22550 Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices

in the Indonesian surrogate value for

factory overhead.

The petitioner urges the Department

not to eliminate indirect labor and

energy, and instead use a surrogate

valuation based on a percentage of

direct materials, all labor and energy

costs. In any event, the petitioner states

that the Department should not ignore

the respondent’s energy costs.

DOC Position

We agree with the respondents. Based

on the Department’s surrogate value

methodology, Indonesia is our preferred

surrogate, and since the factory

overhead percentage for Indonesia

includes the above-mentioned items, we

have not separately valued those items

in our calculations for the final

determination.

Comment 17: Salt

The respondents state that the

Department verified that salt, not the

originally reported factor, was used by

two of the factories. To value this factor,

the respondents suggest using either the

Indonesian price, if available, or the

U.S. price. Alternatively, the

respondents state that the Department

should consider disregarding the cost of

salt altogether because it was not used

in the production process. They point to

the verification report for one of the

factories, wherein salt was referred to as

‘‘a low cost consumable’’ used for

equipment maintenance.

The petitioner argues that the

Department’s calculations of surrogate

values in the preliminary determination

were correct and should not be changed.

DOC Position

We agree with both parties, in part.

For the factory that treats salt as a ‘‘low

cost consumable,’’ we have treated these

costs as part of factory overhead and

have not valued them separately as a

factor of production. For the other

factory, there is no evidence concerning

how salt was used in the production

process or what kind of salt was used.

Therefore, we have treated salt as a

factor of production, and have

continued to use the surrogate value

that was used in the preliminary

determination.

Comment 18: Sulfuric Acid

The respondents state that the

surrogate value used for sulfuric acid in

the preliminary determination is either

erroneous or aberrational and should be

corrected. They state that a more

realistic value for sulfuric acid has been

established in the Pencils investigation,

where an Indian price was used.

The petitioner contends that the

Department should follow the surrogate

country hierarchy established in this

case.

DOC Position

We agree with both parties, in part.

We agree with the petitioner that the

Department should use the established

hierarchy. Based on our analysis, we

also agree with the respondents that a

more accurate value should be used.

Because furfuryl alcohol is not

produced in India, we based our

calculations on the export values

derived from the November 1993

Indonesian Foreign Trade Statistical

Bulletin— Exports. Because this was a

contemporaneous value, no adjustment

for inflation was needed (see calculation

memorandum attached to the

concurrence memorandum, dated May

1, 1995).

Comment 19: Valuation of Ammonia

Water

The respondents state that the

surrogate value used for ammonia water

in the preliminary determination was

aberrational and should be corrected.

The respondent cites to the

Department’s publication of an ‘‘Index

of Factor Values for Use in

Antidumping Duty Investigations

Involving Products from the People’s

Republic of China’’ which lists a price

for ammonia water in another approved

surrogate, India.

The petitioner alleges that the

respondents misuse the terms

‘‘erroneous’’ and ‘‘aberrational’’ and

completely disregard the Department’s

factor valuation hierarchy. The

petitioner urges the Department not to

change its surrogate value for this factor.

DOC Position

We agree with the respondents in

part. Based on our analysis, we

determined that the surrogate value

used in the preliminary determination

was inappropriate. (For the details of

our analysis of this value, see the

calculation memorandum attached to

the concurrence memorandum, dated

May 1, 1995.) Since the Indonesian

import value for ammonia water was

found to be inappropriate, we based our

calculations on the export values

derived from the November 1993

Indonesian Foreign Trade Statistical

Bulletin—Exports. Because this was a

contemporaneous value, no adjustment

for inflation was needed.

Continuation of Suspension of

Liquidation

In accordance with sections 733(d)(1)

and 735(c)(4)(B) of the Act, we are

directing the Customs Service to

continue to suspend liquidation of all

entries of furfuryl alcohol from the PRC,

that are entered, or withdrawn from

warehouse, for consumption on or after

the date of publication of this notice in

the Federal Register. The Customs

Service shall require a cash deposit or

posting of a bond equal to the estimated

amount by which the FMV exceeds the

USP as shown below. These suspension

of liquidation instructions will remain

in effect until further notice.

The weighted-average dumping

margins are as follows:

Manufacturer/producer/exporter

Weighted-Average

Margin

Percentage

Sinochem Shandong ...................... 43.54

Qingdao .......................................... 50.43

China-Wide ..................................... 45.27

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the

International Trade Commission (ITC) of

our determination. As our final

determination is affirmative, the ITC

will determine whether these imports

are causing material injury, or threat of

material injury, to the industry in the

United States, within 45 days. If the ITC

determines that material injury, or

threat of material injury, does not exist,

the proceeding will be terminated and

all securities posted will be refunded or

cancelled. If the ITC determines that

such injury does exist, the Department

will issue an antidumping duty order

directing Customs officials to assess

antidumping duties on all imports of the

subject merchandise entered, or

withdrawn from warehouse, for

consumption on or after the effective

date of the suspension of liquidation.

This determination is published

pursuant to section 735(d) of the Act

and 19 CFR 353.20(a)(4).

Dated: May 1, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 95–11262 Filed 5–5–95; 8:45 am]

BILLING CODE 3510–DS–P

[A–791–802]

Final Determination of Sales at Less

Than Fair Value: Furfuryl Alcohol From

South Africa

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.
Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices 22551

EFFECTIVE DATE: May 8, 1995.

FOR FURTHER INFORMATION CONTACT: John

Brinkmann or Donna Berg, Office of

Antidumping Investigations, Import

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230;

telephone (202) 482–5288 or 482–0114,

respectively.

Final Determination

We determine that furfuryl alcohol

from South Africa is being sold in the

United States at less than fair value

(LTFV), as provided in section 735 of

the Tariff Act of 1930, as amended (‘‘the

Act’’). The estimated margins are shown

in the ‘‘Suspension of Liquidation’’

section of this notice.

Case History

Since the preliminary determination

of sales at LTFV on December 9, 1994,

(59 FR 65012, December 16, 1994), the

following events have occurred:

On January 25, 1995, ISL submitted

its response to Section D of the

Department’s questionnaire which

requests information on the COP and

constructed value (CV). The Department

issued a supplemental cost

questionnaire on January 30, 1995. ISL

submitted its response to this

supplemental questionnaire on February

8, 1995. QO Chemicals, Inc. (the

petitioner) submitted comments

concerning the respondent’s Section D

responses on February 14, 1995.

On January 17, 1995, the respondent

submitted relevant audited financial

statements for 1994. On January 20,

1995, ISL and Harborchem submitted

revisions to its U.S. sales data.

The Department issued its verification

outline to the respondent on January 24,

1995. Verifications of the respondent’s

sales and cost questionnaire responses

were conducted during the months of

January, February, and March 1995. The

Department issued reports concerning

these verifications in March 1995.

The respondent and the petitioner

submitted case briefs on March 30,

1994, and rebuttal briefs on April 4,

1995. At the request of both the

respondent and the petitioner, we held

a public hearing on April 6, 1995.

Scope of Investigation

The product covered by this

investigation is furfuryl alcohol

(C4H3OCH2OH). Furfuryl alcohol is a

primary alcohol, and is colorless or pale

yellow in appearance. It is used in the

manufacture of resins and as a wetting

agent and solvent for coating resins,

nitrocellulose, cellulose acetate, and

other soluble dyes.

The product subject to this

investigation is classifiable under

subheading 2932.13.00 of the

Harmonized Tariff Schedule of the

United States (HTSUS). Although the

HTSUS subheading is provided for

convenience and customs purposes, our

written description of the scope of this

proceeding is dispositive.

Period of Investigation

The period of investigation (POI) is

December 1, 1993, through May 31,

1994.

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute and to the

Department’s regulations are in

reference to the provisions as they

existed on December 31, 1994.

Such or Similar Comparisons

For purposes of the final

determination, we have determined that

furfuryl alcohol constitutes a single

‘‘such or similar’’ category of

merchandise. Further, because the

respondent had sales in the home

market of merchandise identical to that

sold to the United States, similar

comparisons were not necessary.

Fair Value Comparisons

To determine whether sales of

furfuryl alcohol from South Africa to the

United States were made at less than

fair value, we compared the United

States price (USP) to the foreign market

value (FMV), as specified in the ‘‘United

States Price’’ and ‘‘Foreign Market

Value’’ sections of this notice. In

accordance with 19 CFR 353.58, we

made comparisons at the same level of

trade, where possible.

United States Price

We have found that ISL and its

exclusive selling agent, Harborchem, are

related parties pursuant to section

771(13)(A) of the Act (see Comment 1

and the concurrence memorandum,

dated May 1, 1995, on file in Room B–

099 of the Main Commerce Department

building), and that all of ISL’s U.S. sales

to the first unrelated purchaser took

place after importation into the United

States. Therefore, we based USP on

exporter’s sales price (ESP), in

accordance with section 772(c) of the

Act.

We calculated ESP based on FOB U.S.

storage facility or delivered prices to

unrelated customers in the United

States. We made deductions, where

appropriate, for the following movement

charges in accordance with section

772(e) of the Act: foreign loading on

ship, foreign inland freight, ocean

freight, marine insurance, tank car

rental, U.S. inland freight, U.S. inland

insurance, U.S. brokerage and handling,

and U.S. duty. We also made

deductions, where appropriate, for

credit expenses, indirect selling

expenses incurred in South Africa, and

indirect selling expenses incurred in the

United States, including quality control

testing, inventory carrying expenses,

warehousing expenses, and U.S. storage

insurance. We also increased U.S. price,

as appropriate, to account for additional

freight revenue (see Comment 8).

In accordance with our standard

practice, and pursuant to the decision of

the U.S. Court of International Trade in

Federal-Mogul Corp. v. United States,

834 F. Supp. 1391 (CIT 1993), our

calculations include an adjustment to

U.S. price for the consumption tax

levied on comparison sales in South

Africa. See Preliminary Antidumping

Duty Determination: Color Negative

Photographic Paper and Chemical

Components from Japan, 59 FR 16177,

16179 (April 6, 1994), for an

explanation of this methodology.

Cost of Production

As indicated in the preliminary

determination, the Department initiated

an investigation of sales below the COP

in the home market on December 9,

1994. In order to determine whether

home market sales prices were below

COP within the meaning of section

773(b) of the Act, we calculated COP

based on the sum of the respondent’s

cost of materials, fabrication, general,

and packing expenses, in accordance

with 19 CFR 353.51(c). We made the

following adjustments to respondent’s

reported COP data:

1. We recalculated the cost of furfuryl,

the primary material input into FA,

used in the production of furfuryl

alcohol during the POI based on ISL’s

normal first-in first out inventory

valuation method;

2. We removed selling, general and

administrative costs from the cost of

sales figure used in the denominator of

the submitted general and

administrative rate calculation;

3. We increased ISL’s reported

furfuryl steam overhead expenses by the

amount actual steam costs exceeded

budgeted costs; and

4. We disallowed ISL’s reduction of

furfuryl production costs for a certain

proprietary item.

After computing COP, we added the

sales-specific VAT to the COP figure.

We compared product-specific COP to

reported prices that were net of

movement charges, direct and indirect

selling expenses, and inclusive of VAT.

In accordance with section 773(b) of the
22552 Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices

Act, we followed our standard

methodology to determine whether the

home market sales of each product were

made at prices below their COP in

substantial quantities over an extended

period of time, and whether such sales

were made at prices that would permit

recovery of all costs within a reasonable

period of time in the normal course of

trade.

To satisfy the requirement of section

773(b)(1) that below-cost sales be

disregarded only if made in substantial

quantities, we apply the following

methodology. Where we find that over

90 percent of a respondent’s sales were

at prices above the COP, we do not

disregard any below-cost sales because

we determine that a respondent’s belowcost sales are not made in substantial

quantities. If between ten and 90

percent of a respondent’s sales were at

prices above the COP, we disregard only

the below-cost sales if made over an

extended period of time. Where we find

that more than 90 percent of a

respondent’s sales were at prices below

the COP and were sold over an extended

period of time, we disregard all sales

and calculate FMV based on CV, in

accordance with section 773(b) of the

Act.

In accordance with section 773(b)(1)

of the Act, in order to determine

whether below-cost sales had been

made over an extended period of time,

we compare the number of months in

which below-cost sales occurred to the

number of months in the POI in which

the product was sold. If a product is

sold in three or more months of the POI,

we do not exclude below-cost sales

unless there are below-cost sales in at

least three months during the POI.

When we find that sales occur in one or

two months, the number of months in

which the sales occur constitutes the

extended period of time; i.e., where

sales are made in only two months, the

extended period of time is two months,

where sales are made in only one

month, the extended period of time is

one month. (See Final Determination of

Sales at Less Than Fair Value: Certain

Carbon Steel Butt-Weld Pipe Fittings

from the United Kingdom (60 FR 10558,

10560, February 27, 1995)).

In this case, we found that none of the

respondent’s sales of furfuryl alcohol

were at prices below the COP. As a

result, we did not need to test whether

below-cost sales had been made over an

extended period of time. Therefore, we

included all home market sales in

calculating a weighted-average FMV.

Foreign Market Value

As stated in the preliminary

determination, we found that the home

market was viable for sales of FA, in

accordance with 19 CFR 353.48(a).

We calculated FMV based on FOB

storage facility or delivered prices to

unrelated customers. We treated both

pre-sale home market movement

expenses and pre-sale home market

warehousing expenses as indirect

expenses because these expenses could

not be tied directly to specific sales. We

also treated ISL’s home market rebate as

an indirect, rather than direct, expense

because ISL did not adequately tie the

rebate to specific home market sales (see

Comment 4). We deducted these

indirect selling expenses along with

inventory carrying costs, capped by the

sum of U.S. indirect selling expenses, in

accordance with 19 CFR 353.56(b)(1)

and (2).

FMV was reduced by home market

packing costs and increased by U.S.

packing costs in accordance with

section 773(a)(1) of the Act. We

deducted post-sale home market inland

freight from FMV under the

circumstance-of-sale provision of 19

CFR 353.56(a). The Department also

made other circumstance-of-sale

adjustments for home market direct

selling expenses, which included

imputed credit expenses, as recalculated

by the Department, in accordance with

19 CFR 353.56(a)(2). The Department

recalculated home market credit

expenses based on gross prices

exclusive of imputed valued added tax

expenses.

We adjusted for the consumption tax

in accordance with our practice (see

‘‘United States Price’’ section of this

notice).

No deduction was made for the

claimed quantity discount because ISL

failed to place adequate information on

the record to demonstrate that the

discount met the criteria for quantity

discounts set forth in 19 CFR 353.55(b)

(see Comment 5). We did not exclude

home market sales of furfuryl alcohol

packed in drums from the base of home

market sales used for comparison to

U.S. sales, as requested by ISL, because

ISL did not demonstrate that these sales

were outside the ordinary course of

trade (see Comment 7).

Currency Conversion

We have made currency conversions

based on the official exchange rates, as

certified by the Federal Reserve Bank of

New York, in effect on the dates of the

U.S. sales, pursuant to 19 CFR 353.60.

Verification

As provided in section 776(b) of the

Act, we verified the information used in

making our final determination.

Interested Party Comments

Comment 1: Purchase Price versus

Exporter’s Sales Price

In the preliminary determination, the

Department relied on ESP methodology

to calculate USP because we found that

Harborchem was ISL’s agent and thus, a

related party within the meaning of

section 771(13)(A) of the Act.

The petitioner argues that the

Department should revise its

methodology and base USP on purchase

price because Harborchem failed to

meet the criteria for an agent under

either the law of agency or the

Department’s four-part test.

ISL asserts that reliance on ESP is

appropriate in the final determination,

maintaining that the information on the

record, which the Department verified,

confirms that ISL and Harborchem are

related parties.

DOC Position

We agree with the respondent. Based

on the findings at verification, the

Department has determined that ISL and

its exclusive U.S. selling agent,

Harborchem, constitute the ‘‘exporter’’

pursuant to section 771(13)(A) of the

Act (see concurrence memorandum,

dated May 1, 1995), and that all of ISL’s

U.S. sales to the first unrelated

purchaser took place after importation

into the United States. Therefore, it is

appropriate to base USP on exporter’s

sales prices, in accordance with section

772(c) of the Act.

In evaluating related party claims

based on agency, the Department

examines: (1) Whether the foreign

manufacturer participates in the

marketing of the product to the U.S.

customers; (2) whether the foreign

manufacturer participates in setting

prices and in the negotiation of other

terms of sales to U.S. customers; (3)

whether U.S. customers look to the U.S.

importer or the foreign manufacturer for

product testing and quality control; and

(4) whether the foreign manufacturer

interacts directly with U.S. customers.

See Electrolytic Manganese Dioxide

from Japan: Final Results of

Antidumping Duty Administrative

Review, 58 FR 28551, 28555 (May 14,

1993), and Final Determination of Sales

at Not Less Than Fair Value: Certain

Forged Steel Crankshafts from Japan, 52

FR 36984, 36985 (October 2, 1987)

(Crankshafts).

During verification, we were able to

confirm that ISL and Harborchem view

their relationship as one of principal

and agent and communicate continually

on matters related to U.S customer

marketing and sales of furfuryl alcohol.

Based on our examination of
Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices 22553

correspondence files and interviews

with company personnel we also

determined that ISL: (1) Participates

directly with Harborchem in marketing

furfuryl alcohol to U.S. customers; (2)

participates directly in pricing and sales

negotiations with U.S. customers; (3)

interacts directly, as well as through

Harborchem, with U.S. customers on

product testing and quality control

matters; and (4) interacts with U.S.

customers directly.

Therefore, because Harborchem meets

the criteria established in Crankshafts,

we determine that Harborchem is ISL’s

agent for sales made in the U.S. during

the POI.

Comment 2: Related Party

‘‘Commission’’ Paid to Harborchem

Should the Department employ its

ESP methodology in the final

determination, the petitioner urges the

Department to adjust USP to reflect the

commission received by Harborchem.

The adjustment is necessary, argues the

petitioner, because the Department’s

practice is to deduct commissions paid

to related parties from USP under the

ESP methodology. Specifically, section

772(e)(1) of the Act provides that the

exporter’s sales price shall be reduced

by the amount of ‘‘commission for

selling in the United States the

particular merchandise under

consideration.’’ See also 19 CFR

353.41(e)(1).

ISL maintains that its compensation

arrangement with Harborchem does not

fit the traditional definition of

commission for antidumping

calculations, and, as such, an

adjustment to USP is not appropriate.

DOC Position

We disagree with the petitioner. The

petitioner’s characterization of

Departmental practice is misleading.

Under the ESP methodology, the foreign

exporter and its related importer are

effectively treated as one unit. Thus, any

compensation paid by ISL to its agent

Harborchem, whether or not specifically

called a commission, is considered a

related party transfer and ignored for the

purposes of the margin calculation.

Instead, the Department deducts the

amount of the related importer’s (i.e.,

Harborchem’s) U.S. indirect and direct

selling expenses pursuant to section

772(e)(2) of the Act. This methodology

avoids double-counting the same

expenses (i.e., the commission which

includes an amount for the related

importer’s selling expenses, and indirect

selling expenses) and avoids deducting

any profit of the related importer as

established in Timken Co. v. United

States, 630 F. Supp. 1327, 1343 (CIT

1986) (Timken).

These practices are fully described in

the notice of the Final Determination of

Sales at Less Than Fair Value: Fresh Cut

Roses from Colombia and Ecuador 60

FR 7019, 7028 (February 6, 1995)

(Roses), and are consistent with the

Department’s past practice on this issue

(see e.g., Antifriction Bearings (Other

than Tapered Roller Bearings) and Parts

Thereof, 56 FR 39729 (July 26, 1993);

LMI—La Metalli Industriale, S.p.A. v.

United States, 912 F.2d 455, 459 (Fed.

Cir. 1990); Certain Fresh Cut Flowers

from Colombia; Final Results of

Administrative Review, 55 FR 20491

(May 17, 1990); and Porcelain-on-Steel

Cooking Ware from Mexico, 51 FR

36438 (October 10, 1986)).

Comment 3: Misreported Ocean Freight,

Marine Insurance, and U.S. Duty

The petitioner contends that the

respondent vastly underreported its

ocean freight and marine insurance

costs to the Department. It alleges that

the underreporting is discernible from

the official U.S. Customs entry

documents for ISL’s U.S. shipments,

which indicate a difference between the

CIF and FOB values greater than ISL’s

reported freight and insurance costs.

Furthermore, contends the petitioner,

this underreporting is also discernible

from the responses which indicate that

ISL reported the ocean freight and

insurance charges for only one of the

shipments corresponding to U.S. sales

of furfuryl alcohol during the POI.

Based on these contentions, the

petitioner argues that the Department

should reject the respondent’s

information and apply the amount

deduced from the official Customs

documents for ocean freight and marine

insurance costs as the best information

available.

According to the respondent, the

Department should rely on the actual

ocean freight, marine insurance, and

U.S. duty charges as verified, not

unverified estimates deduced from

customs forms. The respondent argues

that if the Department believes an

adjustment is necessary, it should revise

the amount of U.S. duty applicable to

U.S. sales during the POI. ISL suggests

that the adjustment to U.S. duty should

equal the amount which would have

been paid had the deductions to

calculate FOB price been correctly

calculated and applied in the customs

entry documents.

DOC Position

Consistent with our treatment of

minor changes to submitted data, the

Department has used verified data for

ocean freight and marine insurance (see

Roses, 60 FR at 7035; and Final

Determination of Sales at Less Than

Fair Value: New Minivans from Japan,

57 FR 21937, 21952 (May 26, 1992)).

Inasmuch as the Department has the

necessary information to determine the

actual ocean freight and insurance

charges applicable to U.S. sales during

the POI, it is appropriate to apply this

information to the final margin

calculations.

With respect to U.S. duty, we

determined that it was appropriate to

recalculate the amount applicable to the

respondent’s U.S. sales during the POI.

This recalculation was necessary

because we verified that the entry

documents for the respondent’s U.S.

shipments incorrectly reflected the FOB

value which was used to calculate U.S.

duty and therefore, the actual duty paid

by ISL was understated.

Comment 4: Home Market Rebate

ISL claims the rebates granted to one

customer during the POI are related to

POI sales and thus should be taken into

account in the Department’s final

margin calculations. ISL reports that it

granted rebates to a home market

customer that manufactures and exports

resins using furfuryl alcohol purchased

from ISL. According to ISL, this rebate

was granted based on the customer’s

providing documentation concerning

the actual amount of furfuryl alcohol

used in the resins exported from South

Africa.

The petitioner alleges that ISL’s

claimed rebate should be rejected

because there is no information on the

record that ties ISL’s rebate to specific

sales in the POI.

DOC Position

We agree with the petitioner that ISL

was unable to demonstrate that the

reported rebates were directly linked to

POI sales. However, it is the

Department’s practice in such instances

to reclassify the adjustment as an

indirect selling expense (see e.g.,

Tapered Roller Bearings, Four Inches or

Less in Outside Diameter, and

Components Thereof, From Japan: Final

Results of Antidumping Duty

Administrative Review, 57 FR 4976,

4982–83 (February 11, 1992)).

Accordingly, we have treated ISL’s

home market rebate as an indirect

expense in the calculations for the final

determination.

Comment 5: Home Market Quantity

Discount

The respondent contends that it has

met the criterion established by section

353.55(b)(1) of the Department’s
22554 Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices

regulations to qualify for a quantity

discount adjustment insofar as the

quantity discount was granted to one

home market customer that accounts for

over 20 percent of home market sales of

the same magnitude during the POI. ISL

submits that no other home market

customer receives the discount because

no other home market customer

regularly places orders of the same size

as the customer in question.

According to the petitioner, the

respondent’s claim is defective because

the quantity discount at issue was

available to only one customer and not,

as the Department requires, to any

prospective purchasers. Furthermore,

the petitioner argues that ISL failed to

establish the necessary linkage between

the discount in question and the volume

of individual sales, as required by 19

CFR 353.55(b)(1). For these reasons, the

petitioner argues that the Department

should reject this claimed adjustment.

DOC Position

We agree with the petitioner. The

Department requires that (1) quantity

discounts are available to any

prospective purchaser; (2) and that the

discount is based on the quantity of the

sale in question. This policy was

articulated in Circular Welded NonAlloy Steel Pipe from Mexico: Final

Determination, 57 FR 42953, 42955,

(September 17, 1992) and Color

Television Receivers from the Republic

of Korea, 55 FR 26225 (June 27, 1990).

ISL was unable to establish that the

discount was available to any

prospective home market customer. ISL

also was unable to sufficiently support

its claim that the discount is linked to

the volume of individual sales.

Therefore, we have determined,

pursuant to section 353.55(b) of the

Department’s regulations, that the

information on the record does not

justify granting ISL’s claimed

adjustment for quantity discounts.

Comment 6: Home Market Export

Incentive Payments

ISL reports that it receives export

incentive payments from the South

African government for all of its exports

of FA. ISL argues that the amount

earned from the subsidy payments

during the POI should be added to the

gross unit price of each U.S. sale for the

purpose of calculating dumping

margins.

The petitioner argues that the

Department abandoned its former

practice of making circumstance of sale

adjustments to account for payments

from export programs. The Department’s

current practice is to make no

adjustments to either FMV or to USP for

payments received pursuant to export

subsidy programs. Moreover, the

petitioner contends that the Department

has concluded that it does not have the

statutory authority to adjust USP for the

payments received from an export

subsidy program. See Oil Country

Tubular Goods from Israel: Final

Determination of Sales At Less Than

Fair Value, 52 FR 1511 (January 14,

1987) (OCTG).

DOC Position

We agree with the petitioner and

reject the respondent’s request for this

adjustment to USP. Section 772(d)(1) of

the Act permits the Department to

increase U.S. price for purposes of fair

value comparisons only under four

specific circumstances: by the amount

of the packing, if not included in the

U.S. price; by the amount of import

duties imposed and rebated upon

export; by the amount of any taxes

imposed on the merchandise that are

rebated upon export; and by the amount

of countervailing duties levied to offset

an export subsidy. The Department does

not make adjustments to the USP for

export subsidy payments because

payments of this type are not

enumerated within section 772(d)(1) of

the Act (see OCTG, 52 FR 1513).

There is no CVD investigation or

order on the subject merchandise, thus,

as required by section 772(d)(1)(D), we

cannot adjust USP for an export

subsidy.

Comment 7: Exclusion of Sales of

Furfuryl Alcohol in Drums

ISL requests that the Department

exclude its home market sales of

furfuryl alcohol in drums in the pool of

home market sales used for comparison

to U.S. sales. ISL argues that exclusion

of the drummed furfuryl alcohol sales is

appropriate because they are not

representative of home market sales in

terms of price and quantity and because

of the small amount of total sales

involved.

The petitioner argues that the

Department should uphold its decision

in the preliminary determination to

reject ISL’s request. The petitioner

maintains that there are two primary

reasons for rejecting ISL’s request. First,

the petitioner argues that furfuryl

alcohol is physically identical, whether

sold on a drummed or semi-bulk basis.

And second, the petitioner contends

that ISL’s sales listing indicates the

drummed sales are comparable to ISL’s

bulk transactions.

DOC Position

We agree with the petitioner. There is

no physical difference between furfuryl

alcohol that is sold in drums and that

sold on a semi-bulk basis. Furthermore,

the quantities of these drum sales are

comparable to many of ISL’s sales on a

semi-bulk basis. Accordingly, the

Department has included these sales in

the pool of home market sales used for

comparison to U.S. sales.

Comment 8: U.S. Freight Charges

The respondent requests that the

Department include the adjustment for

U.S. freight cost reimbursement claimed

by Harborchem. Although the

Department disallowed the adjustment

in the preliminary determination based

on the lack of adequate information, ISL

indicates that the Department

specifically reviewed data on customer

reimbursement of these freight expenses

at verification. Inasmuch as the reported

data verified, ISL requests that the

Department include an adjustment to

USP in the final margin calculations.

DOC Position

We agree with the respondent. The

Department fully verified the

respondent’s information concerning

the freight cost reimbursement.

Accordingly, this information was

included in the calculation of USP for

the final determination.

Comment 9: Untimely Data

The petitioner alleges that ISL

submitted new factual information in

Exhibit 1 of its case brief concerning the

COPs for furfuryl and FA. According to

the petitioner, the Department should

strike this information from the record.

DOC Position

We disagree with the petitioner.

Careful examination of this information

revealed Exhibit 1 to be a

reconfiguration of information already

on the record in this investigation. The

majority of information contained in

Exhibit 1 was submitted by ISL in its

original and supplemental response to

Section D of the questionnaire. Other

data was derived from exhibits to the

cost verification (see cost verification

exhibits 4 and 13). Accordingly, this

information is not new factual

information, and the Department has

allowed this information to remain on

the record of this investigation.

Comment 10: Rescinding the COP

Investigation

The respondent contends that the

information on the record does not

support the Department’s finding that

there are reasonable grounds to believe

or suspect that sales below COP have

been made. Rather, ISL argues that the

information used to support the COP
Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices 22555

investigation should properly be viewed

as amounting to statistical aberrations in

the data reported. Therefore, ISL

requests that the Department rescind the

COP investigation in this case.

According to the petitioner, the

Department properly initiated the COP

investigation after it conducted a

thorough examination of the petitioner’s

allegation. Based on this examination,

the Department determined that there

were reasonable grounds to believe or

suspect that sales were made at prices

which were less than ISL’s COP.

Accordingly, the petitioner argues that

ISL’s request should be rejected.

DOC Position

We agree with the petitioner that the

COP investigation should not be

rescinded. Based on our analysis of the

petitioner’s COP allegations at the time

they were made, we determined, in

accordance with section 773(b) of the

Act, that there was a reasonable basis to

believe or suspect that home market

sales of ISL were made at less than the

COP. (For a description of the

Department’s analysis, see concurrence

memorandum, dated December 9, 1994).

As a result, initiation of the COP

investigation was appropriate.

Comment 11: Use of Best Information

Available (BIA)

The petitioner asserts that ISL has

purposely impeded this investigation by

failing to provide all of the costs for

furfuryl used in furfuryl alcohol

production during the POI. The

petitioner contends that the Department

has repeatedly asked ISL to submit

actual cost data for all of the furfuryl

used to produce furfuryl alcohol during

the POI. In response to these requests,

however, the petitioner maintains that

ISL submitted two flawed furfuryl

costing methodologies. Accordingly,

pursuant to section 776(c) of the Act,

the petitioner urges the Department to

use noncooperative BIA to determine

ISL’s antidumping duty margin.

According to ISL, the petitioner’s

claim that ISL has significantly impeded

the investigation by failing to provide

sufficient furfuryl cost information is

totally without merit. ISL maintains that

it has complied with all of the

Department’s requests regarding the

actual cost of furfuryl consumed during

the POI. ISL submitted furfuryl cost data

covering an eighteen-month period,

including the six months of the POI.

Moreover, ISL notes that it has

submitted furfuryl costs using three

different methodologies.

DOC Position

We have not found that ISL has

impeded this investigation. Rather, ISL

has cooperated in every aspect of this

investigation. Therefore, we have

determined that it is appropriate to use

ISL’s information in our margin

calculation.

Comment 12: Furfuryl Costs

The petitioner argues that all three of

ISL’s submitted furfuryl costing

methodologies fail to accurately reflect

the cost of furfuryl used in production

during the POI. The petitioner therefore

contends that the Department should

reject these methodologies and resort to

BIA as the basis for computing ISL’s

antidumping margin.

ISL maintains that each of the

methodologies used in the questionnaire

responses to calculate furfuryl

production costs are reasonable and

should be accepted by the Department.

However, ISL contends that its fiscal

year furfuryl cost calculation is most

appropriate because it represents all

costs normally incurred during a full

seasonal cycle.

DOC Position

We agree with the petitioner that none

of the three methodologies ISL has

proposed properly values the cost of

furfuryl consumed in the furfuryl

alcohol process during the POI. ISL’s

first methodology included the cost of

furfuryl produced after the POI, June

through September 1994. ISL’s second

methodology reflected furfuryl

production costs for only part of the

furfuryl consumed during the POI.

Lastly, the furfuryl costs computed by

the company under the third

methodology were based on a weightedaverage cost rather than on ISL’s normal

first-in first-out (FIFO) inventory

valuation method. However, the

information on the record is sufficient to

allow the Department to recalculate the

furfuryl cost.

We have recalculated the cost of

furfuryl used to produce furfuryl

alcohol during the POI based on ISL’s

normal FIFO inventory valuation

method. The Department normally

follows the respondent’s inventory

valuation method unless it fails to

reasonably reflect the costs associated

with producing the merchandise. There

is no information on the record to

indicate that ISL’s FIFO method distorts

per-unit furfuryl costs.

Comment 13: Accounting Adjustment

The petitioner argues that ISL’s

submission methodology for a particular

proprietary adjustment distorts the COP.

The respondent argues that its

submission methodology provides a

reasonable basis for the calculation of

the effect of this item on the COP.

DOC Position

Because of the business proprietary

nature of this item, we have addressed

the parties comments and analyzed the

issue in detail in the proprietary

concurrence memorandum dated May 1,

1995. But, our determination was not to

allow respondent’s submitted

methodology but rather to rely on

respondent’s normal accounting

practice with respect to this adjustment.

Comment 14: Bagasse

The petitioner asserts that ISL failed

to properly account for the value of its

bagasse used to produce furfuryl and

that the value should be included in

ISL’s COP. The petitioner notes that

during the POI, ISL sold bagasse

generated from one of its sugar mills to

an unrelated paper producer located

near the mill. It argues that the

Department should utilize this sales

value in assigning a cost to bagasse

consumed during the POI.

The respondent maintains that its

submission methodology of assigning no

cost to bagasse usage is reasonable and

consistent with its financial and cost

accounting systems. The respondent

contends that its methodology considers

the value of bagasse based on its energy

content. Additionally, respondent

argues that there is no market for

bagasse from its Sezela mill where the

company produced the subject

merchandise. Furthermore, respondent

notes that the sale of bagasse from one

of ISL’s other mills was possible only

because of the close proximity of this

mill to the purchaser’s manufacturing

plant.

DOC Position

ISL’s furfuryl and furfuryl alcohol

plant is located adjacent to its sugar

cane processing plant. Bagasse is

generated from the processing of sugar

cane. Bagasse generated at the sugar mill

is transferred to the furfural plant. In the

first stage of the furfural process, ISL

extracts a chemical from bagasse called

pentosan. After the furfural plant

performs the extraction, the remaining

bagasse residue is transferred to the

boiler as an energy source. The bagasse

loses a minimal amount of its energy

content from the extraction process. ISL

has one boiler which generates high

pressure steam for both its sugar mill

and furfural process. ISL uses coal,

bagasse and bagasse residue to fuel this

boiler.

In its normal accounting system, ISL

assigns no costs to the bagasse used to
22556 Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices

extract pentosan and as a fuel source for

the boiler. All coal costs incurred for the

boiler are charged to furfural

production.

During verification, we noted that the

energy content of the coal charged to the

furfural process exceeded the sum of the

energy content of steam used in the

furfural process plus the net energy loss

from bagasse used in furfural

production. Consequently, we found

that ISL’s actual reported coal costs

charged to furfural exceeded the value

of the bagasse and steam used in the

furfural production process. We

therefore consider it reasonable for ISL

to assign no cost to the bagasse

consumed in the furfural production

process.

We believe that the circumstances

surrounding ISL’s bagasse sales during

the POI do not reflect the operations of

the Sezela mill where ISL produces the

subject merchandise. The Sezela sugar

mill has no bagasse customers located

within its vicinity, whereas the bagasse

customer of ISL’s other mill is located

next to that mill. Thus, unlike the

Sezela mill, sales between the other ISL

sugar mill and the unrelated company

were economically feasible because

transportation of bagasse between seller

and customer was reasonably available

and relatively inexpensive.

Comment 15: General and

Administrative (G&A)

The petitioner maintains ISL’s G&A

calculation methodology is flawed for

numerous reasons and urges the

Department to reject it. Specifically, the

petitioner maintains that ISL’s G&A

expense calculation methodology failed

to compute G&A on a company-wide

basis and included both G&A and

selling expenses in the denominator.

ISL contends its reported G&A

expense methodology is appropriate.

The G&A expenses were based on

amounts recorded in separate general

ledger accounts for the chemical

division G&A departments and were

properly allocated to the operations

receiving the benefit. However,

respondent agrees that the denominator

incorrectly included both G&A and

selling expenses.

DOC Position

To compute G&A expenses for COP,

ISL calculated a company-wide G&A

rate for G&A expenses that related to the

operations of the company as a whole.

In addition, ISL calculated separate

G&A rates for its chemical operations

and the operations of its Sezela furfuryl

alcohol plant. These rates excluded

G&A expenses relating to the company’s

sugar operations (i.e., non-subject

merchandise).

During verification, ISL demonstrated

that it normally records certain G&A

expenses by product line for chemical

operations (including furfuryl and

furfuryl alcohol) and sugar. The

company showed that it recorded these

product-line expenses in specific G&A

accounts maintained in its general

ledger. Since ISL demonstrated that

some of its G&A expenses relate

exclusively to the company’s nonsubject sugar operation, we consider

respondent’s submitted G&A expense

methodology reasonable.

We further note that because we are

applying the G&A rate to cost of

manufacturing exclusive of selling,

general and administrative (SG&A)

expenses, we recalculated ISL’s G&A

rate by excluding SG&A from the cost of

sales figure used as the denominator in

the calculation.

Comment 16: Decentralization Incentive

ISL claims its decentralization

incentive payments were approved by

and received from the South African

government during fiscal year 1994.

Since the revenue was recorded in its

audited financial statements, ISL

maintains that it appropriately included

this amount in its submitted G&A rate

calculation.

The petitioner argues the Department

should exclude ISL’s decentralization

incentive revenue as the revenue relates

to expenses incurred before the POI.

Additionally, the petitioner argues this

revenue is not linked to the sales made

during the POI.

DOC Position

According to both South African and

U.S. generally accepted accounting

principles (GAAP), companies do not

normally recognize revenue in the

income statement unless they are

relatively certain that the amount will

be collected. In ISL’s case, even though

the government approved ISL’s grant

application in 1993, the company did

not record the revenue for financial

statement purposes until the money was

received in 1994. We consider ISL’s

conservative treatment of not recording

the grant revenue for financial statement

purposes until the year of receipt a

reasonable approach. Accordingly, we

included the grant revenue in ISL’s G&A

calculation.

Comment 17: Overhead Expense

Allocation

ISL contends that the method used to

allocate overhead costs for submission

purposes is the same as that applied in

its normal accounting records.

The petitioner contends ISL’s

overhead allocation method distorts

costs. According to the petitioner, ISL

understated furfuryl costs by allocating

an excessive amount of overhead

expenses to the furfuryl alcohol process.

ISL maintains that, contrary to the

petitioner’s arguments, its normal

overhead allocation methodology is

reasonable. Moreover, ISL asserts that

the method of allocation between

furfuryl and furfuryl alcohol does not

significantly effect the overall furfuryl

alcohol costs.

DOC Position

The Department normally relies on

the respondent’s books and records

prepared in accordance with the home

country GAAP unless these accounting

principles do not reasonably reflect the

COP of the merchandise. ISL’s reported

overhead costs were based on its normal

accounting books and records. We have

found no evidence on the record to

indicate ISL’s allocation of overhead

costs between furfuryl and furfuryl

alcohol distorts the production costs.

Accordingly, we accepted ISL’s

submission methodology for allocating

overhead costs.

Comment 18: Steam Costs

The petitioner asserts the Department

should increase ISL’s steam costs by the

amount suggested in the cost

verification report. The respondent

agrees with this adjustment to steam

costs.

DOC Position

We increased ISL’s reported steam

cost.

Continuation of Suspension of

Liquidation

In accordance with section 735(d) of

the Act, we are directing the Customs

Service to continue to suspend

liquidation of all entries of furfuryl

alcohol from South Africa, as defined in

the ‘‘Scope of Investigation’’ section of

this notice, that are entered, or

withdrawn from warehouse, for

consumption on or after December 16,

1994, the date of publication of our

preliminary determination notice in the

Federal Register.

The Customs Service shall require a

cash deposit or posting of a bond on all

entries equal to the estimated dumping

margin, as shown below. The

suspension of liquidation will remain in

effect until further notice.
Federal Register / Vol. 60, No. 88 / Monday, May 8, 1995 / Notices 22557

Producer/manufacturer/exporter

Margin

percentage

Illovo Sugar Limited ...................... 15.48

All Others ...................................... 15.48

ITC Notification

In accordance with section 735(d) of

the Act, we have notified the ITC of our

determination. The ITC will make its

determination whether these imports

materially injure, or threaten injury to,

a U.S. industry within 45 days of the

publication of this notice. If the ITC

determines that material injury or threat

of material injury does not exist, the

proceeding will be terminated and all

securities posted as a result of the

suspension of liquidation will be

refunded or canceled.

However, if the ITC determines that

such injury does exist, we will issue an

antidumping duty order directing the

Customs Service officers to assess an

antidumping duty on furfuryl alcohol

from South Africa, that are entered, or

withdrawn from warehouse, for

consumption on or after the date of

suspension of liquidation, equal to the

amount by which the foreign market

value of the merchandise exceeds the

United States price.

This determination is published

pursuant to section 735(d) of the Act (19

U.S.C. 1673(d)) and 19 CFR 353.20.

Dated: May 1, 1995.

Susan G. Esserman,

Assistant Secretary for Import

Administration.

[FR Doc. 95–11261 Filed 5–5–95; 8:45 am]

BILLING CODE 3510–DS–P

[A–549–812]

Final Determination of Sales at Less

Than Fair Value: Furfuryl Alcohol From

Thailand

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: May 8, 1995.

FOR FURTHER INFORMATION CONTACT: John

Brinkmann or Greg Thompson, Office of

Antidumping Investigations, Import

Administration, U.S. Department of

Commerce, 14th Street and Constitution

Avenue, N.W., Washington, D.C. 20230;

telephone (202) 482–5288 or 482–2336,

respectively.

Final Determination

We determine that furfuryl alcohol

from Thailand is being, or is likely to be,

sold in the United States at less than fair

value (LTFV), as provided in section

735 of the Tariff Act of 1930, as

amended (the Act). The estimated

margins are shown in the ‘‘Suspension

of Liquidation’’ section of this notice.

Case History

Since the preliminary determination

of sales at LTFV on December 9, 1994

(59 FR 65014, December 16, 1994), the

following events have occurred.

At the request of the petitioner, QO

Chemicals, the Department postponed

the final determination until May 1,

1995 (59 FR 66901, December 28, 1994).

Pursuant to the Department’s request,

on January 17, 1995, the respondent,

Indo-Rama Chemicals (Thailand) Ltd.

(IRCT), submitted additional

information pertaining to its potential

exports sales price (ESP) transactions. In

addition, IRCT submitted its response to

Section D of the questionnaire, which

requests information on the cost of

production (COP) and constructed value

(CV). The petitioner commented on this

response, which IRCT later

supplemented pursuant to our request

on February 6, 1995.

Verification of IRCT’s sales and COP/

CV questionnaire responses was

conducted during the months of

February and March, 1995. The

Department issued reports concerning

these verifications on March 21, 1995.

IRCT and the petitioner submitted

case briefs on March 29, 1995, and

rebuttal briefs on March 31, 1995. At the

petitioner’s request, the Department

held a hearing on April 4, 1995.

Scope of Investigation

The product covered by this

investigation is furfuryl alcohol

(C4H3OCH2OH). Furfuryl alcohol is a

primary alcohol, and is colorless or pale

yellow in appearance. It is used in the

manufacture of resins and as a wetting

agent and solvent for coating resins,

nitrocellulose, cellulose acetate, and

other soluble dyes.

The product subject to this

investigation is classifiable under

subheading 2932.13.00 of the

Harmonized Tariff Schedule of the

United States (HTSUS). Although the

HTSUS subheading is provided for

convenience and customs purposes, our

written description of the scope of this

proceeding is dispositive.

Period of Investigation

The period of investigation (POI) is

December 1, 1993, through May 31,

1994.

Applicable Statute and Regulations

Unless otherwise indicated, all

citations to the statute and to the

Department’s regulations are in

reference to the provisions as they

existed on December 31, 1994.

Such or Similar Comparisons

For purposes of the final

determination, we have determined that

furfuryl alcohol constitutes a single

‘‘such or similar’’ category of

merchandise. Since the respondent sold

merchandise in the home market

identical to that sold in the United

States during the POI, we made

identical merchandise comparisons.

Fair Value Comparisons

To determine whether sales of

furfuryl alcohol from Thailand to the

United States were made at less than

fair value, we compared the United

States price (USP) to the foreign market

value (FMV), as specified in the ‘‘United

States Price’’ and ‘‘Foreign Market

Value’’ sections of this notice. In

accordance with 19 CFR 353.58 (1994),

we made comparisons at the same level

of trade, where possible.

United States Price

We based USP on purchase price, in

accordance with section 772(b) of the

Act, because the subject merchandise

was sold to an unrelated purchaser

before importation into the United

States and because exporter’s sales price

methodology was not otherwise

indicated (see Comment 2 below).

With regard to the calculation of

movement expenses, we made

deductions from the U.S. sales price,

where appropriate, for foreign

brokerage, foreign inland freight, ocean

freight, and marine insurance in

accordance with section 772(d)(2)(A) of

the Act.

Since IRCT discounts all account

receivables pertaining to its U.S. sales,

we calculated U.S. credit expenses

based on IRCT’s average short-term

interest rate. In accordance with section

772(d)(1)(B) of the Act, we added to

USP the amount of the Thai import

duties, not collected on material inputs,

by reason of exportation of the subject

merchandise to the United States.

In accordance with our standard

practice, pursuant to the decision of the

U.S. Court of International Trade (CIT)

in Federal-Mogul Corporation and The

Torrington Company v. United States,

834 F. Supp. 1391 (CIT 1993), our

calculations include an adjustment to

U.S. price for the consumption tax

levied on comparison sales in Thailand

(See Preliminary Antidumping Duty

Determination: Color Negative

Photographic Paper and Chemical

Components from Japan, 59 FR 16177,

16179 (April 6, 1994), for an

explanation of this methodology).