Elemental Sulphur From Canada; Preliminary Results of Antidumping Finding Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-047]

Elemental Sulphur From Canada; Preliminary Results of Antidumping

Finding Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of Preliminary Results of Antidumping Finding

Administrative Review.

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SUMMARY: In response to a request by a U.S. producer, the Department of

Commerce (the Department) is conducting an administrative review of the

antidumping finding on elemental sulphur from Canada. The review covers

15 manufacturers/exporters of the subject merchandise to the United

States and the period December 1, 1991 through November 30, 1992.

As a result of the review, we have preliminarily determined that

dumping margins exist for certain of these respondents. If these

preliminary results are adopted in our final results of administrative

review, we will instruct U.S. Customs to assess antidumping duties at

the prescribed rates.

Interested parties are invited to comment on these preliminary

results.

EFFECTIVE DATE: July 24, 1995.

FOR FURTHER INFORMATION CONTACT: Thomas O. Barlow, Office of

Antidumping Compliance, Import Administration, International Trade

Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-

0410.

SUPPLEMENTARY INFORMATION:

Background

On December 17, 1973, the Department of the Treasury published in

the Federal Register (38 FR 34655) an antidumping finding with respect

to elemental sulphur from Canada. On December 4, 1992, the Department

published a notice of ``Opportunity to Request an Administrative

Review'' of this antidumping finding for the period December 1, 1991

through November 30, 1992 (57 FR 57419). We received a timely request

from Pennzoil Sulphur Company (Pennzoil), a domestic producer of

elemental sulphur, for review of the finding with respect to Alberta

Energy Co., Ltd. (Alberta), Allied Corporation (Allied), Brimstone

Export (Brimstone), Burza Resources (Burza), Canamex, Delta Marketing

(Delta), Drummond Oil & Gas, Ltd. (Drummond), Fanchem, Husky Oil, Ltd.

(Husky), Mobil Oil Canada, Ltd. (Mobil), Norcen Energy Resources

(Norcen), Petrosul International (Petrosul), Real International (Real),

Saratoga Processing Co., Ltd. (Saratoga), and Sulbow Minerals (Sulbow).

Pennzoil is a producer of elemental sulphur, and, thus, an ``interested

party'' as defined by 771(9)(C) of the Tariff Act of 1930, as amended

(the Act) and Sec. 353.2(k)(3) of the Department's regulations. This

review was initiated on February 23, 1993 (58 FR 11026) with respect to

all 15 of the companies listed above. On March 25, 1993, the Department

issued antidumping sales questionnaires to respondents. On June 23,

1993, Pennzoil filed allegations of sales below the cost of production

(COP) against Mobil, Husky, and Petrosul. On December 3, 1993, the

Department initiated cost investigations of these three respondents and

issued COP questionnaires on December 6, 1993. The Department is

conducting this review in accordance with section 751 of the Act.

Scope of the Review

The period of review (POR) is December 1, 1991 through November 30,

1992. 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.

The HTS subheading is provided for convenience and for U.S. Customs

purposes. The written description of the scope of this order remains

dispositive as to product coverage.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the statute and to the

Department's regulations are references to the provisions as they

existed on December 31, 1994.

United States Price (USP)

The Department has calculated a dumping margin only for Husky. (see

explanations below for analyses of remaining firms.)

In calculating USP for Husky, the Department used purchase price as

defined in section 772(b) of the Act, because the merchandise was sold

to unrelated U.S. purchasers prior to importation. Husky sold primarily

liquid sulphur to the United States during the POR but also had sales

of bagged and powdered elemental sulphur.

We calculated purchase price based on an ex-factory f.o.b. Canadian

plant, or customer's specific delivery point bases. We made

adjustments, where applicable, for discounts and movement expenses in

accordance with section 772(d)(2) of the Act.

Foreign Market Value (FMV)

Husky did not have a viable home market during the POR. Therefore,

Husky reported third-country sales of formed (e.g., prilled) elemental

sulphur. Section 773(a)(4)(C) of the Act provides that a difference-in-

merchandise (DIFMER) allowance may be made when a product on which FMV

is based is not identical to that exported to the United States.

Section 353.57 of the Department's regulations provides that the

allowance will normally be based on differences in cost of production,

but may be based on differences in market value. The Department makes

DIFMER adjustments on the basis of precise physical differences. In

addition, the cost differences which form the adjustment must be

related to those physical differences and not to

[[Page 37873]]

extraneous factors. Further, when the DIFMER is greater than twenty

percent of the U.S. product's total cost of manufacture (COM), the

Department resorts to constructed value (CV) to establish FMV. See

Differences in Merchandise; 20% Rule, Import Administration Policy

Bulletin: Number 92.2, July 29, 1992 (``Policy Bulletin No. 92.2'').

For purposes of these preliminary results, we determined that variable

manufacturing cost differences of formed elemental sulphur exceeded

twenty percent of the total average cost of manufacture, on a model-

specific basis, of the product exported to the United States (liquid,

powdered and bagged). Therefore, in accordance with Department policy

and section 773(a)(2) of the Act, we calculated FMV based on the CV of

the merchandise sold in the United States.

In accordance with section 773(e) of the Act, CV includes the costs

of materials and fabrication, general expenses, profit, and, where

relevant, packing for shipment to the United States. We adjusted

Husky's reported COM by disallowing the offset of processing income

against operating costs and increasing depreciation by basing it on a

cost basis allocation methodology as opposed to a net-realizable value

allocation methodology (See COP and CV Calculation Adjustment Memo for

the Preliminary Determination of Elemental Sulphur From Canada--Husky

Oil Ltd., July 7, 1995). We used Husky's third-country selling expenses

pursuant to section 773(e)(1)(B) of the Act. We used Husky's actual

general expenses as they were greater than the statutory minimum of ten

percent of COM but applied the statutory eight percent for profit to

COP.

We made circumstance-of-sale adjustments for differences in credit

and royalty expenses.

No other adjustments were claimed or allowed.

Non-Shippers

Based on the information on the record, the Department has

determined that Allied, Alberta, and Norcen had no shipments to the

United States during the POR. Because these firms have never been

subject to a review and, therefore, do not have their own rates in

place, entries of their merchandise will continue to enter under the

``All Others'' category.

Best Information Available

As a result of our review, we have preliminarily determined to

apply best information available (BIA) to various firms. (See company

specific descriptions below.)

Section 776(c) of the Act requires the Department to use BIA

``whenever a party or any other person refuses or is unable to produce

information requested in a timely manner or in the form required, or

otherwise significantly impedes an investigation.''

Department regulations provide that ``[t]he Secretary will use the

best information available whenever the Secretary (1) [d]oes not

receive a complete, accurate, and timely response to the Secretary's

request for factual information; or (2) [i]s unable to verify, within

the time specified, the accuracy and completeness of the factual

information submitted.'' 19 CFR 353.37(a).

In deciding what to use as BIA, the Department's regulations

provide that the Department may take into account whether a party

refuses to provide requested information. 19 CFR 353.37(b). Prior

Department practice has been to determine, on a case-by-case basis,

what constitutes BIA. This can be a decision to apply total BIA to a

respondent or partial BIA (the selective use of individual pieces of

data to substitute for missing or unreliable data in a dumping

analysis).

In Allied-Signal Aerospace Co. v. United States, 996 F.2d 1185,

1191-92 (Fed. Cir. 1993), the Court of Appeals for the Federal Circuit

held that it is within the Department's discretion to decide what

constitutes BIA in a particular case and that this decision must be

afforded considerable deference. In exercising this discretion, the

Department has established two tiers of BIA in situations where it is

unable to use a company's response for purposes of determining that

company's dumping margin and applies each tier based on whether the

respondent cooperated or failed to cooperate in the proceeding.

For first-tier BIA, applied when a company refuses to

cooperate with the Department or significantly impedes the proceeding,

the Department has used as BIA the higher of (1) the highest of the

rates found for any firm for the same class or kind of merchandise in

the same country of origin in the less than fair value (LTFV)

investigation or prior administrative reviews, or (2) the highest rate

found in this review for any firm for the same class or kind of

merchandise in the same country of origin.

For second-tier BIA, applied when a company substantially

cooperates with the Department's requests for information but fails to

provide the information requested in a timely manner or in the form

required, or the Department is unable to verify the accuracy and

completeness of the information submitted, the Department has used as

BIA the higher of (1) the highest rate (including the ``All Others''

rate) ever applicable to the firm for the same class or kind of

merchandise from either the LTFV investigation or a prior

administrative review, or (2) the highest calculated rate in this

review for the class or kind of merchandise for any firm from the same

country of origin.

The Department's two-tiered BIA methodology also was upheld by the

court in Allied-Signal. Id.

Mobil

Mobil did not have a viable home market during the POR. Therefore,

Mobil reported third-country sales of formed (e.g., prilled) elemental

sulphur. During this administrative review, Mobil cooperated with the

Department's requests for information, including participating in

verification of its responses. However, during verification at Mobil,

the Department discovered significant discrepancies in Mobil's

submissions to the Department and company records, which are outlined

in detail in the sales verification report. See Verification of Sales

Questionnaire Response of Mobil Oil Canada Ltd., November 22, 1994

(Verification Report) (see also Memorandum to Joseph A. Spetrini, from

Holly A. Kuga, re: Use of Best Information Available for Mobil Oil

Canada, Ltd., in 1991-92 Administrative Review of Antidumping Finding

on Elemental Sulphur from Canada (May 10, 1995)). Therefore, because we

were unable to verify Mobil's response as required by 776(b) of the

Act, the Department determined that the use of total BIA is

appropriate. However, because Mobil substantially cooperated in this

segment of the proceeding by responding to the Department's requests

for information and participating in verification, the Department

determined that the second tier of BIA as described above should be

applied to Mobil for the preliminary results of review. The highest

rate previously applicable to Mobil is 5.56 percent. Therefore, the

rate calculated for Husky, the highest calculated rate in this review,

shall apply to Mobil as this rate is higher than the rate previously

applicable to Mobil.

Petrosul

Petrosul, a reseller of elemental sulphur, had a viable home market

during the POR and had home-market and U.S. sales of liquid sulphur.

Pennzoil alleged that Petrosul made home market sales at prices

below the cost of producing the elemental sulphur. Based on this

allegation, the Department found reasonable grounds to believe or

[[Page 37874]]

suspect that Petrosul's sales were below cost and initiated a cost

investigation pursuant to 772(b) of the Act. The statute is concerned

specifically with the cost of production of the merchandise, and

Petrosul does not itself produce the elemental sulphur it sells.

Department practice in such situations is to compare the production

costs of the producer (Petrosul's supplier/producers), plus the

producer's SG&A, plus the SG&A of the seller (Petrosul), to the

seller's home market sales to determine whether home market sales were

made below the COP. See Final Determination of Sales at Less Than Fair

Value: Fresh and Chilled Atlantic Salmon from Norway 56 FR 7661

(February 25, 1991); Final Results of Antidumping Duty Administrative

Reviews: Oil Country Tubular Goods from Canada 56 FR 38408 (August 13,

1991). Therefore, on May 3, 1994, the Department requested cost of

production information from the producers of the merchandise sold by

Petrosul. However, these producers refused to supply that information.

Because Petrosul's suppliers did not provide their production costs,

the only cost data on the record is Petrosul's SG&A. Because the

Department could not identify any other source of data that would

provide a reasonable surrogate for the missing supplier-producers' cost

of producing elemental sulphur, the only alternative open to the

Department is to apply total BIA to Petrosul. See Memorandum to Joseph

A. Spetrini, from Holly A. Kuga, re: 1991-92 Antidumping Administrative

Review of the Antidumping Finding on Elemental Sulphur from Canada: Use

of Best Information Available for Petrosul International Due to Lack of

Any Useable Cost of Production Information (July 11, 1995).

However, during this administrative review, Petrosul responded to

the Department's requests for information, including the initial and

supplementary sales questionnaires, as well as the request for limited

COP data. Given Petrosul's attempts to fully cooperate in this review,

the Department determined that second tier of BIA as described above be

applied to Petrosul for the preliminary results of review. The rate

previously applicable to Petrosul is zero percent. Therefore, the rate

calculated for Husky, the highest calculated rate in this review, shall

apply to Petrosul as this is higher than the rate previously applicable

to Petrosul.

Non-Responders/Untimely Responders

Based on a failure to respond or an untimely response to the

Department's questionnaire, we have determined that Brimstone, Burza,

Sulbow, Canamex, Delta, Drummond, Real, Fanchem, and Saratoga failed to

cooperate in this proceeding and, therefore, we have been assigned them

margins based on BIA. Furthermore, consistent with the Department's

two-tiered BIA methodology, the Department has determined that first-

tier BIA, as described above, applies to each of these companies. The

highest rate applicable to a firm is 28.9 percent. Therefore, this rate

shall apply to each of these respondents.

Preliminary Results of the Review

As a result of our review, we preliminarily determine that the

following margins exist for the period December 1, 1991, through

November 30, 1992:

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

Percent

Manufacturer/exporter margin

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

Husky Oil Ltd................................................ 5.66

Mobil Oil Canada, Ltd........................................ (\1\)

5.66

Petrosul..................................................... (\1\)

5.66

Alberta...................................................... (\2\)

Allied....................................................... (\2\)

Norcen....................................................... (\2\)

Brimstone.................................................... (\3\)

28.9

Burza........................................................ (\3\)

28.9

Canamex...................................................... (\3\)

28.9

Delta........................................................ (\3\)

28.9

Drummond..................................................... (\3\)

28.9

Fanchem...................................................... (\3\)

28.9

Real......................................................... (\3\)

28.9

Saratoga..................................................... (\3\)

28.9

Sulbow....................................................... (\3\)

28.9

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\1\ Cooperative BIA rate.

\2\ No shipments or sales subject to this review. The firm has no

individual rate from any segment of this proceeding.

\3\ Non-cooperative BIA rate.

Interested parties may request disclosure within 5 days of the date

of publication of this notice and may request a hearing within 10 ten

days of the date of publication. Any hearing, if requested, will be

held as early as convenient for the parties but not later than 44 days

after the date of publication or the first work day thereafter. Case

briefs and/or other written comments from interested parties may be

submitted not later than 30 days after the date of publication of this

notice. Rebuttal briefs and rebuttals to written comments, limited to

issues raised in case briefs and written comments, may be filed not

later than 37 days after the date of publication of this notice. The

Department will publish the final results of this administrative

review, including the results of its analysis of issues raised in any

such written comments.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Individual

differences between USP and FMV may vary from the percentages stated

above. Upon completion of the review, the Department will issue

appraisement instructions on each exporter directly to the U.S. Customs

Service.

Furthermore, the following deposit requirements will be effective

for all shipments of elemental sulphur, 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 the reviewed

companies will be those rates established in the final results of this

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 review, a prior review, or the original

less-than-fair-value (LTFV) investigation, but the manufacturer is, the

cash deposit rate will be the rate established for the most recent

period for the manufacturer of the merchandise; and (4) if neither the

exporter nor the manufacturer is a firm covered in this or any previous

review, or the less-than-fair-value (LTFV) investigation, the cash

deposit rate will be the ``new shipper'' rate established in the first

review conducted by the Department in which a ``new shipper'' rate was

established, as discussed below.

On May 25, 1993, the Court of International Trade (CIT) in Floral

Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) and Federal-

Mogul Corporation and The Torrington Company v. United States, 822

F.Supp. 782 (CIT 1993) decided that once an ``All Others'' rate is

established for a company it can only be changed through an

administrative review. The Department has determined that in order to

implement these decisions, it is appropriate to reinstate the ``All

Others'' rate from the LTFV investigation (or that rate as amended for

correction or clerical errors as a result of litigation) in proceedings

governed by antidumping duty orders. In proceedings governed by

antidumping findings, unless we are able to ascertain the ``All

Others'' rate from the Treasury LTFV investigation, the Department has

determined that it is appropriate to adopt the ``new shipper'' rate

established in the first final results of administrative review

published by the Department (or that rate as amended for correction or

clerical errors as a result of litigation) as the ``All Others'' rate

for the purposes of establishing

[[Page 37875]]

cash deposits in all current and future administrative reviews.

Because this proceeding is governed by an antidumping finding, and

we are unable to ascertain the ``All Others'' rate from the Treasury

LTFV investigation, the ``All Others'' rate for the purposes of this

review would normally be the ``new shipper'' rate established in the

first notice of final results of administrative review published by the

Department. However, a ``new shipper'' rate was not established or

ascertainable in that notice. Therefore, for the purposes of this

review, we have drawn the ``All Others'' rate of 5.56 percent from the

final results of administrative review of this finding conducted by the

Department generally for the period December 1, 1980 through November

30, 1982. See Elemental Sulphur from Canada; Final Results of

Administrative Review of Antidumping Finding, 48 FR 53592 (November 28,

1983).

These deposit requirements, when imposed, 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 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 administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

Dated: July 17, 1995.

Susan G. Esserman,

Assistant Secretary for Import Administration.

[FR Doc. 95-18136 Filed 7-21-95; 8:45 am]

BILLING CODE 3510-DS-P