[Federal Register Volume 75, Number 239 (Tuesday, December 14, 2010)]
[Notices]
[Pages 77831-77838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-31370]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-840]


Lightweight Thermal Paper From Germany: Notice of Preliminary 
Results of Antidumping Duty Administrative Review

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

SUMMARY: The Department of Commerce (``the Department'') is conducting 
an administrative review of the antidumping duty order on lightweight 
thermal paper from Germany. For the period November 20, 2008, through 
October 31, 2009, we have preliminarily determined that Papierfabrik 
August Koehler AG and Koehler America, Inc. (collectively, ``Koehler'') 
did not make sales of subject merchandise at less than normal value 
(``NV'') (i.e., sales were made at de minimis dumping margins). If 
these preliminary results are adopted in the final results of this 
administrative review, we will instruct U.S. Customs and Border 
Protection (``CBP'') to liquidate appropriate entries without regard to 
antidumping duties. See ``Preliminary Results of Review'' section of 
this notice. Interested parties are invited to comment on these 
preliminary results.

DATES: Effective Date: December 14, 2010.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or George McMahon, AD/
CVD Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
3692 or (202) 482-1167, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 2, 2009, the Department issued a notice of opportunity 
to request an administrative review of this order for the period of 
review (``POR'') November 20, 2008, through October 31, 2009. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 74 FR 
56573 (November 2, 2009).
    On November 30, 2009, we received a timely request from Appleton 
Papers, Inc. (``petitioner'') for the Department to conduct an 
administrative review of Mitsubishi HiTec Paper Flensburg GmbH, 
Mitsubishi HiTec Paper Bielefeld GmbH and Mitsubishi International 
Corporation (collectively, ``Mitsubishi''), and Papierfabrik August 
Koehler AG and Koehler America, Inc. (collectively, ``Koehler''). We 
also received a request from Koehler for the Department to conduct an 
administrative review of Koehler.
    On December 23, 2009, the Department published the notice of 
initiation of this antidumping duty administrative review covering the 
period November 20, 2008, through October 31, 2009, naming Mitsubishi 
and Koehler as respondents. See Initiation of Antidumping and 
Countervailing Duty Administrative Reviews and Request for Revocation 
in

[[Page 77832]]

Part, 74 FR 68229 (December 23, 2009) (``Initiation Notice''). On 
December 23, 2009, the Department also issued initial questionnaires 
covering Sections A, B, C, and E to Mitsubishi and Koehler with a due 
date of January 29, 2010.
    On January 26, 2010, petitioner, the sole party that requested a 
review of Mitsubishi timely withdrew its request for a review of 
Mitsubishi. Accordingly, the Department rescinded the administrative 
review with respect to Mitsubishi. See Lightweight Thermal Paper from 
Germany: Notice of Partial Rescission of Antidumping Duty 
Administrative Review, 75 FR 11135 (March 10, 2010).
    On January 29, 2010, Koehler submitted its response to Section A of 
the Department's initial questionnaire. On February 16, 2010, Koehler 
submitted its response to Sections B and C of the Department's initial 
questionnaire. On March 8, 2010, petitioner requested that the 
Department conduct an investigation of sales below cost of production 
by Koehler (March 8th Cost Allegation). On March 19, 2010, the 
Department issued questions to petitioner to obtain additional 
information regarding its March 8th Cost Allegation. On March 23, 2010, 
petitioner responded to the Department's March 19, 2010, questionnaire 
regarding the sales below cost allegation it filed with respect to 
Koehler, and on March 25, 2010, Koehler commented on petitioner's March 
23, 2010, response. In the letter of March 23, 2010, Koehler asserted 
that the basis for petitioner's March 8th Cost Allegation is 
unrepresentative of Koehler's costs and should be rejected. On April 6, 
2010, the Department requested additional information from petitioner 
regarding its allegation of below cost sales made by Koehler, and 
petitioner responded on April 8, 2010. On April 16, 2010, Koehler 
commented on petitioner's April 8, 2010, response to the Department's 
questions regarding its March 8th Cost Allegation.
    On April 16, 2010, the Department found that petitioner had 
provided a reasonable basis to believe or suspect that Koehler is 
selling lightweight thermal paper (``LTWP'') at prices below its cost 
of production, and initiated a sales below cost investigation on April 
20, 2010. See Memorandum to Melissa Skinner, Director, Office 3 from 
the Team titled ``Petitioner's Allegation of Sales Below the cost of 
Production for Papierfabrik August Koehler AG,'' (``Sales Below Cost 
Memo'') dated April 16, 2010.
    On April 19, 2010, petitioner submitted factual information from 
the investigation for the record of the instant administrative review. 
On April 21, 2010, Koehler requested that it be allowed to report its 
costs based on its fiscal year 2009 costs instead of the POR, and the 
Department responded on the same date with a letter to Koehler 
requesting additional information. On April 23, 2010, Koehler submitted 
its reply to the Department's April 21, 2010, letter seeking certain 
additional cost information. On April 28, 2010, and on May 7, 2010, 
petitioner submitted letters objecting to Koehler's request to shift 
its cost reporting period, on the basis that weighted-average POR costs 
would be distorted if Koehler's request to report its costs based on 
its fiscal year was granted. On April 29, 2010, the Department 
requested additional cost information from Koehler regarding Koehler's 
request to shift the cost reporting period. On May 6, 2010, Koehler 
submitted its reply to the Department's April 21, 2010, letter seeking 
certain additional cost information. On May 10, 2010, the Department 
denied Koehler's request to shift its cost reporting period in this 
administrative review.
    On May 25, 2010, Koehler submitted its response to Section D of the 
Department's initial questionnaire which was issued on April 20, 2010. 
On June 11, 2010, petitioner submitted deficiency comments concerning 
Koehler's supplemental sales and initial cost responses. On June 17, 
2010, Koehler submitted a letter in response to the petitioner's letter 
of June 11, 2010.
    On July 16, 2010, the Department published a notice extending the 
time period for issuing the preliminary results of the administrative 
review from August 2, 2010, to December 7, 2010. See Lightweight 
Thermal Paper from Germany: Extension of Time Limits for the 
Preliminary Results of Antidumping Duty Administrative Review, 75 FR 
41439 (July 16, 2010).
    The Department issued several supplemental questionnaires to 
Koehler and received timely responses to its requests for additional 
information.
    On November 5, 2010, petitioner submitted ``pre-preliminary 
results'' comments to reiterate certain comments that it previously 
made in this review. Specifically, the petitioner argues that the 
Department should disregard Koehler's home market sales of the 48 grams 
per square meter (g/m \2\) product, alleging that such sales 
established a fictitious market and were made outside the ordinary 
course of trade. The petitioner argues that if the Department does not 
exclude Koehler's sales of KT 48 F20 thermal paper from its margin 
calculations, then it should disallow certain rebates relating to those 
sales.

Period of Review

    The POR is November 20, 2008, through October 31, 2009.

Scope of the Order

    The scope of this order includes certain lightweight thermal paper, 
which is thermal paper with a basis weight of 70 grams per square meter 
(g/m \2\) (with a tolerance of <plus-minus> 4.0 g/m \2\) or less; 
irrespective of dimensions; \1\ with or without a base coat \2\ on one 
or both sides; with thermal active coating(s) \3\ on one or both sides 
that is a mixture of the dye and the developer that react and form an 
image when heat is applied; with or without a top coat; \4\ and without 
an adhesive backing. Certain lightweight thermal paper is typically 
(but not exclusively) used in point-of-sale applications such as ATM 
receipts, credit card receipts, gas pump receipts, and retail store 
receipts. The merchandise subject to this order may be classified in 
the Harmonized Tariff Schedule of the United States (``HTSUS'') under 
subheadings 3703.10.60, 4811.59.20, 4811.90.8040, 4811.90.9090, 
4820.10.20, and 4823.40.00.\5\ Although HTSUS subheadings are provided 
for convenience and customs purposes, the written description of the 
scope of this order is dispositive.
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    \1\ LWTP is typically produced in jumbo rolls that are slit to 
the specifications of the converting equipment and then converted 
into finished slit rolls. Both jumbo and converted rolls (as well as 
LWTP in any other form, presentation, or dimension) are covered by 
the scope of these orders.
    \2\ A base coat, when applied, is typically made of clay and/or 
latex and like materials and is intended to cover the rough surface 
of the paper substrate and to provide insulating value.
    \3\ A thermal active coating is typically made of sensitizer, 
dye, and co-reactant.
    \4\ A top coat, when applied, is typically made of polyvinyl 
acetone, polyvinyl alcohol, and/or like materials and is intended to 
provide environmental protection, an improved surface for press 
printing, and/or wear protection for the thermal print head.
    \5\ HTSUS subheading 4811.90.8000 was a classification used for 
LWTP until January 1, 2007. Effective that date, subheading 
4811.90.8000 was replaced with 4811.90.8020 (for gift wrap, a non-
subject product) and 4811.90.8040 (for ``other'' including LWTP). 
HTSUS subheading 4811.90.9000 was a classification for LWTP until 
July 1, 2005. Effective that date, subheading 4811.90.9000 was 
replaced with 4811.90.9010 (for tissue paper, a non-subject product) 
and 4811.90.9090 (for ``other,'' including LWTP).
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Product Comparisons

    In accordance with section 771(16) of the Tariff Act of 1930, as 
amended (``the Act''), all products produced by Koehler covered by the 
description in the ``Scope of the Order'' section above and sold in 
Germany during the POR are considered to be foreign like products for 
purposes of determining appropriate product

[[Page 77833]]

comparisons to U.S. sales. We have relied on 12 criteria to match U.S. 
sales of subject merchandise to comparison market sales of the foreign 
like product: (1) Form, (2) thermal active coating, (3) top coating, 
(4) basis weight, (5) maximum optical density units, (6) static 
sensitivity, (7) dynamic sensitivity, (8) color coating, (9) printing, 
(10) width, (11) length, and (12) core material. Where there were no 
sales of identical merchandise in the home market made in the ordinary 
course of trade to compare to U.S. sales, we compared U.S. sales to the 
next most similar foreign like product on the basis of the 
characteristics listed above.
    For purposes of these preliminary results, where appropriate, we 
have calculated the adjustment for differences in merchandise based on 
the difference in the variable cost of manufacturing (``VCOM'') between 
each U.S. model and the most similar home market model selected for 
comparison.

Comparisons to Normal Value

    To determine whether sales of LWTP from Germany were made in the 
United States at less than NV, we compared the export price (``EP'') or 
constructed export price (``CEP'') to the NV, as described in the 
Export Price and Constructed Export Price and Normal Value sections of 
this notice. In accordance with section 777A(d)(2) of the Act, we 
calculated monthly weighted-average prices for NV and compared these to 
individual U.S. transaction prices.

Allegation of a Fictitious Market

    In petitioner's letter dated March 5, 2010, petitioner argued that 
the Department should scrutinize Koehler's pricing in the German 
market. Petitioner asserts that there is evidence in the pricing trends 
for certain products which indicate that Koehler has artificially 
manipulated prices for certain sales or created a ``fictitious market'' 
within the meaning of section 773(a)(2) of the Act. Citing Stainless 
Steel Bar from India,\6\ and Gray Portland Cement and Clinker From 
Mexico,\7\ the petitioner states that the Department investigates 
whether there might be a ``fictitious market'' where there is evidence 
of ``different movements in prices at which forms of the foreign like 
product are sold,'' and where such movements tend to reduce normal 
value for the like product matching to the respondent's U.S. sales.\8\
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    \6\ See Stainless Steel Bar from India; Preliminary Results of 
New Shipper Review, 64 FR 46350, 46352 (August 25, 1999) (citing 
Tubeless Steel Disc Wheels from Brazil; Final Results of Antidumping 
Duty Administrative Review, 56 FR 14085 (April 1, 1991)).
    \7\ See Gray Portland Cement and Clinker From Mexico; Final 
Results of Antidumping Duty Administrative Review, 58 FR 25803, 
25804 (April 28, 1993).
    \8\ See petitioner's comments, dated March 5, 2010, at pages 7-
8.
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    Petitioner states that heavier basis weight paper is more costly to 
produce, and thus, commands a higher price, than lighter basis weight 
paper on a per square meter basis because of the additional material 
required to produce the same area. However, petitioner states that, 
when priced on a per kilogram basis, heavier basis weight paper is 
generally less expensive than lighter basis weight paper. The 
petitioner asserts that Koehler's reporting of its sales prices in the 
home market does not follow this relationship and contends that 
Koehler's explanation based on the relative demand of the products does 
not explain the alleged distortions in Koehler's home market prices.\9\ 
The petitioner alleges that there is a significant difference in price 
movements between Koehler's home market sales of certain products.\10\ 
The petitioner asserts that Koehler has manipulated its sales in such a 
way that causes artificial price comparisons with Koehler's U.S. sales.
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    \9\ See petitioner's comments, dated November 5, 2010, at pages 
5-7.
    \10\ See petitioner's comments, dated March 5, 2010, at page 8.
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    Koehler refutes petitioner's assertions that Koehler has 
artificially manipulated prices for certain sales or created a 
fictitious market. Koehler claims that it has been marketing KT 48 F20 
in commercial quantities in the German and U.S. markets since February 
2007, and that such sales are normal market transactions. Koehler 
states that the KT 48 F20 lowers transportation costs by 15 percent, 
because a reel of KT 48 F20 provides 15 percent more length than a reel 
of KT 55 F20. Koehler explains that there are relatively more sales of 
KT 48 F20 in the United States than in Germany because it is lighter 
and longer than KT 55 F20, which translates to fewer reels needed and a 
reduction in the cost of transportation. Koehler states that shipping 
costs are not as significant in Germany because all German destinations 
are much closer compared to U.S. destinations. Therefore, German 
companies tend to purchase less KT 48 F20 than U.S. companies. Koehler 
also points out what it claims to be other additional benefits for U.S. 
companies that purchase KT 48 F20, such as less waste paper and time 
lost due to changing reels that do not have the length of KT 48 
F20.\11\
    Koehler states that data for the POR, plus sales data from the 
period of investigation (``POI''), show a consistent pricing pattern in 
Germany in which KT 55 F20 sells at a higher price than KT 48 F20. 
Koehler contends that petitioner's assertion relating pricing to grams 
per square meter of merchandise ignores the role of market demand in 
pricing, and further contends that there is no one-to-one relationship 
between grams per square meter and price. Furthermore, Koehler states 
that it needs to offer competitive prices in the home market to attract 
customers to this new product.
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    \11\ See Koehler's March 16, 2010 letter, at pages 3- 5; see 
also Koehler's Section A-C Supplemental Questionnaire response, 
dated April 15, 2010, at pages 8-10 and Exhibit S-8.
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    In accordance with section 773(a)(2) of the Act, no pretended sale 
or offer for sale, and no sale or offer for sale intended to establish 
a fictitious market, shall be taken into account in determining normal 
value. The occurrence of different movements in the prices at which 
different forms of the foreign like product are sold (or, in the 
absence of sales, offered for sale) in the exporting country after the 
issuance of an antidumping duty order may be considered by the 
administering authority as evidence of the establishment of a 
fictitious market for the foreign like product if the movement in such 
prices appears to reduce the amount by which the normal value exceeds 
the export price (or the constructed export price) of the subject 
merchandise.
    In Gray Portland Cement and Clinker From Mexico, we stated that 
``the existence of a fictitious market is not necessarily established 
merely on the basis of price movements without regard to the reasons 
that may have caused those price movements. The presence of commercial 
factors other than the existence of an antidumping duty order is 
relevant in determining whether a fictitious market exists.'' See Gray 
Portland Cement and Clinker From Mexico; Final Results of Antidumping 
Duty Administrative Review, 58 FR 25803, 25804 (April 28, 1993). 
Accordingly, the Department will examine not only whether there are 
price movements, but also whether there are commercial or market 
factors that explain these price movements. A review of the record of 
this case shows that the International Trade Commission (``ITC'') 
examined U.S. market conditions in its report issued for its 
Preliminary Determination and noted a shift from the 55 g/m\2\ product 
to the 48 g/m\2\ product. Based on the analysis performed by the ITC, 
it stated that ``the entire increase in subject import volume

[[Page 77834]]

from Germany from 2005 to interim 2007 was attributable to increased 
shipments of the 48 gram product. At the same time, subject imports 
from Germany of the traditional 55 gram product have declined since 
2005.'' See ITC Preliminary Determination Report: Certain Lightweight 
Thermal Paper from China and Germany, Investigation Nos. 701-TA-451 and 
731-TA-1126-1127 (``Preliminary Determination'') at 48-49, Publication 
3964, November 2007. See also Preliminary Results Calculations in the 
08/09 Administrative Review of Lightweight Thermal Paper from Germany 
at Appendix 3 (``Preliminary Results Calculation Memo'').
    Similarly, the ITC's Final Determination Report analysis of the 
trends in the basis weight of thermal paper sales stated that: 
``{a{time} ccording to Appleton, paper markets have, in general, been 
gravitating toward lighter basis weight products, and in recent years, 
certain LW thermal paper weighing 48 g/m\2\ has been introduced into 
the U.S. market at a discount to the 55 g/m\2\ product, which makes it 
appealing to some converters. However, Appleton contends that there has 
not been a big push by end users for lighter basis weights and that 
market acceptance of the 48 g/m\2\ product has been limited because of 
certain disadvantages (e.g., thinner paper more prone to breaking 
during converting, smaller converted rolls, and the need to inventory 
more types of packaging). On the other hand, Koehler, which introduced 
its 48 g/m\2\ certain LW thermal paper to the U.S. market in 2005, sees 
an advantage in the thinner paper in that it can be used to make a 
longer finished roll with the same diameter meaning less time spent by 
the end user changing rolls. Koehler also notes that the product has a 
freight advantage for converters because they can ship 10 percent more 
footage at the same shipping weight, and the firm expects sales of the 
48 g/m\2\ product to continue growing.'' See ITC Report: Certain 
Lightweight Thermal Paper from China and Germany, Investigation Nos. 
701-TA-451 and 731-TA-1126-1127 (Final) at I-8. Publication 4043, 
November 2008. See also Preliminary Results Calculations Memo.
    The Department's review of the marketing materials (i.e., product 
brochures) submitted by Koehler combined with the ITC discussion of the 
48 g/m\2\ product in the context of the underlying investigation 
provides evidence that this is a relatively new product with expected 
growth in the United States. See Koehler's Section A-C Supplemental 
Questionnaire response, dated April 15, 2010, at pages 8-10 and Exhibit 
S-8. Koehler's arguments about the effect of lower shipping costs, and 
the factual information on the record, are consistent with the ITC 
analysis of this product. This product's sales growth appears to be 
more significant in the United States than in Germany because freight 
cost for shipping the subject merchandise is comparatively more 
important in the U.S. market than in Germany, as the United States is a 
larger country and the distances to deliver to the United States are 
much more significant than in Germany.
    In addition, we find that petitioner's allegation that there are 
different price trends for certain product(s) is inaccurate. 
Specifically, we disagree with the petitioner's analysis because it 
examined only net prices and was predicated on a prior version of 
Koehler's home market sales database, which has been corrected by 
Koehler to account for all of Koehler's rebates during the reporting 
period covered by this review. Koehler reported that, in the first 
version of the home market sales database that it submitted in this 
review, it inadvertently excluded certain quarterly rebates which apply 
to the period immediately prior to the POR for KT 48 F20. See Koehler's 
Section A-C Supplemental Questionnaire response, dated April 15, 2010, 
at pages 16-17. Once these rebates were accounted for, the Department's 
analysis of this data shows the general price trend for the products at 
issue is consistent over time, based on the revised rebate amounts and 
corresponding gross and net prices for the pre-POR and POR time 
periods. Therefore, the Department preliminary finds that Koehler's 
pricing of sales of certain products in Germany does not result in a 
fictitious market. Due to the proprietary nature of this issue, see 
Preliminary Results Calculations Memo.

Allegation of Sales Made Outside the Ordinary Course of Trade

    The petitioner argues that the Department should disregard 
Koehler's home market sales of the KT 48 F20 product, alleging that 
such sales were made outside the ordinary course of trade. The 
petitioner asserts that Koehler's home market sales of the KT 48 F20 
product comprise a relatively small portion of its home market sales 
and were made pursuant to unusual terms of sale based on the post-sale 
adjustments discussed below.
    Koehler rebuts these arguments, claiming that it has been marketing 
KT 48 F20 in commercial quantities in the German and U.S. markets since 
February 2007, and that such sales are normal market transactions. 
Koehler reports sales of KT 48 F20 during the investigation and this 
POR to multiple customers. Koehler states that the 48 g/m\2\ product is 
still a relatively new product and faces relatively lower demand in the 
home market, as compared to its U.S. sales of 48 g/m\2\ and its home 
market sales of other products. In regard to its sales terms, Koehler 
states that it bases its pricing and rebates on its customer-specific 
sales negotiations and the commercial demand of its products relative 
to its other products.\12\
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    \12\ See Koehler's Section A-C Supplemental Questionnaire 
response, dated April 15, 2010, at pages 14-17.
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    The Department considers sales to be outside the ordinary course of 
trade when, ``based on an evaluation of all of the circumstances 
particular to the sales in question,'' they ``have characteristics that 
are extraordinary for the market in question.'' See 19 CFR 
351.102(b)(35). Although there is no exhaustive list of such 
characteristics, {e{time} xamples of sales that the Secretary might 
consider as being outside the ordinary course of trade are sales or 
transactions involving off-quality merchandise or merchandise produced 
according to unusual product specifications, merchandise sold at 
aberrational prices or with abnormally high profits, merchandise sold 
pursuant to unusual terms of sale, or merchandise sold to an affiliated 
party at a non-arm's length price. See 19 CFR 351.102(b)(35); see also 
section 771(15) of the Act and the Statement of Administrative Action 
accompanying the Uruguay Round Agreements Act, H.R. Doc. No. 103-316, 
Vol. 1 at 834 (1994) (``SAA'').
    We have examined the terms of sale for the products in question and 
the sales trends of the products in question. Koehler reported sales of 
KT 48 F20 to a number of customers in both the POI and the POR.\13\ 
Furthermore, we have evaluated all of the circumstances particular to 
the sales in question and do not find that such sales have 
characteristics that are extraordinary for the market in question. 
Based on our examination of the record, we find that there is no 
evidence on the record to demonstrate that Koehler's sales of KT 48 F20 
are based on transactions involving off-quality merchandise, 
merchandise produced according to unusual product specifications, 
merchandise sold at aberrational prices or with abnormally high 
profits, merchandise sold pursuant to unusual terms of sale, or 
merchandise sold to an

[[Page 77835]]

affiliated party at a non-arm's length price.
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    \13\ See Koehler's March 16, 2010 letter, at page 1.
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    In summary, the record of this review does not support a finding of 
sales outside the ordinary course of trade. Petitioner has not provided 
sufficient evidence to demonstrate that Koehler's sales of KT 48 F20 
are outside the ordinary course of trade.

Allegation That Koehler's Home Market Rebates Are Not Bona Fide 
Adjustments

    The petitioner argues that if the Department does not exclude 
Koehler's sales of KT 48 F20 thermal paper from its margin calculations 
on the basis that such sales were made outside the ordinary course of 
trade, then it should disallow certain rebates relating to those sales. 
Petitioner contends that the terms were not agreed to by the customers 
until after the respective sales occurred, and thus, the rebates are 
not within normal commercial considerations. Citing the Thai Pineapple 
Final Results,\14\ petitioner states that the Department's practice is 
to closely examine the circumstances surrounding the adjustment to 
determine whether it was a bona fide adjustment made in the ordinary 
course of business.
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    \14\ See Canned Pineapple from Thailand: Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 71 FR 
70948 (December 7, 2006), and accompanying Issues and Decision 
Memorandum at Comment 1 (Thai Pineapple Final Results).
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    The petitioner argues that Koehler has significantly increased the 
rebates to a particular customer in the home market during the POR. The 
petitioner asserts that Koehler has manipulated its sales prices by 
applying rebates to certain product(s). In its letter dated March 5, 
2010, the petitioner provided an analysis of certain products sold by 
Koehler in the home market using net prices for several months prior to 
the POR for comparison to the months during the POR. Based on this 
analysis, the petitoner asserts that Koehler artificially manipulated 
its home market pricing by applying higher rebates during the POR for 
the product(s) identified by petitioner, as compared to the months 
prior to the POR. The petitioner alleges that Koehler has applied a 
pricing scheme using post-sale adjustments and argues that these are 
not bona fide rebate adjustments where the customer knows the rebate 
amount at the time of sale.
    Koehler reports customer-specific rebates which may apply to all 
products or be product-specific. Koehler paid rebates on a periodic 
basis (either monthly, quarterly, or annually). The rebate terms were 
all agreed to on a percentage of gross unit price basis and differ by 
customer and by product. Koehler states that there are generally no 
written rebate agreements covering sales of subject merchandise during 
the POR. Koehler reports that it had these rebate agreements in place 
for several years and although there were initially written agreements 
with customers, the rebate practices had become routine enough by the 
POR that the parties did not bother with formalized written rebate 
agreements.\15\ Rather, the rebate percentage is simply specified on 
the relevant customer-specific price lists.
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    \15\ See Koehler's April 15, 2010, Supplemental Questionnaire 
Response at Exhibits S-11 through S-13.
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    Koehler rebuts petitioner's allegation that its home market prices 
were artificially manipulated, stating that its home market pricing and 
rebate percentages cannot be examined in isolation; rather, the sales 
prices are based on customer-specific price negotiations in which the 
starting prices may differ by customer and product based on commercial 
demand considerations. Koehler acknowledges that, in its reporting for 
certain sales, the customer may not know the exact percentage of the 
rebate that will be received until after the sale date. Koehler states 
that regardless of whether this adjustment may be referred to as a 
post-sale billing adjustment or a rebate, it must be accounted for as a 
reduction to normal value in the Department's margin calculations.
    The Department's practice is to reduce the gross selling price by 
the amount of the rebate when the seller establishes the terms and 
conditions under which the rebate will be granted at or before the time 
of sale. See, e.g., Certain Corrosion-Resistant Carbon Steel Flat 
Products and Certain Cut-to-Length Carbon Steel Plate From Canada; 
Final Results of Antidumping Duty Administrative Reviews, 61 FR 13815, 
13822-23 (March 28, 1996). Consistent with this practice, we have 
disallowed certain rebates that are instituted retroactively since such 
rebates could be designed to reduce the comparison market price for the 
purpose of reducing or eliminating dumping margins. See id. In the 
instant case, although certain customers may not always know the 
precise rebate amount at the time of the sale, the customer-specific 
price lists indicate the rebate percentages and the customers expect to 
receive rebates based on their existing, and in some cases, long-
standing relationship with Koehler and their prior written rebate 
agreements.
    We find that the fact pattern in this case is dissimilar to the 
fact pattern in cases such as Thai Pineapple Final Results.\16\ In Thai 
Pineapple Final Results, the Department was concerned as to why post-
sale price increases were made by the respondent, Vita, for only U.S. 
sales and not comparison market sales. The Department stated that in 
the Thai Pineapple Preliminary Results,\17\ it rejected the claimed 
post-sale price increases because (1) the record did not support Vita's 
rationale for the price increases; (2) Vita either could not supply an 
agreement providing for the price increases or supplied an agreement 
where virtually none of the terms of the agreement were followed; and, 
(3) the price increases appeared to be unique given there was no 
evidence that Vita made post-sale price adjustments to sales to any 
other markets or any other customers.\18\
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    \16\ See Canned Pineapple from Thailand: Final Results and 
Partial Rescission of Antidumping Duty Administrative Review, 71 FR 
70948 (December 7, 2006) (Thai Pineapple Final Results), and 
accompanying Issues and Decision Memorandum at Comment 1.
    \17\ See Canned Pineapple Fruit from Thailand: Preliminary 
Results of Antidumping Duty Administrative Review, 71 FR 44256 
(August 4, 2006) (Thai Pineapple Preliminary Results).
    \18\ Id.
---------------------------------------------------------------------------

    In the Thai Pineapple Final Results, the Department stated ``the 
circumstances surrounding the U.S. customers' payment of the post-sale 
price increases do not appear to be consistent with commercial 
realities and call into question the nature of these payments. As noted 
in the Preliminary Results, if these are, in fact, payments on the 
claimed post-sale price adjustments, it would mean that these customers 
were willing to pay significant charges imposed after the sale, even 
though, in the case of one U.S. customer, there was: (1) No agreement 
requiring the company to pay such amounts; (2) no understanding as to 
how these additional charges would be calculated; and (3) no limits 
placed on the amount of the additional charges. Similarly, another U.S. 
customer reportedly paid the post-sale price increases even though: (1) 
The purported agreement covering these additional charges was not 
followed; and (2) the price increases appear to be inconsistent with 
Vita's cost increases. Thus, regardless of how Vita labeled the 
payments, the payments do not demonstrate that Vita is entitled to the 
claimed post-sale price adjustments.''\19\
---------------------------------------------------------------------------

    \19\ See Thai Pineapple Final Results.
---------------------------------------------------------------------------

    In contrast, in the instant review, Koehler has reported rebates in 
both the U.S. and comparison market during the POI and POR and has 
provided rebate agreements covering sales dating back to 2002 and 2003. 
Koehler has explained

[[Page 77836]]

that the customers subject to the rebate programs are aware of the 
general rebate terms and expect the rebate, which is negotiated by 
Koehler on a product and customer-specific basis.
    As referenced above, the petitioner's allegation that there are 
different movements in prices between certain products in the home 
market is inaccurate, and the petitioner's analysis was based on an 
incorrect prior version of Koehler's home market sales database which 
did not account for all of Koehler's rebates. Furthermore, as Koehler 
indicated in its June 11, 2010 letter, and as the Department's analysis 
confirms, there is not a significant difference in the rebate 
percentages applied to home market sales of KT 48 F20 during the 
investigation, as compared to the POR.
    We have analyzed Koehler's home market rebates for two products KT 
48 F20 and KT 55 F 20 using data from the POI and the POR. See 
Preliminary Results Calculations Memo. These data clearly show a 
consistent pattern. Regarding the nature of the sales documentation and 
whether these are ``post-sale adjustments'' as alleged by petitioner, 
we find that Koehler has a long-standing practice of allowing rebates. 
Koehler provided documentation to demonstrate that there was an 
original formal written rebate program in effect during 2002 and 
2003.\20\ Koehler then began documenting the rebate percentages on 
individually negotiated customer specific price lists which are updated 
periodically by Koehler. See, e.g., Koehler's Section A-C Supplemental 
Questionnaire response, dated April 15, 2010, at Exhibit S-14. In some 
instances, the rebate percentages were adjusted after certain shipments 
were made. However, it is clear the Koehler and its customers had a 
long-standing understanding that rebates would be applied. Therefore, 
based on the evidence on the record of this review, we preliminarily 
find Koehler's rebates to be bona fide, and we will allow the rebates 
as reported in Koehler's sales databases.
---------------------------------------------------------------------------

    \20\ See Koehler's April 15, 2010, Supplemental Questionnaire 
Response at Exhibits S-11 through S-13.
---------------------------------------------------------------------------

Export Price and Constructed Export Price

    For the price to the United States, we used, as appropriate, EP or 
CEP, in accordance with sections 772(a) and (b) of the Act. Pursuant to 
section 772(a) of the Act, we used the EP methodology when the 
merchandise was first sold by the producer or exporter outside the 
United States directly to the unaffiliated purchaser in the United 
States prior to importation and when CEP was not otherwise warranted 
based on the facts on the record. We calculated CEP for those sales 
where a person in the United States, affiliated with the foreign 
exporter or acting for the account of the exporter, made the first sale 
to the unaffiliated purchaser in the United States of the subject 
merchandise. See section 772(b) of the Act. We based EP and CEP on the 
packed prices charged to the first unaffiliated customer in the United 
States and the applicable terms of sale. When appropriate, we adjusted 
prices to reflect billing adjustments, rebates, and early payment 
discounts, and commissions.
    In accordance with section 772(c)(2) of the Act, we made 
deductions, where appropriate, for movement expenses including U.S. 
warehouse expense, inland freight, inland insurance, brokerage & 
handling, international freight, marine insurance, freight rebate 
revenue, and U.S. customs duties.
    For CEP, in accordance with section 772(d)(1) of the Act, when 
appropriate, we deducted from the starting price those selling expenses 
that were incurred in selling the subject merchandise in the United 
States, including direct selling expenses (cost of credit, warranty, 
and other direct selling expenses). These expenses also include certain 
indirect selling expenses incurred by affiliated U.S. distributors. See 
Preliminary Results Calculations Memo. We also deducted from CEP an 
amount for profit in accordance with sections 772(d)(3) and (f) of the 
Act.

Normal Value

A. Selection of Comparison Market

    To determine whether there was a sufficient volume of sales in the 
home market to serve as a viable basis for calculating NV, we compared 
Koehler's volume of home market sales of the foreign like product to 
the volume of its U.S. sales of the subject merchandise. Pursuant to 
section 773(a)(1)(B)(i) of the Act, because Koehler had an aggregate 
volume of home market sales of the foreign like product that was 
greater than five percent of its aggregate volume of U.S. sales of the 
subject merchandise, we determined that the home market was viable.

B. Arm's-Length Test

    Because Koehler reported that its sales of the foreign like product 
were made to unaffiliated customers, the arm's-length test is not 
applicable.

C. Cost of Production Analysis

    The Department did not disregard any sales below the cost of 
production (``COP'') in the underlying investigation.\21\ As a result, 
the Department did not initially issue a Section D questionnaire with 
the Section A-C questionnaire sent to Koehler on December 23, 2009. The 
petitioner subsequently submitted a sales below cost allegation and the 
Department initiated a ``sales-below-cost'' investigation because the 
Department determined that the petitioner provided a reasonable basis 
to believe or suspect that Koehler is selling lightweight thermal paper 
in Germany at prices below the COP. See Sales Below Cost Memo.
---------------------------------------------------------------------------

    \21\ See Lightweight Thermal Paper from Germany: Notice of Final 
Determination of Sales at Less Than Fair Value 73 FR 57326 (October 
2, 2008); see also Memorandum to Neal M. Halper, Director, Office of 
Accounting, titled ``Cost of Production and Constructed Value 
Calculation Adjustments for the Final Determination Koehler,'' dated 
September 25, 2008 (``Final Cost Memorandum''); see also Memorandum 
to The File, titled ``Final Analysis Memorandum for Sales--
Koehler,'' dated September 25, 2008 (``Final Sales Memo'').
---------------------------------------------------------------------------

1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated 
Koehler's COP based on the sum of its costs of materials and conversion 
for the foreign like product, plus amounts for general and 
administrative (``G&A'') expenses and interest expenses (see the Test 
of Comparison Market Sales Prices section below for the treatment of 
home market selling expenses). The Department relied on the COP data 
submitted by Koehler and its Section D supplemental questionnaire 
responses for the COP calculation. Based on the review of record 
evidence, Koehler did not appear to experience significant changes in 
the cost of manufacturing during the period of review. Therefore, we 
followed our normal methodology of calculating an annual weighted-
average cost.
2. Test of Comparison Market Sales Prices
    As required under section 773(b)(2) of the Act, we compared the 
weighted-average COP to the per-unit price of the comparison market 
sales of the foreign like product, to determine whether these sales 
were made at prices below the COP within an extended period of time in 
substantial quantities, and whether such prices were sufficient to 
permit the recovery of all costs within a reasonable period of time. We 
determined the net comparison market prices for the below-cost test by 
subtracting from the gross unit price any applicable movement charges,

[[Page 77837]]

discounts, rebates, direct and indirect selling expenses (also 
subtracted from the COP), and packing expenses which were excluded from 
COP for comparison purposes.
3. Results of the COP Test
    After calculating the COP and in accordance with section 773(b)(1) 
of the Act, we tested whether home-market sales of the foreign like 
product were made at prices below the COP within an extended period of 
time in substantial quantities and whether such prices permitted the 
recovery of all costs within a reasonable period of time. See section 
773(b)(2) of the Act. We compared the COPs of the models represented by 
control numbers to the reported home-market prices less any applicable 
movement charges, discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, when less than 20 
percent of Koehler's sales of a given product were at prices less than 
the COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in substantial quantities 
within an extended period of time. When 20 percent or more of Koehler's 
sales of a given product during the POR were at prices less than the 
COP, we disregarded the below-cost sales because they were made in 
substantial quantities within an extended period of time pursuant to 
sections 773(b)(2)(B) and (C) of the Act and because, based on 
comparisons of prices to weighted-average COPs for the POR, we 
determined that these sales were at prices which would not permit 
recovery of all costs within a reasonable period of time in accordance 
with section 773(b)(2)(D) of the Act. Based on this test, we only 
disregarded below-cost sales that amounted to 20 percent or more of 
Koehler's sales of a given product. All other sales that were below 
cost but did not meet the 20-percent threshold were included in our 
calculation of normal value. See Preliminary Results Calculations Memo.
    Our preliminary findings show that we did not find that more than 
20 percent of Koehler's sales were at prices less than the COP. 
Therefore, we used all of Koehler's remaining home market sales as the 
basis for determining NV.

D. Calculation of Normal Value Based on Comparison Market Prices

    We based home market prices on packed prices to unaffiliated 
purchasers in Germany. The Department excluded certain sales 
transactions reported as samples by Koehler. We adjusted the starting 
price for billing adjustments, early payment discounts, rebates, 
warehouse expenses, and inland freight where appropriate, pursuant to 
section 773(a)(6) of the Act. In addition, for comparisons made to EP 
sales, we made adjustments for differences in circumstances of sale 
(``COS'') pursuant to section 773(a)(6)(C)(iii) of the Act. We made COS 
adjustments by deducting direct selling expenses incurred for home 
market sales (credit expense, warranty directly linked to sales 
transactions, royalties, and other direct selling expenses) and adding 
U.S. direct selling expenses (credit, commissions, warranty directly 
linked to sales transactions, and other direct selling expenses), where 
appropriate. See 19 CFR 351.410.
    When comparing U.S. sales with comparison market sales of similar, 
but not identical, merchandise, we also made adjustments for physical 
differences in the merchandise in accordance with section 
773(a)(6)(C)(ii) of the Act and 19 CFR 351.411. We based this 
adjustment on the difference in the VCOM for the foreign like product 
and subject merchandise, using weighted-average costs. See 19 CFR 
351.411(b).

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 comparison 
market at the same level of trade (``LOT'') as the EP or CEP sales. In 
identifying LOTs for EP and comparison market sales (i.e., NV based on 
home market), we consider the starting prices before any adjustments. 
For CEP sales, we consider only the selling activities reflected in the 
price after the deduction of expenses and profit under section 772(d) 
of the Act. See Micron Technology, Inc. v. United States, 243 F.3d 
1301, 1314 (Federal Circuit 2001).
    Consistent with 19 CFR 351.412, to determine whether comparison 
market sales were at a different LOT 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 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. For CEP sales, 
if the NV level is more remote from the factory than the CEP level and 
there is no basis for determining whether the difference in the levels 
between NV and CEP affects price comparability, we will grant a CEP 
offset, as provided in section 773(a)(7)(B) of the Act. See Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Cut-to-
Length Carbon Steel Plate from South Africa, 62 FR 61731, 61732-33 
(November 19, 1997).
    Koehler reported its sales in the home market and the U.S. market 
at the same single LOT. In the home market, Koehler reported that its 
sales were made through two channels of distribution: (1) Direct sales 
and (2) consignment sales. In the U.S. market, Koehler reported that 
its sales were made through three channels of distribution: (1) Market 
direct-shipment sales through its U.S. affiliated distributor, Koehler 
America, Inc. (i.e., CEP sales), (2) warehouse sales made through 
Koehler America, Inc. (i.e., CEP sales), (3) and direct sales from 
Koehler AG to the customer (i.e., EP sales).
    Based on our analysis, we found that Koehler's sales to the U.S. 
and home market were made at the same LOT, and as a result, no LOT 
adjustment was warranted. Furthermore, our analysis shows that 
Koehler's home market sales were not made at a more advanced LOT than 
Koehler's U.S. sales. Accordingly, we have not made a CEP offset to NV. 
See 773(a)(7)(B) of the Act.
    For a detailed description of our LOT methodology and a summary of 
company-specific LOT findings for these preliminary results, see our 
analysis contained in the Preliminary Results Sales Calculation Memo.

Currency Conversion

    We made currency conversions into U.S. dollars in accordance with 
section 773A(a) of the Act, based on the official exchange rates 
published by the Federal Reserve Bank.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following weighted-average percentage margin exists for the following 
respondents for the period November 20, 2008, through October 31, 2010.

------------------------------------------------------------------------
                                               Weighted-average margin
           Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Papierfabrik August Koehler AG............  0.03 (de minimis).
------------------------------------------------------------------------

Public Comment

    The Department will disclose calculations performed within five 
days of the date of publication of this notice to the parties to this 
proceeding in accordance with 19 CFR 351.224(b). Interested parties may 
submit case briefs

[[Page 77838]]

no later than 30 days after the date of publication of these 
preliminary results of review. See 19 CFR 351.309(c)(1)(ii). Rebuttal 
briefs are limited to issues raised in the case briefs and may be filed 
no later than five days after the time limit for filing the case 
briefs. See 19 CFR 351.309(d). Parties submitting arguments in this 
proceeding are requested to submit with the argument: (1) A statement 
of the issue, (2) a brief summary of the argument, and (3) a table of 
authorities, in accordance with 19 CFR 351.309(d)(2). Further, parties 
submitting case and/or rebuttal briefs are requested to provide the 
Department with an additional electronic copy of the public version of 
any such comments on a computer diskette. Case and rebuttal briefs must 
be served on interested parties in accordance with 19 CFR 351.303(f).
    An interested party may request a hearing within 30 days of 
publication of these preliminary results. See 19 CFR 351.310(c). Any 
hearing, if requested, ordinarily will be held two days after the due 
date of the rebuttal briefs in accordance with 19 CFR 351.310(d)(1). 
The Department will issue the final results of this administrative 
review, which will include the results of its analysis of issues raised 
in any such comments, or at a hearing, if requested, within 120 days of 
publication of these preliminary results, unless extended. See section 
751(a)(3)(A) of the Act, and 19 CFR 351.213(h).

Assessment Rate

    Upon completion of the final results of this administrative review, 
the Department shall determine, and CBP shall assess, antidumping 
duties on all appropriate entries. Pursuant to 19 CFR 351.212(b)(1), 
the Department will calculate importer-specific assessment rates for 
each respondent based on the ratio of the total amount of antidumping 
duties calculated for the examined sales to the total entered value of 
those sales. Where the respondent did not report the entered value for 
U.S. sales, we have calculated importer-specific assessment rates for 
the merchandise in question by aggregating the dumping margins 
calculated for all U.S. sales to each importer and dividing this amount 
by the total quantity of those sales. To determine whether the duty 
assessment rates were de minimis, in accordance with the requirement 
set forth in 19 CFR 351.106(c)(2), we calculated importer-specific ad 
valorem rates based on the estimated entered value. Where the 
assessment rate is above de minimis, we will instruct CBP to assess 
duties on all entries of subject merchandise by that importer. Pursuant 
to 19 CFR 351.106(c)(2), we will instruct CBP to liquidate without 
regard to antidumping duties any entries for which the assessment rate 
is de minimis (i.e., less than 0.50 percent). The Department intends to 
issue assessment instructions directly to CBP 15 days after publication 
of the final results of this review.
    The Department clarified its ``automatic assessment'' regulation on 
May 6, 2003. See Antidumping and Countervailing Duty Proceedings: 
Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003). This 
clarification will apply to entries of subject merchandise during the 
POR produced by the respondents subject to this review for which the 
reviewed companies did not know that the merchandise which it sold to 
an intermediary (e.g. a reseller, trading company, or exporter) was 
destined for the United States. In such instances, we will instruct CBP 
to liquidate unreviewed entries at the all-others rate if there is no 
rate for the intermediary involved in the transaction. For a full 
discussion of this clarification, see id.

Cash Deposit Requirements

    To calculate the cash deposit rate for Koehler, we divided its 
total dumping margin by the total net value of its sales during the 
review period.
    The following deposit rates will be effective upon publication of 
the final results of this administrative review for all shipments of 
lightweight thermal paper from Germany entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided by section 751(a)(2)(C) of the Act: (1) The cash deposit rate 
for companies subject to this review will be the rate established in 
the final results of this review, except if the rate is less than 0.5 
percent and, therefore, de minimis, no cash deposit will be required; 
(2) for previously reviewed or investigated companies not listed above, 
the cash deposit rate will continue to be the company-specific rate 
published for the most recent final results for a review in which that 
manufacturer or exporter participated; (3) if the exporter is not a 
firm covered in this review, a prior review, or the original less-than-
fair-value (``LTFV'') investigation, but the manufacturer is, the cash 
deposit rate will be the rate established for the most recent final 
results for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in this review, the 
cash deposit rate will be 6.50 percent, the all-others rate established 
in the LTFV investigation. See Antidumping Duty Orders: Lightweight 
Thermal Paper from Germany and the People's Republic of China, 73 FR 
70959 (November 24, 2008). These cash deposit requirements, when 
imposed, shall remain in effect until further notice.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    These preliminary results of administrative review are issued and 
published in accordance with sections 751(a)(1) and 777(i)(1) of the 
Act and 19 CFR 351.221(b)(4).

    Dated: December 7, 2010.
Paul Piquado,
Acting Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-31370 Filed 12-13-10; 8:45 am]
BILLING CODE 3510-DS-P