[Federal Register Volume 61, Number 98 (Monday, May 20, 1996)]
[Notices]
[Pages 25196-25200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-12517]



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DEPARTMENT OF COMMERCE
[A-570-815]


Sulfanilic Acid From the People's Republic of China; Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to requests by a U.S. importer of the subject 
merchandise to the United States and by petitioner, the Department of 
Commerce (the Department) is conducting an administrative review of the 
antidumping duty order on sulfanilic acid from the People's Republic of 
China (PRC). The review covers ten manufacturers/exporters of subject 
merchandise to the United States and the period August 1, 1993 through 
July 31, 1994. The review indicates the existence of dumping margins 
during the period of review.
    We have preliminarily determined that sales have been made below 
foreign market value (FMV). If these preliminary results are adopted in 
our final results of administrative review, we will instruct U.S. 
Customs to assess antidumping duties equal to the difference between 
United States price (U.S. price) and FMV.
    Interested parties are invited to comment on these preliminary 
results.

EFFECTIVE DATE: May 20, 1996.

FOR FURTHER INFORMATION CONTACT: Karin Price or Maureen Flannery, 
Office of Antidumping Compliance, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington D.C. 20230; telephone: (202) 482-
4733.

SUPPLEMENTARY INFORMATION:

Background

    On August 19, 1992, the Department published in the Federal 
Register (57 FR 37524) the antidumping duty order on sulfanilic acid 
from the PRC. On August 3, 1994, the Department published in the 
Federal Register (59 FR 39544) a notice of opportunity to request an 
administrative review of this antidumping duty order. On August 30, 
1994, in accordance with 19 CFR 353.22(a) (1994), a U.S. importer of 
sulfanilic acid from the PRC, PHT International, Inc. (PHT), requested 
that we conduct an administrative review of four exporters, China 
National Chemical Construction Company (CNCCC), Hainan Garden Trading 
Company (Hainan Garden), Yude Chemical Industry Company (Yude), and 
Zhenxing Chemical Industry Company (Zhenxing). On August 31, 1994, in 
accordance with 19 CFR 353.22(a), petitioner, R-M Industries, Inc., 
requested that we conduct an administrative review of Baoding No. 3 
Chemical Factory (Baoding), China National Chemical Construction 
Corporation, Qingdao Branch (CNCCC Qingdao), CNCCC, Jinxing Chemical 
Factory (Jinxing), Sinochem Hebei Import & Export Corporation (Sinochem 
Hebei), Sinochem Qingdao, Sinochem Shandong, Yude, and Zhenxing. We 
published the notice of initiation of this antidumping duty 
administrative review on September 16, 1994 (59 FR 47609). The notice 
of initiation was amended on April 14, 1995 (60 FR 19017). The 
Department is conducting this administrative review in accordance with 
section 751 of the Tariff Act of 1930, as amended (the Act).

Applicable Statute and Regulations

    Unless otherwise stated, all citations to the statute and to the 
Department's regulations are references to the provisions as they 
existed on December 31, 1994.

Scope of Review

    Imports covered by this review are all grades of sulfanilic acid, 
which include technical (or crude) sulfanilic acid, refined (or 
purified) sulfanilic acid and sodium salt of sulfanilic acid.
    Sulfanilic acid is a synthetic organic chemical produced from the 
direct sulfonation of aniline with sulfuric acid. Sulfanilic acid is 
used as a raw material in the production of optical brighteners, food 
colors, specialty dyes, and concrete additives. The principal 
differences between the grades are the undesirable quantities of 
residual aniline and alkali insoluble materials present in the 
sulfanilic acid. All grades are available as dry, free flowing powders.
    Technical sulfanilic acid, classifiable under the subheading 
2921.42.24 of the Harmonized Tariff Schedule (HTS), contains 96 percent 
minimum sulfanilic acid, 1.0 percent maximum aniline, and 1.0 percent 
maximum alkali insoluble materials. Refined sulfanilic acid, also 
classifiable under the subheading 2921.42.24 of the HTS, contains 98 
percent minimum sulfanilic acid, 0.5 percent maximum aniline and 0.25 
percent maximum alkali insoluble materials.
    Sodium salt, classifiable under the HTS subheading 2921.42.79, is a 
powder, granular or crystalline material which contains 75 percent 
minimum equivalent sulfanilic acid, 0.5 percent

[[Page 25197]]

maximum aniline based on the equivalent sulfanilic acid content, and 
0.25 percent maximum alkali insoluble materials based on the equivalent 
sulfanilic acid content.
    Although the HTS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
proceeding is dispositive.
    This review covers 10 manufacturers/exporters of sulfanilic acid 
from the PRC, Baoding, CNCCC, CNCCC Qingdao, Jinxing, Hainan Garden, 
Sinochem Hebei, Sinochem Shandong, Sinochem Qingdao, Yude, and 
Zhenxing. The review period is August 1, 1993 through July 31, 1994.

Verification

    As provided by section 776(b) of the Act, we conducted 
verifications of the information provided by CNCCC, Hainan Garden, 
Sinochem Hebei, Yude, and Zhenxing. We also conducted verifications of 
two related importers of the subject merchandise, Alchemy International 
and PHT, at their facilities in the United States. We conducted the 
verifications using standard verification procedures, including onsite 
inspection of the manufacturers' facilities, the examination of 
relevant sales and financial records, and selection of original 
documentation containing relevant information. Our verification results 
are outlined in the public versions of the verification reports.

Separate Rates

    To establish whether a company is sufficiently independent to be 
entitled to a separate rate, the Department analyzes each exporting 
entity under the test established in the Final Determination of Sales 
at Less Than Fair Value: Sparklers from the People's Republic of China 
(56 FR 20588, May 6, 1991) (Sparklers), as amplified in the Notice of 
Final Determination of Sales at Less Than Fair Value: Silicon Carbide 
from the People's Republic of China (59 FR 22585, May 2, 1994) (Silicon 
Carbide). Under this policy, exporters in non-market-economy (NME) 
countries are entitled to separate, company-specific margins when they 
can demonstrate an absence of government control, both in law (de jure) 
and in fact (de facto), with respect to exports. Evidence supporting, 
though not requiring, a finding of de jure absence of government 
control over export activities includes: (1) An absence of restrictive 
stipulations associated with an individual exporter's business and 
export licenses; (2) any legislative enactments decentralizing control 
of companies; and (3) any other formal measures by the government 
decentralizing control of companies. De facto absence of government 
control with respect to exports is based on four criteria: (1) Whether 
the export prices are set by or subject to the approval of a government 
authority; (2) whether each exporter retains the proceeds from its 
sales and makes independent decisions regarding the disposition of 
profits and financing of losses; (3) whether each exporter has autonomy 
in making decisions regarding the selection of management; and (4) 
whether each exporter has the authority to negotiate and sign contracts 
and other agreements.
    Baoding submitted its response to the Department's request for 
information regarding separate rates in Chinese, but did not respond to 
our request that the response be translated into English or to further 
requests for information. Jinxing, CNCCC Qingdao, and Sinochem Qingdao 
did not respond to our requests for information. Sinochem Shandong 
submitted a response indicating that it had no exports of the subject 
merchandise to the United States during the period of review; however, 
it did not submit a response to the Department's questionnaire 
regarding separate rates. Therefore, we have not given Baoding, 
Jinxing, CNCCC Qingdao, Sinochem Qingdao, or Sinochem Shandong a 
separate rate.
    CNCCC, Hainan Garden, Sinochem Hebei, Yude, and Zhenxing have 
responded to the Department's request for information regarding 
separate rates. We have found that the evidence on the record 
demonstrates an absence of government control, both in law and in fact, 
with respect to their exports according to the criteria identified in 
Sparklers and Silicon Carbide for this period of review, and have 
assigned to each of these companies a separate rate. For further 
discussion of the Department's preliminary determination that each of 
these companies is entitled to a separate rate, see Decision Memorandum 
to Holly A. Kuga, Director, Office of Antidumping Compliance, dated 
August 24, 1995, ``Separate rates in the 1993/1994 administrative 
review of sulfanilic acid from the People's Republic of China,'' which 
is on file in the Central Records Unit (room B-099 of the Main Commerce 
Building).

Collapsing

    The Department ``collapses'' related firms (i.e., treats them as a 
single entity for review purposes and assigns them a single dumping 
margin) where the type and degree of relationship is so significant 
that we find that there is a strong possibility of price manipulation 
(Nihon Cement Co., Ltd. v. United States, 17 CIT 400 (1993) (Nihon)). 
Because Yude and Zhenxing each formed joint ventures with PHT during 
the period of review, we have considered whether Yude and Zhenxing 
should be collapsed for purposes of this administrative review as a 
result of their relationships with PHT.
    In determining whether to collapse related parties, the Department 
considers the following criteria:
    <bullet> Whether the companies have interlocking boards of 
directors;
    <bullet> Whether the companies have similar production processes, 
facilities, or equipment so as to facilitate shifting of production 
between the facilities;
    <bullet> Whether the companies operate as separate and distinct 
entities;
    <bullet> Whether the companies share marketing and sales 
information or offices; and
    <bullet> Whether the companies are involved in the pricing or 
production decisions of the other entity.

See Final Determinations of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products, Certain Cold-Rolled Carbon Steel 
Flat Products, Certain Corrosion-Resistant Carbon Steel Flat Products, 
and Certain Cut-to-Length Carbon Steel Plate from Canada (58 FR 37099, 
July 9, 1993) and Final Determinations of Sales at Less Than Fair 
Value: Certain Hot-Rolled Carbon Steel Flat Products, Certain Cold-
Rolled Carbon Steel Flat Products, and Certain Corrosion-Resistant 
Carbon Steel Flat Products from Japan (58 FR 37154, July 9, 1993).
    The use of these factors was upheld by the Court of International 
Trade (CIT) in Nihon. In Nihon, the CIT held that, although each of 
these criteria does not have to be met in order for the Department to 
collapse related parties, the Department must consider them all.
    Based on our analysis of these criteria, we have determined that 
there is a strong possibility of price manipulation between Yude and 
Zhenxing, and that Yude and Zhenxing should be collapsed as a result of 
their relationships with PHT. We have found that some of the same 
people sit on Yude's and Zhenxing's boards of directors, that Yude and 
Zhenxing have similar production processes, and that PHT makes sales 
decisions for each of the joint ventures. For a further discussion of 
this issue, see Memorandum from Case Analyst to the File, dated 
February 20, 1996, ``Analysis for the preliminary results of the 1993/
1994 administrative review of sulfanilic acid from the People's 
Republic of China--Yude Chemical Industry Company and

[[Page 25198]]

Zhenxing Chemical Industry Company,'' which is on file in the Central 
Records Unit (room B-099 of the Main Commerce Building).
    We are collapsing Yude and Zhenxing for the purposes of calculating 
margins, and we are collapsing their factor data for use in calculating 
FMV. We have calculated one FMV for Yude and Zhenxing by weight 
averaging Yude's and Zhenxing's factors based on the quantities of 
sulfanilic acid each produced during the period of review.

United States Price

    The Department used purchase price and exporter's sales price 
(ESP), in accordance with sections 772 (b) and (c) of the Act, in 
calculating U.S. price. We made deductions from purchase price and ESP 
sales, where appropriate, for foreign inland freight, ocean freight, 
and marine insurance, in accordance with section 772(d)(2)(A). We used 
surrogate data from India to value foreign inland freight, marine 
insurance, and ocean freight, in accordance with section 773(c). We 
selected India as the surrogate country for reasons explained in the 
``Foreign Market Value'' section of this notice. We made additional 
deductions from ESP sales, where appropriate, for U.S. duties, U.S. 
brokerage and handling, U.S. inland freight, containerization expenses, 
and repacking in the United States, in accordance with section 
772(d)(2)(A).

Foreign Market Value

    For companies located in NME countries, section 773(c)(1) of the 
Act provides that the Department shall determine FMV using a factors of 
production methodology if (1) the merchandise is exported from a NME 
country, and (2) the information does not permit the calculation of FMV 
using home market prices, third country prices, or constructed value 
under section 773(a) of the Act.
    In every case conducted by the Department involving the PRC, the 
PRC has been treated as an NME country. None of the parties to this 
proceeding has contested such treatment in this review. Accordingly, we 
calculated FMV in accordance with section 773(c) of the Act and section 
353.52 of the Department's regulations. Pursuant to section 773(c)(4), 
we determined that India is comparable to the PRC in terms of per 
capita gross national product (GNP), the growth rate in per capita GNP, 
and the national distribution of labor, and that India is a significant 
producer of comparable merchandise. For further discussion of the 
Department's selection of India as the primary surrogate country, see 
Memorandum from Director, Office of Policy, to Acting Division 
Director, Office of Antidumping Compliance, dated April 13, 1995, 
``Sulfanilic Acid from the People's Republic of China (PRC): Nonmarket 
Economy Status and Surrogate Country Selection,'' and File Memorandum, 
dated August 8, 1995, ``India as a significant producer of comparable 
merchandise in the 1993/1994 administrative review of sulfanilic acid 
from the People's Republic of China,'' which are on file in the Central 
Records Unit (room B099 of the Main Commerce Building).
    For purposes of calculating FMV, we valued PRC factors of 
production as follows, in accordance with section 773(c)(1) of the Act:
    <bullet> To value aniline used in the production of sulfanilic 
acid, we used the rupee per kilogram value of imports into India during 
April 1993-March 1994, obtained from the March 1994 Monthly Statistics 
of the Foreign Trade of India, Volume II--Imports (Indian Import 
Statistics). Using wholesale price indices (WPI) obtained from the 
International Financial Statistics, published by the International 
Monetary Fund (IMF), we adjusted this value to reflect inflation 
through the period of review. We made adjustments to include freight 
costs incurred between the suppliers and the sulfanilic acid factories.
    <bullet> To value sulfuric acid used in the production of 
sulfanilic acid, we used the rupee per kilogram value reported in 
Chemical Weekly. We made adjustments to include freight costs incurred 
between the suppliers and the sulfanilic acid factories.
    <bullet> To value activated carbon used in the production of 
sulfanilic acid, we used the rupee per kilogram value reported in 
Chemical Business. We made adjustments to include freight costs 
incurred between the suppliers and the sulfanilic acid factories.
    <bullet> For direct labor, we used the labor rates reported in the 
Business International Corporation reports IL&T India, released 
November 1993. This source breaks out labor rates between skilled and 
unskilled labor for 1993 and provides information on the number of 
labor hours worked per week. Using WPI obtained from the International 
Financial Statistics, we adjusted the labor rates to reflect inflation 
through the period of review.
    <bullet> For factory overhead, we used information reported in the 
September 1994 Reserve Bank of India Bulletin. From this information, 
we were able to determine factory overhead as a percentage of total 
cost of manufacture.
    <bullet> For selling, general and administrative (SG&A) expenses, 
we used information obtained from the September 1994 Reserve Bank of 
India Bulletin. We calculated an SG&A rate by dividing SG&A expenses by 
the cost of manufacture.
    <bullet> To calculate a profit rate, we used information obtained 
from the September 1994 Reserve Bank of India Bulletin. We calculated a 
profit rate by dividing the before-tax profit by the sum of those 
components pertaining to the cost of manufacturing plus SG&A.
    <bullet> To value the inner and outer bags used as packing 
materials, we used import statistics for India obtained from the Indian 
Import Statistics. Using WPI obtained from the International Financial 
Statistics, we adjusted these values to reflect inflation through the 
period of review. We adjusted these values to include freight costs 
incurred between the suppliers and the sulfanilic acid factories.
    <bullet> To value coal, we used the price of steam coal reported in 
The Gazette of India, June 16, 1994.
    <bullet> To value electricity, we used the price of electricity 
reported in the Electric Utilities Data Book for the Asian and Pacific 
Region, January 1993, for the period April 1993 through March 1994. We 
adjusted the value of electricity to reflect inflation through the 
period of review using WPI published by the IMF.
    <bullet> To value truck freight, we used the rate reported in a 
June 1992 cable from the U.S. Embassy in India submitted for the Final 
Determination of Sales at Less Than Fair Value: Sulfanilic Acid from 
the People's Republic of China (57 FR 29705, July 6, 1992). We adjusted 
the truck freight rates to reflect inflation through the period of 
review using WPI published by the IMF.
    <bullet> To value rail freight, we used the price reported in a 
December 1989 cable from the U.S. Embassy in India submitted for the 
Final Results of Antidumping Duty Administrative Review: Shop Towels of 
Cotton from the People's Republic of China (56 FR 4040, February 1, 
1991). We adjusted the rail freight rates to reflect inflation through 
the period of review using WPI published by the IMF.

Currency Conversion

    We made currency conversions in accordance with 19 CFR 353.60(a). 
Currency conversions were made at the rates certified by the Federal 
Reserve Bank.

Best Information Available

    We preliminarily determine, in accordance with section 776(c) of 
the

[[Page 25199]]

Act, that the use of best information available (BIA) is appropriate 
for Baoding, CNCCC Qingdao, Jinxing, and Sinochem Qingdao because these 
companies did not respond to our requests for information. Section 
776(c) of the Act states that the Department shall use BIA whenever a 
company refuses or is unable to produce information in a timely manner 
and in the form required, or significantly impedes an investigation.
    In deciding what to use as BIA, section 353.37(b) of the 
Department's regulations provide that the Department may take into 
account whether a party refuses to provide requested information or 
impedes a proceeding. Thus, the Department determines on a case-by-case 
basis what is BIA. The Department uses a two-tiered approach in its 
choice of BIA. When a company refuses to provide the information 
requested in the form required or otherwise significantly impedes the 
Department's review (first tier), the Department will normally assign 
to that company the higher of (1) the highest rate found for any firm 
in the less-than-fair-value (LTFV) investigation or a prior 
administrative review; or (2) the highest rate found in the current 
review for any firm. When a company has cooperated with the 
Department's request for information but fails to provide information 
requested in a timely manner or in the form required such that margins 
for certain sales cannot be calculated (second tier), the Department 
will normally assign to those sales the higher of (1) the highest 
margin calculated for that company in any previous review or the 
original investigation for the same class or kind of merchandise; or 
(2) the highest calculated margin for any respondent in the current 
review. See Final Results of Antidumping Duty Administrative Reviews 
and Revocation in Part of An Antidumping Duty Order (Antifriction 
Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from 
France, Germany, Italy, Japan, Romania, Singapore, Sweden, Thailand and 
the United Kingdom) (58 FR 39729, July 26, 1993). This practice has 
been upheld in Allied-Signal Aerospace Co. v. United States, 996 F.2d 
1185 (Fed. Cir. 1993), and Krupp Stahl AG et al. v. United States, 822 
F. Supp. 789 (CIT 1993).
    We have applied BIA to sales made by Baoding, CNCCC Qingdao, 
Jinxing, and Sinochem Qingdao. Because these firms did not respond to 
our questionnaires, as BIA we have applied the highest margin ever in 
the LTFV investigation, prior administrative reviews, or in this 
review, which is 85.20 percent. Because these firms have not been found 
eligible for a separate rate, they form the basis of the PRC country-
wide rate, which is therefore also based on non-cooperative BIA.

Non Shipper

    Sinochem Shandong submitted a response to the Department's 
questionnaire stating that it did not ship sulfanilic acid to the 
United States during the period of review. There is no evidence on the 
record to demonstrate that Sinochem Shandong shipped subject 
merchandise to the United States during the period of review. Since we 
have no information to determine whether Sinochem Shandong merits a 
separate rate for this review, as discussed in the separate rates 
section above, Sinochem Shandong falls within the PRC country-wide 
rate.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist:

------------------------------------------------------------------------
                                                                Margin  
          Manufacturer/Exporter              Time period      (percent) 
------------------------------------------------------------------------
China National Chemical Construction                                    
 Corporation............................     8/1/93-7/31/94        47.51
Hainan Garden Trading Company...........     8/1/93-7/31/94        53.36
Sinochem Hebei Import & Export                                          
 Corporation............................     8/1/93-7/31/94         2.01
Yude Chemical Industry Company \1\......     8/1/93-7/31/94         0.00
Zhenxing Chemical Industry Company \1\..     8/1/93-7/31/94         0.00
PRC Rate................................     8/1/93-7/31/94       85.20 
------------------------------------------------------------------------
\1\ Yude and Zhenxing have been collapsed for the purposes of this      
  administrative review. However, we have listed them separately on this
  chart for Customs purposes.                                           

    Parties to the proceeding may request disclosure within 5 days of 
the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit case 
briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 37 days after the date of 
publication. See section 353.38(d) of the Department's regulations. The 
Department will publish a notice of final results of this 
administrative review, which will include the results of its analysis 
of issues raised in any such comments.
    The Department shall determine, and the Customs Service shall 
assess, antidumping duties on all appropriate entries. Individual 
differences between U.S. price and FMV may vary from the percentages 
stated above. The Department will issue appraisement instructions 
directly to the Customs Service.
    Furthermore, the following deposit requirements will be effective 
upon publication of the final results of this administrative review for 
all shipments of sulfanilic acid from the PRC entered, or withdrawn 
from warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(1) of the Act: (1) the cash deposit 
rates for the reviewed companies named above which have separate rates 
will be the rates for those firms established in the final results of 
this administrative review; (2) for the companies named above which 
were not found to have separate rates, Baoding, CNCCC Qingdao, Jinxing, 
Sinochem Qingdao, and Sinochem Shandong, as well as for all other PRC 
exporters, the cash deposit rate will be the highest margin ever in the 
LTFV investigation or in this or prior administrative reviews, the PRC 
rate; and (3) the cash deposit rate for non-PRC exporters of subject 
merchandise from the PRC will be the rate applicable to the PRC 
supplier of that exporter. These deposit requirements, when imposed, 
shall remain in effect until publication of the final results of the 
next administrative review.

Notification of Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 353.26 of the Department's regulations to 
file a certificate regarding the reimbursement of antidumping duties 
prior to liquidation of the relevant entries during this review period. 
Failure to

[[Page 25200]]

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.
    This administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and section 353.22 
of the Department's regulations.

    Date: May 9, 1996.
Paul L. Joffe,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-12517 Filed 5-17-96; 8:45 am]
BILLING CODE 3510-DS-P