Purified Carboxymethylcellulose from the Netherlands; Preliminary Results of Antidumping Duty Administrative Review, 44099-44105 [E7-15337]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 72, Number 151 (Tuesday, August 7, 2007)]
[Notices]
[Pages 44099-44105]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-15337]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-421-811


Purified Carboxymethylcellulose from the Netherlands; 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 the Netherlands. This administrative review 
covers imports of subject merchandise produced and exported by Noviant 
B.V. and CP Kelco B.V. (collectively, CP Kelco). The period of review 
(POR) is December 27, 2004, through June 30, 2006.
    We preliminarily determine that sales of subject merchandise by CP 
Kelco have 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 assess antidumping duties 
on appropriate entries based on the difference between the export price 
(EP) or constructed export price (CEP) and NV. Interested parties are 
invited to comment on these preliminary results.

EFFECTIVE DATE: August 7, 2007.

FOR FURTHER INFORMATION CONTACT: Stephen Bailey 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-
0193 or (202) 482-3019, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 11, 2005, the Department published the antidumping duty 
order on CMC from the Netherlands. See Notice of Antidumping Duty 
Orders: Purified Carboxymethylcellulose from Finland, Mexico, the 
Netherlands and

[[Page 44100]]

Sweden, 70 FR 39734 (July 11, 2005) (CMC Order). On July 3, 2006, the 
Department published the opportunity to request an administrative 
review of, inter alia, CMC from the Netherlands for the period December 
27, 2004, through June 30, 2006. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity To Request 
Administrative Review, 71 FR 37890 (July 3, 2006).
    In accordance with 19 CFR 351.213(b)(1), Aqualon requested that the 
Department conduct an administrative review of the antidumping duty 
order on CMC from the Netherlands on July 27, 2006. On August 30, 2006, 
the Department published in the Federal Register a notice of initiation 
of this antidumping duty administrative review covering sales, entries 
and/or shipments of CMC for the period December 27, 2004, through June 
30, 2006, for CP Kelco and Akzo Nobel Surface Chemistry (Akzo). See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 71 FR 51573 (August 30, 
2006).
    On September 11, 2006, the Department issued its antidumping duty 
questionnaire to CP Kelco and Akzo.\1\ CP Kelco submitted its section A 
questionnaire response (AQR) on October 16, 2006, and its sections B 
and C questionnaire responses on November 21, 2006 (BCQR). On December 
4 and 8, 2006, respectively, Aqualon alleged that Akzo and CP Kelco 
made home market sales of CMC at prices below the cost of production 
during the POR.
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    \1\ As noted below, the antidumping duty review for Akzo was 
rescinded on March 13, 2007.
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    On December 12, 2006, Aqualon submitted comments regarding Akzo's 
sections A-C questionnaire responses. On January 8, 2007, the 
Department issued its first sections A-C supplemental questionnaire to 
Akzo and on January 29, 2007, Akzo submitted its response.
    On January 22, 2007, we initiated sales-below-cost investigations 
of home market sales made by Akzo and CP Kelco. See the Department's 
Memorandum to the File, from Judy Lao, Case Analyst and Nancy Decker, 
Senior Accountant, titled Petitioner's Allegation of Sales Below the 
Cost of Production for Noviant BV/CP Kelco BV, dated January 22, 2007 
(Cost Initiation Memorandum), applicable to both Akzo and CP Kelco. As 
a result, on January 22, 2007, the Department requested that both Akzo 
and CP Kelco respond to section D of the Department's questionnaire. CP 
Kelco submitted its section D response on February 5, 2007, including 
its cost reconciliation.
    On February 9, 2007, the Department issued its first sections A-C 
supplemental questionnaire to CP Kelco and on March 12, 2007, CP Kelco 
submitted its response (SQR). On February 12, 2007, the Department 
issued a second sections A-C supplemental questionnaire to CP Kelco and 
on February 26, 2007, CP Kelco submitted its response.
    On February 15, 2007, Aqualon submitted a letter to the Department 
requesting a rescission of the administrative review with respect to 
Akzo. On March 13, 2007, the Department rescinded the administrative 
review with respect to Akzo.\2\ See Purified Carboxymethylcellulose 
from the Netherlands: Rescission of Antidumping Duty Administrative 
Review in Part, 72 FR 11325 (March 13, 2007).
    On February 27, 2007, the Department issued its third-country 
selection memorandum in which Taiwan was chosen as the appropriate 
third country for CP Kelco. See the Department's Memorandum to Office 7 
Director Richard O. Weible, from Judy Lao and Stephen Bailey, Case 
Analysts, titled Selection of Third Country Market for Noviant B.V. and 
CP Kelco B.V. (collectively, CP Kelco B.V.), dated February 27, 2007 
(Third Country Memorandum). Also on February 27, 2007, Aqualon 
submitted comments on CP Kelco's section questionnaire response. On 
March 27, 2007, Aqualon submitted comments on CP Kelco's SQR.
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    \2\ The Department notes that while the rescission notice lists 
both Akzo Nobel Surface Chemistry B.V. and Akzo Nobel Functional 
Chemicals B.V., the Department has not made a determination on the 
successor to Akzo Nobel Surface Chemistry B.V.
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    On April 5, 2007, 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).
    On April 6, 2007, CP Kelco submitted certain documents that were 
inadvertently omitted from its March 12, 2007, SQR. Additionally on 
April 6, 2007, the Department issued to CP Kelco a third sections A C 
supplemental questionnaire, and on April 27, 2007, CP Kelco submitted 
its response. On April 19, 2007, the Department issued to CP Kelco its 
first section D supplemental questionnaire, and on May 8, 2007, CP 
Kelco submitted its response. On June 8, 2007, the Department issued to 
CP Kelco a fourth sections A C supplemental questionnaire, and on June 
18, 2007, CP Kelco submitted its response.
    On July 10, 2007, CP Kelco submitted its sales reconciliation. On 
July 12, 2007, the Department requested that CP Kelco provide a revised 
calculation for parent company J.M. Huber's financial expense ratio 
that deducts packing and freight-out expenses from J.M. Huber's cost of 
goods sold denominator. CP Kelco submitted this information on July 13, 
2007. See Memorandum to the File, from Joe Welton, Accountant, titled 
Phone Call with Respondent, dated July 13, 2007; see also Memorandum to 
Neal Halper, Director Office of Accounting, from Gina Lee, Analyst, 
titled Cost of Production and Constructed Value Calculation Adjustments 
for the Preliminary Results - CP Kelco BV, dated July 31, 2007 (Cost 
Memorandum) for a discussion of this issue.
    On July 26, 2007, the Department issued a supplemental 
questionnaire to CP Kelco requesting the actual transaction-specific 
bank fees charged by CP Kelco's factoring agent, both for U.S. and 
comparison market sales. We intend to consider this information in our 
final results.

Period of Review

    The POR is December 27, 2004, through June 30, 2006.

Scope of the Order

    The merchandise covered by this order is all purified 
carboxymethylcellulose (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 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.

[[Page 44101]]

Successor-In-Interest

    In February 2005, the Noviant group of companies (including 
Noviant's Netherlands-based operation of Noviant B.V.) were merged with 
the CP Kelco group of companies, with both corporate groups previously 
operating as subsidiaries of the J.M. Huber Corporation (J.M. Huber). 
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 B.V. 
became CP Kelco B.V. in the Netherlands). 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 apply the 
appropriate and necessary company-specific cash deposit and assessment 
rates.
    In December 2005, the shares of Noviant B.V.'s U.S. sales 
affiliate, Noviant Inc., were sold in an agreement with the CP Kelco 
entity'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 
merger, see Memorandum to the File, from Stephen Bailey, Analyst, 
titled Analysis of Data Submitted by Noviant B.V. and CP Kelco B.V. 
(collectively, CP Kelco) in the Preliminary Results of the Antidumping 
Duty Administrative Review of Purified Carboxymethylcellulose (CMC) 
from the Netherlands, dated July 31, 2007, (Sales Analysis Memorandum), 
on file in the Department's Central Records Unit (CRU) located in Room 
B-099 of the main Department of Commerce Building, 14th Street and 
Constitution Avenue, NW, Washington, DC. CP Kelco U.S. is a subsidiary 
of CP Kelco, respondent in the current administrative review and 
subsidiary of J.M. Huber.
    In determining whether CP Kelco B.V. (and, therefore, CP Kelco 
U.S.) is the successor to Noviant B.V. and its U.S. affiliate Noviant 
Inc. for purposes of applying 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 at 20461. Thus, if the evidence 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.
    Specifically, the evidence on the record, particularly CP Kelco's 
response to questions 3-9 of its SQR specifically addressing its 
claimed successorship, demonstrates that, with respect to the 
production and sale of the subject merchandise, CP Kelco B.V. is the 
successor to Noviant B.V. We reviewed CP Kelco's organizational 
structure before and after the merger 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, PC 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, the merger of Noviant BV with CP Kelco BV 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 BV nor CP Kelco BV (as well 
as the U.S. affiliates, Noviant Inc. and CP Kelco U.S.) experienced 
significant shifts in senior executive management. While new management 
positions were created, we found that Noviant BV's senior management 
still existed within CP Kelco BV 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 B.V.
    Record evidence shows that CP Kelco B.V. uses the same CMC 
production facilities, and maintains the same customer and supplier 
relationships as Noviant B.V. See pages 8 and 12 of the SQR. For CP 
Kelco's sales to Taiwan, there were no changes in selling activities 
before and after the merger, as CP Kelco Singapore Pte. (CP Kelco's 
Asian sales office) performs the same selling functions as its 
predecessor Noviant Pte. See SQR at pages 12 and 15. Therefore, we 
preliminarily find that CP Kelco B.V. is the successor to Noviant B.V. 
for purposes of this proceeding, and for the application of the 
antidumping law.

Fair Value Comparisons

    To determine whether sales of CMC from the Netherlands to the 
United States were made at less than fair value, we compared the 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 Tariff Act of 1930, as 
amended (the Act), we compared the EPs and CEPs of individual U.S. 
transactions to monthly weighted-average NVs.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered sales 
of CMC covered by the description in the ``Scope of the Review'' 
section of this notice, supra, which were sold in the appropriate 
third-country market, Taiwan, during the POR to be the foreign like 
product for the purpose of determining appropriate product comparisons 
to CMC sold in the United States. For our discussion of market 
viability and selection of comparison market, see the ``Normal Value'' 
section of this notice, infra. We have relied on the following five 
criteria to match U.S. sales of the subject merchandise to sales in 
Taiwan of the foreign like product: grade, viscosity, degree of 
substitution, particle size, and solution characteristic.
    Where there were no sales of identical merchandise in the third-
country market to compare to U.S. sales, we

[[Page 44102]]

compared U.S. sales to the next most similar foreign like product on 
the basis of the characteristics and reporting instructions listed in 
the Department's September 11, 2006, antidumping duty questionnaire.

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) sales to direct end user customers (EP sales); and 2) 
sales via its U.S. affiliates, CP Kelco U.S. and HEM, to end-users and 
distributors (CEP sales). For purposes of these preliminary results, we 
have accepted CP Kelco's classifications and identified two additional 
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.\3\ We 
based EP on the packed freight on board (FOB) prices to the first 
unaffiliated purchasers outside the Netherlands. We made deductions for 
movement expenses in accordance with section 772(c)(2)(A) of the Act, 
including foreign inland freight, and foreign brokerage and handling.
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    \3\ See the Department's Sales Analysis Memorandum for a further 
discussion of this issue.
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    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 U.S. 
and HEM to their unaffiliated U.S. customers, making adjustments where 
necessary for billing adjustments, pursuant to section 772(c)(1) of the 
Act. Where applicable, the Department made deductions for movement 
expenses (foreign inland freight, international freight, U.S. movement, 
U.S. customs duty and brokerage, marine insurance and post-sale 
warehousing), while adding freight revenue, in accordance with section 
772(c)(2) of the Act and section 351.401(e) of the Department's 
regulations. In accordance with sections 772(d)(1) and (2) 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 the 
Netherlands associated with economic activities in the United States. 
We also deducted CEP profit in accordance with section 772(d)(3) of the 
Act.

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.
    Section 773(a)(1)(C)(ii) of the Act provides that the Department 
may determine that home market sales are inappropriate as a basis for 
determining NV if the administering authority determines that the 
aggregate quantity of the foreign like product sold in the exporting 
country is insufficient to permit a proper comparison with the sales of 
the subject merchandise to the United States. When sales in the home 
market are not viable, section 773(a)(1)(B)(ii) of the Act provides 
that sales to a particular third country market may be utilized if (I) 
the prices in such market are representative; (II) the aggregate 
quantity of the foreign like product sold by the producer or exporter 
in that third country market is five percent or more of the aggregate 
quantity of the subject merchandise sold in or to the United States; 
and (III) the Department does not determine that a particular market 
situation in the third country market prevents a proper comparison with 
the U.S. price.
    CP Kelco reported, and we determined, that CP Kelco's aggregate 
volume of home market sales of the foreign like product was not greater 
than five percent of the aggregate volume of U.S. sales of subject 
merchandise. See AQR at exhibit A-1. Therefore, because CP Kelco's 
sales in the home market did not provide a viable basis for calculating 
NV, we relied on sales to a third country as the basis for NV in 
accordance with section 773(a)(1)(B)(ii) of the Act. The following is a 
description of the Department's procedure in selecting the third 
country sales used to calculate NV for sales of the foreign like 
product made by CP Kelco.
    In its section A response, CP Kelco provided information regarding 
its sales to Taiwan, Germany, and Denmark. Upon review of the 
information provided by CP Kelco, in accordance with section 
773(a)(1)(c) of the Act, the Department selected Taiwan as the 
appropriate comparison market. The Department found that exports of the 
foreign like product to Taiwan were similar to those exported to the 
United States, and that exports to Taiwan were substantially larger 
than exports either to Germany or to Denmark. In addition, the 
Department did not find any evidence on the record suggesting that 
Taiwan would be an inappropriate third country market to select as a 
comparison market. Accordingly, on February 27, 2007, the Department 
selected Taiwan as the appropriate third country for comparison market 
purposes. See Third Country Memorandum.\4\
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    \4\ CP Kelco reported sales to Taiwan in its BCQR.
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    We also used constructed value (CV) as the basis for calculating 
NV, in accordance with section 773(a)(4) of the Act, for those sales 
that did not have identical or similar product matches.

B. Cost of Production Analysis

    On January 22, 2007, after a request 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 Taiwan at prices below its cost of production (COP). 
Based on the Department's findings, there is a reasonable basis to 
believe or suspect that CP Kelco is selling CMC in Taiwan at prices 
below COP. Therefore, pursuant to section 773(b)(1) of the Act, we 
examined whether CP Kelco's sales in Taiwan 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 
material and fabrication costs for the foreign like product, plus 
amounts for selling expenses, general and administrative (G&A) 
expenses, financial expenses and packing costs.
    We relied on the COP information provided by CP Kelco except for 
the following adjustment. We added depreciation expense, and deducted 
packing and freight costs incurred by CP

[[Page 44103]]

Kelco's parent company J.M. Huber, from the cost of goods sold 
denominator to generate a revised cost of goods sold used in CP Kelco's 
financial expense ratio calculation. See Cost Memorandum.

D. Test of Comparison Market Prices

    We compared CP Kelco's weighted-average COP figures to that 
company's Taiwan sales prices of the foreign like product, as required 
under section 773(b) of the Act, to determine whether sales to Taiwan 
had been made at prices below COP. On a product-specific basis, we 
compared COP to Taiwan prices, less any applicable movement charges, 
billing adjustments, taxes, and discounts and rebates.
    In determining whether to disregard Taiwan sales made at prices 
below the 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 permitted the recovery of all costs within a 
reasonable period of time in the normal course of trade. Pursuant to 
section 773(b)(2)(C) of the Act, where less than 20 percent of CP 
Kelco's Taiwan sales of a given model were made at prices below the 
COP, we did not disregard any below-cost sales of that model because we 
determined that the below-cost sales were not made within an extended 
period of time in ``substantial quantities.'' Where 20 percent or more 
of CP Kelco's Taiwan sales of a given model were at prices less than 
COP, we disregarded the below-cost sales because: (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, as described in section 
773(b)(2)(D) of the Act.

E. Results of Cost Test

    Our sales below cost test for CP Kelco revealed that for Taiwan 
sales of certain models, less than 20 percent of the sales of those 
models were made at prices below the COP. We therefore retained all 
such sales in our analysis and used them as the basis for determining 
NV. Our cost test also indicated that for certain models, more than 20 
percent of Taiwan sales of those models were sold at prices below COP 
within an extended period of time and were at prices which would not 
permit the recovery of all costs within a reasonable period of time. 
Thus, in accordance with section 773(b)(1) of the Act, we excluded 
these below-cost sales from our analysis and used the remaining above-
cost sales as the basis for determining NV.

F. Price-to-Price Comparisons

    We used the sale invoice date as the date of sale.\5\ We calculated 
NV based on prices to unaffiliated customers and matched U.S. sales to 
NV. We made deductions, where appropriate, for foreign inland freight 
and international freight pursuant to section 773(a)(6)(B) of the Act. 
In addition, we made adjustments for differences in cost attributable 
to differences in physical characteristics of the merchandise, pursuant 
to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, as well as 
for differences in circumstances of sale (COS) as appropriate, in 
accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 
351.410. Finally, we deducted third country packing costs and added 
U.S. packing costs in accordance with sections 773(a)(6)(A) and (B) of 
the Act.
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    \5\ See the Department's Sales Analysis Memorandum for a further 
discussion of this issue.
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G. Price-to-CV Comparisons

    In accordance with section 773(a)(4) of the Act, we based NV on CV 
if we were unable to find a contemporaneous comparison market match for 
the U.S. sale. We calculated CV based on the cost of materials and 
fabrication employed in producing the subject merchandise, selling, 
general and administrative (SG&A) expenses, financial expense, and 
profit including the adjustment as described in the COP section above. 
In accordance with section 773(e)(2)(A) of the Act, we based SG&A 
expenses, interest, 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 Taiwan. For 
selling expenses, we used weighted-average Taiwan selling expenses. 
Where appropriate, we made COS adjustments to CV in accordance with 
section 773(a)(8) of the Act and 19 CFR 351.410.

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 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-

[[Page 44104]]

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 CP Kelco's BCQR at page B-25. 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''),\6\ 
including selling functions, class of customer (customer category), and 
the level of selling expenses for each type of sale.
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    \6\ The marketing process in the United States and third country 
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.
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    CP Kelco reported two LOTs in the third country market, Taiwan, 
with two channels of distribution to two classes of customers: (1) 
direct sales from the plant to end users (LOT 1 and Channel 1), and (2) 
direct sales from the plant to distributors (LOT 4 and Channel 2). 
Based on our review of evidence on the record, we find that third 
country 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 for sales in both third country market channels of 
distribution, including sales forecasting, order input/processing, 
advertising, warranty service, freight and delivery services, etc. See 
CP Kelco's AQR at exhibit A-5; CP Kelco's SQR at exhibit A-34. 
Additionally, as explained on pages A-18 and A-19 of CP Kelco's AQR, 
for sales to end users and through distributors, CP Kelco Singapore Pte 
takes orders directly from the customer, and enters the order in the 
Oracle 11i ERP (Oracle) system for production (or from stock for sales 
through distributors). Accordingly, we preliminarily find that CP Kelco 
had only one LOT for its third country 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 users of 
merchandise (EP sales of LOT 1 and Channel 5), and (2) sales through 
U.S. affiliates (CEP sales) to end users and distributors of 
merchandise (LOT 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 four channels of 
distribution for its U.S. sales: (1) direct sales to end users of 
merchandise produced to order, (2) direct sales to end users of 
merchandise sold from inventory, (3) sales through U.S. affiliates (CP 
Kelco U.S. and HEM) to end users and distributors of merchandise 
produced to order, and (4) sales through U.S. affiliates (CP Kelco U.S. 
and HEM) from warehouse stock maintained by each company to end users 
and distributors of merchandise. Therefore, we preliminarily find that 
there are two channels of distribution for EP sales, and two channels 
of distribution for CEP sales. See CP Kelco's AQR at pages A-19-A-24.
    We reviewed the selling functions and services performed by CP 
Kelco in the U.S. market for EP sales, as described by CP Kelco in its 
questionnaire responses. We find that the selling functions and 
services performed by CP Kelco on direct sales for both U.S. channels 
of distribution relating to the EP LOT (i.e., sales of merchandise 
produced to order to unaffiliated end users and sales of merchandise 
from stock to unaffiliated end users) are similar. In particular, for 
sales produced to order and pulled from stock, CP Kelco's customer care 
personnel process all orders, which are entered into the Oracle system. 
Additionally, sales invoices are issued by CP Kelco's plant directly to 
the customer, and CP Kelco's logistics department arranges for freight 
and delivery to CP Kelco's unaffiliated U.S. customers. Other services 
provided within both channels of CP Kelco' EP sales include: sales 
forecasting, procurement/sourcing services, order/input processing, 
etc. See CP Kelco's AQR at pages A-23-A-24. Accordingly, because these 
selling functions are substantially similar for these two channels of 
distribution, we preliminarily determine that there is one EP LOT in 
the U.S. market.
    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 
freight and delivery and sales/marketing support services. See CP 
Kelco's SQR at exhibit A-34. 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, 
advertising, sales promotion, inventory maintenance, market research, 
after-sales support services, technical assistance, etc.). See CP 
Kelco's SQR at exhibit A-34. 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 third country market and EP sales. CP Kelco's 
third country market and EP sales were both made to end users and 
distributors. In both cases, the selling functions performed by CP 
Kelco were almost identical for both markets. Other than distributor 
training, which was only performed for third country sales made through 
distributors, and 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, 
market research, procurement/sourcing services, order/input processing, 
technical assistance, after-sales services, etc. See CP Kelco's SQR at 
exhibit A-34. Because the selling functions and channels of 
distribution are substantially similar, we preliminarily determine that 
the third country market LOT is the same as the EP LOT. It was, 
therefore, unnecessary to make an LOT adjustment for comparison of 
third country 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 or third country market is 
at a more advanced stage than the LOT of the CEP sales and there is no 
basis for

[[Page 44105]]

determining whether the difference in LOTs between NV and CEP effects 
price comparability. CP Kelco reported that it provided minimal selling 
functions and services for the CEP LOT and that, therefore, the third 
country 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 third country 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 third country market LOT is at a more advanced stage of 
distribution when compared to CEP sales because CP Kelco provides many 
selling functions in the third country market at a higher level of 
service (i.e., sales forecasting, strategic/economic planning, 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 CP Kelco's SQR 
at exhibit A-34. Thus, we find that CP Kelco's third country market 
sales are at a more advanced LOT than its CEP sales. There was only one 
LOT in the third country market, no data available to determine the 
existence of a pattern of price differences, 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 third country market 
indirect selling expenses from NV for third country market sales that 
were compared to U.S. CEP sales. As such, we limited the third country 
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 the weighted-
average dumping margin for the period December 27, 2004, through June 
30, 2006, to be as follows:

------------------------------------------------------------------------
               Manufacturer / Exporter                 Margin (percent)
------------------------------------------------------------------------
Noviant B.V. and CP Kelco B.V.......................               24.50
------------------------------------------------------------------------

    The Department will disclose calculations performed in connection 
with these preliminary results of review within five days of the date 
of publication of this notice in accordance with 19 CFR 351.224(b). 
Interested parties may submit case briefs and/or written comments no 
later than 30 days after the date of publication of these preliminary 
results of review. See 19 CFR 351.309(c)(ii). Rebuttal briefs and 
rebuttals to written comments, limited to issues raised in the case 
briefs and comments, may be filed no later than five days after the 
time limit for filing case briefs. See 19 CFR 351.309(d). Parties who 
submit argument in these proceedings are requested to submit with the 
argument: 1) a statement of the issue, 2) a brief summary of the 
argument, and 3) a table of authorities. See 19 CFR 351.309(c)(2). An 
interested party may request a hearing within 30 days after the 
publication of the preliminary results. See 19 CFR 351.310(c). Any 
hearing, if requested, will be held two days after the scheduled date 
for submission of rebuttal briefs. See 19 CFR 351.310(d). The 
Department will issue the final results of these preliminary results, 
including the results of our analysis of the issues raised in any such 
written comments or at a hearing, within 120 days of publication of 
these preliminary results, pursuant to 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. The Department intends to issue assessment instructions to 
CBP 15 days after the date of publication of the final results of 
review.
    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 for which CP Kelco 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 requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rate for the reviewed 
company will be the rate listed in the final results of review; (2) for 
previously investigated companies not listed above, the cash deposit 
rate will continue to be the company-specific rate published for the 
most recent period; (3) if the exporter is not a firm covered in this 
review or the original less-than-fair-value (LTFV) investigation, but 
the manufacturer is, the cash deposit rate will be the rate established 
for the most recent period for the manufacturer of the merchandise; and 
(4) the cash deposit rate for all other manufacturers or exporters will 
continue to be the ``all others'' rate of 14.57 percent, which is the 
``all others'' rate established in the LTFV investigation. See CMC 
Order. These deposit requirements, when imposed, shall remain in effect 
until further notice.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant 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.
    We are issuing and publishing this notice 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. E7-15337 Filed 8-6-07; 8:45 am]
BILLING CODE 3510-DS-S