Notice of Preliminary Results of Antidumping Duty Administrative Review: Certain In-Shell Raw Pistachios From Iran

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of antidumping administrative review.

SUMMARY:

In response to a request from Tehran Negah Nima Trading Company, Inc., trading as Nima Trading Company, (collectively, Nima), the U.S. Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on certain in-shell raw pistachios from Iran. The period of review is July 1, 2002, through June 30, 2003. We have preliminarily determined that Nima has made sales at not less than normal value during the period covered by this review. The preliminary results are listed below in the section titled “Preliminary Results of Review.” Interested parties are invited to comment on these preliminary results.

EFFECTIVE DATE:

August 9, 2004.

FOR FURTHER INFORMATION CONTACT:

Angelica Mendoza at (202) 482-3019 or Abdelali Elouaradia at (202) 482-1374; AD/CVD Operations, Office Six, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

The Department published in the Federal Register an antidumping duty order on certain in-shell raw pistachios (pistachios) from Iran on July 17, 1986. See Antidumping Duty Order: Certain In Shell Pistachios from Iran, 51 FR 25922 (July 17, 1986). On July 2, 2003, the Department published a notice of opportunity to request an administrative review of the antidumping duty order on pistachios from Iran, 68 FR 39511. On July 30, 2003, Nima, an exporter of subject merchandise during the period of review, requested that the Department conduct an administrative review of its sales to the United States covered by the antidumping duty order. On August 22, 2003, the Department initiated an administrative review of the antidumping duty order on pistachios from Iran for the period July 1, 2002, through June 30, 2003, in order to determine whether merchandise imported into the United States was sold at less than fair value by Nima. See Initiation of Antidumping and Countervailing Duty Administrative Review and Requests for Revocations in Part, 68 FR 50750 (Administrative Review Initiation).

On August 29, 2003, the Department issued Nima an antidumping duty questionnaire. On September 19, 2003, Nima filed its response to Section A of the Department's questionnaire. We received Nima's response to Section C of the Department's questionnaire on October 14, 2003.

On October 24, 2003, petitioner, California Pistachio Commission, filed comments on Nima's Section A and C questionnaire responses and filed a request that the Department determine whether antidumping duties had been absorbed during the period of review by Nima. See “Duty Absorption” section below. We received comments on Nima's Section A and C questionnaire responses from Cal Pure Pistachios, Inc. (Cal Pure), an interested party in this proceeding, on November 6, 2003.

On November 7, 2003, the Department issued a Section D antidumping duty questionnaire soliciting information from Nima's supplier of pistachios, Razi Domghan Agricultural and Animal Husbandry Company (Razi Farm). On November 20, 2003, we issued Nima a supplemental questionnaire covering its Section A and C responses. On November 25, 2003, petitioner requested that the Department conduct a verification of Nima's questionnaire responses. We received Nima's first supplemental Section A and C questionnaire response on December 4, 2003.

On December 11, 2003, petitioner requested that the Department extend the deadline for new factual information until 30 days before issuance of the preliminary results. In response to petitioner's request, on December 16, 2003, the Department extended the deadline for submitting new factual information in this proceeding until 60 days prior to issuance of the preliminary results.

On December 31, 2003, Razi Farm filed its Section D questionnaire response. Petitioner and Cal Pure filed comments on Nima's first supplemental questionnaire response on January 9, 2004. On January 16, 2004, the Department issued Nima a second supplemental Section A and C questionnaire. We received comments on Razi Farm's Section D questionnaire response from petitioner and Cal Pure on January 20, 2004. On January 27, 2004, Razi Farm filed original copies of certificates of representation and of facts. On January 28, 2004, petitioner submitted factual information regarding current conditions in Iran. On January 30, 2004, petitioner submitted factual information with respect to Nima's pistachio supplier in Iran.

On February 2, 2004, we issued a supplemental Section D questionnaire to Razi Farm. On February 5, 2004, the Department fully extended its deadline for the preliminary results of this review. See Certain In-Shell Raw Pistachios from Iran; Extension of Time Limit for Preliminary Results of Administrative Review, 69 FR 5487.

On February 6, 2004, we received Nima's second supplemental Section A and C questionnaire response. We received Razi Farm's first supplemental Section D questionnaire response on March 1, 2004. Petitioner filed comments on Nima's second supplemental Section A and C questionnaire response on March 1, 2004.

On March 19, 2004, petitioner and interested parties (i.e., Cal Pure and Western Pistachios Association) filed comments on Razi Farm's first supplemental Section D questionnaire response. The Department issued a second supplemental Section D questionnaire to Razi Farm on March 23, 2004. On April 2, 2004, petitioner withdrew its January 30, 2004, filing that included factual information with respect to Nima's pistachio supplier in Iran. We received Razi Farm's second supplemental Section D questionnaire response on April 19, 2004. On May 3, 2004, Cal Pure filed comments on Razi Farm's supplemental response. On May 12, 2004, we issued Razi Farm a third supplemental Section D questionnaire response.

On May 18, 2004, petitioner filed factual information regarding Razi Farm's knowledge that the pistachios it sold to Nima were destined for the United States. On May 21, 2004, we solicited information from Razi Farm as to the types of documents that would be available during our cost verification. On May 24, 2004, we received from petitioner a request to rescind the instant review in which petitioner alleged that Razi Farm knew or should have known that the goods it sold to Nima were for export to the United States.

On May 25, 2004, Razi Farm filed its third supplemental Section D questionnaire response. On the same day, Nima also filed a copy of its 2002 tax return. We issued our agendas for verification to Nima and Razi Farm on June 2, 2004. On June 3, 2004, and June 4, 2004, we received pre-verification comments from petitioner and Cal Pure. On June 4, 2004, Cal Pure requested that the Department cancel verification. On July 7, 2004, we received comments from petitioner for consideration in these preliminary results.

Period of Review

The period of review (POR) is July 1, 2002 through June 30, 2003.

Scope of Antidumping Duty Order

The product covered by the antidumping duty order is raw, in-shell pistachio nuts from which the hulls have been removed, leaving the inner hard shells, and edible meats from Iran. This merchandise is currently provided for in item 0802.50.20.00 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheading is provided for convenience and customs purposes, the Department's written description of the merchandise under order is dispositive.

Verification

As provided in section 782(i)(3) of the Tariff Act of 1930, as amended (the Act) and section 351.307 of the Department's regulations, we conducted verification of U.S. sales and cost questionnaire responses submitted by Nima and Razi Farm from June 7, 2004, through June 9, 2004 in Yerevan, Armenia. Although the verification was conducted off-site, we used standard verification procedures, including the examination of relevant sales, cost, and financial records, and a selection of original documentation. Our verification results are outlined in the Memorandum to the File through Abdelali Elouaradia, Program Manager, Office 6, Administrative Review of the Antidumping Duty Order on Certain In-Shell Raw Pistachios from Iran: Verification of U.S. Sales Questionnaire Responses Submitted by Tehran Negah Nima Trading Company, Ltd. (Nima), dated June 29, 2004 (Sales Verification Report); and Memorandum to Neal Halper, Director, Office of Accounting, Antidumping Duty Administrative Review of Certain In-Shell Raw Pistachios from Iran: Verification Report on Cost of Production and Constructed Value Data Submitted by Razi Farm, dated June 29, 2004 (Cost Verification Report).

Duty Absorption

As noted in the “Background” section above, on October 24, 2003, petitioner requested that the Department determine whether antidumping duties had been absorbed during the POR by Nima. Section 751(a)(4) of the Act provides that the Department, if requested, determine during an administrative review initiated two or four years after the publication of the order whether antidumping duties have been absorbed by a foreign producer or exporter, if the subject merchandise is sold in the United States through an affiliated importer.

Because the antidumping duty order was published seventeen years prior to the initiation of this review, we determine that petitioner's request is unwarranted by section 751(a)(4) of the Act. Moreover, neither the foreign producer nor the exporter subject to the instant order is affiliated with the U.S. importer. Therefore, we find that section 751(a)(4) of the Act is not applicable to this review, and accordingly, we did not determine whether antidumping duties had been absorbed during the POR by Nima.

Bona Fides of Sale Under Review

Based on questionnaire responses submitted by Nima, and our verification thereof, we preliminarily determine that Nima's sale to the United States constitutes a bona fide commercial transaction. We note that in the recent new shipper review of Nima the Department faced similar facts and concluded that the sale of a relatively small quantity of pistachios shipped via air freight was a bona fide arm's-length transaction. See Final Results of Antidumping Duty New Shipper Review: Certain In-Shell Raw Pistachios from Iran, 68 FR 353 (January 3, 2003) and accompanying Issues and Decision Memorandum at Comment 2.

Application of Knowledge Test

Based on our examination of the questionnaire responses and verification findings, we preliminarily determine, in accordance with the Department's established practice, that Razi Farm neither knew nor should have known that the merchandise under review was for export to the United States at the time of the sale.

Under section 772(a) of the Act, the basis for export price is the price at which the first party in the chain of distribution who has knowledge of the U.S. destination of the merchandise sells the subject merchandise, either directly to a U.S. purchaser or to an intermediary such as a trading company. The party making such a sale, with knowledge of the destination, is the appropriate party to be reviewed. See Certain Pasta from Italy: Termination of New Shipper Antidumping Duty Administrative Review, 62 FR 66602 (December 19, 1997) (Pasta from Italy). The Department's test for determining knowledge is whether the relevant party knew or should have known that the merchandise was destined for the United States.

In determining whether a party knew or should have known that its merchandise was destined for the United States, the Department's well-established practice is to consider such factors as: (1) Whether that party prepared or signed any certificates, shipping documents, contracts or other papers stating that the destination of the merchandise was the United States; (2) whether that party used any packaging or labeling which stated that the merchandise was destined for the United States; (3) whether any unique features or specifications of the merchandise otherwise indicated that the destination was the United States; and (4) whether that party admitted to the Department that it knew that its sales were destined for the United States. See, e.g., Dynamic Random Access Memory Semiconductors of One Megabit or Above from the Republic of Korea: Final Results of Antidumping Duty Administrative Review and Determination Not To Revoke the Order in Part, 64 FR 69694 (December 14, 1999); Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Synthetic Indigo from the People's Republic of China, 64 FR 69723 (December 14, 1999) (unchanged in final determination); and Pasta from Italy, 62 FR 66602 (December 19, 1997). Because at the time of the sale none of the above factors appears to be present in the instant case, the Department preliminarily determines that Razi Farm neither knew nor should have known that the pistachios it sold to Nima were destined for the United States.

Based upon the Department's analysis of record documentation, we conclude that there is no evidence that Razi Farm prepared or signed any documentation relevant to the shipping, handling, and packing of the merchandise for export during the POR. Instead, the record clearly indicates that Nima, not Razi Farm, prepared and signed all certificates, shipping documents, contracts or other papers identifying the destination of the merchandise as the United States. See Nima's September 19, 2003, Section A questionnaire response at Exhibit 6. Moreover, the record is void of evidence that Razi Farm used any packaging or labeling which stated that the merchandise was destined for the United States. Rather, the record indicates that Nima re-packed the merchandise for shipment to the United States. See Nima's December 4, 2003, supplemental questionnaire response at 6. Further, there were no unique features or specifications of the merchandise that would otherwise indicate that it was destined for the United States.

In addition, as noted above, the Department analyzed Nima's response recounting conversations that it had with Razi Farm around the time of the sale. In particular, Nima informed Razi Farm that it might receive a questionnaire from some foreign government, including the U.S. government (U.S. Department of Commerce). See Nima's December 4, 2003 supplemental questionnaire response at 3 and 10. We find that while Nima's statements indicate that these pistachios would be used for an export sale, Nima did not clearly indicate to which market the pistachios would be shipped. The statements alone are inconclusive in determining whether Razi Farm knew or should have known at the time of sale that the pistachios it sold to Nima were destined for the United States.

Furthermore, during verification, the general manager of Razi Farm stated that he first learned that the pistachios he sold to Nima were exported to the United States in May 2004, approximately a year after the date of the sale. See Sales Verification Report at 4. It is clear from the statements made by Razi Farm's general manager during verification that Razi Farm did not admit to the Department that it knew that its sales were destined for the United States at the time of its sale to Nima. Therefore, contrary to petitioner's and Cal Pure's claims, we do not find that Nima's account of conversations it had with Razi Farm during the POR compel the Department to find that Razi Farm had knowledge as defined in section 772(a) of the Act. Moreover, there is no evidence currently on the record that meets the factors, described above, considered by the Department in its knowledge test. We also note that unsubstantiated conversations and hearsay placed on the record by petitioners are not evidence sufficient for this analysis. In summary, in considering the totality of current record information, we preliminarily determine that Razi Farm neither knew nor should have known at the time of sale that the pistachios it sold to Nima were destined for the United States.

In light of the significance of this issue, the Department will allow parties to submit written comments and any additional documentary evidence based on factual information that indicate that Razi Farm did or did not have knowledge that the goods in question were destined for the United States at the time of the sale, in accordance with the types of factors listed above. Comments and factual evidence with respect to this issue are due no later than 14 calendar days after the publication date of these preliminary results.

Product Comparisons

In accordance with section 771(16) of the Act, we considered all products produced by the respondent covered by the description in the “Scope of Antidumping Duty Order” section above and sold in the comparison market during the POR, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. As there were no home market foreign like products to compare to a U.S. sale, we used constructed value (CV).

United States Price

For Nima, we based the United States price on export price (EP), in accordance with section 772(a) of the Act, because the first sale to an unaffiliated purchaser was made prior to importation, and constructed export price was not otherwise warranted by the facts on the record. We calculated EP based on the packed price from the exporter to the first unaffiliated customer in the United States. We deducted inland freight expenses from the starting price (gross unit price), in accordance with section 772(c) of the Act.

Normal Value Based on CV

In accordance with section 773(e) of the Act, we calculated CV based on the sum of the cost of materials and fabrication of the subject merchandise, plus amounts for selling, general, and administrative (SG&A) expenses, interest, profit, and U.S. packing costs. In particular, we calculated CV based on the producer's (Razi Farm's) costs of materials and fabrication of the subject merchandise, G&A, and interest, plus the exporter's (Nima's) SG&A expenses and an amount for profit.

The producer's costs were submitted in three supplemental section D responses as well as a copy of a production cost study compiled by the Iranian Ministry of Finance based on production of pistachio farms in Iran. The producer provided copies of company ledgers maintained for the farm and sales invoices. See Razi Farm's May 25, 2004, third supplemental questionnaire response. We verified the producer's data and information provided in Razi Farm's responses in June 2004. See Cost Verification Report.

Because there were no viable home market sales or third country sales made by Nima during the POR, we cannot calculate CV profit under section 773(e)(2)(A) of the Act. Section 773(e)(2)(B)(iii) of the Act allows the Department to use amounts incurred and realized for profits based on any other reasonable method, as long as that profit does not exceed the amount normally realized by exporters or producers in connection with the sale for consumption in the foreign country of merchandise that is in the same general category of products as the subject merchandise. Using the methodology established in a prior segment of this proceeding, we based profit on a home market sale made by an Iranian pistachio farmer in Nima's new shipper review pursuant to section 773(e)(2)(B)(iii) of the Act. See Certain In-Shell Raw Pistachios from Iran: Preliminary Results of Antidumping Duty New Shipper Review, 67 FR 50863 (August 6, 2002) (unchanged in the final results). The profit rate is a profit realized in connection with a sale for consumption in the foreign country of subject merchandise. There is no evidence on the record that indicates this profit rate is aberrational or not representative of home market profit rates of subject merchandise. However, we may revisit this rate calculation in computing CV for our final results. See Memorandum from Gina K. Lee through Michael P. Martin to Neal M. Halper, Constructed Value Adjustments for Preliminary Results, dated July 30, 2004 (CV Prelim Memo).

For these preliminary results, we have relied on the submitted CV, except where noted below:

1. We recalculated depreciation expense to correct an error.

2. We revised the reported pesticide expenses for a clerical error.

3. We increased the electricity expenses to reflect the costs for an entire year.

4. We calculated a profit rate based on publicly available information.

See CV Prelim Memo for details.

Currency Conversion

We made currency conversions pursuant to section 351.415 of the Department's regulations at the rates certified by the Federal Reserve Bank or by Dow Jones Reuter Business Interactive, LLC (trading as Factiva).

Preliminary Results of Review

We preliminarily determine that an antidumping duty margin does not exist for the following exporter:

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

Pursuant to 19 CFR 351.309 of the Department's regulations, interested parties may submit written comments and/or case briefs on these preliminary results. Comments and case briefs must be submitted no later than thirty days after the date of publication of this notice. Rebuttal comments and briefs must be limited to issues raised in the case briefs and comments, and must be submitted no later than five days after the time limit for filing case briefs and comments. Parties submitting arguments in this proceeding are requested to submit with the argument: (1) A statement of the issue, and (2) a brief summary of the argument. Case and rebuttal briefs and comments must be served on interested parties in accordance with 19 CFR 351.303(f). Also, within thirty days of the date of publication of this notice, an interested party may request a public hearing on the arguments to be raised in the case and rebuttal briefs and comments. See 19 CFR 351.310(c). Unless otherwise specified, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, or the first working day thereafter. The Department will issue the final results of this administrative review, including the results of its analysis of issues raised in any case and rebuttal briefs and comments, within 120 days of publication of these preliminary results.

Assessment Rates

Upon completion of this administrative review, the Department will determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have calculated an importer-specific assessment rate for merchandise subject to this review. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of review. If these preliminary results are adopted in the final results of review, we will direct CBP to assess the resulting assessment rates against the entered customs values for the subject merchandise on each of the importer's entries during the review period.

Cash Deposit

The following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(1) of the Act: (1) The cash deposit rate for Nima will be the rate established in the final results of this administrative review (except that no deposit will be required if the rate is zero or de minimis, i.e., less than 0.5 percent); (2) for previously reviewed or investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (3) if the exporter is not a firm covered in this review, a prior review, or the original less than fair value (LTFV) investigation, but the producer is, the cash deposit rate will be the rate established for the most recent period for the producer of the merchandise; and (4) if neither the exporter nor the producer is a firm covered in this review, a prior review, or the original LTFV investigation, the cash deposit rate will continue to be the “all others” rate of 184.28 percent established in the LTFV investigation. This rate reflects the amount of export subsidies found in the final countervailing duty determination in the investigation subtracted from the dumping margin found in the LTFV determination. See Final Affirmative Countervailing Duty Determination and Countervailing Duty Order; In-Shell Pistachios From Iran, 51 FR 8344 (March 11, 1986). These cash deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this administrative review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.