[Federal Register: September 11, 2006 (Volume 71, Number 175)]
[Notices]
[Page 53400-53403]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11se06-35]
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DEPARTMENT OF COMMERCE
International Trade Administration
(A-475-703)
Notice of Preliminary Results of Antidumping Duty Administrative
Review: Granular Polytetrafluoroethylene Resin From Italy
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: September 11, 2006.
FOR FURTHER INFORMATION CONTACT: Salim Bhabhrawala or Saliha Loucif, at
(202) 482-1784 or (202) 482-1779, respectively; AD/CVD Operations,
Office 1, Import Administration, International Trade Administration,
U.S. Department of Commerce, 14th Street & Constitution Avenue, NW,
Washington, DC 20230.
SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on granular
polytetrafluoroethylene resin (PTFE) from Italy, covering the period
August 1, 2004, through July 31, 2005. We preliminarily determine that
sales of subject merchandise by Solvay Solexis, Inc. and Solvay Solexis
S.p.A (collectively, Solvay) have been made below normal value (NV). If
these preliminary results are adopted in our final results, we will
instruct U.S. Customs and Border Protection (CBP) to assess antidumping
duties on appropriate entries based on the difference between the
export price (EP) and the NV. Interested parties are invited to comment
on these preliminary results.
SUPPLEMENTARY INFORMATION:
Background
On August 30, 1988, the Department published in the Federal
Register the antidumping duty order on granular PTFE resin from Italy.
See Antidumping Duty Order; Granular Polytetrafluoroethylene Resin from
Italy, 53 FR 33163 (August 30, 1988). On August 1, 2005, the Department
issued a notice of opportunity to request an administrative review of
this order. See Antidumping or Countervailing Duty Order, Finding, or
Suspended Investigation; Opportunity To Request Administrative Review,
70 FR 44085 (August 1, 2005). In accordance with 19 CFR 351.213(b),
Solvay requested an administrative review. On September 28, 2005, the
Department published the notice of initiation of this antidumping duty
administrative review, covering the period August 1, 2004, through July
31, 2005 (the period of review, or POR). See Initiation of Antidumping
and Countervailing Duty Administrative Reviews and Request for
Revocation in Part, 70 FR 56631 (September 28, 2005).
On October 11, 2005, the Department issued its antidumping
questionnaire to Solvay, specifying that the responses to Section A and
Sections B-E would be due on November 1, 2005, and, November 15, 2005,
respectively.\1\ The
[[Page 53401]]
Department received timely responses to Sections A-E of the initial
antidumping questionnaire and associated supplemental
questionnaires.\2\
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\1\ Section A of the questionnaire requests general information
concerning a company's corporate structure and business practices,
the merchandise under review that it sells, and the manner in which
it sells that merchandise in all of its markets. Section B requests
a complete listing of all home market sales, or, if the home market
is not viable, of sales in the most appropriate third-country market
(this Section is not applicable to respondents in non-market economy
cases). Section C requests a complete listing of U.S. sales. Section
D requests information on the cost of production of the foreign like
product and the constructed value of the merchandise under review.
Section E requests information on further manufacturing.
\2\ During the POR, Solvay sold merchandise further processed in
the United States, which was made prior to the POR. In its Section A
response, dated November 1, 2005, Solvay stated that its PTFE
further manufacturing operations have been discontinued. In
addition, Solvay reported it could not fill out Section E because
its factory had been damaged by hurricane Rita. Solvay stated that
it would provide the information as ``soon as possible'' but no
Section E was filed. In Solvay's first supplemental questionnaire,
dated March 29, 2006, the Department again asked for Section E.
Solvay responded on April 26, 2006, and stated that some of its
documents were damaged in the hurricane and it could not fill out
Section E ``at this time.'' In the Department's second supplemental
questionnaire, the Department told Solvay it had to either fill out
Section E, or pursuant to the regulations, offer a full explanation
and suggest alternate forms for presenting the data to the
Department. Solvay replied again on July 14, 2006, that it could not
fill out Section E because of the hurricane damage and submitted
documents demonstrating structural damages to its facilities. In
response to the Department's fifth supplemental, dated August 8,
2006, Solvay submitted a Section E response, however, there are
certain deficiencies in the Section E response. We plan to issue
supplemental questionnaires after the preliminary results of this
review. Our use of the Section E for the final results of this
review will be contingent on complete answers by Solvay to our
supplemental questions.
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On April 14, 2006, the Department published a notice of a 90-day
extension of the preliminary results of this administrative review. See
Granular Polytetrafluoroethylene Resin From Italy: Extension of the
Time Limit for the Preliminary Results of Antidumping Duty
Administrative Review, 71 FR 19481. This notice extended the deadline
for the preliminary results to August 1, 2006. On August 3, 2006, the
Department published a notice of a 30-day extension of the preliminary
results of this administrative review. See Granular
Polytetrafluoroethylene Resin From Italy: Second Extension of the Time
Limit for the Preliminary Results of Antidumping Duty Administrative
Review, 71 FR 44018. This notice extended the deadline for the
preliminary results to August 31, 2006.
Scope of the Order
The product covered by this order is granular PTFE resin, filled or
unfilled. This order also covers PTFE wet raw polymer exported from
Italy to the United States. See Granular Polytetrafluoroethylene Resin
From Italy; Final Affirmative Determination of Circumvention of
Antidumping Duty Order, 58 FR 26100 (April 30, 1993). This order
excludes PTFE dispersions in water and fine powders. During the period
covered by this review, such merchandise was classified under item
number 3904.61.00 of the Harmonized Tariff Schedule of the United
States (HTSUS). We are providing this HTSUS number for convenience and
CBP purposes only. The written description of the scope remains
dispositive.
Fair Value Comparisons
We compared the constructed export price (CEP) to the NV, as
described in the Constructed Export Price and Normal Value sections of
this notice. Pursuant to section 777A(d)(2) of the Tariff Act of 1930,
as amended (the Act), we compared the CEPs of individual transactions
to contemporaneous monthly weighted-average prices of sales of the
foreign like product.
We first attempted to compare contemporaneous sales of products
sold in the United States and the comparison market that were identical
with respect to the following characteristics: type, filler, percentage
of filler, and grade. Where we were unable to compare sales of
identical merchandise, we compared U.S. sales with comparison market
sales of the most similar merchandise.
Constructed Export Price
For all sales to the United States, we calculated CEP, as defined
in section 772(b) of the Act, because all sales to unaffiliated parties
were made after importation of the subject merchandise into the United
States through the respondent's affiliate, Solvay Solexis, Inc. We
based CEP on the packed, delivered prices to unaffiliated purchasers in
the United States, net of billing adjustments. We adjusted these prices
for movement expenses, including international freight, marine
insurance, brokerage and handling in the United States, U.S. inland
freight, U.S. warehousing, 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
selling expenses incurred by the affiliated reseller in connection with
economic activity in the United States. These expenses include credit,
inventory carrying costs, and indirect selling expenses incurred by
Solvay Solexis, Inc. We adjusted inventory carrying cost for the sales
of further manufactured products to accurately reflect the time they
spent in inventory. See Memorandum from Saliha Loucif and Salim
Bhabhrawala, International Trade Compliance Analysts, to Constance
Handley, Program Manager, re: Preliminary Results Calculation
Memorandum, dated August 31, 2006 (Analysis Memo).
With respect to sales involving imported wet raw polymer that was
further manufactured into finished PTFE resin in the United States, we
deducted the cost of such further manufacturing in accordance with
section 772(d)(2) of the Act. We adjusted the variable overhead for
further-manufactured products to reflect a positive amount. In
addition, we applied Solvay's reported interest expense ratio to its
further manufacturing cost. See Analysis Memo.
Normal Value
A. Selection of Comparison Markets
In order to determine whether there was a sufficient volume of
sales of granular PTFE resin in the home market to serve as a viable
basis for calculating NV, we compared Solvay's volume of home market
sales of the foreign like product to the volume of U.S. sales of the
subject merchandise, in accordance with section 773(a)(1)(C) of the
Act. Because the aggregate volume of home market sales of the foreign
like product was greater than five percent of the respective aggregate
volume of U.S. sales for the subject merchandise, we determined that
the home market provided a viable basis for calculating NV. Therefore,
in accordance with section 773(a)(1)(B)(i) of the Act, we based NV on
the prices at which the foreign like product was first sold for
consumption in the exporting country, in the usual commercial
quantities and in the ordinary course of trade.
B. Cost of Production Analysis
Because we disregarded below-cost sales in the calculation of the
final results of the 2000-2001 administrative review (13\th\ review),
with respect to Solvay, we had reasonable grounds to believe or suspect
that home market sales of the foreign like product by Solvay had been
made at prices below the cost of production (COP) during the period of
this review. See section 773(b)(2)(A)(ii) of the Act. Therefore,
pursuant to section 773(b)(1) of the Act, we initiated a COP
investigation regarding home market sales. Solvay calculated its model-
specific costs of production on a POR basis.
1. Calculation of COP
In accordance with section 773(b)(3) of the Act, we calculated the
model-specific, weighted-average COP, by model, based on the sum of the
cost of materials and fabrication for the foreign like product, plus
amounts for general and administrative expenses, interest expenses,
selling expenses, and packing costs.
[[Page 53402]]
2. Test of Home Market Sales Prices
We compared the adjusted weighted-average COP to the home market
sales of the foreign like product, as required under section 773(b) of
the Act, in order to determine whether these sales had been made at
prices below the COP within an extended period of time (i.e., a period
of one year) in substantial quantities and whether such prices were
sufficient to permit the recovery of all costs within a reasonable
period of time.
On a model-specific basis, we compared the COP to home market
prices, less any rebates, discounts, applicable movement charges, and
direct and indirect selling expenses (which were also deducted from
COP).
3. Adjustments to Respondent's Data
We relied on the COP data submitted Solvay in its cost
questionnaire response except for general and administrative (G&A)
expenses. We adjusted Solvay's G&A based on its normal books and
records, in accordance with Italian GAAP. See Analysis Memo.
4. Results of the COP Test
We disregarded below-cost sales where (1) 20 percent or more of
Solvay's sales of a given product during the POR were made at prices
below the COP, because such sales were made within an extended period
of time in substantial quantities in accordance with sections
773(b)(2)(B) and (C) of the Act; and (2) based on comparisons of price
to weighted-average COPs for the POR, we determined that the below-cost
sales of the product were at prices which would not permit recovery of
all costs within a reasonable time period, in accordance with section
773(b)(2)(D) of the Act. We found that Solvay made sales below cost,
and we disregarded such sales where appropriate.
C. Calculation of Normal Value Based on Comparison-Market Prices
We determined home market prices net of price adjustments (i.e.,
early payment discounts and rebates). Where applicable, we made
adjustments for packing and movement expenses, in accordance with
sections 773(a)(6)(A) and (B) of the Act. In order to adjust for
differences in packing between the two markets, we deducted home market
packing costs from NV and added U.S. packing costs. We also made
adjustments for differences in costs attributable to differences in
physical characteristics of the merchandise, pursuant to section
773(a)(6)(C)(ii) of the Act, and for other differences in the
circumstances of sale (COS) in accordance with section
773(a)(6)(C)(iii) of the Act (i.e., differences in credit expenses).
Finally, we made a CEP-offset adjustment to the NV for indirect selling
expenses pursuant to section 773(a)(7)(B) of the Act as discussed in
the Level of Trade/CEP Offset section below.
D. 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 at the same level of trade
in the comparison market as the level of trade of 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 Solvay 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,
e.g., Industrial Nitrocellulose From the United Kingdom; Notice of
Final Results of Antidumping Duty Administrative Review, 65 FR 6148,
6151 (February 8, 2000) (Industrial Nitrocellulose).
For purpose of this review, we obtained information from Solvay
about the marketing involved in the reported U.S. sales and in the home
market sales, including a description of the selling activities
performed by Solvay for each channel of distribution. In identifying
levels of trade for CEP and for 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 in this review indicates that the home market
and the CEP levels of trade for Solvay, formerly known as Solvay Inc.
and Solvay SpA (Solvay) have not changed from the 2000-2001 review, the
most recently completed review in this case. As explained below, we
determined in this review that, as in the prior review,\3\ there was
one home market level of trade and one U.S. level of trade (i.e., the
CEP level of trade).
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\3\ See Notice of Final Results of Antidumping Duty
Administrative Review: Granular Polytetrafluoroethylene Resin from
Italy, 68 FR 2007 (January 15, 2003) and Notice of Final Results of
Antidumping Duty Administrative Review; Granular
Polytetrafluoroethylene Resin From Italy, 67 FR 1960 (January 15,
2002).
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In the home market, Solvay sold directly to fabricators. These
sales primarily entailed selling activities such as technical
assistance, engineering services, research and development, technical
programs, and delivery services. Given this fact pattern, we found that
all home market sales were made at a single level of trade. In
determining the level of trade for the U.S. sales, we only considered
the selling activities reflected in the price after making the
appropriate adjustments under section 772(d) of the Act. See, e.g.,
Industrial Nitrocellulose, 65 FR at 6150. The CEP level of trade
involves minimal selling functions such as invoicing and the occasional
exchange of personnel between Solvay and its U.S. affiliate. Given this
fact pattern, we found that all U.S. sales were made at a single level
of trade.
Based on a comparison of the home market level of trade and this
CEP level of trade, we find the home market sales to be at a different
level of trade from, and more remote from the factory than, the CEP
sales. Section 773(a)(7)(A) of the Act directs us to make an adjustment
for difference in levels of trade where such differences affect price
comparability. However, we were unable to quantify such price
differences from information on the record. Because we have determined
that the home-market level of trade is more remote from the factory
than the CEP level of trade, and because the data necessary to
calculate a level-of-trade adjustment are unavailable, we made a CEP-
offset adjustment to NV pursuant to section 773(a)(7)(B) of the Act.
Currency Conversion
We made currency conversions into U.S. dollars in accordance with
section 773A of the Act, based on exchange rates in effect on the date
of the U.S. sale, as certified by the Federal Reserve Bank.
[[Page 53403]]
Preliminary Results of Review
As a result of this review, we preliminarily determine that the
following weighted-average margin exists for the period August 1, 2004,
through July 31, 2005:
------------------------------------------------------------------------
Weighted-
Producer Average Margin
(Percentage)
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Solvay Solexis, Inc. and Solvay Solexis S.p.A 39.48
(collectively, Solvay)................................
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In accordance with 19 CFR 351.224(b), the Department will disclose
its weighted average antidumping margin calculations within 10 days of
public announcement of these preliminary results. An interested party
may request a hearing within 30 days of publication of these
preliminary results. See 19 CFR 351.310(c). Any hearing, if requested,
will be held 44 days after the date of publication, 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 these preliminary results. See 19 CFR 351.309(c). Rebuttal briefs
and rebuttals to written comments, limited to issues raised in such
briefs or comments, may be filed no later than 37 days after the date
of publication. 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.
Further, the parties submitting written comments should provide the
Department with an additional copy of the public version of any such
comments on diskette.
The Department will issue the final results of this administrative
review, which will include the results of its analysis of issues raised
in any such comments, within 120 days of publication of these
preliminary results.
Assessment
Upon completion of this administrative review, pursuant to 19 CFR
351.212(b), the Department will calculate an assessment rate on all
appropriate entries. We will calculate importer-specific duty
assessment rates on the basis of the ratio of the total amount of
antidumping duties calculated for the examined sales to the total
quantity of the sales for that importer. Where the assessment rate is
above de minimis, we will instruct CBP to assess duties on all entries
of subject merchandise by that importer.
The Department clarified its ``automatic assessment'' regulation on
May 6, 2003. See Antidumping and Countervailing Duty Proceedings:
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This
clarification will apply to entries of subject merchandise during the
POR produced by the company included in these preliminary results for
which the reviewed company did not know their merchandise was destined
for the United States. In such instances, we will instruct CBP to
liquidate unreviewed entries at the all-others rate if there is no rate
for the intermediate company or companies involved in the transaction.
Cash Deposit Requirements
The following deposit rates will be effective upon publication of
the final results of this administrative review for all shipments of
PTFE from Italy 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 listed above for Solvay will be the
rate established in the final results of this review, except if a rate
is less than 0.5 percent, and therefore de minimis, the cash deposit
rate will be zero; (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 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 conducted by the Department, the cash deposit rate will be 46.46
percent, the ``all others'' rate established in the LTFV investigation.
See 53 FR 26096 (July 11, 1988). 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 351.402(f)(2) to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entities 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) and 777(i)(1) of the Act.
Dated: August 31, 2006.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E6-14909 Filed 9-11-06; 8:45 am]
BILLING CODE 3510-DS-S