Lemon Juice from Argentina: Preliminary Determination of Sales at Less Than Fair Value and Affirmative Preliminary Determination of Critical Circumstances

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a petition filed by Sunkist Growers, Inc. (Petitioner), the U.S. Department of Commerce (the Department) is conducting an antidumping duty investigation of sales to the United States of lemon juice from Argentina for the period July 1, 2005 through June 30, 2006. See Notice of Initiation of Antidumping Duty Investigations: Lemon Juice from Argentina and Mexico, 71 FR 61710 (October 19, 2006) (Initiation Notice). The Department preliminarily determines that lemon juice from Argentina is being, or is likely to be, sold in the United States at less than fair value (LTFV), as provided in section 733(b) of the Tariff Act of 1930, as amended (the Act). The estimated margins of sales at LTFV are listed in the “Suspension of Liquidation” section of this notice. Moreover, we preliminarily determine that critical circumstances exist with regard to imports of lemon juice from Argentina. See the “Critical Circumstances” section below. Interested parties are invited to comment on this preliminary determination.

EFFECTIVE DATE:

April 26, 2007.

FOR FURTHER INFORMATION CONTACT:

Mark Hoadley or Joshua Reitze, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3148, or (202) 482-0666, respectively.

SUPPLEMENTARY INFORMATION:

Case History

This investigation was initiated on October 19, 2006. See Initiation Notice. Since the initiation of the investigation, the following events have occurred. On November 6, 2006, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that imports of the products subject to this investigation are materially injuring an industry in the United States producing the domestic like product. See Lemon Juice from Argentina and Mexico, 71 FR 66795 (November 16, 2006) (ITC Preliminary Determination).

On November 7, 2006, the Department selected Citrusvil, S.A. (Citrusvil) and S.A. San Miguel A.G.I.C.y F. (San Miguel) as the respondents in this investigation. See “Respondent Selection” section below. On November 7, 2006, the Department issued a letter providing interested parties an opportunity to comment on a proposed set of model-match criteria. We received comments in response to this letter from Petitioner, Citrusvil, and San Miguel on November 13, 2006. Based on our analysis of these submissions, we determined the appropriate model-match characteristics. See Memorandum to Barbara E. Tillman, Director, Office 6, and Laurie Parkhill, Director, Office 5, “Antidumping Duty Investigations of Lemon Juice from Argentina and Mexico: Selection of Model Matching Criteria” (November 20, 2006).

The Department issued sections A - D of the questionnaire to Citrusvil and San Miguel on November 20, 2006.¹ Citrusvil submitted its response to section A on December 18, 2007. Citrusvil submitted its response to sections B and C on January 17, 2007, and its section D response on January 22, 2007. San Miguel submitted its response to section A on December 14, 2006, responses to sections B and C on January 16, 2007, and its response to section D on March 12, 2007.

On January 5, 2007, Petitioner submitted comments on Citrusvil's section A response. The Department issued a supplemental section A questionnaire to Citrusvil on January 16, 2007. We received Citrusvil's supplemental section A response on January 26, 2007. On January 31, 2007, Petitioner submitted a German-specific, sales-below-cost allegation. Citrusvil did not rebut this allegation. On February 1, 2007, we issued a supplemental section D questionnaire to Citrusvil, to which Citrusvil responded on February 23, 2007. On February 9, 2007, and again on March 6, 2007, Petitioner submitted comments on Citrusvil's section D response. On January 30, 2007, Petitioner submitted comments on Citrusvil's section B and C response. The Department issued a supplemental section B and C questionnaire to Citrusvil on February 5, 2007. We received Citrusvil's supplemental section B and C response on March 9, 2007. Citrusvil submitted corrections to its section B and C response on April 4, 2007. On February 9, 2007, Petitioner submitted comments concerning possible affiliation issues between Citrusvil and its German sales agent. On February 16, 2007, the Department sent a general supplemental questionnaire to Citrusvil, to which Citrusvil responded on March 12, 2007. On March 15, we sent Citrusvil a second supplemental section D questionnaire, to which Citrusvil responded on April 5, 2007. On March 23, 2007, we sent Citrusvil a request for additional sales information, to which Citrusvil partially responded on April 9, 2007.

Petitioner submitted its comments on San Miguel's section A response on January 29, 2007. On January 12, 2007, the Department issued a supplemental section A questionnaire to San Miguel. Petitioner filed a sales-below-cost allegation on January 24, 2007 with respect to San Miguel's sales in Argentina. On February 23, 2007, Petitioner submitted comments to San Miguel's section B and C response. The Department issued a supplemental section A to San Miguel on January 16, 2007, supplemental sections B and C on January 31, 2007, and a supplemental section D on March 16, 2007. San Miguel responded to the supplemental section A on January 23, 2007, supplemental sections B and C on March 1, 2007, and supplemental section D on April 5, 2007.

On February 1, 2007, Petitioner requested that the Department extend the preliminary determination in this investigation from February 28, 2007 to April 19, 2007. On February 16, 2007, the Department postponed the preliminary determination to April 19, 2007 pursuant to section 733(c) of the Act. See Postponement of Preliminary Determinations of Antidumping Duty Investigations: Lemon Juice from Argentina and Mexico, 72 FR 7606 (February 16, 2007).

On March 26, 2007, April 9, 2007, and April 10, 2007, Petitioner submitted comments in anticipation of the preliminary determination. On March 16, 2007, the Department granted Petitioner an extension of time until March 27, 2007 to file its allegation of targeted dumping. On March 27, 2007, Petitioner submitted a targeted dumping allegation for San Miguel. On April 13, 2007, San Miguel submitted comments in response to Petitioner's allegation. Although this allegation was timely, the Department did not have sufficient time to fully analyze it for purposes of this preliminary determination pursuant to section 777A(d)(1)(B) of the Act. We intend to fully consider this issue for purposes of our final determination.

Finally, on March 30, 2007, Petitioner alleged that critical circumstances existed with regard to imports of lemon juice from Argentina and Mexico. On April 4, 2007, the Department issued letters to Citrusvil and San Miguel, requesting that the respondents provide shipment data for purposes of the Department's critical circumstances inquiry. On April 11, 2007, Citrusvil and San Miguel submitted the requested shipment data. For further information on the Department's preliminary critical circumstances determination, see “Critical Circumstances” section below.

Respondent Selection

Section 777A(c)(1) of the Act directs the Department to calculate individual dumping margins for each known exporter and producer of the subject merchandise. Section 777A(c)(2) of the Act gives the Department discretion, when faced with a large number of producers/exporters, to limit its examination to a reasonable number of such companies if it is not practicable to examine all companies. Where it is not practicable to examine all known producers/exporters of subject merchandise, this provision permits the Department to investigate either (A) a sample of exporters, producers, or types of products that is statistically valid based on the information available to the Department at the time of selection or (B) producers/exporters accounting for the largest volume of the merchandise under investigation that can reasonably be examined. In the petition, Petitioner identified nine potential producers and exporters of lemon juice in Argentina: Citrusvil, San Miguel, Vicente Trapani S.A., Citromax S.A.C.I (Citromax), Litoral Citrus S.A., COTA S.A., La Moraleja S.A., Jugos Minerva (Molinos Rio de la Plata), and Jugos Minerva (S.C. Johnson & Son de Argentina S.A.I.C.). The Department determined that it was unable to investigate all nine of these named producers/exporters. See Memorandum to Barbara E. Tillman, Director, Office 6, “Antidumping Duty Investigation on Lemon Juice from Argentina - Respondent Selection”, (November 7, 2006) (Respondent Selection Memorandum).

Based on our analysis of import data obtained from U.S. Customs and Border Protection (CBP), we selected two producers/exporters, Citrusvil and San Miguel as the mandatory respondents in this investigation because they were the largest Argentine producers/exporters of lemon juice to the United States, accounting for the vast majority of imports into the United States. For a complete analysis of the respondent selection, see Respondent Selection Memorandum. Therefore, pursuant to section 777A(c)(2)(B) of the Act, the Department has calculated individual dumping margins for each of the two selected producers/exporters.

Period of Investigation

The period of investigation (POI) is July 1, 2005 through June 30, 2006. This period corresponds to the four most recent fiscal quarters prior to the month of filing of the petition (i.e., September 2006) involving imports from a market economy, and is in accordance with the Department's regulations. See 19 CFR 351.204(b)(1).

Scope of Investigation

The merchandise covered by this investigation includes certain lemon juice for further manufacture, with or without addition of preservatives, sugar, or other sweeteners, regardless of the GPL (grams per liter of citric acid) level of concentration, brix level, brix/acid ratio, pulp content, clarity, grade, horticulture method (e.g., organic or not), processed form (e.g., frozen or not-from-concentrate), FDA standard of identity, the size of the container in which packed, or the method of packing.

Excluded from the scope are: (1) lemon juice at any level of concentration packed in retail-sized containers ready for sale to consumers, typically at a level of concentration of 48 GPL; and (2) beverage products such as lemonade that typically contain 20%% or less lemon juice as an ingredient.

Lemon juice is classifiable under subheadings 2009.39.6020, 2009.31.6020, 2009.31.4000, 2009.31.6040, and 2009.39.6040 of the Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS subheadings are provided for convenience and U.S. Customs and Border Patrol purposes, our written description of the scope of this investigation is dispositive.

Scope Issue

In the Initiation Notice, the Department set aside a period for parties to submit comments on the scope of the investigations on Argentina and Mexico. On November 1, 2006, Citromax submitted comments stating that organic lemon juice should be excluded from the scope of the investigations. On November 8, 2006, Petitioner responded to Citromax's November 1, 2006, scope comments, arguing that organic lemon juice should remain within the scope of the investigations. On March 21, 2007, the Department issued a decision that organic lemon juice is included within the scope of the investigations on lemon juice from Argentina and Mexico. For a detailed discussion of our decision, see Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, “Scope Issue in the Antidumping Duty Investigations on Lemon Juice from Argentina and Mexico” (March 21, 2007).

Date of Sale

It is the Department's practice to use invoice date as the date of sale. However, the Secretary “may use a date other than the date of invoice if the Secretary is satisfied that a different date better reflects the date on which the exporter or producer establishes the material terms of sale.” See 19 CFR 351.401(i); see also Allied Tube and Conduit Corp. v. United States, 132 F. Supp. 2d 1087, 1090-92 (CIT 2001).

Citrusvil reported date of purchase order as the date of sale for all sales in the U.S. market that involved purchase orders; otherwise, it reported invoice date. See Citrusvil January 17, 2007, section B and C response at C-7. Citrusvil reported contract date for all sales to Germany² that involved short- or long-term contract agreements; for the remaining sales, Citrusvil reported purchase order date as date of sale. See Citrusvil January 17, 2007 section B and C response at B-7. Citrusvil reported that these dates were the earliest dates on which the material terms of sale (i.e., price and quantity) were fixed, and that these terms never change after these dates. Because the material terms of sale are established when the purchase order is issued or contracts are signed, and because Citrusvil has stated that the terms of sale never changed after they were established, we are using the dates of sale as reported by Citrusvil.

San Miguel reported invoice date as date of sale for all sales in both markets, stating that the material terms of sale indicated in other documents sometimes change before invoices are issued. It provided two examples of such changes. First, it referred to a purchase order issued by a U.S. customer requiring multiple shipments. This customer later requested that San Miguel cancel some of the shipments ordered. While San Miguel agreed and these shipments were therefore never shipped nor invoiced, the fact that the buyer felt compelled to ask San Miguel to cancel indicates that the parties considered the purchase order binding. In the second example, San Miguel reached an agreement via email regarding the per-unit price of shipments to a U.S. customer, but the price stated in the purchase order, issued subsequent to the exchange of emails, is different from that indicated in the email agreement. However, this change occurred between the date of an email agreement and the resulting purchase order, not between the purchase order and invoice. See San Miguel March 1, 2007 supplemental section B and C response, at 2-4. Accordingly, we preliminarily find that the two examples of changes in material terms of sale prior to invoice provided by San Miguel are not sufficient to show actual changes in material terms between purchase order date and invoice date, nor do they support a conclusion that the parties at issue consider purchase orders to be non-binding.

Moreover, San Miguel's description of its production and distribution process indicates that the use of invoice date as date of sale for all sales may be distortive, given the significant lag time between purchase order date and invoice date. The record indicates that invoices can be issued up to several months after purchase orders are received. As such, the material terms of sale are set much earlier in the process than invoice date would indicate.

Thus, for all sales involving purchase orders to the United States and comparison markets, the Department preliminarily determines that purchase order is the appropriate date of sale, as the evidence on the record demonstrates that the material terms of sale set forth in the purchase orders are not subject to change. For sales in which a purchase order is not generated, we will use the earliest of shipment or invoice date. Because purchase order date is not yet on the record for all sales reported by San Miguel, we are using the earliest of shipment or invoice date as date of sale for purposes of this preliminary determination. The Department has requested that San Miguel provide, prior to verification, revised U.S. and comparison market sales databases using purchase order date as date of sale.

Fair Value Comparisons

To determine whether sales of lemon juice to the United States were made at LTFV, we compared export price (EP) or constructed export price (CEP) to normal value (NV) or constructed value (CV), as described in the “U.S. Price,” “Normal Value,” and “Constructed Value” sections below.

U.S. Price

Section 772(a) and (b) of the Act defines EP and CEP:

The term “export price” means the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c).

The term “constructed export price” means 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, as adjusted under subsections (c) and (d).

For purposes of this investigation, Citrusvil classified all of its U.S. sales as CEP sales. Citrusvil stated that, although it is not affiliated with any companies in the United States, its sales occurred after importation into the United States and are thus CEP sales. The record evidence indicates, however, that, based on purchase order date, Citrusvil's sales to the United States were made prior to importation. Accordingly, we preliminarily determine that all of Citrusvil's U.S. transactions were EP sales.

We calculated the EP for Citrusvil in accordance with section 772(c)(2) of the Act. We made appropriate deductions from gross unit price for Argentine inland freight and warehousing, Argentine brokerage and handling, international freight and insurance, U.S. brokerage and handling, U.S. freight and warehousing, U.S. duties, a fee paid to the regional government of Tucuman, and an export tax paid to the Argentine government. See Analysis Memorandum for Lemon Juice from Argentina: Citrusvil, April 19, 2007 (Citrusvil Analysis Memorandum).

San Miguel reported that most of its U.S. sales took place prior to importation. It noted, however, that a small number of those sales were made after importation. According to San Miguel, these sales were made to the U.S. customer out of inventory held in a refrigerated warehouse located in the United States. Thus, because these sales were made after importation, they cannot be classified as EP sales and we are treating them as CEP sales.

We calculated the EP for San Miguel in accordance with section 772(c)(2) of the Act. We made appropriate deductions for billing adjustments (or added billing adjustments in some cases), Argentine inland freight and warehousing, Argentine brokerage and handling, international freight and insurance, U.S. brokerage and handling, U.S. freight and warehousing, U.S. duties, a fee paid to the regional government of Tucuman, and an export tax paid to the Argentine government. San Miguel claimed another U.S. price adjustment: a per-sale reimbursement received from the Argentine government under its Reintegro program. In past proceedings involving merchandise from Argentina, we have accounted for these reimbursements by making an adjustment to cost of manufacturing (COM), and will do so here as well. See, e.g., Notice of Final Results and Recision in Part of Antidumping Duty Administrative Review; Oil Country Tubular Goods, Other Than Drill Pipe, From Argentina, 68 FR 13262, 13263 (March 19, 2003), and accompanying Issues and Decision Memorandum at Comment 5; Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Cold-Rolled Carbon Steel Flat Products From Argentina, 67 FR 62138 (October 3, 2002), and accompanying Issues and Decision Memorandum at Comment 1.

We calculated CEP for the small number of San Miguel's sales as discussed above in accordance with section 772(d)(1) of the Act. For CEP, we would normally deduct direct selling expenses and indirect selling expenses related to commercial activity in the United States in accordance with section 772(d)(1) of the Act; however, for San Miguel we only made a deduction for its credit expenses. These credit expenses covered the time between the date of shipment from Buenos Aires until the date payment was received. Deducting U.S. inventory carrying costs would impermissibly double count a portion of these credit expenses, because the number of days between date of shipment from Buenos Aires and payment date includes the number of days the CEP sales spent in U.S. inventory. See 19 CFR 351.401(b)(2). Also, because there was no affiliate acting on San Miguel's behalf in the United States, there are no U.S. indirect selling expenses to deduct, except for a few sales involving commissions paid to unaffiliated parties (in which case we deducted commissions from the U.S. price). All expenses related to the U.S. warehousing of these CEP sales are accounted for in the U.S. warehousing expense field reported by San Miguel and deducted from price as a movement expense. See Analysis Memorandum for Lemon Juice from Argentina: San Miguel, April 19, 2007 (San Miguel Analysis Memorandum).

Normal Value

A. Selection of Comparison Market

Section 773(a)(1) of the Act directs the Department to calculate NV based on the price at which the foreign like product is first 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. Under the statute, the Department will normally consider quantity (or value) insufficient if it is less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States. See section 773(a)(1)(C) of the Act.

Citrusvil's sales in Argentina were less than five percent of its sales to the United States; therefore, we found that Citrusvil did not have a viable home market for lemon juice to serve as the basis for comparison market sales in accordance with section 773(a)(1)(C) of the Act and 19 CFR 351.404. Citrusvil reports that it makes sales throughout Europe either to exclusive sales agents who then sell to unaffiliated customers (channel 1) or through the same exclusive agents to unaffiliated customers (channel 2). See Citrusvil December 18, 2006 section A response at 2, 11. In both sales channels, Citrusvil controls the terms of sale which normally are made on a Free Carrier (FCA) Rotterdam basis. Under FCA sales terms, title and risk transfer from Citrusvil to the agent who collects payment from (and releases the merchandise to) the ultimate customer in sales designated as channel 1 by Citrusvil. In sales designated as channel 2 sales by Citrusvil, title and risk transfer directly to the unaffiliated customers after that customer pays Citrusvil. See Citrusvil January 17, 2007, section B and C response, at B-8. In both sales channels, it appears that the customer (rather than Citrusvil) is responsible for any inland delivery within Europe.

To determine the most appropriate third country market for comparison purposes, the Department examined the record evidence, including statements by Citrusvil. Initially Citrusvil claimed that it does not know with certainty to which European country its product is ultimately delivered. However, Citrusvil also stated that it believes the address on its invoice is the best indication of where the merchandise is ultimately delivered, and that customers with facilities in more than one country request that the invoice be issued to the address where the product is delivered. See Citrusvil December 18, 2006 section A response, at A-2. Because the information we have gathered with respect to Citrusvil and its agents indicates that at the time of price and quantity negotiations, Citrusvil has knowledge of the first unaffiliated customer and the country in which such customer is located, we believe that it is appropriate to classify the sales shipped to Rotterdam based on the customer and its country of location.

Classifying the sales as described above, we find that Germany is Citrusvil's largest third country market for sales of foreign like product. We further find that there are no significant differences in product comparability with respect to Citrusvil's sales to Germany and sales to other third country markets and merchandise sold to the United States. As such, we preliminarily determine that Germany is the appropriate comparison market. See “Calculation of Normal Value Based on Comparison Market Prices” and “Calculation of Normal Value Based on Constructed Value” sections below.

San Miguel's sales of lemon juice in Argentina were sufficient to find the home market a viable for comparison purposes. Accordingly, we calculated NV for San Miguel based on sales prices to Argentine customers. See “Calculation of Normal Value Based on Comparison Market Prices” and “Calculation of Normal Value Based on Constructed Value” sections below.

B. Cost of Production Analysis

In the petition, Petitioner alleged that Argentine producers/exporters made sales in the comparison market at less than the cost of production (COP). In the allegation, Petitioner used the Netherlands as the comparison market, arguing that Argentina was not a viable market. Based on these allegations, and in accordance with section 773(b)(2)(A)(i) of the Act, we found reasonable grounds to believe or suspect that lemon juice sales were made in the comparison market at prices below the COP and initiated a country-wide sales-below-cost investigation. See Initiation Notice.

After reviewing Citrusvil's section A response, we determined that Citrusvil's sales to Argentina did not meet the viability threshold. Based on the section A response, however, it was unclear what the appropriate third-country comparison market was. As reported by Citrusvil, virtually all of its sales to Europe are shipped FCA Rotterdam. It claimed Germany as the proper comparison market based on the volume of sales to customers located in Germany. As discussed above, the Department has now determined that Germany is the most appropriate third-country market for comparison purposes. Although the sales-below-cost allegation from the petition involved shipments to the Netherlands-including, presumably, merchandise subsequently shipped to Germany-we informed the parties that the sales-below-cost allegation in the petition was still viable. See Letter from the Department to Citrusvil (December 22, 2007) stating that the “allegation was made using shipment data to Rotterdam. The Rotterdam data did not exclude transhipments to other points in Europe, and thus should have included any transhipments to Germany.” Citrusvil did not object to this request and submitted section D of its questionnaire response on January 22, 2007. Further, as noted above in the “Case History” section of this notice, on January 31, 2007, Petitioner submitted a German-specific, sales-below-cost allegation, which Citrusvil did not rebut.

The petition compared COP to the FOB Rotterdam value of shipments to the Netherlands. Citrusvil reports that it ships virtually everything sold to all countries in Europe to the Netherlands, on an FCA basis, at which point the product is claimed by customers and transported to different countries in Europe. Germany is the location of the customer for most of these shipments. Thus, because sales to Germany are subsumed in any shipments to the Netherlands, the petition allegation covered sales to Germany. As such, there was sufficient evidence on the record to continue our sales-below-cost investigation once we had determined that Germany was the appropriate comparison market.

This decision is consistent with Department precedent. See, e.g., Preliminary Determination of Sales at Less Than Fair Value; Aramid Fiber Formed of Poly-Phenylene Terephthalamide From the Netherlands, 58 FR 65699 (December 16, 1993) unchanged in the final determination, (Notice of Final Determination of Sales at Less Than Fair Value: Aramid Fiber Formed of Poly-Phenylene Terephthalamide From the Netherlands, 59 FR 23684 (May 6, 1994)), in which the Department “reanalyzed petitioner's sales below cost allegation in light of our determination” that the Netherlands was not the proper comparison market, and determined that there was “sufficient evidence on the record to continue our sales below cost investigation.”

After reviewing San Miguel's section A response, we determined that Argentina was in fact a viable market for that company, and notified parties that the previous sales-below-cost allegation was no longer viable for San Miguel. See Letter from the Department to San Miguel (December 20, 2007). Petitioner subsequently filed a timely new sales-below-cost allegation on January 24, 2007 with respect to San Miguel's sales in Argentina. After determining that the new allegation demonstrated reasonable grounds to believe that San Miguel's sales in Argentina were below cost, we initiated a new sales-below-cost investigation of that company. See Memorandum to Barbara E. Tillman, Director, Office 6, “Petitioner's Allegation of Sales Below the Cost of Production for S.A. San Miguel A.G.I.C.I.y F.” (February 12, 2007).

1. Calculation of Cost of Production

In accordance with section 773(b)(3) of the Act, we calculated a weighted-average COP based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for the home market general and administrative (G&A) expenses, including interest expenses and packing expenses. For Citrusvil, we relied on the COP data submitted in its cost questionnaire responses, except as noted below:

• We adjusted the fresh lemon input costs to value the lemons transferred from the packing to processing plant at the average fresh lemon cost actually incurred or paid based on the company's normal books and records.
• For reporting to the Department, Citrusvil allocated fresh lemon costs to lemon co-products using a net realizable value (NRV) methodology. We note that an NRV methodology relies upon relative sales values at the split off point (i.e., when separate products are first identifiable in the production process) as a means of allocating joint costs when multiple products are processed simultaneously from the same raw material. However, because the fresh lemon cost allocation is based on sales values and because the Petitioner has alleged that Citrusvil's POI sales values may not represent a fair value for the merchandise under consideration, we revised the company's reported allocation to rely upon sales data prior to the POI, i.e., a period for which no allegation of dumping has been lodged (in this case, July 1, 2004 to June 30, 2005).
• We revised the reported G&A expense rate to include other operating expenses.

For further details regarding these adjustments, see Memorandum to Neal M. Halper, Director, Office of Accounting, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination - Citrusvil, S.A.” (April 19, 2007) (Citrusvil COP Memo).

For San Miguel, we relied on the COP data submitted in its cost questionnaire responses, except as noted below:

• We revised San Miguel's reported lemon costs. For self-grown lemons, we allocated the growing costs to the lemons based on volume. For self-grown and purchased lemons harvested by San Miguel, we valued the harvesting costs at the actual costs incurred by San Miguel. For purchased lemons either harvested by San Miguel or delivered by the suppliers, we used the actual POI average purchase price.
• We recalculated the by-product offset amount by using the POI production quantities instead of the POI sales quantities
• For reporting to the Department, San Miguel allocated fresh lemon costs to lemon co-products using an NRV methodology. Because the fresh lemon cost allocation is based on sales values and because the Petitioner has alleged that San Miguel's POI sales values may not represent a fair value for the merchandise under consideration, we revised the company's reported allocation of fresh lemon costs and indirect processing costs to co-products, which was based on the POI sales data, to reflect sales data prior to the POI (in this case, July 1, 2004 to June 30, 2005).
• We used San Miguel's company-wide G&A and net financial expense rates instead of the industrial division's G&A and net financial expense rates.
• We revised the company-wide G&A and net financial expense rates by deducting by-product revenues and packing expenses from the cost of sales denominator.
• We made a deduction to COM for estimated Reintegro rebates received by San Miguel.

For further details regarding these adjustments, see Memorandum to Neal M. Halper, Director, Office of Accounting, “Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination - San Miguel” (April 19, 2007) (San Miguel COP Memo).

2. Test of Comparison Market Sales Prices

We compared the weighted-average COPs for both companies to their comparison market sales prices of the foreign like product, under section 773(b) of the Act, to determine whether these sales had been made at prices below the COP within an extended period of time (i.e., a period of one year) in substantial quantities, and whether such prices were sufficient to permit the recovery of all costs within a reasonable period of time. On a model-specific basis, we compared the COP to the German (for Citrusvil) and Argentine (for San Miguel) market prices, less any applicable movement charges, discounts, rebates, and direct and indirect selling expenses (excluding imputed expenses), commissions, and packing.

3. Results of the COP Test

Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of the respondent's sales of a given product during the POI are at prices less than the COP, we do not disregard any below-cost sales of that product, because we determine that in such instances the below-cost sales were not made in substantial quantities. Where 20 percent or more of the respondent's sales of a given product during the POI are at prices less than the COP, we determine that the below-cost sales represent substantial quantities within an extended period of time, in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determine whether such sales were made at prices which would not permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(1)(B) of the Act.

We found that more than 20 percent of Citrusvil's comparison market sales of a given product during the POI were at prices below the COP, and, in addition, the below-cost sales of the product were at prices which would not permit recovery of all costs within a reasonable time period, in accordance with section 773(b)(2)(D) of the Act. We therefore excluded these sales and used the remaining sales, if any, as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

We also found that more than 20 percent of San Miguel's comparison market sales of a given product during the POI were at prices below the COP, and, in addition, the below-cost sales of the product were at prices which would not permit recovery of all costs within a reasonable time period, in accordance with section 773(b)(2)(D) of the Act. We therefore excluded these sales and used the remaining sales, if any, as the basis for determining NV, in accordance with section 773(b)(1) of the Act.

C. Calculation of Normal Value Based on Comparison Market Prices

Citrusvil

Citrusvil has an exclusive sales agreement with its agent in the German market. Due to the nature of the arrangement between the two companies, pursuant to section 771(33)(g) of the Act, we preliminarily find that Citrusvil and its agent are affiliated via an agent-principle agreement/relationship. See, e.g., Stainless Steel Sheet and Strip in Coils from Taiwan: Final Results and Partial Rescission of Antidumping Duty Administrative Review, 67 FR 6682 (February 13, 2002) and accompanying Issues and Decision Memorandum at Comment 23, upheld in Chia Far Industrial Factory Co. v. United States, 343 F. Supp. 2d 1344, 1356 (CIT 2004) (“when there exists a principal who has the potential to control pricing and/or the terms of sale through the end-customer, Commerce will find agency and thus affiliation”). Thus, the appropriate sales for comparison purposes in this investigation are the sales from Citrusvil to the first unaffiliated customers in Germany. Since much of our analysis with respect to the relationship between Citrusvil and its agent involves business proprietary information, a full discussion of the bases for our finding of affiliation is set forth in the Citrusvil Analysis Memorandum.

For those sales made directly to the customer, with Citrusvil's agent acting as intermediary (the channel 2 sales described in the “Selection of Comparison Market” section above), the price charged by Citrusvil to the customer is the starting price. Pursuant to section 773(a)(6)(B) of the Act, we deducted home market freight, warehousing and insurance expenses. We also made circumstances of sale (COS) adjustments reflecting differences between direct selling expenses (credit expense) incurred on third-country and U.S. sales, in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. We also made adjustments for any differences in packing between domestic and U.S. sales, pursuant to section 773(a)(6)(B)(ii) of the Act, and any differences between the variable costs of the U.S. product and the matching home market product (the “DIFMER” adjustment), pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

For sales made by Citrusvil to its affiliated agent (the channel 1 sales described in the “Selection of Comparison Market” section above), which in turn sells to the first unaffiliated customer, we find that Citrusvil failed to provide the correct downstream sales information. Section 776(a)(2) of the Act provides that if an interested party or any other person: (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782 of the Act; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i) of the Act, the Department shall, subject to section 782(d) of the Act, use the facts otherwise available in reaching the applicable determination under this title. In applying facts otherwise available, section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value and Final Negative Critical Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 FR 55792, 55794-96 (August 30, 2002).

With respect to adverse inferences, our practice, as reflected in the Statement of Administrative Action, is “to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See Statement of Administrative Action accompanying the Uruguay Round Agreements Act, H.R. Rep. No. 103-316, (1994) (“SAA”) at 870. Furthermore, “affirmative evidence of bad faith on the part of a respondent is not required before the Department may make an adverse inference.” See Nippon Steel Corp. v. United States, 337 F.3d 1373, 1377 (Fed. Cir. 2003); Antidumping Countervailing Duties: Final Rule, 62 FR 27296, 27340 (May 19, 1997).

With respect to Citrusvil's channel 1 sales to Germany, we preliminarily find that the application of facts otherwise available is appropriate. The Department's original questionnaire, issued to Citrusvil on November 20, 2006, states that “if you sold to an affiliate that resold the merchandise to an unaffiliated party in the comparison market, report the affiliate's resales during the POI to unaffiliated customers rather than your sales to the affiliate.” See Department November 20, 2006, questionnaire, at B-2. On February 9, 2007, Petitioner argued that it appeared that Citrusvil might be affiliated with its German agent. On February 16, 2007, we issued a supplemental questionnaire in which we requested more detailed information on the relationship between Citrusvil and its German agent. See Department February 16, 2007, General Supplemental questionnaire, at 1-3. Based on Citrusvil's response and our analysis of the agreement, there was sufficient information to indicate affiliation. On March 23, 2007, in an additional supplemental questionnaire to Citrusvil, the Department specifically requested that Citrusvil report the downstream sales of its German sales agent. On April 6, 2007, Citrusvil responded that it was not able to obtain the requested information from its agent. Citrusvil explained that it made several attempts (including phone calls and e-mails) to convince its agent to supply the requested information. However, Citrusvil reported that its agent was not willing to open its books to foreign authorities. See Citrusvil April 6, 2007, third supplemental section B and C response, at Exhibit 1. The use of facts available is warranted under 776(a)(2)(A) of the Act as Citrusvil and its affiliated agent have withheld information requested by the Department.

Moreover, in accordance with section 776(b) of the Act, we have applied an adverse inference for purposes of calculating Citrusvil's channel 1 prices in Germany. The record of this investigation shows that Citrusvil has sufficient control over its agent and the sales at issue to comply with our request for channel 1 sales information. See Citrusvil March 12, 2007, Second Supplemental section B and C response, at Exhibit 2. These parties are bound through an exclusive principle-agent relationship, and Citrusvil has indicated on the record that it controls the final terms of all sales involving its agent, including channel 1 sales. See Citrusvil January 26, 2007, Supplemental section A response, at Exhibit 5. Moreover, while Citrusvil argues that it made every effort to obtain the necessary information, it failed to submit any documentary evidence to support its claims. For example, in its April 6, 2007, submission Citrusvil states that it sent e-mails to its agent regarding the need for this information, but did not submit copies of any such e-mails on the record of this proceeding.

The Department has consistently demonstrated willingness to accommodate Citrusvil's difficulties in collecting requested information in a timely manner throughout the course of this proceeding. In fact, the Department granted Citrusvil an extension to submit the downstream sales at issue. See Letter from the Department to Citrusvil (April 2, 2007). Citrusvil, however, failed to provide the downstream sales information by the extended deadline and failed to substantiate its claims that it made significant efforts to obtain the information.

Therefore, we conclude that Citrusvil has not cooperated to the best of its ability with respect to channel 1 sales, and thus, pursuant to section 776(b) of the Act, we have used an adverse inference in selecting among the facts available with respect to such sales. Specifically, we have used the highest net price per control number (CONNUM) as the basis for normal value for all channel 1 sales. Because much of our analysis involves business proprietary information, a full discussion of the bases for our finding of affiliation and the specific application of partial adverse facts available is set forth in the Citrusvil Analysis Memorandum.

As a result, for such sales, the Department has relied on facts available with an adverse inference. As AFA, to determine NV for these sales, the Department has used the highest NV per CONNUM in lieu of the price paid to Citrusvil's agent. The Department intends, however, following this preliminary determination, to provide an additional opportunity to Citrusvil to submit the requested sales information to the first unaffiliated customer in Germany.

San Miguel

For San Miguel, starting with prices paid by its Argentine customers, we added or subtracted billing adjustments, where appropriate, and subtracted early payment discounts, Argentine inland freight, warehousing, and insurance expenses, and a fee paid to the regional government of Tucuman. For home market sales compared to EP sales, we made COS adjustments for differences between credit expenses incurred on Argentine and U.S. sales in accordance with section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410. In accordance with section 772(c)(2) of the Act, for home market sales compared to CEP sales, we only deducted Argentine credit expenses from home market price, because U.S. credit expenses were deducted from U.S. price, as noted above. We also made adjustments for any differences in packing between domestic and U.S. sales and for DIFMER pursuant to section 773(a)(6)(C)(ii) of the Act and 19 CFR 351.411.

D. Calculation of Normal Value Based on Constructed Value

Section 773(a)(4) of the Act provides that, where NV cannot be based on comparison market sales, NV may be based on constructed value (CV). Accordingly, for sales of lemon juice 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 COP test, we based NV on CV.

Section 773(e) of the Act provides that CV shall be based on the sum of the cost of materials and fabrication for the imported merchandise, plus amounts for SG&A expenses, profit, and U.S. packing costs. We calculated the cost of materials and fabrication based on the methodology described in the “Cost of Production Analysis” section, above. We based SG&A, interest expense, and profit on the actual amounts incurred and/or realized in connection with the production and sale of the foreign like product in the ordinary course of trade for consumption in the comparison market, in accordance with section 773(e)(2)(A) of the Act.

For comparison with EP sales, we made adjustments to CV for differences in COS in accordance with section 773(a)(6)(C)(iii) and 773(a)(8) of the Act and 19 CFR 351.410. For CV compared to CEP sales, we only deducted domestic direct selling expenses from home market price, as U.S. direct selling expenses were deducted from U.S. price, as noted above.

E. 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 U.S. sales. See 19 CFR 351.412. The NV or CV LOT is the level of the starting-price sale in the home market or comparison market. For EP, the U.S. LOT is based on the starting price, which is usually from the exporter to the importer.

To determine whether NV sales are at a different LOT than EP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer in the home market in accordance with 19 CFR 351.412(c). See, e.g., Light-Walled Rectangular Pipe and Tube From Mexico: Notice of Final Determination of Sales at Less Than Fair Value, 69 FR 53677 (September 2, 2004), and accompanying Issues and Decisions Memorandum at Comment 14. If the comparison market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Act.

In the current investigation, Citrusvil claimed one LOT in the German market and one similar LOT in the U.S. market. Citrusvil did not request an LOT adjustment. Citrusvil maintains that its selling functions do not vary by market. Citrusvil's narrative description of its sales and distribution process indicate that its sales functions involve inventory maintenance, freight service arrangements, advertising, negotiating sales terms, and arranging for domestic and foreign warehousing. It did not indicate a significant variance, however, among these common expense items according to market, channel of distribution, customer, or some other variable, nor do we see any reason to conclude that there is such variance. See Citrusvil December 18, 2006 section A response, at A-13. Based on the selling functions performed, we preliminarily determine that Citrusvil did not sell at different LOTs in the German and U.S. markets. After examining the selling functions for the one LOT reported in the United States, and the one reported LOT reported in the German market, we determine that these sales were all made at the same LOT.

San Miguel claimed one LOT in the Argentine market and one LOT in the U.S. market. San Miguel did not request an LOT adjustment. Given the selling functions chart submitted by San Miguel and its narrative description of its sales and distribution process, it would appear its significant sales functions involve negotiating sales and delivery, providing customer-specific packaging, arranging transportation, and arranging for domestic and foreign warehousing. It did not indicate a significant variance, however, among these common expense items according to market, channel of distribution, customer, or some other variable, nor do we see any reason to conclude that there is such variance. See San Miguel December 14, 2006, section A response, at A-15 - A-19. After examining the selling functions for the one LOT reported in the United States, and the one reported LOT reported in the Argentine market, we determine that these sales were all made at the same LOT.

Currency Conversions

We made currency conversions into U.S. dollars in accordance with section 773A of the Act based on exchange rates in effect on the dates of the U.S. sales, as obtained from the Federal Reserve Bank (the Department's preferred source for exchange rates).

Critical Circumstances

On March 30, 2007, Petitioner filed a timely allegation pursuant to section 733(e) of the Act that critical circumstances exist in the antidumping duty investigations of lemon juice from Argentina and Mexico. In addition, Petitioner requested that the Department request CBP to compile information on an expedited basis regarding entries of subject merchandise. See 19 CFR 351.206(g). In its allegation, Petitioner contends that there is a reasonable basis to believe or suspect that critical circumstances exist with respect to lemon juice from Argentina because the importers in this case knew or should have known that exporters were selling lemon juice at less than fair value and that there was likely to be material injury by reason of such sales; and that there have been a massive imports of lemon juice over a relatively short period. Since this allegation was filed at least 20 days prior to the deadline for the Department's preliminary determination, we must issue our preliminary critical circumstances determination not later than the date of the preliminary determination. See 19 CFR 351.206(c)(2)(i); see also Policy Bulletin 98.4; “Change in Policy Regarding Timing of Issuance of Critical Circumstances Determinations” (63 FR 55364 (October 15, 1998)) for a further discussion of our practice.

Petitioner contends that, in determining whether there is a reasonable basis to believe or suspect that an importer should have known that the exporter was selling lemon juice from Argentina at less than fair value, the Department normally considers margins of 25 percent or more for EP sales and 15 percent or more for CEP transactions sufficient to impute knowledge of dumping. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value and Affirmative Preliminary Determination of Critical Circumstances: Wax and Wax/Resin Thermal Transfer Ribbons From Japan, 68 FR 71072, 71076-77 (December 22, 2003) unchanged in the final determination, (Notice of Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances: Wax and Wax/Resin Thermal Transfer Ribbons From Japan, 69 FR 11834 (March 12, 2004)). Petitioner contends that the estimated dumping margin from the initiation of 102.46 for Argentina is well above the 25 percent sufficient to impute knowledge. See Initiation Notice.

Petitioner contends that, in determining whether there have been massive imports, the Department normally considers imports during the comparison period that have increased 15 percent or more compared to the base period to be massive. See 19 CFR 351.206(h)(2). The petition for this case was filed on September 21, 2006. Petitioner provided import data from the ITC's “Dataweb” (http://dataweb.usitc.gov/) comparing subject imports in July through September 2006 to subject imports in the period October through December 2006. Petitioner calculated that subject imports from Argentina surged 147 percent. See Petitioner's March 30, 2007 Critical Circumstances Allegation at 5, Exhibit 1.

Section 733(e)(1) of the Act provides that the Department will preliminarily determine that critical circumstances exist if there is a reasonable basis to believe or suspect that: (A)(i) there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise; or (ii) the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value and that there was likely to be material injury by reason of such sales; and, (B) there have been massive imports of the subject merchandise over a relatively short period. Section 351.206(h)(1) of the Department's regulations provides that, in determining whether imports of the subject merchandise have been “massive,” the Department normally will examine: (i) the volume and value of the imports; (ii) seasonal trends; and (iii) the share of domestic consumption accounted for by the imports. In addition, 19 CFR 351.206(h)(2) provides that an increase in imports of 15 percent during a “relatively short period” of time may be considered “massive.” Further, 19 CFR 351.206(i) defines “relatively short period” as normally being the period beginning on the date the proceeding begins (i.e., the date the petition is filed) and ending at least three months later.

To determine whether there is a history of injurious dumping of the merchandise under investigation, in accordance with section 733(e)(1)(A)(i) of the Act, the Department normally considers evidence of an existing antidumping duty order on the subject merchandise in the United States or elsewhere to be sufficient. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Cut-To-Length Carbon Quality Steel Plate Products from Indonesia, 64 FR 41206 (July 29, 1999) unchanged in the final determination, (Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon-Quality Steel Plate Products from Indonesia, 64 FR 73164 (December 29, 1999)). With regard to imports of lemon juice from Argentina, Petitioner makes no specific mention of a history of dumping for Argentina. There have been no dumping orders issued by the United States or by any other country on lemon juice from Argentina. For this reason, the Department does not find a history of injurious dumping of the subject merchandise from Argentina pursuant to section 733(e)(1)(A)(i) of the Act.

To determine whether the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value and that there was likely to be material injury by reason of such sales in accordance with section 733(e)(1)(A)(ii) of the Act, the Department normally considers margins of 25 percent or more for EP sales, or 15 percent or more for CEP transactions, sufficient to impute knowledge of dumping. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Lined Paper Products from Indonesia, 71 FR 15162 (March 27, 2006) unchanged in the final determination, (Final Determination of Sales at Less Than Fair Value and Affirmative Final Determination of Critical Circumstances: Certain Lined Paper Products from Indonesia, 71 FR 47171 (August 16, 2006)).

For Citrusvil and San Miguel, we determine that there is a sufficient basis to find that the importer should have known that the exporter was selling the subject merchandise at less than its fair value pursuant to section 733(e)(1)(A)(ii) of the Act, because the calculated margins are greater than 25 percent for both companies' sales. Consequently, we have imputed knowledge of dumping with regard to both respondents.

Regarding the companies subject to the “all others” rate, it is the Department's normal practice to conduct its critical circumstances analysis for these companies based on the experience of investigated companies. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737, 9741 (March 4, 1997). However, the Department does not automatically extend an affirmative critical circumstances determination to companies covered by the “all others” rate. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils from Japan, 64 FR 30574 (June 8, 1999) (Stainless Steel from Japan). Instead, the Department considers the traditional critical circumstances criteria with respect to the companies covered by the “all others” rate. Consistent with Stainless Steel from Japan, the Department has, in this case, applied the traditional critical circumstances criteria to the “all others” category for the antidumping investigation of certain lemon juice from Argentina.

The dumping margin for the “all others” category in the instant case exceeds the 25 percent threshold necessary to impute knowledge of dumping. Therefore, we find there is a reasonable basis to impute to importers, knowledge of dumping for the companies covered by the “all others” rate. Consequently, we preliminarily find that knowledge of dumping exists with regard to the companies subject to the “all others” rate.

In determining whether there is a reasonable basis to believe or suspect that an importer knew or should have known that there was likely to be material injury by reason of dumped imports, consistent with section 733(e)(1)(A)(ii) of the Act, the Department normally will look to the preliminary injury determination of the ITC. See, e.g., Stainless Steel from Japan, 64 FR at 30578. On November 16, 2006, the ITC preliminarily found material injury to the domestic industry due to imports of lemon juice from Argentina and Mexico, which are alleged to be sold in the United States at less than fair value and, on this basis, the Department may impute knowledge of likelihood of injury to these respondents. See ITC Preliminary Report.

In determining whether there are “massive imports” over a “relatively short period,” pursuant to section 733(e)(1)(B) of the Act, the Department normally compares the import volumes of the subject merchandise for at least three months immediately preceding the filing of the petition (i.e., the “base period”) to a comparable period of at least three months following the filing of the petition (i.e., the “comparison period”). Imports normally will be considered massive when imports during the comparison period have increased by 15 percent or more compared to imports during the base period.

The Department requested and obtained from both respondents monthly shipment data from June 2006 through March 2007 in order to determine whether imports were massive. We also relied on U.S. import data found on the ITC's Dataweb for imports through January 2007 (i.e., the latest month for which complete data exist at the time of this preliminary determination).

We have used a period of four months as the period for comparison in preliminarily determining whether imports of the subject merchandise have been massive. We believe that a four-month period is most appropriate as the basis for analysis because using four months captures all data available at this time, based on October 2006 as the beginning of the comparison period. Additionally, a four-month period properly reflects the “relatively short period” set forth in the statute for determining whether imports have been massive. See section 733(e)(1)(B) of the Act. It is our practice to base the critical-circumstances analysis on all available data, using base and comparison periods of no less than three months. See Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Affirmative Preliminary Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp from India, 69 FR 47111 (Aug. 4, 2004) unchanged in the final determination, (Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Frozen and Canned Warmwater Shrimp From India, 69 FR 76916 (December 23, 2004)); and Notice of Final Determination of Sales at Less Than Fair Value and Negative Final Determination of Critical Circumstances: Certain Color Television Receivers From the People's Republic of China, 69 FR 20594 (Apr. 16, 2004), and accompanying Issues and Decision Memorandum at Comment 3. Therefore, we have used all available data in our critical-circumstances analysis for the preliminary determination.

San Miguel provided shipment data from June 2006 through January 2007. San Miguel's shipment data indicate that its shipments increased by more than 15 percent between the four-month base and comparison periods. However, San Miguel argued that this increase is due largely to issues of “timing.” Our analysis of San Miguel's 2005 and 2006 monthly shipment data leads us to reject this argument. However, because the details of our analysis are business proprietary, complete discussion can be found in the Memorandum to Barbara E. Tillman, Director, Office 6, “Critical Circumstances Allegation,” (April 19, 2007) (Critical Circumstances Memorandum). Based on our analysis of San Miguel's shipment data for 2005 and 2006, we have determined that San Miguel's shipments increased by more than 15 percent between the four-month base and comparison periods. See Critical Circumstances Memorandum.

Citrusvil reported shipment data for June 2006 through March 2007. Citrusvil's reported shipment data do not indicate that its shipments increased by more than 15 percent between the four-month base and comparison periods. However, our analysis of Citrusvil's reported shipment data leads us to question the reliability of that data.³ For a discussion of the BPI details of this analysis, see Critical Circumstances Memorandum. Because we have determined that Citrusvil's shipment data are unreliable, we have relied on ITC data to determine whether Citrusvil's imports increased by more than 15 percent between the four-month base and comparison periods. See Critical Circumstances Memorandum; Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Affirmative Preliminary Critical Circumstances Determination: Certain Orange Juice from Brazil, 70 FR 49557, 49565-66 (August 24, 2005) (Orange Juice from Brazil) (basing the evaluation of massive imports on ITC Dataweb information for all companies because company-specific information was not submitted with sufficient time to use in the analysis). We adjusted the ITC data to account for shipments of lemon juice exported by San Miguel, because San Miguel's information is the only reliable company-specific information on the record with which we could make a relevant adjustment. After adjusting the data to account for shipments of lemon juice exported by San Miguel, the data indicate an increase in imports greater than 15 percent. See Critical Circumstances Memorandum. As such, we find that imports have increased by more than 15 percent between the four-month base and comparison periods.

We have examined the information on the record to determine whether the increase in San Miguel's and Citrusvil's imports into the United States during the comparison period are consistent with seasonal patterns related to the growing season for lemons and the corresponding production cycle for lemon juice. We analyzed import data for the relevant base and comparison periods for 2003 through 2006 and find that imports do not show a pattern of seasonality. See Critical Circumstances Memorandum. As such, we preliminarily determine that the surge in imports is not due to seasonality.

As noted above, the Department does not automatically extend an affirmative critical circumstances determination to companies covered by the “all others” rate. Therefore, with respect to whether imports were massive in this case for the “all others” category, we considered the experience of Citrusvil and San Miguel. As discussed above, we preliminarily find that imports from Citrusvil and San Miguel have been massive over a relatively short period of time. Since our normal practice of conducting the critical circumstances analysis of companies in the all-others category is based on the experience of the investigated companies, we determine that there have been massive imports of lemon juice in the all-others category. In addition, we also examined ITC data for the four-month base and comparison periods noted above. See Orange Juice from Brazil, 70 FR at 49565-66. As explained above, we adjusted the ITC data to account for shipments of lemon juice exported by San Miguel. After this adjustment, the ITC data indicate an increase in imports greater than 15 percent. See Critical Circumstances Memorandum.

In summary, we preliminarily find that Citrusvil, San Miguel and the companies subject to the “all others” rate satisfy the imputed knowledge of injury and dumping criteria under section 733(e)(1)(A)(ii) of the Act and the massive imports criterion under section 733(e)(1)(B) of the Act. Given the analysis summarized above, we preliminarily determine that critical circumstances exist for all imports of lemon juice into the United States produced in and exported from Argentina.

Verification

In accordance with section 782(i) of the Act, we will verify the questionnaire responses of Citrusvil and San Miguel before making our final determination.

Preliminary Determination

We preliminarily determine that the following weighted-average dumping margins exist for the period July 1, 2005 through June 30, 2006:

Suspension of Liquidation

In accordance with section 733(d) of the Act, we will instruct CBP to suspend liquidation of all entries of lemon juice from Argentina that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. Additionally, because we have made an affirmative preliminary determination of critical circumstances, we will instruct CBP to suspend liquidation of entries made on or after 90 days prior to the date of publication of this notice in accordance with section 733(e)(2) of the Act. We will instruct CBP to require a cash deposit or the posting of a bond equal to the weighted-average margin, as indicated in the chart above, as follows: (1) the rates for exports from the mandatory respondents will be the rates we have determined in this preliminary determination as outlined above; (2) if the exporter is not a firm identified in this investigation, but the producer is, the rate will be the rate established for the producer of the subject merchandise; (3) the rate for all other producers or exporters will be 113.52 percent. These suspension of liquidation instructions will remain in effect until further notice.

Disclosure

In accordance with 19 CFR 351.224(b), the Department will disclose to interested parties the calculations performed in this preliminary determination within five days of the date of the public announcement.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs either 50 days after the date of publication of this notice or ten days after the issuance of the verification reports, whichever is later. See 19 CFR 351.309(c)(1)(i). Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must be filed within five days after the deadline for the submission of case briefs. See 19 CFR 351.309(d). A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. See 19 CFR 351.309(c)(2), (d)(2). Executive summaries should be limited to five pages total, including footnotes. See id.

In accordance with section 774 of the Act, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs. If a request for a hearing is made, we will tentatively hold the hearing two days after the deadline for submission of rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the date of publication of this notice. Requests should contain: 1) the party's name, address, and telephone number; 2) the number of participants; and 3) a list of the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs. See 19 CFR 351.310(c). Unless the Department receives a request for a postponement pursuant to section 735(a)(2) of the Act, the Department will make its final determination no later than 75 days after the date of this preliminary determination. See section 735(a)(1) of the Act.

International Trade Commission Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information relating to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order, without the written consent of the Assistant Secretary for Import Administration. If the final determination in this proceeding is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after the final determination whether imports of lemon juice from Argentina materially injure, or threaten material injury to, the U.S. industry. See section 735(b)(2) of the Act.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.