Certain Frozen Warmwater Shrimp from India: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 10658-10669 [E7-4277]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 46 (Friday, March 9, 2007)]
[Notices]
[Pages 10658-10669]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-4277]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-533-840]


Certain Frozen Warmwater Shrimp from India: Preliminary Results 
and Partial Rescission of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on certain frozen 
warmwater shrimp from India with respect to 70 companies.\1\ The 
respondents which the Department selected for individual review are 
Devi Marine Food Exports Private Limited (DMF), Kader Investment and 
Trading Company Private Limited, Premier Marine Products, Kader Exports 
Private Limited (KEPL), Universal Cold Storage Private Limited (UCS), 
and Liberty Frozen Foods Private Limited (collectively, ``the Liberty 
Group''), Falcon Marine Exports Limited (Falcon), and Hindustan Lever 
Limited (HLL). The respondents which were not selected for individual 
review are listed in the ``Preliminary Results of Review'' section of 
this notice. This is the first administrative review of this order. The 
period of review (POR) is August 4, 2004, through January 31, 2006.
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    \1\ This figure does not include those companies for which the 
Department is preliminarily rescinding the administrative review.
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    We preliminarily determine that sales made by Falcon, HLL, and the 
Liberty Group have been made below normal value (NV). In addition, 
based on the preliminary results for the respondents selected for 
individual review, we have preliminarily determined a weighted-average 
margin for those companies that were not selected for individual review 
but were responsive to the Department's requests for information. For 
those companies which were not responsive to the Department's requests 
for information, we have preliminarily assigned to them a margin based 
on adverse facts available (AFA).
    If the preliminary results are adopted in our final results of 
administrative review, we will instruct U.S. Customs and Border 
Protection (CBP) to assess antidumping duties on all appropriate 
entries. Interested parties are invited to comment on the preliminary 
results.

EFFECTIVE DATE: March 9, 2007.

FOR FURTHER INFORMATION CONTACT: Elizabeth Eastwood or Jill Pollack, 
AD/CVD Operations, Office 2, Import Administration-Room B099, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-3874 or (202) 482-4593, respectively.

SUPPLEMENTARY INFORMATION:

Background

    In February 2005, the Department published in the Federal Register 
an antidumping duty order on certain warmwater shrimp from India. See 
Notice of Amended Final Determination of Sales at Less Than Fair Value 
and Antidumping Duty Order: Certain Frozen Warmwater Shrimp from India, 
70 FR 5147 (Feb. 1, 2005) (Shrimp Order). Subsequently, on February 1, 
2006, the Department published in the Federal Register a notice of 
opportunity to request an administrative review of the antidumping duty 
order of certain frozen warmwater shrimp from India for the period 
August 4, 2004, through January 31, 2006. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 71 FR 5239 (Feb. 1, 
2006). Between February 23 and 28, 2006, the Department received timely 
requests under 19 CFR 351.213(b)(2) to conduct an administrative review 
of the sales of certain frozen warmwater shrimp from the following 
producers/exporters of subject merchandise: Amalgam Foods & Beverages 
Limted, Ananda Aqua Exports Private Limited, Asvini Exports, Asvini 
Fisheries Limited, Avanti Feeds Limted, Devi Fisheries Limited, Devi 
Seafoods Limited, Falcon, Five Star Marine Exports Private Limited, GVR 
Exports Pvt. Ltd., HLL, Jaya Lakshmi Sea Foods Pvt. Ltd., Jayalakshmi 
Sea Foods Private Limited, K.R.M. Marine Exports, the Liberty Group, 
Magnum Estate Private Limited, Nekkanti Sea Foods Limited, Sagar 
Grandhi Exports Pvt. Ltd., Sai Marine Exports Pvt. Ltd., Sandhya 
Marines Limited, Satya Seafoods Private Limited, Selvam Exports Private 
Limited, Star Agro Marine Exports Private Limited, Suvarna Rekha 
Exports Private Limited, Veejay Impex, Vinner Marine, and Wellcome 
Fisheries Limited. Also on February 28, 2006, the petitioner\2\ 
submitted a letter timely requesting that the Department conduct an 
administrative review of the sales of certain frozen warmwater shrimp 
made by numerous companies during the POR, pursuant to section 751(a) 
of the Tariff Act of 1930, as amended (the Act), and in accordance with 
19 CFR 351.213(b)(1).
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    \2\ The petitioner is the Ad Hoc Shrimp Trade Action Committee.
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    On April 7, 2006, the Department published a notice of initiation 
of administrative review for 347 companies and requested that each 
provide data on the quantity and value (Q&V) of its exports of subject 
merchandise to the United States during the POR for mandatory 
respondent selection purposes. These companies are listed in the 
Department's notice of initiation. See Notice of Initiation of 
Administrative Reviews of the Antidumping Duty Orders on Certain Frozen 
Warmwater Shrimp from Brazil, Ecuador, India and Thailand, 71 FR 17819 
(Apr. 7, 2006) (Notice of Initiation).
    During the period April 24 through June 12, 2006, we received 
responses to the Department's Q&V questionnaire from 59 companies. We 
were unable to locate 29 companies, and we did not receive responses to 
this questionnaire from the remaining companies.\3\ For further 
discussion, see the ``Application of Facts Available'' section of this 
notice.
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    \3\ As discussed below, for certain of these companies, the 
petitioner subsequently withdrew its request for review.
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    One of the companies that responded to our Q&V questionnaire, 
Coastal

[[Page 10659]]

Trawlers Ltd. (Coastal Trawlers), notified us that it had changed its 
name during the POR, and is now doing business under the name Coastal 
Corporation Ltd. (Coastal Corp.). As a result, we solicited information 
on this change from Coastal Corp., which the company supplied in June 
2006. After analyzing this information, we preliminarily find that 
Coastal Corp. is the successor-in-interest to Coastal Trawlers. For 
further discussion, see the ``Successor-in-Interest'' section of this 
notice, below.
    Based upon our consideration of the responses received to the Q&V 
questionnaire and the resources available to the Department, we 
determined that it was not practicable to examine all exporters/
producers of subject merchandise for which a review was requested. As a 
result, on July 11, 2006, we selected the three largest producers/
exporters of certain frozen warmwater shrimp from India during the POR 
(i.e., Falcon, HLL, and the Liberty Group) as the mandatory respondents 
in this proceeding. See the Memorandum to Stephen J. Claeys, Deputy 
Assistant Secretary for Import Administration, from Irene Darzenta 
Tzafolias, Acting Director, Office 2, AD/CVD Operations, entitled, 
``Antidumping Duty Administrative Review of Certain Frozen Warmwater 
Shrimp from India: Selection of Respondents,'' dated July 11, 2006. On 
this same date, we issued the antidumping questionnaire to Falcon, HLL, 
and the Liberty Group.
    On July 21, 2006, we published a notice rescinding the 
administrative review with respect to 268 companies for which the 
requests for an administrative review were withdrawn in a timely 
manner, in accordance with 19 CFR 351.213(d)(1). See Certain Frozen 
Warmwater Shrimp from India; Partial Rescission of Antidumping Duty 
Administrative Review, 71 FR 41419 (July 21, 2006) (Notice of 
Rescission). See also the Memorandum to the file from Elizabeth 
Eastwood entitled, ``Intent to Rescind in Part the Antidumping Duty 
Administrative Review on Frozen Warmwater Shrimp from India,'' dated 
June 22, 2006.
    On August 8, 2006, we received responses to section A of the 
questionnaire from Falcon, HLL, and the Liberty Group.
    On August 11, 2006, the petitioner submitted comments regarding 
third country market selection and the possible existence of a 
``particular market situation'' with respect to both Falcon and HLL.
    On August 25, 2006, the Department postponed the preliminary 
results in this review until no later than February 28, 2007. See 
Certain Frozen Warmwater Shrimp from Brazil, Ecuador, India, the 
Socialist Republic of Vietnam, the People's Republic of China, and 
Thailand: Notice of Extension of Time Limits for the Preliminary 
Results of the First Administrative Reviews and New Shipper Reviews, 71 
FR 50387 (Aug. 25, 2006).
    We issued supplemental section A questionnaires to HLL, Falcon, and 
the Liberty Group on August 31, 2006.
    We received responses to sections B and C of the questionnaire from 
Falcon and HLL on September 6, 2006, and from the Liberty Group on 
September 7, 2006. Also on September 7, 2006, HLL submitted a response 
to section D of the questionnaire.
    On September 14, 2006, we published a notice amending the partial 
rescission of the administrative review to correct a typographical 
error. See Certain Frozen Warmwater Shrimp from India; Corrected 
Partial Rescission of Antidumping Duty Administrative Review, 71 FR 
54268 (Sept. 14, 2006).
    The petitioner requested that the Department initiate a sales-
below-cost investigation of the Liberty Group on September 20, 2006, 
and of HLL on September 21, 2006.
    Also on September 21, 2006, we issued a supplemental questionnaire 
covering sections A through C to the Liberty Group and we received a 
response to the supplemental section A questionnaire from HLL.
    We received responses to the supplemental section A questionnaires 
from Falcon on September 22, 2006, and from the Liberty Group on 
September 25, 2006. Also on September 25, 2006, we issued a 
supplemental questionnaire covering sections B and C to Falcon.
    On September 27, 2006, the petitioner requested that the Department 
initiate a sales-below-cost investigation of Falcon, and the petitioner 
submitted comments on the selection of the appropriate third country 
comparison markets for Falcon and HLL.
    On October 4, 2006, we initiated a sales-below-cost investigation 
of the Liberty Group. See the Memorandum to James Maeder, Director, 
Office 2, AD/CVD Operations, from The Team entitled, ``Petitioners' 
Allegation of Sales Below the Cost of Production for the Liberty Group 
Frozen Foods,'' dated October 4, 2006 (Sales-Below-Cost-Memo for the 
Liberty Group).
    On October 5, 2006, we determined that Japan constitutes the 
appropriate third country comparison market for both Falcon and the 
Liberty Group, and that France constitutes the appropriate third 
country comparison market for HLL. See the Memorandum to James Maeder, 
Director, Office 2, AD/CVD Operations, from The Team entitled, 
``Antidumping Duty Administrative Review on Certain Frozen Warmwater 
Shrimp from India - Selection of the Appropriate Third Country 
Markets,'' dated October 5, 2006 (Selection of Third County Markets 
Memo). See also the ``Home Market Viability and Selection of Comparison 
Markets'' section of this notice, below, for further discussion. 
Accordingly, on October 5, 2006, we requested that Falcon and HLL 
resubmit their responses to section B of the Department's questionnaire 
to report sales to Japan and France, respectively. Additionally, on 
October 5, 2006, we issued a supplemental section C questionnaire to 
HLL.
    On October 17, 2006, Falcon submitted its supplemental 
questionnaire response covering sections A through C. On October 20, 
2006, Falcon submitted a revised section B questionnaire response 
reporting sales to Japan. Also on October 20, 2006, Liberty submitted 
its supplemental questionnaire response covering sections A through C. 
On October 25, 2006, HLL submitted both a revised section B 
questionnaire response reporting sales to France and a response to the 
supplemental section C questionnaire.
    On November 3, 2006, we determined that the Department's finding in 
the less-than-fair- value (LTFV) investigation, that HLL made 
comparison market sales below the cost of production and that such 
sales were disregarded, provides sufficient grounds to automatically 
initiate a sales-below-cost investigation for HLL in this segment of 
the proceeding. See the Memorandum to James Maeder, Director, Office 2, 
AD/CVD Operations, from The Team entitled, ``2004-2006 Antidumping Duty 
Administrative Review on Certain Frozen Warmwater Shrimp from India - 
Cost Allegation for Hindustan Lever Limited,'' dated November 3, 2006 
(Sales-Below-Cost Memo for HLL).
    On November 7, 2006, the Liberty Group submitted a response to 
section D of the questionnaire. Also on November 7, 2006, we issued a 
supplemental section D questionnaire to HLL.
    On November 13, 2006, we initiated a sales-below-cost investigation 
for Falcon. See the Memorandum to James Maeder, Director, Office 2, AD/
CVD Operations, from The Team entitled, ``Petitioners' Allegation of 
Sales Below the Cost of Production for Falcon Marine Exports Limited,'' 
dated

[[Page 10660]]

November 13, 2006 (Sales-Below-Cost-Memo for Falcon).
    On November 29, 2006, we issued a supplemental section D 
questionnaire to the Liberty Group.
    On December 5, 2006, we received HLL's response to the supplemental 
section D questionnaire.
    On December 12 and 20, 2006, respectively, Falcon and the Liberty 
Group responded to section D of the questionnaire. On December 22, 26, 
and 28, 2006, respectively, we issued supplemental section D 
questionnaires to Falcon, the Liberty Group, and HLL. We received 
responses to these questionnaires from Falcon and the Liberty Group on 
January 11, 2007, and from HLL on January 22, 2007.
    On January 23, 2007, we published a correction to the scope of the 
order in which we clarified that the scope does not cover warmwater 
shrimp in non-frozen form. See Certain Frozen Warmwater Shrimp from 
Brazil, Ecuador, India, Thailand, the People's Republic of China and 
the Socialist Republic of Vietnam; Amended Orders, 72 FR 2857 (Jan. 23, 
2007).
    We issued an additional section D supplemental questionnaire to HLL 
on February 2, 2007, and to the Liberty Group on February 8, 2007. We 
received responses to these questionnaires on February 9 and 15, 2007, 
respectively.
    Sales and cost verifications were conducted at Falcon and the 
Liberty Group in January and February 2007. The sales verification 
reports for Falcon and the Liberty Group were issued in February 2007.
    On February 8, 2007, we issued an additional supplemental 
questionnaire to the Liberty Group regarding its relationship with 
Liberty Oil Mills Limited (LOML).
    On February 12, 2007, Falcon submitted a revised cost database 
which incorporated certain minor corrections to its data discovered at 
verification.
    On February 15, 2007, we received the Liberty Group's response to 
the February 8, 2007, supplemental questionnaire.
    On February 23 and 26, 2007, respectively, the Liberty Group and 
Falcon submitted revised sales databases which incorporated certain 
minor corrections to these companies' data discovered at verification.

Scope of the Order

    The scope of this order includes certain frozen warmwater shrimp 
and prawns, whether wild-caught (ocean harvested) or farm-raised 
(produced by aquaculture), head-on or head-off, shell-on or peeled, 
tail-on or tail-off,\4\ deveined or not deveined, cooked or raw, or 
otherwise processed in frozen form.
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    \4\ ``Tails'' in this context means the tail fan, which includes 
the telson and the uropods.
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    The frozen warmwater shrimp and prawn products included in the 
scope of this order, regardless of definitions in the Harmonized Tariff 
Schedule of the United States (HTSUS), are products which are processed 
from warmwater shrimp and prawns through freezing and which are sold in 
any count size.
    The products described above may be processed from any species of 
warmwater shrimp and prawns. Warmwater shrimp and prawns are generally 
classified in, but are not limited to, the Penaeidae family. Some 
examples of the farmed and wild-caught warmwater species include, but 
are not limited to, whiteleg shrimp (Penaeus vannemei), banana prawn 
(Penaeus merguiensis), fleshy prawn (Penaeus chinensis), giant river 
prawn (Macrobrachium rosenbergii), giant tiger prawn (Penaeus monodon), 
redspotted shrimp (Penaeus brasiliensis), southern brown shrimp 
(Penaeus subtilis), southern pink shrimp (Penaeus notialis), southern 
rough shrimp (Trachypenaeus curvirostris), southern white shrimp 
(Penaeus schmitti), blue shrimp (Penaeus stylirostris), western white 
shrimp (Penaeus occidentalis), and Indian white prawn (Penaeus 
indicus).
    Frozen shrimp and prawns that are packed with marinade, spices or 
sauce are included in the scope of this order. In addition, food 
preparations, which are not ``prepared meals,'' that contain more than 
20 percent by weight of shrimp or prawn are also included in the scope 
of this order.
    Excluded from the scope are: 1) breaded shrimp and prawns (HTSUS 
subheading 1605.20.10.20); 2) shrimp and prawns generally classified in 
the Pandalidae family and commonly referred to as coldwater shrimp, in 
any state of processing; 3) fresh shrimp and prawns whether shell-on or 
peeled (HTSUS subheadings 0306.23.00.20 and 0306.23.00.40); 4) shrimp 
and prawns in prepared meals (HTSUS subheading 1605.20.05.10); 5) dried 
shrimp and prawns; 6) canned warmwater shrimp and prawns (HTSUS 
subheading 1605.20.10.40); 7) certain dusted shrimp; and 8) certain 
battered shrimp. Dusted shrimp is a shrimp-based product: 1) that is 
produced from fresh (or thawed-from-frozen) and peeled shrimp; 2) to 
which a ``dusting'' layer of rice or wheat flour of at least 95 percent 
purity has been applied; 3) with the entire surface of the shrimp flesh 
thoroughly and evenly coated with the flour; 4) with the non-shrimp 
content of the end product constituting between four and 10 percent of 
the product's total weight after being dusted, but prior to being 
frozen; and 5) that is subjected to IQF freezing immediately after 
application of the dusting layer. Battered shrimp is a shrimp-based 
product that, when dusted in accordance with the definition of dusting 
above, is coated with a wet viscous layer containing egg and/or milk, 
and par-fried.
    The products covered by this order are currently classified under 
the following HTSUS subheadings: 0306.13.00.03, 0306.13.00.06, 
0306.13.00.09, 0306.13.00.12, 0306.13.00.15, 0306.13.00.18, 
0306.13.00.21, 0306.13.00.24, 0306.13.00.27, 0306.13.00.40, 
1605.20.10.10, and 1605.20.10.30. These HTSUS subheadings are provided 
for convenience and for customs purposes only and are not dispositive, 
but rather the written description of the scope of this order is 
dispositive.

Successor-in-Interest

    As noted above, in April 2006, Coastal Trawlers informed the 
Department that it is now doing business under the name Coastal Corp. 
As a result, on June 1, 2006, we requested that Coastal Corp. address 
the following four factors with respect to this change in name in order 
to determine whether Coastal Corp. is the successor-in-interest to 
Coastal Trawlers: management, production facilities for the subject 
merchandise, supplier relationships, and customer base.
    On June 15, 2006, Coastal Corp. responded to the Department's 
request. In this submission, Coastal Corp. stated that, in February 
2005, Coastal Trawlers changed its name to Coastal Corp., and that the 
name change had no effect on the core activity of the company. 
According to Coastal Corp., there were no changes to Coastal Trawlers' 
management, production facilities for the subject merchandise, supplier 
relationships, or customer base as a result of the change in corporate 
structure. Specifically, Coastal Corp. maintains that the only change 
in production was that the company ceased its deep sea fishing/trawler 
activities.
    Based on our analysis of Coastal Corp.'s June 15, 2006, submission, 
we preliminarily find that Coastal Trawlers' organizational structure, 
management, production facilities, supplier relationships, and 
customers have remained essentially unchanged.

[[Page 10661]]

Further, we preliminarily find that Coastal Corp. operates as the same 
business entity as Coastal Trawlers with respect to the production and 
sale of shrimp. Thus, we preliminarily find that Coastal Corp. is the 
successor-in-interest to Coastal Trawlers, and, as a consequence, its 
exports of shrimp are subject to this proceeding. We note that we 
intend to solicit further supporting documentation from Coastal Corp. 
regarding its assertions, and we will make a final finding regarding 
this successor-in-interest determination no later than the date of the 
final results. For further discussion, see the Memorandum to James 
Maeder, Office Director, from Nichole Zink, Analyst, entitled, 
``Successor-In-Interest Determination for Coastal Trawlers Ltd. and 
Coastal Corporation Ltd. in the 2004-2006 Antidumping Duty 
Administrative Review of Certain Frozen Warmwater Shrimp from India,'' 
dated February 28, 2007.

Partial Rescission of Review

    Eight of the companies that responded to the Department's Q&V 
questionnaire stated that they had no shipments/entries of subject 
merchandise into the United States during the POR. However, based on 
information obtained from CBP, it appeared that these eight companies 
did, in fact, have shipments or entries of subject merchandise entered 
into the United States during the POR. See the Memorandum to The File 
from Jill Pollack entitled, ``2004-2006 Antidumping Duty Administrative 
Review of Certain Frozen Warmwater Shrimp from India: Entry Documents 
from U.S. Customs and Border Protection (CBP),'' dated July 28, 2006. 
Based on the CBP information, we requested that each of these eight 
companies explain the entries in question. In response to the 
Department's solicitation, only four of the eight companies, Balaji 
Seafoods Exports (India) Ltd., Innovative Foods Limited, Sharat 
Industries Limited, and Triveni Fisheries Pvt. Ltd., demonstrated that 
the entries at issue were not reportable transactions because they were 
either: 1) a non-paid sample; or 2) reported by another company in its 
Q&V response. Therefore, in accordance with 19 CFR 351.213(d)(3), and 
consistent with the Department's practice, we are preliminarily 
rescinding our review with respect to Balaji Seafoods Exports (India) 
Ltd., Innovative Foods Limited, Sharat Industries Limited, and Triveni 
Fisheries Pvt. Ltd. See, e.g., Certain Steel Concrete Reinforcing Bars 
From Turkey; Final Results, Rescission of Antidumping Duty 
Administrative Review in Part, and Determination To Revoke in Part, 70 
FR 67665, 67666 (Nov. 8, 2005).
    Three of the remaining four exporter/producers, Baby Marine 
(Eastern) Exports, Baby Marine Exports, and Baby Marine Products 
(collectively, ``the Baby Marine Group''), failed to respond to the 
Department's request for additional information. The remaining company, 
LOML, is an affiliate of the Liberty Group. Therefore, we are not 
rescinding the administrative review with respect to these companies. 
For further information, see the ``Application of Facts Available'' and 
``Collapsing the Liberty Group and LOML'' sections of this notice.

Collapsing the Liberty Group and LOML

    The Liberty Group has an affiliate, LOML, which exported some of 
the shrimp produced by the Liberty Group during the POR. In its August 
9, 2006, section A response, as well as its February 15, 2007, response 
and at verification, the Liberty Group provided information regarding 
the relationship between these entities during the POR. After an 
analysis of this information, we preliminarily determine that, in 
accordance with 19 CFR 351.401(f), it is appropriate to collapse these 
entities for purposes of this review because: 1) certain of the 
directors of LOML are also directors of Liberty Group companies, and 
the family which owns the Liberty Group owns a majority of the shares 
in LOML; 2) LOML exported shrimp produced by the Liberty Group to the 
United States during the POR; and 3) the operations of LOML and the 
Liberty Group are intertwined. Thus, there is significant potential for 
manipulation of price if LOML does not receive the same antidumping 
duty rate as the Liberty Group. For further discussion, see the 
Memorandum from Elizabeth Eastwood, Senior Analyst, Office 2, to James 
Maeder, Director, Office 2, entitled, ``Whether to Collapse Liberty Oil 
Mills Limited with the Liberty Group in the 2004-2006 Administrative 
Review on Certain Frozen Warmwater Shrimp from India,'' dated February 
28, 2007.

Application of Facts Available

    Section 776(a) of the Act provides that the Department will apply 
``facts otherwise available'' if, inter alia, necessary information is 
not available on the record or an interested party: 1) withholds 
information that has been requested by the Department; 2) fails to 
provide such information within the deadlines established, or in the 
form or manner requested by the Department, subject to subsections 
(c)(1) and (e) of section 782 of the Act; 3) significantly impedes a 
proceeding; or 4) provides such information, but the information cannot 
be verified.
    As discussed in the ``Background'' section above, in April 2006, 
the Department requested that all companies subject to review respond 
to the Department's Q&V questionnaire for purposes of mandatory 
respondent selection. The original deadline to file a response was 
April 28, 2006. Of the 347 companies initially subject to review, 213 
companies did not respond to the Department's initial requests for 
information. Subsequently, in May 2006, the Department issued letters 
to these companies affording them a second opportunity to submit a 
response to the Department's Q&V questionnaire. However, after 
rescinding this administrative review for 268 companies in July 2006, 
there were still several companies which failed to respond to the 
Department's second request for Q&V data.\5\ On February 6, 2007, the 
Department placed documentation on the record confirming delivery of 
the questionnaires to each of these companies. See the Memorandum to 
the File from Elizabeth Eastwood entitled, ``Placing Delivery 
Information on the Record of the 2004-2006 Antidumping Duty 
Administrative Review on Certain Frozen Warmwater Shrimp from India,'' 
dated February 6, 2007. By failing to respond to the Department's Q&V 
questionnaire, these companies withheld requested information and 
significantly impeded the proceeding. Thus, pursuant to sections 
776(a)(2)(A) and (C) of the Act, because these companies did not 
respond to the Department's questionnaire, the Department preliminarily 
finds that the use of total facts available is warranted.
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    \5\ These companies are: Amison Foods Ltd., Amison Seafoods 
Ltd., Cherukattu Industries (Marine Div), Global Sea Foods & Hotels 
Ltd, HA & R Enterprises, InterSea Exports Corporation, Lotus Sea 
Farms, National Steel, National Steel & Agro Ind, Nsil Exports, 
Premier Marine Foods, R F. Exports, and Vaibhav Sea Foods.
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    Furthermore, three additional companies, all within the Baby Marine 
Group, claimed that they made no shipments of subject merchandise to 
the United States during the POR. However, because we were unable to 
confirm the accuracy of the Baby Marine Group's claim with CBP, we 
requested further information/clarification from these exporters. 
However, the Baby Marine Group failed to provide the requested 
information. Finally, an additional exporter, Kadalkanny Frozen Foods, 
failed to properly file its Q&V response with the Department because it 
did not

[[Page 10662]]

submit a company official certification for its Q&V information. 
Although the Department afforded this exporter an opportunity to 
correct the procedural deficiencies in its response, it failed to do 
so. By failing to respond to the Department's requests, these companies 
withheld requested information and significantly impeded the 
proceeding. Therefore, pursuant to sections 776(a)(2)(A) and (C) of the 
Act, the Department preliminarily finds that the use of total facts 
available for the Baby Marine Group and Kadalkanny Frozen Foods is 
appropriate.
    According to section 776(b) of the Act, if the Department finds 
that an interested party fails to cooperate by not acting to the best 
of its ability to comply with requests for information, the Department 
may use an inference that is adverse to the interests of that party in 
selecting from the facts otherwise available. See also Notice of Final 
Results of Antidumping Duty Administrative Review: Stainless Steel Bar 
from India, 70 FR 54023, 54025-26 (Sept. 13, 2005); and Notice of Final 
Determination of Sales at Less Than Fair Value and Final Negative 
Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from 
Brazil, 67 FR 55792, 55794-96 (Aug. 30, 2002). Adverse inferences are 
appropriate ``to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
Statement of Administrative Action accompanying the Uruguay Round 
Agreements Act, H.R. Rep. No. 103-316, Vol. 1, at 870 (1994) (SAA), 
reprinted in 1994 U.S.C.C.A.N. 4040, 4198-99. Furthermore, 
``affirmative evidence of bad faith on the part of a respondent is not 
required before the Department may make an adverse inference.'' See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27340 (May 19, 1997); see also Nippon Steel Corp. v. United States, 337 
F.3d 1373, 1382-83 (Fed. Cir. 2003) (Nippon). We preliminarily find 
that Amison Foods Ltd., Amison Seafoods Ltd., the Baby Marine Group, 
Cherukattu Industries (Marine Div), Global Sea Foods & Hotels Ltd, HA & 
R Enterprises, InterSea Exports Corporation, Kadalkanny Frozen Foods, 
Lotus Sea Farms, National Steel, National Steel & Agro Ind, Nsil 
Exports, Premier Marine Foods, R F. Exports, and Vaibhav Sea Foods did 
not act to the best of their abilities in this proceeding, within the 
meaning of section 776(b) of the Act, because they could have responded 
to the Department's requests for information, but failed to do so. 
Therefore, an adverse inference is warranted in selecting from the 
facts otherwise available with respect to these companies. See Nippon, 
337 F.3d at 1382-83.
    Section 776(b) of the Act provides that the Department may use as 
AFA information derived from: 1) the petition; 2) the final 
determination in the investigation; 3) any previous review; or 4) any 
other information placed on the record.
    The Department's practice, when selecting an AFA rate from among 
the possible sources of information, has been to ensure that the margin 
is sufficiently adverse ``as to effectuate the statutory purposes of 
the adverse facts available rule to induce respondents to provide the 
Department with complete and accurate information in a timely manner.'' 
See, e.g., Certain Steel Concrete Reinforcing Bars from Turkey; Final 
Results and Rescission of Antidumping Duty Administrative Review in 
Part, 71 FR 65082, 65084 (Nov. 7, 2006).
    In order to ensure that the margin is sufficiently adverse so as to 
induce cooperation, we have preliminarily assigned a rate of 82.3 
percent, which is the lowest rate alleged in the petition (as adjusted 
at the initiation of the LTFV investigation). See Notice of Initiation 
of Antidumping Duty Investigations: Certain Frozen and Canned Warmwater 
Shrimp From Brazil, Ecuador, India, Thailand, the People's Republic of 
China and the Socialist Republic of Vietnam 69 FR 3876, 3880 (Jan. 27, 
2004) (LTFV Notice of Initiation). The Department finds that this rate 
is sufficiently high as to effectuate the purpose of the facts 
available rule (i.e., we find that this rate is high enough to 
encourage participation in future segments of this proceeding in 
accordance with section 776(b) of the Act).
    Information from the petition constitutes secondary information and 
section 776(c) of the Act provides that the Department shall, to the 
extent practicable, corroborate that secondary information from 
independent sources reasonably at its disposal. The Department's 
regulations provide that ``corroborate'' means that the Department will 
satisfy itself that the secondary information to be used has probative 
value. See 19 CFR 351.308(d); see also SAA at 870. To the extent 
practicable, the Department will examine the reliability and relevance 
of the information to be used.
    To corroborate the margins in the petition, we compared them to the 
transaction-specific rates calculated for each respondent in this 
review. We note that we are unable to corroborate the highest rate 
alleged in the petition (as adjusted at the initiation of the LTFV 
investigation) using the data of other respondents, as it is 
significantly higher than the highest non-aberrational transaction-
specific rate calculated for any respondent in this review. However, we 
find that the lowest rate alleged in the petition (as adjusted at the 
initiation of the LTFV investigation), 82.30 percent, is reliable and 
relevant because it is similar to several individual transaction 
margins calculated for the mandatory respondents. See Notice of 
Preliminary Results of Antidumping Duty Administrative Review; Partial 
Rescission and Postponement of Final Results: Certain Softwood Lumber 
Products from Canada, 71 FR 33964, 33968 (June 12, 2006). Therefore, we 
have determined that the 82.3 percent margin is appropriate as AFA and 
are assigning it to the uncooperative companies listed above.
    Further, the Department will consider information reasonably at its 
disposal as to whether there are circumstances that would render a 
margin inappropriate. Where circumstances indicate that the selected 
margin is not appropriate as AFA, the Department may disregard the 
margin and determine an appropriate margin. See, e.g., Fresh Cut 
Flowers from Mexico; Final Results of Antidumping Duty Administrative 
Review, 61 FR 6812, 6814 (Feb. 22, 1996) (where the Department 
disregarded the highest calculated margin as AFA because the margin was 
based on a company's uncharacteristic business expense resulting in an 
unusually high margin). Therefore, we examined whether any information 
on the record would discredit the selected rate as reasonable facts 
available. We were unable to find any information that would discredit 
the selected AFA rate.
    Because we did not find evidence indicating that the selected 
margin is not appropriate and because this margin is similar to the 
range of transactions-specific margins for the mandatory respondents, 
we have preliminarily determined that the 82.3 percent margin, as 
alleged in the petition and adjusted at the initiation of the LTFV 
investigation, is appropriate as AFA. We are assigning this rate to 
Amison Foods Ltd., Amison Seafoods Ltd., the Baby Marine Group, 
Cherukattu Industries (Marine Div), Global Sea Foods & Hotels Ltd, HA & 
R Enterprises, InterSea Exports Corporation, Kadalkanny Frozen Foods, 
Lotus Sea Farms, National Steel, National Steel & Agro Ind, Nsil 
Exports, Premier Marine Foods, R F. Exports, and Vaibhav Sea Foods. For 
company-specific information used to corroborate this

[[Page 10663]]

rate, see the Memorandum to the File from Elizabeth Eastwood, Senior 
Analyst, Office 2, AD/CVD Operations, entitled ``Corroboration of 
Adverse Facts Available Rate for the Preliminary Results in the 2004-
2006 Antidumping Duty Administrative Review of Certain Frozen Warmwater 
Shrimp from India,'' dated February 28, 2007.

Comparisons to Normal Value

    To determine whether sales of certain frozen warmwater shrimp by 
Falcon, HLL, and the Liberty Group to the United States were made at 
less than NV, we compared EP to the NV, as described in the ``Export 
Price'' and ``Normal Value'' sections of this notice.
    Pursuant to section 777A(d)(2) of the Act, we compared the EPs of 
individual U.S. transactions to the weighted-average NV of the foreign 
like product where there were sales made in the ordinary course of 
trade, as discussed in the ``Cost of Production Analysis'' section 
below.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by Falcon, HLL, and the Liberty Group covered by the 
description in the ``Scope of the Order'' section, above, to be foreign 
like products for purposes of determining appropriate product 
comparisons to U.S. sales. Pursuant to 19 CFR 351.414(e)(2), we 
compared U.S. sales of non-broken shrimp to sales of non-broken shrimp 
made in Japan (for Falcon and the Liberty Group) and France (for HLL) 
within the contemporaneous window period, which extends from three 
months prior to the month of the first U.S. sale until two months after 
the last U.S. sale. Where there were no non-broken sales of identical 
merchandise in the comparison market made in the ordinary course of 
trade to compare to U.S. sales, we compared U.S. sales to sales of the 
most similar foreign like product made in the ordinary course of trade. 
In making the product comparisons, we matched foreign like products 
based on the physical characteristics reported by Falcon, HLL, and the 
Liberty Group in the following order: cooked form, head status, count 
size, organic certification, shell status, vein status, tail status, 
other shrimp preparation, frozen form, flavoring, container weight, 
presentation, species, and preservative.

Export Price

    For all U.S. sales made by Falcon, HLL, and the Liberty Group, we 
used EP methodology, in accordance with section 772(a) of the Act, 
because the subject merchandise was sold directly to the first 
unaffiliated purchaser in the United States prior to importation and 
constructed export price (CEP) methodology was not otherwise warranted 
based on the facts of record.
A. Falcon
    We based EP on packed prices to the first unaffiliated purchaser in 
the United States. We made deductions from the starting price for cold 
storage expenses, inland freight expenses, wharfage charges, loading 
expenses, inspection fees, other miscellaneous shipment charges, 
foreign brokerage and handling expenses, international freight 
expenses, U.S. customs duties, and U.S. brokerage and handling 
expenses, where appropriate, in accordance with section 772(c)(2)(A) of 
the Act. We also made deductions for export taxes in accordance with 
section 772(c)(2)(B) of the Act.
B. HLL
    We based EP on packed prices to the first unaffiliated purchaser in 
the United States. We made deductions from the starting price for 
inland freight expenses, port dues, terminal handling charges, other 
shipment expenses, foreign brokerage and handling expenses, 
international freight expenses, marine insurance, U.S. customs duties, 
and U.S. brokerage and handling expenses, where appropriate, in 
accordance with section 772(c)(2)(A) of the Act. We also made 
deductions for export taxes in accordance with section 772(c)(2)(B) of 
the Act.
C. The Liberty Group
    We based EP on packed prices to the first unaffiliated purchaser in 
the United States. Where appropriate, we made adjustments for billing 
adjustments. We made deductions from the starting price for cold 
storage charges, inland freight expenses, other shipment and movement 
expenses, foreign brokerage and handling expenses, shipment related 
expenses, international freight expenses, terminal handling charges, 
U.S. customs duties, and U.S. brokerage and handling expenses, where 
appropriate, in accordance with section 772(c)(2)(A) of the Act. We 
also made deductions for export taxes, in accordance with section 
772(c)(2)(B) of the Act.

Normal Value

A. Home Market Viability and Selection of Comparison Markets
    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared the 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.
    We determined that aggregate volume of home market sales of the 
foreign like product for Falcon, HLL, and the Liberty Group was 
insufficient to permit a proper comparison with U.S. sales of the 
subject merchandise. Therefore, with respect to Falcon and the Liberty 
Group, we used sales to Japan, and, with respect to HLL, we used sales 
to France as the basis for comparison-market sales in accordance with 
section 773(a)(1)(C) of the Act and 19 CFR 351.404 because, among other 
things, sales of foreign like product in these third country markets 
were the most similar to the subject merchandise. See the Selection of 
Third Country Markets Memo for further discussion.
B. Level of Trade
    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (LOT) as the EP or CEP. Sales are made at different 
LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id. 
See also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (Nov. 19, 1997) (Plate from South Africa). In order to 
determine whether the comparison market sales were at different stages 
in the marketing process than the U.S. sales, we reviewed the 
distribution system in each market (i.e., the chain of distribution), 
including selling functions, class of customer (customer category), and 
the level of selling expenses for each type of sale.
    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying LOTs 
for EP and comparison market sales (i.e., NV based on either home 
market or third country prices),\6\ we consider the starting prices 
before any adjustments. For CEP sales, we consider only the selling 
activities reflected in the price after the deduction of expenses and 
profit under section 772(d) of the Act. See Micron

[[Page 10664]]

Technology, Inc. v. United States, 243 F.3d 1301, 1314 (Fed. Cir. 
2001).
---------------------------------------------------------------------------

    \6\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, general 
and administrative (G&A) expenses, and profit for CV, where 
possible.
---------------------------------------------------------------------------

    When the Department is unable to match U.S. sales of the foreign 
like product in the comparison market at the same LOT as the EP or CEP, 
the Department may compare the U.S. sale to sales at a different LOT in 
the comparison market. In comparing EP or CEP sales at a different LOT 
in the comparison market, where available data make it practicable, we 
make an LOT adjustment under section 773(a)(7)(A) of the Act. Finally, 
for CEP sales only, if the NV LOT is more remote from the factory than 
the CEP LOT and there is no basis for determining whether the 
difference in LOTs between NV and CEP affects price comparability 
(i.e., no LOT adjustment was practicable), the Department shall grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Plate 
from South Africa, 62 FR at 61732-33.
    In this administrative review, we obtained information from each 
respondent regarding the marketing stages involved in making the 
reported foreign market and U.S. sales, including a description of the 
selling activities performed by each respondent for each channel of 
distribution. Company-specific LOT findings are summarized below.
1. Falcon
    Falcon reported that it made EP sales in the U.S. market to trading 
companies and distributors. Because Falcon reported no difference in 
the selling activities it performed for these two customer categories, 
we find that there is only one channel of distribution for Falcon's EP 
sales. We examined the selling activities performed for this channel 
and found that Falcon performed the following selling functions: 1) 
customer contact; 2) price negotiation; 3) order processing; 4) invoice 
issuance; 5) arranging for freight and the provision of customs 
clearance/brokerage services; 6) cold storage and inventory 
maintenance; 7) quality assurance related activities; 8) commission 
payments; 9) payment receipt; and 10) packaging services. These selling 
activities can be generally grouped into four core selling function 
categories for analysis: 1) sales and marketing; 2) freight and 
delivery; 3) inventory maintenance and warehousing; and, 4) warranty 
and technical support. Accordingly, based on the core selling 
functions, we find that Falcon performed sales and marketing, freight 
and delivery services, and inventory maintenance and warehousing for 
U.S. sales. Because all sales in the United States are made through a 
single distribution channel, we preliminarily determine that there is 
one LOT in the U.S. market.
    With respect to the third country market, Falcon reported that it 
made sales to trading companies. We examined the selling activities 
performed for third country sales, and found that Falcon performed the 
following selling functions: 1) customer contact; 2) price negotiation; 
3) order processing; 4) invoice issuance; 5) arranging for freight and 
the provision of customs clearance/brokerage services; 6) cold storage 
and inventory maintenance; 7) quality assurance related activities; 8) 
commission payments; 9) payment receipt; and 10) packaging services. 
Accordingly, based on the core selling functions, we find that Falcon 
performed sales and marketing, freight and delivery services, and 
inventory maintenance and warehousing for third country sales. Because 
all third country sales are made through a single distribution channel, 
we preliminarily determine that there is one LOT in the third country 
market for Falcon.
    Finally, we compared the EP LOT to the third country market LOT and 
found that the core selling functions performed for U.S. and third 
country market customers do not differ. Therefore, we determined that 
sales to the U.S. and third country markets during the POR were made at 
the same LOT, and as a result, no LOT adjustment was warranted.
2. HLL
    HLL reported that it made EP sales in the U.S. market to 
distributors. We examined the selling activities performed for this 
channel and found that HLL performed the following selling functions: 
1) customer contact; 2) price negotiation; 3) order processing; 4) 
production scheduling; 5) arranging for freight and the provision of 
customs clearance/brokerage services; 6) quality assurance related 
activities; 7) arranging for a refrigerated container; and 8) payment 
receipt. Accordingly, based on the core selling functions noted above, 
we find that HLL performed sales and marketing and freight and delivery 
services for U.S. sales. Because all sales in the United States are 
made through a single distribution channel, we preliminarily determine 
that there is one LOT in the U.S. market.
    With respect to the third country market, HLL reported that it also 
made sales only to distributors. We examined the selling activities 
performed for third country sales and found that HLL performed the 
following selling functions: 1) customer contact; 2) price negotiation; 
3) order processing; 4) production scheduling; 5) arranging for freight 
and the provision of customs clearance/brokerage services; 6) quality 
assurance related activities; 7) arranging for a refrigerated 
container; and 8) payment receipt. Accordingly, based on the core 
selling functions, we find that HLL performed sales and marketing and 
freight and delivery services for third country sales. Because all 
third country sales are made through a single distribution channel, we 
preliminarily determine that there is one LOT in the third country 
market for HLL.
    Finally, we compared the EP LOT to the third country market LOT and 
found that the core selling functions performed for U.S. and third 
country market customers do not differ. Therefore, we determined that 
sales to the U.S. and third country markets during the POR were made at 
the same LOT, and as a result, no LOT adjustment was warranted.
3. The Liberty Group
    The Liberty Group reported that it made EP sales in the U.S. market 
to trading companies. We examined the selling activities performed for 
this channel and found that the Liberty Group performed the following 
selling functions: 1) customer contact; 2) price negotiation; 3) order 
processing; 4) invoice issuance; 5) arranging for freight and the 
provision of customs clearance/brokerage services; 6) cold storage and 
inventory maintenance; 7) quality assurance related activities; 8) 
commission payments; 9) payment receipt; and 10) packaging services. 
Accordingly, based on the core selling functions noted above, we find 
that the Liberty Group performed sales and marketing, freight and 
delivery services, and inventory maintenance and warehousing for U.S. 
sales. Because all sales in the United States are made through a single 
distribution channel, we preliminarily determine that there is one LOT 
in the U.S. market.
    With respect to the third country market, the Liberty Group 
reported that it made sales to trading companies. We examined the 
selling activities performed for third country sales, and found that 
the Liberty Group performed the following selling functions: 1) 
customer contact; 2) price negotiation; 3) order processing; 4) invoice 
issuance; 5) arranging for freight and the provision of customs 
clearance/brokerage services; 6) cold storage and inventory 
maintenance; 7) quality assurance related activities; 8) commission 
payments; 9) payment receipt; and 10) packaging services. Accordingly, 
based on the core selling

[[Page 10665]]

functions, we find that the Liberty Group performed sales and 
marketing, freight and delivery services, and inventory maintenance and 
warehousing for third country sales. Because all third country sales 
are made through a single distribution channel, we preliminarily 
determine that there is one LOT in the third country market for the 
Liberty Group.
    Finally, we compared the EP LOT to the third country market LOT and 
found that the core selling functions performed for U.S. and third 
country market customers do not differ. Therefore, we determined that 
sales to the U.S. and third country markets during the POR were made at 
the same LOT, and as a result, no LOT adjustment was warranted.
C. Cost of Production Analysis
    Based on our analysis of the petitioner's allegations, we found 
that there were reasonable grounds to believe or suspect that Falcon 
and the Liberty Group's sales of frozen warmwater shrimp in the third 
country comparison markets were made at prices below their cost of 
production (COP). Accordingly, pursuant to section 773(b) of the Act, 
we initiated sales-below-cost investigations to determine whether 
Falcon's and the Liberty Group's sales were made at prices below their 
respective COPs. See the Sales-Below-Cost Memo for the Liberty Group 
and the Sales-Below-Cost Memo for Falcon.
    Regarding HLL, we found that HLL had made sales below the COP in 
the LTFV investigation, the most recently completed segment of this 
proceeding as of the date the questionnaire was issued in this review, 
and such sales were disregarded. See Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Postponement of Final 
Determination, and Affirmative Preliminary Determination of Critical 
Circumstances: Certain Frozen and Canned Warmwater Shrimp from India, 
69 FR 47111, 47116-17 (Aug. 4, 2004) (LTFV Preliminary Determination); 
unchanged in the Notice of Final Determination of Sales at Less Than 
Fair Value and Negative Final Determination of Critical Circumstances: 
Certain Frozen and Canned Warmwater Shrimp From India, 69 FR 76916 
(Dec. 23, 2004) (LTFV Final Determination). Thus, in accordance with 
section 773(b)(2)(A)(ii) of the Act, there are reasonable grounds to 
believe or suspect that HLL made sales in the third country market at 
prices below the cost of producing the merchandise in the current 
review period.
1. Calculation of Cost of Production
    In accordance with section 773(b)(3) of the Act, we calculated the 
respondents' COPs based on the sum of their costs of materials and 
conversion for the foreign like product, plus amounts for G&A expenses 
and interest expenses (see ``Test of Comparison Market Sales Prices'' 
section, below, for treatment of third country selling expenses).
    The Department relied on the COP data submitted by each respondent 
in its most recently submitted cost database for the COP calculation, 
except for the following instances:
a. Falcon
    1. Falcon did not provide the Department with cost data for a small 
number of products sold in the comparison market during the window 
periods. Thus, as neutral facts available, we assigned these products 
the cost of the most similar product reported in the cost database.
    2. Falcon adjusted its standard cost of raw shrimp purchased for 
each count size to the actual cost of raw shrimp by applying a variance 
(i.e., the difference between the total standard costs and total actual 
costs). In calculating the variance, Falcon multiplied its standard raw 
material cost for each count size by the corresponding production 
quantity, including glaze, and compared the resulting total sum to the 
raw material costs in its financial records. We recalculated the 
variance using production quantities that were glaze-exclusive and 
applied the resulting adjusted variance to the standard cost of raw 
shrimp purchased for each count size.
    3. We revised Falcon's raw shrimp cost by reallocating the costs 
from Falcon's shrimp farms only to those species and count sizes that 
could have been raised on the farms.
    4. We revised the costs for packaging, labor, variable overhead, 
and fixed overhead (FOH) to base them on production quantities that 
were glaze-exclusive. We also revised FOH to allocate depreciation 
expenses to block frozen, individually quick frozen, and cooked 
products.
    5. We revised the reported G&A expense ratio by reclassifying 
certain expenses from the cost of goods sold to G&A expenses.
    6. We revised the net financial expense ratio by excluding the 
deduction for the profit on the sale of securities, and only including 
a deduction for interest income from short-term sources.
For further discussion of these adjustments, see the Memorandum from 
Michael P. Harrison, Accountant, to Neal Halper, Director, Office of 
Accounting, entitled, ``Cost of Production and Constructed Value 
Adjustments for the Preliminary Results - Falcon Marine Exports,'' 
dated February 28, 2007.
b. HLL
    1. HLL did not provide the Department with cost data for a small 
number of products sold in the comparison market during the window 
periods. Thus, as neutral facts available, we assigned these products 
the cost of the most similar product reported in the cost database.
    2. We adjusted HLL's reported raw shrimp consumption cost to 
account for an understatement.
    3. We revised HLL's reported G&A expense ratio to include in the 
numerator certain items related to research and development, supply 
support and chain management, and restructuring costs. Moreover, we 
included the surplus of fixed assets sold and miscellaneous income as 
offsets to the G&A expenses. In addition, we excluded from the cost of 
sales, used as the denominator in calculating the G&A expense ratio, 
excise duties and packing material costs, and included the 2005 fiscal 
year increase in finished goods inventory.
    4. We revised the net financial expenses to include pension costs 
and similar obligations.
For further discussion of these adjustments, see the Memorandum from 
Sheikh Hannan, Accountant, to Neal Halper, Director, Office of 
Accounting, entitled, ``Cost of Production and Constructed Value 
Adjustments for the Preliminary Results - Hindustan Lever Limited,'' 
dated February 28, 2007.
c. The Liberty Group
    1. We revised the cost data reported for all Liberty Group 
companies to account for minor corrections found during the cost 
verification.
    2. We revised DMF's shrimp direct material costs to exclude certain 
by-product revenues.
    3. We revised DMF's inner packing costs to exclude the revenue 
related to the sale of outer packing materials.

[[Page 10666]]

    4. We revised KEPL's variable overhead costs to exclude premiums 
paid on duty export passbook benefits.
    5. We revised the application of the G&A expense ratio from a 
single weighted-average rate applied to all Liberty Group companies to 
applying each Liberty Group entity's specific G&A expense ratio to its 
specific cost of manufacture. We continued to allocate certain G&A 
expenses to all Liberty Group companies. We revised each Liberty Group 
company's costs of sales, used as the denominator in calculating the 
G&A expense ratio, to include the change in finished goods inventory. 
We reclassified certain expenses for DMF from production to G&A. 
Finally, we included certain expenses related to the loss on a sale of 
a fixed asset in the calculation of PMP's G&A expenses.
    6. The Liberty Group does not prepare consolidated financial 
statements in the normal course of business. Therefore, we revised the 
application of the financial expense ratio by applying each Liberty 
Group company's specific financial expense ratio to its specific cost 
of manufacture. We also revised each Liberty Group company's costs of 
sales, used as the denominator in calculating the financial expense 
ratio, to include the change in finished goods inventory. Finally, we 
included certain bank charges in each entity's financial expenses.
For further discussion of these adjustments, see the Memorandum from 
Mark Todd, Accountant, to Neal Halper, Director, Office of Accounting, 
entitled, ``Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results - Liberty,'' dated February 28, 
2007.
2. Test of Comparison Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the third country sales prices of the foreign like 
product, as required under section 773(b) of the Act, in order to 
determine whether the sale prices were below the COP. For purposes of 
this comparison, we used COP exclusive of selling and packing expenses. 
The prices (inclusive of billing adjustments, where appropriate) were 
exclusive of any applicable movement charges, rebates, direct and 
indirect selling expenses and packing expenses, revised where 
appropriate, as discussed below under the ``Price-to-Price 
Comparisons'' section.
3. Results of the COP Test
    In determining whether to disregard third country sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) and (B) or the Act: 1) whether, within an extended period 
of time, such sales were made in substantial quantities; and 2) whether 
such sales were made at prices which permitted the recovery of all 
costs within a reasonable period of time in the normal course of trade. 
Where less than 20 percent of the respondent's third country sales of a 
given product are at prices less than the COP, we do not disregard any 
below-cost sales of that product, because we determine that in such 
instances the below-cost sales were not made within an extended period 
of time and in ``substantial quantities.'' Where 20 percent or more of 
a respondent's sales of a given product are at prices less than the 
COP, we disregard the below-cost sales when: 1) they 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 our 
comparison of prices to the weighted-average COPs for the POR, they 
were at prices which would not permit the recovery of all costs within 
a reasonable period of time, in accordance with section 773(b)(2)(D) of 
the Act.
    We found that, for certain products, more than 20 percent of 
Falcon's, HLL's, and the Liberty Group's third country sales were at 
prices less than the COP and, in addition, such sales did not provide 
for the recovery of costs within a reasonable period of time. We 
therefore excluded these sales and used the remaining sales as the 
basis for determining NV, in accordance with section 773(b)(1) of the 
Act.
    For those U.S. sales of subject merchandise for which there were no 
useable third country sales in the ordinary course of trade, we 
compared EPs to the CV in accordance with section 773(a)(4) of the Act. 
See ``Calculation of Normal Value Based on Constructed Value'' section 
below.
E. Calculation of Normal Value Based on Comparison Market Prices
1. Falcon
    We based NV for Falcon on delivered prices to unaffiliated 
customers in the third country market. We made deductions from the 
starting price for export taxes, in accordance with section 
773(a)(6)(B)(iii) of the Act. We also made deductions, where 
appropriate, from the starting price for inland freight expenses from 
the plant to the port, other shipment and movement expenses, clearing 
and forwarding agency charges, cold storage charges, international 
freight expenses, and terminal handling charges, under section 
773(a)(6)(B)(ii) of the Act.
    We made adjustments for differences in costs attributable to 
differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
In addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410 for differences in circumstances of sale for 
commissions, credit expenses, bank fees, export inspection agency (EIA) 
expenses, export credit guarantee corporation premiums, and outside 
inspection/lab expenses. Specifically, where commissions were granted 
in the U.S. market but not in the comparison market, we made a downward 
adjustment to NV for the lesser of: 1) the amount of commission paid in 
the U.S. market; or 2) the amount of indirect selling expenses incurred 
in the comparison market. If commissions were granted in the comparison 
market but not in the U.S. market, we made an upward adjustment to NV 
following the same methodology.
    We also deducted third country packing costs and added U.S. packing 
costs, in accordance with sections 773(a)(6)(A) and (B) of the Act.
2. HLL
    We based NV for HLL on cost and freight, delivered, and free on 
board prices to unaffiliated customers in the third county market. We 
made adjustments, where appropriate, to the starting price for export 
taxes, in accordance with section 773(a)(6)(B)(iii) of the Act. We also 
made deductions, where appropriate, from the starting price for inland 
freight expenses from the plant to the port, other shipment and 
movement expenses, shipment-related expenses, international freight 
expenses, and terminal handling charges, under section 773(a)(6)(B)(ii) 
of the Act.
    We made adjustments for differences in costs attributable to 
differences in the physical characteristics of the merchandise in 
accordance with section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. 
In addition, we made adjustments under section 773(a)(6)(C)(iii) of the 
Act and 19 CFR 351.410 for differences in circumstances of sale for 
commissions, credit expense