Purified Carboxymethylcellulose from the Netherlands; Preliminary Results of Antidumping Duty Administrative Review, 36519-36525 [2011-15648]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 120 (Wednesday, June 22, 2011)]
[Notices]
[Pages 36519-36525]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-15648]


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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 requests from petitioner Aqualon Company, a 
unit of Hercules Incorporated and a U.S. manufacturer of purified 
carboxymethylcellulose, and Akzo Nobel Functional Chemicals B.V., the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on purified carboxymethylcellulose 
(CMC) from the Netherlands. This administrative review covers imports 
of subject merchandise produced and exported by Akzo Nobel Functional 
Chemicals B.V. during the period of review (POR) of July 1, 2009, 
through June 30, 2010.
    We preliminarily determine that sales of subject merchandise by 
Akzo Nobel Functional Chemicals B.V. were made at less than normal 
value during the period of review. If these preliminary results are 
adopted in our final results of administrative review, we will issue 
appropriate assessment instructions to U.S. Customs and Border 
Protection (CBP). Interested parties are invited to comment on these 
preliminary results. Parties who submit argument in this review 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.

[[Page 36520]]


DATES: Effective Date: June 22, 2011.

FOR FURTHER INFORMATION CONTACT: Dena Crossland or David Cordell, 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-
3362 or (202) 482-0408, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On July 11, 2005, the Department published the antidumping duty 
order on CMC from the Netherlands. See Notice of Antidumping Duty 
Orders: Purified Carboxymethylcellulose from Finland, Mexico, the 
Netherlands, and Sweden, 70 FR 39734 (July 11, 2005) (CMC Order). On 
July 1, 2010, the Department published an opportunity to request an 
administrative review of this order for the period July 1, 2009, 
through June 30, 2010. See Antidumping or Countervailing Duty Order, 
Finding, or Suspended Investigation; Opportunity To Request 
Administrative Review, 75 FR 38074 (July 1, 2010).
    Pursuant to 19 CFR 351.213(b)(1), Aqualon Company (Aqualon), 
petitioner in this proceeding, filed a July 26, 2010, request that the 
Department conduct an administrative review of the sales of subject 
merchandise from Akzo Nobel Functional Chemicals B.V. (ANFC) and CP 
Kelco B.V. (CP Kelco) during the POR. On July 27, 2010, CP Kelco 
requested a review of its sales of subject merchandise and, on July 30, 
2010, ANFC requested a review of its sales of subject merchandise made 
during the POR. On August 18, 2010, CP Kelco withdrew its request for 
an administrative review of its sales of subject merchandise during the 
POR. Additionally, on August 18, 2010, Aqualon withdrew its request for 
an administrative review with respect to CP Kelco.
    On August 31, 2010, the Department published a notice of initiation 
of this administrative review, covering exports, sales, and/or entries 
of purified CMC from ANFC in the Federal Register. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Deferral 
of Initiation of Administrative Review, 75 FR 53274 (August 31, 2010).
    The Department issued its antidumping duty questionnaire to ANFC on 
September 28, 2010. ANFC responded to the questionnaire on November 2, 
2010 (section A questionnaire response (AQR), and on November 17, 2010 
(sections B and C questionnaire responses (BQR and CQR)).
    On December 7, 2010, Aqualon filed a request for a sales-below-cost 
investigation of ANFC, in which it alleged that ANFC had made home 
market sales of purified CMC at prices below the cost of production 
(COP) during the POR. After reviewing the allegation, the Department 
initiated a cost investigation of ANFC on January 20, 2011, and 
requested that the company respond to section D of the questionnaire. 
ANFC filed its section D questionnaire response (DQR) on February 17, 
2011.
    ANFC responded to supplemental questionnaires concerning sections A 
through C of the Department's questionnaire on March 7, 2011, April 25, 
2011, and May 19, 2011. ANFC responded to supplemental questionnaires 
concerning section D of the Department's questionnaire on April 18, 
2011, May 9, 2011, May 17, 2011, and May 19, 2011.
    On April 1, 2011, the Department extended the deadline for the 
preliminary results of review from April 2, 2011, until June 16, 2011. 
See Purified Carboxymethylcellulose From the Netherlands; Extension of 
Time Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 76 FR 18156 (April 1, 2011).

Period of Review

    The POR is July 1, 2009, through June 30, 2010.

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.

Date of Sale

    For its home market sales, ANFC reported its date of sale to be the 
invoice date, which coincided with the loading and shipment date of the 
merchandise. It stated that, until the time that the merchandise is 
loaded, changes can occur in the material terms of sale. See ANFC's BQR 
at B-11. Similarly, for its warehouse sales in the United States 
(constructed export price (CEP) Channel 2 sales), ANFC reported the 
date of sale to be the invoice date, which is the date that merchandise 
is loaded for shipment from the warehouse and, because material changes 
can take place prior to loading, the invoice date is the date on which 
the terms of sale are set. See ANFC's CQR at C-11 and C-12. However, 
for sales in which the product was shipped directly from the 
Netherlands to the United States (CEP Channel 1 sales), ANFC reported 
the date of shipment as the date of sale as this date preceded the 
invoice date. See ANFC's CQR at C-12. In its description of the sales 
process for these sales, ANFC stated that material terms, such as the 
quantity or price of the merchandise, could change prior to invoicing 
from ANFC's U.S. affiliate to the U.S. customer. See ANFC's AQR at A-
28, A-29, and A-31; see also ANFC's supplemental questionnaire 
response, dated March 7, 2011, at 7 and Tabs 2-3. We noted that the 
unaffiliated customer is not invoiced by AN-US until the customer 
receives the merchandise from the Netherlands. See ANFC's AQR at A-28 
and A-29.
    Normally, the Department considers 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; 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.
    Although ANFC asserts that material terms of sale for its direct 
sales to the United States may change between the time of shipment of 
the goods from the Netherlands and the issuance of an invoice by AN-US, 
we find that the quantity and price for these sales are established at 
the time the merchandise was shipped from the Netherlands. See

[[Page 36521]]

ANFC's CQR at C-11 and C-12. Therefore, we preliminarily determine that 
invoice date is the appropriate date of sale for ANFC's home market and 
U.S. sales, except for ANFC's U.S. sales in which shipment occurred 
prior to invoice date. Consistent with past segments of this preceding 
and the Department's practice, we used the shipment date as the date of 
sale for those sales.

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 
CEP of each sale to the normal value, as described in the ``Constructed 
Export Price'' and ``Normal Value'' sections of this notice below. In 
accordance with section 777A(d)(2) of the Tariff Act of 1930, as 
amended (the Act), we compared the CEPs of individual U.S. transactions 
to monthly weighted-average normal values.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
purified CMC that fit the description in the ``Scope of the Order'' 
section above and that was produced and sold by ANFC in the Netherlands 
during the POR to be foreign like product for the purpose of 
determining appropriate product comparisons to purified CMC sold by the 
respondent in the United States. For our discussion of home market 
viability, see the ``Normal Value'' section of this notice below. We 
compared the U.S. sales with the sales of the foreign like product in 
the comparison market.
    Specifically, in making our comparisons, we used the following 
methodology. If sales of an identical comparison-market model were 
reported, we compared the CEPs of the U.S. sales to the weighted-
average, comparison-market prices of all sales that passed the COP test 
of the identical product during the relevant or contemporary month. See 
sections 771(16) and (35) of the Act; see also section 773(b)(1) of the 
Act. If there were no contemporaneous sales of an identical model, we 
identified sales of the most similar comparison-market model. See 
section 771(16) of the Act. To determine the most similar model, we 
matched the physical characteristics of the foreign like product, as 
reported by ANFC, to the characteristics of the subject merchandise in 
the following order of importance: (1) Grade, (2) viscosity, (3) degree 
of substitution, (4) particle size, and (5) solution characteristics. 
Where there were no sales of identical or similar foreign like product 
in the ordinary course of trade with which to compare to a U.S. sale, 
we made product comparisons using constructed value.

Constructed Export Price

    In accordance with section 772 of the Act, we calculate either an 
export price or a CEP, depending on the nature of each sale. 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.
    ANFC classified all of its sales to the United States as sales made 
through its U.S. affiliate, AN-US, to end-users and distributors (i.e., 
CEP sales). For purposes of these preliminary results, we have accepted 
this classification.
    We calculated CEP based on prices charged to the first unaffiliated 
U.S. customer. As discussed in the ``Date of Sale'' section above, we 
used invoice date as the date of sale for CEP sales, except in 
instances where the date of shipment preceded the invoice date. We 
based CEP on the gross unit price to the first unaffiliated U.S. 
customer, making adjustments where necessary for billing adjustments. 
See 19 CFR 351.401(c). Where applicable, and pursuant to sections 
772(c)(2)(A) and (d)(1) of the Act, the Department made deductions for 
movement expenses, including deductions for domestic foreign inland 
freight and warehousing expenses, domestic inland insurance, domestic 
brokerage and handling expenses, international freight, marine 
insurance, U.S. inland insurance, brokerage and handling expenses 
incurred in the United States, U.S. warehousing expenses, U.S. inland 
freight, and U.S. customs duties.
    In accordance with section 772(d)(1) of the Act, we also deducted, 
where applicable, U.S. direct selling expenses (i.e., credit expenses) 
and indirect selling expenses and inventory carrying costs incurred in 
the Netherlands and the United States and associated with economic 
activities in the United States.
    We deducted an amount for CEP profit in accordance with section 
772(d)(3) of the Act.

Normal Value

A. Home Market Viability and Comparison Market Selection

    In order to determine whether there is a sufficient volume of sales 
in the home market to serve as a viable basis for calculating normal 
value (i.e., whether the aggregate volume of home market sales of the 
foreign like product is equal to or greater than five percent of the 
aggregate volume of U.S. sales), we compared ANFC's volume of home 
market sales of the foreign like product to the volume of U.S. sales of 
the subject merchandise, in accordance with section 773(a)(1)(C) of the 
Act.
    A review of the record shows that ANFC's home market sales were 
viable, for purposes of comparing them to U.S. sales. See ANFC's AQR at 
A-3 and Exhibit 1. Thus, we based normal value on ANFC's home market 
sales made in the usual commercial quantities and in the ordinary 
course of trade.

B. Cost of Production Analysis

    Based on Aqualon's cost allegation, the Department had reasonable 
grounds to believe or suspect that ANFC made below-cost sales of the 
foreign like product. See section 773(b)(2)(A)(i) of the Act. 
Therefore, the Department initiated a cost investigation of ANFC on 
January 20, 2011, and requested that ANFC file a response to section D 
of the antidumping duty questionnaire on that date.

C. Calculation of Cost of Production

    We have preliminarily relied upon the COP information provided by 
ANFC in its section D submission, except as noted below. In accordance 
with section 773(b)(3) of the Act, we calculated the weighted-average 
COP for each foreign like product based on the sum of ANFC's material 
and fabrication costs for the product, plus amounts for selling, 
general, and administrative (SG&A) expenses, as well as packing costs. 
Based on the review of record evidence, ANFC did not appear to 
experience significant changes in its cost of manufacturing during the 
POR. Therefore, we followed our normal methodology of calculating an 
annual weighted-average cost. We relied on the COP data provided in 
ANFC's May 17, 2011, submission, except for the following instances:
    During the POR, ANFC stated that it purchased two major inputs, 
mono-chloroacetic acid (MCA) and caustic soda, from a home market 
affiliated company.\1\ Section 773(f)(3) of the Act (the major input 
rule) states:
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    \1\ See ANFC's DQR at D-7. For further discussion of these 
inputs, Memorandum from Christopher Zimpo, Accountant, to Neal M. 
Halper, Director, Office of Accounting, regarding ``Cost of 
Production and Constructed Value Calculation Adjustments for the 
Preliminary Results--Akzo Nobel Functional Chemicals B.V.,'' dated 
June 16, 2011 (Calculation Memo), at pages 1-2 and Attachment 1.


[[Page 36522]]


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    If, in the case of a transaction between affiliated persons 
involving the production by one of such persons of a major input to 
the merchandise, the administering authority has reasonable grounds 
to believe or suspect that an amount represented as the value of 
such input is less than the cost of production of such input, then 
the administering authority may determine the value of the major 
input on the basis of the information available regarding such cost 
of production, if such cost is greater than the amount that would be 
determined for such input under paragraph (2).

    Paragraph 2 of section 773(f) of the Act (transactions disregarded) 
states:

    A transaction directly or indirectly between affiliated persons 
may be disregarded if, in the case of any element of value required 
to be considered, the amount representing that element does not 
fairly reflect the amount usually reflected in sales of merchandise 
under consideration in the market under consideration. If a 
transaction is disregarded under the preceding sentence and no other 
transactions are available for consideration, the determination of 
the amount shall be based on the information available as to what 
the amount would have been if the transaction had occurred between 
persons who are not affiliated.

    In accordance with the major input rule, and as stated in Stainless 
Steel Sheet and Strip in Coils From Mexico; Preliminary Results of 
Antidumping Duty Administrative Review, 73 FR 45708, 45714 (August 6, 
2008), unchanged in Stainless Steel Sheet and Strip in Coils from 
Mexico; Final Results of Antidumping Duty Administrative Review, 74 FR 
6365 (February 9, 2009), it is the Department's normal practice to use 
all three elements of the major input rule (i.e., transfer price, COP, 
and market price) where available. In accordance with section 773(f)(3) 
of the Act (the major input rule), we evaluated transactions between 
ANFC and its affiliate using the transfer price, COP and market price 
of MCA and caustic soda. For the preliminary results, we adjusted 
ANFC's reported costs to reflect the highest of these three values for 
ANFC's affiliated purchases of MCA and caustic soda. For further 
discussion of these adjustments, see Calculation Memo.
    We adjusted ANFC's and its affiliate's general and administrative 
(G&A) expense calculation for certain non-operating income and expense 
items in accordance with the Department's practice of including in G&A 
certain non-operating amounts which relate to the general operations of 
the company as a whole. See Magnesium Metal from the Russian 
Federation: Notice of Final Determination of Sales at Less Than Fair 
Value, 70 FR 9041 (February 24, 2005), and accompanying Issues and 
Decision Memorandum at Comment 10. We did not allow certain non-
operating income to offset the reported G&A expenses because ANFC did 
not support why they were appropriate reductions to the reported G&A 
expenses. We excluded net foreign exchange gains and losses from ANFC's 
reported G&A expense calculation because these are accounted for 
elsewhere in the COP calculation, specifically in the net financial 
expense rate. For further discussion of these adjustments, see 
Calculation Memo.

D. Test of Comparison Market Prices

    As required under section 773(b) of the Act, we compared ANFC's 
weighted-average COP figures to its comparison-market sales prices (net 
of certain discounts, any applicable movement expenses, direct and 
indirect selling expenses, and packing) of the foreign like product in 
order to determine whether sales in the comparison market had been made 
at prices below COP. In determining whether to disregard such sales, we 
examined, in accordance with sections 773(b)(1)(A) and (B) of the Act, 
whether such sales were made within an extended period of time in 
substantial quantities and whether the sales were made at prices which 
would not permit the recovery of all costs within a reasonable period 
of time.

E. Results of Cost Test

    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of the sales of a given product were at prices less than the 
COP, we did not disregard any of the below-cost sales of that product 
because they were not made in substantial quantities. However, where 20 
percent or more of the respondent's comparison-market sales of a model 
were made at prices below the COP, we disregarded these sales because 
they 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. We used the remaining 
comparison-market sales, if such sales existed and were made in the 
ordinary course of trade, as the basis for determining normal value, in 
accordance with section 773(b)(1) of the Act.
    In the current review, we found sales by ANFC made below the COP 
for 20 percent or more of certain models and, therefore, we disregarded 
these below-cost sales from our margin calculations. See ANFC's 
Preliminary Analysis Memorandum at page 11.

F. Price-to-Price Comparisons

    We calculated normal value based on prices to unaffiliated 
customers in the comparison market. In this market, we used invoice 
date as the date of sale except where shipment preceded invoice date, 
in which cases we used shipment date as date of sale. See 19 CFR 
351.401(i). We decreased price, as appropriate, for certain discounts. 
We made deductions, where appropriate, for foreign inland freight and 
international freight pursuant to section 773(a)(6)(B) of the Act. In 
addition, when comparing sales of similar merchandise to U.S. sales, we 
made adjustments to normal value for differences in cost attributable 
to differences in physical characteristics of the merchandise, pursuant 
to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411, as well as 
for differences in circumstances of sale, as appropriate (i.e., 
credit), in accordance with section 773(a)(6)(C)(iii) of the Act and 19 
CFR 351.410. We also made an adjustment, where appropriate, for a CEP 
offset, in accordance with section 773(a)(7)(B) of the Act. See the 
``Level of Trade'' section below. Finally, we deducted comparison-
market packing costs and added U.S. packing costs to normal value, in 
accordance with sections 773(a)(6)(A) and (B) of the Act.

G. Price-to-Constructed-Value Comparisons

    Section 773(a)(4) of the Act provides that, if we are unable to 
find a contemporaneous comparison-market match of identical or similar 
merchandise for a U.S. sale, then we base normal value on constructed 
value. Section 773(e) of the Act provides that constructed value shall 
be based on the sum of the cost of materials and fabrication employed 
in producing the merchandise, SG&A expenses, profit, and expenses 
associated with packing the merchandise for shipment to the United 
States. We calculated the cost of materials and fabrication based on 
the methodology described above in the ``Calculation of Cost of 
Production'' section. In accordance with section 773(e)(2)(A) of the 
Act, we based SG&A expenses (as adjusted above) and profit on the 
amounts incurred and realized by ANFC in connection with the production 
and sale of the foreign like product, in the ordinary course of trade, 
for consumption in the foreign country. See 19 CFR 351.405(b)(1).

[[Page 36523]]

Level of Trade

    In accordance with section 773(a)(1)(B)(i) of the Act, to the 
extent practicable, we determine normal value based on sales in the 
comparison market at the same level of trade as the export price or CEP 
transaction. The level of trade in the comparison market is the level 
of trade of the starting-price sales in the comparison market or, when 
normal value is based on constructed value, the level of trade of the 
sales from which we derive SG&A expenses and profit. See 19 CFR 
351.412(c). For CEP, the level of trade is that of the constructed sale 
from the exporter to the importer. Id.
    To determine whether comparison market sales are at a different 
level of trade 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 comparison market 
sales are at different levels of trade, and the difference affects 
price comparability, as manifested in a pattern of consistent price 
differences between the sales on which normal value is based and 
comparison market sales at the level of trade of the export 
transaction, the Department makes a level-of-trade adjustment in 
accordance with section 773(a)(7)(A) of the Act. For CEP sales, we 
examine stages in the marketing process and selling functions along the 
chain of distribution between the producer and the customer. We analyze 
whether different selling activities are performed, and whether any 
price differences (other than those for which other allowances are made 
under the Act) are shown to be wholly or partly due to a difference in 
level of trade between the CEP and normal value. See section 
773(a)(7)(A) of the Act.
    Under section 773(a)(7)(A) of the Act, we make an upward or 
downward adjustment to normal value for level of trade if the 
difference in level of trade 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 levels of trade in the country in which normal value is 
determined. Finally, if the normal-value level of trade is at a more 
advanced stage of distribution than the level of trade of the CEP, but 
the data available do not provide an appropriate basis to determine a 
level-of-trade adjustment, we reduce normal value by the amount of 
indirect selling expenses incurred in the comparison market on sales of 
the foreign like product, but by no more than the amount of the 
indirect selling expenses incurred for CEP sales. See section 
773(a)(7)(B) of the Act (the CEP-offset provision).
    In analyzing differences in selling functions, we determine whether 
the levels of trade identified by the respondent are meaningful. See 
Antidumping Duties: Countervailing Duties, 62 FR 27296, 27371 (May 19, 
1997). If the claimed levels of trade are the same, we expect that the 
functions and activities of the seller should be similar. Conversely, 
if a party claims that levels of trade 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, ANFC claimed that a CEP offset was required 
because the CEP level of trade was less advanced than levels of trade 
in the comparison market. See ANFC's CQR at C-54 and C-55. In order to 
determine whether the comparison market sales were at different stages 
in the marketing process than the U.S. sales, we reviewed the 
distribution system in each market (i.e., the ``chain of 
distribution''),\2\ including selling functions, class of customer 
(customer category), and the level of selling functions for each type 
of sale.
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    \2\ The marketing process in the United States and comparison 
market begins with the producer and extends to the sale to the final 
user or customer. The chain of distribution involved in the two 
markets may have many or few links, and respondent's sales occur 
somewhere along this chain. In performing this evaluation, we 
considered respondent's narrative responses to properly determine 
where in the chain of distribution the sale occurs.
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    ANFC reported one level of trade in the home market, the 
Netherlands, with one channel of distribution to two classes of 
customers: (1) Direct sales from the warehouse located near the ANFC 
manufacturing plant to end users, and (2) direct sales from the 
warehouse located near the ANFC manufacturing plant to distributors. 
See ANFC's AQR at A-17; see also ANFC's BQR at B-10. Based on our 
review of evidence on the record, we find that the home market sales to 
both customer categories through the one channel of distribution were 
substantially similar with respect to selling functions and stages of 
marketing. ANFC performed the same selling functions for sales in a 
single home market channel of distribution, including sales 
forecasting, strategic planning, advertising, distributor training, 
packing, warehousing, inventory management, order processing, direct 
sales crew, market research, providing guarantees, after sales 
services, freight and delivery, and invoicing. See ANFC's AQR at A-19 
through A-23 and Tab 9. Each of these selling functions was identical 
in the intensity of their provision or only differed minimally, the 
exception being that ANFC provided sales/marketing support and 
technical assistance to a different degree of involvement to different 
customer types. See ANFC's AQR at Tab 9. See also Preliminary Analysis 
Memorandum. Thus, after considering all of the above, we preliminarily 
find that ANFC had only one LOT for its home market sales.
    ANFC reported one CEP LOT, with two separate channels of 
distribution in the United States. CEP Channel 1 sales were made to 
order for two classes of customers, i.e., end users and distributors. 
See ANFC's AQR at A-17. The U.S. customer orders merchandise from 
ANFC's U.S. affiliate, AN-US, and the merchandise is shipped directly 
to the U.S. customer from ANFC. Id. Further, the customer is invoiced 
by AN-US, and the title passed directly from the AN-US to the 
unaffiliated customer in the United States. CEP Channel 2 sales were 
also made to two classes of customers, i.e., end users and 
distributors, from inventory. Id. Specifically, the U.S. customer 
orders merchandise from AN-US, which is shipped out of a stock of 
materials maintained at AN-US's unaffiliated warehouses. Id. Upon 
examining ANFC's questionnaire responses, we preliminarily find that it 
has two channels of distribution for its CEP sales in the United 
States. See ANFC's AQR at A-16 through A-17, A-27 through A-29, and Tab 
8; and CQR at C-10.
    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 ANFC on CEP sales as described in its 
questionnaire and supplemental questionnaire responses, after these 
deductions. We found that selling functions performed by ANFC to its 
U.S. affiliate in support of the CEP sales were almost identical 
regardless of class of customers or channel of trade. ANFC reported 
that it provided services to both CEP channels including strategic 
planning, packing, warehousing, inventory management, order processing, 
and logistics for freight and delivery. See ANFC's AQR at Tab 9. ANFC 
reported that the only services it provided for the CEP Channel 1 sales 
to a different degree of performance comparatively to the

[[Page 36524]]

degree of performance provided for Channel 2 sales were logistics for 
freight and delivery, warehousing, and inventory management. Id. 
Therefore, we found that selling functions performed by ANFC for both 
channels are at the same level.
    Next, we compared the stages in the marketing process and selling 
functions along the chain of distribution for home market and CEP 
sales. ANFC's home market and CEP sales were both made to end users and 
distributors. We found that ANFC performs an additional layer of 
selling functions at a greater degree of involvement in the home market 
than it provided on CEP Channel 1 and Channel 2 sales (e.g., sales 
forecasting, strategic planning, advertising, distributor training, 
market research, technical assistance, sales and marketing support, 
after sales service, and invoicing). See ANFC's AQR at A-19 through A-
23 and Tab 9. Because these additional selling functions are 
significant, we find that ANFC's CEP sales are at a different level of 
trade than its home market sales.
    According to section 773(a)(7)(B) of the Act, a CEP offset is 
appropriate when the level of trade in the home market is at a more 
advanced stage than the level of trade of the CEP sales and there is no 
basis for determining whether the difference in levels of trade between 
normal value and CEP affects price comparability. ANFC reported that it 
provided minimal selling functions and services for the CEP level of 
trade and that, therefore, the home market level of trade is more 
advanced than the CEP level of trade. Based on our analysis of the 
channels of distribution and selling functions performed by ANFC for 
sales in the home market and CEP sales in the U.S. market (i.e., sales 
support and activities provided by ANFC for sales to its U.S. 
affiliate), we preliminarily find that the home market level of trade 
is at a more advanced stage when compared to CEP sales because ANFC 
provides many selling functions in the home market at a different level 
of service (i.e., sales forecasting, advertising, distributor training, 
market research, sales and marketing support, etc.) as compared to 
selling functions performed for its CEP sales (i.e., ANFC reported that 
the only services it provided for the CEP sales were logistics for 
freight and delivery, packing, warehousing, inventory management, order 
processing, providing guarantees, and limited strategic planning and 
technical assistance). See ANFC's AQR at Tab 9. Thus, we find that 
ANFC's home market sales are at a more advanced level of trade than its 
CEP sales. As there was only one level of trade 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 level-of-trade 
adjustment; therefore, we applied a CEP offset to normal value for CEP 
comparisons.
    To calculate a CEP offset for ANFC, we deducted the comparison 
market indirect selling expenses from normal value for sales that were 
compared to U.S. CEP sales. We limited the deduction by the amount of 
the indirect selling expenses deducted in calculating the CEP 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 Web site at: 
https://ia.ita.doc.gov/exchange/.

Preliminary Results of Review

    We preliminarily determine that, for the period July 1, 2009, 
through June 30, 2010, the following dumping margin exists:

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Manufacturer/exporter                       margin
                                                              (percent)
------------------------------------------------------------------------
Akzo Nobel Functional Chemicals...........................    B.V. 3.24
------------------------------------------------------------------------

Disclosure and Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR 351.309(c)(1)(ii), 
interested parties may submit written comments in response to these 
preliminary results. Interested parties may submit case briefs to the 
Department no later than 30 days after the publication of these 
preliminary results. See 19 CFR 351.309(c)(1)(ii). Rebuttal briefs, the 
content of which is limited to the issues raised in the case briefs, 
must be filed within five days from the deadline date for the 
submission of case briefs. See 19 CFR 351.309(d)(1) and (2).
    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). Executive summaries 
should be limited to five pages total, including footnotes. 
Furthermore, we request that parties, when submitting briefs and 
rebuttal briefs, provide the Department with a copy of the public 
versions of the briefs on diskette.
    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, pursuant to 19 CFR 351.310(c). Unless the 
Department 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 of the 
hearing.
    The Department will publish the final results of the administrative 
review, including the results of its analysis of issues addressed 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(b)(1), we have calculated, whenever possible, an exporter/
importer (or customer)-specific assessment rate or value for 
merchandise subject to this review as described below.
    For CEP sales, we divide the total dumping margins for the reviewed 
sales by the total entered value of those reviewed sales for each 
importer. We will direct CBP to assess the resulting percentage margin 
against the entered customs values for the subject merchandise on each 
of that importer's POR entries. See 19 CFR 351.212(b).
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. This clarification will apply to entries of subject 
merchandise during the POR produced by companies 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:

[[Page 36525]]

Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003).
    We intend to issue liquidation instructions to CBP 15 days after 
publication of the final results of this review. We will instruct CBP 
to assess antidumping duties on all appropriate entries covered by this 
review if any importer-specific assessment rate calculated in the final 
results of this review is above de minimis. Pursuant to 19 CFR 
351.106(c)(2), we will instruct CBP to liquidate without regard to 
antidumping duties any entries for which the assessment rate is de 
minimis. The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
the final results of this review and for future deposits of estimated 
duties, where applicable. See section 751(a)(2)(C) of the Act.

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 company 
listed above will be that established in the final results of this 
review, except if the rate is less than 0.50 percent and, therefore, de 
minimis within the meaning of 19 CFR 351.106(c)(1), in which case the 
cash deposit rate will be zero; (2) 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 in 
the 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 
investigation. See CMC Order, 70 FR at 39735. These deposit 
requirements, when imposed, shall remain in effect until further 
notice.

Notification to Importers

    This notice also serves as a 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 Department's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing this notice in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: June 16, 2011.
Christian Marsh,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-15648 Filed 6-21-11; 8:45 am]
BILLING CODE 3510-DS-P