Notice of Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review: Ninth Administrative Review of the Antidumping Duty Order on Certain Pasta from Italy, 45017-45023 [E6-12796]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 152 (Tuesday, August 8, 2006)]
[Notices]
[Pages 45017-45023]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-12796]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-475-818)


Notice of Preliminary Results and Partial Rescission of 
Antidumping Duty Administrative Review: Ninth Administrative Review of 
the Antidumping Duty Order on Certain Pasta from Italy

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests by interested parties, the Department 
of Commerce (``the Department'') is conducting an administrative review 
of the antidumping duty order on certain pasta (``pasta'') from Italy 
for the period of review (``POR'') July 1, 2004, through June 30, 2005.
    We preliminarily determine that during the POR, both Corticella 
Molini e Pastifici S.p.A. and its affiliate Pasta Combattenti S.p.A. 
(collectively, ``Corticella/Combattenti'') and Atar, S.r.L. (``Atar'') 
sold subject merchandise at less than normal value (``NV''). If these 
preliminary results are adopted in the final results of this 
administrative review, we will instruct U.S. Customs and Border 
Protection (``CBP'') to assess antidumping duties equal to the 
difference between the export price and normal value (``EP'').
    Further, requests for review of the antidumping duty order for the 
following companies were withdrawn: Barilla G.e.R. Fratelli, S.p.A.,/
Barilla Alimentare, S.p.A. (``Barilla''), Moline e Pastificio Tomasello 
S.r.L. (``Tomasello''), and Pastificio Laporta S.a.s (``Laporta''). 
Because the withdrawal requests were timely and there were no other 
requests for review of these companies, we are rescinding the review 
for these companies. See 19 CFR 351.213(d)(1).
    Furthermore, we are preliminarily rescinding the review with 
respect to Italpasta/Pasta Berruto S.p.A. (``Italpasta'')\1\ because 
Italpasta submitted a letter stating that it had no shipments of 
subject merchandise during the POR. See 19 CFR 351.213(d)(3). As 
discussed in the Partial Rescission section below, customs data did not 
contradict Italpasta's claim that it did not have shipments of subject 
merchandise during the POR.
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    \1\ In its September 20, 2005 letter, counsel for Italpasta 
S.p.A. informed the Department that it merged with its affiliate, 
Arrighi S.p.A. into a new company Pasta Berruto S.p.A.. See Letter 
to the Department from Italpasta, Re: Pasta from Italy; Response to 
Questionnaire (September 20, 2005).
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    Finally, we are rescinding the review with respect to Pastificio 
Antonio Pallante S.r.L./Industrie Alimentari Molisane, S.r.L./Vitelli 
Foods, LLC (``Pallante'') because, since the initiation of the current 
review, the Department has revoked the order in part, with respect to 
Pallante, effective July 1, 2004. See Notice of Final Results of the 
Eighth Administrative Review of the Antidumping Order on Certain Pasta 
From Italy and Determination to Revoke in Part, 70 FR 71464 (November 
29, 2005) (``Pasta Eighth Review Final Results'').
    Interested parties are invited to comment on these preliminary 
results and partial rescission. Parties who submit comments in this 
segment of the proceeding should also submit with them: (1) a statement 
of the issues and (2) a brief summary of the comments. Further, parties 
submitting written comments are requested to provide the Department 
with an electronic version of the public version of any such comments 
on diskette.

EFFECTIVE DATE: August 8, 2006.

FOR FURTHER INFORMATION CONTACT: Dennis McClure, Maura Jeffords or 
Preeti Tolani, AD/CVD Operations, Office 3, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone: 
(202) 482-5973, (202) 482-3146 or (202) 482-0395, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 24, 1996, the Department published in the Federal Register 
the antidumping duty order on pasta from Italy. See Notice of 
Antidumping Duty Order and Amended Final Determination of Sales at Less 
Than Fair Value: Certain Pasta From Italy, 61 FR 38547 (July 24, 1996).
    On July 1, 2005, the Department published a notice of opportunity 
to request an administrative review of the antidumping duty order on 
certain pasta from Italy. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation: Opportunity to Request 
Administrative Review, 70 FR 38099 (July 1, 2005). We received

[[Page 45018]]

requests for review from petitioners\2\ and from individual Italian 
exporters/producers of pasta, in accordance with 19 CFR 
351.213(b)(1)&(2). On August 29, 2005, the Department published the 
notice of initiation of this antidumping duty administrative review 
covering the period July 1, 2004, through June 30, 2005, listing these 
seven companies as respondents: Barilla, Atar, Italpasta, Tomasello, 
Laporta, Corticella/Combattenti, and Pallante. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Requests 
for Revocation in Part, 70 FR 51009 (August 29, 2005) (``Initiation 
Notice'').
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    \2\ New World Pasta Company; Dakota Growers Pasta Company; and 
American Italian Pasta Company.
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    On October 13, 2005, Laporta timely withdrew its request for an 
administrative review of certain pasta from Italy. On November 9, 2005, 
Barilla timely withdrew its request for an administrative review of 
certain pasta from Italy. On November 14, 2005, Tomasello timely 
withdrew its request for an administrative review of certain pasta from 
Italy. No other party requested a review of these three entities.
    Between October 2005 and July 2006, the Department issued its 
initial questionnaire and supplemental questionnaires to each 
respondent, as applicable. In the initial questionnaire to Corticella/
Combattenti, the Department requested that Corticella/Combattenti 
submit its cost of production information because during the 
Department's most recently completed review, we disregarded sales made 
by Corticella/Combattenti at less than cost of production. See sections 
773 (b)(1) and (2)(A)(ii) of the Tariff Act of 1930, as amended (``the 
Act''); Pasta Eighth Review Final Results, 70 FR 71464 (November 29, 
2005). We received responses to the Department's initial and 
supplemental questionnaires on October 31, 2005, February 2, March 15, 
June 27, June 30 and July 18, 2006 from Atar. Corticella/Combattenti 
provided responses to the Department's initial and supplemental 
questionnaires on February 6, February 16, and March 30, 2006. On 
November 21, 2005, January 4, and May 1, 2006, the petitioners filed 
comments on Atar's response. Atar filed rebuttal comments on December 
1, 2005, February 6, and May 8, 2006. On March 10, 2005, the Department 
extended the due date for the preliminary results of review from April 
3, to May 18, 2006. See Certain Pasta from Italy: Extension of Time 
Limits for the Preliminary Results of Antidumping Duty Administrative 
Review, 71 FR 13584 (March 16, 2006). On May 17, 2006, we fully 
extended the due date for the preliminary results of review from May 
18, to July 31, 2006. See Certain Pasta from Italy: Extension of Time 
Limits for the Preliminary Results of Antidumping Duty Administrative 
Review, 71 FR 29615 (May 23, 2006). We issued additional supplemental 
questionnaires to Atar between May 31 and July 7, 2006.

Affiliation and Collapsing

    During the seventh administrative review in this proceeding, the 
Department collapsed Corticella/Combattenti and its affiliated toll 
producer, CLC. The Department found, among other things, that 
Corticella/Combattenti and CLC had common ownership, common control and 
management, and significant potential for manipulation of price and 
production; therefore, the Department collapsed the companies for 
purposes of that review. See Notice of Final Results of the Seventh 
Administrative Review of the Antidumping Duty Order on Certain Pasta 
From Italy and Determination to Revoke in Part, 70 FR 6832, 6833 
(February 9, 2005) (Pasta Seventh Review Final Results) (citing the 
February 2, 2005, memorandum from the Team to Melissa G. Skinner, 
Director, AD/CVD Operations, Office 3, entitled, ``The relationship of 
Coopertive Lomellina Cerealicoltori S.r.l. (CLC) with Corticella Molini 
e Pastifici S.p.A. (Corticella) and its affiliate Pasta Combattenti 
S.p.A. (Combattenti, collectively Corticella/Combattenti),'' a 
proprietary document, the public version of which is available in the 
Central Records Unit (``CRU''), room B-099 of the main Department 
building.) This memo has been placed on the record of this review. See 
Memo to File, dated July 31, 2006. The Department also found 
Corticella/Combattenti and CLC to be a single entity for the purposes 
of the eighth administrative review. See Pasta Eighth Review Final 
Results, 70 FR 6832, 6833. As the facts are the same for this POR as 
they were for both the Pasta Seventh Review Final Results and the Pasta 
Eighth Review Final Results, we continue to find that there is 
significant potential for manipulation of price and production between 
these affiliated parties, and therefore, we have treated Corticella/
Combattenti and CLC as a single entity for this review.

Scope of the Order

    Imports covered by this order are shipments of certain non-egg dry 
pasta in packages of five pounds four ounces or less, whether or not 
enriched or fortified or containing milk or other optional ingredients 
such as chopped vegetables, vegetable purees, milk, gluten, diastasis, 
vitamins, coloring and flavorings, and up to two percent egg white. The 
pasta covered by this scope is typically sold in the retail market, in 
fiberboard or cardboard cartons, or polyethylene or polypropylene bags 
of varying dimensions.
    Excluded from the scope of this order are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione, by Bioagricoop Scrl, by QC&I International Services, by 
Ecocert Italia, by Consorzio per il Controllo dei Prodotti Biologici, 
or by Associazione Italiana per l'Agricoltura Biologica.
    In addition, based on publicly available information, the 
Department has determined that, as of March 13, 2003, imports of 
organic pasta from Italy that are accompanied by the appropriate 
certificate issued by Instituto per la Certificazione Etica e 
Ambientale (``ICEA'') are also excluded from this order. See Memorandum 
from Audrey Twyman to Susan Kuhbach, dated February 28, 2006, entitled 
``Recognition of Instituto per la Certificazione Etica e Ambientale 
(``ICEA'') as a Public Authority for Certifying Organic Pasta from 
Italy'' which is on file in the Department's CRU.
    The merchandise subject to this order is currently classifiable 
under item 1902.19.20 of the Harmonized Tariff Schedule of the United 
States (``''). Although the HTSUS subheading is provided for 
convenience and customs purposes, the written description of the 
merchandise subject to the order is dispositive.

Partial Rescission

    Between October 13 and November 14, 2005, Laporta, Barilla, and 
Tomasello timely withdrew their requests for administrative review of 
the antidumping order. Because their withdrawal requests were filed 
within 90 days of publication of the Initiation Notice, and because 
there were no other requests for review of the above-mentioned 
companies, we are rescinding the review with respect to Laporta, 
Barilla, and Tomasello in accordance with 19 CFR 351.213(d)(1).
    On November 29, 2005, the order was revoked, in part with respect 
to Pallante. See Pasta Eighth Review Final Results,

[[Page 45019]]

70 FR 71464 (November 29, 2005). Consequently, we are rescinding the 
administrative review with respect to Pallante.
    On September 20, 2005, Italpasta submitted a letter stating that it 
had no shipments of subject merchandise during the period of review. We 
confirmed this information through customs data. See Memorandum to the 
File from the Team regarding Customs Query dated May 18, 2006, the 
public version of which is on file in the CRU. In accordance with 19 
CFR 351.213(d)(3), we are preliminarily rescinding the review in part 
as to Italpasta because it made no sales or shipments of subject 
merchandise during the review period.

Product Comparisons

    In accordance with section 771(16) of the Act, we first attempted 
to match contemporaneous sales of products sold in the United States 
and comparison markets that were identical with respect to the 
following characteristics: (1) pasta shape; (2) type of wheat; (3) 
additives; and (4) enrichment. When there were no sales of identical 
merchandise in the comparison market to compare with U.S. sales, we 
compared U.S. sales with the most similar product based on the 
characteristics listed above, in descending order of priority. When 
there were no appropriate comparison market sales of comparable 
merchandise, we compared the merchandise sold in the United States to 
constructed value (``CV''), in accordance with section 773(a)(4) of the 
Act.
    For purposes of the preliminary results, where appropriate, we have 
calculated the adjustment for differences in merchandise based on the 
difference in the variable cost of manufacturing (``VCOM'') between 
each U.S. model and the most similar home market model selected for 
comparison.

Comparisons to Normal Value

    To determine whether sales of certain pasta from Italy were made in 
the United States at less than NV, we compared the EP to the NV, as 
described in the ``Export Price'' and ``Normal Value'' sections of this 
notice. In accordance with section 777A(d)(2) of the Act, we calculated 
monthly weighted-average prices for NV for Corticella/Combattenti and 
CV for Atar and compared these to individual U.S. transactions. See the 
company-specific calculation memoranda, available in the CRU.

Export Price

    For both Corticella/Combattenti and Atar, for the price to the 
United States, we used, as appropriate, EP, in accordance with section 
772(a) of the Act. We calculated EP when the merchandise was sold by 
the producer or exporter outside of the United States directly to the 
first unaffiliated purchaser in the United States prior to importation. 
We based EP on the packed cost-insurance-freight (``CIF''), ex-factory, 
free-on-board (``FOB''), or delivered prices to the first unaffiliated 
customer in, or for exportation to, the United States. When 
appropriate, we made adjustments to these prices to reflect billing 
adjustments, discounts, rebates, and freight revenue.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including inland 
freight from the plant to the distribution warehouse, from plant or 
warehouse to port of exportation, brokerage, handling and loading 
charges, export duties, international freight, marine insurance, U.S. 
inland freight expenses, warehousing, and U.S. duties. In addition, 
when appropriate, we increased EP, by an amount equal to the 
countervailing duty rate attributed to export subsidies in the most 
recently completed administrative review of the countervailing duty 
order applicable to the POR, in accordance with section 772(c)(1)(C) of 
the Act. Corticella/Combattenti reported resales to the United States 
of subject merchandise purchased in Italy from unaffiliated producers. 
In those situations in which an unaffiliated producer of the subject 
pasta knew at the time of the sale that the merchandise was destined 
for the United States, the relevant basis for the EP would be the price 
between that producer and the respondent. See Dynamic Random Access 
Memory Semiconductors of One Megabit or Above From the Republic of 
Korea: Final Results of Antidumping Duty Administrative Review, Partial 
Rescission of Administrative Review and Notice of Determination Not to 
Revoke Order, 63 FR 50867, 50876 (September 23, 1998). Because we 
determined in prior reviews that virtually all enriched pasta is sold 
to the United States, we preliminarily determine, as we did in prior 
reviews, that the unaffiliated producers knew or had reason to know at 
the time of sale that the ultimate destination of the merchandise was 
the United States. See, e.g., Notice of Preliminary Results, Partial 
Rescission of Antidumping Duty Administrative Review and Revocation of 
the Antidumping Duty Order in Part: Eighth Administrative Review of the 
Antidumping Duty Order on Certain Pasta from Italy, 70 FR 42303, 42306 
(``Pasta Eighth Review Prelim''); Notice of Preliminary Results and 
Partial Rescission of Antidumping Duty Administrative Review and Intent 
Not to Revoke in Part: For the Sixth Administrative Review of the 
Antidumping Duty Order on Certain Pasta from Italy, 68 FR 47020, 47028; 
Notice of Preliminary Results and Partial Rescission of Antidumping 
Duty Administrative Review: Certain Pasta from Italy, 63 FR 42368, 
42370 (August 7, 1998). Accordingly, consistent with our methodology in 
prior reviews, when a respondent purchased pasta from other producers 
and we were able to identify resales of this merchandise to the United 
States, we excluded these sales of the purchased pasta from the margin 
calculation for that respondent. See, e.g., Pasta Eighth Review Prelim, 
70 FR 42303, 42306 (July 22, 2005); Pasta Eighth Review Final Results, 
70 FR 71464 (November 29, 2005).

Normal Value

A. Selection of Comparison Markets

    Pursuant to sections 773(a)(1)(B) and (C) of the Act, 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 each 
respondent's volume of home market sales of the foreign like product to 
the volume of its U.S. sales of the subject merchandise. Where a 
respondent had an aggregate volume of home market sales of the foreign 
like product that 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. Based on the data Corticella/Combattenti reported 
for its home market sales, we determined that its home market was a 
viable basis for calculating NV. Atar's home market sales were less 
than five percent of its aggregate sales to the United States; 
therefore, Atar's home market sales are not viable for calculating NV.
    When sales in the home market are not suitable to serve as the 
basis for NV, section 773(a)(1)(B)(ii) of the Act provides that sales 
to a third-country market may be utilized if the prices in such market 
are representative; the aggregate quantity or, if the quantity is not 
appropriate, the value of the foreign like product sold by the producer 
or exporter in the third- country market is five percent or more of the 
aggregate quantity of the subject merchandise sold in or to the United 
States; and the Department does not determine that a particular market 
situation in the third-

[[Page 45020]]

country market prevents a proper comparison with the U.S. price.
    Atar reported Angola as its largest and only third-country market 
during the POR, in terms of volume of sales (and the aggregate quantity 
of such sales is five percent or more of sales to the United States). 
While the volume of Atar's third-country market sales exceeded five 
percent, the Department preliminarily determines that a particular 
market situation exists which prevents proper comparison between Atar's 
third-country market sales and its U.S. sales. See Memorandum to 
Stephen J. Claeys, Deputy Assistant Secretary for Import 
Administration, from Melissa G. Skinner, Director, AD/CVD Operations, 
Office 3: Particular Market Situation, July 31, 2006 (a public version 
is on file in the CRU). Therefore, consistent with section 
773(a)(1)(B)(4) of the Act, we are calculating NV based on CV. We 
calculated NV as noted in the ``Calculation of Normal Value Based on 
Constructed Value'' section of this notice.

B. Arm's-Length Test

    Corticella/Combattenti reported sales of the foreign like product 
to affiliated end-users and affiliated resellers.\3\ The Department 
calculates NV based on a sale to an affiliated party only if it is 
satisfied that the price to the affiliated party is comparable to the 
price at which sales are made to parties not affiliated with the 
producer or exporter, i.e., sales at arm's length. See 19 CFR 
351.403(c). To test whether these sales were made at arm's length, we 
compared the starting prices of sales to affiliated and unaffiliated 
customers net of all movement charges, direct selling expenses, 
discounts and packing. In accordance with the Department's current 
practice, if the prices charged to an affiliated party were, on 
average, between 98 and 102 percent of the prices charged to 
unaffiliated parties for merchandise identical or most similar to that 
sold to the affiliated party, we consider the sales to be at arm's-
length prices and included such sales in the calculation of NV. See 
Stainless Steel Bar from Germany: Preliminary Results of Antidumping 
Duty Administrative Review, 69 FR 70651, 70652 (December 7, 2004); 
Preliminary Results of Antidumping Duty Administrative Review: 
Stainless Steel Sheet and Strip in Coils from Italy, 69 FR 48205, 48208 
(August 9, 2004); see also 19 CFR 351.403(c). Conversely, where all 
sales to the affiliated party did not pass the arm's-length test, all 
sales to that affiliated party were excluded from the NV calculation. 
See Antidumping Proceedings: Affiliated Party Sales in the Ordinary 
Course of Trade, 67 FR 69186, 69187 (Nov. 15, 2002).
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    \3\ We note that sales from Corticella/Combattenti to each 
affiliated customer constitute less than 5 percent of Corticella/
Combattenti's total sales in the foreign market and we did not 
require it to report the sales from its affiliated resellers to the 
unaffiliated customers. See 19 CFR 351.403(d).
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C. Cost of Production Analysis

1. Calculation of Cost of Production (COP)

    We conducted a COP analysis of Corticella/Combattenti pursuant to 
section 773(b) of the Act, to determine whether the respondents' 
comparison market sales were made below the COP. We calculated the COP 
based on the sum of the cost of materials and fabrication for the 
foreign like product, plus amounts for selling, general, and 
administrative (``SG&A'') expenses and packing, in accordance with 
section 773(b)(3) of the Act. We relied on home market sales and COP 
information provided by Corticella/Combattenti in its questionnaire 
responses, except where noted below:
    Molini Certosa, a semolina producer affiliated with Corticella and 
Combattenti, sold Corticella/Combattenti semolina, a major input to the 
production of pasta. Section 773(f)(3) of the Act, the ``major input 
rule'', states that ``if, in the case of a transaction between 
affiliated persons involving the production by one of such persons of a 
major input to the merchandise, the administering authority has 
reasonable grounds to believe or suspect that an amount represented as 
the value of such input is less than the cost of production of such 
input, then the administering authority may determine the value of the 
major input on the basis of the information available regarding such 
cost of production, if such cost is greater than the amount that would 
be determined for such input under paragraph (2).'' Section 773(f)(2), 
the ``transactions disregarded rule,'' states that transactions between 
affiliated persons ``may be disregarded if, in the case of any element 
of value required to be considered, the amount representing that 
element does not fairly reflect the amount usually reflected in sales 
of merchandise under consideration in the market under consideration.'' 
We evaluated the transfer prices between Molini Certosa and Corticella 
and Combattenti accordingly. The Department normally determines the 
market price of a particular input by looking at the average price of 
any transactions made between the respondent and unaffiliated 
suppliers. See Section D at question II. A. 8. c. in the Department's 
September 7, 2005, questionnaire. Such transactions were available in 
this case, and we determined the market price of the semolina input by 
determining the weighted-average price of all such transactions between 
Corticella/Combattenti and their unaffiliated suppliers, as applicable, 
in this POR.
    In its February 16, 2006, response to the section D supplemental 
questionnaire, Corticella claimed that transactions between Combattenti 
and a certain unaffiliated supplier are not reflective of a market 
price, and therefore the Department should not use prices between 
Combattenti and this supplier in determining the market price for the 
purposes of applying the major input rule. Corticella also claimed, in 
its March 30, 2006, response to the section D supplemental 
questionnaire, that transactions between Combattenti and this 
unaffiliated company are functionally a ``tolling'' arrangement, even 
though Combattenti takes ownership of the semolina. Corticella claims 
that Combattenti recovers the semolina price through a conversion fee 
charged to the customer/supplier.
    We disagree with Corticella that we should exclude the purchases of 
semolina from the supplier in question. First, the supplier is not 
affiliated with Combattenti. Second, even Corticella concedes that the 
supplier is not a toller. See also 19 CFR 351.401(h). Indeed, 
Combattenti acquires ownership and controls the relevant sale through 
its contractual agreement; therefore, Combattenti is the producer of 
pasta, not a subcontractor or toller. See Notice of Final Results of 
New Shipper Review of the Antidumping Duty Order on Certain Pasta from 
Italy, 69 FR 18869 (April 9, 2004). Furthermore, Corticella failed to 
provide any evidence that these purchases were not at arm's length or 
anything other than market transactions. Therefore, we have included 
them in our calculation of market price used to test Corticella's 
affiliated purchases of semolina.
    Because the market price was higher than the transfer prices 
between Molini Certosa and both Corticella and Combattenti and higher 
than Molina Certosa's COP, consistent with section 773(f)(3) of the 
Act, we increased the reported direct material cost to reflect the 
market price. For further details regarding these adjustments, see the 
Department's ``Cost of Production and Constructed Value Calculation 
Adjustments for Preliminary Results - Corticella'' (COP Memorandum) 
(July 31, 2006).

[[Page 45021]]

2. Test of Comparison Market Prices

    As required under section 773(b)(1) of the Act, for Corticella/
Combattenti we compared the weighted-average COP to the per-unit price 
of the comparison market sales of the foreign like product to determine 
whether these sales had been made at prices below the COP within an 
extended period of time in substantial quantities, and whether such 
prices were sufficient to permit the recovery of all costs within a 
reasonable period of time. We determined the net comparison market 
prices for the sales-below-cost test by subtracting from the gross unit 
price any applicable movement charges, discounts, rebates, direct and 
indirect selling expenses (also excluded from the COP), and packing 
expenses.

3. Results of COP Test

    Pursuant to sections 773(b)(1) and 773(b)(2)(C)(i) of the Act, 
where less than 20 percent of sales of a given product were at prices 
less than the COP, we did not disregard any below-cost sales of that 
product because we determined that the below-cost sales were not made 
in ``substantial quantities.'' In contrast, where 20 percent or more of 
a respondent's sales of a given product during the POR were at prices 
less than the COP, we determined such sales to have been made in 
``substantial quantities.'' See section 773(b)(2)(C) of the Act. The 
sales were made within an extended period of time in accordance with 
section 773(b)(2)(B) of the Act, because they were made over the course 
of the POR. In such cases, because we compared prices to POR-average 
costs, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Based on this 
methodology, for Corticella/Combattenti, for purposes of this 
administrative review, we disregarded certain below-cost sales and used 
the remaining sales as the basis for determining NV, in accordance with 
section 773(b)(1) of the Act. See the company-specific calculation 
memoranda on file in the CRU, for our calculation methodology and 
results.

D. Calculation of Normal Value Based on Comparison Market Prices

    For Corticella/Combattenti, we calculated NV based on ex-works, FOB 
or delivered prices to comparison market customers. When appropriate, 
we made adjustments to these prices to reflect billing adjustments, 
discounts, and rebates. We made deductions from the starting price, 
when appropriate, for handling, loading, inland freight, international 
freight, and warehousing. In accordance with sections 773(a)(6)(A) and 
(B) of the Act, we added U.S. packing costs and deducted comparison 
market packing, respectively. In addition, we made circumstance-of-sale 
(``COS'') adjustments for direct expenses, including imputed credit 
expenses, advertising, warranty expenses, commissions, and bank 
charges, in accordance with section 773(a)(6)(C)(iii) of the Act.
    We also made adjustments, in accordance with 19 CFR 351.410(e), for 
indirect selling expenses incurred in the home market or United States 
where commissions were granted on sales in one market but not in the 
other, the ``commission offset.'' Specifically, where commissions are 
incurred in one market, but not in the other, we will limit the amount 
of such adjustment to the amount of either the selling expenses 
incurred in the one market or the commissions allowed in the other 
market, whichever is less.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise, in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the VCOM for the foreign like product 
and subject merchandise, using POR-average costs.
    Sales of pasta purchased by the respondents from unaffiliated 
producers and resold in the comparison market were treated in the same 
manner described above in the ``Export Price'' section of this notice.

E. Calculation of Normal Value Based on Constructed Value

    For Atar, we calculated CV in accordance with section 773(e) of the 
Act, which states that CV shall be based on the sum of a respondent's 
cost of materials and fabrication for the subject merchandise, plus 
amounts for SG&A expenses, profit, and U.S. packing costs. We relied on 
Atar's submitted materials and fabrication costs, G&A expenses and U.S. 
packing costs. We adjusted Atar's reported total cost of manufacture to 
account for an unreconciled difference between its reported costs and 
its financial accounting records. Further, we calculated selling 
expenses and profit, in accordance with section 773(e)(2)(B)(iii) of 
the Act, as detailed in the Memorandum to Neal Halper from LaVonne 
Clark, Cost of Production and Constructed Value Calculation Adjustments 
for the Preliminary Results (July 31, 2006) (``Preliminary Results Cost 
Calculation Memo'').
    Because the Department has determined for purposes of these 
preliminary results that Atar does not have a viable comparison market, 
we could not determine selling expenses and profit under section 
773(e)(2)(A) of the Act. Therefore, we relied on section 773(e)(2)(B) 
of the Act to determine these selling expenses and profit. 
Specifically, we used the weighted-average selling expenses and profit 
rate derived from the comparison market data of the respondents in the 
previous administrative review. See Pasta Eighth Review Final Results. 
See Memo to the File from LaVonne Clark through Taija Slaughter, Final 
Results Calculations from the Eighth Administrative Review (July 31, 
2006) (placing selling expense and profit data submitted by respondents 
in the Eighth Administrative Review on the record of the Ninth 
Administrative Review). The statute does not establish a hierarchy for 
selecting among the alternative methodologies provided in section 
773(e)(2)(B) of the Act for determining selling expenses and profit. 
See Statement of Administrative Action Accompanying the URAA, H.R. Rep. 
No. 103-316, vol. 1, at 840 (1994). Nonetheless, we examined each 
alternative in searching for an appropriate method.
    Alternative (i) of section 773(e)(2)(B) of the Act specifies that 
selling expenses and profit may be calculated based on ``actual amounts 
incurred by the specific exporter or producer...on merchandise in the 
same general category'' as subject merchandise. The Department could 
not rely on this alternative because Atar does not produce any products 
other than the subject merchandise. Alternative (ii) of section 
773(e)(2)(B) of the Act provides that selling expenses and profit may 
be calculated based on ``the weighted average of the actual amounts 
incurred and realized by [other] exporters or producers that are 
subject to the investigation or review.'' We could not calculate 
selling expenses and profit based on this alternative because there is 
only one other respondent in this case and relying on that respondent's 
indirect selling expenses and profit would reveal the business-
proprietary information. Therefore, we calculated Atar's CV selling 
expenses and profit based on alternative (iii) of section 773(e)(2)(B) 
of the Act, which is any other reasonable method.
    We calculated Atar's CV selling expense and profit ratios using the 
comparison market selling expense and profit ratios calculated for the

[[Page 45022]]

respondents in the Pasta Eighth Review Final Results in this 
administrative proceeding (i.e., Barilla, Corticella/Combattenti, 
Industrie Alimentare Colavita, S.p.A., Pastificio F.lli Pagani S.p.A., 
Pallante, and Pastificio Riscossa F.lli Mastromauro, S.r.L.). We 
computed weighted-average ratios and applied the selling expense ratios 
to the sum of the cost of materials and fabrication to determine CV 
selling expenses, and applied the profit ratio to the sum of the cost 
of materials, fabrication, and general expenses to calculate an amount 
for profit.
    Pursuant to alternative (iii), the Department has the option of 
using any other reasonable method, as long as the result is not greater 
than the amount realized by exporters or producers ``in connection with 
the sale, for consumption in the foreign country, of merchandise that 
is in the same general category of products as the subject 
merchandise'' (i.e., the ``profit cap''). In the instant case, we are 
using the weighted-average profit rate derived from the comparison 
market data of the respondents in the immediately preceding 
administrative review. Accordingly, this weighted-average profit rate 
represents an amount normally realized by exporters or producers in 
connection with the sale, for consumption in the foreign county, of 
merchandise that is in the same general category of products as the 
subject merchandise. As such, in accordance with section 
773(e)(2)(B)(iii) of the Act, the weighted-average profit rate of the 
respondents in the Pasta Eighth Review Final Results establishes a 
profit cap. Thus, the reasonable method used by the Department to 
calculate profit does not exceed the profit cap.
    Atar submitted to the Department the financial statements of four 
Italian companies, which Atar claims are ``leading pasta 
manufacturers,'' and calculated profit ratios of those companies based 
on the companies' profits realized during fiscal year 2004. Although 
these four companies are producers of the same general category of 
products as the subject merchandise, the financial statements do not 
provide information that would allow the Department to determine if or 
the extent to which the companies' sales were made in the comparison 
market.
    Further, to determine the most appropriate profit rate under 
alternative (iii), we weighed several factors. Among them are: (1) The 
similarity of the potential surrogate companies' business operations 
and products to those of respondent; (2) the extent to which the 
financial data of the surrogate companies reflect sales in the United 
States as well as the home market; (3) the contemporaneity of the 
surrogate data with the POR; and (4) the similarity of the customer 
base. The greater the similarity in business operations, products, and 
customer base, the more likely that there is a greater correlation 
between the profit experience of the companies in question. Because the 
Department typically compares U.S. sales to an NV based on sales in the 
home market or third country, the Department does not normally 
construct an NV based on financial data derived from exclusively or 
predominantly U.S. sales. Finally, contemporaneity is a concern because 
markets change over time and the more current the data, the more 
reflective it will be of the market in which the respondent is 
operating. See Notice of Final Determination of Sales at Less Than Fair 
Value: Pure Magnesium from Israel, 66 FR 49349 (September 27, 2001), 
and accompanying Issues and Decision Memorandum at Comment 8, and 
Notice of Final Determination of Sales at Not Less Than Fair Value: 
Certain Color Television Receivers from Malaysia, 69 FR 20592 (April 
16, 2004), and accompanying Issues and Decision Memorandum at Comment 
26). We determined that the use of the weighted-average profit rate of 
the respondents in the Pasta Eighth Review Final Results is a 
reasonable method. First, the products sold by the other respondents in 
the comparison market are substantially similar to those sold by Atar. 
Second, the CV profit rate for the respondents in the Pasta Eighth 
Review Final Results excludes sales to the United States. Third, the 
respondents in the Pasta Eighth Review Final Results sold to 
distributor/wholesalers similar to Atar's U.S. customers (i.e., they 
had the same type of customer base). We note that the weighted-average 
CV profit rate calculated for the respondents in the Pasta Eighth 
Review Final Results covers a time frame that is not contemporaneous 
with the POR. The Pasta Eighth Review Final Results period was July 1, 
2003 through June 30, 2004, while the instant POR is July 1, 2004, 
through June 30, 2005. However, we note that the profit rate experience 
from the Pasta Eighth Review Final Results period reflects the time 
immediately prior to the instant review. In addition, there is no 
information on the record to suggest that the profit rate experience 
from that period is so different from the instant period to render 
those profit rates distortive.
    For price-to-CV comparisons, we made adjustments to CV for COS 
differences, in accordance with section 773(a)(8) of the Act and 19 CFR 
351.410. We made COS adjustments by deducting the weighted-average 
direct selling expenses incurred or realized by the respondents in the 
Pasta Eighth Review Final Results, and adding Atar's U.S. direct 
selling expenses. See Preliminary Results Cost Calculation Memo.

F. Level of Trade

    Pursuant to 19 CFR 351.412, to determine whether comparison market 
sales are at a different level of trade (``LOT''), we examine stages in 
the marketing process and selling functions along the chain of 
distribution between the producer and the unaffiliated (or arm's-
length) customers. If the comparison market sales are at a different 
LOT and the differences affect 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 LOT of the export 
transaction, we will make an LOT adjustment under section 773(a)(7)(A) 
of the Act.
    In the home market, Corticella reported three different LOTs 
corresponding to two differing channels of distribution and five 
selling activities. Combattenti reported two LOTs and one channel of 
distribution and five selling activities. The Department has determined 
that differing channels of distribution, alone, are not sufficient 
evidence for finding separate LOTs in the home market, when selling 
functions performed for each customer class are sufficiently similar. 
See 19 CFR 351.412(c)(2). Based on our overall analysis, we found that 
the three home market distribution channels reported by respondents 
were not distinct enough to constitute more than one LOT. Therefore, we 
found only one LOT in the home market.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see 
calculation memoranda for Corticella/Combattenti, on file in the CRU.

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average percentage

[[Page 45023]]

margins exist for the period July 1, 2004, through June 30, 2005:

------------------------------------------------------------------------
                Manufacturer/exporter                  Margin (percent)
------------------------------------------------------------------------
Atar................................................               18.48
Corticella/Combattenti..............................                3.32
------------------------------------------------------------------------

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties of this 
proceeding, in accordance with 19 CFR 351.224(b). 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 no 
later than 30 days after the date of publication of these preliminary 
results of review. Rebuttal briefs, limited to issues raised in case 
briefs, may be filed no later than five days after the time limit for 
filing the case briefs, unless the Department alters this time limit. 
See 19 CFR 351.309(d). Parties who submit arguments are requested to 
submit with the argument (1) a statement of the issue, and (2) a brief 
summary of the argument. Further, parties submitting written comments 
are requested to provide the Department with an additional copy of the 
public version of any such comments on diskette. Pursuant to 19 CFR 
351.213(h), the Department intends to issue the final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments, or at a hearing, if requested, 
within 120 days of publication of these preliminary results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of the subject merchandise. Upon 
issuance of the final results of this administrative review, if any 
importer-specific assessment rates calculated in the final results are 
above de minimis (i.e., at or above 0.5 percent), the Department will 
issue appraisement instructions directly to CBP to assess antidumping 
duties on appropriate entries by applying the assessment rate to the 
entered value of the merchandise. For assessment purposes, we 
calculated importer-specific assessment rates for the subject 
merchandise by aggregating the dumping margins for all U.S. sales to 
each importer and dividing the amount by the total entered value of the 
sales to that importer. Where appropriate, to calculate the entered 
value, we subtracted international movement expenses (e.g., 
international freight) from the gross sales value.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the period of review produced by companies 
included in these preliminary results of review for which the reviewed 
companies 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(ies) involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

Cash Deposit Requirements

    To calculate the cash deposit rate for each producer and/or 
exporter included in this administrative review, we divided the total 
dumping margins for each company by the total net value for that 
company's sales during the review period.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
pasta from Italy entered, or withdrawn from warehouse, for consumption 
on or after the publication date, as provided by section 751(a)(2)(C) 
of the Act: (1) The cash deposit rates for the companies listed above 
will be the rates 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) 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 
final results in which that manufacturer or exporter participated; (3) 
if the exporter is not a firm covered in this review, a prior review, 
or the original less-than-fair-value (``LTFV'') investigation, but the 
manufacturer is, the cash deposit rate will be the rate established for 
the most recent final results 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 11.26 percent, the All Others rate established in 
the LTFV investigation. See Notice of Antidumping Duty Order and 
Amended Final Determination of Sales at Less Than Fair Value: Certain 
Pasta from Italy, 61 FR 38547 (July 24, 1996).
    These cash deposit requirements, when imposed, shall remain in 
effect until publication of the final results of the next 
administrative review.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 increase the 
subsequent assessment of the antidumping duties by the amount of 
antidumping duties reimbursed.
    These preliminary results of this administrative review are issued 
and published in accordance with sections 751(a)(1) and 777(i)(1) of 
the Act and 19 CFR 351.221(b)(4).

    Dated: July 31, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-12796 Filed 8-7-06; 8:45 am]
BILLING CODE 3510-DS-S