Furfuryl Alcohol From the Republic of South Africa; Preliminary Results of Antidumping Duty Administrative Review and Intent To Revoke Order in Part

The Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Act), are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to the regulations codified at 19 CFR Part 351 (1998).

Background

On June 21, 1995, the Department published in the Federal Register (60 FR 32302) the antidumping duty order on furfuryl alcohol from the Republic of South Africa. On June 10, 1998, the Department published a notice of ``Opportunity to Request an Administrative Review'' (63 FR 31717) of this antidumping duty order for the period June 1, 1997, through May 31, 1998. On June 22, 1998, we received a timely request for review from Illovo Sugar Ltd. (ISL) and Harborchem, ISL's related selling agent in the United States. In addition, ISL requested that the Department revoke the antidumping duty order with respect to ISL. On July 28, 1998, we published the notice of initiation of this review (63 FR 40258). We issued a questionnaire to ISL on July 24, 1998, followed by a supplemental questionnaire on October 27, 1998. Because ISL requested revocation of the order, the Department verified the company's response pursuant to section 782(i)(2) of the Act.

Scope of Review

The merchandise covered by this order 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 order 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.

Verification

As provided in section 782(i)(2) of the Act, we verified information provided by ISL and Harborchem. We used

standard verification procedures, including on-site inspection of the manufacturer's facilities and examination of relevant sales and financial records. Our verification results are outlined in the verification reports placed in the case file.

Comparisons

We compared the constructed export price (CEP) to the normal value, as described in the Constructed Export Price and Normal Value sections of this notice. Pursuant to section 777A(d)(2) of the Act, we compared the CEPs of individual transactions to contemporaneous monthly weighted-average prices of sales of the foreign like product. We were able to compare all subject merchandise sold during the POR to identical merchandise sold in the home market.

Constructed Export Price

For sales to the United States, we calculated a CEP as defined in section 772(b) of the Act because we determined that ISL is affiliated with its exclusive U.S. agent, Harborchem, and because the subject merchandise was sold to unaffiliated U.S. purchasers after the date of importation. Our finding that ISL and Harborchem are affiliated is consistent with our findings in the less-than-fair-value (LTFV) investigation and in the first and second administrative reviews. See Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol from the Republic of South Africa, 60 FR 22550, 22552 (Comment 1) (May 8, 1995) and Notice of Final Results of Antidumping Duty Review: Furfuryl Alcohol from the Republic of South Africa, 62 FR 61084, 61087- 88 (Comment 5) (November 14, 1997)). We calculated CEP based on f.o.b. and delivered prices to unaffiliated purchasers in the United States. We made deductions, where applicable, for foreign inland movement expenses (including foreign warehousing and warehousing insurance), domestic brokerage and handling, ocean freight, marine insurance, U.S. brokerage and handling, U.S. inland freight expenses (offset by freight revenue), U.S. warehousing and insurance, and quality testing,\1\ in accordance with section 772(c)(2)(A) of the Act. ---------------------------------------------------------------------------

\1\ Consistent with the 1994-96 Final Results (62 FR 61084, 61091 (Comment 9)), we have determined that quality testing expenses incurred by ISL are movement expenses that the company incurs upon the arrival of the subject merchandise at the U.S. port of entry. The testing is performed at the time the product is unloaded from the maritime vessel in order to detect any impurities that may have entered the product while in transit. ---------------------------------------------------------------------------

In accordance with section 772(d)(1) of the Act we also deducted direct selling expenses and indirect selling expenses associated with commercial activity in the United States. These include credit expenses, inventory carrying costs, and other indirect selling expenses. Finally, in accordance with section 772(d)(3) of the Act, we deducted an amount for profit allocated to direct, indirect, and imputed selling expenses associated with commercial activity in the United States. No other adjustments to CEP were claimed or allowed.

Normal Value

In order to determine whether there was a sufficient volume of sales in the home market to serve as a viable basis for calculating normal value, we compared ISL's volume of home market sales of the foreign like product to the volume of its U.S. sales of the subject merchandise. Pursuant to section 773(a)(1) of the Act, because ISL's aggregate volume of home market sales of the foreign like product was greater than 5 percent of its aggregate volume of U.S. sales of the subject merchandise, we determined that the home market was viable. We based normal value on the price at which the foreign like product was first sold for consumption in South Africa, in the usual commercial quantities, in the ordinary course of trade, and at the same level of trade as the CEP,\2\ in accordance with section 773(a)(1)(B)(i) of the Act. We made deductions from the starting price for home market packing and movement expenses in accordance with sections 773(a)(6)(B)(i) and (ii) of the Act. Pursuant to section 773(a)(6)(C)(iii) of the Act, we made a circumstance-of-sale (COS) adjustment to normal value by deducting home market credit expenses. ---------------------------------------------------------------------------

\2\ The record evidence before us in this review indicates that the home market and the CEP levels of trade have not changed from the 1994-96 Review. See 62 FR 61084, 61089-90 (Comment 7). Furthermore, in this review, unlike the prior segments of the proceeding, ISL has not claimed entitlement to a CEP offset. ---------------------------------------------------------------------------

No other adjustments to normal value were claimed or allowed.

Intent To Revoke

On June 22, 1998, ISL requested that, pursuant to 19 CFR 351.222(b), ``the Department revoke the antidumping duty finding in the above-referenced proceeding with respect to Illovo at the conclusion of this administrative review.'' ISL submitted along with its revocation request a certification stating that: (1) the company sold subject merchandise at not less than normal value during the POR, and that in the future it would not sell such merchandise at less than normal value (see 19 CFR 351.222(e)(i)); and (2) the company has sold the subject merchandise to the United States in commercial quantities during each of the past three years (see 19 CFR 351.222(e)(ii)). ISL further stated in its revocation request that, because it was the sole producer/ reseller of subject merchandise, it was not required to submit an additional certification (as set forth at 19 CFR 351.222(b)(iii), and as referenced at 19 CFR 351.222(e)(iii)) agreeing to its immediate reinstatement in the order, as long as any exporter or producer is subject to the order, if the Department concludes that the company, subsequent to revocation, sold the subject merchandise at less than normal value. However, because record evidence indicates that a South African company unrelated to ISL has exported the subject merchandise to the United States under the order, ISL has now provided this certification at the Department's request. Based on the preliminary results in this review and the final results of the two preceding reviews (see Notice of Final Results of Antidumping Duty Review: Furfuryl Alcohol from the Republic of South Africa, 62 FR 61084 (November 14, 1997) and Notice of Final Results of Antidumping Duty Review: Furfuryl Alcohol from the Republic of South Africa, 63 FR 30473 (June 4, 1998)), ISL has preliminarily demonstrated three consecutive years of sales at not less than normal value. Furthermore, ISL's aggregate sales to the United States have been made in commercial quantities during all segments of this proceeding. Based on the above facts and absent any evidence to the contrary, the Department preliminarily determines that it is not likely in the future that ISL will sell the subject merchandise in the United States at less than normal value. Therefore, if these preliminary findings are affirmed in our final results, we intend to revoke the order with respect to merchandise produced and exported by ISL. In accordance with 19 CFR 351.222 (f), we will terminate the suspension of liquidation for any such merchandise entered, or withdrawn from warehouse, for consumption on or after June 1, 1998, and will instruct Customs to release any cash deposit.

Currency Conversion

We made currency conversions based on the exchange rates in effect on the dates of the U.S. sales as certified by the Federal Reserve Bank of New York. Section 773A(a) of the Act directs the Department to use a daily exchange rate

in order to convert foreign currencies into U.S. dollars, unless the daily rate involves a ``fluctuation.'' In accordance with our practice, we have determined as a general matter that a fluctuation exists when the daily exchange rate differs from a benchmark by 2.25 percent. The benchmark is defined as the rolling average of rates for the past 40 business days. When we determine a fluctuation exists, we substitute the benchmark for the daily rate. See Policy Bulletin 96-1 Currency Conversions, 61 FR 9434 (March 8, 1996).

Preliminary Results of Review

As a result of this review, we preliminarily determine that the following margin exists for the period June 1, 1997-May 31, 1998:

------------------------------------------------------------------------ Margin Manufacturer/exporter (percent) ------------------------------------------------------------------------ Illovo Sugar Ltd............................................ 0.00 ------------------------------------------------------------------------

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 five days after the date after the submission of the case briefs. Any interested party may request a hearing within 30 days of publication of this notice. Any hearing, if requested, will be held two days after the submission of rebuttal briefs, or the first workday thereafter. The Department will issue a notice of the final results of this administrative review, which will include the results of its analysis of issues raised in any briefs, within 120 days from the publication of these preliminary results. The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. If these preliminary results are adopted in our final results, we will instruct the Customs Service to assess no antidumping duties on the merchandise subject to review. Upon completion of this review, the Department will issue appraisement instructions directly to the Customs Service. Furthermore, the following deposit requirements will be effective upon completion of the final results of this administrative review for all shipments of furfuryl alcohol from the Republic of South Africa entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(c) of the Act: (1) no cash deposit will be required for merchandise produced and exported by ISL if we revoke the order with respect to merchandise produced and exported by ISL; (2) if the exporter is not a firm covered in this review, the previous review, or the original LTFV investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and (3) 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 11.55 percent, the ``All Others'' rate established in the LTFV investigation. These cash deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this 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 and notice are in accordance with sections 751(a)(1) and 771(i)(1) of the Act.

Dated: March 2, 1999. Robert S. LaRussa, Assistant Secretary for Import Administration. [FR Doc. 99-5626 Filed 3-5-99; 8:45 am] BILLING CODE 3510-DS-P