Furfuryl Alcohol From the Republic of South Africa; Preliminary Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-791-802]

Furfuryl Alcohol From the Republic of South Africa; Preliminary

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of antidumping duty

administrative review.

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SUMMARY: In response to a request by the respondent, Illovo Sugar Ltd.,

the Department of Commerce is conducting an administrative review of

the antidumping duty order on furfuryl alcohol from the Republic of

South Africa. The review covers one manufacturer/exporter of the

subject merchandise to the United States. The period of review is June

1, 1996, through May 31, 1997.

We preliminarily find that sales have not been made below normal

value. If these preliminary results are adopted in our final results of

administrative review, we will instruct the U.S. Customs Service not to

assess antidumping duties on the subject merchandise exported by this

company.

Interested parties are invited to comment on the preliminary

results. Parties who submit case briefs in this proceeding are

requested to provide, for each comment: (1) a statement of the issue;

and (2) a brief summary of the argument.

EFFECTIVE DATE: March 6, 1998.

FOR FURTHER INFORMATION CONTACT: Michelle Frederick or Kris Campbell,

AD/CVD Enforcement Group I, Import Administration, International Trade

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

Constitution Avenue, Washington, D.C. 20230; telephone: (202) 482-0186

or 482-3813, 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 of Commerce's (the

Department's) regulations are to the regulations last codified at 19

CFR Part 353 (April 1, 1997).

Background

On June 21, 1995, the Department published in the Federal Register

(60 FR 32302) the antidumping duty order on furfuryl alcohol from the

Republic of South Africa. On June 11, 1997, the Department published a

notice of ``Opportunity to Request an Administrative Review'' (62 FR

31786) of this antidumping duty order for the period June 1, 1996,

through May 31, 1997. On June 27, 1997, we received a timely request

for review from Illovo Sugar Ltd. (ISL). On August 1, 1997, we

published the notice of initiation of this review (62 FR 41339).

We issued a questionnaire to ISL on August 5, 1997, followed by a

supplemental questionnaire on January 8, 1998. On August 29, 1997, the

petitioner requested that the Department determine whether the

respondent absorbed antidumping duties.

Scope of Review

The merchandise covered by this order is furfuryl alcohol

(C4H3OCH2OH). Furfuryl alcohol is a

primary alcohol and is colorless or pale yellow in appearance. It is

used in the manufacture of resins and as a wetting agent and solvent

for coating resins, nitrocellulose, cellulose acetate, and other

soluble dyes. The product subject to this order is classifiable under

subheading 2932.13.00 of the Harmonized Tariff Schedule of the United

States (HTSUS). Although the HTSUS subheading is provided for

convenience and customs purposes, our written description of the scope

of this proceeding is dispositive.

Fair Value Comparisons

We compared the constructed export price (CEP) to the normal value

(NV), as described in the Constructed Export Price and Normal Value

sections of this notice. Pursuant to section 777A(d)(2) of the Act, we

compared the CEPs of individual transactions to contemporaneous monthly

weighted-average prices of sales of the foreign like product. We were

able to match all subject merchandise sold during the POR to identical

merchandise sold in the home market.

Constructed Export Price

For sales to the United States, we calculated a CEP as defined in

section 772(b) of the Act because we determined that ISL is affiliated

with its exclusive U.S. agent, Harborchem, and because the subject

merchandise was sold to unaffiliated U.S. purchasers after the date of

importation. Our finding that ISL and Harborchem are affiliated is

consistent with our findings in the less-

[[Page 11210]]

than-fair-value (LTFV) investigation and the first administrative

review. See Final Determination of Sales at Less Than Fair Value:

Furfuryl Alcohol from the Republic of South Africa, 60 FR 22550, 22552

(Comment 1) (May 8, 1995), and Notice of Final Results of Antidumping

Duty Review: Furfuryl Alcohol from the Republic of South Africa, 62 FR

61084, 61087-88 (Comment 5) (November 14, 1997) (1994-96 Final

Results). We reviewed the information submitted on the record of this

segment of the proceeding (e.g., Exhibit A-4 of the September 9, 1997

response) and found that the facts that led to this finding in the

above-cited segments have not changed. For example, this evidence

indicates that ISL and Harborchem have an exclusive distributor

agreement and routinely coordinate marketing and sales activity,

including pricing, with respect to sales to U.S. customers.

We calculated CEP based on f.o.b. and delivered prices to

unaffiliated purchasers in the United States. We made deductions, where

applicable, for foreign inland movement expenses, (including foreign

warehousing and warehousing insurance), domestic brokerage and

handling, ocean freight, marine insurance, U.S. brokerage and handling,

U.S. inland freight expenses (offset by freight revenue), U.S.

warehousing and insurance, and quality testing,1 in

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

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\1\ Consistent with the 1994-96 Final Results (62 FR 61084,

61091 (Comment 9)), we have determined that quality testing expenses

incurred by ISL are movement expenses that the company incurs upon

the arrival of the subject merchandise at the U.S. port of entry.

The testing is performed at the time the product is unloaded from

the maritime vessel in order to detect any impurities that may have

entered the product while in transit.

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We also deducted direct selling expenses and indirect selling

expenses associated with commercial activity in the United States in

accordance with section 772(d)(1) of the Act. These include credit

expenses, inventory carrying costs, and other indirect selling

expenses.

Finally, we deducted an amount of profit allocated to direct,

indirect, and imputed selling expenses associated with commercial

activity in the United States in accordance with section 772(d)(3) of

the Act. For a further discussion of the calculation of this profit

amount, see Memorandum from Michelle Frederick and Constance Handley to

the File: Preliminary Results of 1996-97 Administrative Review of

Furfuryl Alcohol from South Africa (March 2, 1998).

No other adjustments to CEP were claimed or allowed.

Normal Value

In order to determine whether there was a sufficient volume of

sales in the home market to serve as a viable basis for calculating NV,

we compared ISL's volume of home market sales of the foreign like

product to the volume of its U.S. sales of the subject merchandise.

Pursuant to section 773(a)(1) of the Act, because ISL's aggregate

volume of home market sales of the foreign like product was greater

than five percent of its aggregate volume of U.S. sales of the subject

merchandise, we determined that the home market was viable.

We based NV on the price at which the foreign like product was

first sold for consumption in South Africa, in the usual commercial

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

trade as the CEP,2 in accordance with section

773(a)(1)(B)(i) of the Act. We made deductions from the starting price

for home market packing and movement expenses in accordance with

sections 773(a)(6)(B)(i) and (ii) of the Act. Pursuant to section

773(a)(6)(C)(iii) of the Act, we made a circumstance-of-sale (COS)

adjustment to NV by deducting home market credit expenses.

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\2\ As noted below, we found that all home market and CEP sales

were made at the same level of trade.

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No other adjustments to NV were claimed or allowed.

Level of Trade/CEP Offset

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 as the U.S. sales. The NV level of trade is

that of the starting-price sales in the comparison market. For CEP

sales, such as those made by ISL in this review, the U.S. level of

trade is the level of the constructed sale from the exporter to the

importer.

To determine whether NV sales are at a different level of trade

than that of the U.S. 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 level of trade 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 level of trade of the export transaction, we make a

level-of-trade adjustment under section 773(a)(7)(A) of the Act.

Finally, if the NV level is more remote from the factory than the CEP

level and there is no basis for determining whether the difference in

the levels between NV and CEP affects 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

Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732

(November 19, 1997).

In implementing these principles in this review, we obtained

information from ISL about the marketing stage involved in the reported

U.S. and home market sales, including a description of the selling

activities performed by ISL for each channel of distribution. In

identifying levels of trade for CEP and home market sales, we

considered the selling functions reflected in the CEP, after the

deduction of expenses and profit under section 772(d) of the Act, and

those reflected in the home market starting price before making any

adjustments. We expect that, if claimed levels of trade are the same,

the functions and activities of the seller should be similar.

Conversely, if a party claims that levels of trade are different for

different groups of sales, the functions and activities of the seller

should be dissimilar.

The record evidence before us in this review indicates that the

home market and CEP levels of trade have not changed from the 1994-96

Review.3 Although in this review, as in prior segments of

the proceeding, ISL claimed entitlement to a CEP offset, we determined

that for ISL there was one home market level of trade and one U.S.

level of trade (i.e., the CEP level of trade), and that ISL's CEP level

of trade was equivalent to the level of trade for the home market. ISL

has claimed that ``a different level of trade must exist'' 4

because the level-of-trade analysis does not consider the selling

activities of Harborchem (the affiliated U.S. distributor). However, we

find that the selling activities performed by ISL with respect to its

home market and CEP sales 5 are not sufficiently different

to constitute separate levels of trade. In both markets, ISL's selling

activities consist primarily of order processing, marketing assistance,

and technical support (including quality control

[[Page 11211]]

reports provided by ISL to Harborchem with respect to U.S. sales).

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\3\ See 62 FR 61084, 61089-90 (Comment 7).

\4\ ISL February 6, 1998, supplemental response at 26.

\5\ ISL's home market and U.S. selling activities are detailed

at pages 24-26 of its September 9, 1998, response and at page 25 of

its February 6, 1998, response, respectively.

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ISL claims that there is a qualitative difference in the amount of

selling activities provided, since its home market sales significantly

outnumber its shipments to Harborchem. However, as we stated in the

1994-96 Final Results, while we examine selling functions on both a

qualitative and quantitative basis, our examination is not contingent

on the number of customers nor on the number of sales for which the

activity is performed.6

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\6\ 62 FR 61084, 61090 (Comment 7).

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Accordingly, having determined that ISL's sales in the home market

were at a level of trade that does not constitute a more advanced stage

of distribution than the level of trade of the CEP, we did not make a

CEP offset to NV.

Absorption of Antidumping Duties

On August 29, 1997, the petitioner requested that the Department

determine whether antidumping duties have been absorbed by ISL. Since

the preliminary assessment rate for the review is zero, we

preliminarily determine that ISL has not absorbed antidumping duties.

Currency Conversion

We made currency conversions based on the exchange rates in effect

on the dates of the U.S. sales as certified by the Federal Reserve Bank

of New York. Section 773A(a) of the Act directs the Department to use a

daily exchange rate in order to convert foreign currencies into U.S.

dollars, unless the daily rate involves a ``fluctuation.'' In

accordance with our practice, we have determined as a general matter

that a fluctuation exists when the daily exchange rate differs from a

benchmark by 2.25 percent. The benchmark is defined as the rolling

average of rates for the past 40 business days. When we determine a

fluctuation exists, we substitute the benchmark for the daily rate. See

Policy Bulletin 96-1 Currency Conversions, 61 FR 9434 (March 8, 1996).

Preliminary Results of Review

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

following margin exists for the period June 1, 1996--May 31, 1997:

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

Margin

Manufacturer/exporter (percent)

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Illovo Sugar Ltd........................................... 0.00

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Parties to the proceeding may request disclosure within five days

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

request a hearing within ten days of publication. Any hearing, if

requested, will be held 44 days after the publication of this notice,

or the first workday thereafter. Interested parties may submit case

briefs within 30 days of the date of publication of this notice.

Rebuttal briefs, which must be limited to issues raised in the case

briefs, may be filed not later than 37 days after the date of

publication. The Department will issue a notice of the final results of

this administrative review, which will include the results of its

analysis of issues raised in any such briefs, within 120 days from the

publication of these preliminary results.

The Department shall determine, and the Customs Service shall

assess, antidumping duties on all appropriate entries. If these

preliminary results are adopted in our final results, we will instruct

the Customs Service 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.

Furthermore, the following deposit requirements will be effective

upon completion of the final results of this administrative review for

all shipments of furfuryl alcohol from the Republic of South Africa

entered, or withdrawn from warehouse, for consumption on or after the

publication date of the final results of this administrative review, as

provided by section 751(a)(2)(c) of the Act: (1) the cash deposit rate

for ISL will be the rate established in the final results of this

review, except, if the rate is less than 0.5 percent and, therefore, de

minimis, the cash deposit will be zero; (2) if the exporter is not a

firm covered in this review, the 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 (3) if neither the exporter nor the manufacturer

is a firm covered in this or any previous review conducted by the

Department, the cash deposit rate will be 11.55 percent, the ``All

Others'' rate established in the LTFV investigation.

These cash deposit requirements, when imposed, shall remain in

effect until publication of the final results of the next

administrative review.

This notice 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: March 2, 1998.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 98-5867 Filed 3-5-98; 8:45 am]

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