Certain Pasta From Italy: Notice of Preliminary Results of Antidumping Duty Administrative Review, 49907-49912 [2010-20187]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 75, Number 157 (Monday, August 16, 2010)]
[Notices]
[Pages 49907-49912]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-20187]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818]


Certain Pasta From Italy: Notice of Preliminary Results of 
Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

SUMMARY: In response to requests by interested parties, the Department 
of Commerce (``the Department'') is conducting an administrative review 
of the antidumping duty order on certain pasta (``pasta'') from Italy 
for the period of review (``POR'') July 1, 2008, through June 30, 2009. 
This review covers two producers/exporters of subject merchandise: 
Pastificio Attilio Mastromauro--Pasta Granoro S.r.L. (``Granoro'') and 
Pastaficio Lucio Garofalo S.p.A. (``Garofalo'').\1\ We preliminarily 
determine that during the POR, Granoro and Garofalo sold subject 
merchandise at less than normal value (``NV''). If these preliminary 
results are adopted in the final results of this administrative review, 
we will instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on all appropriate entries of subject merchandise 
during the POR. Interested parties are invited to comment on these 
preliminary results.
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    \1\ At the Initiation of the instant review, the Department 
incorrectly spelled ``Garofalo'' as ``Garafalo.'' See Initiation FR 
of Antidumping and Countervailing Duty Administrative Reviews and 
Request for Revocation in Part, 74 FR 42873, 42875. The Department 
acknowledges that the correct spelling is ``Garofalo.''

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DATES: Effective Date: August 16, 2010.

FOR FURTHER INFORMATION CONTACT: Victoria Cho or Jolanta Lawska AD/CVD 
Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
5075 or (202) 482-8362, respectively.

SUPPLEMENTARY INFORMATION: 

Background

    On July 24, 1996, the Department published in the Federal Register 
the antidumping duty order on pasta from Italy. See Notice of 
Antidumping Duty Order and Amended Final Determination of Sales at Less 
Than Fair Value: Certain Pasta From Italy, 61 FR 38547 (July 24, 1996).
    On July 1, 2009, the Department published a notice of opportunity 
to request an administrative review of the antidumping duty order on 
certain pasta from Italy. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation: Opportunity to Request 
Administrative Review, 74 FR 31406 (July 1, 2009). We received requests 
for review from petitioners \2\ and individual Italian exporters/
producers of pasta, in accordance with 19 CFR 351.213(b)(1) and (2). On 
August 26, 2008, the Department published the notice of initiation of 
this antidumping duty administrative review covering the period July 1, 
2008, through June 30, 2009, listing the following companies as 
respondents: Domenico Paone fu Erasmo, S.p.A. (``Erasmo''), Fasolino 
Foods Company, Inc. and its affiliate Euro-American Foods Group, Inc. 
(``Fasolino/Euro-American Foods''), Garofalo, Granoro, Industria 
Alimentare Colavita, S.p.A. (``Indalco''), P.A.M. S.p.A. (``PAM''), and 
Pasta Lensi S.r.L. (``Lensi''). See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Request for revocation 
in Part, 74 FR 42873 (August 25, 2009) (``Initiation Notice'').
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    \2\ New World Pasta Company, American Italian Pasta Company, and 
Dakota Growers Pasta Company, (collectively, ``Petitioners'').
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    As explained in the memorandum from the Deputy Assistant Secretary 
for Import Administration, the Department has exercised its discretion 
to toll deadlines for the duration of the closure of the Federal 
Government from February 5, through February 12, 2010. Thus, all 
deadlines in this segment of the proceeding have been extended by seven 
days. The revised deadline for the preliminary results of this review 
is now August 9, 2010. See Memorandum to the Record from Ronald 
Lorentzen, DAS for Import Administration, regarding ``Tolling of 
Administrative Deadlines As a Result of the Government Closure During 
the Recent Snowstorm,'' dated February 12, 2010.
    On September 8, 2009, the Department announced its intention to 
select mandatory respondents based on CBP Data. See Memorandum from 
George McMahon to Melissa Skinner entitled ``Customs and Border 
Protection Data for Selection of Respondents for Individual Review,'' 
dated September 8, 2009. On September 11, 2009, the petitioners 
withdrew their request for review with respect to Erasmo, Garofalo, 
Indalco, and PAM. As a result of the petitioner's request to withdraw 
the aforementioned companies, the Department issued a memorandum on 
October 21, 2009, which indicated that respondent selection was no 
longer necessary in the instant review because it was practicable for 
the Department to review the remaining companies, Lensi, Granoro, 
Garofalo and Fasolino/Euro-American Foods. On October 30, 2009, Lensi 
withdrew its request for a review. On February 22, 2010, the 
petitioners withdrew their request for review with respect to Fasolino/
Euro-American Foods.
    As a result of withdrawals of request for review, we rescinded this 
review, in part, with respect to Erasmo, Lensi, Indalco, PAM, and 
Fasolino/Euro-American Foods. We did not rescind the review with 
respect to Garofalo because it self-requested a review and that request 
was not withdrawn. See Certain Pasta from Italy: Notice of Partial 
Rescission of Antidumping Duty Administrative Review and Extension of 
Time Limit for the Preliminary Results of Antidumping Duty 
Administrative Review, FR 75 10464 (March 8, 2010)

[[Page 49908]]

(``Partial Rescission and Extension Notice'').
    Between October 2009 and May 2010, the Department issued its 
initial questionnaire and supplemental questionnaires to each 
respondent, as applicable. We received responses to the Department's 
initial and supplemental questionnaires on December 11, 2009, April 13, 
2010, May 19, 2010, and May 25, 2010, from Granoro. Garofalo provided 
responses to the Department's initial and supplemental questionnaires 
on December 11, 2009, December 30, 2009, May 24, 2010, May 27, 2010, 
May 28, 2010, June 15, 2010, and June 22, 2010.
    On December 17, 2009, petitioners alleged that Granoro made home 
market sales of pasta at prices below the cost of production (``COP'') 
during the POR. On January 22, 2010, the Department initiated an 
investigation to determine whether Granoro's sales of pasta products 
were made at prices below the COP during the POR.\3\
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    \3\ See the January 22, 2010, Memorandum from the Team to 
Melissa Skinner, re: Antidumping Duty Administrative Review of Pasta 
from Italy, entitled ``Petitioners' Allegation of Sales Below the 
Cost of Production for Pastificio Attilio Mastromauro-Pasta Granoro 
S.r.L.''
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    On March 8, 2010, the Department fully extended the due date for 
the preliminary results of review from April 9, 2010, to August 9, 
2010. See ``Partial Rescission and Extension Notice.''
    The Department conducted the sales verification of Granoro from 
June 7, 2010, through June 11, 2010, in Corato, Italy. The Department 
conducted the cost verification of Granoro from June 14, 2010, through 
June 18, 2010, in Corato, Italy. We verified the information upon which 
we relied in making our preliminary determination.

Scope of the Order

    Imports covered by this order are shipments of certain non-egg dry 
pasta in packages of five pounds four ounces or less, whether or not 
enriched or fortified or containing milk or other optional ingredients 
such as chopped vegetables, vegetable purees, milk, gluten, diastasis, 
vitamins, coloring and flavorings, and up to two percent egg white. The 
pasta covered by this scope is typically sold in the retail market, in 
fiberboard or cardboard cartons, or polyethylene or polypropylene bags 
of varying dimensions.
    Excluded from the scope of this order are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione, by QC&I International Services, by Ecocert Italia, by 
Consorzio per il Controllo dei Prodotti Biologici, by Associazione 
Italiana per l'Agricoltura Biologica, by Codex S.r.L., by Bioagricert 
S.r.L., or by Instituto per la Certificazione Etica e Ambientale. 
Effective July 1, 2008, gluten free pasta is also excluded from this 
order. See Certain Pasta from Italy: Notice of Final Results of 
Antidumping Duty Changed Circumstances Review and Revocation, in Part, 
74 FR 41120 (August 14, 2009).
    The merchandise subject to this order is currently classifiable 
under items 1902.19.20 and 1901.90.9095 of the Harmonized Tariff 
Schedule of the United States (``HTSUS''). Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
written description of the merchandise subject to the order is 
dispositive.

Product Comparisons

    In accordance with section 771(16) of the Tariff Act of 1930, as 
amended (``the Act''), we first attempted to match contemporaneous 
sales of products sold in the United States and comparison markets that 
were identical with respect to the following characteristics: (1) Pasta 
shape; (2) wheat species; (3) milling form; (4) protein content; (5) 
additives; and (6) enrichment, by quarter. When there were no sales of 
identical merchandise in the comparison market to compare with U.S. 
sales, we compared U.S. sales with the most similar product based on 
the characteristics listed above, in descending order of priority. When 
there were no appropriate comparison market sales of comparable 
merchandise, we compared the merchandise sold in the United States to 
CV, in accordance with section 773(a)(4) of the Act.
    For purposes of the preliminary results, where appropriate, we have 
calculated the adjustment for differences in merchandise based on the 
difference in the variable cost of manufacturing (``VCOM'') between 
each U.S. model and the most similar home market model selected for 
comparison.

Comparisons to Normal Value

    To determine whether sales of certain pasta from Italy were made in 
the United States at less than NV, we compared the export price 
(``EP'') or constructed export price (``CEP'') to the NV by quarter, as 
described in the ``Export Price/Constructed Export Price'' and ``Normal 
Value'' sections of this notice. In accordance with section 777A(d)(2) 
of the Act, we calculated monthly weighted-average prices for NV and 
compared these to individual U.S. transactions. Regarding Granoro and 
Garofalo, because we are using a quarterly costing approach, we have 
not made price-to-price comparisons outside of a quarter to lessen the 
potential distortion to sales prices which result from significantly 
changing costs. See Memorandum through James Terpstra from Jolanta 
Lawska titled ``Sales Analysis Memorandum--Attilio Mastromauro-Pasta 
Granoro S.r.L.'' (``Granoro's Sales Analysis Memo''), dated August 9, 
2010, of which the public version is on file in the Central Records 
Unit (``CRU'') in Room 1117 of the Main Commerce Building.

Export Price/Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. We 
calculated EP when the merchandise was sold by the producer or exporter 
outside of the United States directly to the first unaffiliated 
purchaser in the United States prior to importation and when CEP was 
not otherwise warranted based on the facts on the record. We calculated 
CEP for those sales where a person in the United States, affiliated 
with the foreign exporter or acting for the account of the exporter, 
made the sale to the first unaffiliated purchaser in the United States 
of the subject merchandise. We based EP and CEP on the packed cost-
insurance-freight (``CIF''), ex-factory, free-on-board (``FOB''), or 
delivered prices to the first unaffiliated customer in, or for 
exportation to, the United States. When appropriate, we reduced these 
prices to reflect discounts and rebates.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including inland 
freight from plant or warehouse to port of exportation, foreign 
brokerage, handling and loading charges, export duties, international 
freight, marine insurance, U.S. inland freight expenses, warehousing, 
and U.S. duties. With respect to Granoro, we capped the transportation 
recovery amounts by the amount of U.S. freight expenses, incurred on 
the subject merchandise, in accordance with our practice. See 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 (``2005-2007 OJ from 
Brazil'') at Comment 7.
    In addition, when appropriate, we increased EP or CEP as 
applicable, by an

[[Page 49909]]

amount equal to the countervailing duty (``CVD'') rate attributed to 
export subsidies in the most recently completed CVD administrative 
review, in accordance with section 772(c)(1)(C) of the Act.
    For CEP, in accordance with section 772(d)(1) of the Act, when 
appropriate, we deducted from the starting price those selling expenses 
that were incurred in selling the subject merchandise in the United 
States, including direct selling expenses (advertising, cost of credit, 
warranties, banking, slotting fees, and commissions paid to 
unaffiliated sales agents). In addition, we deducted indirect selling 
expenses that related to economic activity in the United States. These 
expenses include certain indirect selling expenses incurred by its 
affiliated U.S. distributors. We also deducted from CEP an amount for 
profit in accordance with sections 772(d)(3) and (f) of the Act. See 
Memorandum through James Terpstra from Victoria Cho titled ``Sales 
Analysis Memorandum--Pastaficio Lucio Garofalo S.p.A.'' (``Garofalo's 
Sales Analysis Memo''), dated August 9, 2010, of which the public 
version is on file in the Central Records Unit (``CRU'') in Room 1117 
of the Main Commerce Building.

Normal Value

A. Selection of Comparison Markets

    Section 773(a)(1) of the Act directs that NV be based on the price 
of the foreign like product sold in the home market, provided that the 
merchandise is sold in sufficient quantities (or value, if quantity is 
inappropriate) and that there is no particular market situation that 
prevents a proper comparison with the export price or constructed 
export price. The statute contemplates that quantities (or value) 
normally be considered insufficient if they are less than five percent 
of the aggregate quantity (or value) of sales of the subject 
merchandise to the United States. To determine whether there was a 
sufficient volume of sales in the home market to serve as a viable 
basis for calculating NV, we compared each respondents' volume of home 
market sales of the foreign like product to the volume of its U.S. 
sales of the subject merchandise. Pursuant to section 773(a)(1)(B) of 
the Act, because Granoro and Garofalo each had an aggregate volume of 
home market sales of the foreign like product that 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 both 
Granoro and Garofalo.

B. Cost Reporting Period

    The Department's normal practice is to calculate an annual 
weighted-average cost for the POR. See Certain Pasta From Italy: Final 
Results of Antidumping Duty Administrative Review, 65 FR 77852 
(December 13, 2000), and accompanying Issues and Decision Memorandum at 
Comment 18, and Notice of Final Results of Antidumping Duty 
Administrative Review: Carbon and Certain Alloy Steel Wire Rod from 
Canada, 71 FR 3822 (January 24, 2006), and accompanying Issues and 
Decision Memorandum at Comment 5 (explaining the Department's practice 
of computing a single weighted-average cost for the entire period). 
However, we recognize that possible distortions may result if we use 
our normal annual-average cost method during a period of significant 
cost changes. In determining whether to deviate from our normal 
methodology of calculating an annual weighted-average cost, we evaluate 
the case-specific record evidence using two primary factors: (1) The 
change in the COM recognized by the respondent during the POR must be 
deemed significant; (2) the record evidence must indicate that sales 
during the shorter averaging periods could be reasonably linked with 
the cost of production (``COP'') or constructed value (``CV'') during 
the same shorter averaging periods. See Stainless Steel Sheet and Strip 
in Coils From Mexico: Final Results of Antidumping Duty Administrative 
Review, 75 FR 6627 (February 10, 2010) (``SSSS from Mexico''), and 
accompanying Issues and Decision Memorandum at Comment 6 and Stainless 
Steel Plate in Coils From Belgium: Final Results of Antidumping Duty 
Administrative Review, 73 FR 75398 (December 11, 2008) (``SSPC from 
Belgium''), and accompanying Issues and Decision Memorandum at Comment 
4.
1. Significance of Cost Changes
    In prior cases, we established 25 percent as the threshold (between 
the high- and low- quarter COM) for determining that the changes in COM 
are significant enough to warrant a departure from our standard annual-
cost approach. See SSPC from Belgium at Comment 4. In the instant case, 
record evidence shows that Garofalo and Granoro experienced significant 
changes (i.e., changes that exceeded 25 percent) between the high and 
low quarterly COM during the POR for the selected highest sales volume 
pasta products. This change in COM is attributable primarily to the 
price volatility for semolina used in the manufacture of pasta. We 
found that prices for semolina changed significantly throughout the POR 
and, as a result, directly affected the cost of the material inputs 
consumed by Garofalo and Granoro. See Memorandum from Ernest Gziryan to 
Neal M. Halper, Director of Office of Accounting, ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results--Pastificio Attillio Mastromauro-Pasta Granoro'' (``Granoro 
Cost Calculation Memo'') and Memorandum from Angie Sep[uacute]lveda to 
Neal M. Halper, Director of Office of Accounting, ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results--Pastificio Lucio Garofalo S.p.A.,'' (``Garofalo Cost 
Calculation Memo'') dated August 9, 2010.
2. Linkage Between Cost and Sales Information
    Consistent with past precedent, because we found the changes in 
costs to be significant, we evaluated whether there is evidence of a 
linkage between the cost changes and the sales prices during the POR. 
See, e.g., SSSS from Mexico at Comment 6 and SSPC from Belgium at 
Comment 4. The Department's definition of ``linkage'' does not require 
direct traceability between specific sales and their specific 
production costs but, rather, relies on whether there are elements that 
would indicate a reasonable correlation between the underlying costs 
and the final sales prices levied by the company. See SSPC from Belgium 
at Comment 4. These correlative elements may be measured and defined in 
a number of ways depending on the associated industry and the overall 
production and sales processes. To determine whether a reasonable 
correlation existed between the sales prices and their underlying costs 
during the POR, for each respondent, we compared weighted-average 
quarterly prices to the corresponding quarterly COM for the five 
control numbers with the highest volume of sales in the comparison 
market and the United States. Our comparison reveals that sales and 
costs for each of the sample CONNUMs generally trended in the same 
direction and demonstrated correlation between the sales and cost data. 
The inventory records for both respondents demonstrate that the raw 
material and finished goods inventory are relatively low, indicating a 
minimal time lag between production and sale dates. After reviewing 
this information and determining that there is a trend of sales and 
costs for the majority of the POR, we preliminarily determine that 
there is

[[Page 49910]]

linkage between Garofalo and Granoro's changing costs and sales prices 
during the POR. See Granoro's Cost Calculation Memo. See also 
Garofalo's Cost Calculation Memo. See, e.g., SSSS from Mexico at 
Comment 6 and SSPC from Belgium at Comment 4.
    Because we have found significant cost changes in COM as well as 
reasonable linkage between costs and sales prices, we have 
preliminarily determined that a quarterly costing approach leads to 
more appropriate comparisons in our antidumping duty calculation for 
Garofalo and Granoro.

C. Cost of Production Analysis

    The Department disregarded sales below the COP in the last 
completed review in which Grafolo participated. See Amended Final 
Results of the Sixth Administrative Review of the Antidumping Duty 
Order on Certain Pasta from Italy and Determination Not to Revoke in 
Part, 69 FR 22761 (April 27, 2004) (``Pasta Six''). For Granoro, as 
discussed above, we initiated a COP investigation based on petitioners' 
allegation. We therefore have reasonable grounds to believe or suspect, 
pursuant to section 773(b)(2)(A)(ii) of the Act, that sales of the 
foreign like product under consideration for the determination of NV in 
this review may have been made at prices below COP. Thus, pursuant to 
section 773(b)(1) of the Act, we examined whether sales from Granoro 
and Garofalo in the home market were made at prices below the COP.
    We compared sales of the foreign like product in the home market 
with model-specific COP figures. In accordance with section 773(b)(3) 
of the Act, we calculated COP based on the sum of the costs of 
materials and fabrication employed in producing the foreign like 
product, plus selling, general and administrative (``SG&A'') expenses, 
financial expenses and all costs and expenses incidental to placing the 
foreign like product in packed condition and ready for shipment. In our 
sales-below-cost analysis, we relied on home market sales and COP 
information provided by Granoro and Garofalo in its questionnaire 
responses, except where noted below.
Granoro
    We increased Granoro's per-unit cost of manufacturing to include 
certain production expenses which were excluded from the reported 
costs. For additional details, see Memorandum from Ernest Gziryan to 
Neal M. Halper, Director of Office of Accounting, ``Cost of Production 
and Constructed Value Calculation Adjustments for the Preliminary 
Results--Pastificio Attillio Mastromauro-Pasta Granoro,'' dated August 
9, 2010.
 Garofalo
    a. We increased Garofalo's COM to account for the unreconciled 
difference between the COM from its normal books and records and the 
reported COM.
    b. We adjusted Garofalo's reported quarterly tolled quantities and 
re-calculated the weighted-average total COM.
    c. We used the reported allocation methodology to distribute other 
losses between fixed overhead and general and administrative expenses 
which Garofalo excluded from the reported costs.
    For additional details, see Memorandum from Angie Sep[uacute]lveda 
to Neal M. Halper, Director of Office of Accounting, ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Results--Pastificio Lucio Garofalo S.p.A.,'' dated August 
9, 2010.

D. CV Section

    We made the same adjustments to CV that we made for COP.
1. Calculation of COP
    Before making any comparisons to NV, we conducted a COP analysis of 
Granoro and Garofalo pursuant to section 773(b) of the Act, to 
determine whether Granoro and Garofalo's comparison market sales were 
made at prices below the COP, by quarter. We calculated the COP based 
on the sum of the cost of materials and fabrication for the foreign 
like product, plus amounts for SG&A expenses and packing, in accordance 
with section 773(b)(3) of the Act.
2. Test of Comparison Market Prices
    As required under section 773(b)(2) of the Act, we compared the 
weighted-average COP to the per-unit price of the comparison market 
sales of the foreign like product to determine whether these sales had 
been made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. We 
determined the net comparison market prices for the below-cost test by 
subtracting from the gross unit price any applicable movement charges, 
discounts, rebates, direct and indirect selling expenses (also 
subtracted from the COP), and packing expenses. See Granoro's Sales 
Analysis Memo; see also Garofalo's Sales Analysis Memo.
3. Results of COP Test
    Pursuant to section 773(b)(2)(C)(i) of the Act, where less than 20 
percent of sales of a given product were at prices less than the COP, 
we did not disregard any below-cost sales of that product because we 
determined that the below-cost sales were not made in ``substantial 
quantities.'' Where 20 percent or more of a respondent's sales of a 
given product were at prices less than the 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 indexed weighted-average COPs for the POR, they were at 
prices which would not permit the recovery of all costs within a 
reasonable period of time, in accordance with section 773(b)(2)(D) of 
the Act. Therefore, for Granoro and Garofalo, we disregarded below-cost 
sales of a given product of 20 percent or more and used the remaining 
sales as the basis for determining NV, in accordance with section 
773(b)(1) of the Act. See Granoro's Sales Analysis Memo; see also 
Garofalo's Sales Analysis Memo.

E. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on ex-works, free on board (``FOB'') or 
delivered prices to comparison market customers. We made deductions 
from the starting price, when appropriate, for handling, loading, 
inland freight, warehousing, inland insurance, discounts, and rebates. 
In accordance with sections 773(a)(6)(A) and (B) of the Act, we added 
U.S. packing costs and deducted comparison market packing, 
respectively. In addition, we made circumstance-of-sale adjustments for 
direct expenses, including imputed credit expenses, advertising, 
warranty expenses, commissions, bank charges, and billing adjustments, 
in accordance with section 773(a)(6)(C)(iii) of the Act. We also made 
adjustments for Granoro and Garofalo, in accordance with 19 CFR 
351.410(e), for indirect selling expenses incurred in the home market 
or the United States where commissions were granted on sales in one 
market but not in the other, the ``commission offset.'' Specifically, 
where commissions are incurred in one market, but not in the other, we 
will limit the amount of such allowance to the amount of either the 
selling expenses incurred in the one market or the commissions allowed 
in the other market, whichever is less.
    When comparing U.S. sales with comparison market sales of similar, 
but

[[Page 49911]]

not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the variable cost of manufacture 
(``VCOM'') for the foreign like product and subject merchandise, using 
weighted-average costs.
    Sales of pasta purchased by the respondents from unaffiliated 
producers and resold in the comparison market were disregarded. See 
Granoro's Sales Analysis Memo; see also Garofalo's Sales Analysis Memo.

F. Level of Trade

    In accordance with section 773(a)(1)(B) of the Act, we determined 
NV based on sales in the comparison market at the same level of trade 
(``LOT'') as the EP and CEP sales, to the extent practicable. When 
there were no sales at the same LOT, we compared U.S. sales to 
comparison market sales at a different LOT. When NV is based on CV, the 
NV LOT is that of the sales from which we derive SG&A expenses and 
profit.
    Consistent with 19 CFR 351.412, to determine whether comparison 
market sales were at a different LOT, we examined stages in the 
marketing process and selling functions along the chain of distribution 
between the producer and the unaffiliated (or arm's-length) customers. 
If the comparison market sales were at a different LOT and the 
differences affect 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, we will 
make an LOT adjustment under section 773(a)(7)(A) of the Act.
    Finally, if the NV LOT is more remote from the factory than the CEP 
LOT and there is no basis for determining whether the differences in 
LOT between NV and CEP affected price comparability, we will grant a 
CEP offset, as provided in section 773(a)(7)(B) of the Act. See Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Cut-
to-Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 
(November 19, 1997).
    In the home market, Granoro reported that it sold through two 
channels of distribution (direct sales and sales though unaffiliated 
agents) to eleven customer categories. Granoro reported that this 
constituted a single LOT. Our analysis of the selling activities for 
Granoro shows that Granoro performed similar selling activities for all 
customer categories and channels of distribution. Although there are 
differences in intensity of these activities for some of the claimed 
customer categories, this, in and of itself, does not show a 
substantial difference in selling activities that would form the basis 
for finding a different LOT. See, e.g., Certain Frozen Warmwater Shrimp 
from Ecuador: Final Results of Antidumping Duty Administrative Review, 
72 FR 52070 (September 12, 2007), and accompanying Issues and Decision 
Memorandum at Comment 4. Therefore, we agree with Granoro that there is 
one LOT in the home market.
    In the U.S. market, Granoro reported that its sales were made 
through two channels of distribution to one customer category. Granoro 
claims that its U.S. sales are at one LOT.
    We compared the EP LOT to the home market LOT and concluded that 
the selling functions of the customers in the home market LOT are 
sufficiently similar to those of the U.S. to warrant considering them 
the same LOT. Thus, we find that the U.S. LOT is comparable to the HM 
LOT. Consequently, we are matching the EP sales to sales at the same 
LOT in the home market. Due to the proprietary nature of this issue, 
please refer to Granoro's Sales Analysis Memo for further discussion.
    Garofalo claimed two LOTs in the home market. Garofalo reported 
that it sold through three channels of distribution to three customer 
categories. We disagree with Garofalo that there are two LOTs in the 
home market. Section 351.412 (c)(2) of the Department's regulations 
provide that the Department will determine that sales are made at 
different LOTs if they are made at different marketing stages (or their 
equivalent). Substantial differences in selling activities are a 
necessary, but not sufficient, condition for determining that there is 
a difference in the stage of marketing. Some overlap in selling 
activities will not preclude a determination that two sales are at 
different stages of marketing.
    Our analysis of the selling activities for Garofalo shows that 
there is overlap in these activities for channels of distribution and 
customer categories. In other words, Garofalo performs similar selling 
activities for all customer categories and channels of distribution. 
Although there are differences in intensity of these activities for 
some of the claimed customer categories, this, in and of itself, does 
not show a substantial difference in selling activities that would form 
the basis for finding a different LOT. See, e.g., Certain Frozen 
Warmwater Shrimp from Ecuador: Final Results of Antidumping Duty 
Administrative Review, 72 FR 52070 (September 12, 2007), and 
accompanying Issues and Decision Memorandum at Comment 4. Due to the 
proprietary nature of this issue, please refer to Garofalo's Sales 
Analysis Memo for further discussion.
    In the U.S. market, Garofalo reported that their sales were made 
through one channel of distribution to one customer category, and 
therefore, at one LOT. The Department has determined that Garofalo's 
home market sales were made at the same stage of marketing as the U.S. 
sales LOT. We are matching the EP sales which are at a single LOT to 
the same LOT in the home market, and will not make an LOT adjustment 
for Garofalo's sales to the United States.

Currency Conversion

    For purposes of these preliminary results, we made currency 
conversions in accordance with section 773A(a) of the Act, based on the 
official exchange rates published by the Federal Reserve Bank. See 
Granoro's Sales Analysis Memo; see also Garofalo's Sales Analysis Memo.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average percentage margins exist for the period July 
1, 2008, through June 30, 2009, for the mandatory respondents:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Granoro.................................................            0.80
Garofalo................................................            6.29
------------------------------------------------------------------------

    The Department intends to disclose the calculations performed for 
these preliminary results within five days of the date of publication 
of this notice to the parties of this proceeding, in accordance with 19 
CFR 351.224(b). An interested party may request a hearing within 30 
days of publication of these preliminary results. See 19 CFR 
351.310(c).
    Pursuant to 19 CFR 351.213(h), the Department intends to issue the 
final results of this administrative review, which will include the 
results of its analysis of issues raised in any such comments, or at a 
hearing, if requested, within 120 days of publication of these 
preliminary results.

Assessment Rate

    Pursuant to 19 CFR 351.212(b), the Department calculated an 
assessment rate for each importer of the subject merchandise. Upon 
issuance of the final results of this administrative review, if any 
importer-specific assessment rates calculated in the final results are 
above

[[Page 49912]]

de minimis (i.e., at or above 0.5 percent), the Department will issue 
appraisement instructions directly to CBP to assess antidumping duties 
on appropriate entries by applying the assessment rate to the entered 
value of the merchandise. For assessment purposes, we calculated 
importer-specific assessment rates for the subject merchandise by 
aggregating the dumping margins for all U.S. sales to each importer and 
dividing the amount by the total entered value of the sales to that 
importer. Where appropriate, to calculate the entered value, we 
subtracted international movement expenses (e.g., international 
freight) from the gross sales value.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003 (68 FR 23954). This clarification will apply to entries of 
subject merchandise during the POR produced by companies included in 
these preliminary results of 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 unreviewed entries at 
the all-others rate if there is no rate for the intermediate 
company(ies) involved in the transaction. For a full discussion of this 
clarification, see Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).

Cash Deposit Requirements

    To calculate the cash deposit rate for Granoro and Garofalo, we 
divided its total dumping margin by the total net value of its sales 
during the review period.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
pasta from Italy entered, or withdrawn from warehouse, for consumption 
on or after the publication date, as provided by section 751(a)(2)(C) 
of the Act: (1) The cash deposit rate for companies subject to this 
review will be the rate established in the final results of this 
review, except if the rate is less than 0.5 percent and, therefore, de 
minimis, no cash deposit will be required; (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 
final results for a review in which that manufacturer or exporter 
participated; (3) if the exporter is not a firm covered in this review, 
a prior 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 final results for the 
manufacturer of the merchandise; and (4) if neither the exporter nor 
the manufacturer is a firm covered in this or any previous review 
conducted by the Department, the cash deposit rate will be 15.45 
percent, the all-others rate established in the LTFV investigation. See 
Implementation of the Findings of the WTO Panel in US--Zeroing (EC): 
Notice of Determination Under Section 129 of the Uruguay Round 
Agreements Act and Revocations and Partial Revocations of Certain 
Antidumping Duty Orders, 72 FR 25261 (May 4, 2007). These cash deposit 
requirements, when imposed, shall remain in effect until further 
notice.

Notification to Importers

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f) 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 increase the 
subsequent assessment of the antidumping duties by the amount of 
antidumping duties reimbursed.
    These preliminary results of administrative review are issued and 
published in accordance with sections 751(a)(1) and 777(i)(1) of the 
Act and 19 CFR 351.221(b)(4).

    Dated: August 9, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-20187 Filed 8-13-10; 8:45 am]
BILLING CODE 3510-DS-P