Purified Carboxymethylcellulose From the Netherlands; Preliminary Results of Antidumping Duty Administrative Review, 45943-45948 [E8-18218]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 153 (Thursday, August 7, 2008)]
[Notices]
[Pages 45943-45948]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-18218]


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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) and CP Kelco B.V., CP Kelco U.S. 
Inc., Huber Engineered Materials (HEM) and J.M. Huber Corporation (CP 
Kelco B.V. is a producer of CMC in the Netherlands \1\ and is referred 
to as ``CP Kelco'' for purposes of these preliminary results), 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 CP Kelco (formerly known as Noviant B.V.).\2\ The 
period of review (POR) is July 1, 2006, through June 30, 2007.
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    \1\ CP Kelco U.S. Inc. and HEM are importers and purchasers of 
subject merchandise, and J.M. Huber Corporation is the parent of the 
CP Kelco group of companies.
    \2\ See Purified Carboxymethylcellulose from the Netherlands; 
Preliminary Results of Antidumping Duty Administrative Review, 72 FR 
44099, 44101 (August 7, 2007), unchanged in the final, Purified 
Carboxymethylcellulose from the Netherlands: Final Results of 
Antidumping Duty Administrative Review, 72 FR 70821, 70822 (December 
13, 2007) (Final Results of First Administrative Review).
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    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.

DATES: Effective Date: August 7, 2008.

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 Sweden, 70 FR 39734 (July 11, 2005) (CMC Order). On 
July 3, 2007, the Department published the opportunity to request an 
administrative review of, inter alia, CMC from the Netherlands for the 
period July 1, 2006, through June 30, 2007. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity To Request Administrative Review, 72 FR 36420 (July 3, 
2007).
    In accordance with 19 CFR 351.213(b), Aqualon, CP Kelco, and Akzo 
Nobel Functional Chemicals B.V. (Akzo) requested that the Department 
conduct an administrative review of the antidumping duty order on CMC 
from the Netherlands on July 25, 2007, July 27, 2007, and July 31, 
2007, respectively. On August 24, 2007, 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 July 1, 2006, through June 30, 2007, from CP Kelco and 
Akzo. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 72 FR 48613 
(August 24, 2007).
    On September 6, 2007, the Department issued its antidumping duty 
questionnaire to CP Kelco and Akzo. Akzo withdrew its request for 
review on October 2, 2007. Petitioner withdrew its request for review 
of sales by Akzo on October 3, 2007.
    CP Kelco submitted its section A questionnaire response (AQR) on 
October 11, 2007, and its sections B and C questionnaire responses on 
October 26, 2007 (BCQR).
    On November 14, 2007, Aqualon alleged that CP Kelco made home 
market sales of CMC at prices below the cost of production (COP) during 
the POR. Also on November 14, 2007, in the same submission, Aqualon 
provided

[[Page 45944]]

deficiency comments for CP Kelco's AQR relating to, inter alia, the 
viability of CP Kelco's home market.\3\
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    \3\ The Department addressed Aqualon's comments in its February 
8, 2008, Memorandum to Director Richard O. Weible, from Stephen 
Bailey, Case Analyst, titled ``Selection of Third Country Market for 
CP Kelco B.V.'' (Third Country Memorandum).
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    On November 16, 2007, the Department rescinded the administrative 
review with respect to Akzo. See Purified Carboxymethylcellulose from 
the Netherlands: Partial Rescission of Antidumping Duty Administrative 
Review, 72 FR 64582 (November 16, 2007).
    On December 21, 2007, the Department initiated a sales-below-cost 
investigation of home market sales made by CP Kelco. See the 
Department's December 21, 2007, Memorandum to the File, from Stephen 
Bailey, Case Analyst, and Theresa Deeley, Program Manager, Office of 
Accounting, titled ``Petitioner's Allegation of Sales Below the Cost of 
Production for CP Kelco B.V.'' (Cost Initiation Memorandum). As a 
result, on December 27, 2007, the Department requested that CP Kelco 
respond to section D of the Department's questionnaire.
    On January 4, 2008, CP Kelco submitted comments regarding Aqualon's 
November 14, 2007, submission relating to the viability of CP Kelco's 
home market. CP Kelco submitted its section D response on January 10, 
2008, including its cost reconciliation. On January 16, 2008, the 
Department issued its first sections A-C supplemental questionnaire to 
CP Kelco. On January 17, 2008, Aqualon submitted comments on CP Kelco's 
January 10, 2008, section D questionnaire response.\4\
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    \4\ Also on January 17, 2008, the Department clarified one of 
the questions in its January 16, 2008, supplemental questionnaire 
asking for cancelled sales in both the comparison and U.S. markets. 
See the Department's January 17, 2008, Memo to the File from Stephen 
Bailey, Case Analyst, titled ``Clarification of Question 1 of the 
Sections A-C Supplemental Questionnaire for CP Kelco B.V.''
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    On February 8, 2008, the Department issued its third-country 
selection memorandum in which Taiwan was chosen as the appropriate 
third-country market for CP Kelco. See Third Country Memorandum.
    On February 13, 2008, CP Kelco submitted its sections A-C 
supplemental questionnaire response (SQR). On February 15, 2008, the 
Department issued a section D supplemental questionnaire to CP Kelco, 
and on February 28, 2008, CP Kelco submitted its response. On March 10, 
2008, Aqualon submitted comments on CP Kelco's February 28, 2008, 
section D supplemental questionnaire response.
    On March 18, 2008, the Department extended the deadline for the 
preliminary results by 120 days from April 1, 2008, until July 30, 
2008. See Purified Carboxymethylcellulose from the Netherlands: 
Extension of Time Limit for Preliminary Results of Antidumping Duty 
Administrative Review, 73 FR 14436 (March 18, 2008).
    On May 5, 2008, the Department issued its second sections A-C 
supplemental questionnaire to CP Kelco and on May 12, 2008, CP Kelco 
submitted its response (2nd SQR). On July 2, 2008, Aqualon submitted 
comments regarding the shutdown of operations at the CP Kelco CMC plant 
in Sweden.

Period of Review

    The POR is July 1, 2006, through June 30, 2007.

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.

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 Order'' 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 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 6, 2007, 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. See ``Level of Trade'' section below.
    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.\5\ We 
made

[[Page 45945]]

deductions for movement expenses in accordance with section 
772(c)(2)(A) of the Act, including foreign inland freight, 
international freight, marine insurance, and U.S. customs duty and 
brokerage. Additionally, and consistent with the prior administrative 
review of this antidumping duty order, we made a deduction from EP for 
the factoring charges incurred by CP Kelco on its U.S. accounts 
receivable, where appropriate. See Final Results of First 
Administrative Review, 72 FR at 70822.
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    \5\ See the Department's July 30, 2008, Memorandum to the File 
from Stephen Bailey, Case Analyst titled ``Analysis of Data 
Submitted by CP Kelco B.V. in the Preliminary Results of the 
Antidumping Duty Administrative Review of Purified 
Carboxymethylcellulose (CMC) from the Netherlands'' (Sales Analysis 
Memo), 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.\6\ 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. 
inland freight, U.S. customs duty and brokerage, marine insurance and 
post-sale warehousing), in accordance with section 772(c)(2) of the Act 
and section 351.401(e) of the Department's regulations. We also added 
freight revenue, where applicable. 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. Additionally, and consistent with the 
prior administrative review of this antidumping duty order, we made a 
deduction from CEP for the factoring charges incurred by CP Kelco on 
its U.S. accounts receivable, where appropriate. See Final Results of 
First Administrative Review, 72 FR at 70822.
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    \6\ See Id.
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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; see also Third Country Memorandum. 
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 AQR, 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, the aggregate 
quantity of the exports of the foreign like product to Taiwan was five 
percent or more of the subject merchandise sold in the United States, 
there was no evidence of a particular market situation, and 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 8, 
2008, the Department selected Taiwan as the appropriate third country 
for comparison market purposes. See Third Country Memorandum.\7\
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    \7\ 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 (COP) Analysis

    On December 21, 2007, based on 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 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 and requested 
that CP Kelco respond to Section D of the Department's antidumping duty 
questionnaire. 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.

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.
    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

[[Page 45946]]

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 less than 20 
percent of the sales of certain models to Taiwan 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 more than 20 percent of sales of certain models to Taiwan 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.\8\ 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 (i.e., 
commissions and credit), 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. Additionally, and consistent with the 
prior administrative review of this antidumping duty order, we made a 
deduction from NV for the factoring charges incurred by CP Kelco on its 
home market accounts receivable, where appropriate. See Final Results 
of First Administrative Review, 72 FR 70822.
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    \8\See the Department's Sales Analysis Memo 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. 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 Taiwanese 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 (LOT)
    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 
transactions, 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-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-19. 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''),\9\ including selling functions, class of customer 
(customer category), and the

[[Page 45947]]

level of selling expenses for each type of sale.
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    \9\ 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: (1) Direct sales from the plant to 
end users, and (2) direct sales from the plant to distributors. Based 
on our review of evidence on the record, we find that third country 
market sales 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 customer care, 
logistics, packing, freight and delivery services, collection, sales 
promotion, and guarantees, etc. See CP Kelco's AQR at page A-29, and CP 
Kelco's SQR at page 7. 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 for EP and CEP 
sales: (1) Direct (EP) sales to end users and distributors, and (2) 
sales through its U.S. affiliate (CEP sales) to end users and 
distributors of merchandise. However, 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 (EP sales); (2) 
direct sales to end users of merchandise sold from inventory (EP 
sales); (3) sales through U.S. affiliates (CP Kelco U.S. and HEM) to 
end users and distributors of merchandise produced to order (CEP 
sales); 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 (CEP sales). 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-
16 through A-29.
    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. CP Kelco reported that for sales produced to 
order and pulled from stock, CP Kelco's customer care personnel process 
all orders which are entered into its operating 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 for 
CP Kelco's EP sales include: Customer care, logistics, packing, freight 
and delivery, and collection, etc. See CP Kelco's AQR at page A-16 
through A-29.
    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 relating to 
the CEP LOT, as described by CP Kelco in its questionnaire responses, 
after these deductions. We found that CP Kelco provides almost no 
selling functions to its U.S. affiliate. CP Kelco reported that the 
only services it provided for the CEP sales were logistics, packing, 
and freight and delivery, and very limited customer care and inventory 
maintenance. See CP Kelco's AQR at page A-16 through A-29.
    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 negotiating, credit risk management, collection, sales promotion, 
direct sales personnel, technical support, guarantees, etc.). See CP 
Kelco's AQR at page A-29. 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 commissions, 
which were only incurred on third country sales made to end users, in 
both markets CP Kelco provided the following services: Sales 
negotiating, credit risk management, customer care, logistics, packing, 
freight/delivery, collection, sales promotion, direct sales personnel, 
technical support, and guarantees. See CP Kelco's AQR at page A-29. 
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 a 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 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; consequently, 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 (e.g., sales negotiations, customer care, collection, direct 
sales personnel, technical support, etc.) compared to selling functions 
performed for its CEP sales (i.e., CP Kelco reported that the only 
services it provided for CEP sales were logistics, packing, and freight 
and delivery, and very limited customer care and inventory 
maintenance). See CP Kelco's AQR at page A-29. Thus, we find that CP 
Kelco's third country market sales are at a more advanced LOT than its 
CEP sales. Because there was only one LOT in the third country market 
and no data were 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, we 
applied a CEP offset to NV for CEP comparisons pursuant to section 
773(a)(7)(B) of the Act.
    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. 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.

[[Page 45948]]

Preliminary Results of Review

    As a result of our review, we preliminarily determine the weighted-
average dumping margin for the manufacturer/exporter listed below for 
the period July 1, 2006, through June 30, 2007, to be as follows:

------------------------------------------------------------------------
                                                               Margin
                   Manufacturer/Exporter                      (percent)
------------------------------------------------------------------------
CP Kelco B.V. (formerly known as Noviant B.V.)............         7.02
------------------------------------------------------------------------

    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). 
Executive summaries should be limited to five pages total, including 
footnotes. Further, we request that parties submitting briefs and 
rebuttal briefs provide the Department with a copy of the public 
version of such briefs on diskette. 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 
this review, 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 30, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
 [FR Doc. E8-18218 Filed 8-6-08; 8:45 am]
BILLING CODE 3510-DS-P