Industrial Nitrocellulose From the United Kingdom; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-412-803]

Industrial Nitrocellulose From the United Kingdom; 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; Industrial Nitrocellulose from the United

Kingdom.

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SUMMARY: The Department of Commerce (the Department) is conducting an

administrative review of the antidumping duty order on industrial

nitrocellulose (INC) from the United Kingdom in response to a request

by petitioner, Hercules Incorporated. This review covers exports of

subject merchandise to the United States during the period July 1, 1996

through June 30, 1997.

We have preliminarily determined that sales have been made below

normal value (NV). If these preliminary results are adopted in our

final results, we will instruct the U.S. Customs Service to assess

antidumping duties based on the difference between the constructed

export price (CEP) and the NV. Interested parties are invited to

comment on these preliminary results. Parties who submit comments are

requested to submit with each comment (1) a statement of the issue and

(2) a brief summary of the comment.

EFFECTIVE DATE: August 7, 1998.

FOR FURTHER INFORMATION CONTACT: Gideon Katz or Maureen Flannery, AD/

CVD Enforcement, Import Administration, International Trade

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

Constitution Avenue, N.W., Washington D.C. 20230; telephone (202) 482-

5255 or (202) 482-3020.

Applicable Statute and Regulations

Unless otherwise stated, all citations to the statute are

references to the provisions effective January 1, 1995, the effective

date of the amendments made to the Tariff Act of 1930 (the Act) by the

Uruguay Round Agreements Act. In addition, unless otherwise stated, all

citations to the Department's regulations are references to the

regulations as codified at 19 CFR Part 351 (62 FR 27296, May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register the antidumping

duty order on INC from the United Kingdom on July 10, 1990 (55 FR

28270). On July 21, 1997, we published in the Federal Register (62 FR

38973) a notice of opportunity to request an administrative review of

the antidumping duty order on INC from the United Kingdom covering the

period July 1, 1996 through June 30, 1997.

In accordance with 19 CFR 351.221, petitioner requested that we

conduct an administrative review of sales of subject merchandise made

by respondent, Imperial Chemical Industries PLC (ICI). We published a

notice of initiation of this antidumping duty administrative review on

August 28, 1997 (62 FR 45622). Under section 751(a)(3)(A) of the Act,

the Department may extend the deadline for completion of administrative

reviews if it determines that it is not practicable to complete the

review within the established time limit. The Department published a

notice of extension of the time limit for the preliminary results in

this case on February 17, 1998. See Industrial Nitrocellulose from the

United Kingdom: Notice of Extension of Time Limits for Preliminary

Results of Antidumping Administrative Review, 63 FR 7756 (February 17,

1998). The Department is conducting this administrative review in

accordance with section 751(a) of the Act.

Scope of the Review

This review covers shipments of 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. Although HTS subheadings are provided for convenience and

Customs purposes, the written description of the scope of this order

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.

This review covers sales of the subject merchandise manufactured by

ICI and entered into the United States during the period July 1, 1996

through June 30, 1997.

Verification

As provided in section 782(i) of the Act, we verified information

provided by ICI using standard verification procedures, including on-

site inspection of the manufacturer's facilities, examination of

relevant sales and financial records, and selection of original

documentation containing relevant information. Our verification results

are outlined in the verification reports.

Constructed Export Price

Respondent reported U.S. sales as export price (EP) sales, claiming

that, although an affiliated U.S. company, ICI Americas Inc. (ICIA),

was involved in the sales process, ICIA's role involved no more than

processing paperwork, and that all of ICI's U.S. sales were actually

made in the United Kingdom.

We examined the facts of this case in light of the statute and our

past practice regarding EP and CEP sales and have preliminarily

determined that respondent's U.S. sales are properly classified as CEP

sales. Section 772(b) of the Act defines CEP as ``the price at which

the subject merchandise is first sold (or agreed to be sold) in the

United States before or after the date of importation by or for the

account of the producer or exporter of such merchandise or by a seller

affiliated with the producer or exporter, to a purchaser not affiliated

with the producer or exporter, as adjusted * * *.'' (emphasis added).

Section 772(a) of the Act defines EP as ``the price at which the

subject merchandise is first sold (or agreed to be sold) before the

date of importation by the producer or exporter of the subject

merchandise outside of the United States to an unaffiliated purchaser

in the United States or to an unaffiliated purchaser for exportation to

the United States, as adjusted * * *.''

When sales are made prior to importation through an affiliated or

unaffiliated U.S. sales agent to an unaffiliated customer in the United

States, our practice is to examine several criteria in order to

determine whether the sales are EP sales. Those criteria are: (1)

whether the merchandise was shipped directly from the manufacturer to

the unaffiliated U.S. customer; (2) whether this was the customary

commercial channel between the parties involved; and (3) whether the

function of the U.S. selling agent was limited to that of a ``processor

of sales-related documentation'' and a ``communications link'' with the

unaffiliated U.S. buyer. Where all three criteria are met, indicating

that the activities of the U.S. selling agent are ancillary to the

sale, the Department has classified the sales as EP sales. Where one or

more of these conditions are not

[[Page 42367]]

met, indicating that the U.S. sales agent is substantially involved in

the U.S. sales process, the Department has classified the sales in

question as CEP sales. See, e.g., Certain Cold-Rolled and Corrosion-

Resistant Carbon Steel Flat Products From Korea: Final Results of

Antidumping Duty Administrative Reviews, 63 FR 13170 (March 18, 1998)

wherein the Department determined that where a U.S. affiliate is

involved in making a sale, it normally considers the sale to be a CEP

transaction unless the record demonstrates that the U.S. affiliate's

involvement in making the sale is incidental or ancillary (see, also,

Viscose Rayon Staple Fiber from Finland: Final Results of Antidumping

Duty Administrative Review, 63 FR 32820 (June 16, 1998)).

In the instant review, the fact that the subject merchandise was

shipped directly from ICI to the unaffiliated U.S. customers and that

this was the customary commercial channel between these parties is not

disputed. However, ICI contracted a U.S. selling agent whose duties

included sales solicitation and price negotiation. Discussion of these

two functions in a public notice is not possible due to their

proprietary nature. See U.S. Verification Report.

Because of ICI's agent's involvement in sales solicitation and

price negotiation, we determine that ICI's U.S. selling agent is

substantially involved in the sales process for INC. As indicated by

our analysis of the third factor listed above, in this case, the

function of the U.S. selling agent is not limited to that of a

``processor of sales-related documentation'' and a ``communications

link'' with the unaffiliated U.S. buyer. See U.S. Steel Group v. United

States, CIT Slip Op. 98-96 (July 7, 1998) (upholding the Department's

CEP determination in Certain Cut-to-Length Carbon Steel Plate from

Germany: Final Results of Antidumping Administrative Review, 62 FR

18390, which was largely based on the Department's discovery at

verification that the U.S. importer was authorized to negotiate sales

terms without prior approval from the exporter/producer).

Therefore, ICI's U.S. sales process does not satisfy all of the

three criteria for EP treatment. Accordingly, we determine that ICI's

U.S. sales are properly treated as CEP transactions. We calculated CEP

as defined in section 772(b) of the Act. We based CEP on the packed,

delivered prices to unaffiliated purchasers in the United States. We

made adjustments for rebates. We made deductions for movement expenses,

including international freight, other U.S. transportation expenses,

marine insurance, brokerage and handling, and U.S. customs duties, in

accordance with section 772(c)(2)(A) of the Act.

In accordance with section 772(d)(1) of the Act, we deducted

commissions for selling INC in the United States, credit expenses, and

indirect selling expenses. Finally, we made an adjustment for the

profit allocated to selling expenses incurred in the United States, in

accordance with section 772(d)(3) of the Act.

Normal Value

Based on a comparison of the aggregate quantity of home market and

U.S. sales, we determined that the quantity of foreign like product

sold in the home market 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. Therefore, in accordance with

section 773(a)(1)(B)(i) of the Act, we based NV on the price (exclusive

of value-added tax (VAT)) at which the foreign like product was first

sold for consumption in the home market, in the usual commercial

quantities and in the ordinary course of trade, and at the same level

of trade as the CEP sale.

Under 19 CFR 351.403(c), we excluded sales to one affiliated

customer in calculating NV because we determined that sales to this

customer were not made at arm's length prices (i.e., at prices

comparable to prices at which the firm sold identical merchandise to

unaffiliated customers).

We based NV on packed, delivered prices to unaffiliated purchasers

in the home market. We made adjustments, where applicable, in

accordance with section 773(a)(6) of the Act. Where applicable, we made

adjustments to home market price for billing adjustments, rebates,

discounts, and inland freight. We also made a deduction for home market

credit, pursuant to section 773(a)(6)(C)(iii) of the Act. We deducted

home market indirect selling expenses, up to the amount of U.S.

commissions. In order to adjust for differences in packing between the

two markets, we increased home market price by U.S. packing costs and

reduced it by home market packing costs. Prices were reported net of

VAT and, therefore, no deduction for VAT was necessary.

In accordance with section 773(a)(1)(B) of the Act, to the extent

practicable, we determine NV based on sales in the United Kingdom at

the same level of trade (LOT) as the CEP transactions. The NV LOT is

that of the starting-price sales in the comparison market. The U.S. LOT

is the level of the constructed sale from the exporter to the importer.

To evaluate LOTs, we examined information regarding the

distribution systems in both the U.S. and Canadian markets, including

the selling functions, classes of customer, and selling expenses for

each respondent. We determined that in this case the NV LOT was

identical to the CEP LOT.

Price-to-Price Comparisons

Pursuant to section 777A(d)(2), we compared the CEPs of individual

transactions to the monthly weighted-average prices of sales of the

foreign like product.

Preliminary Results of the Review

As a result of our comparison of CEP and NV, we preliminarily

determine that the following weighted-average dumping margin exists:

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Margin

Manufacturer/exporter Period (percent)

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Imperial Chemical Industries PLC......... 7/1/96-6/30/97 16.48

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Parties to the proceeding may request disclosure within 5 business

days of the date of publication of this notice. Any interested party

may request a hearing within 30 days of publication. Pursuant to 19 CFR

351.310, any hearing, if requested, will be held 2 days after the date

rebuttal briefs are due, or the first workday thereafter. Interested

parties may submit case briefs within 30 days of the date of

publication of this notice. Rebuttal briefs, which must be limited to

issues raised in the case briefs, may be filed not later than 5 days

after the time limit for filing the case brief. The Department will

publish a notice of final results of this administrative review, which

will include the results of its analysis of issues raised in any such

comments, not later than 120 days after the date of publication of this

notice.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. Upon completion

of this review, the Department will issue appraisement instructions

directly to the Customs Service.

Furthermore, the following deposit rates will be effective upon

publication of the final results of this administrative 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 for by section 751(a)(2)(c) of the Act: (1) the cash deposit

rate for the reviewed

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company will be the rate established in the final results of this

review; (2) for merchandise exported by manufacturers or exporters not

covered in this review but covered in the original investigation of

sales at less than fair value (LTFV) or a previous review, the cash

deposit 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 original 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)

for all other producers and/or exporters of this merchandise, the cash

deposit rate shall be 11.13 percent, the ``all others'' rate

established in the LTFV investigation (55 FR 21058, May 22, 1990).

These deposit rates, 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 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) of the Act (19 U.S.C. 1675(a)) and 19 CFR 351.213.

Dated: July 30, 1998.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

[FR Doc. 98-21229 Filed 8-6-98; 8:45 am]

BILLING CODE 3510-DS-P