Import Administration, International Trade Administration, Department of Commerce.
Notice of preliminary results and partial rescission of antidumping duty administrative review and intent to revoke the antidumping duty order in part.
In response to requests by interested parties, the Department of Commerce (“the Department”) is conducting an administrative review of the antidumping duty order on certain pasta (“pasta”) from Italy for the period July 1, 1999 through June 30, 2000.
We preliminarily determine that during the POR, (1) Barilla G.e.R. F.lli S.p.A. (“Barilla”), (2) Delverde S.p.A. and its affiliate, Tamma Industrie Alimentari di Capitanata, S.r.L. (collectively, “Delverde”), (3) Pastificio Guido Ferrara S.r.l. (“Ferrara”), (4) Pastificio Antonio Pallante S.r.l. and its affiliate Industrie Alimentari Molisane S.r.l. (collectively, “Pallante”), (5) P.A.M., S.r.l. and its affiliate Liguori (collectively, “PAM”), and (6) Pastificio Riscossa F.lli Mastromauro S.r.l. (“Riscossa”) sold subject merchandise at less than normal value (“NV”). If these preliminary results are adopted in the final results of this administrative review, we will instruct the U.S. Customs Service to assess antidumping duties equal to the difference between the export price (“EP”) or constructed export price (“CEP”) and NV.
We preliminarily determine that during the POR, (1) Commercio-Rappresentanze-Export S.p.A. (“Corex”), (2) Pastificio F.lli Pagani S.p.A. (“Pagani”), (3) N. Puglisi & F. Industria Paste Alimentari S.p.A. (“Puglisi”), and (4) Rummo S.p.A. Molino e Pastificio (“Rummo”) did not make sales of the subject merchandise at less than NV (i.e., made sales at “zero” or de minimis dumping margins). If these preliminary results are adopted in the final results of this administrative review, we will instruct the U.S. Customs Service to liquidate appropriate entries without regard to antidumping duties. Also, if these preliminary results are adopted in our final results of this administrative review, we intend to revoke the antidumping duty order with respect to Puglisi and Corex, based on three years of sales at not less than NV. See “Intent to Revoke” section of this notice.
Interested parties are invited to comment on these preliminary results. Parties who submit comments in this proceeding should also submit with them: (1) A statement of the issues; (2) a brief summary of the comments; and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette.
July 28, 2001.Start Further Info
FOR FURTHER INFORMATION CONTACT:
James Terpstra or Geoffrey Craig, AD/CVD Enforcement, Office 6, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-3965 or (202) 482-4161, respectively.End Further Info End Preamble Start Supplemental Information
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (“the Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department regulations refer to the regulations codified at 19 CFR part 351 (2000).
On July 24, 1996, the Department published in the Federal Register the antidumping duty order on pasta from Italy (61 FR 38547). On July 20, 2000, we published in the Federal Register the notice of “Opportunity to Request an Administrative Review” of this order, for the period July 1, 1999 through June 30, 2000 (65 FR 45035).
From July 13 to July 31, 2000, we received requests for review from the Borden Foods Corporation (“Borden”), which is an affiliate of Borden Inc., a petitioner  in the case, from New World Start Printed Page 34415Pasta, and from individual Italian exporters/producers of pasta, in accordance with 19 CFR 351.213(b)(2). There were requests made for 31 Italian companies. On September 6, 2000, we published the notice of initiation of this antidumping duty administrative review covering the period July 1, 1999 through June 30, 2000 and listed 30 companies. Notice of Initiation, 65 FR 53980 (September 6, 2000). Although Borden requested a review of De Matteis Agroalimentare S.p.A. (“De Matteis”), we did not initiate a review of De Matteis because it received a de minimis margin in the less-than-fair-value (“LTFV”) investigation and, thus, is excluded from the order.
On September 6, 2000 and September 7, 2000, respectively, Borden and New World Pasta withdrew their request for certain companies enumerated in their original letters. Of the 30 companies  named in the Initiation Notice, we are rescinding a review of 14 companies because petitioners withdrew their request and there was no request from any other interested party. See Memorandum from Melissa G. Skinner to Bernard Carreau, “Partial Rescission of Antidumping Duty Administrative Review” dated June 21, 2001 (“Partial Rescission Memo”) and the Partial Recission section below.
On September 13, 2000, we sent questionnaires to the remaining companies that we initiated a review of: (1) Arrighi S.p.A. Industrie Alimentari (“Arrighi”); (2) Barilla; (3) Corex; (4) Delverde; (5) Di Martino Gaetano E. F.lli S.r.l. (“Di Martino”); (6) Ferrara; (7) La Molisana Industrie Alimentari S.p.A. (“La Molisana”); (8) Puglisi; (9) Pallante; (10) Pagani; (11) Riscossa; (12) PAM; and (13) Rummo.
During the most recently completed segment in which each of the following companies participated, the Department disregarded sales that failed the cost test: Corex, Delverde, La Molisana, Puglisi, Pallante, PAM and Rummo. Therefore, pursuant to section 773(b)(2)(A)(ii) of the Act, we had reasonable grounds to believe or suspect that sales by these companies of the foreign like product under consideration for the determination of NV in this review were made at prices below the cost of production (“COP”). Therefore, we initiated cost investigations on these companies.
In the first administrative review, which was the most recently completed segment of the proceeding involving Arrighi and Pagani, the Department initiated cost investigations of Arrighi and Pagani. However, we were unable to complete those investigations because we had to base the final determination on facts otherwise available. The use of facts otherwise available precluded the Department from determining whether, in fact, sales below the cost of production would be disregarded from the home market sales response in that proceeding. Nonetheless, pursuant to section 773(b)(2)(A)(ii) of the Act, we initiated cost investigations on Arrighi and Pagani at the time we initiated this antidumping review based on the fact that we initiated COP investigations for these companies in the most recently completed review involving these companies and presumably would have disregarded sales that failed the cost test but for having to base their margins on total facts available.
However, we are preliminarily rescinding the review with respect to Arrighi because it submitted a letter stating that it had no shipments of subject merchandise during the POR. As discussed in the Partial Recission section below, using customs data, we verified that Arrighi did not have shipments of subject merchandise during the POR.
Also, on September 27, 2000 and October 18, 2000, respectively, La Molisana and Di Martino withdrew their requests for a review. Thus, as also discussed in the Partial Recission section below, we are rescinding the review for La Molisana and Di Martino because they withdrew their requests in a timely manner and there was no other request by an interested party to review La Molisana or Di Martino.
We also received a letter from Barilla stating that it did not intend to respond to the Department's questionnaire. See “Facts Available” section of this notice.
After several extensions, the remaining respondents submitted their responses to sections A through C of the questionnaire by November 15, 2000, and section D responses by January 16, 2001, except Riscossa and Ferrara who were not required to respond to section D.
From October 2000 to April 2001, the Department issued supplemental and second supplemental section A through C questionnaires to the responding companies. From November 2000 to March 2001, supplemental and second supplemental section D questionnaires were issued to all relevant companies.
We verified the sales information submitted by Corex from February 12-16, 2001; Riscossa from February 26-March 2, 2001; Pallante from March 12-23, 2001; Ferrara from March 26-29, 2001; and Puglisi from April 30-May 4, 2001. We verified the cost information submitted by Corex from February 19-23, 2001; Pallante from March 12-23, 2001; and Puglisi from May 7-11, 2001.
On January 30, 2001, the Department published a notice postponing the preliminary results of this review until June 21, 2000 (66 FR 8198).
We initiated a review of 30 companies. However, this list included companies known to be affiliated. After accounting for known affiliated parties, there are 27 companies in the Initiation Notice. On September 6, 2000, we received a revised letter from Borden shortening its list to five companies for the Department to review. New World Pasta submitted a letter withdrawing its request for the Department to review any companies. In its September 6, 2000 letter, Borden included Arrighi as a company that it wanted the Department to review. On October 4, 2000, Arrighi submitted a letter stating that it had no shipments of subject merchandise during the period of review. We verified this information through customs data. In accordance with 19 CFR 351.213(d)(3), we are preliminarily rescinding the review in part as to Arrighi because it made no sales or shipments of subject merchandise during the review period.Start Printed Page 34416
There were eight companies that self-requested a review. On September 27, 2000 and October 18, 2000, respectively, La Molisana and Di Martino withdrew their requests for a review. Because there were no other requests for review of Di Martino and La Molisana and because the letters withdrawing the requests were timely filed, we are rescinding the review with respect to Di Martino and La Molisana in accordance with 19 CFR 351.213(d)(1).
We are rescinding the review, in accordance with 19 CFR 351.213(d)(1), with respect to the remaining 14 companies for which petitioners withdrew their request and the producer did not self-request a review. See the “Partial Rescission Memo” which lists the 14 companies that we are rescinding.
Use of Facts Available
Barilla notified the Department in an October 6, 2000 letter that it did not intend to respond to the Department's questionnaire. Section 776(a)(2) of the Act provides that if any interested party: (A) Withholds information that has been requested by the Department; (B) fails to provide such information by the deadlines for submission of the information or in the form or manner requested; (C) significantly impedes an antidumping investigation; or (D) provides such information but the information cannot be verified, the Department shall, subject to section 782(d) of the Act, use facts otherwise available in making its determination. Because Barilla wholly failed to respond to our questionnaire, pursuant to section 776(a)(2)(A) of the Act, we have applied facts available (“FA”) to determine its dumping margin.
Selection of Adverse FA
In selecting from among the facts otherwise available, section 776(b) of the Act authorizes the Department to use an adverse inference if the Department finds that an interested party failed to cooperate by not acting to the best of its ability to comply with the request for information. See e.g., Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-20 (October 16, 1997). We find that Barilla's refusal to answer the questionnaire in whole or part and its failure to offer alternative methods of compliance constitutes a failure to act to the best of its ability. For this reason, and to ensure that Barilla does not benefit from that lack of cooperation, we are employing an adverse inference in selecting from facts otherwise available.
In assigning an adverse facts available rate in an administrative review, the Department's practice is to use the highest rate given to any respondent in any segment of the proceeding. See e.g., Final Results of Antidumping Duty Administrative Review: Brass Sheet and Strip from Germany, 64 FR 43342 (August 10, 1999). In the first administrative review, we based the antidumping duty rate for Arrighi, Barilla, and Pagani on the highest margin from the petition, as adjusted by the Department, 71.49 percent. See Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Italy, 64 FR 6615 (February 10, 1999).
Pagani did not contest the 71.49 percent rate. However, Barilla and World Finer Foods, Inc. (an importer of Arrighi pasta) sued the Department on the basis that the adverse facts available rate selected by the Department was not properly corroborated. The Court of International Trade (“CIT”) ruled that the Department must determine an appropriate facts available rate for Arrighi and assess Barilla a dumping margin that, while adverse, “bears a rational relationship to the probability of dumping.” See World Finer Foods v. the United States, Slip Op. 00-72 (CIT June 26, 2000) at 26-27.
On September 15, 2000, we filed with the Court the final results of redetermination pursuant to the CIT's remand order. We assigned Arrighi a rate of 19.09 percent (net of export subsidies) which was the rate we calculated for Arrighi in the prior segment of the proceeding, the LTFV investigation. We based the adverse facts available margin for Barilla on secondary price information in the petition and U.S. Customs import statistics. Normal value was derived using a Barilla price list contained in the petition with an effective date of January 1, 1995. With respect to U.S. price, we reviewed U.S. Customs import statistics from the first administrative period of review and were able to identify an average unit value (“AUV”) specifically for Barilla. We calculated a margin for every product on the price list and found margins ranging from 39.63 to 63.63 percent with a simple average of 45.59 percent. We applied the 63.63 percent margin to Barilla.
On November 3, 2000, the CIT affirmed the final revised remand determination in World Finer Foods, Inc. v. United States, 120 F. Supp.2d 1131 (November 3, 2000). With respect to Barilla, the CIT found that “the only margin that is available that is supported by the evidence is the margin of 45.59 percent, Commerce's best guess, which, based on this record, is adverse.” Barilla did not appeal the CIT decision. See Notice of Amended Final Results of Antidumping Duty Administrative Review: Certain Pasta From Italy, 66 FR 20636 (April 24, 2001).
After the litigation relating to the first administrative review, the highest rate given to a respondent is the 71.49 percent rate assigned to Pagani. The court did not address the appropriateness of this rate for Pagani because Pagani did not challenge the Department after the final results. The only other company to receive a facts available rate was De Cecco in the LTFV investigation. For De Cecco, we chose a simple average of the margins calculated in the petition, which ranged from 21.85 percent to 71.49 percent, as adjusted by the Department: 46.67 percent. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Pasta from Italy, 61 FR 1344, 1345 (January 19, 1996). De Cecco filed suit and the Court of Appeals for the Federal Circuit (“CAFC”) affirmed the CIT's rejection of the 46.67 percent rate as “discredited and uncorroborated” on the record of the LTFV investigation. See F.lli De Cecco Di Filippo Fara S. Martino S.p.A. v. the United States, 216 F. Supp.3d 1027, 1032-33 (CAFC June 16, 2000).
Although we prefer to use the highest rate given to a company in the course of the proceeding as the basis for an adverse facts available rate, we are cognizant of the legal history of this case and the court's rejection of the 71.49 percent rate with respect to Arrighi and Barilla and the 46.67 percent rate with respect to De Cecco. The 45.59 percent rate assigned to Barilla from the remand of the first administrative review is the highest rate ever upheld by the court. In considering the appropriateness of the 45.59 percent rate as an adverse facts available rate for Barilla in the current administrative review, we must consider whether the rate has probative value, i.e. is relevant and reliable. The rate is reliable because it is based on Barilla's own price lists and the actual average import prices. It is based on a home market price list (effective January 1995) which was compared to U.S. import prices during the first administrative period of review (July 1996 through June 1997).
We are mindful that the 45.59 percent rate is based upon data from the LTFV investigation and the first administrative review. However, there is no evidence on the record that is more contemporaneous since Barilla did not Start Printed Page 34417participate in the second or third administrative reviews of this order and did not provide the Department with any information related to the current review. Further, we do not consider data from the LTFV investigation and first administrative review to be so outdated as to warrant rejecting said data since only three years have passed between the LTFV investigation and this review. Moreover, in the current review, we have found individual sales transactions of other respondents at or above 45.59 percent. Thus, it is reasonable to conclude that the 45.59 percent rate is still relevant to Barilla's current level of dumping.
Next, we consider whether the 45.59 percent rate is appropriately adverse. Inasmuch as we found the 45.59 percent rate to be adverse in our remand determination, and the CIT upheld this determination, and there is no new information that would lead us to conclude this rate is not adverse in this review, we find the 45.59 percent rate to still be an appropriately adverse rate. Thus, we are assigning Barilla an adverse facts available rate of 45.59 percent.
Scope of Review
Imports covered by this review are shipments of certain non-egg dry pasta in packages of five pounds (2.27 kilograms) or less, whether or not enriched or fortified or containing milk or other optional ingredients such as chopped vegetables, vegetable purees, milk, gluten, diastasis, vitamins, coloring and flavorings, and up to two percent egg white. The pasta covered by this scope is typically sold in the retail market, in fiberboard or cardboard cartons, or polyethylene or polypropylene bags of varying dimensions.
Excluded from the scope of this review are refrigerated, frozen, or canned pastas, as well as all forms of egg pasta, with the exception of non-egg dry pasta containing up to two percent egg white. Also excluded are imports of organic pasta from Italy that are accompanied by the appropriate certificate issued by the Instituto Mediterraneo Di Certificazione, by Bioagricoop Scrl, by QC&I International Services, by Ecocert Italia, by Consorzio per il Controllo dei Prodotti Biologici, or by Associazione Italiana per l'Agricoltura Biologica.
The merchandise subject to review is currently classifiable under item 1902.19.20 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheading is provided for convenience and Customs purposes, the written description of the merchandise subject to the order is dispositive.
The Department has issued the following scope rulings to date:
(1) On August 25, 1997, the Department issued a scope ruling that multicolored pasta, imported in kitchen display bottles of decorative glass that are sealed with cork or paraffin and bound with raffia, is excluded from the scope of the antidumping and countervailing duty orders. See Memorandum from Edward Easton to Richard Moreland, dated August 25, 1997, in the case file in the Central Records Unit, main Commerce building, room B-099 (“the CRU”).
(2) On July 30, 1998, the Department issued a scope ruling, finding that multipacks consisting of six one-pound packages of pasta that are shrink-wrapped into a single package are within the scope of the antidumping and countervailing duty orders. See Letter from Susan H. Kuhbach, Acting Deputy Assistant Secretary for Import Administration, to Barbara P. Sidari, Vice President, Joseph A. Sidari Company, Inc., dated July 30, 1998, which is available in the CRU.
(3) On October 23, 1997, the petitioners filed an application requesting that the Department initiate an anti-circumvention investigation of Barilla, an Italian producer and exporter of pasta. The Department initiated the investigation on December 8, 1997 (62 FR 65673). On October 5, 1998, the Department issued its final determination that Barilla's importation of pasta in bulk and subsequent repackaging in the United States into packages of five pounds or less constitutes circumvention, with respect to the antidumping duty order on pasta from Italy pursuant to section 781(a) of the Act and 19 CFR 351.225(b). See Anti-circumvention Inquiry of the Antidumping Duty Order on Certain Pasta from Italy: Affirmative Final Determination of Circumvention of the Antidumping Duty Order, 63 FR 54672 (October 13, 1998).
(4) On October 26, 1998, the Department self-initiated a scope inquiry to determine whether a package weighing over five pounds as a result of allowable industry tolerances is within the scope of the antidumping and countervailing duty orders. On May 24, 1999 we issued a final scope ruling finding that, effective October 26, 1998, pasta in packages weighing or labeled up to (and including) five pounds four ounces is within the scope of the antidumping and countervailing duty orders. See Memorandum from John Brinkmann to Richard Moreland, dated May 24, 1999, which is available in the CRU. The following scope ruling is pending:
(1) On April 27, 2000, the Department self-initiated an anti-circumvention inquiry to determine whether Pagani's importation of pasta in bulk and subsequent repackaging in the United States into packages of five pounds or less constitutes circumvention, with respect to the antidumping and countervailing duty orders on pasta from Italy pursuant to section 781(a) of the Act and 19 CFR 351.225(b). See Certain Pasta from Italy: Notice of Initiation of Anti-circumvention Inquiry of the Antidumping and Countervailing Duty Orders, 65 FR 26179 (May 5, 2000).
As provided in section 782(i) of the Act, we verified sales and cost information provided by Corex, Pallante, and Puglisi, and the sales information provided by Ferrara and Riscossa. We used standard verification procedures, including on-site inspection of the manufacturers' facilities and examination of relevant sales and financial records. Our verification results are outlined in the company-specific verification reports placed in the case file in the CRU. We revised certain sales and cost data based on verification findings. See the company-specific verification report and calculation memorandum.
In accordance with section 771(16) of the Act, we first attempted to match contemporaneous sales of products sold in the United States and comparison markets that were identical with respect to the following characteristics: (1) Pasta shape; (2) type of wheat; (3) additives; and (4) enrichment. Where there were no sales of identical merchandise in the home market to compare with U.S. sales, we compared U.S. sales with the most similar product based on the characteristics listed above, in descending order of priority. Where there were no appropriate comparison market sales of comparable merchandise, we compared the merchandise sold in the United States to CV, in accordance with section 773(a)(4) of the Act.
For purposes of the preliminary results, where appropriate, we have calculated the adjustment for differences in merchandise based on the difference in the variable cost of manufacturing between each U.S. model and the most similar home market model selected for comparison. Start Printed Page 34418
Comparisons to Normal Value
To determine whether sales of certain pasta from Italy were made in the United States at less than normal value, we compared the EP or 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. transactions.
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. We calculated EP where the merchandise was sold by the producer or exporter outside of the United States directly to the first unaffiliated purchaser in the United States prior to importation and CEP was not otherwise warranted based on the facts on the record. We calculated CEP where sales to the first unaffiliated purchaser took place in the United States. We based EP and CEP on the packed CIF, ex-factory, FOB, or delivered prices to the first unaffiliated customer in, or for exportation to, the United States. Where appropriate, we reduced these prices to reflect discounts and rebates.
In accordance with section 772(c)(2) of the Act, we made deductions, where appropriate, for movement expenses including inland freight from plant or warehouse to port of exportation, foreign brokerage, handling and loading charges, export duties, international freight, marine insurance, U.S. duties, and U.S. inland freight expenses (freight from port to the customer). In addition, where appropriate, we increased EP or CEP as applicable, by an amount equal to the countervailing duty rate attributed to export subsidies in the most recently completed administrative review, in accordance with section 772(c)(1)(C).
For CEP, in accordance with section 772(d)(1) of the Act, where 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 (advertising, cost of credit, warranties, and commissions paid to unaffiliated sales agents). In addition, we deducted indirect selling expenses that related to economic activity in the United States. These expenses include certain indirect selling expenses incurred by affiliated U.S. distributors. We also deducted from CEP an amount for profit in accordance with sections 772(d)(3) and (f) of the Act.
Certain respondents reported the resale of subject merchandise purchased in Italy from unaffiliated producers. Where an unaffiliated producer of the subject pasta knew at the time of the sale that the merchandise was destined for the United States, the relevant basis for the export price would be the price between that producer and the respondent. See Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Final Results of Antidumping Duty Administrative Review, Partial Rescission of Administrative Review and Notice of Determination Not to Revoke Order, 63 FR 50867, 50876 (September 23, 1998). In this review, we determined that it was reasonable to assume that the unaffiliated producers knew or had reason to know at the time of sale that the ultimate destination of the merchandise was the United States because virtually all enriched pasta is sold to the United States. See Notice of Preliminary Results and Partial Recission of Antidumping Duty Administrative Review and Intent to Revoke Antidumping Duty Order in Part: Certain Pasta from Italy, 65 FR 4867, 4869 (August 8, 2000). Accordingly, consistent with our methodology in prior reviews (see id.), when respondents purchased pasta from other producers and we were able to identify resales of this merchandise to the United States, we excluded these sales of the purchased pasta from the margin calculation for that respondent. Where the purchased pasta was commingled with the respondent's production and the respondent could not identify the resales, we examined both sales of produced pasta and resales of purchased pasta. Inasmuch as the percentage of pasta purchased by any single respondent was an insignificant part of its U.S. sales database, we included the sales of commingled purchased pasta in our margin calculations.
A. Selection of Comparison Markets
In order 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 each respondent'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 sections 773(a)(1)(B) and (C) of the Act, because, with the exception of Corex, each respondent's aggregate volume of home market sales of the foreign like product 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 for all producers, except Corex.
Corex reported that it made no home market sales during the POR. Therefore, in accordance with section 773(a)(1)(B)(ii) of the Act, we have based NV on the price at which the foreign like product was first sold for consumption in the respondent's largest third-country market, Australia, which had an aggregate sales quantity greater than five percent of the aggregate quantity sold in the United States.
B. Arm's Length Test
Sales to affiliated customers for consumption in the home market which were determined not to be at arm's length were excluded from our analysis. To test whether these sales were made at arm's length, we compared the prices of sales of comparison products to affiliated and unaffiliated customers, net of all movement charges, direct selling expenses, discounts, and packing. Pursuant to 19 CFR 351.403(c) and in accordance with our practice, where the prices to the affiliated party were on average less than 99.5 percent of the prices to unaffiliated parties, we determined that the sales made to the affiliated party were not at arm's length. See e.g., Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Roller Chain, Other Than Bicycle, From Japan, 62 FR 60472, 60478 (November 10, 1997), and Antidumping Duties; Countervailing Duties: Final Rule (“Antidumping Duties”), 62 FR 27295, 27355-56 (May 19, 1997). We included in our NV calculations those sales to affiliated customers that passed the arm's-length test in our analysis. See 19 CFR 351.403; Antidumping Duties, 62 FR at 27355-56.
C. Cost of Production Analysis
1. Calculation of COP
Before making any comparisons to NV, we conducted a COP analysis of Corex, Delverde, PAM, Pallante, Pagani, Puglisi, and Rummo, pursuant to section 773(b) of the Act, to determine whether the respondents' comparison market sales were made below the COP. We calculated the COP based on the sum of the cost of materials and fabrication for the foreign like product, plus amounts for selling, general, and administrative expenses (“SG&A”) and packing, in accordance with section 773(b)(3) of the Act. We relied on the respondents' information as submitted, except in instances where we used Start Printed Page 34419revised data based on verification findings. See the company-specific calculation memoranda on file in the CRU, for a description of any changes that we made.
2. Startup Adjustment
PAM claimed a start-up adjustment for its new pasta production line at the D'Apuzzo facility. Construction of the new line began on April 30, 2000 and the new line was ready for commercial production on August 23, 2000. During this period, the existing lines were periodically shut down because the new production line was installed in close proximity to the rest of the facility. PAM claims a startup adjustment equal to the amount of the fixed overhead which can be attributed to the period of time that the D'Apuzzo facility was closed during the POR for installation of the new production lines.
We are not allowing a startup adjustment in this case. Specifically, section 773(f)(1)(C)(ii) of the Act states that the Department will make an adjustment for startup costs where the following two conditions are met: (1) A producer is using new production facilities or producing a new product that requires substantial additional investment, and (2) the production levels are limited by technical factors associated with the initial phase of commercial production.
We have examined PAM's claim and determined that the criteria for granting a startup adjustment have not been satisfied in this case. The construction of a new pasta production line does not constitute a “new facility,” nor is PAM producing a “new product” that required substantial additional investment, within the meaning of section 773(f)(1)(C)(ii)(I) of the Act. Rather, the addition of a new production line within an already existing facility is a “mere improvement” that the Statement of Administrative Action accompanying the URAA, H.R. Doc. No. 103-316, Vol. I, (1994) at 835 (“SAA”) states will not qualify for a startup adjustment. Moreover, PAM has not identified any additional costs associated with “substantially retooling” its existing facility, which, according to the SAA might satisfy the first criterion. See Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products From Korea: Final Results of Antidumping Duty Administrative Reviews, 63 FR 13170, 13200 (March 18, 1998) (where the Department disallowed a startup adjustment because the respondent failed to demonstrate that the production line in question constituted a “new facility” and manufactured a “new product”).
Section 773(f)(1)(C)(ii) of the Act establishes that both prongs of the startup test must be met to warrant a startup adjustment; therefore, this finding is sufficient to deny PAM's claim. As a result, we have not addressed PAM's arguments concerning technical factors that limit commercial production levels. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms From Chile, 63 FR 41786, 41788 (August 5, 1998).
3. Test of Comparison Market Prices
As required under section 773(b) 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 had been 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, discounts, rebates, direct and indirect selling expenses (also subtracted from the COP), and packing expenses.
4. Results of COP Test
Pursuant to section 773(b)(2)(C) of the Act, where less than 20 percent of sales of a given product were at prices less than the COP, we did not disregard any below-cost sales of that product because we determined that the below-cost sales were not made in “substantial quantities.” Where 20 percent or more of a respondent's sales of a given product were at prices less than the COP, we determined such sales to have been made in “substantial quantities” within an extended period of time in accordance with section 773(b)(2)(B) and (C) of the Act. In such cases, because we compared prices to POR-average costs, we also determined that such sales were not made at prices which would permit recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Act. Therefore, for purposes of this administrative review, we disregarded the below-cost sales and used the remaining sales as the basis for determining NV, in accordance with section 773(b)(1) of the Act. Specifically, we have disregarded below-cost sales made by Corex, Delverde, PAM, Pallante, Pagani, Puglisi, and Rummo in this administrative review.
D. Calculation of Normal Value Based on Comparison Market Prices
We calculated NV based on ex-works, FOB or delivered prices to comparison market customers. We made deductions from the starting price, where appropriate, for handling, loading, inland freight, warehousing, inland insurance, discounts, and rebates. In accordance with sections 773(a)(6)(A) and (B) of the Act, we added U.S. packing costs and deducted comparison market packing, respectively. In addition, we made circumstance of sale (“COS”) adjustments for direct expenses, including imputed credit expenses, advertising, warranty expenses, commissions, bank charges, billing adjustments, and interest revenue, in accordance with section 773(a)(6)(C)(iii) of the Act.
We also made adjustments, in accordance with 19 CFR 351.410(e), for indirect selling expenses incurred on comparison market or U.S. sales where commissions were granted on sales in one market but not in the other (the “commission offset”). Specifically, where commissions are incurred in one market, but not in the other, we make an allowance for the indirect selling expenses in the other market up to the amount of the commissions.
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 of the Department's regulations. We based this adjustment on the difference in the variable cost of manufacturing (“COM”) for the foreign like product and subject merchandise, using POR-average costs.
Sales of pasta purchased by the respondents from unaffiliated producers and resold in the comparison market were treated in the same manner described above in the “Export Price and Constructed Export Price” section of this notice.
E. Normal Value Based on CV
For Corex, where we could not determine the NV based on comparison market sales because there were no contemporaneous sales of a comparable product above COP, we compared the EP to CV. In accordance with section 773(e) of the Act, we calculated CV based on the sum of the cost of manufacturing of the product sold in the United States, plus amounts for SG&A expenses, profit, and U.S. packing costs. In accordance with section 773(e)(2)(A) of the Act, we based SG&A expenses and profit on the amounts incurred by Start Printed Page 34420Corex in connection with the production and sale of the foreign like product in the comparison market.
For price-to-CV comparisons, we made adjustments to CV for COS differences, in accordance with section 773(a)(8) of the Act and 19 CFR 351.410. We made COS adjustments by deducting direct selling expenses incurred on comparison market sales and adding U.S. direct selling expenses.
F. Level of Trade (“LOT”)
In accordance with section 773(a)(1)(B) of the Act, we determined NV based on sales in the comparison market at the same LOT as the EP and CEP sales, to the extent practicable. When there were no sales at the same LOT, we compared U.S. sales to comparison market sales at a different LOT. When NV is based on CV, the NV LOT is that of the sales from which we derive SG&A expenses and profit.
Pursuant to § 351.412 of the Department's regulations, to determine whether comparison market sales were at a different LOT, we examined stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated (or arm's length) customers. If the comparison-market sales were at a different LOT and the differences affected 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 made a LOT adjustment under section 773(a)(7)(A) of the Act. PAM was the only company for which we made an LOT adjustment.
Finally, if the NV LOT was more remote from the factory than the CEP LOT and there was no basis for determining whether the differences in LOT between NV and CEP affected price comparability, we granted 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). We granted a CEP offset for the following companies: Delverde; Puglisi; and Rummo.
For a detailed description of our LOT methodology and a summary of company-specific LOT findings for these preliminary results, see the June 21, 2001, “99/00 Administrative Review of Pasta from Italy and Turkey: Preliminary Determination Level of Trade Findings' memoranda on file in the CRU.
G. Company-Specific Issues
We relied on the respondents' information as submitted, except in instances where, based on verification findings, we made modifications to the calculation of normal value and EP or CEP. See the company-specific calculation memoranda on file in the CRU, for a description of any changes that we made.
For purposes of these preliminary results, we made currency conversions in accordance with section 773A(a) of the Act, based on the official exchange rates published by the Federal Reserve.
Intent To Revoke
On July 13, 2000 and July 31, 2000, Puglisi and Corex, respectively, submitted letters to the Department requesting, pursuant to 19 CFR 351.222(b), revocation of the antidumping duty order with respect to their sales of the subject merchandise.
The Department “may revoke, in whole or in part” an antidumping duty order upon completion of a review under section 751 of the Act. While Congress has not specified the procedures that the Department must follow in revoking an order, the Department has developed a procedure for revocation that is described in 19 CFR 351.222. This regulation requires, inter alia, that one or more exporters and producers covered by the order submit the following: (1) A certification that the company has sold the subject merchandise at not less than NV in the current review period and that the company will not sell at less than NV in the future; (2) a certification that the company sold the subject merchandise in each of the three years forming the basis of the request in commercial quantities; and (3) an agreement to immediate reinstatement of the order if the Department concludes that the company, subsequent to the revocation, has sold subject merchandise at less than normal value. See 19 CFR 351.222(e)(1). Upon receipt of such a request, the Department will consider the following in determining whether to revoke the order in part: (1) Whether the producer or exporter requesting revocation has sold subject merchandise at not less than NV for a period of at least three consecutive years; (2) whether the continued application of the antidumping duty order is otherwise necessary to offset dumping; and (3) whether the producer or exporter requesting revocation in part has agreed in writing to the immediate reinstatement of the order, as long as any exporter or producer is subject to the order, if the Department concludes that the exporter or producer, subsequent to revocation, sold the subject merchandise at less than NV. See 19 CFR. 351.222(b)(2).
On July 31, 2000 and September 13, 2000, respectively, Puglisi and Corex submitted the required certifications and agreements.
Based on the preliminary results in this review and the final results of the two preceding reviews, Puglisi and Corex had de minimis dumping margins for three consecutive reviews. Further, in determining whether three years of no dumping establish a sufficient basis to make a revocation determination, the Department must be able to determine that the company continued to participate meaningfully in the U.S. market during each of the three years at issue. See Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada; Final Results of Antidumping Duty Administrative Reviews and Determination To Revoke in Part, 64 FR 2173, 2175 (January 13, 1999); see also Pure Magnesium From Canada; Final Results of Antidumping Duty Administrative Review and Determination Not to Revoke Order in Part, 64 FR 12977, 12979 (March 16, 1999); and Notice of Final Results of Antidumping Duty Administrative Review and Determination Not to Revoke the Antidumping Order: Brass Sheet and Strip from the Netherlands, 65 FR 742 (January 6, 2000). This practice has been codified in § 351.222(d)(1) of the Department's regulations, which states that, “before revoking an order or terminating a suspended investigation, the Secretary must be satisfied that, during each of the three (or five) years, there were exports to the United States in commercial quantities of the subject merchandise to which a revocation or termination will apply.” 19 CFR 351.222(d)(1) (emphasis added); see also 19 CFR 351.222(e)(1)(ii). For purposes of revocation, the Department must be able to determine that past margins are reflective of a company's normal commercial activity. Sales during the POR which, in the aggregate, are an abnormally small quantity do not provide a reasonable basis for determining that the discipline of the order is no longer necessary to offset dumping.
With respect to the threshold matter of whether Puglisi and Corex made sales of subject merchandise to the United States in commercial quantities, we find that Puglisi's and Corex's aggregate sales to the United States were made in Start Printed Page 34421commercial quantities during all segments of this proceeding. Both the quantity and number of Puglisi's and Corex's shipments to the United States of subject merchandise have remained at sufficiently high levels to be considered commercial quantities. Therefore, we can reasonably conclude that the zero or de minimis margins calculated for Puglisi and Corex in each of the last three administrative reviews are reflective of the company's normal commercial experience. See Memorandum from Geoffrey Craig to File, “Shipments of Pasta to the United States by Puglisi,” dated June 21, 2001; and Memorandum from Cindy Robinson to File, “Shipments of Pasta to the United States by Corex,” dated June 21, 2001.
With respect to 19 CFR 351.222(b)(2)(ii), in considering whether continued application of the order is necessary to offset dumping, “the Department may consider trends in prices and costs, investment, currency movements, production capacity, as well as all other market and economic factors relevant to a particular case.” Proposed Regulation Concerning the Revocation of Antidumping Duty Orders, 64 FR 29818, 29820 (June 3, 1999). Thus, based upon three consecutive reviews resulting in zero or de minimis margins, the Department presumes that the company requesting revocation is not likely to resume selling subject merchandise at less than the NV in the near future unless the Department has been presented with evidence to demonstrate that dumping is likely to resume if the order were revoked. In this proceeding, we have not received any evidence that would demonstrate that Puglisi and Corex are likely to resume dumping in the future if the order were revoked. Therefore, we also preliminarily determine that the order is no longer necessary to offset dumping.
Because all requirements under the regulation have been satisfied, if these preliminary findings are affirmed in our final results, we intend to revoke the antidumping duty order with respect to merchandise produced and exported by Puglisi and Corex. In accordance with 19 CFR 351.222(f)(3), if these findings are affirmed in our final results, we will terminate the suspension of liquidation for any such merchandise entered, or withdrawn from warehouse, for consumption on or after the first day after the period under review, and will instruct the U.S. Customs Service to refund any cash deposit.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the following percentage weighted-average margins exist for the period July 1, 1999, through June 30, 2000:
The Department will disclose calculations performed within five days of the date of publication of this notice to the parties of this proceeding in accordance with 19 CFR 351.224(b). 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, will be held 44 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than 37 days after the date of publication. Parties who submit arguments 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. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette. 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.
Pursuant to 19 CFR 351.212(b), the Department calculated an assessment rate for each importer of the subject merchandise. Upon issuance of the final results of this administrative review, if any importer-specific assessment rates calculated in the final results are above de minimis (i.e., at or above 0.5 percent), the Department will issue appraisement instructions directly to the U.S. Customs Service to assess antidumping duties on appropriate entries by applying the assessment rate to the entered value of the merchandise. For assessment purposes, we calculated importer-specific assessment rates for the subject merchandise by aggregating the dumping margins for all U.S. sales to each importer and dividing the amount by the total entered value of the sales to that importer. Where appropriate, in order to calculate the entered value, we subtracted international movement expenses (e.g., international freight) from the gross sales value.
Cash Deposit Requirements
To calculate the cash deposit rate for each producer and/or exporter included in this administrative review, we divided the total dumping margins for each company by the total net value for that company's 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 certain pasta from Italy 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 rates for the companies listed above will be the rates established in the final results of this review, except if the rate is less than 0.5 percent and, therefore, de minimis, the cash deposit will be zero; (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 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 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 or any previous review conducted by the Department, the cash deposit rate will be 11.26 percent, the “All Others” rate established in the LTFV investigation. See Notice of Antidumping Duty Order and Amended Final Determination of Sales at Less Than Fair Value: Certain Pasta from Italy, 61 FR 38547 (July 24, 1996).
These cash deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.
Notification to Importers
This notice 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 Start Printed Page 34422prior 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.
This administrative review is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.Start Signature
Dated: June 21, 2001.
Assistant Secretary for Import Administration.
1. The petitioners are Borden Inc., Hershey Foods Corp. (“Hershey Pasta”), Grocery Corp. Inc., and Gooch Foods, Inc. (effective January 1, 1999, Hershey Pasta and Grocery Corp. Inc. became New World Pasta, Inc.).Back to Citation
2. See letter from Collier Shannon Scott dated July 31, 2000, submitted on behalf of Borden and New World Pasta, on file in room B-099 of the Department's main building. This letter was written on behalf of Borden and New World Pasta. However, on September 7, 2000, Collier Shannon Scott submitted a letter stating that its July 31, 2000 letter should have been on behalf of New World Pasta alone, because Borden submitted its own letter.Back to Citation
3. This list included companies known to be affiliated. After accounting for known affiliated parties, there are 27 companies in the Initiation Notice.Back to Citation
4. The third administrative review was the most recently completed review for Corex, La Molisana, Puglisi, Pallante, and PAM. See Certain Pasta From Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 77852 (December 13, 2000). The most recently completed review that Rummo participated in was the second administrative review. See Notice of Final Results of Antidumping Duty Administrative Review: Certain Pasta From Italy, 65 FR 7349 (February 14, 2000). The LTFV investigation was the most recent segment of the proceeding in which Delverde participated. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Pasta From Italy, 61 FR 30326 (June 14, 1996).Back to Citation
5. Delverde S.r.l. has an affiliate, Tamma Industrie Alinmentari di Capitanata, SrL. Pastificio Antonio Pallante S.r.l. is affiliated with Industrie Alimentari Molisane S.r.l and P.A.M., S.r.l. has an affiliate, Liguori. Each of these pairs of affiliates was treated as a single entity in the prior segments of this proceeding.Back to Citation
[FR Doc. 01-16300 Filed 6-27-01; 8:45 am]
BILLING CODE 3510-DS-P