[Federal Register: October 16, 2003 (Volume 68, Number 200)]
[Notices]
[Page 59584-59585]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr16oc03-30]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-412-803]
Notice of Preliminary Results of Antidumping Duty Changed
Circumstances Review: Industrial Nitrocellulose from the United Kingdom
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of Antidumping Duty Changed
Circumstances Review.
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SUMMARY: On May 8, 2003, the Department of Commerce (the Department)
initiated a changed circumstances review of the antidumping duty order
on industrial nitrocellulose (INC) from the United Kingdom in order to
determine whether Troon Investments Limited (TIL) is the successor-in-
interest to Imperial Chemical Industries, PLC (ICI). See Notice of
Initiation of Antidumping Duty Changed Circumstances Review: Industrial
Nitrocellulose from the United Kingdom, 68 FR 27015 (May 19, 2003). TIL
purchased Nobel's Explosives Company, Ltd.'s (NEC) INC business. NEC is
a wholly-owned subsidiary of ICI. We preliminarily determine that TIL
is the successor-in-interest to ICI for purposes of determining
antidumping duty liability. Interested parties are invited to comment
on these preliminary results.
EFFECTIVE DATE: October 16, 2003.
FOR FURTHER INFORMATION CONTACT: Michele Mire or Howard Smith, AD/CVD
Enforcement, Office 4, Group II, Import Administration, International
Trade Administration, U.S. Department of Commerce, 14th Street and
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-4711
and (202) 482-5193, respectively.
SUPPLEMENTARY INFORMATION:
Background
On July 10, 1990, the Department published in the Federal Register
(55 FR 28270) the antidumping duty order on INC from the United
Kingdom. On March 28, 2003, TIL requested that the Department conduct a
changed circumstances review of the antidumping duty order on INC from
the United Kingdom claiming that it is the successor-in-interest to
ICI, and, as such, it is entitled to receive the same antidumping
treatment accorded to ICI. On April 11, 2003, Green Tree Chemical
Technologies, Inc., the sole U.S. producer of INC and the petitioner in
this proceeding, notified the Department that it opposes TIL's request
to be considered the successor-in-interest to ICI. On July 18, 2003,
and August 14, 2003, at the request of the Department, TIL submitted
additional information and documentation pertaining to its changed
circumstances request.
Scope of Review
Imports covered by this review are 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, and is produced from
the reaction of cellulose with nitric acid. INC is used as a film-
former in coatings, lacquers, furniture finishes, and printing inks.
The scope of this order does not include explosive grade
nitrocellulose, which has a nitrogen content of greater than 12.2
percent.
INC is currently classified under Harmonized Tariff Schedule of the
United States (HTSUS) item number 3912.20.0000. While the HTSUS
classification is provided for convenience and customs purposes, the
written description remains dispositive as to the scope of the product
coverage.
Preliminary Results of Changed Circumstances Review
In making a successor-in-interest determination, the Department
examines several factors including, but not limited to, changes in: (1)
management; (2) production facilities; (3) supplier relationships; and
(4) customer base. See Brass Sheet and Strip from Canada: Final Results
of Antidumping Duty Administrative Review, 57 FR 20460, 20462 (May 13,
1992) (Canadian Brass). While no one single factor, or combination of
factors, will necessarily prove to be dispositive, the Department will
generally consider a new company to be the successor-in-interest to its
predecessor company if its resulting operations are essentially the
same as those of its predecessor. See, e.g., Canadian Brass at 20460,
and Final Results of Changed Circumstances Antidumping Duty
Administrative Review: Industrial Nitrocellulose From Korea, 65 FR
2115, 2116 (January 13, 2000). Therefore, if there is evidence
demonstrating that, with respect to the production and sale of subject
[[Page 59585]]
merchandise, a new company essentially operates as the same business
entity as the former company, the Department will assign the new
company the cash deposit rate of its predecessor.
In its March 28, 2003, request for a changed circumstances review,
TIL advised the Department that, on December 31, 2002, it purchased
NEC's (a wholly owned subsidiary of ICI) INC and energetic technologies
businesses. TIL notes that the energetic technologies business is
unrelated to INC. NEC was the sole producer of INC in the United
Kingdom, and therefore, the only respondent in prior administrative
reviews. TIL was formed to acquire NEC's INC and energetic technologies
businesses.
According to TIL, the transfer of ownership of the INC business
resulted in no material changes in the management, production
facilities, suppliers of raw materials, or customers of NEC's former
INC business. While the managing director of NEC's INC business has
been replaced, TIL states that all of the other management personnel of
the former entity are now employed by TIL. See TIL's March 28, 2003
submission to the Department at 5. Also, TIL notes that it operates the
factory formerly operated by NEC using the same equipment and
production process used by NEC. Furthermore, TIL reports that it uses
the suppliers of raw materials used by NEC (and currently plans no
changes to those suppliers) and sells to the former customers of NEC,
in the United States and the United Kingdom, on the same basis as NEC
sold to these customers. See TIL's July 18, 2003 questionnaire response
at 4-5. TIL notes that there have been no changes in the customer base
since the acquisition and none are currently anticipated. See TIL's
March 28, 2003 submission to the Department at 7. Moreover, TIL points
out that since the acquisition, there have been no changes in INC sales
personnel, no material changes in the marketing of INC in the United
States and the United Kingdom, and no systemic modifications in INC
selling prices in either the U.S. or U.K. market. See id.
In its April 11, 2003, submission, the petitioner contends that the
change in ownership of the INC business has resulted in a change in the
business' cost of capital (which affects the Department's interest
expense calculation), management, and sales distribution channels.
Specifically, the petitioner points out that, recently, in addressing
whether NEC's cost of production should include its interest expenses
or those of its parent, the Department found that NEC's parent, ICI,
``determined the capital structure of its group companies involved in
the production of the subject merchandise.'' See Industrial
Nitrocellulose From the United Kingdom; Final Results of Antidumping
Duty Administrative Review, 67 FR 77747 (December 19, 2002) and
accompanying Issues and Decision Memorandum. Thus, the petitioner
concludes that the cost of capital for the new entity will differ from
that of its predecessor. In addition to different capital costs, the
petitioner points out that, under TIL, the managing director of the INC
business is not the managing director formerly employed by NEC. The
petitioner finds this significant because it is the managing director
who has decision-making authority. Further, the petitioner states that
with new ownership and senior management, there can be no assurance
that pricing will have the same objectives or follow the same pattern
as when NEC was owned by ICI. Finally, the petitioner claims that the
sales structure changed after TIL acquired the INC business.
Specifically, the petitioner notes that NEC's U.S. affiliate, ICI
Americas, Inc., carried out many sales functions for NEC. Based on the
foregoing, the petitioner contends that TIL should not be allowed to
take advantage of ICI's current cash deposit rate.
As noted above, in determining whether a new company's operations
are essentially the same as those of its predecessor, the Department
examines whether there have been changes in management, production
facilities, supplier relationships, or the customer base. Our review of
the record indicates that the change in ownership of the INC business
has not resulted in changes to the production facilities or production
processes used to manufacture INC, nor has it resulted in material
changes in supplier relationships or customer base. Although TIL
replaced the managing director of the INC business, there is no
indication that this action resulted in significant changes to the INC
operations. Furthermore, while the petitioner expressed concern over a
possible difference between the cost of capital for the new entity and
its predecessor, the record indicates that many of the significant
factors that affect costs, with the possible exception of those that
affect capital costs, have not changed (e.g., no changes in production
process, suppliers of raw materials, and management and sales
personnel). Finally, even though there has been a change in the legal
entity performing U.S. selling functions (i.e., ICI Americas Inc. has
ceased performing selling functions), with respect to U.S. sales of
INC, the record indicates that there have been no significant changes
in the order process, movement of INC from the United Kingdom, customer
base, or sales terms, and no systematic price changes. See TIL's July
18, 2003 submission at 6. Thus, the record shows that TIL's operations
are essentially the same as those of its predecessor. Therefore, we
preliminarily determine that TIL is the successor-in-interest to ICI
and should receive the same antidumping duty cash deposit rate as ICI,
i.e., 3.06 percent. As a result, if these preliminary results are
adopted in our final results of this changed circumstances review, we
will instruct the U.S. Bureau of Customs and Border Protection to
suspend shipments of subject merchandise made by TIL at ICI's cash
deposit rate (i.e., 3.06 percent). Until that time, the cash deposit
rate assigned to TIL's entries is the rate in effect at the time of
entry (i.e., the ``all others'' rate).
Public Comment
Any interested party may request a hearing within 30 days of
publication of this notice. See 19 CFR 351.310(c). Any hearing, if
requested, will be held 44 days after the date of publication of this
notice, or the first working day thereafter. Interested parties may
submit case briefs and/or written comments no later than 30 days after
the date of publication of this notice. See 19 CFR 351.309(c)(ii).
Rebuttal briefs and rebuttals to written comments, which must be
limited to issues raised in such briefs or comments, may be filed no
later than 37 days after the date of publication of this notice. See 19
CFR 351.309(d). Parties who submit arguments are requested to submit
with the argument (1) a statement of the issue, (2) a brief summary of
the argument, and (3) a table of authorities.
Consistent with 19 CFR 351.216(e), we will issue the final results
of this changed circumstances review no later than 270 days after the
date on which this review was initiated. We are issuing and publishing
this determination and notice in accordance with sections 751(b)(1) and
777(i)(1) of the Act and 19 CFR 351.216.
Dated: October 9, 2003.
Jeffrey May,
Acting Assistant Secretary for Import Administration.
[FR Doc. 03-26209 Filed 10-15-03; 8:45 am]