Notices. Import Administration, International Trade Administration, Department of Commerce
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BILLING CODE 3410-11-M DEPARTMENT OF COMMERCE International Trade Administration (A-570-848) Freshwater Crawfish Tail Meat from the People's Republic of China; Notice of Rescission of Antidumping Duty New Shipper Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: August 6, 2007. FOR FURTHER INFORMATION CONTACT: Howard Smith or Jeff Pedersen, AD/CVD Operations, Office 4, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202)482-5193 and
(202)482-2769, respectively. SUPPLEMENTARY INFORMATION: Background On October 30, 2006, the Department of Commerce (Department) published a notice of initiation of four new shipper reviews of the antidumping duty order on freshwater crawfish tail meat from the People's Republic of China (PRC), covering the period September 1, 2005, through August 31, 2006. *See Freshwater Crawfish Tail Meat From the People's Republic of China: Initiation of Antidumping Duty New Shipper Reviews* , 71 FR 63284 (October 30, 2006). One of the four new shipper reviews covers Shanghai Now Again International Trading Co., Ltd. (Shanghai Now Again), an exporter of subject merchandise. On March 26, 2007, Shanghai Now Again withdrew its request for a new shipper review. Shanghai Now Again explained that the U.S. Food and Drug Administration
(FDA)had recently rejected its only entry of subject merchandise made during the period of review. Shanghai Now Again stated that, since the FDA's rejection resulted in no sale being made during the period of review, it was withdrawing its request for a new shipper review. No other party requested a new shipper review of Shanghai Now Again. Rescission of Review 19 CFR 351.214(f)(1) provides that the Department may rescind a new shipper review if the party that requested the review withdraws its request for review within 60 days of the date of publication of the notice of initiation of the requested review. Although Shanghai Now Again withdrew its request after the 60-day deadline, we find it reasonable to accept the withdrawal because we have not yet committed significant resources to the new shipper review of Shanghai Now Again. Specifically, we have not calculated a preliminary margin for Shanghai Now Again nor have we verified Shanghai Now Again's data. Further, no party has opposed Shanghai Now Again's withdrawal from this review. For these reasons, we are rescinding the 2005-2006 new shipper review of the antidumping duty order on freshwater crawfish tail meat from the PRC with respect to Shanghai Now Again in accordance with 19 CFR 351.214(f)(1). Assessment The Department will instruct Customs and Border Protection
(CBP)to assess antidumping duties on all appropriate entries. For Shanghai Now Again, antidumping duties shall be assessed at a rate equal to the cash deposit of estimated antidumping duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). The Department will issue liquidation instructions to CBP 15 days after the publication of this notice. Dated: July 30, 2007. Stephen J. Claeys, Deputy Assistant Secretary for Import Administration. [FR Doc. E7-15214 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration [A-570-912] Initiation of Antidumping Duty Investigation: Certain New Pneumatic Off-the-Road Tires From the People's Republic of China AGENCY: Import Administration, International Trade Administration, Department of Commerce. DATES: *Effective Date:* August 6, 2007. FOR FURTHER INFORMATION CONTACT: Laurel LaCivita or Charles Riggle, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202)482-4243 or
(202)482-0650, respectively. Initiation of Investigation The Petition On June 18, 2007, the Department of Commerce (“Department”) received a petition on imports of certain new pneumatic off-the-road tires (“certain OTR tires”) from the People's Republic of China (“PRC”) filed in proper form by Titan Tire Corporation, a subsidiary of Titan International, Inc. (“Titan”), and the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union, AFL-CIO-CLC (“USW”), (collectively, “Petitioners”) on behalf of the domestic industry producing certain OTR tires. The period of investigation (“POI”) is October 1, 2006 through March 31, 2007. In accordance with section 732(b) of the Tariff Act of 1930, as amended (“the Act”), Petitioners alleged that imports of certain OTR tires from the PRC are being, or are likely to be, sold in the United States at less than fair value within the meaning of section 731 of the Act, and that such imports are materially injuring an industry in the United States. The Department issued supplemental questions to Petitioners on June 21 and 22, 2007. Petitioners filed an amendment to the petition on June 22, 2007 and responded to both questionnaires on June 27, 2007. Scope of Investigation The products covered by this investigation are certain OTR tires. For a full description of the scope of the investigation, please see the **Scope of Investigation** in Attachment I of this notice. Comments on the Scope of the Investigation During our review of the petition, we discussed the scope with Petitioners to ensure that it accurately reflects the product for which the domestic industry is seeking relief. During this review, we noted that, while the Department typically prefers to rely upon physical characteristics to determine the scope of product coverage, the scope description proposed by Petitioners relied upon, in part, end-use applications as a method for determining scope coverage. As discussed in the preamble to the Department's regulations, we are setting aside a period for interested parties to raise issues regarding product coverage. *See Antidumping Duties; Countervailing Duties; Final Rule,* 62 FR 27296, 27323 (May 19, 1997). The Department encourages all interested parties to submit comments on the scope of the investigation, including whether the definition of covered merchandise should be based on end-use application, and whether additional Harmonized Tariff Schedule of the United States (“HTSUS”) numbers should be included in the scope description. The deadline for submitting such comments is fourteen calendar days after publication of this initiation notice. Rebuttal comments are due seven calendar days after the deadline for submitting comments on the scope of the investigation. Comments should be addressed to Import Administration's Central Records Unit in Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230—Attention: Laurel LaCivita, Room 4416. The period of scope consultations is intended to provide the Department with ample opportunity to consider all comments and consult with interested parties prior to the issuance of the preliminary determination. Determination of Industry Support for the Petition Section 732(b)(1) of the Act requires that a petition be filed on behalf of the domestic industry. Section 732(c)(4)(A) of the Act provides that a petition meets this requirement if the domestic producers or workers who support the petition account for:
(i)At least 25 percent of the total production of the domestic like product; and
(ii)more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for, or opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act provides that, if the petition does not establish support of domestic producers or workers accounting for more than 50 percent of the total production of the domestic like product, the Department shall:
(i)Poll the industry or rely on other information in order to determine if there is support for the petition, as required by subparagraph (A), or
(ii)determine industry support using a statistically valid sampling method. Section 771(4)(A) of the Act defines the “industry” as the producers as a whole of a domestic like product. Thus, to determine whether a petition has the requisite industry support, the statute directs the Department to look to producers and workers who produce the domestic like product. The International Trade Commission (ITC), which is responsible for determining whether “the domestic industry” has been injured, must also determine what constitutes a domestic like product in order to define the industry. While both the Department and the ITC must apply the same statutory definition regarding the domestic like product (section 771(10) of the Act), they do so for different purposes and pursuant to a separate and distinct authority. In addition, the Department's determination is subject to limitations of time and information. Although this may result in different definitions of the like product, such differences do not render the decision of either agency contrary to law. *See USEC, Inc.* v. *United States,* 132 F. Supp. 2d 1, 8 (CIT 2001), citing *Algoma Steel Corp. Ltd.* v. *United States,* 688 F. Supp. 639, 644 (CIT 1988), *aff'd* 865 F.2d 240 (Fed. Cir. 1989), *cert. denied* 492 U.S. 919 (1989). Section 771(10) of the Act defines the domestic like product as “a product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to an investigation under this subtitle.” Thus, the reference point from which the domestic like product analysis begins is “the article subject to an investigation,” ( *i.e.* , the class or kind of merchandise to be investigated, which normally will be the scope as defined in the petition). With regard to the domestic like product, the Petitioners do not offer a definition of domestic like product distinct from the scope of the investigation. Based on our analysis of the information submitted on the record, we have determined that certain OTR tires constitute a single domestic like product and we have analyzed industry support in terms of that domestic like product. For a discussion of the domestic like product analysis in this case, *see* the *Antidumping Duty Investigation Initiation Checklist: Certain Off-the-Road Tires from the People's Republic of China (PRC),* Industry Support at Attachment II (AD Initiation Checklist), on file in the Central Records Unit (CRU), Room B-099 of the main Department of Commerce building. On July 6, 2007, the Department extended the initiation deadline by 20 days to poll the domestic industry in accordance with section 732(c)(4)(D) of the Act, because it was “not clear from the petitions whether the industry support criteria have been met * * *” *See Extension of the Deadline for Determining the Adequacy of the Antidumping Duty and Countervailing Duty Petitions: New Pneumatic Off-the-Road Tires from the People's Republic of China,* 72 FR 38816 (July 16, 2007). On July 16, 2007, we issued polling questionnaires to all known domestic producers of certain OTR tires identified in the petitions and by the Department's research. The questionnaires are on file in the CRU. For a detailed discussion of the responses received, *see* AD Initiation Checklist at Attachment II. Based on an analysis of the data collected, we determine that the Petitioners have demonstrated industry support representing over 50 percent of the total production of the domestic like product. Therefore, the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and the requirements of section 732(c)(4)(A)(i) of the Act are met. Furthermore, given that the Petitioners represent more than 50 percent of the total production of the domestic like product, the requirements of section 732(c)(4)(A)(ii) of the Act are also met. Accordingly, we determine that this petition is filed on behalf of the domestic industry within the meaning of section 732(b)(1) of the Act. *See* AD Initiation Checklist at Attachment II. The Department finds that the Petitioners filed the petition on behalf of the domestic industry because they are interested parties as defined in sections 771(9)(C) and
(D)of the Act and they have demonstrated sufficient industry support with respect to the countervailing duty investigation that they are requesting the Department initiate. *See* AD Initiation Checklist at Attachment II. Allegations of Sales at Less Than Fair Value The following is a description of the allegations of sales at less than fair value upon which the Department based its decision to initiate this investigation on imports of certain OTR tires from the PRC. The source of data for the deductions and adjustments relating to the U.S. price as well as normal value (“NV”) for the PRC are also discussed in the AD Initiation Checklist. Should the need arise to use any of this information as facts available under section 776 of the Act in our preliminary or final determinations, we will reexamine the information and revise the margin calculations, if appropriate. Export Price Petitioners relied on nineteen U.S. prices for certain OTR tires manufactured in the PRC and offered by U.S. distributors for sale in the United States. The prices provided were invoice prices for specific models of certain OTR tires falling within the scope of this petition for delivery to the U.S. customer during the POI. Petitioners deducted from the invoice prices the costs associated with exporting and delivering the product, which include ocean freight and insurance, and foreign brokerage and handling, distributor costs and profit, U.S. inland freight and, where applicable, U.S. duties. Petitioners did not deduct foreign-inland-freight charges or domestic brokerage and handling (in China) from the export price (“EP”) because such costs were included in the valuation of international movement expenses. *See* Volume I of the petition at Exhibit 5. Normal Value Petitioners stated that the PRC is a non-market economy (“NME”) and no determination to the contrary has yet been made by the Department. In previous investigations, the Department has determined that the PRC is a NME. *See, e.g., Final Determination of Sales at Less Than Fair Value and Partial Affirmative Determination of Critical Circumstances: Certain Polyester Staple Fiber from the People's Republic of China* , 72 FR 19690 (April 19, 2007). In accordance with section 771(18)(C)(i) of the Act, the presumption of NME status remains in effect until revoked by the Department. The presumption of NME status for the PRC has not been revoked by the Department and remains in effect for the purpose of initiating this investigation. Accordingly, the NV of the product is appropriately based on factors of production valued in a surrogate market-economy country in accordance with section 773(c) of the Act. In the course of this investigation, all parties will have the opportunity to provide relevant information related to the issues of the PRC's NME status and the granting of separate rates to individual exporters. Petitioners selected India as the surrogate country. Petitioners argued that, pursuant to section 773(c)(4) of the Act, India is an appropriate surrogate country because it is a market-economy country that is at a comparable level of economic development to that of the PRC and is a significant producer and exporter of certain OTR tires. *See* Volume I of the petition at Exhibits 6 and 7. Based on the information provided by Petitioners, we believe that their use of India as a surrogate country is appropriate for purposes of initiating this investigation. After the initiation of the investigation, we will solicit comments regarding surrogate-country selection. Also, pursuant to 19 CFR 351.301(c)(3)(i), interested parties will be provided an opportunity to submit publicly available information to value factors of production within 40 calendar days after the date of publication of the preliminary determination. Petitioners provided dumping margin calculations using the Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C) and 19 CFR 351.408. Petitioners calculated NV based on consumption rates for inputs used to produce certain OTR tires experienced by U.S. producers. In accordance with section 773(c)(4) of the Act, Petitioners valued factors of production, where possible, on reasonably available, public surrogate country data. To value certain factors of production, Petitioners used official Indian government import statistics, excluding shipments from countries previously determined by the Department to be NME countries and excluding shipments into India from Indonesia, the Republic of Korea and Thailand, because the Department has previously excluded prices from these countries because they may maintain broadly-available, non-industry specific export subsidies. *See, e.g., Hand Trucks and Certain Parts Thereof From the People's Republic of China: Final Results of Administrative Review and Final Results of New Shipper Review* , 72 FR 27287 and Issues and Decision Memorandum at Comment 23 (May 15, 2007). Petitioners valued two separate inputs using Indonesian import statistics gathered from *Statistics Indonesia* , the official Indonesian import statistics, because it claimed that the Indian import values were aberrationally high. Citing *Saccharin from the People's Republic of China: Final Results and Partial Rescission of Antidumping Duty Administrative Review* , 71 FR 7515, 7516 (February 13, 2006) and *The Timken Company* v. *United States* , 59 F. Supp. 2d 1371, 1375-76 (CIT 1999) (sustaining the Department's practice of resorting to a second surrogate country when the values in the primary surrogate country are deemed to be inappropriate), Petitioners explained that the Department looks to secondary countries when a particular value in the primary country is questionable. *See* Volume I of the petition at Exhibit 8B. For inputs valued in Indian rupees and not contemporaneous with the POI, Petitioners developed an inflation factor based on import prices into India as published in *Chemical Weekly* . See Volume II of the petition at Exhibit 8F. Where such information was unavailable, Petitioners used information from the wholesale price indices (“WPI”) in India as published in the *International Financial Statistics* (“IFS”) of the International Monetary Fund (“IMF”) for input prices during the period preceding the POI. *Id.* In addition, Petitioners made currency conversions, where necessary, based on the average exchange rate for the POI, based on monthly exchange rates published by the U.S. Federal Reserve Board. *See* Volume I of the petition at Exhibit 5 and 8K. We revised Petitioners' calculation of the surrogate values for material inputs to include more contemporaneous data than was provided in the petition, and to base our calculations on a single source of information. As a result, we valued raw material inputs using the weighted-average unit import values derived from the Monthly Statistics of the Foreign Trade of India, as published by the Directorate General of Commercial Intelligence and Statistics of the Ministry of Commerce and Industry, Government of India in the World Trade Atlas, available at *http://www.gtis.com/wta.htm* (“WTA”) for the period July through December 2006, which includes the first three months of the POI, and the three months immediately preceding the POI. We made no adjustments for inflation since the surrogate values for this period include a significant portion of the POI. In addition, we corrected the values for certain factors to correct clerical errors made by Petitioners in the transcription of the U.S. dollar values recorded for the POI by *Statistics Indonesia* into the normal value calculations. *See* Exhibits 8B and 8E of the petition and AD Initiation Checklist at Attachments V and V-R. We also calculated the surrogate values for two factors for which there were no imports into India during the period July to December 2006 using the most contemporaneous values available in the Indian WTA data. We made appropriate adjustments for inflation. *See* AD Initiation Checklist at Attachments V and V-R. The Department calculates and publishes the surrogate values for labor to be used in NME cases on its Web site. Therefore, to value labor, Petitioners used a labor rate of $0.83 per hour, published on the Department's Web site, *http://ia.ita.doc.gov/wages* , in accordance with the Department's regulations. *See* 19 CFR 351.408(c)(3) and AD Initiation Checklist. Petitioners valued electricity in the production of certain OTR tires based on the Indian electricity rate as reported in the *Key World Energy Statistics 2003* , published by the International Energy Agency for the year 2000. *See* Volume II of the petition at Exhibit 8J. Petitioners valued water by calculating the weighted-average rate of water for industrial use from various regions as reported by the Maharashtra Industrial Development Corporation at *http://midcindia.org* . dated June 1, 2003. *Id* . Petitioners valued natural gas using the rate published by the Gas Authority of India Ltd. Web site, a supplier of natural gas in India, covering the period January through June 2002. *Id* . In each case, Petitioners inflated these figures to the POI using information published in *IFS* . *See* Volume II of the petition at Exhibit 8I. We revised these calculations to take into account more current information concerning the WPI in India based on the *IFS* statistics. *See* AD Initiation Checklist at Attachments 5 and 5-H through 5-M. For the NV calculations, Petitioners derived the figures for factory overhead, selling, general and administrative expenses, and profit from the financial ratios of seven Indian producers of merchandise that is either identical or similar to the domestic like product: Apollo Tyres Ltd. (“Apollo”), Balkrishna Industries Limited (“Balkrishna”), CEAT Limited (“CEAT”), Goodyear India (“Goodyear”), J.K. Industries Ltd. (“J.K. Industries”), MRF Limited (“MRF”) and TVS Srichakra Limited (“TVS”). The financial statements provided covered the periods of April 2004 to March 2005 (Apollo), October 2004 to September 2005 (J.K. Industries, MRF Ltd.), January to December 2005 (“Goodyear”) and April 2005 to March 2006 (CEAT, Balkrishna, Apollo and TVS). We accepted the information presented in the financial statements provided in Volume I of the petition at Exhibit 8N for Balkrishna, CEAT and TVS for the purposes of initiation, because these data appear to be the most contemporaneous and best information on such expenses currently available to Titan. We did not use the information from the financial statements for Apollo, Goodyear, J.K. Industries and MRF, because of the availability of more contemporaneous information from Balkrishna, CEAT and TVS. We made one adjustment to Petitioners' calculations of the financial ratios: We excluded commissions from the calculation of selling, general and administrative expenses (“SG&A”) because commissions are ordinarily accounted for in the calculation of U.S. price. Therefore, in order to avoid double counting direct selling expenses, we omitted them from the calculation of the financial ratio for SG&A. *See* AD Initiation Checklist at Attachment V and V-Q. Based on the data provided by Petitioners, there is reason to believe that imports of certain OTR tires from the PRC are being, or are likely to be, sold in the United States at less than fair value. Based upon comparisons of EP to the NV, calculated in accordance with section 773(c) of the Act, the estimated calculated dumping margins for certain OTR tires from the PRC range from 30.49 percent to 210.48 percent. Allegations and Evidence of Material Injury and Causation Petitioners allege that the U.S. industry producing the domestic like product is being materially injured by reason of the imports of the subject merchandise sold at less than NV. Petitioners contend that the industry's injured condition is illustrated by the reduced market share, lost sales, reduced production and capacity utilization, reduced shipments, underselling and price depressing and suppressing effects, lost revenue and sales, reduced employment, decline in financial performance, decrease in capital expenditure, and increase in import penetration. We have assessed the allegations and supporting evidence regarding material injury and causation, and we have determined that these allegations are properly supported by adequate evidence and meet the statutory requirements for initiation. *See* AD Initiation Checklist at Attachment III. Separate-Rates Application On April 5, 2005, the Department modified the process by which exporters and producers may obtain separate-rate status in NME investigations. *See* Policy Bulletin 05.1: “Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations Involving Non-Market Economy Countries,” available on the Department's Web site at *http://ia.ita.doc.gov/policy/bull05-1.pdf* . The process now requires the submission of a separate-rate status application. Based on our experience in processing separate-rate applications in antidumping duty investigations, we have modified the application for this investigation to make it more administrable and easier for applicants to complete. *See Certain Steel Nails from the People's Republic of China and the United Arab Emirates: Initiation of Antidumping Duty Investigations* , 72 FR 38816 (July 16, 2007); *Initiation of Antidumping Duty Investigation: Circular Welded Carbon Quality Steel Pipe from the People's Republic of China* , 72 FR 36663 (July 5, 2007); *and, Initiation of Antidumping Duty Investigations: Coated Free Sheet Paper from Indonesia, the People's Republic of China, and the Republic of Korea* , 71 FR 68537 (November 27, 2006). The specific requirements for submitting the separate-rate application in this investigation are outlined in detail in the application itself, which will be available on the Department's Web site at *http://ia.ita.doc.gov/* on the date of publication of this initiation notice in the **Federal Register** . Submission of the separate-rate application is due no later than August 20, 2007. NME Respondent Selection and Quantity and Value Questionnaire For NME investigations, it is the Department's practice to request quantity and value information from all known exporters identified in the petition. Although many NME exporters respond to the quantity and value information request, at times some exporters may not have received the quantity and value questionnaire or may not have received it in time to respond by the specified deadline. Therefore, the Department typically requests the assistance of the NME government in transmitting the Department's quantity and value questionnaire to all companies who manufacture and export subject merchandise to the United States, as well as to manufacturers who produce the subject merchandise for companies who were engaged in exporting subject merchandise to the United States during the POI. The quantity and value data received from NME exporters is used as the basis to select the mandatory respondents. The Department requires that the respondents submit a response to both the quantity and value questionnaire and the separate-rates application by the respective deadlines in order to receive consideration for separate-rate status. Appendix II of this notice contains the quantity and value questionnaire that must be submitted by all NME exporters no later than August 20, 2007. In addition, the Department will post the quantity and value questionnaire along with the filing instructions on the Department's Web site at *http://ia.ita.doc.gov/ia-highlights-and-news.html* . The Department will send the quantity and value questionnaire to those exporters identified in Volume I of the petition at Exhibit 4, and to the PRC government. Use of Combination Rates in an NME Investigation The Department will calculate combination rates for certain respondents that are eligible for a separate rate in this investigation. The Separate-Rates and Combination Rates Bulletin states the following: {w}hile continuing the practice of assigning separate rates only to exporters, all separate rates that the Department will now assign in its NME investigations will be specific to those producers that supplied the exporter during the period of investigation. Note, however, that one rate is calculated for the exporter and all of the producers which supplied subject merchandise to it during the period of investigation. This practice applies both to mandatory respondents receiving an individually calculated separate rate as well as the pool of non-investigated firms receiving the weighted-average of the individually calculated rates. This practice is referred to as the application of “combination rates” because such rates apply to specific combinations of exporters and one or more producers. The cash-deposit rate assigned to an exporter will apply only to merchandise both exported by the firm in question and produced by a firm that supplied the exporter during the period of investigation. *See* Separate-Rates and Combination Rates Bulletin, at 6. Initiation of Antidumping Investigation Based upon our examination of the petition on certain OTR tires from the PRC, we find that the petition meets the requirements of section 732 of the Act. Therefore, we are initiating an antidumping duty investigation to determine whether imports of certain OTR tires from the PRC are being, or are likely to be, sold in the United States at less than fair value. Unless postponed, we will make our preliminary determination no later than 140 calendar days after the date of publication of this initiation notice. Distribution of Copies of the Petition In accordance with section 732(b)(3)(A) of the Act, a copy of the public version of the petition has been provided to the government of the PRC. International Trade Commission Notification We have notified the ITC of our initiation, as required by section 732(d) of the Act. Preliminary Determination by the ITC The ITC will preliminarily determine, within 25 days after the date on which it receives notice of this initiation, whether there is a reasonable indication that imports of certain OTR tires from the PRC are causing material injury, or threatening to cause material injury, to a U.S. industry. *See* section 733(a)(2)(A)(i) of the Act. A negative ITC determination will result in the investigation being terminated; otherwise, this investigation will proceed according to statutory and regulatory time limits. This notice is issued and published pursuant to section 777(i) of the Act. Dated: July 30, 2007. Stephen J. Claeys, Acting Assistant Secretary for Import Administration. Appendix I—Scope of The Investigation Attachment I—Scope of the Investigation for the Petitions Covering Certain New Pneumatic Off-the-Road Tires From the People's Republic of China The products covered by the scope are new pneumatic tires designed for off-the-road
(OTR)and off-highway use, subject to exceptions identified below. Certain OTR tires are generally designed, manufactured and offered for sale for use on off-road or off-highway surfaces, including but not limited to, agricultural fields, forests, construction sites, factory and warehouse interiors, airport tarmacs, ports and harbors, mines, quarries, gravel yards, and steel mills. The vehicles and equipment for which certain OTR tires are designed for use include, but are not limited to:
(1)Agricultural and forestry vehicles and equipment, including agricultural tractors, 1 combine harvesters, 2 agricultural high clearance sprayers, 3 industrial tractors, 4 log-skidders, 5 agricultural implements, highway-towed implements, agricultural logging, and agricultural, industrial, skid-steers/mini-loaders; 6
(2)construction vehicles and equipment, including earthmover articulated dump products, rigid frame haul trucks, 7 front end loaders, 8 dozers, 9 lift trucks, straddle carriers, 10 graders, 11 mobile cranes, compactors; and
(3)industrial vehicles and equipment, including smooth floor, industrial, mining, counterbalanced lift trucks, industrial and mining vehicles other than smooth floor, skid-steers/mini-loaders, and smooth floor off-the-road counterbalanced lift trucks. 12 The foregoing list of vehicles and equipment generally have in common that they are used for hauling, towing, lifting, and/or loading a wide variety of equipment and materials in agricultural, construction and industrial settings. The foregoing descriptions are illustrative of the types of vehicles and equipment that use certain OTR tires, but are not necessarily all-inclusive. While the physical characteristics of certain OTR tires will vary depending on the specific applications and conditions for which the tires are designed ( *e.g.* , tread pattern and depth), all of the tires within the scope have in common that they are designed for off-road and off-highway use. Except as discussed below, OTR tires included in the scope of the petitions range in size (rim diameter) generally but not exclusively from 8 inches to 54 inches. The tires may be either tube-type or tubeless, radial or non-radial, and intended for sale either to original equipment manufacturers or the replacement market. The subject merchandise is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings: 4011.20.10.25, 4011.20.10.35, 4011.20.50.30, 4011.20.50.50, 4011.61.00.00, 4011.62.00.00, 4011.63.00.00, 4011.69.00.00, 4011.92.00.00, 4011.93.40.00, 4011.93.80.00, 4011.94.40.00, and 4011.94.80.00. While HTSUS subheadings are provided for convenience and Customs purposes, our written description of the scope is dispositive. 1 Agricultural tractors are four-wheeled vehicles usually with large rear tires and small front tires that are used to tow farming equipment. 2 Combine harvesters are used to harvest crops such as corn or wheat. 3 Agricultural sprayers are used to irrigate agricultural fields. 4 Industrial tractors are four-wheeled vehicles usually with large rear tires and small front tires that are used to tow industrial equipment. 5 A log skidder has a grappling lift arm that is used to grasp, lift and move trees that have been cut down to a truck or trailer for transport to a mill or other destination. 6 Skid-steer loaders are four-wheel drive vehicles with the left-side drive wheels independent of the right-side drive wheels and lift arms that lie alongside the driver with the major pivot points behind the driver's shoulders. Skid-steer loaders are used in agricultural, construction and industrial settings. 7 Haul trucks, which may be either rigid frame or articulated (i.e., able to bend in the middle) are typically used in mines, quarries and construction sites to haul soil, aggregate, mined ore, or debris. 8 Front loaders have lift arms in front of the vehicle. It can scrape material from one location to another, carry material in its bucket or load material into a truck or trailer. 9 A dozer is a large four-wheeled vehicle with a dozer blade that is used to push large quantities of soil, sand, rubble, etc., typically around construction sites. They can also be used to perform “rough grading” in road construction. 10 A straddle carrier is a rigid frame, engine-powered machine that is used to load and offload containers from container vessels and load them onto (or off of) tractor trailers. 11 A grader is a vehicle with a large blade used to create a flat surface. Graders are typically used to perform “finish grading.” Graders are commonly used in maintenance of unpaved roads and road construction to prepare the base course onto which asphalt or other paving material will be laid. 12 A counterbalanced lift truck is a rigid frame, engine-powered machine with lift arms that has additional weight incorporated into the back of the machine to offset or counterbalance the weight of loads that it lifts so as to prevent the vehicle from overturning. An example of a counterbalanced lift truck is a counterbalanced fork lift truck. Counterbalanced lift trucks may be designed for use on smooth floor surfaces, such as a factory or warehouse, or other surfaces, such as construction sites, mines, etc. Specifically excluded from the scope are new pneumatic tires designed, manufactured and offered for sale primarily for on-highway or on-road use, including passenger cars, race cars, station wagons, sport utility vehicles, minivans, mobile homes, motorcycles, bicycles, on-road or on-highway trailers, light trucks, and trucks and buses. Such tires generally have in common that the symbol “DOT” must appear on the sidewall, certifying that the tire conforms to applicable motor vehicle safety standards. Such excluded tires may also have the following designations that are used by the Tire and Rim Association: Prefix Letter Designations P—Identifies a tire intended primarily for service on passenger cars; LT—Identifies a tire intended primarily for service on light trucks; and, ST—Identifies a special tire for trailers in highway service. Suffix Letter Designations TR—Identifies a tire for service on trucks, buses, and other vehicles with rims having specified rim diameter of nominal plus 0.156” or plus 0.250”; MH—Identifies tires for Mobile Homes; HC—Identifies a heavy duty tire designated for use on “HC” 15” tapered rims used on trucks, buses, and other vehicles. This suffix is intended to differentiate among tires for light trucks, and other vehicles or other services, which use a similar designation. Example: 8R17.5 LT, 8R17.5 HC; LT—Identifies light truck tires for service on trucks, buses, trailers, and multipurpose passenger vehicles used in nominal highway service; and MC—Identifies tires and rims for motorcycles. The following types of tires are also excluded from the scope: Pneumatic tires that are not new, including recycled or retreaded tires and used tires; non-pneumatic tires, including solid rubber tires; tires of a kind used on aircraft, all-terrain vehicles, and vehicles for turf, lawn and garden, golf and trailer applications; and, tires of a kind used for mining and construction vehicles and equipment that have a rim diameter equal to or exceeding 39 inches. Such tires may be distinguished from other tires of similar size by the number of plies that the construction and mining tires contain (minimum of 16) and the weight of such tires (minimum 1500 pounds). Appendix II—Quantity and Value Questionnaire Where it is not practicable to examine all known producers/exporters of subject merchandise, section 777A(c)(2) of the Tariff Act of 1930 (as amended) permits us to investigate
(1)A sample of exporters, producers, or types of products that is statistically valid based on the information available at the time of selection, or
(2)exporters and producers accounting for the largest volume and value of the subject merchandise that can reasonably be examined. In the chart below, please provide the total quantity and total value of all your sales of merchandise covered by the scope of this investigation ( *See* scope section of this notice), produced in the PRC, and exported/shipped to the United States during the period October 1, 2006, through March 31, 2007. Market Total quantity Terms of sale Total value United States 1. Export Price Sales 2. a. Exporter name b. Address c. Contact d. Phone No. e. Fax No. 3. Constructed Export Price Sales 4. Further Manufactured Sales Total Sales Total Quantity Please report quantity on a metric ton basis. If any conversions were used, please provide the conversion formula and source. Terms of Sales Please report all sales on the same terms, such as “free on board” at port of export. Total Value All sales values should be reported in U.S. dollars. Please provide any exchange rates used and their respective dates and sources. Export Price Sales Generally, a U.S. sale is classified as an export price sale when the first sale to an unaffiliated customer occurs before importation into the United States. Please include any sales exported by your company directly to the United States. Please include any sales exported by your company to a third-country market economy reseller where you had knowledge that the merchandise was destined to be resold to the United States. If you are a producer of subject merchandise, please include any sales manufactured by your company that were subsequently exported by an affiliated exporter to the United States. Please do not include in your figures any sales of merchandise manufactured in Hong Kong. Constructed Export Price Sales Generally, a U.S. sale is classified as a constructed export price sale when the first sale to an unaffiliated customer occurs after importation. However, if the first sale to the unaffiliated customer is made by a person in the United States affiliated with the foreign exporter, constructed export price applies even if the sale occurs prior to importation. Please include any sales exported by your company directly to the United States. Please include any sales exported by your company to a third-country market economy reseller where you had knowledge that the merchandise was destined to be resold to the United States. If you are a producer of subject merchandise, please include any sales manufactured by your company that were subsequently exported by an affiliated exporter to the United States. Please do not include in your figures any sales of merchandise manufactured in Hong Kong. Further Manufactured Sales Further manufacture or assembly (including re-packing) sales (further manufactured sales”) refers to merchandise that undergoes further manufacture or assembly in the United States before being sold to the first unaffiliated customer. Further manufacture or assembly costs include amounts incurred for direct materials, labor and overhead, plus amounts for general and administrative expense, interest expense, and additional packing expense incurred in the country of further manufacture, as well as all costs involved in moving the product from the U.S. port of entry to the further manufacturer. [FR Doc. E7-15200 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-P DEPARTMENT OF COMMERCE International Trade Administration [A-570-806] Notice of Initiation of the Administrative Review of the Antidumping Duty Order on Silicon Metal From the People's Republic of China AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce (the Department) received a timely request to conduct an administrative review of the antidumping duty order on silicon metal from the People's Republic of China (PRC). The anniversary month of this order is June. In accordance with the Department's regulations, we are initiating this administrative review. DATES: *Effective Date:* August 6, 2007. FOR FURTHER INFORMATION CONTACT: Scot Fullerton or Kristina Horgan, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230, telephone:
(202)482-1386 or
(202)482-8173, respectively. Background On June 1, 2007, the Department published in the **Federal Register** its Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review, 72 FR 30542 (Notice of Opportunity). In the Notice of Opportunity, the Department stated “for any party the Department was unable to locate in prior segments, the Department will not accept a request for an administrative review of that party absent new information as to the party's location. Moreover, if the interested party who files a request for review is unable to locate the producer or exporter for which it requested the review, the interested party must provide an explanation of the attempts it made to locate the producer or exporter at the same time it files its request for review, in order for the Secretary to determine if the interested party's attempts were reasonable, pursuant to 19 CFR 351.303(f)(3)(ii).” *See* Notice of Opportunity, 72 FR at 30543. The Department received a timely request from Globe Metallurgical Inc. (petitioner) in accordance with 19 CFR 351.213(b)(1) for an administrative review of the antidumping duty order on silicon metal from the PRC. Petitioner requested an administrative review for 18 companies. Therefore, the Department is hereby initiating an administrative review of the antidumping duty order on silicon metal from the PRC for the 18 companies for which the Department has received a request for review. Initiation In accordance with section 751(a)(1) of the Tariff Act of 1930, as amended (the Act), we are initiating an administrative review of the antidumping duty order on silicon metal from the PRC (i.e., silicon metal originating in the PRC). We intend to issue the final results of this review on approximately June 30, 2008. Antidumping duty proceeding Period to be reviewed PRC: 1 2 June 1, 2007 through May 31, 2007. Alloychem Impex Corp Bomet (Canada) Inc Carbonsi Metallurgical Inc Chemical and Alloy Inc Coldstone Metals Inc Crown All Corporation Ferro-Alliages & Mineraux Inc Gather Hope International Co. Ltd GE Silicones (Canada) Global Minerals (Canada) Global Minerals Corp Hunan Provincial Import and Export Group Corp IMMECC Resources Inc Jiangxi Gangyuan Silicon Industry Co., Ltd Lorbec Metals Ltd MPM Silicones, LLC Seaview Trading Transtrading House Ltd 1 If one of the below-named companies does not qualify for a separate rate, all other exporters of silicon metal from PRC that have not qualified for a separate rate are deemed to be covered by this review as part of the single PRC entity of which the named exporter is a part. 2 Some companies may appear to be listed twice, but there are two addresses provided in the administrative review requests for similar named companies and, therefore, we are listing them separately. Interested parties must submit applications for disclosure under administrative protective orders in accordance with 19 CFR 351.305. Instructions for filing such applications may be found on the Department's Web site at *http://www.trade.gov/ia/.* This initiation and notice are in accordance with section 751(a)(1) of the Act and 19 CFR 351.221(c)(1)(i). Dated: July 31, 2007. James C. Doyle, Office Director, AD/CVD Operations, Office 9. [FR Doc. E7-15203 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-P DEPARTMENT OF COMMERCE International Trade Administration A-412-822 Stainless Steel Bar from the United Kingdom: Final Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: On March 30, 2007, the Department of Commerce (the Department) published the preliminary results of the administrative review of the antidumping duty order on stainless steel bar
(SSB)from the United Kingdom. *See Stainless Steel Bar from the United Kingdom: Preliminary Results of Antidumping Duty Administrative Review* , 72 FR 15106 (March 30, 2007) ( *Preliminary Results* ). This review covers one producer/exporter of the subject merchandise to the United States. The period of review
(POR)is March 1, 2005, through February 28, 2006. Based on our analysis of the comments received, we have made certain changes in the margin calculations. Therefore, the final results differ from the preliminary results. The final weighted-average dumping margin for the reviewed firm is listed below in the section entitled “Final Results of Review.” In addition, the Department received information sufficient to warrant a successor-in-interest analysis in this administrative review. Based on this information, we determine that Enpar is the successor-in-interest to Firth Rixson Special Steels Ltd. for purposes of determining antidumping duty liability. EFFECTIVE DATE: August 6, 2007. FOR FURTHER INFORMATION CONTACT: Kate Johnson or Rebecca Trainor, AD/CVD Operations, Office 2, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC, 20230; telephone
(202)482-4929 and
(202)482-4007, respectively. SUPPLEMENTARY INFORMATION: Background This review covers one producer/exporter, Enpar Special Alloys Limited (formerly Firth Rixson Special Steels) (Enpar). On March 30, 2007, the Department published in the **Federal Register** the preliminary results of administrative review of the antidumping duty order on SSB from the United Kingdom. *See Preliminary Results* . We invited parties to comment on our preliminary results of review. On April 27, 2007, we received case briefs from Enpar and Sandvik Bioline, a producer of SSB from the United Kingdom. We received a rebuttal brief from the petitioners ( *i.e.* , Carpenter Technology Corporation, Valbruna Slater Stainless, Inc., and Electralloy Corporation, a division of G.O. Carlson, Inc.) on May 2, 2007. On April 30, 2007, Enpar requested that the Department conduct a public hearing, but withdrew its hearing request on June 4, 2007. A meeting was held with Enpar's counsel on June 20, 2007, to discuss issues raised in Enpar's case brief. The Department has conducted this administrative review in accordance with section 751 of the Tariff Act of 1930, as amended (the Act). Scope of the Order For purposes of this order, the term “stainless steel bar” includes articles of stainless steel in straight lengths that have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-finished, or ground, having a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles, hexagons, octagons, or other convex polygons. Stainless steel bar includes cold-finished stainless steel bars that are turned or ground in straight lengths, whether produced from hot-rolled bar or from straightened and cut rod or wire, and reinforcing bars that have indentations, ribs, grooves, or other deformations produced during the rolling process. Except as specified above, the term does not include stainless steel semi-finished products, cut length flat-rolled products ( *i.e.* , cut length rolled products which if less than 4.75 mm in thickness have a width measuring at least 10 times the thickness, or if 4.75 mm or more in thickness having a width which exceeds 150 mm and measures at least twice the thickness), products that have been cut from stainless steel sheet, strip or plate, wire ( *i.e.* , cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products), and angles, shapes and sections. The stainless steel bar subject to this order is currently classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 7222.20.00.75, and 7222.30.00.00 of the *Harmonized Tariff Schedule of the United States* (“HTSUS”). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive. Successor-In-Interest Analysis We preliminarily determined that Enpar is the successor-in-interest to Firth Rixson Special Steels Ltd. Enpar explained in its questionnaire response that Firth Rixson Special Steels Ltd. was a subsidiary of the U.K.-based Firth Rixson Ltd. Firth Rixson Special Steels Ltd. and two other subsidiaries of the U.K.-based Firth Rixson Ltd., T.W. Pearson and Enpar, were combined in 2003 to form Enpar. Enpar has the same company registration number as that of Firth Rixson Special Steels Ltd., the registered office is the same for both companies, and three of Enpar's four directors were also directors of Firth Rixson Special Steels Ltd. We confirmed at verification that Enpar's business structure is the same as that of Firth Rixson Special Steels Ltd. Although certain upgrades have been made to the production facility, the supplier and customer bases and relationships remain the same. The only real change is the name of the subsidiary. Accordingly, we preliminarily found that Enpar should receive the same antidumping duty treatment with respect to SSB as the former Firth Rixson Special Steels Ltd. Since the *Preliminary Results* , no party to this proceeding has commented on this issue and we have found no additional information that would compel us to reverse our preliminary finding. Thus, for purposes of these final results, we continue to find that Enpar is the successor-in-interest to Firth Rixson Special Steels Ltd. for purposes of determining antidumping duty liability. Period of Review The POR is March 1, 2005, through February 28, 2006. Cost of Production As discussed in the *Preliminary Results* , we conducted an investigation to determine whether Enpar made home market sales of the foreign like product during the POR at prices below its costs of production
(COP)within the meaning of section 773(b)(1) of the Act. We performed the cost test for these final results following the same methodology as in the *Preliminary Results* , except as discussed in the Issues and Decision Memorandum accompanying this notice (the Decision Memo). As a result of our cost test, we found 20 percent or more of Enpar's sales of a given product during the reporting period were at prices less than the weighted-average COP for this period. Thus, we determined that these below-cost sales were made in “substantial quantities” within an extended period of time and at prices which did not permit the recovery of all costs within a reasonable period of time in the normal course of trade. *See* sections 773(b)(2)(B) -
(D)of the Act. Therefore, for purposes of these final results, we found that Enpar made below-cost sales not in the ordinary course of trade. Consequently, we disregarded these sales and used the remaining sales as the basis for determining normal value pursuant to section 773(b)(1) of the Act. Analysis of Comments Received All issues raised in the case briefs by parties to this administrative review, and to which we have responded, are listed in the Appendix to this notice and addressed in the Decision Memo, which is adopted by this notice. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit, room B-099, of the main Department building. In addition, a complete version of the Decision Memo can be accessed directly on the Web at *http://ia.ita.doc.gov/frn/* . The paper copy and electronic version of the Decision Memo are identical in content. Changes Since the Preliminary Results Based on our analysis of the comments received, we have made certain changes in the margin calculations. These changes are discussed in the relevant sections of the Decision Memo. Final Results of Review We determine that the following weighted-average margin percentage exists for the period March 1, 2005, through February 28, 2006: Manufacturer/Exporter Percent Margin Enpar Special Alloys Ltd. (formerly Firth Rixson Special Steels) 34.35 Assessment The Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries, in accordance with 19 CFR 351.212(b). The Department will issue assessment instructions directly to CBP 15 days after the date of publication of these final results of review. Pursuant to 19 CFR 351.106(c)(2), we will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above *de minimis* ( *i.e.* , is not less than 0.50 percent). We calculated importer-specific *ad valorem* duty assessment rates based on the ratio of the total amount of antidumping duties calculated for the examined sales to the total entered value of the examined sales for that importer. The Department clarified its “automatic assessment” regulation on May 6, 2003. *See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties* , 68 FR 23954 (May 6, 2003) ( *Assessment Policy Notice* ). This clarification will apply to entries of subject merchandise during the POR produced by the company included in these final results of review for which the reviewed company did not know that the merchandise it sold to the intermediary ( *e.g.* , a reseller, trading company, or exporter) was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the “All Others” rate if there is no rate for the intermediary involved in the transaction. *See Assessment Policy Notice* for a full discussion of this clarification. Cash Deposit Requirements Further, the following deposit requirements will be effective for all shipments of SSB from the United Kingdom entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided for by section 751(a)(2)(C) of the Act: 1) the cash deposit rates for the reviewed company will be the rate shown above; 2) for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period; 3) if the exporter is not a firm covered in this review, or the original 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 4) the cash deposit rate for all other manufacturers or exporters will be 83.85 percent, the all-others rate established in the *Implementation of the Findings of the WTO Panel in US--Zeroing (EC): Notice of Determinations Under Section 129 of the Uruguay Round Agreements Act and Revocations and Partial Revocations of Certain Antidumping Duty Orders* , 72 FR 25261 (May 4, 2007). These deposit requirements shall remain in effect until further notice. Notification to Importers This notice serves as a final 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. Notification to Interested Parties This notice serves as the only reminder to parties subject to administrative protective order
(APO)of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation. We are issuing and publishing these final results of review in accordance with sections 751(a)(1) and 777(i)(1) of the Act. Dated: July 30, 2007. Stephen J. Claeys, Acting Assistant Secretary for Import Administration. Appendix - Issues in Decision Memorandum Issues 1. Average vs. Specific Material Costs 2. Calculation of Conversion Costs 3. Calculation of the All-Others Rate [FR Doc. E7-15204 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration A-201-822 Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce SUMMARY: In response to requests from respondent ThyssenKrupp Mexinox S.A. de C.V. (Mexinox S.A.) and Mexinox USA, Inc. (Mexinox USA) (collectively, Mexinox) and petitioners, 1 the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on stainless steel sheet and strip in coils (S4 in coils) from Mexico. This administrative review covers imports of subject merchandise from Mexinox S.A. during the period July 1, 2005 to June 30, 2006. 1 Petitioners are Allegheny Ludlum Corporation, United Auto Workers Local 3303, Zanesville Armco Independent Organization, Inc. and the United Steelworkers of America. We preliminarily determine that sales of S4 in coils from Mexico have been made below normal value (NV). If these preliminary results are adopted in our final results of administrative review, we will instruct United States Customs and Border Protection
(CBP)to assess antidumping duties based on the difference between the constructed export price
(CEP)and NV. Interested parties are invited to comment on these preliminary results. Parties who submit argument in these proceedings are requested to submit with the argument: 1) a statement of the issues, 2) a brief summary of the argument, and 3) a table of authorities. EFFECTIVE DATE: August 6, 2007. FOR FURTHER INFORMATION CONTACT: Maryanne Burke or Robert James, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202)482-5604 or
(202)482-0649, respectively. SUPPLEMENTARY INFORMATION: Background On July 27, 1999, the Department published in the **Federal Register** the *Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils from Mexico* , 64 FR 40560 (July 27, 1999). On July 3, 2006, the Department published a notice entitled *Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review* , 71 FR 37890 (July 3, 2006), covering, *inter alia* , S4 in coils from Mexico for the period July 1, 2005 through June 30, 2006. In accordance with 19 CFR 351.213(b)(1), Mexinox and petitioners requested that the Department conduct an administrative review. On August 30, 2006, we published in the **Federal Register** a notice of initiation of this antidumping duty administrative review covering the period July 1, 2005 through June 30, 2006. *See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part* , 71 FR 51573 (August 30, 2006). On September 13, 2006, the Department issued an antidumping duty questionnaire to Mexinox. Mexinox submitted its response to section A of the questionnaire on October 13, 2006, and its response to sections B through E of the questionnaire on November 20, 2006. On March 9, 2007, the Department issued its first supplemental questionnaire for sections A through C. Mexinox responded to this first supplemental questionnaire on April 10, 2007. The Department also issued a supplemental questionnaire for section D on April 25, 2007, to which Mexinox responded on May 21, 2007. On May 7, 2007, the Department issued a second supplemental questionnaire for sections A through C, as well as for section E, which pertains to an affiliated U.S. reseller, Ken-Mac Metals (Ken-Mac). Mexinox filed its response to this second supplemental questionnaire on May 21, 2007. Finally, the Department issued a second supplemental questionnaire covering section D on June 26, 2007, to which Mexinox responded on July 3, 2007. Because it was not practicable to complete this review within the normal time frame, on February 20, 2007, we published in the **Federal Register** our notice of the extension of time limits for this review. *See Stainless Steel Sheet and Strip in Coils from Mexico; Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review* , 72 FR 7764 (February 20, 2007). This extension established the deadline for these preliminary results as July 31, 2007. Period of Review The period of review
(POR)is July 1, 2005 through June 30, 2006. Scope of the Order For purposes of this order, the products covered are certain stainless steel sheet and strip in coils. Stainless steel is an alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject sheet and strip is a flat-rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness, and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed ( *e.g.* , cold-rolled, polished, aluminized, coated, *etc.* ) provided that it maintains the specific dimensions of sheet and strip following such processing. The merchandise subject to this order is currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise under review is dispositive. Excluded from the scope of this order are the following: 1) sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled; 2) sheet and strip that is cut to length; 3) plate ( *i.e.* , flat-rolled stainless steel products of a thickness of 4.75 mm or more); 4) flat wire ( *i.e.* , cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm); and 5) razor blade steel. Razor blade steel is a flat-rolled product of stainless steel, not further worked than cold-rolled (cold-reduced), in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent chromium, and certified at the time of entry to be used in the manufacture of razor blades. *See* Chapter 72 of the HTSUS, “Additional U.S. Note” 1(d). In response to comments by interested parties, the Department has determined that certain specialty stainless steel products are also excluded from the scope of this order. These excluded products are described below. Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness
(Hv)of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves for compressors. Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus-or-minus 2.01 microns, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm, and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm over 685 mm length. Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of this order. This stainless steel strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron. Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of this order. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.” 2 2 “Arnokrome III” is a trademark of the Arnold Engineering Company. Certain electrical resistance alloy steel is also excluded from the scope of this order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials
(ASTM)specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. The product is currently available under proprietary trade names such as “Gilphy 36.” 3 3 “Gilphy 36” is a trademark of Imphy, S.A. Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of this order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System
(UNS)as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging, and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent or less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4 mm. This product is most commonly used in the manufacture of television tubes and is currently available under proprietary trade names such as “Durphynox 17.” 4 4 “Durphynox 17” is a trademark of Imphy, S.A. Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of this order. These include stainless steel strip in coils used in the production of textile cutting tools ( *e.g.* , carpet knives). 5 This steel is similar to ASTM grade 440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 0.020 percent or less, and includes between 0.20 and 0.30 percent copper and between 0.20 and 0.50 percent cobalt. This steel is sold under proprietary names such as “GIN4 Mo.” The second excluded stainless steel strip in coils is similar to AISI 420-J2 and contains, by weight, carbon of between 0.62 and 0.70 percent, silicon of between 0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, phosphorus of no more than 0.025 percent and sulfur of no more than 0.020 percent. This steel has a carbide density on average of 100 carbide particles per square micron. An example of this product is “GIN5” steel. The third specialty steel has a chemical composition similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, molybdenum of between 1.15 and 1.35 percent, but lower manganese of between 0.20 and 0.80 percent, phosphorus of no more than 0.025 percent, silicon of between 0.20 and 0.50 percent, and sulfur of no more than 0.020 percent. This product is supplied with a hardness of more than Hv 500 guaranteed after customer processing, and is supplied as, for example, “GIN6.” 6 5 This list of uses is illustrative and provided for descriptive purposes only. 6 “GIN4 Mo,” “GIN5” and “GIN6” are the proprietary grades of Hitachi Metals America, Ltd. Verification As provided in section 782(i) of the Tariff Act of 1930, as amended (the Tariff Act), we verified sales information provided by Mexinox, using standard verification procedures such as the examination of relevant sales and financial records. We will issue our verification report and allow parties to comment on the findings of that report prior to the issuing of our final results. Sales Made Through Affiliated Resellers A. U.S. Market Mexinox USA, a wholly owned subsidiary of Mexinox S.A., which in turn is a subsidiary of ThyssenKrupp AG, sold subject merchandise in the United States during the POR to unaffiliated customers. Mexinox USA also made sales of subject merchandise to U.S. affiliate Ken-Mac. Ken-Mac is an operating division of ThyssenKrupp Materials Inc., which is a subsidiary of ThyssenKrupp USA, Inc., the primary holding company for ThyssenKrupp AG in the U.S. market. Ken-Mac purchased subject merchandise from Mexinox USA and further manufactured and/or resold the subject merchandise to unaffiliated customers in the United States. *See* Mexinox's October 13, 2006 section A questionnaire response at A-11, A-20 and A-27 through A-28. For purposes of this review, we have included both Mexinox USA's and Ken-Mac's sales of subject merchandise to unaffiliated customers in the United States in our margin calculation. B. Home Market Mexinox Trading, S.A. de C.V. (Mexinox Trading), a wholly owned subsidiary of Mexinox S.A., resold the foreign like product as well as other merchandise in the home market. Mexinox S.A.'s sales to Mexinox Trading represented a small portion of Mexinox S.A.'s total sales of the foreign like product in the home market and constituted less than five percent of all home market sales. *See* , *e.g.* , Mexinox's October 13, 2006 section A questionnaire response at A-3 through A-4, and its May 21, 2007 supplemental questionnaire response covering sections A through C and E at Attachment A-28-B (quantity and value chart). Because sales to Mexinox Trading of the foreign like product were below the five-percent threshold established under 19 CFR 351.403(d), we did not require Mexinox S.A. to report Mexinox Trading's downstream sales to its first unaffiliated customer. This is consistent with our practice to date and the methodology we have employed in past administrative reviews of S4 in coils from Mexico. *See* , *e.g.* , *Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review* , 71 FR 76978 (December 22, 2006) ( *2004-2005 Final Results* ), and *Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review* , 70 FR 73444 (December 12, 2005), and accompanying Issues and Decisions Memorandum at Comment 2 ( *2003-2004 Final Results* ). Fair Value Comparisons To determine whether sales of S4 in coils from Mexico to the United States were made at less than normal value, we compared CEP sales made in the United States by both Mexinox USA and Ken-Mac to unaffiliated purchasers to NV as described in the “Constructed Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(2) of the Tariff Act, we compared individual CEPs to monthly weighted-average NVs. Product Comparisons In accordance with section 771(16) of the Tariff Act, we considered all products produced by Mexinox S.A. covered by the description in the “Scope of the Order” section above, and sold in the home market during the POR, to be foreign like product for purposes of determining appropriate product comparisons to U.S. sales. We relied on nine characteristics to match U.S. sales of subject merchandise to comparison sales of the foreign like product (listed in order of priority): 1) grade; 2) cold/hot rolled; 3) gauge; 4) surface finish; 5) metallic coating; 6) non-metallic coating; 7) width; 8) temper; and 9) edge trim. Where there were no sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics and reporting instructions listed in the Department's original September 13, 2006 questionnaire. Level of Trade In accordance with section 773(a)(1)(B) of the Tariff Act, to the extent practicable, we base NV on sales made in the comparison market at the same level of trade
(LOT)as the export transaction. The NV LOT is based on the starting price of sales in the home market or, when NV is based on constructed value (CV), that of the sales from which selling, general, and administrative (SG&A) expenses and profit are derived. With respect to CEP transactions in the U.S. market, the CEP LOT is defined as the level of the constructed sale from the exporter to the importer. *See* section 773(a)(7)(A) of the Tariff Act. To determine whether NV sales are at a different LOT than CEP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the customer. *See* 19 CFR 351.412(c)(2). If the comparison-market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make an LOT adjustment under section 773(a)(7)(A) of the Tariff Act. For CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in the levels between NV and CEP affects price comparability, we adjust NV under section 773(a)(7)(B) of the Tariff Act (the CEP offset provision). *See* , *e.g.* , *Final Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes From Canada* , 67 FR 8781 (February 26, 2002), and accompanying Issues and Decisions Memorandum at Comment 8; *see also Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil; Preliminary Results of Antidumping Duty Administrative Review* , 70 FR 17406, 17410 (April 6, 2005), unchanged in *Notice of Final Results of Antidumping Duty Administrative Review of Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil* , 70 FR 58683 (October 7, 2005). For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and CEP profit under section 772(d) of the Tariff Act. *See Micron Technology, Inc. v. United States* , 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001). We expect that if the claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that the LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. *See Porcelain-on-Steel Cookware from Mexico: Final Results of Administrative Review* , 65 FR 30068 (May 10, 2000), and accompanying Issues and Decisions Memorandum at Comment 6. We obtained information from Mexinox regarding the marketing stages involved in making its reported home market and U.S. sales to both affiliated and unaffiliated customers. Mexinox provided a description of all selling activities performed, along with a flowchart and tables comparing the LOTs among each channel of distribution and customer category for both markets. *See* Mexinox's October 13, 2006 section A questionnaire response at A-30 through A-37 and Attachments A-4-A through A-4-C; *see also* Mexinox's April 10, 2007 supplemental questionnaire response at pages 20 through 22 and Attachments A-20 and A-21. Mexinox sold S4 in coils to end-users and retailers/distributors in the home market and to end-users and distributors/service centers in the United States. For the home market, Mexinox identified two channels of distribution described as follows: 1) direct shipments (i.e., products produced to order) and 2) sales from inventory. Within each of these two channels of distribution, Mexinox S.A. made sales to affiliated and unaffiliated distributors/retailers and end-users. *See* Mexinox's October 13, 2006 section A questionnaire response at A-3 and A-24 through A-25. We reviewed the intensity of all selling functions Mexinox claimed to perform for each channel of distribution and customer category. For certain activities, such as pre-sale technical assistance, processing of customer orders, sample analysis, prototypes and trial lots, freight and delivery, price negotiation/customer communications, sales calls and visits, and warranty services, the level of performance for both direct shipments and sales through inventory was identical across all types of customers. Only a few functions exhibited differences, including inventory maintenance/just-in-time performance, further processing, credit and collection, low volume orders and shipment of small packages. *See* Mexinox's April 10, 2007 supplemental questionnaire response at Attachment A-20. While we find differences in the levels of intensity performed for some of these functions, such differences are minor and do not establish distinct, multiple LOTs in Mexico. Based on our analysis of all of Mexinox S.A.'s home market selling functions, we find all home market sales were made at the same LOT, the NV LOT. We then compared the NV LOT, based on the selling activities associated with the transactions between Mexinox S.A. and its customers in the home market, to the CEP LOT, which is based on the selling activities associated with the transaction between Mexinox S.A. and its affiliated importer, Mexinox USA. Our analysis indicates the selling functions performed for home market customers are either performed at a higher degree of intensity or are greater in number than the selling functions performed for Mexinox USA. *See* Mexinox's October 13, 2006 questionnaire response at A-30 through A-37 and Attachments A-4-A through A-4-C; *see also* Mexinox's April 10, 2007 supplemental questionnaire response at Attachment A-20. For example, in comparing Mexinox's selling activities, we find there are more functions performed in the home market which are not a part of CEP transactions ( *e.g.* , pre-sale technical assistance, sample analysis, prototypes and trial lots, price negotiation/customer communications, sales calls and visits, credit and collection, and warranty services). For selling activities performed for both home market sales and CEP sales ( *e.g.* , processing customer orders, freight and delivery arrangements), we find Mexinox S.A. actually performed each activity at a higher level of intensity in the home market. Based on Mexinox's responses, we note that CEP sales from Mexinox S.A. to Mexinox USA generally occur at the beginning of the distribution chain, representing essentially a logistical transfer of inventory that resembles ex-factory sales. In contrast, all sales in the home market occur closer to the end of the distribution chain and involve smaller volumes and more customer interaction which, in turn, require the performance of more selling functions. *See* Mexinox's October 13, 2006 questionnaire response at A-30 through A-37 and Attachments A-4-A through A-4-C; *see also* Mexinox's April 10, 2007 supplemental questionnaire response at Attachment A-20. Based on the foregoing, we conclude that the NV LOT is at a more advanced stage than the CEP LOT. Because we found the home market and U.S. sales were made at different LOTs, we examined whether an LOT adjustment or a CEP offset may be appropriate in this review. As we found only one LOT in the home market, it was not possible to make an LOT adjustment to home market sales, because such an adjustment is dependent on our ability to identify a pattern of consistent price differences between the home market sales on which NV is based and home market sales at the LOT of the export transaction. *See* 19 CFR 351.412(d)(1)(ii). Furthermore, we have no other information that provides an appropriate basis for determining an LOT adjustment. Because the data available do not form an appropriate basis for making an LOT adjustment, and because the NV LOT is at a more advanced stage of distribution than the CEP LOT, we have made a CEP offset to NV in accordance with section 773(a)(7)(B) of the Tariff Act. Constructed Export Price Mexinox indicated it made CEP sales through its U.S. affiliate, Mexinox USA, in the following four channels of distribution: 1) direct shipments to unaffiliated customers; 2) stock sales from the San Luis Potosi
(SLP)factory; 3) sales to unaffiliated customers through Mexinox USA's warehouse inventory; and 4) sales through Ken-Mac. *See* Mexinox's October 13, 2006 section A questionnaire response at A-25 through A-27. Ken-Mac is an affiliated service center located in the United States which purchases S4 in coils produced by Mexinox S.A. and then resells the merchandise (after, in some instances, further manufacturing) to unaffiliated U.S. customers. In accordance with section 772(b) of the Tariff Act, CEP is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise, or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter. We find Mexinox properly classified all of its U.S. sales of subject merchandise as CEP transactions because such sales were made in the United States through Mexinox USA or Ken-Mac to unaffiliated purchasers. We based CEP on packed prices to unaffiliated purchasers in the United States sold by Mexinox USA or its affiliated reseller, Ken-Mac. We accounted for billing adjustments, discounts and rebates where applicable. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act. These expenses included, where appropriate: foreign inland freight, foreign brokerage and handling, inland insurance, U.S. customs duties, U.S. inland freight, U.S. brokerage, and U.S. warehousing expenses. As directed by section 772(d)(1) of the Tariff Act, we deducted those selling expenses associated with economic activities occurring in the United States, including direct selling expenses ( *i.e.* , credit costs, warranty expenses, and a certain expense of proprietary nature), commissions, inventory carrying costs, and other indirect selling expenses. We also made an adjustment for profit in accordance with section 772(d)(3) of the Tariff Act. We used the expenses as reported by Mexinox, with the exception of the U.S. indirect selling expense ratio which we recalculated. *See* “Analysis of Data Submitted by ThyssenKrupp Mexinox S.A. de C.V. for the Preliminary Results of the Antidumping Duty Administrative Review of S4 in Coils from Mexico” (Preliminary Analysis Memorandum) from Maryanne Burke to the File dated July 31, 2007. For sales in which the material was sent to an unaffiliated U.S. processor, we made an adjustment based on the transaction-specific further-processing expenses incurred by Mexinox USA. In addition, the U.S. affiliated reseller Ken-Mac performed some further manufacturing for its sales to unaffiliated U.S. customers. For these sales, we deducted the cost of further processing in accordance with section 772(d)(2) of the Tariff Act. In calculating the cost of further manufacturing for Ken-Mac, we relied upon Ken-Mac's reported cost of further manufacturing materials, labor and overhead. We also included amounts for further manufacturing general and administrative expenses (G&A), as reported in Mexinox's May 21, 2007 supplemental section D questionnaire response. *See* the Department's Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results - ThyssenKrupp Mexinox S.A. de C.V. from Frederick Mines to Neal M. Halper, dated July 31, 2007 (Cost Calculation Memorandum), and Preliminary Analysis Memorandum. Normal Value A. Selection of Comparison Market To determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV ( *i.e.* , the aggregate volume of home market sales of the foreign like product is greater than five percent of the aggregate volume of U.S. sales), we compared Mexinox's volume of home market sales of the foreign like product to the volume of its U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(B) of the Tariff Act. Because Mexinox'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 for subject merchandise, we determined the home market was viable. *See* , *e.g.* , Mexinox's May 21, 2007 supplemental questionnaire response covering sections A through C and E at Attachment A-28-B. B. Affiliated-Party Transactions and Arm's-Length Test Sales to affiliated customers in the home market not made at arm's-length prices are excluded from our analysis because we consider them to be outside the ordinary course of trade. *See* section 773(f)(2) of the Tariff Act; *see* , *also* 19 CFR 351.102(b). Consistent with 19 CFR 351.403(c) and
(d)and agency practice to date, “the Department may calculate NV based on sales to affiliates if satisfied that the transactions were made at arm's length.” *See China Steel Corp. v. United States* , 264 F. Supp. 2d 1339, 1365 (CIT 2003). To test whether the sales to affiliates were made at arm's-length prices, we compared, on a model-specific basis, the starting prices of sales to affiliated and unaffiliated customers, net of all direct selling expenses, billing adjustments, discounts and rebates, movement charges and packing. Where prices to the affiliated party were, on average, within a range of 98 to 102 percent of the price of identical or comparable merchandise to the unaffiliated parties, we determined that the sales made to the affiliated party were at arm's length. *See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade* , 67 FR 69186, 69194 (November 15, 2002). We found one affiliated home market customer failed the arm's-length test and, in accordance with the Department's practice, we excluded sales to this affiliate from our analysis. C. Cost of Production Analysis Because we disregarded sales of certain products made at prices below the cost of production
(COP)in the most recently completed review for Mexinox of S4 in coils from Mexico ( *see 2003-2004 Final Results* ), we had reasonable grounds to believe or suspect that sales of the foreign like product under consideration for the determination of NV in this review for Mexinox may have been made at prices below the COP, as provided by section 773(b)(2)(A)(ii) of the Tariff Act. Pursuant to section 773(b)(1) of the Tariff Act, we initiated a COP investigation of sales by Mexinox. We relied on home market sales and COP information provided by Mexinox in its questionnaire responses, except where noted below: ThyssenKrupp Nirosta GmbH
(TKN)and ThyssenKrupp AST, S.p.A. (TKAST), hot-rolled stainless steel band (hot band) producers affiliated with Mexinox, sold hot band to Mexinox USA, which in turn sold hot band to Mexinox S.A.. Hot band is considered a major input to the production of stainless steel sheet and strip in coils. Section 773(f)(3) of the Tariff Act, the major input rule, states that “in the case of a transaction between affiliated persons involving the production by one of such persons of a major input to the merchandise, the administering authority has reasonable grounds to believe or suspect that an amount represented as the value of such input is less than the cost of production of such input, then the administering authority may determine the value of the major input on the basis of the information available regarding such cost of production, if such cost is greater than the amount that would be determined for such input under paragraph (2).” We evaluated the transfer prices between Mexinox and its affiliated hot band suppliers on a grade-specific basis. Where available on the record, we used market prices for certain grades. However, market prices were not available for some grades of hot band purchased from affiliates. *See* Mexinox's section D supplemental questionnaire, dated July 3, 2007. Therefore, for each of these grades, as facts otherwise available, we constructed a market price using the available market prices and COP information for the hot band grade purchased from the same affiliated supplier. Specifically, we calculated the ratio of the available market prices to the COP for the hot band grade, and applied the ratio to the COP of the hot band grades with no market price. We noted that, for some grades of hot band the market price was higher than the transfer prices between Mexinox and its affiliates. Therefore, we increased the reported direct material costs to reflect the market price. We also recalculated Mexinox's G&A expense rate to include employee profit sharing in the numerator. *See* Cost Calculation Memorandum. In determining whether to disregard home market sales made at prices below the COP, we examined, in accordance with sections 773(b)(1)(A) and
(B)of the Tariff Act, whether, within an extended period of time, such sales were made in substantial quantities, and whether such sales were made at prices which permitted the recovery of all costs within a reasonable period of time in the normal course of trade. Where less than 20 percent of the respondent's home market sales of a given model were at prices below the COP, we did not disregard any below-cost sales of that model because we determined that the below-cost sales were not made within an extended period of time and in “substantial quantities.” Where 20 percent or more of the respondent's home market sales of a given model were at prices less than the COP, we disregarded the below-cost sales because:
(1)they were made within an extended period of time in “substantial quantities,” in accordance with sections 773(b)(2)(B) and
(C)of the Tariff Act; and
(2)based on our comparison of prices to the weighted-average COPs for the POR, they were at prices which would not permit the recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Tariff Act. Our cost test for Mexinox revealed that, for home market sales of certain models, less than 20 percent of the sales of those models were at prices below the COP. We therefore retained all such sales in our analysis and used them as the basis for determining NV. Our cost test also indicated that for home market sales of other models, more than 20 percent were sold at prices below the COP within an extended period of time and were at prices which would not permit the recovery of all costs within a reasonable period of time. Thus, in accordance with section 773(b)(1) of the Tariff Act, we excluded these below-cost sales from our analysis and used the remaining above-cost sales as the basis for determining NV. D. Constructed Value In accordance with section 773(e) of the Tariff Act, we calculated CV based on the sum of Mexinox's material and fabrication costs, SG&A expenses, profit, and U.S. packing costs. We calculated the COP component of CV as described above in the “Cost of Production Analysis” section of this notice. In accordance with section 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and profit on the amounts incurred and realized by the respondent in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country. E. Price-to-Price Comparisons We calculated NV based on prices to unaffiliated customers or prices to affiliated customers we determined to be at arm's length. Mexinox S.A. reported home market sales in Mexican pesos, but noted certain home market sales were invoiced in U.S. dollars during the POR. *See* Mexinox's November 20, 2006 section B questionnaire response at B-26. In our margin calculation we used the currency of the sale invoice at issue and applied the relevant adjustments in the actual currency invoiced or incurred by Mexinox. We accounted for billing adjustments, discounts and rebates, where appropriate. We also made deductions, where appropriate, for foreign inland freight, insurance, handling, and warehousing, pursuant to section 773(a)(6)(B) of the Tariff Act. In addition, we made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise compared pursuant to section 773(a)(6)(C)(ii) of the Tariff Act and 19 CFR 351.411. We also made adjustments for differences in circumstances of sale
(COS)in accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS adjustments for imputed credit expenses and warranty expenses. As noted above in the “Level of Trade” section of this notice, we also made an adjustment for the CEP offset in accordance with section 773(a)(7)(B) of the Tariff Act. Finally, we deducted home market packing costs and added U.S. packing costs in accordance with sections 773(a)(6)(A) and
(B)of the Tariff Act. We used Mexinox's adjustments and deductions as reported, except for certain handling expenses and imputed credit expenses. We have recalculated the handling expenses incurred by Mexinox's home market affiliate, Mexinox Trading, and applied the revised ratio to those home market sales where Mexinox reported a handling expense. We calculated imputed credit expenses based on the short-term borrowing rate associated with the currency of each home market sale transaction. *See* Preliminary Analysis Memorandum. Our methodology for calculating handling charges and imputed credit expenses is consistent with past administrative reviews of this case. *See* , *e.g.* , *2004-2005 Final Results* and *2003-2004 Final Results* . F. Price-to-CV Comparisons If we were unable to find a home market match of such or similar merchandise, in accordance with section 773(a)(4) of the Tariff Act, we based NV on CV. Where appropriate, we made adjustments to CV in accordance with section 773(a)(8) of the Tariff Act. Facts Available In accordance with section 776(a)(1) of the Tariff Act, for these preliminary results we find it necessary to use partial facts available in those instances where the respondent did not provide certain information necessary to conduct our analysis. In our September 13, 2006 questionnaire at G-6, we requested that Mexinox provide sales and cost data for all affiliates involved with the production or sale of the merchandise under review during the POR in both home and U.S. markets. In response, Mexinox stated that its affiliated U.S. reseller, Ken-Mac, sold subject merchandise in the United States during the POR which it had purchased from various suppliers. *See* Mexinox's October 13, 2006 section A questionnaire response at A-11. However, Mexinox explained to the Department that a small subset of subject merchandise which was resold by Ken-Mac to unaffiliated customers in the United States could not be traced to an original stock item or supplier. *See* Mexinox's November 20, 2006 section E questionnaire response at KMC-2 and KMC-3. Mexinox further stated in its May 21, 2007 supplemental questionnaire response covering sections A through C and E at 23, that it was unable to identify the producer of those reported sale transactions (unattributed sales). Because of the unknown origin of certain of Ken-Mac resales, Mexinox was not able to provide all the information necessary to complete our analysis. Pursuant to section 776(a)(1) of the Tariff Act, it is appropriate to use the facts otherwise available in calculating a margin on Ken-Mac's unattributed sales. Section 776(a)(1) of the Tariff Act provides that the Department will, subject to section 782(d) of the Tariff Act, use the facts otherwise available in reaching a determination if “necessary information is not available on the record.” For these preliminary results, we have calculated a margin on Ken-Mac's unattributed sales by applying the overall margin calculated on Mexinox's other U.S. sales of subject merchandise to the weighted-average price of Ken-Mac's unattributed sales. This methodology is consistent to date with that employed in past administrative reviews of S4 in coils from Mexico. *See* , *e.g.* , *2004-2005 Final Results* and *2003-2004 Final Results* . Prior to applying the overall margin calculated on other sales/resales of subject merchandise to Ken-Mac's unattributed sales, we calculated the portion of the unattributed sales quantity that could be reasonably allocated to subject stainless steel merchandise purchased from Mexinox. We based our allocation on the relative percentage (by volume) of subject stainless steel merchandise that Ken-Mac had purchased from Mexinox as compared to the total stainless steel merchandise it had purchased from all vendors. *See* Mexinox's May 21, 2007 supplemental questionnaire response covering sections A through C and E at Attachment KME-12. The Department preliminarily finds Mexinox acted to the best of its ability in responding to the Department's request for information; therefore, the application of an adverse inference, as provided under section 776(b) of the Tariff Act, is not warranted in calculating a margin on Ken-Mac's unattributed sales. Currency Conversion We made currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank, in accordance with section 773A(a) of the Tariff Act. Preliminary Results of Review As a result of our review, we preliminarily determine the following weighted-average dumping margin exists for the period July 1, 2005 through June 30, 2006: Manufacturer / Exporter Weighted-Average Margin (percentage) ThyssenKrupp Mexinox S.A. de C.V. 2.82%% The Department will disclose calculations performed within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). An interested party may request a hearing within thirty days of publication of these preliminary results. *See* 19 CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first business day thereafter, unless the Department alters the date per 19 CFR 351.310(d). Interested parties may submit case briefs no later than 30 days after the date of publication of these preliminary results of review. *See* 19 CFR 351.309 (c). Rebuttal briefs limited to issues raised in the case briefs may be filed no later than five days after the time limit for submitting the case briefs. *See* 19 CFR 351.309(d). Parties who submit argument in these proceedings 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, parties submitting case briefs and/or rebuttal briefs are requested to provide the Department with an additional copy of the public version of any such argument on diskette. The Department will issue final results of this administrative review, including the results of our analysis of the issues in any such argument or at a hearing, within 120 days of publication of these preliminary results. Duty Assessment Upon completion of this administrative review, the Department shall determine, and CBP shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we will calculate importer-specific *ad valorem* assessment rates for the merchandise based on the ratio of the total amount of antidumping duties calculated for the examined sales made during the POR to the total customs value of the sales used to calculate those duties. The total customs value is based on the entered value reported by Mexinox for all U.S. entries of subject merchandise initially purchased for consumption to the United States made during the POR. *See* Preliminary Analysis Memorandum. In accordance with 19 CFR 356.8(a), the Department intends to issue assessment instructions to CBP on or after 41 days following the publication of the final results of review. The Department clarified its “automatic assessment” regulation on May 6, 2003. *See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties* , 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the POR produced by the company included in these preliminary results for which the reviewed company did not know their merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company or companies involved in the transaction. Cash Deposit Requirements Furthermore, the following cash deposit requirements will be effective for all shipments of S4 in coils from Mexico 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 Tariff Act:
(1)the cash deposit rate for the reviewed company will be the rate established in the final results of this review, except if the rate is less than 0.50 percent ( *de minimis* within the meaning of 19 CFR 351.106(c)(1)), the cash deposit will be zero;
(2)for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period;
(3)if the exporter is not a firm covered in this review, or the original less-than-fair-value
(LTFV)investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and
(4)the cash deposit rate for all other manufacturers or exporters will continue to be the all-others rate of 30.85 percent, which is the all-others rate established in the LTFV investigation. *See Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils from Mexico* , 64 FR 40560 (July 27, 1999). These deposit requirements, when imposed, shall remain in effect until further notice. Notification to Importers 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. We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i) of the Tariff Act. Dated: July 31, 2007. Stephen J. Claeys, Acting Assistant Secretary for Import Administration. [FR Doc. E7-15201 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration A-570-601 Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, from the People's Republic of China; Notice of Extension of Final Results of the 2005-2006 Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. EFFECTIVE DATE: August 6, 2007. FOR FURTHER INFORMATION CONTACT: Paul Stolz, AD/CVD Operations, Office 8, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington DC 20230; telephone:
(202)482-4474. Background On July 27, 2006, the Department of Commerce (“the Department”) published in the **Federal Register** a notice of the initiation of the antidumping duty administrative review of tapered roller bearings and parts thereof, finished and unfinished (“TRBs”) from the People's Republic of China (“PRC”), 71 FR 42626 (July 27, 2006). On March 26, 2007, the Department published its preliminary results on TRBs from the PRC. *See Tapered Roller Bearings and Parts Thereof, Finished or Unfinished, from the People's Republic of China Preliminary Results of Antidumping Duty Administrative Review and Notice of Rescission in Part and Intent to Rescind in Part* , 72 FR 14078 (March 26, 2007). The final results of this administrative review are currently due no later than July 24, 2007. Extension of Time Limit for Final Results Section 751(a)(3)(A) of the Tariff Act of 1930, as amended (“the Act”), requires the Department to issue the final results in an administrative review within 120 days after the date on which the preliminary results are published. However, if it is not practicable to complete the review within this time period, section 751(a)(2)(A) of the Act allows the Department to extend the time period to a maximum of 180 days. Completion of the final results within the 120-day period is not practicable because this review involves certain complex issues, such as a tariff classifications covered by the scope of the order and separate rates. Because it is not practicable to complete this review within the time specified under the Act, we are extending the time period for issuing the final results of review by 60 days until September 22, 2007, in accordance with section 751(a)(3)(A) of the Act and 19 CFR 351.213(h)(2). However, because September 22, 2007 falls on a Saturday, the final results will be due no later than September 24, 2007, the next business day. This notice is published pursuant to sections 751(c) and 777(i) of the Act. Dated: July 23, 2007. Stephen J. Claeys, Deputy Assistant Secretary for Import Administration. [FR Doc. E7-15210 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE International Trade Administration [C-533-825] Polyethylene Terephthalate Film, Sheet, and Strip From India: Preliminary Results and Rescission, in Part, of Countervailing Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce (the Department) is conducting an administrative review of the countervailing duty order on polyethylene terephthalate
(PET)film from India for the period January 1, 2005 through December 31, 2005. We preliminarily determine that subsidies are being provided on the production and export of PET film from India. *See* the “Preliminary Results of Administrative Review” section, below. If the final results remain the same as the preliminary results of this review, we will instruct U.S. Customs and Border Protection
(CBP)to assess countervailing duties. Interested parties are invited to comment on the preliminary results of this administrative review. *See* the “Public Comment” section of this notice, below. DATES: *Effective Date:* August 6, 2007. FOR FURTHER INFORMATION CONTACT: Elfi Blum or Toni Page, AD/CVD Operations, Office 6, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202)482-0197 or
(202)482-1398, respectively. SUPPLEMENTARY INFORMATION: Background On July 1, 2002, the Department published in the **Federal Register** the countervailing duty
(CVD)order on PET film from India. *See Countervailing Duty Order:* *Polyethylene Terephthalate Film, Sheet and Strip (PET Film) from India* , 67 FR 44179 (July 1, 2002) ( *PET Film Order* ). On July 3, 2006, the Department published in the **Federal Register** a notice of opportunity to request an administrative review of this order. *See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review* , 71 FR 37890 (July 3, 2006). On July 26, 2006 and July 31, 2006, the Department received requests to conduct an administrative review of the CVD order on PET film from India from MTZ Polyfilms, Ltd. (MTZ), Jindal Poly Films Limited of India (Jindal), formerly named Jindal Polyester Limited, Polyplex Corporation, Ltd. (Polyplex), and Garware Polyester, Ltd. (Garware), all of whom are Indian producers and exporters of subject merchandise. Dupont Teijin Films, Mitsubishi Polyester Film of America, and Toray Plastics (America), (collectively, petitioners) did not file any requests for review. On August 22, 2006, Polyplex withdrew its request for review of the CVD order of PET film from India. Since its withdrawal occurred prior to the date of initiation and because no other party requested a review of Polyplex, we did not include this company in the initiation of the administrative review. On August 30, 2006, the Department initiated an administrative review of the CVD order on PET film from India covering MTZ, Jindal, and Garware, for the period January 1, 2005 through December 31, 2005. *See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part* , 71 FR 51573 (August 30, 2006). The Department issued questionnaires to the Government of India (GOI), Garware, MTZ, and Jindal on November 7, 2006. On November 28, 2006, pursuant to 19 CFR 351.213(d)(1), Jindal timely withdrew its request for an administrative review of the CVD order on PET film from India. Because no other party requested a review of Jindal, on April 10, 2007, the Department rescinded the administrative review of Jindal. *See Polyethylene Terephthalate Film, Sheet, and Strip from India: Notice of Partial Rescission of Administrative Review of the Countervailing Duty Order* , 72 FR 17838 (April 10, 2007). On January 5, 2007, both the GOI and Garware submitted their questionnaire responses. MTZ submitted its questionnaire response on January 12, 2007. The Department issued its first supplemental questionnaires to the GOI, Garware, and MTZ on March 16, 2007. On April 5, 2007, the Department extended the time limit for the preliminary results of the countervailing duty administrative review until July 31, 2007. *See Polyethylene Terephthalate
(PET)Film, Sheet, and Strip from India: Extension of Time Limit for Preliminary Results of Countervailing Duty Administrative Review* , 72 FR 16769 (April 5, 2007). On April 13, 2007, the GOI submitted its first supplemental response. Both Garware and MTZ submitted their first supplemental responses on April 16, 2007, and April 18, 2007, respectively. On June 11, 2007, the Department issued a second supplemental questionnaire to the GOI, Garware, and MTZ. The Department issued a third supplemental questionnaire to MTZ on June 13, 2007. The GOI submitted its response to the second supplemental questionnaire on June 25, 2007, and Garware responded on July 2, 2007. MTZ responded to the Department's second and third supplemental questionnaires on July 6, 2007. Verification As provided in section 782(i)(3) of the Tariff Act of 1930, as amended (the Act), we intend to conduct verification of the GOI, Garware, and MTZ questionnaire responses following the issuance of the preliminary results. Scope of the Order For purposes of the order, the products covered are all gauges of raw, pretreated, or primed Polyethylene Terephthalate Film, Sheet and Strip, whether extruded or coextruded. Excluded are metallized films and other finished films that have had at least one of their surfaces modified by the application of a performance-enhancing resinous or inorganic layer of more than 0.00001 inches thick. Imports of PET film are classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) under item number 3920.62.00. HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of this proceeding is dispositive. Subsidies Valuation Information Allocation Period Under 19 CFR 351.524(d)(2)(i), we will presume the allocation period for non-recurring subsidies to be the average useful life
(AUL)prescribed by the Internal Revenue Service
(IRS)for renewable physical assets of the industry under consideration (as listed in the IRS's 1977 Class Life Asset Depreciation Range System, and as updated by the Department of the Treasury). This presumption will apply unless a party claims and establishes that these tables do not reasonably reflect the AUL of the renewable physical assets of the company or industry under investigation. Specifically, the party must establish that the difference between the AUL from the tables and the company-specific AUL or country-wide AUL for the industry under investigation is significant, pursuant to 19 CFR 351.524(d)(2)(i) and (ii). For assets used to manufacture plastic film, such as PET film, the IRS tables prescribe an AUL of 9.5 years. 1 1 For our subsidy calculations, we round the 9.5 years up to 10 years. In the investigative segment of this proceeding, the Department determined that Garware had rebutted the presumption and applied a company-specific AUL of 19 years. *See Final Affirmative Countervailing Duty Determination: Polyethylene Terephthalate Film, Sheet, and Strip (PET Film)* , 67 FR 34905 (May 16, 2002), and accompanying *Issues and Decision Memorandum* , at “Allocation Period” ( *PET Film Final Determination* ). Therefore, the Department is using an AUL of 19 years for Garware in allocating non-recurring subsidies. MTZ was not a respondent in the original investigation, nor was the company a respondent in any prior segment of this proceeding. In response to the Department's original questionnaire and its first supplemental questionnaire, MTZ proposed a company-specific AUL of 19.9 years for its plant and machinery. In Exhibits S-7 to S-8(c) of its first supplemental response, MTZ provided its depreciation schedule over the past 10 years, and a detailed list of assets for plant and machinery, respectively. However, MTZ has not demonstrated how the detailed list was tied to its depreciation schedule through the POR, 2 or how the depreciation schedule was ultimately tied to MTZ's 2005-2006 financial statements. Furthermore, MTZ did not provide an explanation of how it derived its depreciation schedule. Based on these concerns, we preliminarily determine that MTZ's calculation of its company-specific AUL should not be used to determine the appropriate allocation period for non-recurring subsidies. Rather, for purposes of these preliminary results we are using the IRS Tables. *Benchmark Interest Rates and Discount Rates.* 2 The detail for plant and machinery is only provided through March 2003. For programs requiring the application of a benchmark interest rate or discount rate, 19 CFR 351.505(a)(1) states a preference for using an interest rate that the company could have obtained on a comparable loan in the commercial market. Also, 19 CFR 351.505(a)(3)(i) stipulates that when selecting a comparable commercial loan that the recipient “could actually obtain on the market” the Department will normally rely on actual short-term and long-term loans obtained by the firm. However, when there are no comparable commercial loans, the Department may use a national average interest rate, pursuant to 19 CFR 351.505(a)(3)(ii). In addition, 19 CFR 351.505(a)(2)(ii) states that the Department will not consider a loan provided by a government-owned special purpose bank for purposes of calculating benchmark rates. The Department has previously determined that the Industrial Development Bank of India
(IDBI)is a government-owned special purpose bank. *See Final Results of Countervailing Duty Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip from India* , 71 FR 7534 (February 13, 2006), and accompanying *Issues and Decision Memorandum* , at *Comment 3* , ( *Second PET Film Review—Final Results* ). As such, the Department did not use loans from the IDBI reported by Garware. Further, in this review, the Department preliminarily determines that the Industrial Finance Corporation of India
(IFCI)and the Export-Import Bank of India
(EXIM)3 are government-owned special purpose banks. As such, the Department did not use loans from IFCI reported by Garware and MTZ, and loans from EXIM reported by Garware, in the benchmark calculations for this administrative review. 3 *Id.* This is based on information we obtained from the internet indicating this bank functions “as the principal financial institution for coordinating the working of institutions engaged in financing export and import of goods and services * * * .” Pursuant to 19 CFR 351.505(a)(2)(iv), if a program under review is a government-provided, short-term loan program, the preference would be to use a company-specific annual average of the interest rates on comparable commercial loans during the year in which the government-provided loan was taken out, weighted by the principal amount of each loan. For this review, the Department required a rupee-denominated short-term loan benchmark rate to determine benefits received under the Pre-Shipment Export Financing and Post-Shipment Export Financing programs. MTZ reported that it did not receive any loans under the GOI Pre-Shipment and Post-Shipment Export Financing programs. 4 4 *See* MTZ's Original Questionnaire Response, at III-12 (January 12, 2007). Garware provided information on rupee-denominated and U.S. dollar-denominated short-term commercial loans outstanding during the period of review (POR). Garware reported that it did receive the following rupee-denominated short-term commercial loans: Supplier Bill Discounting (SBD); Local Bill Discounting (LBD); Working Capital Development Loans (WCDL); and Cash Credit (CC). In previous reviews of this case, the Department has determined that Inland Bill Discounting
(IBD)loans are more comparable to pre-shipment and post-shipment export financing loans than other types of rupee-denominated short-term loans. *See Preliminary Results and Rescission in Part of Countervailing Duty Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip from India* , 70 FR 46483, 46485 (August 10, 2005) ( *Second PET Film Review—Preliminary Results* ) (unchanged in the final results); and *Issues Memorandum—First Review* , at 10. There is no new information or evidence of changed circumstances that would warrant reconsidering this finding. Therefore, for these preliminary results, we continue to use IBD
(LBD)loans as the basis for the short-term rupee-denominated benchmark for all applicable programs for Garware. Garware provided information on U.S. dollar-denominated working capital trade loans
(WCTL)received during the POR to use as the basis for dollar-denominated short-term benchmark rates. Because these loans were obtained from government-owned special purpose banks, the Department is using a national average dollar-denominated short-term interest rate, as reported in the International Monetary Fund's publication “International Financial Statistics” (IMF Statistics) for Garware, in accordance with 19 CFR 351.505(a)(3)(ii). For those programs requiring a rupee-denominated discount rate or the application of a rupee-denominated long-term benchmark rate, we used national average interest rates from the IMF Statistics, pursuant to 19 CFR 351.505(a)(3)(ii). With respect to long-term loans and grants allocated over time, the Department required benchmarks and discount rates to determine benefits received under the Export Promotion Capital Goods Scheme (EPCGS) program. None of the respondents 5 reported comparable commercial long-term rupee-denominated loans for all required years. Normally, for those years for which we did not have company-specific information, the Department relies on comparable long-term rupee-denominated benchmark interest rates from the immediately preceding year as directed by 19 CFR 351.505(a)(2)(iii). When there were no comparable long-term, rupee-denominated loans from commercial banks during either the year under consideration or the preceding year, the Department uses national average interest rates from the IMF Statistics, pursuant to 19 CFR 351.505(a)(3)(ii). Since neither Garware nor MTZ had long-term rupee-denominated benchmark interest rates from the immediately preceding year, we relied on the IMF statistics as benchmarks for the required years. 5 MTZ provided the Department with limited information regarding its long-term benchmarks on three separate occasions: *See* MTZ's original questionnaire response of January 12, 2007; MTZ's First Supplemental Response, at 11-12, and Exhibit S-9 (April 18, 2007), and MTZ's Second Supplemental Response, at 7-8 and Exhibit S3-4a (July 2, 2007). The average interest rates provided in the first supplemental response are supported by bank ledger accounts including postings covering approximately ten years. MTZ did not demonstrate how the supporting documentation tied to its benchmark calculation. Further, MTZ stated that it provided support for the long-term interest rates from its banks in Exhibit S-9. MTZ did not clearly identify which supporting information pertains to its long-term loans. In its second supplemental response MTZ provided long-term loan information for 1995, 1996, and 1997, but MTZ did not calculate average long-term benchmarks for the POR. Cross-Ownership and Attribution of Subsidies In the final determination of the investigation, the Department determined that cross-ownership exists between Garware and Garware Chemicals, Ltd., in accordance with 19 CFR 351.525(b)(6)(vi). *See PET Film Final Determination—Decision Memorandum,* at *Comment 15* . In the original questionnaire of the instant review, we asked Garware to identify all affiliated companies and to describe in detail the nature of its relationship with those companies. Garware responded that Garware Chemical, Ltd. (Garware Chemical) is an affiliated producer of Di-methyl Terephthalate (DMT), which is a primary input into the production of PET film. In the same response, Garware indicated that Garware Chemical did not receive a subsidy. 6 Garware's financial statements submitted in the same response indicate that Garware Chemical is an associate company of Garware and that Garware Chemical shares directors with Garware. These financial statements also indicate that Garware guaranteed Garware Chemical's loans and that Garware owns shares of Garware Chemical. 7 6 *See* Garware's original questionnaire response of January 5, 2007, at 1-2 and Exhibit 1. 7 *See* Garware's original questionnaire response of January 5, 2007, Exhibit 3, Financial Statements 2005-2006, at 32 and 64-65. In the first supplemental questionnaire, we requested Garware to provide more detail regarding Garware Chemical's supply of inputs in the production of subject merchandise. In its response, Garware clarified that Garware Chemicals is not a subsidiary company of Garware but an affiliated company. 8 In response to the Department's second supplemental questionnaire, in which we asked Garware to explain and provide documentation as to whether Garware Chemical had participated in GOI programs, Garware stated that Garware Chemical participated in three programs: The GOI's Export Promotion Capital Goods Scheme (EPCGS), the State of Maharashtra
(SOM)Sales Tax Incentive Program, and the SOM Electricity Duty Exemption. In the same supplemental questionnaire we asked Garware to explain its affiliate relationship to Garware Chemical in more detail; however, it only stated that Garware Chemicals is an “associate company,” in response to our question. Garware did not provide any explanation for its differentiation in terminology, *i.e.* , affiliate, subsidiary, and associate company. However, the record is clear that Garware owns a part of Garware Chemical, that Garware guaranteed Garware Chemical's loans, and that the two companies share at least one director. Based on these facts, we continue to find, as we did in the investigation, that Garware and Garware Chemical are cross-owned in accordance with 19 CFR 351.525(b)(6)(vi). 8 *See* Garware's first supplemental response of July 2, 2007, at 3-4. In order to attribute the benefits received by Garware Chemical to Garware, the Department needs Garware Chemical's sales information ( *i.e.* , total sales less any sales to Garware). Since this information was not provided, the Department is using facts available, in accordance with section 776(a)(2)(A) of the Act, to calculate Garware's subsidy rates. Accordingly, for these preliminary results, we will attribute the subsidies received by Garware Chemical to Garware, pursuant to 19 CFR 351.525(b)(6)(iv) and (vi), without any adjustment to the sales denominator. However, we intend to provide Garware a final opportunity to submit the sales information necessary for these calculations. Programs Preliminarily Determined To Be Countervailable 1. Pre-Shipment and Post-Shipment Export Financing The Reserve Bank of India (RBI), through commercial banks, provides short-term pre-shipment financing, or “packing credits,” to exporters. Upon presentation of a confirmed export order or letter of credit to a bank, companies may receive pre-shipment loans for working capital purposes ( *i.e.* , purchasing raw materials, warehousing, packing, transportation, etc.) for merchandise destined for exportation. Companies may also establish pre-shipment credit lines upon which they draw as needed. Limits on credit lines are established by commercial banks and are based on a company's creditworthiness and past export performance. Credit lines may be denominated either in Indian rupees or in a foreign currency. Commercial banks extending export credit to Indian companies must, by law, charge interest at rates determined by the RBI. Post-shipment export financing consists of loans in the form of discounted trade bills or advances by commercial banks. Exporters qualify for this program by presenting their export documents to the lending bank. The credit covers the period from the date of shipment of the goods to the date of realization of the proceeds from the sale to the overseas customer. Under the Foreign Exchange Management Act of 1999, exporters are required to realize proceeds from their export sales within 180 days of shipment. Post-shipment financing is, therefore, a working capital program used to finance export receivables. In general, post-shipment loans are granted for a period of not more than 180 days. In the investigation, the Department determined that the pre-shipment and post-shipment export financing programs conferred countervailable subsidies on the subject merchandise because:
(1)The provision of the export financing constitutes a financial contribution pursuant to section 771(5)(D)(i) of the Act as a direct transfer of funds in the form of loans;
(2)the provision of the export financing confers benefits on the respondents under section 771(5)(E)(ii) of the Act in as much as the interest rates given under these programs are lower than commercially available interest rates; and
(3)these programs are specific under section 771(5A)(B) of the Act because they are contingent upon export performance. *See PET Film Final Determination—Decision Memorandum* at “Pre-Shipment and Post-Shipment Financing.” There is no new information or evidence of changed circumstances that would warrant reconsidering this finding. Therefore, for these preliminary results, we continue to find this program countervailable. Garware was the only respondent who received benefits under this program during the POR. The benefit conferred by the pre-shipment and post-shipment loans is the difference between the amount of interest the company paid on the government loan and the amount of interest it would have paid on a comparable commercial loan during the POR. Because pre-shipment loans are not tied to exports of subject merchandise, we calculated the subsidy rate for these loans by dividing the total benefit by the value of Garware's total exports during the POR. Because post-shipment loans are normally tied to specific shipments of a particular product to a particular country, we normally divide the total benefit from post-shipment loans tied to exports of subject merchandise to the United States by the value of total exports of subject merchandise to the United States during the POR. *See* 19 CFR 351.525(b)(4). However, Garware did not provide this type of detail for their post-shipment loans so we calculated the subsidy rate for these loans by dividing the total benefit by the value of Garware's total exports during the POR. *See* 19 CFR 351.525(b). On this basis, we preliminarily determine the countervailable subsidy from pre-shipment export financing to be 0.16 percent *ad valorem* for Garware. We also preliminarily determine the countervailable subsidy provided to Garware from post-shipment export financing to be 0.02 percent *ad valorem* . 2. Advance License Program
(ALP)Under the ALP, exporters may import, duty free, specified quantities of materials required to manufacture products that are subsequently exported. The exporting companies, however, remain contingently liable for the unpaid duties until they have fulfilled their export requirement. The quantities of imported materials and exported finished products are linked through standard input-output norms (SIONs) established by the GOI. During the POR, both Garware and MTZ used advance licenses to import certain materials duty free. The Department previously found the 1997-2003 Export/Import Guidelines underlying the ALP to be not countervailable. *See PET Film Final Determination* , at “Advance Licenses.” However, in the 2003 administrative review, the Department examined the revised 2002-2007 Export/Import Policy Guidelines underlying the ALP and found the program to be countervailable because the GOI does not have in place, and does not apply, a system that is reasonable and effective for the purposes intended, in accordance with 19 CFR 351.519(a)(4). *See Final Results of Countervailing Duty Administrative Review: Polyethylene Terephthalate Film, Sheet, and Strip from India* , 71 FR 7534 (February 13, 2006) ( *Second PET Film Review—Final Results* ), and accompanying *Issues and Decision Memorandum* , at “Advance License Program” and *Comment 1 (Issues Memorandum—Second Review* ). In that review, the Department found that the ALP confers a countervailable subsidy because:
(1)A financial contribution, as defined under section 771(5)(D)(ii) of the Act, is provided under the program, as the GOI exempts the respondents from the payment of import duties;
(2)the GOI does not have in place and does not apply a system that is reasonable and effective for the purposes intended in accordance with 19 CFR 351.519(a)(4), to confirm which inputs, and in what amounts, are consumed in the production of the exported products; thus, the entire amount of the import duty deferral or exemption earned by the respondent constitutes a benefit under section 771(5)(E) of the Act; and
(3)this program is contingent upon exportation and, therefore, is specific under section 771(5A)(B) of the Act. *See id* . The Department identified a number of systemic deficiencies that led to its determination, specifically:
(1)The lack of information related to verification or implementation of penalties and the failure to identify the number of companies during the POR that either did not meet export commitments under the ALP, were penalized for not meeting the export requirements under the ALP, or were penalized for claiming excessive credits;
(2)the availability of ALP benefits for a broad category of “deemed” exports; and
(3)the GOI's inability to provide the SION calculations for the PET film industry or any documentation demonstrating that the process outlined in its regulations was actually applied in calculating the PET film SION. In the investigation of *Certain Lined Paper from India* , the Department stated that it had examined certain monitoring procedures with respect to the GOI's tracking of inputs and exports through the Directorate General for Foreign Trade (DGFT), and the tracking of inputs imported duty-free under the ALP through a customs database. *See Notice of Final Affirmative Countervailing Duty Determination and Final Negative Critical Circumstances Determination: Certain Lined Paper Products from India* , 71 FR 45034 (August 8, 2006), at *Comment 10 (Lined Paper—Final Determination* ). However, the Department ultimately determined that, in spite of these procedures, systemic issues continued to exist that demonstrate that the GOI lacks a system or procedure to confirm which inputs are consumed in the production of the exported products and in what amounts that is reasonable and effective for the purposes intended, as required under 19 CFR 351.519. For example, while the Department confirmed at verification that the GOI had recently updated the SION for the lined paper industry, the GOI was unable to provide source documents concerning the initial formation and subsequent revision of the SION used for the lined paper industry, including the SION in effect during the POI. The Department further stated that neither the GOI nor the respondent claimed that the laws and procedures underlying the ALP had changed with respect to the issue of “deemed exports” during that investigation. Thus, the Department determined that the respondent failed to provide information demonstrating that the ALP was implemented and monitored effectively during the period of investigation (POI), and continued to find that the GOI had not demonstrated that it had carried out an examination of actual inputs involved to confirm which inputs were consumed in the production of the exported product, and in what amounts or that the ALP was reasonable and effective for the purposes intended. *See Lined Paper—Final Determination* , at *Comment 10* . In this administrative review, the GOI indicated that it had revised its Foreign Trade Policy and Handbook of Procedures for ALP during the POR. Specifically, the GOI revisions, introduced May 13, 2005 and October 10, 2005, provided for a mechanism to review a SION and monitor a company's consumption and stocks of duty-free, imported or domestically procured, raw materials. For instance, the GOI revised its Foreign Trade Policy and Handbook of Procedures to update its consumption register on inputs imported and inputs consumed to be filed by companies with the DGFT. 9 Further, the GOI noted that the Foreign Trade Policy and Handbook of Procedures, at sections 4.22 and 4.28, provides guidelines for the granting of extensions and levying of penalties. 9 The revision pertains to Appendix 23, which replaced the previous version, Appendix 18 of the Foreign Trade Policy and Handbook of Procedures. Appendix 23 states the consumption and stock of inputs for each SION. It provides details of inputs, quantity imported, name of the finished product produced, quantity of the finished product, inputs actually consumed for the exported product, excess imports, if any, and actual consumption. Producers/exporters are required to file Appendix 23 with the DGFT at the beginning of each year. In addition, the GOI argued that Chapter 4, paragraph 4.10 of the Foreign Trade and Policy Handbook provides for the review of SIONs. Paragraph 4.10.2 of the Foreign Trade and Policy Handbook states that: {a}t the beginning of the financial year or at any other time as the {Norms Committee (NC)} may find it necessary, the NC may identify the SIONs which in its opinion are required to be reviewed. The exporters are required to submit revised data in form given in ‘Aayaat Niryaat Form' for such revisions. It is mandatory for the industry/exporter(s) to provide the production and consumption data etc. as may be required by DGFT/EPC for revision of SION. Furthermore, the GOI reported in this proceeding that it revised the SION for PET film effective September 19, 2005. Exhibit S-12 of the GOI's first supplemental response 10 contains a “Report on PET film Sub committee,” summarizing the old versus the new “actual”consumption of inputs, as provided by two producers/exporters of subject merchandise. The report indicates that for the first producer/exporter, the DGFT inspected the manufacturing facilities. Specifically, it states in Annexure I that the “details of raw materials actually consumed for manufacture of unit quantity of resultant product was ascertained,” and that the company maintains a register of consumption and stock of imported raw material in electronic form. 10 This exhibit was filed separately from the GOI's first supplemental response (April 13, 2007) on April 16, 2007. *Compare* GOI First Supplemental Response (April 13, 2007) *with* GOI First Supplemental Response—Exhibit-12 (April 16, 2007). The Department has analyzed the changes introduced by the GOI to the ALP during 2005 and acknowledges certain improvements to the ALP system. However, we find that systemic issues continued to exist in the ALP system during the POR, all of which were enumerated in the *Second PET Film Review—Final Results* and the *Lined Paper—Final Determination* . For example, while the GOI pointed to provisions in the Handbook of Procedures that lay out the procedures for the granting of extensions and levying of penalties, the GOI did not demonstrate any enforcement of these deadlines and actual application of the penalty provisions. In addition, the GOI did not place any supporting documentation on the record of this review that demonstrates enforcement procedures for the DGFT and the Customs Authorities, respectively, as addressed in the *Issues Memorandum—Second Review* . Furthermore, while the GOI points to certain provisions that provide for the review of SIONs, the GOI was not able to demonstrate the existence of a legal or regulatory requirement or process required for the NC to monitor the continued accuracy of the SION. Also, the GOI did not provide a layout of the regulatory procedures regarding the review of the SION or revision and selection of SIONs. *See Issues Memorandum—Second Review,* at “Advance License Program.” Instead, the GOI stated that the NC decides which SIONs are to be reviewed based on the inputs received from various concerned government authorities. 11 Thus, the GOI has not demonstrated that it has a process in place to ensure that all SIONs are reviewed regularly and consistently as part of the ALP monitoring system. 11 *See* GOI Response of April 13, 2007, at 9. With regard to the specific SION for Pet Film, although the GOI provided some information regarding verification of this SION, *i.e.* , the quantity of raw materials consumed in the manufacture of Pet Film by certain producers, they were not able to provide any information on how this data was used to derive the revised SION. For example, although we requested additional detail on how it arrived at the revised SION, the GOI did not provide us with any additional information, such as the supporting documentation, demonstrating how the total purchases of inputs, imported and procured domestically, by quantity and value, tie into consumption and total production quantity of subject merchandise. Despite repeated requests by the Department for more detailed information and explanations concerning the process for developing the revised SION for PET film, the GOI did not place pertinent information on the record, *e.g.* , an accounting for all inputs, by-products, and waste, and the supporting documentation for the revised SION. 12 The documentation provided by the GOI indicates that there are three processes by which subject merchandise can be produced. 13 However, the documentation lacks any description of the processes, and it does not include any calculations demonstrating how the revised SION for the production processes was determined. 12 *See* GOI Response of January 5, 2007, at II-51-56; GOI First Supplemental Response of April 13, 2007, at 9-11; and GOI Second Supplemental Response of June 25, 2007, at 8. 13 GOI First Supplemental Response—Exhibit-12, at 5. In addition, the GOI's revisions to the ALP did not address the Department's concerns with respect to deemed exports. In the *Second PET Film Review—Final Results,* the Department found that these deemed export sales were not linked to the actual exportation of the subject merchandise, and provide for government discretion to bestow benefits under the program even more broadly. *See Issues Memorandum—Second Review,* at “Advance License Program.” The GOI has not provided the Department with any of its procedures that would confirm that all deemed exports are exported. 14 14 *See* GOI Third Supplemental Response of June 25, 2007, at 11-12. Therefore, despite the changes to the ALP noted by the GOI, the Department finds that systemic problems continue to exist, and consequently we find that the GOI lacks a system or procedure to confirm which inputs are consumed in the production of the exported products and in what amounts that is reasonable and effective for the purposes intended, as required under 19 CFR 351.519. Pursuant to 19 CFR 351.524(c), the exemption of import duties on inputs consumed in production of an exported product normally provides a recurring benefit. Under this program, for 2005, Garware and MTZ did not have to pay certain import duties for inputs that were used in the production of subject merchandise. Thus, we treated the benefit provided under the ALP as a recurring benefit. To calculate the subsidy, we first determined the total value of duties exempted during the POR, including an amount for the Customs Education Cess duty, for each company. From this amount, we subtracted the required application fees paid for each license during the POR as an allowable offset in accordance with section 771(6) of the Act. We then divided the resulting net benefit by the appropriate value of export sales. Consistent with our calculations in the final results of the last administrative review, 15 “deemed export” sales should be included in the export sales denominator for the ALP program only when the Respondents applied for and were bestowed licenses during the POR based on both physical exports and deemed exports. However, both Garware and MTZ stated that their ALP licences were granted on physical exports, only; therefore, we have only used physical export sales in the denominator. 16 On this basis, we preliminarily determine the countervailable subsidy provided under the ALP to be 0.11 for Garware and 0.21 percent *ad valorem* for MTZ. 15 *See Polyethylene Terephthalate Film, Sheet, and Strip from India: Final Results of Countervailing Duty Administrative Review,* 72 FR 6530 (February 12, 2007) ( *Third PET Film Review—Final Results* ), and accompanying I *ssues and Decision Memorandum,* at *Comment 1* ( *Issues Memorandum—Third Review* ). 16 See Garware's and MTZ's second supplemental response of July 2, 2007 and July 6, 2007, respectively. 3. Export Promotion Capital Goods Scheme (EPCGS) The EPCGS provides for a reduction or exemption of customs duties and excise taxes on imports of capital goods used in the production of exported products. Under this program, producers pay reduced duty rates on imported capital equipment by committing to earn convertible foreign currency equal to four to five times the value of the capital goods within a period of eight years. Once a company has met its export obligation, the GOI will formally waive the duties on the imported goods. If a company fails to meet the export obligation, the company is subject to payment of all or part of the duty reduction, depending on the extent of the export shortfall, plus penalty interest. In the investigation, the Department determined that import duty reductions provided under the EPCGS are a countervailable export subsidy because the scheme:
(1)Provides a financial contribution pursuant to section 771(5)(D)(ii) in the form of revenue forgone for not collecting import duties;
(2)respondents benefit under section 771(5)(E) of the Act in two ways by participating in this program; and
(3)the program is contingent upon export performance, and is specific under section 771(A)(B) of the Act. *See PET Film Final Determination—Decision Memorandum,* at “EPCGS.” There is no new information or evidence of changed circumstances that would warrant reconsidering our determination that this program is countervailable. Therefore, for these preliminary results, we continue to find this program countervailable. The first benefit is the amount of unpaid import duties that would have to be paid to the GOI if accompanying export obligations are not met. The repayment of this liability is contingent on subsequent events, and in such instances, it is the Department's practice to treat any balance on an unpaid liability as an interest-free loan. *Id.* The second benefit is the waiver of duty on imports of capital equipment covered by those EPCGS licenses for which the export requirement has already been met. For those licenses for which companies demonstrate that they have completed their export obligations, we treat the import duty savings as grants received in the year in which the GOI waived the contingent liability on the import exemption. Import duty exemptions under this program are provided for the purchase of capital equipment. The preamble to our regulations states that if a government provides an import duty exemption tied to major equipment purchases, “it may be reasonable to conclude that, because these duty exemptions are tied to capital assets, the benefits from such duty exemptions should be considered non-recurring * * * ” *See Countervailing Duties; Final Rule,* 63 FR 65348, 65393 (November 25, 1998). In accordance with 19 CFR 351.524(c)(2)(iii), we are treating these exemptions as non-recurring benefits. Garware and MTZ reported that they imported capital goods under the EPCGS in years prior to the POR. As stated above, we preliminarily determine that cross-ownership between Garware and Garware Chemicals continues to exist. *See* “Cross-Ownership and Attribution of Subsidies” Section. Garware reported in its second supplemental response of July 2, 2007 that Garware Chemical, an affiliated supplier of DMT, participated in this program; however, Garware did not provide information on Garware Chemical's imports of capital goods under the EPCGS, nor any of its affiliate's export information. The information on the record of this review consists of Garware Chemical's application of the license, license and amendments thereof. We are not able to discern from the information on the record, the benefits provided to Garware Chemical under EPCGS. We will pursue clarifying information for purposes of the final results of review. Therefore, for purposes of these preliminary results, we have only used information provided by Garware and MTZ in the subsidy calculations. According to the information provided in their responses, Garware and MTZ received various EPCGS licenses, which were for equipment involved in the production of both subject merchandise and non-subject merchandise. Further, we note that neither Garware nor MTZ have demonstrated that their respective EPCGS licenses are tied to the production of a particular product within the meaning of 19 CFR 351.525(b)(5). As such, we find that each company's respective EPCGS licenses benefit all of the company's exports. Garware and MTZ met the export requirements for certain EPCGS licenses prior to December 31, 2005 and the GOI formally waived the relevant import duties prior to December 31, 2005. For other licenses, however, Garware and MTZ have not yet met their export obligation as required under the program. Therefore, although Garware and MTZ have received a deferral from paying import duties when the capital goods were imported, the final waiver on the obligation to pay the duties has not yet been granted for many of these imports. For both Garware's and MTZ's imports for which the GOI has formally waived the duties, we treat the full amount of the waived duty as a grant received in the year in which the GOI officially granted the waiver. To calculate the benefit received from the GOI's formal waiver of import duties on Garware's and MTZ's capital equipment imports prior to December 31, 2005, we considered the total amount of duties waived (net of any required application fees paid) to be the benefit. *See* section 771(6) of the Act. Further, consistent with the approach followed in the investigation, we determine the year of receipt of the benefit to be the year in which the GOI formally waived Garware's and MTZ's outstanding import duties. *See PET Film Final Determination-Decision Memorandum,* at *Comment 5.* Next, we performed the “0.5 percent test,” as prescribed under 19 CFR 351.524(b)(2), for each year in which the GOI granted Garware and MTZ an import duty waiver. Those waivers with values in excess of 0.5 percent of Garware's and MTZ's total export sales in the year in which the waivers were granted were allocated using Garware's and MTZ's company-specific AUL or the AUL as prescribed by the IRS table, respectively, while waivers with values less than 0.5 percent of Garware's and MTZ's total export sales were allocated to the year of receipt. *See* “Allocation Period” section, above. As noted above, import duty reductions that Garware and MTZ received on the imports of capital equipment for which they have not yet met export obligations may have to be repaid to the GOI if the obligations under the licenses are not met. Consistent with our practice and prior determinations, we will treat the unpaid import duty liability as an interest-free loan. *See* 19 CFR 351.505(d)(1); and *e.g., Final Affirmative Countervailing Duty Determination: Bottle-Grade Polyethylene Terephthalate
(PET)Resin From India,* 70 FR 13460 (March 21, 2005), and accompanying *Issues and Decision Memorandum,* at “EPCGS,” ( *Final—Indian PET Resin* ). The amount of the unpaid duty liabilities to be treated as an interest-free loan is the amount of the import duty reduction or exemption for which the respondent applied, but, as of the end of the POR, had not been formally waived by the GOI. Accordingly, we find the benefit to be the interest that Garware and MTZ would have paid during the POR had they borrowed the full amount of the duty reduction or exemption at the time of importation. *See, e.g., Second PET Film Review—Preliminary Results,* 70 FR at 46488 (unchanged in the final results); *see also Final—Indian PET Resin,* at “EPCGS.” As stated above, under the EPCGS program, the time period for fulfilling the export commitment expires eight years after importation of the capital good. Consequently, the date of expiration of the time period to fulfill the export commitment occurs at a point in time more than one year after the date of importation of the capital goods. Pursuant to 19 CFR 351.505(d)(1), the benchmark for measuring the benefit is a long-term interest rate because the event upon which repayment of the duties depends ( *i.e.* , the date of expiration of the time period to fulfill the export commitment) occurs at a point in time that is more than one year after the date of importation of the capital goods. As the benchmark interest rate, we used the weighted-average interest rate from all comparable commercial, long-term, rupee-denominated loans for the year in which the capital good was imported. *See* the “Benchmarks Interest Rates and Discount Rates” section above. The benefit received under the EPCGS is the total amount of:
(1)The benefit attributable to the POR from the grant of formally waived duties for imports of capital equipment for which respondents met export requirements by December 31, 2005, and/or
(2)interest that should have been paid on the contingent liability loans for imports of capital equipment that have not met export requirements. To calculate the benefit from the formally waived duties for imports of capital equipment which met export requirements for Garware and MTZ, we took the total amount of the waived duties in each year and treated each year's waived amount as a non-recurring grant. We applied the grant methodology set forth in 19 CFR 351.524(d), using the discount rates discussed in the “Benchmark Interest Rates and Discount Rates” section above to determine the benefit amounts attributable to the POR. To calculate the benefit from the contingent liability loans for both Garware and MTZ, we multiplied the total amount of unpaid duties under each license, including an amount for Customs Education Cess duty, by the long-term benchmark interest rate for the year in which the license was approved. We then summed these two amounts to determine the total benefit for each company. We then divided the benefit under the EPCGS by each company's total exports to determine a subsidy of 3.17 percent *ad valorem* for Garware and 20.77 percent *ad valorem* for MTZ. 4. Duty Entitlement Passbook Scheme (DEPS/DEPB) India's DEPS was enacted on April 1, 1997, as a successor to the Passbook Scheme (PBS). As with PBS, the DEPS enables exporting companies to earn import duty exemptions in the form of passbook credits rather than cash. All exporters are eligible to earn DEPS credits on a post-export basis, provided that the GOI has established a SION for the exported product. DEPS credits can be used for any subsequent imports, regardless of whether they are consumed in the production of an exported product. DEPS credits are valid for twelve months and are transferable after the foreign exchange is realized from the export sales on which the DEPS credits are earned. The Department has previously determined that the DEPS program is countervailable. *See, e.g., PET Film Final Determination—Decision Memorandum,* at “DEPS.” In the investigation, the Department determined that under the DEPS, a financial contribution, as defined under section 771(5)(D)(ii) of the Act, is provided because
(1)The GOI provides credits for the future payment of import duties; and (2), the GOI does not have in place and does not apply a system that is reasonable and effective for the purposes intended to confirm which inputs, and in what amounts, are consumed in the production of the exported products. *Id.* Therefore, under 19 CFR 351.519(a)(4) and section 771(5)(E) of the Act, the entire amount of import duty exemption earned during the POI constitutes a benefit. Finally, this program can only be used by exporters and, therefore, it is specific under section 771(5A)(B) of the Act. *Id.* No new information or evidence of changed circumstances has been presented in this review to warrant reconsideration of this finding. Therefore, we continue to find that the DEPS is countervailable. In accordance with past practice and pursuant to 19 CFR 351.519(b)(2), we find that benefits from the DEPS are conferred as of the date of exportation of the shipment for which the pertinent DEPS credits are earned. We calculated the benefit on an “as-earned” basis upon export because the DEPS credits are provided as a percentage of the value of the exported merchandise on a shipment-by-shipment basis and, as such, it is at this point that recipients know the exact amount of the benefit ( *e.g.* , the duty exemption). *See e.g., Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate From India,* 64 FR 73131, 73134 (December 29, 1999) ( *Carbon Steel Plate From India* ) and accompanying *Issues and Decision Memorandum* ( *Carbon Steel Plate From India—I&D Memo* ). Benefits from the DEPS program are conferred as of the date of exportation of the shipment for which the pertinent DEPS credits are earned. *See Carbon Steel Plate From India—I&D Memo,* at *Comment 4.* Both Garware and MTZ reported that they received post-export credits on PET film under the DEPS program during the POR. Because DEPS credits are earned on a shipment-by-shipment basis, we normally calculate the subsidy rate by dividing the benefit earned on subject merchandise exported to the United States by total exports of subject merchandise to the United States during the POR. See *e.g.* , Carbon Steel Plate From India at 73134. However, the sample licences provided by both Garware and MTZ did not indicate whether the benefit was earned on subject merchandise. 17 Therefore, we calculated the DEPS program rate using the value of the post-export credits that Garware and MTZ earned for their export shipments during the POR and subtracted as an allowable offset the actual amount of required application fees paid for each license in accordance with section 771(6) of the Act. We divided this amount by Garware's and MTZ's total exports of subject merchandise during the POR. On this basis, we preliminarily determine Garware's and MTZ's countervailable subsidy from the DEPS program to be 5.80 percent *ad valorem* and 5.35 percent *ad valorem,* respectively. 17 *See* Garware's Original Response, at Exhibit 8 (January 5, 2007), and MTZ's First Supplemental Response, at Exhibit S-11 (April 18, 2007). Garware confirmed in its second supplemental response that its DEPS licenses are not product specific. Garware's Second Supplemental Response, at 5 (July 2, 2007). 5. State Sales Tax Incentive Programs In the previous countervailing duty administrative review, the Department determined that various state governments in India grant exemptions to, or deferrals from, sales taxes in order to encourage regional development. *See Issues Memorandum—Third Review,* at “State Sales Tax Incentive Programs.” These incentives allow privately-owned ( *i.e.* , not 100 percent owned by the GOI) manufacturers, that are in selected industries and located in the designated regions, to sell goods without charging or collecting state sales taxes. As a result of these programs, the respondents did not pay sales taxes on their purchases from suppliers located in certain states. During the POR, Garware and its affiliated supplier, Garware Chemicals, 18 and MTZ did not pay sales taxes on certain purchases made from the states of Maharashtra
(SOM)and Gujurat. In the investigation of this countervailing duty order, we determined that the operation of these types of state sales tax programs confers a countervailable subsidy. *See PET Film Final Determination* — *Decision Memorandum,* at “State of Maharashtra Programs, Sales Tax Incentives.” The financial contribution is the tax revenue foregone by the respective state governments pursuant to section 771(5)(D)(ii) of the Act, and the benefit equals the amount of sales taxes not paid by Garware and Garware Chemicals, and MTZ pursuant to section 771(5)(E) of the Act. Pursuant to section 771(5A)(D)(iv) of the Act, these programs are *de jure* specific because they are limited to certain geographical regions within the respective states administering the programs. There is no new information or evidence of changed circumstances that would warrant reconsidering this finding. Therefore, for these preliminary results, we continue to find these programs countervailable. Further, as stated above, we preliminarily determine that cross-ownership between Garware and Garware Chemicals continues to exist. Accordingly, we attribute the subsidies received by Garware Chemicals to Garware in our preliminary results, pursuant to 19 CFR 351.525(b)(6)(iv) and (vi). 18 *See* “Cross-Ownership and Attribution of Subsidies” section above. MTZ stated in its April 13, 2007 supplemental response that it purchased inputs from a company based in a “Union Territory” for which the company did not pay a sales tax. MTZ stated in its July 6, 2007 supplemental response that this exemption should not be treated as part of the State Sales Tax Incentive program; however, based on the information provided and from the previous review, the Department is treating this sales tax exemption as part of the State Sales Tax Incentive program preliminarily and will calculate MTZ's subsidy rate for this program accordingly. *See Polyethylene Terephthalate Film, Sheet, and Strip from India: Preliminary Results of Countervailing Duty Administrative Review,* 71 FR 45037 (August 8, 2006) (unchanged in the final results). However, we intend to further examine this issue for the final results. Garware reported in its second supplemental response of July 2, 2007 that Garware Chemical participated in this program. Garware provided information regarding Garware Chemical's benefits under this program, however; Garware did not provide any sales information for Garware Chemical. This information is required in order to attribute Garware Chemical's subsidy to Garware. *See* “Cross-Ownership and Attribution of Subsidies” section above. To calculate the benefit for MTZ, we first calculated the total amount of state sales taxes respondent would have paid on its purchases during the POR absent these programs. We then divided this amount by MTZ's total sales during the POR. On this basis, we preliminarily determine the subsidy rate under this program to be 0.96 percent *ad valorem* for Garware and 7.39 percent ad *valorem* for MTZ. 6. State of Maharashtra
(SOM)Capital Incentive Scheme In the investigation, the Department determined that Garware received grants under this program through the SOM 1988 package scheme of incentives. *See PET Film Final Determination* , at “State of Maharashtra Programs: 3. Capital Incentive Scheme.” The benefits of this program, grants of up to 3,000,000 rupees, are available to certain privately-owned ( *i.e.* , not one hundred percent owned by the GOI) industries that make capital investments in specific regions of Maharashtra. The Department also found that the SOM Capital Incentive Scheme provided a financial contribution under section 771(5)(D)(i) of the Act in the form of a grant, and Garware benefitted under section 771(5)(E) of the Act, in the amount of the capital incentive grants received by Garware from the SOM. The Department also found this program to be specific within the meaning of sections 771(5A)(D)(i) and
(iv)of the Act because the benefits of this program are limited to certain privately-owned ( *i.e.* , not one hundred percent owned by the GOI) industries located within designated geographical regions. Under 19 CFR 351.524(c), the Department treats the grants provided by this program as non-recurring subsidies. In the investigation, to determine the subsidy for this program, the Department first performed the “0.5 percent test,” as prescribed under 19 CFR 351.524(b)(2), for the year in which the SOM approved Garware's grants. Because the grants did not exceed 0.5 percent of Garware's total sales in that year, the Department allocated the total amount of the grants to the year in which the grants were received. In the current review, Garware reported receiving a capital subsidy in 1998. Based on the information provided by Garware, we are unable to confirm that this capital subsidy was the same capital subsidy examined in the investigation. 19 Furthermore, we do not have the information necessary to perform the 0.5 percent test for the year in which the grant was received. Therefore, as facts available, we performed the 0.5 percent test based on sales information from the investigation. *See* Memorandum to The File From Elfi Blum and Toni Page, Case Analysts: *Placing the Calculations from the Final Determination on the Record of this Review* , dated July 31, 2007, and on file in the Central Record Unit, Room B-099 of the Main Commerce Building (CRU). Because this grant did not exceed 0.5 percent of Garware's total sales, the entire amount of the grant is attributable to the year in which it was received ( *i.e.* , 1998). As such, we preliminarily determine that there is no countervailable benefit from this program allocable to the POR. 19 In response to a request by the Department, Garware stated in its first supplemental response of April 13, 2007, that Garware received capital subsidies in 1998. Exhibit S-5B indicates that it was a “Disbursement of Special Capital Incentive under the 1988 Package Scheme of Incentives.” Garware has not yet provided any additional information on this capital subsidy. 7. State of Maharashtra
(SOM)Electricity Duty Exemption This state incentive program provides an exemption from the payment of tax on electricity charges. This program is available to manufacturers located in certain regions of Maharashtra. Garware reported that it and its affiliated supplier, Garware Chemicals, Ltd., received an exemption from the payment of tax on electricity charges through this program. In the investigation, we determined that the electricity duty exemption scheme at issue is separate from the refund of electricity duty scheme under the 1993 SOM package scheme of incentives. *See PET Film Final Determination,* at “Electricity Duty Exemption Scheme.” In the investigation, the Department determined that the electricity duty scheme is countervailable because:
(1)SOM has forgone or not collected revenue otherwise due, the tax exemption provided through this program constitutes a financial contribution within the meaning of section 771(5)(D)(ii) of the Act;
(2)the benefit consists of the amount of tax exempted on electricity charges through this program during the POI, pursuant to section 771(5)(E) of the Act; and
(3)this program is specific within the meaning of section 771(5A)(D)(iv) of the Act because the benefits of this program are limited to industries located within designated geographical regions within the SOM. There is no new information or evidence of changed circumstances that would warrant reconsidering this finding. Therefore, for these preliminary results, we continue to find this program countervailable. Further, we preliminarily determine that cross-ownership continues to exist between Garware and Garware Chemical. *See* “Cross-Ownership and Attribution of Subsidies” section above. Accordingly, we attribute the subsidies received by Garware Chemicals to Garware in our preliminary results, pursuant to 19 CFR 351.525(b)(6)(iv) and (vi). Garware reported in its second supplemental response of July 2, 2007 that Garware Chemical participated in this program. Garware provided information regarding Garware Chemical's benefit under this program; however, Garware did not provide any sales information of Garware Chemical on the record. This information is required in order to attribute Garware Chemical's subsidy to Garware. *See* “Cross-Ownership and Attribution of Subsidies” section above. On this basis, we preliminarily determine the subsidy rate under this program to be 0.13 percent *ad valorem* for Garware. Programs Preliminarily Determined To Be Not Used We preliminarily determine that the producers/exporters of PET film products did not apply for or receive benefits during the POR under the programs listed below: 1. Duty Free Replenishment Certificate (DFRC). 2. Export Oriented Units (EOU). 3. Octroi Refund Scheme—State of Maharashtra. 20 20 Garware stated in its original response of January 5, 2007, at 57, that it applied for the program but had not yet received any benefit during the POR. Preliminary Results of Administrative Review In accordance with 19 CFR 351.221(b)(4)(i), we have calculated individual subsidy rates for Garware and MTZ for the POR. We preliminarily determine the total countervailable subsidy to be 10.35 percent *ad valorem* for Garware and 33.72 percent *ad valorem* for MTZ. If the final results of this review remain the same as these preliminary results, the Department intends to issue assessment instructions to U.S. Customs and Border Protection
(CBP)15 days after the date of publication of the final results of review. We will instruct CBP to collect cash deposits for Garware and MTZ at the rates indicated above. We will instruct CBP to continue to collect cash deposit rates for non-reviewed companies at the most recent rate applicable to the company. Public Comment Pursuant to 19 CFR 351.224(b), the Department will disclose to any party to the proceeding the calculations performed in connection with these preliminary results within five days after the date of public announcement of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Unless extended by the Department, case briefs are to be submitted within 30 days after the date of publication of this notice. Rebuttal briefs, limited to arguments raised in case briefs, may be submitted no later than five days after the time limit for filing case briefs. Parties who submit arguments in this proceeding are requested to submit with the argument:
(1)A statement of the issues;
(2)a brief summary of the argument; and
(3)a table of authorities. *See* 19 CFR 351.309(c)(2). Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing or to participate if one is requested must submit a written request to the Assistant Secretary for Import Administration within 30 days of the publication of this notice. Requests should contain
(1)The party's name, address and telephone number;
(2)the number of participants; and,
(3)a list of issues to be raised. Issues raised in the hearing will be limited to those raised in the respective case briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs. Parties will be notified of the time and location. The Department will publish the final results of this administrative review, including the results of its analysis of issues raised in any case brief, rebuttal brief, or hearing no later than 120 days after publication of these preliminary results, unless extended. See 751(a)(3)(A) of the Act and 19 CFR 351.213(h). These preliminary results are issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act, and 19 CFR 351.221(b)(4). Dated: July 31, 2007. Stephen J. Claeys, Acting Assistant Secretary for Import Administration. [FR Doc. E7-15215 Filed 8-3-07; 8:45 am] BILLING CODE 3510-DS-P DEPARTMENT OF COMMERCE International Trade Administration [C-475-819] Certain Pasta from Italy: Preliminary Results of the Tenth Countervailing Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce is conducting an administrative review of the countervailing duty order on certain pasta from Italy for the period January 1, 2005, through December 31, 2005. We preliminarily find that Pastificio Antonio Pallante S.r.L. (“Pallante”) and De Matteis Agroalimetare S.p.A. (“De Matteis”) received countervailable subsidies in this review, and Atar S.r.L. (“Atar”) did not receive any countervailable subsidies in this review and its rate is, consequently, zero. *See* the “Preliminary Results of Review” section, below. Interested parties are invited to comment on these preliminary results. *See* the “Public Comment” section of this notice. DATES: *Effective Date:* August 6, 2007. FOR FURTHER INFORMATION CONTACT: Audrey Twyman or Brandon Farlander, AD/CVD Operations, Office 1, Import Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone:
(202)482-3534 and
(202)482-0182, respectively. SUPPLEMENTARY INFORMATION: Background On July 24, 1996, the Department of Commerce (“the Department”) published a countervailing duty order on certain pasta (“pasta” or “subject merchandise”) from Italy. *See Notice of Countervailing Duty Order and Amended Final Affirmative Countervailing Duty Determination: Certain Pasta From Italy,* 61 FR 38544 (July 24, 1996) (“ *Pasta Order* ”). On July 3, 2006, the Department published a notice of “Opportunity to Request Administrative Review” of this countervailing duty order for calendar year 2005, the period of review (“POR”). *See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review,* 71 FR 37890 (July 3, 2006). On July 31, 2006, we received a request for review from Atar and Pallante. On July 31, 2006, we received a request for review for De Matteis on behalf of New World Pasta Company, American Italian Pasta Company, and Dakota Growers Pasta Company (“petitioners”). In accordance with 19 CFR 351.221(c)(1)(i), we published a notice of initiation of the review on August 30, 2006. *See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part,* 70 FR 51573 (August 30, 2006). On August 31, 2006, we issued countervailing duty questionnaires to the Commission of the European Union, the Government of Italy (“GOI”), Pallante, De Matteis, and Atar. We received responses to our questionnaire in October and November 2006. We issued supplemental questionnaires to the respondents in November 2006, and we received responses to our supplemental questionnaires in December 2006 and January 2007. In November 2006, we also requested that Agritalia S.r.L. (“Agritalia”) provide a full questionnaire response because of its status as a trading company for Italian pasta producers participating in this review. We received Agritalia's questionnaire response in January 2007. On March 2, 2007, we sent out supplemental questionnaires to Agritalia, De Matteis and the GOI. We received responses on April 11, 2007. We sent out additional supplemental questionnaires to Agritalia, De Matteis, Atar, Pallante, and the GOI on May 11, 2007, and received responses in May and June 2007. We sent out additional supplemental questionnaires to De Matteis, Agritalia, and Pallante on June 19, 2007, and received responses on July 5, 2007. In accordance with 19 CFR 351.213(b), this review covers only those producers or exporters for which a review was specifically requested. The companies subject to this review are De Matteis, Atar, and Pallante. Period of Review The POR for which we are measuring subsidies is January 1, 2005, through December 31, 2005. Scope of the Order Imports covered by the order are shipments of certain non-egg dry pasta in packages of five pounds four ounces 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 the order 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, Bioagricoop S.r.l., QC&I International Services, Ecocert Italia, Consorzio per il Controllo dei Prodotti Biologici, Associazione Italiana per l'Agricoltura Biologica, or Codex S.r.l. In addition, based on publicly available information, the Department has determined that, as of August 4, 2004, imports of organic pasta from Italy that are accompanied by the appropriate certificate issued by Bioagricert S.r.l. are also excluded from this order. *See* memorandum from Eric B. Greynolds to Melissa G. Skinner, dated August 4, 2004, which is on file in the Department's Central Records Unit (“CRU”) in Room B-099 of the main Department building. In addition, based on publicly available information, the Department has determined that, as of March 13, 2003, imports of organic pasta from Italy that are accompanied by the appropriate certificate issued by Instituto per la Certificazione Etica e Ambientale
(ICEA)are also excluded from this order. *See* memorandum from Audrey Twyman to Susan Kuhbach, dated February 28, 2006, entitled “Recognition of Instituto per la Certificazione Etica e Ambientale
(ICEA)as a Public Authority for Certifying Organic Pasta from Italy” which is on file in the Department's Central Records Unit (“CRU”) in Room B-099 of the main Department building. The merchandise subject to review is currently classifiable under items 1901.90.9095 and 1902.19.20 of the *Harmonized Tariff Schedule of the United States* (“ *HTSUS* ”). Although the *HTSUS* subheadings are provided for convenience and customs purposes, the written description of the merchandise subject to the order is dispositive. Scope Rulings 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, which is on file in 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 to Barbara P. Sidari, dated July 30, 1998, which is available in the CRU.
(3)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.
(4)On April 27, 2000, the Department self-initiated an anti-circumvention inquiry to determine whether Pastificio Fratelli Pagani S.p.A.'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). On September 19, 2003, we published an affirmative finding of the anti-circumvention inquiry. *See Anti-Circumvention Inquiry of the Antidumping and Countervailing Duty Orders on Certain Pasta from Italy: Affirmative Final Determinations of Circumvention of Antidumping and Countervailing Duty Orders,* 68 FR 54888 (September 19, 2003). Subsidies Valuation Information Allocation Period Pursuant to 19 CFR 351.524(b), non-recurring subsidies are allocated over a period corresponding to the average useful life (“AUL”) of the renewable physical assets used to produce the subject merchandise. The Department's regulations create a rebuttable presumption that the AUL will be taken from the U.S. Internal Revenue Service's 1977 Class Life Asset Depreciation Range System (“IRS Tables”). *See* 19 CFR 351.524(d)(2). For pasta, the IRS Tables prescribe an AUL of 12 years. None of the responding companies or interested parties objected to this allocation period. Therefore, we have used the 12-year allocation period for all respondents. Attribution of Subsidies Pursuant to 19 CFR 351.525(b)(6), the Department will attribute subsidies received by certain companies to the combined sales of those companies. Based on our review of the responses, we preliminarily find that “cross-ownership” exists with respect to certain companies, as described below, and we have attributed subsidies accordingly: *Pallante:* Pallante has reported that it is affiliated with Vitelli Foods LLC (“Vitelli”), which is a U.S. importer of subject merchandise and other products from Italy and other countries. *See* Pallante's questionnaire response at pages 1-2 (October 31, 2006). Pallante also explained that until April 2003 it was affiliated with Industrie Alimentare Molisane (“IAM”), another Italian pasta producer, but that the affiliation has ended and they were not affiliated during the POR. *See* Pallante's questionnaire response at pages 2-4 (October 31, 2006). Because IAM is no longer cross-owned with Pallante, and because Vitelli is located in the United States, we are attributing Pallante's subsidies to the sales of Pallante only. *De Matteis:* De Matteis has reported that it is affiliated with De Matteis Construzioni S.r.L. (“Construzioni”) by virtue of being 100 percent owned by Construzioni. *See* De Matteis' questionnaire response at pages 2-3 (October 31, 2007). In the *Fourth Administrative Review* 1 De Matteis had another affiliate, Demaservice S.r.l. De Matteis reported that Demaservice S.r.l. is no longer in existence as of December 21, 2001. *See* De Matteis' January 16, 2006, first supplemental questionnaire response at pages 16-17. De Matteis has reported that Construzioni did not receive any subsidies during the POR or AUL period. *See* De Matteis' Second Supplemental Response at 1 (April 13, 2007). Therefore, we are attributing De Matteis' subsidies to its sales only. 1 *See Certain Pasta from Italy: Preliminary Results and Partial Rescission of Countervailing Duty Administrative Review,* 66 FR 40987 (August 6, 2001) (“ *Fourth Administrative Review* ”); (unchanged in Final Results) *Certain Pasta From Italy: Final Results of the Fourth Countervailing Duty Administrative Review,* 66 FR 64214 (December 12, 2001). *Atar:* Atar has reported that it has no affiliates or cross-ownership. Thus, we are attributing any subsidies received to Atar's sales only. Discount Rates Pursuant to 19 CFR 351.524(d)(3)(i)(B), we used the national average cost of long-term, fixed-rate loans as a discount rate for allocating non-recurring benefits over time because no company for which we need such discount rates took out any loans in the years in which the government agreed to provide the subsidies in question. Consistent with past practice in this proceeding, for years prior to 1995, we used the Bank of Italy reference rate adjusted upward to reflect the mark-up an Italian commercial bank would charge a corporate customer. *See, e.g., Certain Pasta from Italy: Preliminary Results and Partial Recision of the Eighth Countervailing Duty Administrative Review,* 70 FR 17971 (April 8, 2005) (decision unchanged in the final results, *Certain Pasta from Italy: Final Results of the Eighth Countervailing Duty Administrative Review,* 70 FR 37084 (June 28, 2005)). For benefits received in 1995-2004, we used the Italian Bankers' Association prime interest rate (as reported by the Bank of Italy), increased by the average spread charged by banks on loans to commercial customers plus an amount for bank charges. The Bank of Italy ceased reporting this rate in 2004. Because the ABI prime rate was no longer reported after 2004, for these preliminary results, for 2005 we have used the “Bank Interest Rates on Euro Loans: Outstanding Amounts, Non-Financial Corporations, Loans With Original Maturity More Than Five Years” published by the Bank of Italy and provided by the Government of Italy in their October 24, 2006, Questionnaire Response at Exhibit 9. To this rate we made the adjustments described above. *See* Memorandum to the File, “Calculations for the Preliminary Results for De Matteis Agroalimentare S.p.A.” (July 31, 2007) (“De Matteis Calc Memo”). Analysis of Programs I. Program Preliminarily Determined to be Countervailable A. Industrial Development Grants Under Law 64/86 Law 64/86 provided assistance to promote development in the Mezzogiorno (the south of Italy). Grants were awarded to companies constructing new plants or expanding or modernizing existing plants. Pasta companies were eligible for grants to expand existing plants but not to establish new plants because the market for pasta was deemed to be close to saturated. Grants were made only after a private credit institution chosen by the applicant made a positive assessment of the project. In 1992, the Italian Parliament abrogated Law 64/86 and replaced it with Law 488/92 ( *see* below). This decision became effective in 1993. However, companies whose projects had been approved prior to 1993 were authorized to continue receiving grants under Law 64/86 after 1993. DeMatteis and Pallante received grants under Law 64/86 which conferred a benefit during the POR. In the *Pasta Investigation,* the Department determined that these grants confer a countervailable subsidy within the meaning of section 771(5) of the Act. *See Final Affirmative Countervailing Duty Determination: Certain Pasta (“Pasta”) from Italy,* 61 FR 30288 (June 14, 1996) (“ *Pasta Investigatio* n”). They are a direct transfer of funds from the GOI bestowing a benefit in the amount of the grant. Also, these grants were found to be regionally specific within the meaning of section 771(5A) of the Act. In this review, neither the GOI nor the responding companies have provided new information which would warrant reconsideration of our determination that these grants are countervailable subsidies. In the *Pasta Investigation,* the Department treated the industrial development grants as non-recurring. No new information has been placed on the record of this review that would cause us to depart from this treatment. We have followed the methodology described in 19 CFR 351.524(b)(2) which directs us to allocate over time those non-recurring grants whose total authorized amount exceeds 0.5 percent of the recipient's sales in the year of authorization. Where the total amount authorized is less than 0.5 percent of the recipient's sales in the year of authorization, the benefit is countervailed in full (“expensed”) in the year of receipt. We determined that the grants received by De Matteis and Pallante under law 64/86 exceeded 0.5 percent of their sales in the year in which the grants were approved, as was done in the *Fourth Administrative Review* . We used the grant methodology described in section 351.524(d) of the regulations to calculate the countervailable subsidy from those grants that were allocated over time. We divided the benefit received by each company in the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the Law 64/86 industrial development grants to be 0.07 percent *ad valorem* for DeMatteis, and 0.28 percent *ad valorem* for Pallante. *See* De Matteis Calc Memo; Memorandum to the File, “Calculations for the Preliminary Results for Pastificio Antonio Pallante S.r.L.” (July 31, 2007) (“Pallante Calc Memo”). B. Industrial Development Grants Under Law 488/92 In 1986, the European Union (“EU”) initiated an investigation of the GOI's regional subsidy practices. As a result of this investigation, the GOI changed the regions eligible for regional subsidies to include depressed areas in central and northern Italy in addition to the *Mezzogiorno* . After this change, the areas eligible for regional subsidies are the same as those classified as Objective 1 (underdeveloped regions), Objective 2 (declining industrial regions), or Objective 5(b) (declining agricultural regions) areas by the EU. The new policy was given legislative form in Law 488/92 under which Italian companies in the eligible sectors (manufacturing, mining, and certain business services) may apply for industrial development grants. Law 488/92 grants are made only after a preliminary examination by a bank authorized by the Ministry of Industry. On the basis of the findings of this preliminary examination, the Ministry of Industry ranks the companies applying for grants. The ranking is based on indicators such as the amount of capital the company will contribute from its own funds, the number of jobs created, regional priorities, etc. Grants are then made based on this ranking. DeMatteis and Pallante received grants under Law 488/92 which conferred a benefit during the POR. Industrial development grants under Law 488/92 were found countervailable in the *Second Administrative Review* 2 . The grants are a direct transfer of funds from the GOI bestowing a benefit in the amount of the grant. Also, these grants were found to be regionally specific within the meaning of section 771(5A) of the Act. In this review, neither the GOI nor the responding companies have provided new information which would warrant reconsideration of our determination that these grants are countervailable subsidies. 2 *See Certain Pasta From Italy: Preliminary Results of Countervailing Duty Administrative Review,* 64 FR 17618 (April 12, 1999) ( *“Second Administrative Review”* ); (unchanged in Final Results) *Certain Pasta From Italy: Final Results of Second Countervailing Duty Administrative Review,* 64 FR 44489 (August 16, 1999). In the *Second Administrative Review,* the Department treated industrial development grants under Law 488/92 as non-recurring. No new information has been placed on the record of this review that would cause us to depart from this treatment. In accordance with section 351.524(b)(2) of the regulations, we determined that the grants received by De Matteis and Pallante under law 488/92 exceeded 0.5 percent of their sales in the year in which the grants were approved, as was the case in the *Fourth Administrative Review.* We used the grant methodology as described in section 351.524(d) of the regulations to calculate the subsidy for those grants that were allocated over time. We divided the benefits received by Pallante in the POR by its total sales in the POR, and the benefits received by De Matteis in the POR by its sales of subject merchandise in the POR. On this basis, we preliminarily determine the countervailable subsidy from the Law 488/92 industrial development grants to be 0.81 percent *ad valorem* for DeMatteis and 0.61 percent *ad valorem* for Pallante. *See* De Matteis Calc Memo and Pallante Calc Memo. C. European Regional Development Fund (“ERDF”) Programma Operativo Plurifondo (P.O.P.) Grant The ERDF is one of the European Union's Structural Funds. It was created pursuant to the authority in Article 130 of the Treaty of Rome in order to reduce regional disparities in socio-economic performance within the EU. The ERDF program provides grants to companies located within regions which meet the criteria of Objective 1 (underdeveloped regions), Objective 2 (declining industrial regions), or Objective 5(b) (declining agricultural regions) under the Structural Funds. DeMatteis received a P.O.P. Grant from the Regione Campania in 1998. *See Fourth Administrative Review.* The P.O.P. Grants were funded by the European Union, the GOI and the Regione Campania. In the *Pasta Investigation,* the Department determined that ERDF grants confer a countervailable subsidy within the meaning of section 771(5) of the Act. They are a direct transfer of funds bestowing a benefit in the amount of the grant. Also, these grants were found to be regionally specific within the meaning of section 771(5A) of the Act. In this review, neither the EU, the GOI nor the responding companies have provided new information which would warrant reconsideration of our determination that ERDF grants are countervailable subsidies. In the *Pasta Investigation,* the Department treated ERDF grants as non-recurring. No new information has been placed on the record of this review that would cause us to depart from this treatment. In accordance with section 351.524(b)(2) of the regulations, we determined that the ERDF grant received by De Matteis exceeded 0.5 percent of its sales in the year in which the grant was approved, as was the case in the *Fourth Administrative Review.* We used the grant methodology described in section 351.524(d) of the regulations to calculate the countervailable benefit. We divided the benefit received De Matteis in the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the ERDF grant to be 0.06 percent *ad valorem* for DeMatteis. *See* De Matteis Calc Memo. D. Social Security Reductions and Exemptions—Sgravi Italian law allows companies, particularly those located in the *Mezzogiorno* region (southern Italy), to use a variety of exemptions from and reductions (sgravi) of payroll contributions that employers make to the Italian social security system for health care benefits, pensions, etc. The sgravi benefits are regulated by a complex set of laws and regulations, and are sometimes linked to conditions such as creating more jobs. We have found in past segments of this proceeding that the benefits under some of these laws ( *e.g.* , Laws 183/76 and 449/97) are available only to companies located in the *Mezzogiorno* and other disadvantaged regions. Other laws ( *e.g.* , Laws 407/90 and 863/84) provide benefits to companies all over Italy, but the level of benefits is higher for companies in the south than for companies in other parts of the country. In the *Pasta Investigation* and subsequent reviews, the Department determined that the various forms of social security reductions and exemptions confer countervailable subsidies within the meaning of section 771(5) of the Act. They represent revenue foregone by the GOI bestowing a benefit in the amount of the savings received by the companies. Also, they were found to be regionally specific within the meaning of section 771(5A)(D)(iv) of the Act because they were limited to companies in the *Mezzogiorno* or because the higher levels of benefits were limited to companies in the *Mezzogiorno.* In the instant review, no party in this proceeding challenged our past determinations in the *Pasta Investigation* and subsequent reviews that sgravi benefits were countervailable for companies located within the *Mezzogiorno* region. Additionally, no new information or evidence of changed circumstances was received that would warrant reconsideration of these past determinations. The laws identified as having provided countervailable sgravi benefits during the POR are the following: Law 407/90 (De Matteis and Pallante), 196/97 (De Matteis), 223/91 Article 8 Paragraph 2 (Pallante), and Law 223/91 Article 25 Paragraph 9 (Pallante). All of these companies are located in the *Mezzogiorno* region of Italy and, therefore, the programs provide countervailable subsidies to these companies. 1. *Law 407/90* Law 407/90 grants a two-year exemption from social security taxes when a company hires a worker who has been previously unemployed for a period of two years. A 100 percent exemption is allowed for companies in southern Italy. However, companies located in northern Italy receive only a 50 percent exemption. In accordance with section 351.524(c) of the Department's regulations and consistent with our methodology in the *Pasta Investigation* and in reviews subsequent to the *Pasta Investigation,* we have treated social security reductions and exemptions as recurring benefits. To calculate the countervailable subsidy, we divided De Matteis's and Pallante's savings in social security contributions during the POR by their total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the sgravi program to be 0.04 percent *ad valorem* for De Matteis and 0.03 percent *ad valorem* for Pallante. *See* De Matteis Calc Memo and Pallante Calc Memo. 2. *Law 196/97* Law 196/97 allows for a reduction or exemption from social security contributions for workers between the ages of 16 and 32 hired under labor or training contacts. Reductions range from 25 percent to 100 percent depending on the location. The newly hired worker(s) must increase the company's total work force or the worker must be 29 years old or younger. For newly hired workers under a temporary contract, employers are exempt from paying a social security contribution for up to 2 years. If workers are then switched to a permanent contract, the exemption may apply for another 12 months. These benefits will only apply if the worker who is switched from a temporary to a permanent contract increases the number of employees in the enterprise. In accordance with section 351.524(c) of the Department's regulations and consistent with our methodology in the *Pasta Investigation* and in reviews subsequent to the *Pasta Investigation,* we have treated social security reductions and exemptions as recurring benefits. To calculate the countervailable subsidy, we divided De Matteis's savings in social security contributions during the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the *sgravi* program to be 0.04 percent *ad valorem* for De Matteis. *See* De Matteis Calc Memo. 3. *Law 223/91 Article 8, Paragraph 2* Law 223/91, Article 8, Paragraph 2 is intended to encourage the hiring of laid off workers or mobility-listed people. Companies who hire unemployed people are allowed to pay lower social security taxes for up to a maximum of 18 months for employees hired under a long-term contract with no expiration date. If an employee is hired for a short-term contract, then the benefit will last as long as the contract. If the short-term contract is renewed, the benefit can be used for an additional 12 months. In the seventh review preliminary results we stated that record information for law 223/91 shows that this law is regionally specific within the meaning of section 771(5A)(D)(iv) of the Act because the higher levels of benefits were limited to companies in the *Mezzogiorno* and to handicraft enterprises. *See Certain Pasta from Italy: Preliminary Results and Partial Rescission of the Seventh Countervailing Duty Administrative Review,* 69 FR 45676, 45683 (July 30, 2004); (unchanged in Final Results) *Certain Pasta from Italy: Final Results of the Seventh Countervailing Duty Administrative Review,* 69 FR 70657 (December 7, 2004). In accordance with section 351.524(c) of the Department's regulations and consistent with our methodology in the *Pasta Investigation* and in reviews subsequent to the *Pasta Investigation,* we have treated social security reductions and exemptions as recurring benefits. To calculate the countervailable subsidy, we divided each company's savings in social security contributions during the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the *sgravi* program to be 0.05 percent *ad valorem* for Pallante. *See* Pallante Calc Memo. 4. *Law 223/91 Article 8, Paragraph 4* Law 223/91, Article 8, Paragraph 4 is intended to encourage the hiring of mobility-listed people. Companies who hire unemployed people on a permanent and full time contract are granted a credit of 50 percent of what the employee would have received in unemployment benefits. In the 7th Administrative Review results we stated that record information for law 223/91 shows that this law is regionally specific within the meaning of section 771(5A)(D)(iv) of the Act because the higher levels of benefits were limited to companies in the *Mezzogiorno* and to handicraft enterprises. *See Certain Pasta from Italy: Preliminary Results and Partial Rescission of the Seventh Countervailing Duty Administrative Review,* 69 FR 45676, 45683 (July 30, 2004); (unchanged in Final Results) *Certain Pasta from Italy: Final Results of the Seventh Countervailing Duty Administrative Review,* 69 FR 70657 (December 7, 2004). In accordance with section 351.524(c) of the Department's regulations and consistent with our methodology in the *Pasta Investigation* and in reviews subsequent to the *Pasta Investigation,* we have treated social security reductions and exemptions as recurring benefits. To calculate the countervailable subsidy, we divided Pallante's savings in social security contributions during the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the sgravi program to be 0.01 percent *ad valorem* for Pallante. *See* Pallante Calc Memo. E. Law 289/02 1. Article 62—Investments in Disadvantaged Areas We preliminarily find that Article 62 of Law 289/02 is a credit towards taxes payable. The law was established to promote investment in disadvantaged areas by providing a tax credit to companies that make investments such as the purchase of new equipment for existing structures, or the building of new structures. *See* the GOI's Second Supplemental Response at 3-4 and Annex 1, 2, 5, and 6 (April 13, 2007). We preliminarily determine that Article 62 of Law 289/02 confers a countervailable subsidy in the form of a financial contribution within the meaning of section 771(5)(D)(ii) of the Act because it represents revenue foregone by the GOI. A benefit is conferred in the amount of the tax savings received by the companies per section 771(5)(E)(iv) of the Act. Also, the program is specific within the meaning of 751(5A)(D)(iv) of the Act because it is limited to certain geographical regions in Italy, specifically, the regions of Calabria, Campania, Basilicata, Pugilia, Sicilia, and Sardegna, and certain municipalities in the Abruzzo and Molise region, and certain municipalities in central and northern Italy. *See* GOI Third Supplemental Response at 3 and Annex 1 and 2, (May 25, 2007). De Matteis is located in Campania, therefore, it could take advantage of this program. De Matteis explained that it received the benefit for the construction of a new semolina milling facility, including wheat silos, by-product storage silos, semolina silos, and milling equipment. *See* De Matteis' Second Supplemental Response at 2 (April 13, 2007). The Department is treating this program as a credit towards taxes payable per 19 CFR 351.509. Normally, the Department will allocate the benefit of a tax exemption to the year in which the benefit is considered to have been received per 19 CFR 351.509(c), treating the benefit as recurring per 19 CFR 351.524(c). However, the Department may find a benefit to be non-recurring by considering the criteria in 19 CFR 351.524(c)(2)(i)-(iii). In this case, the tax program is exceptional because it was only available for a limited period of time, and was dependent upon companies making specific investments. Further, the subsidy required the government of Italy's express authorization, and the subsidy was tied to capital assets of the firm. In accordance with section 351.524(b)(2) of the regulations, we determined that the tax credit received by De Matteis exceeded 0.5 percent of its sales in the year in which the tax credit was approved. We used the non-recurring benefit calculation described in 19 CFR 351.524(d) of the regulations to calculate the countervailable benefit. We divided the benefit received by De Matteis in the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from Law 289/02 Article 62 to be 0.35 percent *ad valorem* for De Matteis. *See* De Matteis Calc Memo. Pallante is located in Campania and, therefore, it could also take advantage of this program. In accordance with section 351.524(b)(2) of the regulations, we determined that the tax credit received by Pallante exceeded 0.5 percent of its sales in the year in which the tax credit was approved. We used the non-recurring benefit calculation described in 19 CFR 351.524(d) of the regulations to calculate the countervailable benefit. We divided the benefit received by Pallante in the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from Law 289/02 Article 62 to be 1.04 percent *ad valorem* for Pallante. *See* Pallante Calc Memo. 2. Article 63—Increase in Employment We preliminarily find that Article 63 of Law 289/02 is a credit towards taxes payable. The law was established to promote employment by providing a tax credit to companies that hire new employees. The tax credit is 100 euros for a new hire for any company in Italy. If the employee is over 45 the amount increases to 150 euros. An additional 300 euros will be granted if the company is located in certain regions of Italy. *See* GOI Second Supplemental Response at 3-4 and Annex 3, 4, 7, and 8 (April 13, 2007). We preliminarily determine that Article 63 of Law 289/02 confers a countervailable subsidy in the form of a financial contribution within the meaning of section 771(5)(D)(ii) of the Act because it represents revenue foregone by the GOI. A benefit is conferred in the amount of the tax savings received by the companies per section 771(5)(E)(iv) of the Act. The program is specific within the meaning of 751(5A)(D)(iv) of the Act because the greater benefit amount is limited to certain geographical regions in Italy, specifically, Campania, Basilicata, Puglia, Calabria, Sicilia, Sardegna, Abruzzo, Molise, and the municipalities of Tivoli, Formia, Sora, Cassino, Frosnone, Viterbo, and Massa. *See* GOI Third Supplemental Response at 3-4 (May 25, 2007). However, if a company is located outside the higher subsidy area, then the program is not countervailable because it is not specific. De Matteis is located in Campania and, therefore, it could take advantage of the higher subsidy rate. The Department is treating this program as a credit towards taxes payable per 19 CFR 351.509. Normally, the Department will allocate the benefit of a credit towards taxes payable to the year in which the benefit is considered to have been received per 19 CFR 351.509. “The Secretary normally will consider the benefit as having been received on the date on which the recipient firm would otherwise have had to pay the taxes associated with the exemption or remission. Normally, this date will be the date on which the firm filed its tax return.” *See* 19 CFR 351.509(b). In expensing the complete benefit in one year, the Department is considering this program as recurring per 19 CFR 351.524(c) which states that “{t}he Secretary normally will treat the following types of subsidies as providing recurring benefits: Direct tax exemptions and deductions; * * *” To calculate the countervailable subsidy, we divided De Matteis' tax credit used on the tax return filed during the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from Law 289/02 Article 63 to be 0.03 percent *ad valorem* for De Matteis. *See* De Matteis Calc Memo. F. Law 662/96 The GOI describes the Patti Territoriali grant (Law 662/96 Article 2, Paragraph 203, Letter d) as provided to companies for entrepreneurial initiatives such as new plants, additions, modernization, restructuring, conversion, reactivation, or transfer. Companies that can apply for the grants must be involved in mining, manufacturing, production of thermal or electric power from biomasses, service companies, tourist companies, agricultural, maritime and salt-water fishing businesses, aquaculture enterprises, or their associations. The Patti Territoriali provides grants to companies located within regions which meet the criteria of Objective 1 or Objective 2 under the Structural Funds or article 87.3.c of the Treaty of Rome. *See* the GOI's Second Supplemental Response at 4-5 and Annex 9-13 (April 13, 2007). The GOI has stated that De Matteis received disbursements from the Patti Territoriali in 2000 and 2004 from a grant approved on January 29, 1999. The Department preliminarily determines that the Patti Territoriali grant confers a countervailable subsidy within the meaning of section 771(5)(D)(i) of the Act because it is a direct transfer of funds. A benefit is conferred in the full amount of the grant. Further, the grant is regionally specific within the meaning of section 771(5A)(D)(iv) of the Act because it is limited to companies located within regions which meet the criteria of Objective 1 or Objective 2 under the Structural Funds or article 87.3.c of the Treaty of Rome. We normally treat grants as non-recurring. In accordance with section 351.524(b)(2) of the regulations, we determined that the Patti Territoriali grant received by De Matteis exceeded 0.5 percent of its sales in the year in which the grant was approved and, therefore, we will allocate the grant over the 12 year AUL. We used the grant methodology described in section 351.524(d) of the regulations to calculate the countervailable benefit. We divided the benefit received by De Matteis in the POR by its total sales in the POR. On this basis, we preliminarily determine the countervailable subsidy from the Patti Territoriali grant to be 0.57 percent ad valorem for De Matteis. *See* De Matteis Calc Memo. On July 23, 2007, petitioners submitted “Comments In Anticipation of Preliminary Results.” In these comments, petitioners have made a further claim concerning this program. Because we did not have time to issue a supplemental questionnaire, we are not acting on the claim at this time. Following the publication of these preliminary results, the Department will decide whether to issue any further supplemental questionnaires concerning this program. II. Programs Preliminarily Determined to be Not Countervailable A. Social Security Reductions and Exemptions—Sgravi (Article 120 of Law 388/00) Atar has reported receiving benefits from Article 120 of Law 388/00. Unlike many other *sgravi* programs, Article 120 of Law 388/00 ( *fiscalizzazione* program) is a nationwide *sgravi* program that provides an equivalent level of deductions throughout Italy and is not specific to the *Mezzogiorno* region or to the pasta industry pursuant to section 771(5A) of the Act. Article 120 of Law 388/00 provides a deduction of certain social security payments related to health care or insurance. The government takes over a minimal amount of the payments for social contributions which are owed to the Instituto Nazionale Previdenza Sociale (“INPS”). In the ninth administrative review we found this program to be non-countervailable. *See Certain Pasta from Italy: Preliminary Results of the Ninth Countervailing Duty Administrative Review and Notice of Intent to Revoke Order, in Part,* 71 FR 17440 (April 6, 2006); and *Certain Pasta from Italy: Final Results of the Ninth Countervailing Duty Administrative Review and Notice of Revocation of Order, in Part,* 71 FR 36318 (June 26, 2006). Therefore, we continue to find that Article 120 of Law 388/00 is not a countervailable subsidy because the subsidy is not specific. Accordingly, we determine that Atar did not receive countervailable subsidies under this program. III. Programs Preliminarily Determined to Not be Used We examined the following programs and preliminarily determine that the producers and/or exporters of the subject merchandise under review did not apply for or receive benefits under these programs during the POR: A. *Industrial Development Loans Under Law 64/86.* B. *Law 236/93 Training Grants.* C. *Law 1329/65 Interest Contributions (Sabatini Law) (Formerly Lump-Sum Interest Payment Under the Sabatini Law for Companies in Southern Italy).* D. *Development Grants Under Law 30 of 1984.* E. *Law 908/55 Fondo di Rotazione Iniziative Economiche (Revolving Fund for Economic Initiatives) Loans.* F. *Law 317/91 Benefits for Innovative Investments.* G. *Brescia Chamber of Commerce Training Grants.* H. *Ministerial Decree 87/02.* I. *Law 10/91 Grants to Fund Energy Conservation.* J. *Export Restitution Payments.* K. *Export Credits Under Law 227/77.* L. *Capital Grants Under Law 675/77.* M. *Retraining Grants Under Law 675/77.* N. *Interest Contributions on Bank Loans Under Law 675/77.* O. *Preferential Financing for Export Promotion Under Law 394/81.* P. *Urban Redevelopment Under Law 181.* Q. *Industrial Development Grants Under Law 183/76.* R. *Interest Subsidies Under Law 598/94.* S. *Duty-Free Import Rights.* T. *European Social Fund Grants.* U. *Law 113/86 Training Grants.* V. *European Agricultural Guidance and Guarantee Fund.* W. *Law 341/95 Interest Contributions on Debt Consolidation Loans (Formerly Debt Consolidation Law 341/95).* X. *Interest Grants Financed by IRI Bonds.* Y. *Grant Received Pursuant to the Community Initiative Concerning the Preparation of Enterprises for the Single Market (PRISMA).* Z. *Article 44 of Law 448/01.* IV. Programs Preliminarily Determined To Have Been Terminated We examined the following programs at verification during the 9th Administrative Review and preliminarily determine in this review that they have been terminated prior to the current POR and that there will be no remaining subsidy benefits from these programs after this POR. *See* “Verification of the Questionnaire Responses of the Government of Italy in the 9th Administrative Review” (March 31, 2006) which was placed on the record of this proceeding on July 31, 2007. A. *Social Security Reductions and Exemptions—Sgravi Article 44 of Law 448/01.* B. *Social Security Reductions and Exemptions—Sgravi Law 337/90.* Preliminary Results of Review In accordance with 19 CFR 351.221(b)(4)(i), we calculated an individual subsidy rate for Pallante and De Matteis. Atar had no countervailable subsidies. We did not calculate an individual rate for Agritalia because a review was not requested for Agritalia. Agritalia was only asked to participate because of the possible effect of subsidies it received on its suppliers who are included in this review. We have preliminarily found that Agritalia did not receive any subsidies which affected any suppliers' rates. For the period January 1, 2005, through December 31, 2005, we preliminarily find the net subsidy rates for the producers/exporters under review to be those specified in the chart shown below: Producer/exporter Net subsidy rate (percent) De Matteis Agroalimetare S.p.A 1.97 Pastificio Antonio Pallante S.r.L 2.02 Atar S.r.l 0.00 The calculations will be disclosed to the interested parties in accordance with 19 CFR 351.224(b). If the final results of this review remain the same as these preliminary results, the Department intends to instruct Customs to assess countervailing duties at these net subsidy rates. The Department will issue appropriate instructions directly to Customs within 15 days of publication of the final results of this review. For all other companies that were not reviewed (except Barilla G. e R. F.lli S.p.A. and Gruppo Agricoltura Sana S.r.l., which are excluded from the order, and Pasta Lensi S.r.l. which was revoked from the order), the Department has directed CBP to assess countervailing duties on all entries between January 1, 2005, and December 31, 2005, at the rates in effect at the time of entry. Agritalia has been reviewed previously and has its own exporter specific rate of 2.92 percent. The Department also intends to instruct CBP to collect cash deposits of estimated countervailing duties. For all non-reviewed firms (except Barilla G. e R. F.lli S.p.A. and Gruppo Agricoltura Sana S.r.l., which are excluded from the order, and Pasta Lensi S.r.l. which was revoked from the order), we will instruct CBP to collect cash deposits of estimated countervailing duties at the most recent company-specific or “all others” rate applicable to the company. These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested. Public Comment Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of the public announcement of this notice. Pursuant to 19 CFR 351.309(c)(ii), interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed no later than five days after the date of filing the case briefs, in accordance with 19 CFR 351.309(d). Parties who submit briefs in this proceeding should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Interested parties may request a hearing within 30 days after the date of publication of this notice, pursuant to 19 CFR 351.310(c). Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs. The Department will publish a notice of the final results of this administrative review within 120 days from the publication of these preliminary results, in accordance with section 751(a)(3) of the Act. We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.221(b)(4). Dated: July 31, 2007. Stephen J. Claeys, Acting Assistant Secretary for Import Administration. [FR Doc. 07-3832 Filed 8-3-07; 8:45 am]
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CFR
- New shipper reviews under section 751(a)(2)(B) of the Act; expedited reviews in countervailing duty proceedings.§ 351.214
- Assessment of antidumping and countervailing duties; provisional measures deposit cap; interest on certain overpayments and underpayments.§ 351.212
- Time limits for submission of factual information.§ 351.301
- Petition requirements.§ 351.202
- Calculation of normal value of merchandise from nonmarket economy countries.§ 351.408
- Filing, document identification, format, translation, service, and certification of documents.§ 351.303
- Administrative review of orders and suspension agreements under section 751(a)(1) of the Act.§ 351.213
- Access to business proprietary information.§ 351.305
- Review procedures.§ 351.221
- De minimis net countervailable subsidies and weighted-average dumping margins disregarded.§ 351.106
- Calculation of export price and constructed export price; reimbursement of antidumping and countervailing duties.§ 351.402
- Sales used in calculating normal value; transactions between affiliated parties.§ 351.403
- Levels of trade; adjustment for difference in level of trade; constructed export price offset.§ 351.412
- Definitions.§ 351.102
- Differences in physical characteristics.§ 351.411
- Differences in circumstances of sale§ 351.410
- Disclosure of calculations and procedures for the correction of ministerial errors.§ 351.224
- Hearings.§ 351.310
- Written argument.§ 351.309
- Continued suspension of liquidation.§ 356.8
- Allocation of benefit to a particular time period.§ 351.524
- Loans.§ 351.505
- Calculation of ad valorem subsidy rate and attribution of subsidy to a product.§ 351.525
- Remission or drawback of import charges upon export.§ 351.519
- Scope rulings.§ 351.225
- Direct taxes.§ 351.509
7 references not yet in our index
- 132 F. Supp. 2d 1
- 688 F. Supp. 639
- 865 F.2d 240
- 492 U.S. 919
- 59 F. Supp. 2d 1371
- 243 F.3d 1301
- 264 F. Supp. 2d 1339
Citation graph
cites case law
Notices
Import Administration, International Trade Administration, Department of Commerce
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