Purified Carboxymethylcellulose From Sweden: Preliminary Results of Antidumping Duty Administrative Review, 44089-44095 [E7-15323]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44089-44095]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15323]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-401-808


Purified Carboxymethylcellulose From Sweden: Preliminary Results 
of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to a request from petitioner Aqualon Company, a 
division of Hercules Incorporated (Aqualon), a U.S. manufacturer of 
purified carboxymethylcellulose (CMC), the Department of Commerce (the 
Department) is conducting an administrative review of the antidumping 
duty order on CMC from Sweden. This administrative review covers 
imports of subject merchandise produced and exported by Noviant AB and 
CP Kelco AB (collectively, CP Kelco). The period of review is December 
27, 2004, through June 30, 2006.
    We preliminarily determine that sales of CMC by CP Kelco have not 
been made at less than normal value (NV). If these preliminary results 
are adopted in our final results, we will instruct U.S. Customs and 
Border Protection (CBP) to liquidate appropriate entries without regard 
to antidumping duties. We invite interested parties to comment on these 
preliminary results. Parties who submit comments in this review are 
requested to submit with each argument a statement of the issue and a 
brief summary of the argument.

EFFECTIVE DATE: August 7, 2007.

FOR FURTHER INFORMATION CONTACT: Patrick Edwards or Angelica Mendoza, 
AD/CVD Operations, Office 7, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
8029 or (202) 482-3019, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 11, 2005, the Department published in the Federal Register 
the antidumping duty order on CMC from Sweden. See Notice of 
Antidumping Duty Orders: Purified Carboxymethylcellulose from Finland, 
Mexico, the Netherlands and Sweden, 70 FR 39734 (July 11, 2005). On 
July 3, 2006, we published in the Federal Register a notice of 
opportunity to request an administrative review of, inter alia, the 
antidumping duty order on CMC from Sweden. See Antidumping or 
Countervailing Duty Order, Findings, or Suspended Investigation; 
Opportunity to Request Administrative Review, 71 FR 37890 (July 3, 
2006). Pursuant to section 751(a) of the Tariff Act of 1930, as amended 
(the Act), and 19 CFR 351.213(b), Aqualon timely requested an 
administrative review of the antidumping duty order on CMC from Sweden 
on July 27, 2006. On August 30, 2006, in accordance with section 751(a) 
of the Act and 19 CFR 351.221(c)(1)(i), the Department published a 
notice of initiation of the administrative review of this order. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 71 FR 51573 (August 30, 
2006). We are conducting an administrative review of the order on CMC 
from Sweden for CP Kelco for the period December 27, 2004, through June 
30, 2006.
    CP Kelco entered its appearance in this proceeding on August 31, 
2006, and the Department issued its Antidumping Duty Questionnaire to 
CP Kelco on September 11, 2006. On October 17, 2006, we received the 
Section A Response from CP Kelco (Section A Response). On November 9, 
2006, CP Kelco filed its Section B and C questionnaire responses 
(Section B and C Responses). On December 8, 2006, Aqualon alleged that 
CP Kelco made home market sales of CMC at prices below the cost of 
production (COP) during the POR. On January 24, 2007, we initiated a 
sales-below-cost investigation of home market sales made by CP Kelco. 
See the Department's January 24, 2007, Memorandum to the File from 
Patrick Edwards, Case Analyst and Gina Lee, Case Accountant, (Cost 
Initiation Memorandum) for CP Kelco. As a result, on January 24, 2007, 
the Department requested that CP Kelco respond to section D of the 
Department's questionnaire. CP Kelco submitted its section D response 
on February 5, 2007, (Section D Response), including its cost 
reconciliation.
    On January 26, 2007, the Department issued its first sections A-C 
supplemental questionnaire to CP Kelco and on February 15, 2007, CP 
Kelco submitted its response (Supplemental Response). On April 2, 2007, 
the Department issued to CP Kelco a second section A through C 
supplemental questionnaire, and on April 13, 2007, CP Kelco submitted 
its response (Second Supplemental Response).
    On April 5, 2007, due to the complexity of the case and pursuant to 
section 751(a)(3)(A) of the Act, the Department extended the deadline 
for the preliminary results by 120 days from April 2, 2007, until July 
31, 2007. See Purified Carboxymethylcellulose from Finland, Sweden, the 
Netherlands, and Mexico: Extension of Time Limits for Preliminary 
Determinations of Antidumping Duty Administrative Reviews, 72 FR 16767 
(April 5, 2007).
    From April 23, 2007, through April 25, 2007, and from April 30, 
2007, through May 4, 2007, respectively, the Department conducted on-
site verifications of CP Kelco's U.S. constructed export price (CEP) 
and home market sales responses. See ``Verification'' section below. On 
June 19, 2007, the Department sent a letter to CP Kelco requesting 
specific changes to its home market and U.S. sales databases, based on 
the verification findings and minor corrections. See Letter to CP Kelco 
AB and CP Kelco U.S. Inc. from Angelica L. Mendoza, Program Manager, 
regarding Request for Revised Home Market and U.S. Sales Databases, 
dated June 19, 2007. On June 29, 2007, the Department received CP 
Kelco's revised sales files as requested by the Department.

Period of Review

    The period of review (POR) is December 27, 2004, through June 30, 
2006.

Scope of the Order

    The merchandise covered by this order is all purified CMC, 
sometimes also referred to as purified sodium CMC, polyanionic 
cellulose, or cellulose gum, which is a white to off-white, non-toxic, 
odorless, biodegradable powder, comprising sodium CMC that has been 
refined and purified to a minimum assay of 90 percent. Purified CMC 
does not include unpurified or crude CMC, CMC Fluidized Polymer 
Suspensions, and CMC that is cross-linked through heat treatment. 
Purified CMC is CMC that has undergone one or more purification 
operations, which, at a minimum, reduce the remaining salt and other 
by-product portion of the product to less than ten percent. The

[[Page 44090]]

merchandise subject to this order is currently classified in the 
Harmonized Tariff Schedule of the United States at subheading 
3912.31.00. This tariff classification is provided for convenience and 
customs purposes; however, the written description of the scope of this 
order is dispositive.

Verification

    As provided in section 782(i) of the Act, and 19 CFR 351.307, we 
conducted a sales verification of the questionnaire responses of CP 
Kelco and CP Kelco's U.S. sales affiliate, CP Kelco U.S. Inc. We used 
standard verification procedures, including on-site inspection of CP 
Kelco's production facility in Sweden. Our verification results are 
outlined in the following two memoranda: 1) Memorandum to the File, 
through Angelica L. Mendoza, Program Manager, ``Verification of Home 
Market and U.S. Sales Information Submitted by CP Kelco A.B. and 
Noviant A.B.,'' dated June 11, 2007 (Home Market Verification Report); 
and 2) Memorandum to the File, through Angelica L. Mendoza, Program 
Manager, ``Sales Verification of Sections A-C Questionnaire Responses 
Submitted by CP Kelco AB, Noviant AB, CP Kelco U.S. Inc. and Noviant 
Inc. (collectively, CP Kelco) in the Antidumping Duty Administrative 
Review of Purified Carboxymethylcellulose from Sweden- Verification of 
United States Affiliates CP Kelco U.S. Inc. and Noviant U.S. Inc. 
(collectively, CP Kelco U.S.),'' dated June 12, 2007 (CEP Verification 
Report). See also Memorandum to the File from Joseph Welton, Senior 
Accountant, through Neal M. Halper, Director, and Theresa C. Deeley, 
Lead Accountant, regarding ``Verification of the Cost Response of CP 
Kelco AB in the Antidumping Duty Administrative Review of 
Carboxymethylcellulose from Sweden,'' dated July 3, 2007 (Cost 
Verification Report). Public versions of these reports are on file in 
the Central Records Unit (CRU) located in room B-099 of the main 
Department of Commerce Building, 14\th\ Street and Constitution Avenue, 
NW, Washington, DC.

Use of Facts Available

    Section 776(a)(1) of the Act provides that the Department will, 
subject to section 782(d) of the Act, use the facts otherwise available 
in reaching a determination if ``necessary information is not available 
on the record.'' In accordance with section 776(a)(1) of the Act, for 
these preliminary results, we find it necessary to use partial facts 
available in those instances where the respondent did not provide 
certain information necessary to conduct our analysis.
    CP Kelco reported in its questionnaire responses that it 
``factors'' its account receivables through an affiliated financial 
institution (i.e., sells the rights to the outstanding payments of its 
unpaid invoices to that financial institution). See, e.g., Section B 
Response and Section C Response at pages B-13 and C-13, respectively, 
and Supplemental Response at pages 33, and 35-37, and at exhibits B-11, 
B-12, B-13, B-14, and B-15. As a result of our review of the factoring 
process during the verifications in Sweden and Atlanta, Georgia, we 
found that CP Kelco incurred transaction expenses on its factored sales 
in both the U.S. and home markets. These expenses are fees charged by 
the affiliated financial institution to CP Kelco for purchasing its 
account receivables and remitting payment to CP Kelco at an earlier 
date than payment would have been received from the invoiced customer. 
For a further description and analysis of CP Kelco's factoring 
methodology, see Analysis of Data Submitted by Noviant AB and CP Kelco 
AB (collectively, CP Kelco) in the Preliminary Results of the 
Antidumping Duty Administrative Review of Purified 
Carboxymethylcellulose (CMC) from Sweden from Patrick Edwards, Analyst, 
to the File, dated July 31, 2007 (Sales Analysis Memorandum) on file in 
the CRU. We preliminarily determine that normal value and net U.S. 
price should be adjusted for these expenses. However, because we did 
not ask CP Kelco to provide this information on a transaction-specific 
basis, there is not sufficient information on the record to make a 
transaction-specific adjustment for these factoring charges.
    Pursuant to section 776(a)(1) of the Act, it is appropriate to use 
the facts otherwise available to make this adjustment. The methodology 
used to make these adjustments is discussed in the ``Export Price and 
Constructed Export Price'' and ``Normal Value'' sections of this 
notice, below. We find that CP Kelco did report all information 
requested to the best of its ability. Therefore, we have not made an 
adverse inference in our use of partial facts available. We intend to 
ask CP Kelco to report its actual factoring expense on a transaction-
specific basis in a later submission, and we intend to consider that 
information in our final results.

Successor-In-Interest

    In February 2005, the Noviant group of companies (including 
Noviant's Sweden-based operation of Noviant AB) were merged with the CP 
Kelco group of companies, with both corporate groups previously 
operating as subsidiaries of the J.M. Huber Corporation. Following the 
merger, the operating title of the two entities became unified under 
the CP Kelco corporate title. Throughout 2005 and 2006, each of the 
European Noviant production and export companies' names were changed 
from ``Noviant'' to ``CP Kelco'' (i.e., Noviant AB became CP Kelco AB 
in Sweden). Because entries have been made under the name of the new 
company during the POR, the Department must make a successorship 
determination in order to determine the appropriate and necessary 
company-specific cash deposit and assessment rates to be applied to 
entries subsequent to the final results of this review.
    In December 2005, the shares of Noviant AB's U.S. sales affiliate, 
Noviant Inc., were sold in an agreement with CP Kelco's holding 
company, merging the U.S.-based operations of Noviant and CP Kelco 
under the CP Kelco corporate title. The completed merger of Noviant's 
U.S.-based operations with those of CP Kelco became effective January 
1, 2006, and the company has since operated as CP Kelco U.S., Inc. (CP 
Kelco U.S.). For a further discussion of this issue, see Sales Analysis 
Memorandum; see also, Home Market Verification Report at 3-6 and CEP 
Verification Report at 4-8. CP Kelco U.S. is a subsidiary of CP Kelco, 
respondent in the current administrative review and subsidiary of J.M. 
Huber Corporation.
    In determining whether CP Kelco is the successor to Noviant AB for 
purposes of the antidumping duty law, the Department examines a number 
of factors including, but not limited to, changes in: (1) management, 
(2) production facilities, (3) suppliers, and (4) customer base. See, 
e.g., Brass Sheet and Strip from Canada: Final Results of Antidumping 
Duty Administrative Review, 57 FR 20460 (May 13, 1992) (Brass from 
Canada); Steel Wire Strand for Prestressed Concrete from Japan: Final 
Results of Changed Circumstances Antidumping Duty Administrative 
Review, 55 FR 28796 (July 13, 1990); and Industrial Phosphoric Acid 
From Israel; Final Results of Antidumping Duty Changed Circumstances 
Review, 59 FR 6944 (February 14, 1994). While examining these factors 
alone will not necessarily provide a dispositive indication of 
succession, the Department will generally consider one company to have 
succeeded another if that company's operations are essentially 
inclusive of the predecessor's operations. See Brass from Canada. Thus, 
if the evidence

[[Page 44091]]

demonstrates, with respect to the production and sale of the subject 
merchandise, that the new company is essentially the same business 
operation as the former company, the Department will assign the new 
company the cash deposit rate of its predecessor.
    The evidence on the record, particularly CP Kelco's response to our 
supplemental questionnaire specifically addressing its claimed 
successorship (Questions 2-11 of the Supplemental Response) and the 
Home Market and CEP Verification Reports, demonstrate that, with 
respect to the production and sale of the subject merchandise, CP Kelco 
is the successor to Noviant AB. Specifically, we reviewed CP Kelco's 
organizational structure before and after the merger, as set forth in 
the company's questionnaire responses, and confirmed that there were 
only minimal changes to management and corporate structure. For 
instance, with respect to direct U.S. sales, sales are still made 
through the Unified Dental Team within Huber Engineered Materials 
(HEM). With respect to sales through Noviant Inc.'s successor, CP Kelco 
U.S., while customer care and logistics functions were transferred from 
Atlanta to Chicago, Illinois, and San Diego, California, those former 
Noviant employees did not relocate; a single new customer care 
representative was hired in Chicago and the existing CP Kelco U.S. 
logistics staff in San Diego took over logistics functions relating to 
CMC.
    From a management perspective, consistent with CP Kelco's responses 
and information obtained during the Department's verifications, the 
merger of Noviant AB with CP Kelco AB is, effectively, a name change, 
the primary purpose of which was to broaden the companies' marketing 
scope under the unified ``CP Kelco'' name. Consequently, our analysis 
of corporate management changes as a result of the merger indicates 
that neither the former Noviant AB nor CP Kelco AB (as well as the U.S. 
affiliates, Noviant Inc. and CP Kelco U.S.) experienced significant 
shifts in senior executive management. See Home Market Verification 
Report at 4-6 and Exhibit 4. See also, CEP Verification Report at 5 to 
8, and Exhibits 2-4. While new management positions were created, we 
found that senior management in place at Noviant AB prior to the merger 
with CP Kelco AB still exist following the merger. The same holds true 
for senior management of the U.S.-based entities, Noviant Inc. and CP 
Kelco U.S., where we found that one senior manager left the company 
following the merger.
    These changes, standing alone, are not sufficiently significant to 
support a determination that CP Kelco's management and organizational 
structure, as well as its production and sales of the subject 
merchandise, are not essentially the same as those of Noviant AB. 
Record evidence also shows that CP Kelco uses the same CMC production 
facilities and suppliers as used by Noviant AB (id. at 10-12). CP Kelco 
also provides CMC to the same customers as Noviant AB (id. at 11-12); 
see also, Section A Response at 10-12. Therefore, we preliminarily find 
that CP Kelco is the successor to Noviant AB for purposes of this 
proceeding, and for the application of the antidumping law.

Fair Value Comparisons

    To determine whether sales of CMC from Sweden to the United States 
were made at less than fair value, we compared the export price (EP) or 
CEP to the NV, as described in the ``Export Price and Constructed 
Export Price'' and ``Normal Value'' sections of this notice, below. In 
accordance with section 777A(d)(2) of the Act, we compared the EPs and 
CEPs of individual U.S. transactions to monthly weighted-average NVs.

Product Comparisons

    We compared U.S. sales with sales of the foreign like product in 
the home market. Specifically, in making our comparisons, we used the 
following methodology. If an identical comparison-market model was 
reported, we made comparisons to weighted-average comparison-market 
prices that were based on all sales which passed the COP test of the 
identical product during the relevant or contemporary month. If there 
were no contemporaneous sales of an identical model, we identified the 
most similar comparison-market model. To determine the most similar 
model, we matched the foreign like product based on the physical 
characteristics reported by the respondent in the following order of 
importance: (1) grade, (2) viscosity, (3) degree of substitution, (4) 
particle size, and (5) solution characteristics.

Export Price and Constructed Export Price

    In accordance with section 772 of the Act, we calculate either an 
EP or a CEP, depending on the nature of each sale. Section 772(a) of 
the Act defines EP as the price at which the subject merchandise is 
first sold by the foreign exporter or producer before the date of 
importation to an unaffiliated purchaser in the United States, or to an 
unaffiliated purchaser for exportation to the United States. Section 
772(b) of the Act defines CEP as the price at which the subject 
merchandise is first sold (or agreed to be sold) in the United States 
before or after the date of importation by or for the account of the 
producer or exporter of such merchandise or by a seller affiliated with 
the producer or exporter, to a purchaser not affiliated with the 
producer or exporter. CP Kelco classified two types of sales to the 
United States: 1) direct sales to end-user customers (EP); and 2) sales 
via its U.S. affiliates, CP Kelco U.S. and HEM, to end-users and 
distributors (CEP). For purposes of these preliminary results, we have 
accepted CP Kelco's classifications.
    We calculated EP based on prices charged to the first unaffiliated 
U.S. customer. We used the sale invoice date as the date of sale.\1\ We 
based EP on the packed free on board (FOB) or delivered duty paid 
prices (DDP) to the first unaffiliated purchasers outside Sweden. We 
made deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act, which included foreign inland freight, 
international freight, marine insurance, foreign brokerage and 
handling, and U.S. customs duty, while adding freight revenue, in 
accordance with section 772(c)(1) of the Act and section 351.401(e) of 
the Department's regulations. We made further adjustments for direct 
expenses (credit expenses) in accordance with section 772(c)(2)(A) of 
the Act.
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    \1\ See the Department's Sales Analysis Memorandum for a further 
discussion of this issue.
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    Based upon our findings at verification, we made a deduction from 
EP for the factoring charges incurred by CP Kelco on its U.S. account 
receivables. For the EP sales examined at verification, we used CP 
Kelco's verified factoring charges to represent this expense. For the 
remaining EP sales (i.e., the sales not examined at verification) upon 
which CP Kelco incurred factoring charges, we based the deduction upon 
the average ratio of factoring charges to the invoice value incurred by 
CP Kelco on the U.S. sales examined at verification.
    We calculated CEP based on prices charged to the first unaffiliated 
U.S. customer after importation. We used the sale invoice date as the 
date of sale. We based CEP on the gross unit price from CP Kelco to its 
unaffiliated U.S. customers, making adjustments where necessary for 
billing adjustments, rebates, and other discounts. Where applicable and 
pursuant to sections 772(c)(2)(A) and (d)(1) of the Act, the Department 
made deductions for movement expenses (foreign inland freight, 
international freight, U.S.

[[Page 44092]]

movement, U.S. customs duty, brokerage and handling, marine insurance, 
and post-sale warehousing), while adding freight revenue, in accordance 
with section 772(c)(1) of the Act and section 351.401(e) of the 
Department's regulations. In accordance with section 772(d)(1) of the 
Act, we also deducted, where applicable, U.S. direct selling expenses, 
including credit expenses, U.S. indirect selling expenses, and U.S. 
inventory carrying costs incurred in the United States and Sweden 
associated with economic activities in the United States. We also 
deducted CEP profit in accordance with section 772(d)(3) of the Act.
    We also made a deduction from CEP for the factoring charges 
incurred by CP Kelco on its U.S. account receivables. For the CEP sales 
examined at verification, we used CP Kelco's verified factoring charges 
to represent this expense. For the remaining CEP sales (i.e., the sales 
not examined at verification) upon which CP Kelco incurred factoring 
charges, we based the deduction upon the average ratio of factoring 
charges to the invoice value incurred by CP Kelco on the U.S. sales 
examined at verification.

Normal Value

A. Home Market Viability and Comparison Market Selection

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating NV (i.e., 
whether the aggregate volume of home market sales of the foreign like 
product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared respondent's volume of home market 
sales of the foreign like product to the volume of U.S. sales of the 
subject merchandise, in accordance with section 773(a)(1)(C) of the 
Act. Pursuant to section 351.404(b)(2) of the Department's regulations, 
because CP Kelco's aggregate volume of home market sales of the 
foreign-like product 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 for comparison. Therefore, pursuant to section 
773(a)(1)(B) of the Act, we have based NV on home market sales in the 
usual commercial quantities and in the ordinary course of trade.

B. Cost of Production Analysis

    On January 24, 2007, based on an allegation from Aqualon, the 
Department initiated a sales-below-cost investigation of CP Kelco 
because Aqualon provided a reasonable basis to believe or suspect that 
CP Kelco is selling CMC in the home market at prices below its COP. See 
Cost Initiation Memorandum. Based on the Department's findings, there 
is a reasonable basis to believe or suspect that CP Kelco is selling 
CMC in Sweden at prices below COP. Therefore, pursuant to section 
773(b)(1) of the Act, we examined whether CP Kelco's sales in Sweden 
were made at prices below the COP. See Cost Initiation Memorandum.

C. Calculation of Cost of Production

    In accordance with section 773(b)(3) of the Act, we calculated the 
weighted-average COP for each model based on the sum of CP Kelco's 
materials and fabrication costs for the foreign like product, plus an 
amount for home market selling expenses, general and administrative 
(G&A) expenses, financial expenses, and packing costs. We relied on the 
COP data submitted by CP Kelco, except for the changes noted below.
    1. CP Kelco revised the standard cost of a limited number of 
products during December 2005, and allocated the 2005 variances (i.e., 
the amount by which actual costs differed from standard costs) to the 
revised standard costs. We reallocated variances to the standard costs 
which were in effect from January 2005 through November 2005.
    2. We revised the cost of goods sold denominator of the reported 
financial expense ratio of parent company J.M. Huber Corporation to 
include J.M. Huber Corporation's depreciation expenses, and to deduct 
packing and freight costs. See Memorandum to Neal Halper from Joseph 
Welton, Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results - CP Kelco AB, dated July 31, 
2007.

D. Test of Home Market Prices

    We compared the weighted-average COP of CP Kelco's home market 
sales to home market sales prices (net of billing adjustments, 
discounts, any applicable movement expenses, direct and indirect 
selling expenses, and packing) of the foreign like product as required 
under section 773(b) of the Act in order to determine whether these 
sales had been made at prices below COP. In determining whether to 
disregard home market sales made at prices below COP, we examined, in 
accordance with sections 773(b)(1)(A) and (B) of the Act, whether such 
sales were made in substantial quantities within an extended period of 
time, and whether such sales were made at prices which would permit 
recovery of all costs within a reasonable period of time.

E. Results of the Cost Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of CP Kelco's sales of a given model were at prices less than 
the COP, we did not disregard any below-cost sales of that model 
because these below-cost sales were not made in substantial quantities. 
Where 20 percent or more of CP Kelco's home market sales of a given 
model were at prices less than the COP, we disregarded the below-cost 
sales because such sales were made: (1) in substantial quantities 
within the POR (i.e., within an extended period of time) in accordance 
with section 773(b)(2)(B) of the Act, and (2) at prices which would not 
permit recovery of all costs within a reasonable period of time, in 
accordance with section 773(b)(2)(D) of the Act (i.e., the sales were 
made at prices below the weighted-average per-unit COP for the POR). We 
used the remaining sales as the basis for determining NV, if such sales 
existed, in accordance with section 773(b)(1) of the Act. In this 
review, we have found sales below the COP and have, as described above, 
disregarded such sales from our margin calculations.

F. Price-to-Price Comparisons

    We calculated NV based on prices to unaffiliated customers or 
prices to affiliated customers that we determined to be at arm's 
length. We used the sale invoice date as the date of sale. We made 
adjustments for billing adjustments, discounts, and rebates, where 
appropriate. We made deductions, where appropriate, for foreign inland 
freight, pursuant to section 773(a)(6)(B) of the Act. We offset inland 
freight for any freight revenue (revenue received from customers for 
invoice items covering transportation expenses). In addition, when 
comparing sales of similar merchandise, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise (i.e., DIFMER) pursuant to section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We also made 
adjustments for differences in circumstances of sale (COS) in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. We made COS adjustments for imputed credit expenses. We also 
made an adjustment, where appropriate, for the CEP offset in accordance 
with section 773(a)(7)(B) of the Act. See ``Level of Trade'' section 
below. Additionally, we deducted home market

[[Page 44093]]

packing costs and added U.S. packing costs in accordance with sections 
773(a)(6)(A) and (B) of the Act.
    We also made a deduction from NV for the factoring charges incurred 
by CP Kelco on its home market account receivables. For the home market 
sales examined at verification, we used CP Kelco's verified factoring 
charges to represent this expense. For the remaining home market sales 
(i.e., the sales not examined at verification) upon which CP Kelco 
incurred factoring charges, we based the deduction upon the average 
ratio of factoring charges to the invoice value incurred by CP Kelco on 
the home market sales examined at verification.

G. Price-to-Constructed Value-Comparison

    In accordance with section 773(a)(4) of the Act, we base NV on 
constructed value (CV) if we are unable to find a contemporaneous 
comparison market match of identical or similar merchandise for the 
U.S. sale. Section 773(e) of the Act provides that CV shall be based on 
the sum of the cost of materials and fabrication employed in making the 
subject merchandise, selling, general and administrative (SG&A) 
expenses, financial expenses, profit, and U.S. packing costs. We 
calculated the cost of materials and fabrication for CP Kelco based on 
the methodology described in the COP section of this notice. In 
accordance with section 773(e)(2)(A) of the Act, we based SG&A 
expenses, financial expense, and profit on the amounts CP Kelco 
incurred and realized in connection with the production and sale of the 
foreign like product in the ordinary course of trade, for consumption 
in the foreign country. However, for these preliminary results, we did 
not base NV on CV in any instances. Accordingly, for sales of CMC for 
which we could not determine the NV based on comparison-market sales, 
either because there were no useable sales of a comparable product or 
all sales of the comparable products failed the sales-below-cost test, 
we based NV on CV.

Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, to the extent 
practicable, we determine NV based on sales in the comparison market at 
the same level of trade (LOT) as the EP or CEP transaction. The LOT in 
the comparison market is the LOT of the starting-price sales in the 
comparison market or, when NV is based on CV, the LOT of the sales from 
which we derive SG&A expenses and profit. With respect to U.S. price 
for EP transactions, the LOT is also that of the starting-price sale, 
which is usually from the exporter to the importer. For CEP, the LOT is 
that of the constructed sale from the exporter to the affiliated 
importer.
    To determine whether comparison market sales are at a different LOT 
from U.S. sales, we examined stages in the marketing process and 
selling functions along the chain of distribution between the producer 
and the unaffiliated customer. If the comparison market sales are at 
different LOTs, and the difference affects price comparability, as 
manifested in a pattern of consistent price differences between the 
sales on which NV is based and comparison market sales at the LOT of 
the export transaction, the Department makes an LOT adjustment in 
accordance with section 773(a)(7)(A) of the Act. For CEP sales, we 
examine stages in the marketing process and selling functions along the 
chain of distribution between the producer and the customer. We analyze 
whether different selling activities are performed, and whether any 
price differences (other than those for which other allowances are made 
under the Act) are shown to be wholly or partly due to a difference in 
LOT between the CEP and NV. Under section 773(a)(7)(A) of the Act, we 
make an upward or downward adjustment to NV for LOT if the difference 
in LOT involves the performance of different selling activities and is 
demonstrated to affect price comparability, based on a pattern of 
consistent price differences between sales at different LOTs in the 
country in which NV is determined. Finally, if the NV LOT is at a more 
advanced stage of distribution than the LOT of the CEP, but the data 
available do not provide an appropriate basis to determine an LOT 
adjustment, we reduce NV by the amount of indirect selling expenses 
incurred in the foreign comparison market on sales of the foreign like 
product, but by no more than the amount of the indirect selling 
expenses incurred for CEP sales. See section 773(a)(7)(B) of the Act 
(the CEP offset provision).
    In analyzing differences in selling functions, we determine whether 
the LOTs identified by the respondent are meaningful. See Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27371 (May 19, 
1997). If the claimed LOTs are the same, we expect that the functions 
and activities of the seller should be similar. Conversely, if a party 
claims that LOTs are different for different groups of sales, the 
functions and activities of the seller should be dissimilar. See 
Porcelain-on-Steel Cookware from Mexico: Final Results of 
Administrative Review, 65 FR 30068 (May 10, 2000) and accompanying 
Issues and Decision Memorandum at Comment 6. In the present review, CP 
Kelco claimed an LOT adjustment. See Section B Response at page B-20. 
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''),\2\ including selling functions, class of customer 
(customer category), and the level of selling expenses for each type of 
sale.
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    \2\ The marketing process in the United States and comparison 
market begins with the producer and extends to the sale to the final 
user or customer. The chain of distribution between the two may have 
many or few links, and the respondent's sales occur somewhere along 
this chain. In performing this evaluation, we considered CP Kelco's 
narrative response to properly determine where in the chain of 
distribution the sale occurs.
---------------------------------------------------------------------------

    CP Kelco reported two LOTs in the comparison market, Sweden, with 
two channels of distribution to two classes of customers: (1) direct 
sales to end user customers (LOT 1 and Channel 1) and (2) direct sales 
to distributors (LOT 2 and Channel 2). Based on our review of record 
evidence, we find that comparison market sales to both customer 
categories and through both channels of distribution were substantially 
similar with respect to selling functions and stages of marketing. CP 
Kelco performed the same selling functions at a similar level of 
performance for sales in both comparison market channels of 
distribution, including sales forecasting, order input/processing, 
advertising, warranty service, freight, delivery, and logistics 
services, etc. See Section A Response at Exhibit A-5; Supplemental 
Response at exhibit A-25. Accordingly, we preliminarily find that CP 
Kelco had only one LOT for its comparison market sales.
    CP Kelco reported one EP LOT and one CEP LOT each with its own 
separate channel of distribution in the United States, and with two 
classes of customers for CEP sales: (1) direct sales to end user 
customers (EP sales of LOT 1 and Channel 5) and (2) sales through U.S. 
affiliates (CEP sales) to end users and distributors of merchandise 
(LOTs 3 and 4 with Channel 1 to end users and Channel 2 to 
distributors). In reviewing CP Kelco's questionnaire responses, we 
preliminarily find that CP Kelco has a total of three channels of 
distribution for its U.S. sales: (1) direct sales to end users of 
merchandise produced to order and from existing inventory, (2) sales 
through U.S. affiliate CP Kelco U.S. to end users and distributors of

[[Page 44094]]

merchandise produced to order and from existing inventory, and (3) 
sales through U.S. affiliate HEM to end users and distributors of 
merchandise produced to order and from existing inventory. Therefore, 
we preliminarily find that there is one channel of distribution for EP 
sales, and two channels of distribution for CEP sales. See Section A 
Response at A-17-A-23.
    For CEP sales, we consider only the selling activities reflected in 
the price after the deduction of expenses and CEP profit under section 
772(d) of the Act. See Micron Technology Inc. v. United States, 243 
F.3d 1301, 1314-1315 (Fed. Cir. 2001). We reviewed the selling 
functions and services performed by CP Kelco on CEP sales for both 
channels of distribution relating to the CEP LOT, as described by CP 
Kelco in its questionnaire responses, after these deductions. We have 
determined that the selling functions performed by CP Kelco on all CEP 
sales are similar because CP Kelco provides almost no selling functions 
to either U.S. affiliate in support of either channel of distribution. 
CP Kelco reported that the only services it provided for the CEP sales 
were packaging, order input/processing services, and very limited 
sales/marketing support services. See Supplemental Response at exhibit 
A-25. Accordingly, because the selling functions provided by CP Kelco 
on sales to affiliates in the United States are substantially similar, 
we preliminarily determine that there is one CEP LOT in the U.S. 
market.
    We then examined the selling functions performed by CP Kelco on its 
EP sales in comparison with the selling functions performed on CEP 
sales (after deductions). We found that CP Kelco performs an additional 
layer of selling functions on its direct sales to unaffiliated U.S. 
customers which are not performed on its sales to affiliates (e.g., 
sales forecasting, strategic/economic planning, engineering services, 
procurement and sourcing services, packing, inventory maintenance, 
direct sales support, after-sales support services, etc.). Id. Because 
these additional selling functions are significant, we find that CP 
Kelco's direct sales to unaffiliated U.S. customers (EP sales) are at a 
different LOT than its CEP sales.
    Next, we examined the comparison market and EP sales. CP Kelco's 
comparison (home) market and EP sales were both made to end users, 
while only CP Kelco's comparison market sales were made to 
distributors. In the case of end user sales, the selling functions 
performed by CP Kelco were almost identical for both markets. Other 
than re-packing services, which were mainly provided on U.S. sales, in 
both markets CP Kelco provided the following services: sales 
forecasting, strategic and economic planning, sales promotion, 
engineering services, advertising, procurement/sourcing services, 
packing, inventory maintenance, direct sales personnel, order/input 
processing, market research, technical assistance, providing 
guarantees, after-sales services, freight and delivery services, etc. 
Id. Because the selling functions and channels of distribution are 
substantially similar, we preliminarily determine that the comparison 
market LOT is the same as the EP LOT. It was therefore unnecessary to 
make an LOT adjustment for comparison of home market and EP prices.
    According to section 773(a)(7)(B) of the Act, a CEP offset is 
appropriate when the LOT in the home market is at a more advanced stage 
than the LOT of the CEP sales and there are no data available to 
determine the existence of a pattern of price difference. CP Kelco 
reported that it provided minimal selling functions and services for 
the CEP LOT and that, therefore, the comparison market LOT is more 
advanced than the CEP LOT. Based on our analysis of the channels of 
distribution and selling functions performed by CP Kelco for sales in 
the comparison market and CEP sales in the U.S. market (i.e., sales 
support and activities provided by CP Kelco on sales to its U.S. 
affiliates), we preliminarily find that the comparison market LOT is at 
a more advanced stage of distribution when compared to CEP sales 
because CP Kelco provides many selling functions in the comparison 
market at a higher level of service (i.e., sales forecasting, 
strategic/economic planning, advertising, personnel training, 
procurement services, sales promotion, inventory maintenance, direct 
sales personnel, market research, technical assistance, after-sales 
service, etc.) as compared to selling functions performed for its CEP 
sales (i.e., CP Kelco reported that the only services it provided for 
the CEP sales were packaging, order input/processing services, and very 
limited freight and delivery and sales/marketing support services). See 
Supplemental Response at exhibit A-25. Thus, we find that CP Kelco's 
comparison market sales are at a more advanced LOT than its CEP sales. 
There was only one LOT in the comparison market, and there are no data 
available to determine the existence of a pattern of price difference, 
and we do not have any other information that provides an appropriate 
basis for determining a LOT adjustment; therefore, we applied a CEP 
offset to NV for CEP comparisons.
    To calculate the CEP offset, we deducted the comparison market 
indirect selling expenses from NV for comparison market sales that were 
compared to U.S. CEP sales. As such, we limited the comparison market 
indirect selling expense deduction by the amount of the indirect 
selling expenses deducted in calculating the CEP as required under 
section 772(d)(1)(D) of the Act.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
weighted-average dumping margin for the period December 27, 2004, 
through June 30, 2006, for CP Kelco to be as follows:

------------------------------------------------------------------------
                                                       Weighted-Average
                Manufacturer/Exporter                       Margin
------------------------------------------------------------------------
Noviant AB and CP Kelco AB..........................        0.00 percent
------------------------------------------------------------------------

    We will disclose the calculations used in our analysis to parties 
to this review within five days of the date of publication of this 
notice. See 19 CFR 351.224(b). Any interested party may request a 
hearing within 30 days of the date of publication of this notice. See 
19 CFR 351.310. Interested parties who wish to request a hearing or to 
participate in a hearing, if a hearing is requested, must submit a 
written request to the Department within 30 days of the date of 
publication of this notice. Requests should contain the following: (1) 
the party's name, address, and telephone number; (2) the number of 
participants; (3) a list of issues to be discussed. See 19 CFR 
351.310(c).
    Issues raised in the hearing will be limited to those raised in the 
case and rebuttal briefs. See 19 CFR 351.310(c). Case briefs from 
interested parties may be submitted not later than 30 days after the 
date of publication of this notice of preliminary results of review. 
See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs from interested parties, 
limited to the issues raised in the case briefs, may be submitted not 
later than five days after the time limit for filing the case briefs or 
comments. See 19 CFR 351.309(d)(1) and 19 CFR 351.310(c). Any hearing, 
if requested, will be held two days after

[[Page 44095]]

the scheduled date for submission of rebuttal briefs. See 19 CFR 
351.310(d). Parties who submit case briefs or rebuttal briefs in this 
proceeding are requested to submit with each argument a statement of 
the issue, a summary of the arguments not exceeding five pages, and a 
table of statutes, regulations, and cases cited. See 19 CFR 
351.309(c)(2). The Department will issue the final results of this 
administrative review, including the results of its analysis of issues 
raised in any such written briefs or at the hearing, if held, not later 
than 120 days after the date of publication of this notice. See section 
751(a)(3)(A) of the Act.

Assessment Rates

    Upon completion of this review, the Department shall determine, and 
CBP shall assess, antidumping duties on all appropriate entries. 
Pursuant to 19 CFR 351.212(b)(1), the Department calculates an 
assessment rate for each importer of the subject merchandise covered by 
the review.\3\ The Department intends to issue assessment instructions 
to CBP 15 days after the date of publication of the results of review.
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    \3\ If for the final results we determine CP Kelco AB to be the 
successor to Noviant AB, we will instruct CBP to liquidate entries 
subject to this review using CP Kelco's final rate, accordingly.
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    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This 
clarification will apply to entries of subject merchandise during the 
POR produced by CP Kelco and/or Noviant AB and for which CP Kelco and/
or Noviant AB did not know another company would export its merchandise 
to 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.

Cash Deposit Requirements

    The following cash-deposit rates will be effective upon publication 
of the final results of this review for all shipments of purified 
carboxymethylcellulose from Sweden entered, or withdrawn from 
warehouse, for consumption on or after publication date, as provided 
for by section 751(a)(2)(C) of the Act: (1) for subject merchandise 
produced by CP Kelco and/or Noviant AB, the cash-deposit rate will be 
the rate established in the final results of this review, except if the 
rate is less than 0.50 percent and, therefore, de minimis within the 
meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate 
will be zero; 2) if the exporter is not a firm covered in this review 
or the less-than-fair-value (LTFV) investigation, but the manufacturer 
is, the cash deposit rate will be the rate established for the most 
recent period for the manufacturer of the merchandise; and 3) 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 the ``all others'' rate of 25.29 percent from the LTFV 
investigation. See Notice of Anitdumping Duty Orders: Purified 
Carboxymethylcellulose from Finland, Mexico, and the Netherlands and 
Sweden, 70 FR 39734 (July 11, 2005).
    These deposit requirements, when imposed, shall remain in effect 
until further notice.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) of the Department's 
regulations 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 the subsequent assessment of double antidumping 
duties.
    This administrative review and this notice are published in 
accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 31, 2007.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
[FR Doc. E7-15323 Filed 8-6-07; 8:45 am]
BILLING CODE 3510-DS-S