69 FR 17645, April 5, 2004

DEPARTMENT OF COMMERCE

International Trade Administration

[A-580-853]

Notice of Final Determination of Sales at Not Less Than Fair Value: 
Wax and Wax/Resin Thermal Transfer Ribbon from the Republic of Korea

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

ACTION: Notice of Final Determination of Sales at Not Less Than Fair 
Value.

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EFFECTIVE DATE: April 5, 2004.

FOR FURTHER INFORMATION CONTACT: Fred Baker, Mike Heaney, or Robert 
James, AD/CVD Enforcement, Group III, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, N.W., Washington, D.C. 20230, 
telephone: (202) 482-2924, (202) 482-4475, or (202) 482-0649, 
respectively.

SUPPLEMENTARY INFORMATION:

Final Determination

    We determine that wax and wax/resin thermal transfer ribbons (TTR) 
are not being, nor are likely to be, sold in the United States at less 
than fair value (LTFV), as provided in section 735 of the Tariff Act of 
1930, as amended (the Tariff Act).

Case History

    The Department published the preliminary determination of sales at 
not less-than-fair-value on December 22, 2003. See Notice of 
Determination of Sales at Not Less Than Fair Value: Wax and Wax/Resin 
Thermal Transfer Ribbons from the Republic of Korea, 68 FR 71078 
(December 22, 2003) (Preliminary Determination). Since then the 
following events have occurred.
    On December 22, 2003 respondent Illinois Tool Works, Inc. (the only 
known producer/exporter of TTR from Korea to the United States (ITW)) 
submitted its response to the Department's November 28, 2003 
supplemental questionnaire regarding the section E further 
manufacturing response of ITW's U.S. affiliate ITW Thermal Films 
(ITWTF). Also on December 22, 2003 ITW submitted its response to the 
Department's sections A, B, and C supplemental questionnaire, issued on 
December 1, 2003.
    On December 23, 2003 DigiPrint International, a U.S. importer of 
TTR slit in India, submitted comments on substantial transformation and 
country of origin.These comments were made part of the TTR from Korea 
investigation as an attachment to a memorandum to the file dated 
January 9, 2004. See memorandum from Cheryl Werner to the file dated 
January 9, 2004 on file in room B-099 of the Department of Commerce 
building.
    On January 5, 2004 ITW submitted its response to the Department's 
December 18, 2003 section D supplemental questionnaire. Also on January 
5, 2004 the Department issued another section E supplemental 
questionnaire.
    On January 5, 2004 and January 16, 2004, International Imaging 
Materials, Inc. (petitioner) submitted comments regarding (1) its 
allegation that respondents in the three concurrent investigations of 
TTR (France, Japan, and South Korea) would attempt to circumvent the 
order by slitting jumbo rolls in third countries, and (2) its request 
that the Department therefore determine that slitting does not change 
the country of origin of TTR for antidumping purposes.
    On January 6, 2004 petitioner submitted comments on the upcoming 
cost of production (COP) verification.
    On January 9, 2004 Armor S.A. (the sole respondent in the 
antidumping investigation of TTR from France) submitted a response to 
petitioner's January 5, 2004 comments on country of origin.
    On January 12, 2004 ITW submitted its response to the Department's 
January 5, 2004 section E supplemental questionnaire.
    From January 12 through January 16, 2004 Department officials 
verified the cost of production response of ITW Specialty Films Co., 
Ltd. (ITWSFK) in Seoul, Korea. See February 5, 2004 cost verification 
report. This and all other memoranda cited herein are on file in the 
Central Records Unit, room B-099 of the Department of Commerce 
building.
    From January 16 through January 19, 2004 Department officials 
verified the sales response of ITWSFK in Seoul, Korea. See February 17, 
2004 sales verification report.
    On January 20, 2004 petitioner met with Department officials to 
discuss their concerns about some of the information on the record. See 
Memorandum from Fred Baker to the File, dated January 22, 2004.

[[Page 17646]]

    On January 21, 2004 petitioner requested a hearing.
    On January 22, 2004, petitioner submitted pre-verification comments 
for the upcoming further manufacturing verification in Romeo, Michigan.
    On January 23, 2004 ITW requested to participate in the hearing. 
Also on January 23, 2004 petitioner submitted comments on ITW's 
sections supplemental A, B, and C responses and the submissions by 
three of ITW's affiliated U.S. resellers. Also on January 23, 2004 
petitioner requested that the Department postpone the final 
determination until March 22, 2004.
    From January 26 through January 28, 2004 Department officials 
verified the further manufacturing response of ITW Thermal Films 
(ITWTF) in Romeo, Michigan. See February 5, 2004 further-manufacturing 
verification report. From January 28 through January 30, 2004 
Department officials verified the sales response of ITWTF in Romeo, 
Michigan. See February 18, 2004 CEP verification report.
    On February 9, 2004 petitioner met with Department officials to 
discuss various aspects of the distribution process for TTR in both the 
United States and Korea. See Memorandum from Robert James to the File 
dated February 9, 2004. On February 11, 2004 petitioner made a 
submission in follow-up to the February 9, 2004 meeting with Department 
officials.
    On February 12, 2004 the Department extended the deadline for 
issuing the final determination. See Notice of Postponement of Final 
Antidumping Duty Determination: Wax and Wax/Resin Thermal Transfer 
Ribbons from the Republic of Korea, 69 FR 6941 (February 12, 2004).
    On February 18, 2004 the Department issued a ``post-preliminary 
analysis'' of ITW's submitted data in response to the below-COP 
allegation made by petitioner. We initiated the below-cost sales 
investigation on November 19, 2003. The ``post-preliminary analysis'' 
consisted of a recalculation of ITW's dumping margin based on all the 
information on the record to date, including cost data and verification 
findings. See Memorandum from Fred Baker to the File dated February 18, 
2004.
    On February 26, 2004 ITW and petitioner submitted case briefs.
    On February 27, 2004 petitioner withdrew its request for a hearing.
    On March 2, 2004 ITW and petitioner submitted rebuttal briefs.
    On March 3, 2004 petitioner met with Department officials to 
discuss issues raised in the case briefs. See Memorandum to the File 
dated March 4, 2004.
    On March 10, 2004 ITW held a meeting with Department officials to 
discuss issues raised in the case briefs. See memorandum to the file 
dated March 10, 2004.
    On March 25, 2004 the Department again extended the deadline for 
issuing the final determination. See Notice of Postponement of Final 
Antidumping Duty Determination: Wax and Wax/Resin Thermal Transfer 
Ribbons from the Republic of Korea, 69 FR 15298 (March 25, 2004).
    On March 22, 2004 Department officials met with counsel for 
petitioners. See Memorandum to the File dated March 23, 2004. The 
following day Department officials met with counsel for ITW. See 
Memorandum to the File dated March 23, 2004.

Period of Investigation

    The period of investigation is April 1, 2002 through March 31, 
2003.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this antidumping investigation are addressed in the ``Issues and 
Decision Memorandum'' (Decision Memorandum) from Joseph A. Spetrini, 
Deputy Assistant Secretary, Import Administration, to James J. Jochum, 
Assistant Secretary for Import Administration, dated March 29, 2004, 
which is hereby adopted by this notice. A list of the issues which 
parties have raised and to which we have responded, all of which are in 
the Decision Memorandum, is attached to this notice as an appendix. 
Parties can find a complete discussion of all issues raised in this 
investigation and the corresponding recommendations in this public 
memorandum which is on file in the Central Records Unit, room B-099 of 
the main Department of Commerce building. In addition, a complete 
version of the Decision Memorandum can be accessed directly on the Web 
at http://ia.ita.doc.gov/. The paper copy and electronic version of the 

Decision Memorandum are identical in content.

Scope of Investigation

    This investigation covers wax and wax/resin thermal transfer 
ribbons (TTR), in slit or unslit (``jumbo'') form originating from 
Korea with a total wax (natural or synthetic) content of all the image 
side layers, that transfer in whole or in part, of equal to or greater 
than 20 percent by weight and a wax content of the colorant layer of 
equal to or greater than 10 percent by weight, and a black color as 
defined by industry standards by the CIELAB (International Commission 
on Illumination) color specification such that L<*35,-20<a*<35 and 
-40<b*<31, and black and near–black TTR. TTR is typically used in 
printers generating alphanumeric and machine–readable characters, 
such as bar codes and facsimile machines. 

    The petition does not cover pure resin TTR, and finished thermal 
transfer ribbons with a width greater than 212 millimeters (mm), but 
not greater than 220 mm (or 8.35 to 8.66 inches) and a length of 230 
meters (m) or less (i.e., slit fax TTR, including cassetted TTR), and 
ribbons with a magnetic content of greater than or equal to 45 percent, 
by weight, in the colorant layer. 

    The merchandise subject to this investigation may be classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) at heading 
3702 and subheadings 3921.90.40.25, 9612.10.90.30, 3204.90, 3506.99, 
3919.90, 3920.62, 3920.99 and 3926.90. 

The tariff classifications are provided for convenience and Customs 
and Border Protection (CBP) purposes; however, the written description
of the scope of the investigation is dispositive.

Currency Conversion

We made currency conversions into U.S. dollars in accordance with
section 773A(a) of the Tariff Act based on exchange rates in effect 
on the dates of the United States sales, as provided by the Dow Jones 
Business Information Services.

Verification

As provided in section 782(i) of the Tariff Act, we verified the 
information submitted by the respondent for use in our final 
determination. We used standard verification procedures, including 
examination of relevant accounting and production records, as well 
as original source documents provided by the respondent.

Affiliation Issues

Petitioner alleges in its February 26, 2004 Case Brief that ITW is 
affiliated to SKC Corporation, a Korean film producer which sold its 
TTR and specialty film mill to ITW in April 1999. Petitioner also 
accuses ITW of misreporting home market sales be concealing its 
affiliation with a certain home market customer. ITW denies both
allegations in its March 2, 2004 Rebuttal Brief. A complete 
discussion of theses issues, necessitating extensive references 
to business proprietary information, is found in a memorandum
to Joseph A. Spetrini, ‘‘Antidumping Duty Investigation on Wax and 
Wax/Resin Thermal Transfer Ribbons from South Korea: Affiliation 
Issues Concerning Respondent Illinois Tool Works, Inc.,’’ dated 
March 25, 2004. See also, the Decision Memorandum.

Country of Origin

As noted above, petitioner has requested that the Department
determine that TTR produced in Korea (in jumbo roll, i.e., unslit 
form) that is slit in a third country does not change the country 
of origin for antidumping purposes. According to petitioner, because 
slitting does not constitute a ‘‘substantial transformation,’’ Korean 
jumbo rolls slit in a third country should be classified as Korean 
TTR for antidumping purposes, and, therefore, within the scope of 
this investigation and any resulting order. Petitioner submitted 
comments on this request on October 28, 2003, December 5, 2003, 
January 5 and January 16, 2004. According to petitioner, substantial 
transformation does not take place because: 1) both slit and jumbo 
rolls have the same essential physical characteristics (e.g., both 
have the same chemical properties that make them suitable for thermal 
transfer printing); 2) large capital investments are required for 
coating and ink–making (production stages prior to slitting), but 
not for slitting; 3) coating and ink–making require significantly 
more skill, expertise, and research and development; and, 4) the 
majority of costs and value comes from coating and ink–making. 
Petitioner states that, for purposes of this issue, slitting and 
packaging do not account for a substantial amount of the total 
cost of finished TTR (depending on the degree of automation and 
whether new or secondhand equipment is involved); and that a 
slitting operation requires a small amount of capital, compared 
with a large amount of capital required for a coating and ink–making 
operation.

   Armor, the sole respondent in the investigation of TTR from France,
argues that slitting does constitute substantial transformation, and,
therefore, that the Department should determine that French jumbo rolls 
slit in a third country should be considered to have originated in that 
third country for antidumping purposes. Armor submitted comments on 
November 26, 2003, December 12, 2003, and January 9, 2004. Armor argues 
that substantial transformation does take place because: 1) slitting, 
and the repackaging that necessarily goes along with it, involves
transforming the product into its final end–use dimensions, the 
insertion of one or two cores (for loading the ribbons into printers), 
and the addition of leaders, bridges, and trailers, which result in 
a new product, with a new name, new character, and new purpose; 2) 
petitioner excluded TTR slit to fax proportions, acknowledging the
importance of slitting; and, 3) U.S. Customs and Border Protection 
(CBP) and the Court of International Trade (CIT) have determined that 
slitting and repackaging amount to substantial transformation. DigiPrint, 
in comments received on January 2, 2004, argues that the record of this 
investigation indicates that slitting and packaging account for a large 
amount (34%) of total cost, indicating substantial transformation.

     The Department has considered several factors in determining 
whether a substantial transformation has taken place, thereby changing 
a product’s country of origin. These have included: the value added to 
the product; the sophistication of the third–country processing; the 
possibility of using the third–country processing as a low cost means 
of circumvention; and, most prominently, whether the processed product 
falls into a different class or kind of product when compared to the
downstream product. While all of these factors have been considered by 
the Department in the past, it is the last factor which is consistently 
examined and emphasized.1 When the upstream and processed products fall 
into different classes or kinds of merchandise, the Department generally
finds that this is indicative of substantial transformation. See, e.g.,
Cold–Rolled 1993, 58 FR at 37066.

     Accordingly, the Department has generally found that substantial
transformation has taken place when the upstream and downstream products 
fall within two different ‘‘classes or kinds’’ of merchandise: (see, e.g., 
steel slabs converted to hot–rolled band; wire rod converted through cold–
drawing to wire; cold–rolled steel converted to corrosion resistant steel; 
flowers arranged into bouquets; automobile chassis converted to limousines)
.2 Conversely, the Department almost invariably determines substantial 
transformation has not taken place when both products are within the same 
‘‘class or kind’’ of merchandise: (see, e.g., computer memory components 
assembled and tested; hot–rolled coils pickled and trimmed; cold–rolled 
coils converted into cold–rolled strip coils; rusty pipe fittings converted 
to rust free, painted pipe fittings; green rod cleaned, coated, and heat 
treated into wire rod).3 In this case, both jumbo and slit TTR are within 
the same class or kind of merchandise, as defined in the Department’s 
initiation and as defined for this final determination.

     While slitting and packaging might account for 34 percent of the total 
cost of production,4 the processes and equipment involved do not amount 
to substantial transformation of the jumbo TTR for antidumping purposes. 
According to information submitted by petitioner, and not rebutted by any 
party to this investigation, a slitting operation requires only a fraction 
of the capital investment required for a coating and ink–making operation.5 
Moreover, the ITC noted in this investigation that the ‘‘slitting and 
packaging process is not particularly complex, especially as compared to 
the jumbo TTR production process.’’ ITC Report, at 7. The ITC also noted 
that the primary cost involved in a slitting and packaging operation is 
not capital cost, but direct labor cost, which, we note, might be hired 
cheaply in a third country. Id. at 14. Thus, it appears that a slitting 
operation could be established in a third country for circumvention 
purposes with far greater ease than a coating and ink–making operation.

     Finally, the ITC concluded that, while slit and jumbo TTR are like 
products, U.S. slitting and packaging operations (or ‘‘converters’’) 
were not part of the domestic industry for purposes of this investigation, 
‘‘for lack of sufficient production related activities.’’ Id. at 13. The 
implication of the ITC’s conclusion, based on its extensive multi–pronged 
analysis, is that TTR is the product of coating and ink–making, not 
slitting and packaging: ‘‘The production related activities of converters 
are insufficient for such firms to be deemed producers of the domestic like 
product.’’ Id. While we are not bound by the ITC’s decisions, the ITC’s 
determination is important to consider in this particular instance because 
it is based on the full participation of respondents and petitioner, 
whereas respondent withdrew its information from our investigation.

     As the Department has stated on numerous occasions, CBP decisions
regarding substantial transformation and customs regulations, referred to 
by respondent, are not binding on the Department, because we make these
decisions with different aims in mind (e.g., anticircumvention). See, e.g.,
DRAMs, 67 FR at 70928. The Department’s independent authority to
determine the scope of its investigations has been upheld by the CIT. See
Diversified Products Corp. v. United States, 572 F. Supp. 883, 887 (CIT
1983). Presumably, a CIT decision interpreting substantial transformation
in the context of CBP regulations, also cited by respondent, also is not 
binding on the Department.

     While the other facts noted by respondent are not necessarily 
irrelevant to this determination, they do not overcome the conclusion 
indicated by the fact that the slitting and packaging of jumbo rolls 
into slit TTR does not create a ‘‘new and different article.’’ In other 
words, the  totality of the circumstances indicates that slitting does 
not constitute substantial transformation for antidumping purposes. 
Even accepting, arguendo, DigiPrint’s statement regarding the amount of 
total cost accounted for by slitting and packaging, and respondent’s 
statements regarding how slitting and packaging transform the product 
into its final end–use form, the product still has not changed sufficiently 
to fall outside the class or kind of merchandise defined in this 
investigation. Jumbo rolls are intermediate products, and slit rolls are 
final, end–use products, but the transformation of an upstream product 
into a downstream product does not necessarily constitute ‘‘substantial 
transformation’’ and, in this case, does not, given the considerations 
listed above.

     Similarly, in DRAMs, we decided that wafers shipped to a third 
country to be used in the assembly of DRAMs (subject merchandise) did 
not amount to substantial transformation because the wafers were the 
‘‘essential’’ component in the product. In this case, the ITC report 
notes petitioner’s statement, unrefuted by respondents, that ‘‘the 
essential characteristic of finished TTR, like that of jumbo TTR, is 
that of a strip of PET film coated with ink.’’ We agree and note that 
the essential characteristic is contained in the jumbo TTR imported 
into the third country.

    Therefore, in light of this fact and the facts discussed below, we 
determine that slitting jumbo rolls does not constitute substantial 
transformation. Jumbo rolls originating in Korea but slit in a third 
country will be subject to any antidumping duties imposed on Korean 
TTR, if an antidumping duty order on such products is issued.

Changes Since the Preliminary Results

     Based on our findings at verification and our analysis of comments 
received, we have made adjustments to the preliminary determination 
calculation methodology and post–preliminary analysis methodology in 
calculating the final margin for ITW. These adjustments are discussed 
in the Decision Memorandum for this investigation.

Suspension of Liquidation

     Because the estimated weight–averaged dumping margin for the
investigated company is 1.65 percent (de minimis), we are not directing 
the CBP to suspend liquidation of entries of TTR from Korea.

Final Determination Margin

     We determine that the following percentage weighted–average margin
exists:
_______________________________________________________________________

Exporter/manufacturer                              Margin (percent)
_______________________________________________________________________

ITW .................................................... 1.65
_______________________________________________________________________

ITC Notification

     In accordance with section 735(d) of the Tariff Act, we have 
notified the International Trade Commission (ITC) of our determination.

     This notice also serves as a reminder to parties subject to 
administrative protective orders (APOs) or their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with 19 CFR 351.305, which continues 
to govern business proprietary information in this segment of the 
proceeding. Timely written notification of the return/destruction of 
APO materials or conversion to judicial protective order is hereby 
requested.  Failure to comply with the regulations and terms of an 
APO is a violation which is subject to sanction.

     This determination is issued and published pursuant to section 
735(d) and 777(i)(1) of the Tariff Act.

Dated: March 29, 2004.

James J. Jochum,
Assistant Secretary 
  for Import Administration.

________________________________________
Footnotes:



1 See, e.g., Notice of Final Determination of Sales at Less Than Fair Value:
Certain Cold- Rolled Carbon Steel Flat Products From Argentina, 58 FR 37062,
37066 (July 9, 1993) (Cold-Rolled 1993); Final Determination of Sales at Less
Than Fair Value; Limousines From Canada, 55 FR 11036, 11040, comment 10 
(March 26, 1990) (Limousines); Erasable Programmable Read Only Memories
EPROMs) From Japan; Final Determination of Sales at Less than Fair Value, 
51 FR 39680, 39692, comment 28 (October 30, 1986) (EPROMs); and, Cold-Rolled 
1993, 58 FR at 37066; respectively.

2 Notice of Final Determination of Sales at Less Than Fair Value; Stainless 
Steel Sheet and Strip in Coils From the United Kingdom, 64 FR 30688, 30703, 
comment 13 (June 8, 1999); Notice of Final Determination of Sales at Less 
Than Fair Value-Stainless Steel Round Wire from Canada, 64 FR 17324, 17325, 
comment 1 (April 9, 1999); Cold-Rolled 1993, 58 FR at 37066; Certain Fresh 
Cut Flowers From Colombia; Final Results of Antidumping Duty Administrative 
Review, 55 FR 20491, 20499, comment 49 (May 17, 1990); and, Limousines, 55 
FR 11040; respectively.

3 Notice of Initiation of Countervailing Duty Investigation: Dynamic Random 
Access Memory Semiconductors from the Republic of Korea, 67 FR 70927, 70928 
(November 27, 2002) (DRAMs); EPROMs, 51 FR at 39692; Dynamic Random Access 
Memory Semiconductors of 256 Kilobits and Above from Japan; Suspension of 
Investigation and Amendment of Preliminary Determination, 51 FR 28396, 28397 
(August 7, 1986); Notice of Preliminary Determination of Sales at Less Than 
Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From the People’s 
Republic of China, 66 FR 22183, 22186 (May 3, 2001); Memorandum to Troy H. 
Cribb, Acting Assistant Secretary, from Holly Kuga, Acting Deputy Assistant 
Secretary, Issues and Decision Memorandum for the Investigation of Certain 
Cold-Rolled Flat-Rolled Carbon Quality Steel Products from Taiwan, comment 
1 (May 22, 2000); Notice of Preliminary Determination of Sales at Less Than 
Fair Value and Postponement of Final Determination: Steel Wire Rod From 
Canada, 62 FR 51572, 51573 (October 1, 1997); Final Determination of Sales 
at Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe Fittings From 
India, 60 FR 10545, 10546 (February 27, 1995); respectively.

4 The ITC report states that ‘‘[s]ix U.S. producers indicate that slitting 
and packaging accounts for an average of 34 percent of the cost of finished 
bar code TTR.’’ Certain Wax and Wax/Resin Thermal Transfer Ribbons from 
France, Japan, and Korea, Investigations Nos. 731-TA-1039-1041 (Preliminary), 
(July 2003) (ITC Report), at 7. DigiPrint apparently is referring to this 
figure, when it refers to 34 percent in its January 2, 2004 submission. 
Figures placed on the record by petitioner related to this issue are 
proprietary, but indicate that the relevant figure might be significantly 
less than 34 percent, depending on the country in which the slitter is 
located, the type of equipment used, the degree of automation involved,
and whether the process relies more on labor than capital.

5 These figures agree with statements made by DNP, a respondent in the 
Japanese TTR investigation, recorded in the preliminary report by the 
U.S. International Trade Commission (ITC), that capital investment in 
a slitting operation was ‘‘generally very small’’ ($100,000 to $300,000). 
Id. at 14.

__________________________________________

Appendix 1 Issues in the Decision Memorandum

Comment 1:  Affiliation Between ITW and SKC
Comment 2:  Alleged Affiliation with Customer
Comment 3:  Costs of Connums Sold in the United States
Comment 4:  Allocation Indices
Comment 5:  Low Costs of Type 2 Wax With Some Resin Jumbo Rolls
Comment 6:  Film Cost
Comment 7:  Ink–Making Costs
Comment 8:  Coating Index
Comment 9:  Korean Slitting Cost
Comment 10: Alleged Incorrectly–Reported U.S. Further–Manufacturing Costs
Comment 11: Use of Adverse Facts Available
Comment 12: Allocation of Goodwill Expenses
Comment 13: Royalty Expenses
Comment 14: Non–Operating Income
Comment 15: Averaging Groups for U.S. Sales
Comment 16: Treatment of Non–Dumped Sales
Comment 17: Clerical Errors

[FR Doc. 04–7643 Filed 4–2–04; 8:45 am]
BILLING CODE 3510–25–S