
by ICI's argument regarding the difficulty of tracking ICI
nitrocellulose to the final product produced by the further processor.
Petitioner suggests that a reasonable basis such as a first-in, first-
out methodology could have been utilized to provide the Department with
the requested information. Petitioner argues that, were the Department
to accept ICI's argument, a huge loophole would result in almost every
case involving further manufacturing. Applying BIA in such situations
is necessary in order for the Department to maintain the credibility
and usefulness of its further-processing questionnaire.
Petitioner asserts that the Department used an improper BIA rate
for the further processed sales. Petitioner argues that, because ICI
willfully refused to comply with the Department's request for
information on further processing, the Department should follow past
practice and use the highest non-aberrant calculated margin for any
other sale of merchandise of the same class or kind made by the same
respondent. See Notice of Final Determination of Sales at Less than
Fair Value: Certain Hot-Rolled Carbon Steel Flat Products, etc. 58 FR
37062 (July 9, 1993). Petitioner contends that there is no a priori
reason why there should be separate BIA policies for investigations and
for administrative reviews.
ICI objects to petitioner's characterization that it ``willfully
refuse[d]'' to comply with the Department's request. ICI also contends
that the further-processing entity expended significant efforts in
order to cooperate fully with the Department in providing documents and
explaining the company's operations at verification.

Department's Position:

We disagree with ICI and have continued to apply uncooperative BIA.
The Department uses partial BIA, when, as in this case, a company's
responses are deficient in limited respects. The decision to use
partial rather than total BIA, therefore, is dependent upon the size of
the deficiency and the degree to which the deficiency affects the
balance of the response. See, e.g., Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From France; et. al.; Final
Results of Antidumping Administrative Reviews, 57 FR 28360, 28379 (June
24, 1992). See also Allied Signal, supra. Because ICI chose not to
respond to the further-processing questionnaire, we used as BIA for
further-processed sales the highest rate ever calculated for ICI.
We applied partial BIA to ICI for its failure to respond to the
further-processing questionnaire. We applied BIA, which by its nature
is meant to be adverse, in accordance with our general practice. ICI's
failure to respond does not warrant an exception to this practice, or
the application of a neutral margin to these sales, as ICI suggests.
We disagree with petitioner's assertion that the Department should
use the highest non-aberrant calculated margin for any other sale.
While the Department follows the same general BIA policy for
investigations and administrative reviews, differences in actual BIA
rates applied occur because the same information is not available in an
investigation as is available for a review. The BIA we selected is in
accordance with the BIA policy for antidumping reviews. See
Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts
Thereof From France; et. al.; Final Results of Antidumping Duty
Administrative Reviews, 57 FR 28360, 28379 (June 24, 1992).

Comment 3:

ICI claims that the Department should not have applied BIA to all
further processed sales made during the period of review but, rather,
should have limited the BIA only to sales made up to May 31, 1993,
since, after that date, the further-processing company became an
unrelated company.

Department's Position:

We disagree. The respondent was unable to demonstrate that, after
May 31, 1993, the further-processing entity had become a separate
company. As noted on page 18 of the verification report, that company's
parent continues to have a large degree of interaction with ICI.
Moreover, during June 1993, the parent of the further processor and ICI
shared the same board chairman. See the January 18, 1994, response to
supplemental questionnaire, pages 1 to 5. For these reasons, which are
outlined in more detail in the August 23, 1994, proprietary memorandum
from case analyst to the file, we treated all of ICI's sales to the
further processor during the period of review as related-party sales.

Comment 4:

ICI contests the BIA the Department used for marine insurance,
claiming it was unreasonable and unjustified. ICI points out that sales
trace documents confirmed ICI's calculation of marine insurance and
notes the Court of International Trade's (CIT's) ruling that the ``use
of the best information available rule is not to be resorted to when
respondents have supplied adequate information.'' See Sigma Corp. et
al. v. United States, 841 F. Supp. 1255 (CIT 1993). ICI argues that,
since complete marine insurance data are on the record, the use of BIA,
based on the assumption that marine insurance was received from a
related party without evidence of arm's-length pricing, is
``unreasonable and unsupported by any evidence on the record.'' See
also Rhone-Poulenc Inc. v. United States, 899 F.2nd 1185, 1190 (Fed.
Cir. 1990).
Further, ICI points out that, since ICI ``self-insures marine
insurance,'' no insurance expense is incurred in the absence of claims.
Therefore, since there were no claims made during the period of review,
ICI claims that the Department would be justified in not making
deductions for this expense.
ICI claims that the Brazilian marine insurance rate used as BIA
represents different commercial realities than those faced by ICI such
as ``shipping distances, risks presented and other factors.'' ICI
points out that, for the Brazilian marine insurance, only a single
shipment was involved and that rates for such a minimal shipment would
not be comparable.
ICI contends that the most accurate form of BIA is the marine
insurance rate from the investigation because that rate represents
verified record information for the producer in the same case. ICI also
asks that the Department consider the use of the publicly available
insurance rates used for other antidumping cases involving shipment of
goods from the United Kingdom during a contemporaneous period. ICI
suggests that the marine insurance rates could be obtained from the
1992 to 1993 administrative review of forged-steel crankshafts from the
United Kingdom and the 1992 to 1993 administrative review of
antifriction bearings from the United Kingdom.

Department's Position:

We disagree with ICI. We did not learn until the verification that
ICI's reported marine insurance was provided by a related company. ICI
was unable to provide any supporting information to demonstrate that
the reported marine insurance was purchased at arm's length prices.
That no insurance claims were made during the period of review is
irrelevant. ICI incurred an expense for marine insurance on its sales
to the United States, and this expense must be deducted from U.S. price
in accordance with section 772(d)(2)(A) of the Act.
The respondent's suggestion that, as BIA, we use the marine
insurance rate from the investigation is inappropriate because that
rate was not demonstrated to be at arm's length. Regarding ICI's other
recommendation that we use the marine insurance rates for either
forged-steel crankshafts from the United Kingdom or antifriction
bearings from the United Kingdom, we note that these products are very
different from nitrocellulose. Nitrocellulose, being a chemical, is
likely to have a very different marine insurance rate than products
such as crankshafts or antifriction bearings. Accordingly, the
Brazilian rate used in the preliminary results is the most appropriate
since it pertains to the same product (nitrocellulose) and it is an
arm's length rate.

Comment 5:

ICI objects to the Department's use of BIA for packing costs for
the months July to November 1992. According to ICI, the Department
verified that, during the first half of the period of review, steel
drums used for packing were used once in the home market and then
reused in third-country markets. ICI claims that the Department not
only verified the average steel drum cost for the first half of the
period of review, but also verified other elements, such as labor and
other materials used in packing, and that these costs should be
included in the calculation of the BIA for packing costs incurred
during the first half of the period of review.
Petitioner agrees with the Department's conclusion in the
preliminary results that ICI did not establish the accuracy of its home
market packing cost for the July 1992 through November 1992 period and
that it could not demonstrate that the month of November, for which the
Department had verified information, was representative of the entire
5-month period. Petitioner contends that ICI's brief exposes an
additional reason why the Department should reject ICI's claimed
packing expense for the July to November 1992 period: ICI's methodology
assumes that the reuse rate is the same in the domestic market as in
foreign markets, even though sales quantities abroad differ from
domestic sales quantities. Petitioner also notes that the data for the
months before November 1992 are based on information that was not
documented at verification.

Department's Position:

We agree with petitioner that ICI was unable to demonstrate that
November 1992 was representative of the July to November 1992 period.
As discussed on pages 9 through 12 of the verification report, and in
an April 15, 1994, memorandum from the case analyst to the file, ICI
based its allocation of home market packing costs for the period July
through November 1992 solely on the month of November 1992, but
provided no information to demonstrate that November was a
representative month, and as such, an appropriate basis for formulating
an allocation of drum costs for the entire 5-month period. In addition
to not being able to verify the drum cost allocation, we were also
unable to verify the cost of the drums used during that 5-month period.
Therefore, the use of BIA for packing costs during the first half of
the period of review is appropriate.
We agree with ICI that we verified other elements of ICI's packing
cost, such as labor and other materials (materials other than drums).
These costs were already included in our calculation of the BIA for the
July to November 1992 packing costs for the preliminary results.
However, we failed to include return freight and refurbishing costs,
which we have included for these final results.

Comment 6:

Petitioner claims that the reuse of drums for home market and
third-country packing was not verified. As a result, the entire packing
cost should be denied or, as an alternative, petitioner suggests using
its average drum reuse rate of 6 to 7 times, rather than using the
packing material costs for the latter part of the period of review and
dividing that amount by two, as was done in the preliminary results.
ICI cites the verification report in contesting the petitioner's
contention that drum usage was not verified. In particular, ICI
indicates a passage which states that ``ICI lifted the November 1992
usage rates from an inventory ledger maintained in the United Kingdom''
and that ``November 1992 information was taken from a page in the
inventory ledger that we had already reviewed and verified in the
United Kingdom with regard to another element of the verification.''
ICI points out that the Department did not question ICI's calculation
methodology, only whether November 1992 was a representative month.

Department's Position:

During the verification, we reviewed ICI's drum purchasing records
for the July to November 1992 period and observed purchasing patterns
for three types of drums used in the home market. All three drum models
are discussed in a June 6, 1992, document included in Verification
Exhibit 3. One of those drum models was the lighter drum used during
the latter portion of the period of review. Of the other two drum
models, the document states that one would ``continue to be used within
the U.K. until considered unfit for use, then scrapped and will not be
reordered * * *'' while the other would be used ``once in the U.K. and
* * * then sent for [e]xport.'' In observing the drum purchasing
records, we noted that purchases were made only of the latter drum
model that would be used ``once in the U.K. and * * * then sent for
[e]xport'' and of the lighter drum used during the December 1992 to
June 1993 period. (See page 12 of the March 24, 1994, ``Report on the
Verification of Imperial Chemical Industries PLC and ICI Americas'' and
home market verification Exhibit 3.) Thus, we were able to confirm that
all drums used in the home market during the July to November 1992
period were used only once in the home market and then sent for export.
Accordingly, we have not denied the entire packing cost, nor have we
used petitioner's average drum reuse rate.

Comment 7:

ICI claims that the Department's use of the company's reported U.S.
short-term borrowing rate as BIA for home market credit and inventory
carrying costs is unreasonable. ICI notes that there are two components
to home market credit calculations: (1) payment terms for each
transaction (the number of days credit outstanding, measured from the
date of shipment to the date of payment); and (2) the short-term
borrowing rate. ICI claims that the Department verified actual payment
terms for all pre-selected and ``surprise'' home market transactions.
Regarding the reported short-term borrowing rate, ICI notes that it
presented a rate from a bank at which it could have borrowed during the
period of review and, to demonstrate the reasonableness of that rate,
submitted a calculation of an actual short-term borrowing rate based on
data for a related company.
ICI claims that the use in the preliminary results of the three-
month LIBOR for short-term borrowing in the United Kingdom is improper
because it is a rate for short-term borrowings of U.S. dollars, and
unavailable to ICI in the United Kingdom. Respondent suggests that, if
BIA is used, the Department should use the prime rate submitted by ICI.
Petitioner states that ICI's lack of short-term borrowing is an
indicator of the strength of the company and, therefore, questions how
ICI could possibly have home market credit costs that approximate the
private sector average.

Department's Position:

We agree with respondent that the three-month LIBOR for short-term
borrowings in U.S. dollars is not the most appropriate interest rate to
apply as BIA for home market short-term credit costs, since ICI would
have borrowed in pounds sterling, not dollars, to finance its sales in
the United Kingdom. See La Metalli Industriale, S.p.A. v. United
States, 912 F 2d 455, 460 (Fed. Cir. 1990). We have found the average
interest rate for three-month interbank loans in pounds sterling for
the review period to be comparable to the average prime rate ICI
submitted. See memorandum from the case analyst to the file, dated 8/
24/94. Therefore, for these final results we have used the average
prime rate submitted by ICI to calculate home market credit costs.

Comment 8:

ICI contends that the Department incorrectly matched U.S. sales
with foreign market values (FMVs) at different levels of trade without
first exhausting contemporaneous FMVs at the same level of trade.
Petitioner agrees with the respondent that the matching sequence is
incorrect with regard to matching by levels of trade. However,
petitioner notes that there is an additional problem at one stage in
the program where a file is created that groups all possible U.S. sales
by product and month, while ignoring level of trade.

Department's Position:

We agree with ICI and petitioner. For the final results, we have
exhausted contemporaneous FMVs at the same level of trade before
seeking FMV matches at different levels of trade. We have also
corrected the problem caused by grouping all possible U.S. sales by
month while ignoring level of trade.

Comment 9:

Petitioner argues that, for all post-June 1, 1993, sales, the
respondent has failed to report the selling price of the sale to the
first unrelated customer. Petitioner notes that ICI claimed that a
company that was related to ICI until a May 31, 1993, ``demerger''
acted as a sales agent in the United States on behalf of ICI.
Petitioner claims that that company could not have been ICI's
agent, because ``[a]n agent does not purchase the goods from the
foreign manufacturer, take title and act as importer of record,'' as
that company did. Rather, the demerged company was the first unrelated
buyer after June 1, 1993. Therefore, ICI should have reported its June
1993 sales to that company.
ICI contests petitioner's argument that the demerged company was
the first unrelated purchaser of ICI nitrocellulose, arguing that the
Department verified that this was not the case. Further, ICI claims
that because the Department also verified the quantity and value of ICI
America's U.S. sales for the period of review, ICI was able to
demonstrate that the selling price charged to the ultimate customer was
the price recorded in ICI America's financial statements.

Department's Position:

We disagree with petitioner. As noted above in our response to
comment 3, we do not consider the ``demerged'' company to have been a
separate, unrelated company during any portion of the period of review.
Furthermore, we verified the activities of that company with respect to
ICI sales and determined that it was not the purchaser as claimed by
petitioner. In verifying sales traces, we were able to confirm that
shipments were made directly to the ultimate customer and did not pass
through the inventory of the ``demerged'' company. Therefore, we
concluded that company acted as a related agent throughout the period
of review and, for all post-June 1, 1993 sales, have continued to use
the sales from ICI to the first unrelated customer in our analysis.

Comment 10:

Petitioner contests the inclusion in ICI's case brief of certain
data, claiming that those data contain new factual information.
Petitioner contends that ICI has included this information in its brief
in an effort to make up for deficiencies highlighted in the preliminary
results.

Department's Position:

We agree with petitioner for the most part. We asked the respondent
to resubmit its case and rebuttal briefs, excluding the new factual
information, and that the petitioner, likewise, remove from its
rebuttal brief references to that information. See letter from OADC
Division II Director to Michael Hertzberg and Maria Tan Pedersen, dated
July 15, 1994; letter from OADC Division II Director to Edward M.
Lebow, dated July 15, 1994; and the memorandum from case analyst to the
file dated August 25, 1994.

Comment 11:

ICI claims that the Department calculated the commission offset
contrary to the methodology stated in the analysis memorandum.

Department's Position:

We agree with the respondent and have corrected this inadvertent
error for the final results.

Comment 12:

ICI claims that a computer error occurred with respect to the
inventory carrying cost field.

Department's Position:

We disagree with the respondent. Correct amounts were calculated
for inventory carrying cost.

Comment 13:

Petitioner notes clerical errors in the program: 1) U.S. packing
was not converted to U.S. dollars; and 2) U.S. brokerage was not
deducted from U.S. price.

Department's Position:

We agree with the petitioner and have made these corrections for
the final results.

Final Results of the Review

As a result of our comparison of the U.S. price to FMV, we
determine that the following dumping margin exists:

------------------------------------------------------------------------
Margin
Manufacturer/exporter Time period (percent)
------------------------------------------------------------------------
Imperial Chemicals Industries PLC............ 7/1/92-6/30/93 5.08
------------------------------------------------------------------------

Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between U.S. price and FMV may vary from the percentage
stated above. The Department will issue appraisement instructions
directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
upon publication of this notice of final results of review for all
shipments of INC from the United Kingdom entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided by section 751(a)(1) of the Act: (1) The cash deposit rate for
the reviewed company will be that established in the final results of
this administrative review; (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 or a previous review or the
less-than-fair-value (LTFV) investigation, but the manufacturer is, the
cash deposit rate will be the rate established in the LTFV
investigation for the manufacturer of the merchandise; and (4) the cash
deposit rate for all other manufacturers or exporters will be the ``all
others'' rate of 11.13 percent established in the final notice of the
LTFV investigation.
This notice also serves as a reminder to importers of their
responsibility under 19 CFR 353.26 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 notice also serves as a reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 C.F.R. 353.34(d) or 355.34(d). Timely written
notification of return/destruction of APO materials or conversion to
judicial protective order is hereby requested. Failure to comply with
the regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22
of the Department's regulations.

Dated: December 16, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-31797 Filed 12-27-94; 8:45 am]
BILLING CODE 3510-DS-P

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A94-31797. Public record. Not legal advice.