Purified Carboxymethylcellulose from the Netherlands; Preliminary Results of Antidumping Duty Administrative Review, 24823-24830 [E9-12128]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 74, Number 99 (Tuesday, May 26, 2009)]
[Notices]
[Pages 24823-24830]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-12128]


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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 respondent CP Kelco B.V. (CP 
Kelco), the Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on purified CMC 
from the Netherlands. This administrative review covers imports of 
subject merchandise produced and exported by CP Kelco (formerly known 
as Noviant B.V.).\1\ The period of review (POR) is July 1, 2007, 
through June 30, 2008.
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    \1\ In a prior review, the Department determined that CP Kelco 
was the successor-in-interest to Noviant B.V. 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.

EFFECTIVE DATE: May 26, 2009.

FOR FURTHER INFORMATION CONTACT: Patrick Edwards or Brian Davis, 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) 482-7924, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 11, 2005, the Department published the antidumping duty 
order on purified 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 11, 2008, the Department published the opportunity to request an 
administrative review of, inter alia, purified CMC from the Netherlands 
for the period July 1, 2007, through June 30, 2008. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity To Request Administrative Review, 73 FR 39948 (July 11, 
2008).
    In accordance with 19 CFR 351.213(b)(2), on July 11, 2008, CP Kelco 
and its U.S. affiliates (CP Kelco U.S., Inc. and JM Huber Corporation) 
timely requested that the Department initiate and conduct an 
administrative review of its sales of subject merchandise during the 
POR. Aqualon timely requested that the Department conduct an 
administrative review of sales of subject merchandise by Akzo Nobel 
Functional Chemicals B.V. (Akzo Nobel) and CP Kelco on July 14, 2008. 
On July 31, 2008, Akzo Nobel timely requested that the Department 
conduct an administrative review of its sales of merchandise covered by 
the order. On August 26, 2008, the Department published in the Federal 
Register a notice of initiation of this antidumping duty administrative 
review covering sales, entries and/or shipments of purified CMC for the 
period July 1, 2007, through June 30, 2008, from CP Kelco and Akzo 
Nobel. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, 73 FR 50308 (August 26, 2008).
    On September 5, 2008, and September 22, 2008, the Department issued 
its antidumping duty questionnaire to CP Kelco and Akzo Nobel, 
respectively. CP Kelco submitted its section A questionnaire response 
(AQR) on October 7, 2008. Akzo Nobel withdrew its request for review on 
October 9, 2008. Subsequently, petitioner withdrew its request for 
review of sales by Akzo Nobel on October 10, 2008. See 19 CFR 
351.213(d)(1). CP Kelco submitted both its section B questionnaire 
response (BQR) and section C questionnaire response (CQR) on October 
20, 2008, and its section D questionnaire response (DQR) on November 3, 
2008.
    On November 6, 2008, Aqualon provided deficiency comments for CP 
Kelco's BQR and CQR relating to, inter alia, data inconsistencies in 
both the home and U.S. markets.\2\
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    \2\ The Department addressed Aqualon's comments in its December 
16, 2008, issuance of its supplemental questionnaire.
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    On November 12, 2008, the Department rescinded the administrative 
review with respect to Akzo Nobel. See Purified Carboxymethylcellulose 
from the Netherlands: Partial Rescission of Antidumping Duty 
Administrative

[[Page 24824]]

Review, 73 FR 66841 (November 12, 2008).
    On December 16, 2008, the Department issued its first sections A-C 
supplemental questionnaire to CP Kelco. On January 9, 2009, the 
Department issued its first section D supplemental questionnaire to CP 
Kelco. On January 22, 2009, CP Kelco submitted its sections A-C 
supplemental questionnaire response (SQR). On February 2, 2009, CP 
Kelco submitted its supplemental section D questionnaire response 
(SDQR). On February 4, 2009, the Department issued its second sections 
A-C supplemental questionnaire to CP Kelco. On February 9, 2009, 
Aqualon submitted comments on CP Kelco's February 2, 2009, SDQR. On 
February 11, 2009, CP Kelco submitted its second sections A-C 
supplemental questionnaire response (SSQR).
    On March 27, 2009, the Department extended the deadline for the 
preliminary results by 46 days from April 2, 2009, until May 18, 2009. 
See Purified Carboxymethylcellulose from the Netherlands; Extension of 
Time Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 74 FR 14959 (April 2, 2009).
    Following the release of the Department's sales verification 
reports, the Department requested CP Kelco revise its home market and 
U.S. sales databases pursuant to the Department's verification findings 
and the minor corrections presented by company officials at the start 
of the verifications. See Letter to CP Kelco from Angelica L. Mendoza, 
Program Manager, regarding Submission of Revised Sales Databases, dated 
May 5, 2009. CP Kelco submitted its revised sales databases on May 11, 
2009. On May 15, 2009, the Department issued an additional supplemental 
questionnaire to CP Kelco requesting further cost information for one 
particular control number, due May, 20, 2009 (i.e., after the date of 
these preliminary results). Given that we will not receive this 
information until after the issuance of these preliminary results, we 
intend to address this issue in our final results. For further detail, 
see Memorandum to the File through Angelica L. Mendoza, Program 
Manager, Office 7, from Patrick Edwards, Senior 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,'' dated May 18, 
2009, (Preliminary Analysis Memorandum) at 9.

Period of Review

    The POR is July 1, 2007, through June 30, 2008.

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 
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 Tariff Act of 1930, as amended 
(the Act), and 19 CFR 351.307, we conducted a sales verification of the 
questionnaire responses of CP Kelco from February 23, 2009, through 
February 27, 2009, and CP Kelco's U.S. sales affiliate, CP Kelco U.S., 
Inc. (CP Kelco US) from March 2, 2009, through March 4, 2009. We used 
standard verification procedures, including on-site inspection of CP 
Kelco's production facility in Nijmegen, the Netherlands. Our 
verification results are outlined in the following memoranda: (1) 
Memorandum to the File, through Angelica L. Mendoza, Program Manager, 
``Verification of the Home Market and Export Price Sales Responses of 
CP Kelco, B.V. in the Administrative Review of the Antidumping Duty 
Order on Purified Carboxymethylcellulose from the Netherlands,'' dated 
April 30, 2009 (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 B.V. and CP Kelco U.S., Inc. in the Antidumping Duty 
Administrative Review of Purified Carboxymethylcellulose from the 
Netherlands: Verification of United States Affiliate CP Kelco U.S., 
Inc.,'' dated April 30, 2009 (CEP Verification Report). The Department 
conducted a verification of CP Kelco's cost responses in Nijmegen, the 
Netherlands, from March 16, 2009, through March 21, 2009. See 
Memorandum to the File from Christopher Zimpo, through Neal M. Halper, 
Director, and Peter Scholl, Lead Accountant, regarding ``Verification 
of the Cost Response of CP Kelco B.V. in the Antidumping Duty 
Administrative Review of Purified Carboxymethylcellulose from the 
Netherlands,'' dated May 18, 2009 (Cost Verification Report). Public 
versions of these reports are on file in the Central Records Unit (CRU) 
located in room 1117 of the main Department of Commerce Building, 14th 
Street and Constitution Avenue, NW, Washington, DC.

Date of Sale

    CP Kelco reported the invoice date as the date of sale for its U.S. 
sales. The Department considers invoice date to be the presumptive date 
of sale (see 19 CFR 351.401(i)). For purposes of this review, we 
examined whether invoice date or another date better represents the 
date on which the material terms of sale were established. The 
Department, in reviewing CP Kelco's questionnaire responses, found that 
the material terms of sale are set on the date on which the invoice is 
issued. CP Kelco reported that, following the receipt of purchase 
orders, the terms of sale are susceptible and subject to changes in 
price and quantity until issuance of the sales invoice. See SQR at page 
12; see also SQR at page 31; see also CEP Verification Report at page 
14. Furthermore, in reviewing sales documentation during verification, 
we noted instances where the material terms of sale changed prior to 
the date of invoice (see, e.g., CEP Verification Report at Exhibit 16). 
Therefore, we preliminarily determine that invoice date is the 
appropriate date of sale for CP Kelco's U.S. sales in this 
administrative review because it represents the date upon which the 
material terms of sale are established. This is consistent with the 
most recently completed administrative review of this order. See 
Purified Carboxymethylcellulose from the Netherlands; Preliminary 
Results of Antidumping Duty Administrative Review, 73 FR 45943, 45944 
(August 8, 2008) (Preliminary Results of Second Administrative Review), 
unchanged at the final results, Purified Carboxymethylcellulose from 
the Netherlands: Final Results of Antidumping Duty Administrative 
Review, 73 FR 75393 (December 11,

[[Page 24825]]

2008) (Final Results of Second Administrative Review).
    However, for instances where the date of shipment preceded the date 
of invoice, we have preliminarily determined to use the date of 
shipment for those sales. Normally, the Department employs invoice date 
as the date of sale in accordance with 19 CFR 351.401(i). However, it 
is the Department's practice to use shipment date as the date of sale 
when shipment date precedes invoice date. See Certain Cold-Rolled and 
Corrosion-Resistant Carbon Steel Flat Products From Korea: Final 
Results of Antidumping Duty Administrative Reviews, 63 FR 13170, 13172-
73 (March 18, 1998); see also Stainless Steel Sheet and Strip in Coils 
from the Republic of Korea: Preliminary Results and Partial Rescission 
of Antidumping Duty Administrative Review, 71 FR 18074, 18079-80 (April 
10, 2006), unchanged in Stainless Steel Sheet and Strip in Coils from 
the Republic of Korea; Final Results and Rescission of Antidumping Duty 
Administrative Review in Part, 72 FR 4486 (January 31, 2007), and the 
accompanying Issues and Decision Memorandum at Comments 4 and 5.
    Similarly, based on our review of CP Kelco's questionnaire 
responses, we preliminarily find that the date of invoice constitutes 
the date on which the material terms of sale are established in the 
home market (i.e., the Netherlands). See SQR at 12; see also Home 
Market Verification Report at pages 23-42; see also Home Market 
Verification Exhibit 21. CP Kelco reported that the terms of sale 
recorded on purchase orders in the home market are also subject to 
change, typically in the form of packing and product grade (which can 
affect price). See CP Kelco's AQR at 30-34. Therefore, we are using the 
invoice date as the date of sale for home market sales. For a further 
discussion of our date of sale analysis, see Preliminary Analysis 
Memorandum at 2.

Fair Value Comparisons

    To determine whether sales of purified 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 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 all 
purified CMC produced and sold by the respondent in the Netherlands 
during the POR that fit the description in the ``Scope of Order'' 
section of this notice to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. We compared 
U.S. sales with sales of the foreign like product in the home market. 
Where there were no sales of identical or similar merchandise made in 
the ordinary course of trade, we made product comparisons using 
constructed value (CV). Specifically, in making our comparisons, we 
used the following methodology. 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. If an identical home-market model was 
reported, we made comparisons to weighted-average home market prices 
that were based on all sales which passed the cost of production (COP) 
test of the identical product during the relevant or contemporary 
month. See sections 771(16) and (35); see also 773(b)(1) of the Act. If 
there were no contemporaneous sales of an identical model, we 
identified the most similar home-market model. See section 773(b)(1) of 
the Act.

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 (or agreed to be 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-users (i.e., EP sales); 
and (2) sales via its U.S. affiliate, CP Kelco US, to end-users and 
distributors (i.e., CEP sales). 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.\3\ We 
based EP on the packed, delivered prices to unaffiliated purchasers in 
the United States. 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, U.S. brokerage 
and handling, U.S. inland freight offset by freight revenue (see below 
for further discussion), and U.S. customs duties. As noted below, we 
are relying upon adverse facts available with respect to the reported 
factoring transaction fees incurred by CP Kelco on its EP sales. 
Specifically, we are adjusting the EP using the highest reported 
factoring transaction fee. See ``Use of Adverse Facts Available'' 
section below; see also Preliminary Analysis Memorandum at 9, for 
further details.
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    \3\ See Preliminary Analysis Memorandum at page 2 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 US to 
its unaffiliated U.S. customers, making adjustments where necessary for 
billing adjustments. 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, 
marine insurance, U.S. inland freight offset by freight revenue (see 
below for further discussion), U.S. warehousing, U.S. brokerage and 
handling, and U.S. customs duties).
    In accordance with the recently completed administrative review of 
polyethylene retail carrier bags from the People's Republic of China, 
we capped the amount of freight revenue deducted at no greater than the 
amount of corresponding movement expenses for CP Kelco's sales of 
purified CMC to the United States and in the home market. See 
Polyethylene Retail Carrier Bags from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review, 74 FR 6857, 
6858 (February 11, 2009) (Bags from the PRC), and the accompanying 
Issues and Decision Memorandum at Comment 4. As the Department 
explained in Bags from the PRC, section 772(c)(1) of the Act provides 
that the Department shall increase the price used to establish either 
export price or constructed export

[[Page 24826]]

price in only the following three instances: (1) when not included in 
such price, the cost of all containers and coverings and all other 
costs, charges, and expenses incident to placing the subject 
merchandise in condition packed ready for shipment to the United 
States; (2) the amount of any import duties imposed by the country of 
exportation which have been rebated, or which have not been collected, 
by reason of the exportation of the subject merchandise to the United 
States; and (3) the amount of any countervailing duty imposed on the 
subject merchandise under subtitle A to offset an export subsidy. 
Section 773(a)(6) of the Act provides that the Department shall 
increase the price used to establish normal value by the cost of all 
containers and coverings and all other costs, charges, and expenses 
incident to placing the subject merchandise in condition packed ready 
for shipment to the United States.
    In addition, 19 CFR 351.401(c) of the Department's regulations 
directs the Department to use a price in the calculation of U.S. price 
and normal value that is net of any price adjustments that are 
reasonably attributable to the subject merchandise or the foreign-like 
product (whichever is applicable). The term ``price adjustment'' is 
defined under 19 CFR 351.102(b)(38) as a ``change in the price charged 
for subject merchandise or the foreign like product, such as discounts, 
rebates, and post-sale adjustments, that are reflected in the 
purchaser's net outlay.''
    In past cases, we have declined to treat freight-related revenues 
as additions to U.S. price under section 772(c) of the Act or price 
adjustments under 19 CFR 351.102(b). Rather, we have incorporated these 
revenues as offsets to movement expenses because they relate to the 
transportation of subject merchandise or the foreign-like product. See, 
e.g., Stainless Steel Wire Rod from Sweden: Preliminary Results of 
Antidumping Duty Administrative Review, 72 FR 51414, 51415 (September 
7, 2007) (SSWR Preliminary Results) (unchanged in Stainless Steel Wire 
Rod from Sweden: Final Results of Antidumping Duty Administrative 
Review, 73 FR 12950 (March 11, 2008)).
    Further, our offset practice limits the granting of an offset to 
situations where a respondent incurs expenses and realized revenue for 
the same type of activity. See SSWR Preliminary Results, 72 FR at 
51415; see also Bags from the PRC, and accompanying Issues and Decision 
Memorandum at Comment 4; see also Certain Orange Juice from Brazil: 
Final Results and Partial Rescission of Antidumping Duty Administrative 
Review, 73 FR 46584 (August 11, 2008), and accompanying Issues and 
Decision Memorandum at Comment 7. According to CP Kelco's responses, 
freight revenues are revenues received from customers for invoice items 
covering transportation expenses, and arise when freight is not 
included in the selling price under the applicable terms of delivery, 
but when CP Kelco arranges and prepays freight for the customer. See CP 
Kelco's BQR at B-20 and CP Kelco's CQR at C-20 through C-21. 
Accordingly, CP Kelco incurred expenses and realized revenue for this 
activity. Therefore, we have limited the amount of the freight revenue 
used to offset CP Kelco's movement expenses to the amount of movement 
expenses incurred on the sale of subject merchandise or the foreign-
like product. For further discussion of our treatment of freight 
revenue, see Preliminary Analysis Memorandum at 13 and 17.
    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 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. As discussed below, we 
are relying upon adverse facts available with respect to the reported 
factoring transaction fees incurred by CP Kelco on its CEP sales. 
Specifically, we are adjusting the CEP using the highest reported 
factoring transaction fee. See ``Use of Adverse Facts Available'' 
section below; see also Preliminary Analysis Memorandum at 9, for 
further details.

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 (e.g., 
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 the subject merchandise sold in the United States), 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) of the Act. Pursuant to section 
773(a)(1)(B)(ii)(II) of the Act, 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, we have based NV on home market sales in the 
usual commercial quantities and in the ordinary course of trade.

B. Cost of Production (COP) Analysis

    In accordance with section 773(b)(2)(A)(ii) of the Act, because we 
determined CP Kelco to have made sales below the cost of production in 
the most recently completed administrative review, the Department 
requested that CP Kelco respond to section D of the Department's 
antidumping duty questionnaire, as there were reasonable grounds to 
believe or suspect that CP Kelco made home market sales at prices below 
the cost of producing the merchandise in the current POR. See 
Preliminary Results of Second Administrative Review, 73 FR at 45946 
(unchanged in Final Results of Second Administrative Review).

C. Calculation of Cost of Production

    We have preliminarily relied on the COP information provided by CP 
Kelco. 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, general, and administrative (SG&A) expenses, as 
well as packing costs.

D. Test of Home Market Prices

    We compared CP Kelco's weighted-average COP figures to CP Kelco's 
home market sales prices (net of billing adjustments, 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, to determine whether sales to the home market had been made at 
prices below COP. On a product-specific basis, we compared COP to home 
market prices, less any applicable movement charges.
    In determining whether to disregard home market 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.

E. Results of Cost Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of CP

[[Page 24827]]

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 sections 
773(b)(2)(B) and (C) 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 
instant review, we found sales below the COP and have, as described 
above, disregarded such sales from our margin calculations. See 
Preliminary Analysis Memorandum at 8.

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. See 19 CFR 351.403(c). We used the sale invoice date as the 
date of sale. See 19 CFR 351.401(i). We increased or decreased price, 
as appropriate, for certain billing adjustments where applicable. We 
made deductions, where appropriate, for foreign inland freight incurred 
in the comparison market, pursuant to section 773(a)(6)(B) of the Act. 
Following the methodology described in the ``Export Price and 
Constructed Export Price'' section above, where applicable, we offset 
foreign inland freight expenses by freight revenue. In addition, when 
comparing sales of similar merchandise, we made adjustments for 
differences in cost attributable to differences in physical 
characteristics of the merchandise (e.g., 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. Specifically, 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 packing 
costs and added U.S. packing costs in accordance with sections 
773(a)(6)(A) and (B) of the Act. We have not made a deduction from NV 
for factoring transaction fees incurred by CP Kelco on certain home 
market sales, as noted in the ``Use of Adverse Facts Available'' 
section below.

G. Price-to-Constructed Value Comparisons

    In accordance with section 773(a)(4) of the Act, we base NV on CV 
if we are unable to find a contemporaneous home 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, 
SG&A expenses, and profit. 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 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 (i.e., the Netherlands). Accordingly, for sales of 
purified 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.

Use of Adverse Facts Available

    For the reasons discussed below, we determine that the use of 
adverse facts available is appropriate for the preliminary results with 
respect to factoring transaction fees incurred by CP Kelco on certain 
home market and U.S. sales.

A. Use of Facts Available

    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information requested by the administering authority, fails 
to provide such information by the deadlines for submission of the 
information and in the form or manner requested, significantly impedes 
a proceeding under this title, or provides such information but the 
information cannot be verified as provided in section 782(i) of the 
Act, the administering authority shall use facts otherwise available in 
reaching the applicable determination.
    In its SQR, CP Kelco explained that factoring is the process by 
which CP Kelco sells its accounts receivables to an affiliated finance 
company for payment of the receivables at a date earlier than CP Kelco 
would have received payment from the customer.\4\ The factoring entity 
charges a transaction fee to CP Kelco, which is discounted from the 
face value of the actual receivable; per the Department's prior 
decisions in this case, CP Kelco reports these transaction fees as 
factoring expenses. See pages 30-31 of CP Kelco's SQR.
---------------------------------------------------------------------------

    \4\ In past segments of this proceeding, the Department has 
included the transaction fees relating to the factoring of certain 
comparison market and U.S. sales by CP Kelco through an affiliated 
finance company in its dumping margin calculations. However, the 
Department intends to re-examine the appropriateness of including 
these affiliated transactions in its calculations in subsequent 
reviews of this proceeding.
---------------------------------------------------------------------------

    During our verification of the pre-selected and surprise home 
market and U.S. sales, we noted several discrepancies with regard to CP 
Kelco's reported transaction fees for factored sales. These transaction 
fees were reported on a percentage and per-unit basis. Specifically, 
the factoring transaction fee expressed as a percentage of gross unit 
price is reported in field FACTOR--PCTH, where the factoring 
transaction fee on a per-metric ton basis is reported in field FACTOR--
DSTH. For the majority of the sales traces examined, we found systemic 
errors in CP Kelco's calculation and reporting of this expense.
    Specifically, we discovered that CP Kelco miscalculated the 
reported and allegedly ``corrected'' (per the company's minor 
corrections presentation) factoring transaction fees in several 
instances where it used total invoice price, inclusive of value-added 
tax (VAT) and shipping costs, in its factoring calculations. In these 
instances, CP Kelco should have used the total invoice price less the 
VAT and shipping costs. Moreover, for the U.S. sales examined, we noted 
instances where factoring transaction fees were unreported, as well as 
instances in which factoring transaction fees were reported although 
the sales were not factored.\5\ Therefore, considering all of the 
above, the Department is unable to rely upon CP Kelco's reporting of 
factoring transaction fees for certain home market and U.S. sales.
---------------------------------------------------------------------------

    \5\ In some instances, the sale was initially factored but later 
reversed because the customer paid CP Kelco directly.
---------------------------------------------------------------------------

    Because CP Kelco has failed to accurately report its factoring 
transaction fees to the best of its abilities, the Department must rely 
on facts available.

B. Application of Adverse Inference for Facts Available

    Section 776(b) of the Act provides that, if the Department finds 
that an

[[Page 24828]]

interested party has failed to cooperate by not acting to the best of 
its ability to comply with a request for information, the Department 
may use an inference adverse to the interests of that party in 
selecting the facts otherwise available. In addition, the Statement of 
Administrative Action accompanying the Uruguay Round Agreements Act, 
H.R. Rep. 103-316, Vol. 1, 103d Cong. (1994) (SAA), explains that the 
Department may employ an adverse inference ``to ensure that the party 
does not obtain a more favorable result by failing to cooperate than if 
it had cooperated fully.'' See SAA at 870. It is the Department's 
practice to consider, in employing adverse inferences, the extent to 
which a party may benefit from its own lack of cooperation. See, e.g., 
Id.
    Furthermore, ``affirmative evidence of bad faith on the part of a 
respondent is not required before the Department may make an adverse 
inference.'' See Antidumping Duties; Countervailing Duties, Final Rule, 
62 FR 27296, 27340 (May 19, 1997) (Preamble). We find that, by failing 
to accurately report the transaction fees associated with its factored 
sales in both the home and U.S. markets, CP Kelco failed to cooperate 
to the best of its abilities. CP Kelco failed to provide accurate, 
verifiable information with regard to this expense and, as such, we are 
unable to determine that CP Kelco's factoring transaction fees are 
either an accurate or a reasonable reflection of the company's own 
sales experience.\6\ These errors were systemic for the vast majority 
of home market sales traces examined and, thus, call into question the 
accuracy of the universe of these reported factoring transaction fees 
in CP Kelco's sales databases. The Federal Circuit has stated that, 
``Sec. wSec. hile the adverse facts available standard does not require 
perfection and recognizes that mistakes sometimes occur, it does not 
condone inattentiveness, carelessness, or inadequate record keeping.'' 
See Nippon Steel Corporation v. United States, 337 F.3d 1373, 1382 
(Fed. Cir. 2003). The AFA standard, moreover, assumes that because 
respondents are in control of their own information, they are required 
to take reasonable steps to present information that reflects its 
experience for reporting purposes before the Department. Therefore, we 
find it appropriate to use an inference that is adverse to the 
company's interests in selecting from among the facts otherwise 
available.
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    \6\ CP Kelco, like all respondents, was provided ample 
opportunity to report correct and accurate information with regard 
to its factoring transaction fees in its AQR, BQR, CQR, two 
supplemental questionnaire responses (SQR and SSQR), as well as in 
its minor corrections presentation during the home market sales 
verification, which were also found to be incorrect. See Home Market 
Verification Report at Section X and VE-1.
---------------------------------------------------------------------------

    As adverse facts available, we have denied an adjustment to price 
for CP Kelco's factoring transaction fees incurred on all its home 
market sales for which factoring was reported. As stated above, with 
regard to CP Kelco's U.S. sales, we have selected the highest reported 
factoring transaction fee in the company's U.S. sales database and used 
that fee as the factoring transaction fee for all of CP Kelco's U.S. 
sales which were factored. While the discrepancies were less prevalent 
with respect to CP Kelco's factored U.S. sales, we have selected the 
highest reported factoring transaction fee in order to ensure that the 
company will not obtain a more favorable rate by failing to cooperate 
than had they cooperated fully. Moreover, because we are relying on the 
company's own information, there is no need to corroborate the chosen 
facts available under section 776(c) of the Act. For a detailed 
discussion on the Department's application of adverse facts available 
for factored home market sales in its margin calculations, see 
Preliminary Analysis Memorandum at 9.

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine NV based on sales in the home market 
at the same level of trade (LOT) as the EP or CEP transaction. The LOT 
in the home market is the LOT of the starting-price sales in the home 
market or, when NV is based on CV, the LOT of the sales from which we 
derive SG&A expenses and profit. See 19 CFR 351.412(b)(2)(c). 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. Id. For CEP, the LOT is that of the constructed sale from the 
exporter to the importer. Id.
    To determine whether home market sales are at a different LOT from 
U.S. sales, we examine stages in the marketing process and selling 
functions along the chain of distribution between the producer and the 
unaffiliated customer. If the home 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 home 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 unaffiliated 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. See 773(a)(7)(A) of the Act.
    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 a LOT adjustment, we reduce 
NV by the amount of indirect selling expenses incurred in the home 
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 Preamble, 62 
FR 27296, 27371. 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 
Antidumping Duty Administrative Review, 65 FR 30068 (May 10, 2000), and 
accompanying Issues and Decision Memorandum at Comment 6.
    In the present review, CP Kelco did not claim a LOT adjustment. See 
CP Kelco's BQR at page B-18. In order to determine whether the home 
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''),\7\ including selling

[[Page 24829]]

functions, class of customer (customer category), and the level of 
selling functions for each type of sale.
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    \7\ 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 involved in the two 
markets 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 one LOT in the home market, the Netherlands, with 
two channels of distribution to two classes of customers: (1) direct 
sales from the plant to end users, and (2) direct sales from the plant 
to distributors. See Section CP Kelco's BQR at page B-11. Based on our 
review of evidence on the record, we find that home 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 home market channels of distribution, including sales 
negotiations, customer care, credit risk management, logistics, 
inventory maintenance, packing, freight and delivery services, 
collection, sales promotion, and guarantees, etc. See CP Kelco's AQR at 
pages A-14 through A-26. Each of these selling functions was identical 
in the intensity of their provision or only differed minimally, the 
exception being that CP Kelco provided direct sales personnel and 
technical support to a ``high'' degree of frequency to end-users, 
whereas these selling functions were provided with a ``moderate'' 
frequency to HM distributors. See CP Kelco's AQR at page A-26. However, 
after considering all of the above, we preliminarily find that CP Kelco 
had only one LOT for its home market sales.
    CP Kelco reported one EP LOT and one CEP LOT, each with two 
separate channels of distribution in the United States. EP sales were 
made to end users and distributors either from inventory or made to 
order, and CEP sales were also made to end users and distributors and 
were either made from inventory or made to order. Upon examining CP 
Kelco's questionnaire responses, we preliminarily find that it has two 
channels of distribution. See CP Kelco's AQR at pages A-14 through A-
15. See also CP Kelco's CQR at page C-11. Therefore, we preliminarily 
find that CP Kelco has two channels of distribution for EP sales, and 
two channels of distribution for CEP sales.
    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 Tech. Inc. v. United States, 243 F.3d 
1301, 1314-15 (Fed. Cir. 2001). We reviewed the selling functions and 
services performed by CP Kelco on CEP sales as described in its 
questionnaire responses, after these deductions. We found that CP Kelco 
provides almost no selling functions to its U.S. affiliate in support 
of the CEP LOT. CP Kelco reported that the only services it provided 
for the CEP sales were logistics for freight, delivery and packing, and 
very limited customer care and inventory maintenance. See CP Kelco's 
AQR at page A-14 through A-26.
    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 at a greater frequency on its direct sales 
to unaffiliated U.S. customers which are not performed on its sales to 
its affiliate (e.g., sales negotiations, credit risk management, 
collection, sales promotion, direct sales personnel, technical support, 
guarantees, and discounts). See CP Kelco's AQR at page A-26. 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 compared the home market and EP sales. CP Kelco's home 
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. Particularly, in both markets, CP Kelco 
provided the following services: sales negotiations, credit risk 
management, customer care, logistics, inventory maintenance, packing, 
freight/delivery, collection, sales promotion, direct sales personnel, 
technical support, guarantees and discounts. See CP Kelco's SQR at page 
26. Because the selling functions and channels of distribution are 
substantially similar, we preliminarily determine that the home market 
LOT is the same as the EP LOT. It was, therefore, unnecessary to make a 
LOT adjustment for comparison of CP Kelco's 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 is no basis for determining 
whether the difference in LOTs between NV and CEP affects price 
comparability. CP Kelco reported that it provided minimal selling 
functions and services for the CEP LOT and that, therefore, the home 
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 home 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. affiliate), we preliminarily find that the home market LOT is 
at a more advanced stage when compared to CEP sales because CP Kelco 
provides many selling functions in the home market at a higher level of 
service (i.e., sales negotiations, customer care, collection, direct 
sales personnel, technical support, 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 logistics for freight, 
delivery and packing, and very limited inventory maintenance and 
customer care). See CP Kelco's AQR at page A-26. Thus, we find that CP 
Kelco's home market sales are at a more advanced LOT than its CEP 
sales. As there was only one LOT in the home market, there were 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 home market indirect 
selling expenses from NV for home market sales that were compared to 
U.S. CEP sales. As such, we limited the home 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. See section 773(a)(7)(B) of the Act.

Currency Conversion

    We made foreign currency conversions into U.S. dollars in 
accordance with section 773A(a) of the Act and 19 CFR 351.415 based on 
exchange rates in effect on the dates of the U.S. sales, as certified 
by the Federal Reserve Bank. See Import Administration website at: 
https://ia.ita.doc.gov/exchange/.

Preliminary Results of Review

    We preliminarily determine that for the period July 1, 2007, 
through June 30, 2008, the following dumping margin exists:

------------------------------------------------------------------------
                                                       Weighted-Average
                Manufacturer/Exporter                  Margin (percent)
------------------------------------------------------------------------
CP Kelco B.V........................................               24.46
------------------------------------------------------------------------

Disclosure and Public Comment

    Pursuant to 19 CFR 351.224(b) of the Department's regulations, the 
Department will disclose to parties to the proceeding any calculations 
performed in connection with these preliminary results within five days

[[Page 24830]]

after the date of publication of this notice. Pursuant to 19 CFR 
351.309(c)(ii) of the Department's regulations, interested parties may 
submit written comments in response to these preliminary results. 
Unless extended by the Department, case briefs are to be submitted 
within 30 days after the date of publication of this notice, and 
rebuttal briefs, limited to arguments raised in case briefs, are to be 
submitted no later than five days after the time limit for filing case 
briefs. See 19 CFR 351.309(c)(1)(ii) and (d)(1). Parties who submit 
arguments in this proceeding are requested to submit with the argument: 
(1) a statement of the issues, (2) a brief summary of the argument, and 
(3) a table of authorities. See 19 CFR 351.309(c)(2). Case and rebuttal 
briefs must be served on interested parties in accordance with 19 CFR 
351.303(f) of the Department's regulations. 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.
    Also, pursuant to 19 CFR 351.310(c) of the Department's 
regulations, within 30 days of the date of publication of this notice, 
interested parties may request a public hearing on arguments raised in 
the case and rebuttal briefs. Unless the Secretary specifies otherwise, 
the hearing, if requested, will be held two days after the date for 
submission of rebuttal briefs. See 19 CFR 351.310(d)(1). Parties will 
be notified of the time and location.
    The Department will publish the final results of the administrative 
review, including the results of its analysis of issues raised in any 
case or rebuttal brief, no later than 120 days after publication of the 
preliminary results, unless extended. See section 751(a)(3)(A) of the 
Act; 19 CFR 351.213(h).

Assessment Rates

    The Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries in accordance with 19 CFR 351.212. 
The Department intends to issue assessment instructions for CP Kelco 
directly to CBP 15 days after the date of publication of the final 
results of this administrative review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). See Antidumping and Countervailing Duty 
Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 
2003) (Assessment Policy Notice). This clarification will apply to 
entries of subject merchandise during the POR produced by companies 
included in the final results of this review for which the reviewed 
companies did not know their merchandise was destined for the United 
States. In such instances, we will instruct CBP to liquidate non-
reviewed entries at the all-others rate if there is no rate for any 
intermediate company involved in the transaction. For a full discussion 
of this clarification, see Assessment Policy Notice.

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)(2)(c) of the Act: (1) the cash deposit rate for the reviewed 
company will be the rate established in the final results of 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); (2) for previously reviewed 
or investigated companies not listed above, the cash deposit rate will 
continue to be the company-specific rate published for the most recent 
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.
    This administrative review and notice are published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: May 18, 2009.
Ronald K. Lorentzen,
Acting Assistant Secretary for Import Administration.
[FR Doc. E9-12128 Filed 5-22-09; 8:45 am]
BILLING CODE 3510-DS-S