Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Carbazole Violet Pigment 23 From India

AGENCY:

Import Administration, International Trade Administration, U.S. Department of Commerce.

ACTION:

Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination.

DATES:

Effective Date: June 24, 2004.

FOR FURTHER INFORMATION CONTACT:

Charles Riggle at (202) 482-0650, AD/CVD Enforcement Office 5, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Preliminary Determination

We preliminarily determine that carbazole violet pigment 23 (CVP-23) from India is being sold, or is likely to be sold, in the United States at less than fair value (LTFV), as provided in section 733 of the Tariff Act of 1930, as amended (the Act). The estimated margin of sales at LTFV is shown in the “Suspension of Liquidation” section of this notice. Interested parties are invited to comment on this preliminary determination.

Case History

This investigation was initiated on December 11, 2003. See Notice of Initiation of Antidumping Duty Investigations: Carbazole Violet Pigment 23 from India and the People's Republic of China, 68 FR 70761 (December 19, 2003) (Initiation Notice). Since the initiation of the investigation, the following events have occurred:

The U.S. Department of Commerce (the Department) set aside a period for all interested parties to raise issues regarding product coverage. See Initiation Notice, 68 FR at 70762. We received no comments.

On January 5, 2004, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that the domestic industry producing CVP-23 is materially injured by reason of imports from India. See Determinations and Views of the Commission, USITC Publication No. 3662 (January 2004); see also Carbazole Violet Pigment 23 from China and India, 69 FR 2002 (January 13, 2004).

Selection of Respondents

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. Where it is not practicable to examine all known producer/exporters of subject merchandise, section 777A(c)(2) of the Act permits us to investigate either (1) a sample of exporters, producers, or types of products that is statistically valid, based on the information available at the time of selection, or (2) exporters and producers accounting for the largest volume of the subject merchandise that can reasonably be examined.

In their petition, the petitioners identified 12 producers of CVP-23 in India. We examined company-specific export data obtained from U.S. Customs and Border Protection (CBP), which indicated that only four companies exported the subject merchandise to the United States during the period of investigation (POI). Due to resource constraints, we selected the two largest companies, Alpanil Industries Ltd. (Alpanil) and Pidilite Industries Ltd. (Pidilite), as respondents. For a more detailed discussion of respondent selection in this investigation, see the January 9, 2004, Respondent Selection Memorandum from David Layton and Monica Gallardo, International Trade Compliance Analysts, to Gary Taverman, Director, Office 5, on file in the Central Records Unit, Room B-099 of the main Commerce building.

On January 15, 2004, the Department issued the complete antidumping questionnaire to Alpanil and Pidilite. We received responses to sections A-C of the antidumping questionnaire from both companies and issued supplementary questionnaires where appropriate.

Postponement of Final Determination

Section 735(a)(2) of the Act provides that a final determination may be postponed until not later than 135 days after the date of the publication of the preliminary determination if, in the event of an affirmative preliminary determination, a request for such postponement is made by exporters who account for a significant proportion of exports of the subject merchandise, or in the event of a negative preliminary determination, a request for such postponement is made by the petitioners. The Department's regulations, at 19 CFR 351.210(e)(2), require that requests by respondents for postponement of a final determination be accompanied by a request for an extension of the provisional measures from a four-month period to not more than six months. On May 26, 2004, Alpanil and Pidilite requested that, in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination until 135 days after the publication of the preliminary determination. Alpanil and Pidilite also included a request to extend the provisional measures from a four-month period to not more than six-months. Accordingly, because we have made an affirmative preliminary determination, and the requesting parties account for a significant proportion of exports of the subject merchandise, we have postponed the final determination until not later than 135 days after the date of the publication of the preliminary determination.

Period of Investigation

The POI is October 1, 2002, through September 30, 2003. This period corresponds to the four most recent fiscal quarters prior to the month of filing of the petition (i.e., November 2003). See 19 CFR 351.204(b)(1).

Scope of Investigation

The merchandise covered by this investigation is carbazole violet 23 identified as Color Index No. 51319 and Chemical Abstract No. 6358-30-1, with the chemical name of diindolo [3,2-b:3',2'-m]triphenodioxazine, 8,18-dichloro-5, 15-diethy-5,15-dihydro-, and molecular formula of C₃₄ H₂₂ Cl₂ N₄ O₂. The subject merchandise includes the crude pigment in any form (e.g., dry powder, paste, wet cake) and finished pigment in the form of presscake and dry color. Pigment dispersions in any form (e.g. pigments dispersed in oleoresins, flammable solvents, water) are not included within the scope of the investigation.

The merchandise subject to this investigation is classifiable under subheading 3204.17.9040 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive.

Product Comparisons

We compared the export price (EP) to the normal value (NV), as described in the Export Price and Normal Value sections of this notice. We first attempted to compare products sold in the U.S. and home markets that were identical with respect to the following characteristics: form, stability, dispersion, and tone. Where there was not an identical comparison, we compared the products sold to the United States with the most similar merchandise sold in the home market based on the characteristics listed above, in that order of priority.

Export Price

For the price to the United States, we used EP as defined in section 772(a) of the Act. Section 772(a) of the Act defines EP as 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 the United States to an unaffiliated purchaser in the United States, or to an unaffiliated purchaser for exportation to the United States.

For both respondents, we calculated EP based on the packed prices charged to the first unaffiliated customer in the United States because the merchandise was sold directly by both Alpanil and Pidilite outside the United States to the first unaffiliated purchaser in the United States prior to importation, and constructed export price was not otherwise indicated. In accordance with section 772(c)(2) of the Act, we calculated the EP by deducting movement expenses from the starting price, where appropriate. We determined the EP for each company as follows:

Alpanil

We calculated EP based on the packed FOB or CIF price, as appropriate, to unaffiliated purchasers in the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses (including inland freight, brokerage and handling, international freight, and marine insurance). See Analysis Memorandum for Alpanil Industries Ltd., dated June 18, 2004.

Pidilite

We calculated EP based on the packed FOB or CIF price, as appropriate, to unaffiliated purchasers in the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions from the starting price for foreign movement expenses (including inland freight, brokerage and handling, international freight, and marine insurance). See Analysis Memorandum for Pidilite Industries Ltd., dated June 18, 2004.

Normal Value

A. Selection of Comparison Markets

Section 773(a)(1) of the Act directs that NV be based on the price at which the foreign like product is sold in the home market, provided that the merchandise is sold in sufficient quantities (or value, if quantity is inappropriate), that the time of the sales reasonably corresponds to the time of the sale used to determine EP or CEP, and that there is no particular market situation that prevents a proper comparison with the EP or CEP. According to the statute, quantities (or value) will normally be considered insufficient if they are less than five percent of the aggregate quantity (or value) of sales of the subject merchandise to the United States.

We found that both Alpanil and Pidilite had viable home markets for CVP-23. As such, the respondents each submitted home market sales data for purposes of the calculation of NV. In deriving NV, we made adjustments as detailed in the Calculation of Normal Value Based on Home Market Prices section below.

B. Calculation of Normal Value Based on Home Market Prices

We determined price-based NVs for the respondent companies as follows. For both respondents we made adjustments to the home market net price for any differences in packing and deducted home market movement expenses pursuant to sections 773(a)(6)(A) and 773(a)(6)(B)(ii) of the Act. In addition, we made adjustments for differences in circumstances of sale (COS) pursuant to section 773(a)(6)(C)(iii) of the Act by deducting direct selling expenses incurred for home market sales and adding U.S. direct selling expenses.

Alpanil

We based home market prices on the packed, delivered or FOB prices, as appropriate, to unaffiliated purchasers in India. We deducted from the starting price billing adjustments, as reported by Alpanil. We adjusted for foreign inland freight. We made COS adjustments by deducting direct selling expenses incurred for home market sales (credit expenses) and adding U.S. direct selling expenses (credit expenses).

Pidilite

We based home market prices on the packed, delivered or FOB prices, as appropriate, to unaffiliated purchasers in India. We adjusted for foreign inland freight and warehousing. We made COS adjustments by deducting direct selling expenses incurred for home market sales (credit expenses) and adding U.S. direct selling expenses (credit expenses).

C. Level of Trade

In accordance with section 773(a)(1)(B) of the Act, to the extent practicable, we determine NV based on sales in the comparison market at the same level of trade as the EP or CEP transaction. The NV level of trade is that of the starting-price sales in the comparison market or, when NV is based on CV, that of the sales from which we derive SG&A expenses and profit. For EP sales, the U.S. level of trade is also the level of the starting-price sale, which is usually from exporter to importer.

To determine whether NV sales are at a different level of trade than EP or CEP transactions, 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 a different level of trade 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 level of trade of the export transaction, we make a level of trade adjustment under section 773(a)(7)(A) of the Act.

In implementing these principles in this investigation, we obtained information from Alpanil and Pidilite about the marketing stages involved in the reported U.S. and home market sales, including a description of the selling activities performed by the respondents for each channel of distribution. In identifying levels of trade for home market sales we considered the selling functions reflected in the starting price before any adjustments.

In conducting our level of trade analyses, we examined the specific types of customers, the channels of distribution, and the selling practices of each respondent. Generally, if the reported levels of trade are the same, the functions and activities of the seller should be similar. Conversely, if a party reports levels of trade that are different for different categories of sales, the functions and activities should be dissimilar. We found the following.

Alpanil

For home market sales Alpanil reported two customer categories—end users and distributors. Alpanil reported that these customer categories constitute distinct levels of trade, and that prices to end users are generally higher than those to distributors because Alpanil performs additional selling functions in making sales to end user customers.

We have preliminarily determined that Apanil has two levels of trade in the home market. For sales to the end user customer category, Alpanil reported that it performs additional selling functions, including advertising, sales promotion, technical assistance and after sales service, none of which it performed for home market sales to distributors.

Alpanil has reported one channel of distribution for sales to the United States, direct sales from the factory to U.S. distributors. We preliminarily determine that Alpanil's EP sales to the United States were made at a single level of trade, and that this level of trade was equivalent to the home market level of trade of Alpanil's sales to distributors.

Pidilite

Pidilite has reported two channels of distribution in the home market and one channel of distribution in the U.S. market. Pidilite defined these channels of distribution based on customer category: Distributors and end users in the home market and solely distributors in the U.S. market.

However, Pidilite has not established that the two channels of distribution in the home market constitute more than one level of trade. There are inconsistencies between the information regarding selling functions provided in Pidilite's supplemental response and that in its original submission. For purposes of this preliminary determination, we have concluded that there is insufficient information on the record to establish more than one level of trade in the home market. Furthermore, we have determined that Pidilite's EP sales to the United States were made at a single level of trade and, for lack of unambiguous and consistent information indicating the contrary, that these sales were made at a level of trade equivalent to that of the home market sales.

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. sale, as obtained from the Federal Reserve Bank (the Department's preferred source for exchange rates).

Verification

In accordance with section 782(i) of the Act, we intend to verify all information relied upon in making our final determination.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing the CBP to suspend liquidation of all entries of CVP-23 from India, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. We are also instructing the CBP to require a cash deposit or the posting of a bond equal to the dumping margins indicated in the chart below, adjusted for export subsidies found in the preliminary determination of the companion countervailing duty investigation. Specifically, consistent with our longstanding practice, where the product under investigation is also subject to a concurrent countervailing duty investigation, we instruct the CBP to require a cash deposit or posting of a bond equal to the amount by which the normal value exceeds the EP, as indicated below, less the amount of the countervailing duty determined to constitute an export subsidy. Accordingly, for cash deposit purposes, we are subtracting from the applicable cash deposit rate that portion of the rate attributable to the export subsidies found in the affirmative countervailing duty determination for each respondent (i.e., 17.91 percent for Alpanil, 17.93 percent for Pidilite, and 17.92 for “All Others”). After the adjustment for the cash deposit rates attributed to export subsidies, the resulting cash deposit rates will be 9.70 percent for Alpanil, 47.68 percent for Pidilite, and 27.14 percent for “All Others.” These instructions suspending liquidation will remain in effect until further notice.

The weighted-average dumping margins are as follows:

Disclosure

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

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. 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 CVP-23 from India are materially injuring, or threaten material injury to, the U.S. industry.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs on the later of 50 days after the date of publication of this notice or one week after the issuance of the verification reports. 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. Executive summaries should be limited to five pages total, including footnotes. Further, we request that parties submitting briefs and rebuttal briefs provide the Department with a copy of the public version of such briefs on diskette.

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 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). The Department will make its final determination no later than 135 days after the date of publication of this preliminary determination.

This determination is issued and published in accordance with sections 733(f) and 777(i)(1) of the Act.