69 FR 10674, March 8, 2004

DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-825]

Notice of Final Determination of Sales at Less Than Fair Value: 
Wax and Wax/Resin Thermal Transfer Ribbons from France

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

EFFECTIVE DATE: March 8, 2004.

SUMMARY: We determine that wax and wax/resin thermal transfer ribbons 
(TTR) from France are being sold, or are likely to be sold, in the 
United States at less than fair value (LTFV), as provided in section 
735 of the Tariff Act of 1930, as amended (the Act). The estimated 
margins of sales at LTFV are shown in the Continuation of Suspension of 
Liquidation section of this notice.

FOR FURTHER INFORMATION CONTACT: Mark Hoadley or Sally Gannon at (202) 
482-3148 and (202) 482-0162, respectively; Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Case History

    The preliminary determination in this investigation was issued on 
December 16, 2003. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value: Wax and Wax/Resin Thermal Transfer Ribbons From 
France, 68 FR 71068 (December 22, 2003) (Preliminary Determination). 
Since the publication of the preliminary determination, the following 
events have occurred. On January 5 and

[[Page 10675]]

January 16, 2004, petitioner, International Imaging Materials, Inc. 
(IIMAK), submitted additional comments regarding (1) its allegation 
that respondents in the three concurrent investigations of TTR (France, 
Japan, and South Korea) would attempt to circumvent the order by 
slitting jumbo rolls in third countries, and (2) its request that the 
Department therefore determine that slitting does not change the 
country of origin of TTR for antidumping purposes. On January 9, 2004, 
Armor, S.A. (Armor), the sole respondent in the French investigation, 
submitted additional comments on the country-of-origin issue. DigiPrint 
International (DigiPrint), a U.S. importer of TTR slit in India, 
submitted comments on January 2, 2004, on the country-of-origin issue. 
Refer to Preliminary Determination for a history of all previous 
comments submitted on this issue.

Scope of Investigation

    This investigation covers wax and wax/resin thermal transfer 
ribbons (TTR), in slit or unslit (``jumbo'') form originating from 
France with a total wax (natural or synthetic) content of all the image 
side layers, that transfer in whole or in part, of equal to or greater 
than 20 percent by weight and a wax content of the colorant layer of 
equal to or greater than 10 percent by weight, and a black color as 
defined by industry standards by the CIELAB (International Commission 
on Illumination) color specification such that L*<35, -20<a*<35, and -
40<b*<31, and black and near-black TTR. TTR is typically used in 
printers generating alphanumeric and machine-readable characters, such 
as bar codes and facsimile machines.
    The petition does not cover resin TTR, and finished thermal 
transfer ribbons with a width greater than 212 millimeters (mm), but 
not greater than 220 mm (or 8.35 to 8.66 inches) and a length of 230 
meters (m) or less (i.e., slit fax TTR, including cassetted TTR), and 
ribbons with a magnetic content of greater than or equal to 45 percent, 
by weight, in the colorant layer.
    The merchandise subject to this investigation may be classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) at heading 
3702 and subheadings 3921.90.40.25, 9612.10.90.30, 3204.90, 3506.99, 
3919.90, 3920.62, 3920.99 and 3926.90. The tariff classifications are 
provided for convenience and Customs and Border Protection (CBP) 
purposes; however, the written description of the scope of the 
investigation is dispositive.

Country of Origin

    As noted above, petitioner has requested that the Department 
determine that TTR produced in France (in jumbo roll, i.e., unslit 
form) that is slit in a third country does not change the country of 
origin for antidumping purposes. According to petitioner, because 
slitting does not constitute a ``substantial transformation,'' French 
jumbo rolls slit in a third country should be classified as French TTR 
for antidumping purposes, and, therefore, within the scope of this 
investigation and any resulting order. Petitioner submitted comments on 
this request on October 28, 2003, December 5, 2003, January 5 and 
January 16, 2004. According to petitioner, substantial transformation 
does not take place because: 1) both slit and jumbo rolls have the same 
essential physical characteristics (e.g., both have the same chemical 
properties that make them suitable for thermal transfer printing); 2) 
large capital investments are required for coating and ink-making 
(production stages prior to slitting), but not for slitting; 3) coating 
and ink-making require significantly more skill, expertise, and 
research and development; and, 4) the majority of costs and value comes 
from coating and ink-making. Petitioner states that, for purposes of 
this issue, slitting and packaging do not account for a substantial 
amount of the total cost of finished TTR (depending on the degree of 
automation and whether new or secondhand equipment is involved); and 
that a slitting operation requires a small amount of capital, compared 
with a large amount of capital required for a coating and ink-making 
operation.
    Armor, the sole respondent in this investigation, argues that 
slitting does constitute substantial transformation, and, therefore, 
that the Department should determine that French jumbo rolls slit in a 
third country should be considered to have originated in that third 
country for antidumping purposes. Armor submitted comments on November 
26, 2003, December 12, 2003, and January 9, 2004. Armor argues that 
substantial transformation does take place because: 1) slitting, and 
the repackaging that necessarily goes along with it, involves 
transforming the product into its final end-use dimensions, the 
insertion of one or two cores (for loading the ribbons into printers), 
and the addition of leaders, bridges, and trailers, which result in a 
new product, with a new name, new character, and new purpose; 2) 
petitioner excluded TTR slit to fax proportions, acknowledging the 
importance of slitting; and, 3) U.S. Customs and Border Protection 
(CBP) and the Court of International Trade (CIT) have determined that 
slitting and repackaging amount to substantial transformation. 
DigiPrint, in comments received on January 2, 2004, argues that the 
record of this investigation indicates that slitting and packaging 
account for a large amount (34%) of total cost, indicating substantial 
transformation.
    The Department has considered several factors in determining 
whether a substantial transformation has taken place, thereby changing 
a product's country of origin. These have included: the value added to 
the product; the sophistication of the third-country processing; the 
possibility of using the third-country processing as a low cost means 
of circumvention; and, most prominently, whether the processed product 
falls into a different class or kind of product when compared to the 
downstream product. While all of these factors have been considered by 
the Department in the past, it is the last factor which is consistently 
examined and emphasized.\1\ When the upstream and processed products 
fall into different classes or kinds of merchandise, the Department 
generally finds that this is indicative of substantial transformation. 
See, e.g., Cold-Rolled 1993, 58 FR at 37066.
---------------------------------------------------------------------------

    \1\ See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Cold- Rolled Carbon Steel Flat Products 
From Argentina, 58 FR 37062, 37066 (July 9, 1993) (Cold-Rolled 
1993); Final Determination of Sales at Less Than Fair Value; 
Limousines From Canada, 55 FR 11036, 11040, comment 10 (March 26, 
1990) (Limousines); Erasable Programmable Read Only Memories 
(EPROMs) From Japan; Final Determination of Sales at Less than Fair 
Value, 51 FR 39680, 39692, comment 28 (October 30, 1986) (EPROMs); 
and, Cold-Rolled 1993, 58 FR at 37066; respectively.
---------------------------------------------------------------------------

    Accordingly, the Department has generally found that substantial 
transformation has taken place when the upstream and downstream 
products fall within two different ``classes or kinds'' of merchandise: 
(see, e.g., steel slabs converted to hot-rolled band; wire rod 
converted through cold-drawing to wire; cold-rolled steel converted to 
corrosion resistant steel; flowers arranged into bouquets; automobile 
chassis converted to limousines).\2\ Conversely, the Department almost

[[Page 10676]]

invariably determines substantial transformation has not taken place 
when both products are within the same ``class or kind'' of 
merchandise: (see, e.g., computer memory components assembled and 
tested; hot-rolled coils pickled and trimmed; cold-rolled coils 
converted into cold-rolled strip coils; rusty pipe fittings converted 
to rust free, painted pipe fittings; green rod cleaned, coated, and 
heat treated into wire rod).\3\ In this case, both jumbo and slit TTR 
are within the same class or kind of merchandise, as defined in the 
Department's initiation and as defined for this final determination.
---------------------------------------------------------------------------

    \2\ Notice of Final Determination of Sales at Less Than Fair 
Value; Stainless Steel Sheet and Strip in Coils From the United 
Kingdom, 64 FR 30688, 30703, comment 13 (June 8, 1999); Notice of 
Final Determination of Sales at Less Than Fair Value-Stainless Steel 
Round Wire from Canada, 64 FR 17324, 17325, comment 1 (April 9, 
1999); Cold-Rolled 1993, 58 FR at 37066; Certain Fresh Cut Flowers 
From Colombia; Final Results of Antidumping Duty Administrative 
Review, 55 FR 20491, 20499, comment 49 (May 17, 1990); and, 
Limousines, 55 FR 11040; respectively.
    \3\ Notice of Initiation of Countervailing Duty Investigation: 
Dynamic Random Access Memory Semiconductors from the Republic of 
Korea, 67 FR 70927, 70928 (November 27, 2002) (DRAMs); EPROMs, 51 FR 
at 39692; Dynamic Random Access Memory Semiconductors of 256 
Kilobits and Above from Japan; Suspension of Investigation and 
Amendment of Preliminary Determination, 51 FR 28396, 28397 (August 
7, 1986); Notice of Preliminary Determination of Sales at Less Than 
Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From the 
People's Republic of China, 66 FR 22183, 22186 (May 3, 2001); 
Memorandum to Troy H. Cribb, Acting Assistant Secretary, from Holly 
Kuga, Acting Deputy Assistant Secretary, Issues and Decision 
Memorandum for the Investigation of Certain Cold-Rolled Flat-Rolled 
Carbon Quality Steel Products from Taiwan, comment 1 (May 22, 2000); 
Notice of Preliminary Determination of Sales at Less Than Fair Value 
and Postponement of Final Determination: Steel Wire Rod From Canada, 
62 FR 51572, 51573 (October 1, 1997); Final Determination of Sales 
at Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe 
Fittings From India, 60 FR 10545, 10546 (February 27, 1995); 
respectively.
---------------------------------------------------------------------------

    While slitting and packaging might account for 34 percent of the 
total cost of production,\4\ the processes and equipment involved do 
not amount to substantial transformation of the jumbo TTR for 
antidumping purposes. According to information submitted by petitioner, 
and not rebutted by any party to this investigation, a slitting 
operation requires only a fraction of the capital investment required 
for a coating and ink-making operation.\5\ Moreover, the ITC noted in 
this investigation that the ``slitting and packaging process is not 
particularly complex, especially as compared to the jumbo TTR 
production process.'' ITC Report, at 7. The ITC also noted that the 
primary cost involved in a slitting and packaging operation is not 
capital cost, but direct labor cost, which, we note, might be hired 
cheaply in a third country. Id. at 14. Thus, it appears that a slitting 
operation could be established in a third country for circumvention 
purposes with far greater ease than a coating and ink-making operation.
---------------------------------------------------------------------------

    \4\ The ITC report states that ``[s]ix U.S. producers indicate 
that slitting and packaging accounts for an average of 34 percent of 
the cost of finished bar code TTR.'' Certain Wax and Wax/Resin 
Thermal Transfer Ribbons from France, Japan, and Korea, 
Investigations Nos. 731-TA-1039-1041 (Preliminary), (July 2003) (ITC 
Report), at 7. DigiPrint apparently is referring to this figure, 
when it refers to 34 percent in its January 2, 2004 submission. 
Figures placed on the record by petitioner related to this issue are 
proprietary, but indicate that the relevant figure might be 
significantly less than 34 percent, depending on the country in 
which the slitter is located, the type of equipment used, the degree 
of automation involved, and whether the process relies more on labor 
than capital.
    \5\ These figures agree with statements made by DNP, a 
respondent in the Japanese TTR investigation, recorded in the 
preliminary report by the U.S. International Trade Commission (ITC), 
that capital investment in a slitting operation was ``generally very 
small'' ($100,000 to $300,000). Id. at 14.
---------------------------------------------------------------------------

    Finally, the ITC concluded that, while slit and jumbo TTR are like 
products, U.S. slitting and packaging operations (or ``converters'') 
were not part of the domestic industry for purposes of this 
investigation, ``for lack of sufficient production related 
activities.'' Id. at 13. The implication of the ITC's conclusion, based 
on its extensive multi-pronged analysis, is that TTR is the product of 
coating and ink-making, not slitting and packaging: ``The production 
related activities of converters are insufficient for such firms to be 
deemed producers of the domestic like product.'' Id. While we are not 
bound by the ITC's decisions, the ITC's determination is important to 
consider in this particular instance because it is based on the full 
participation of respondents and petitioner, whereas respondent 
withdrew its information from our investigation.
    As the Department has stated on numerous occasions, CBP decisions 
regarding substantial transformation and customs regulations, referred 
to by respondent, are not binding on the Department, because we make 
these decisions with different aims in mind (e.g., anticircumvention). 
See, e.g., DRAMs, 67 FR at 70928. The Department's independent 
authority to determine the scope of its investigations has been upheld 
by the CIT. Diversified Products Corp. v. United States, 572 F. Supp. 
883, 887 (CIT 1983). Presumably, a CIT decision interpreting 
substantial transformation in the context of CBP regulations, also 
cited by respondent, also is not binding on the Department.
    While the other facts noted by respondent are not necessarily 
irrelevant to this determination, they do not overcome the conclusion 
indicated by the fact that the slitting and packaging of jumbo rolls 
into slit TTR does not create a ``new and different article.'' In other 
words, the totality of the circumstances indicates that slitting does 
not constitute substantial transformation for antidumping purposes. 
Even accepting, arguendo, DigiPrint's statement regarding the amount of 
total cost accounted for by slitting and packaging, and respondent's 
statements regarding how slitting and packaging transform the product 
into its final end-use form, the product still has not changed 
sufficiently to fall outside the class or kind of merchandise defined 
in this investigation. Jumbo rolls are intermediate products, and slit 
rolls are final, end-use products, but the transformation of an 
upstream product into a downstream product does not necessarily 
constitute ``substantial transformation'' and, in this case, does not, 
given the considerations listed above.
    Similarly, in DRAMs, we decided that wafers shipped to a third 
country to be used in the assembly of DRAMs (subject merchandise) did 
not amount to substantial transformation because the wafers were the 
``essential'' component in the product. In this case, the ITC report 
notes petitioner's statement, unrefuted by respondents, that ``the 
essential characteristic of finished TTR, like that of jumbo TTR, is 
that of a strip of PET film coated with ink.'' We agree and note that 
the essential characteristic is contained in the jumbo TTR imported 
into the third country.
    Therefore, in light of this fact and the facts discussed below, we 
determine that slitting jumbo rolls does not constitute substantial 
transformation. Jumbo rolls originating in France but slit in a third 
country will be subject to any antidumping duties imposed on French 
TTR, if an antidumping duty order on such products is issued.

Period of Investigation

    The period of investigation (POI) is April 1, 2002, through March 
31, 2003.

Facts Available

    In the preliminary determination, we based the dumping margin for 
the mandatory respondent, Armor, on adverse facts available pursuant to 
sections 776(a) and 776(b) of the Act. The use of adverse facts 
available was warranted in this investigation because Armor withdrew 
its questionnaire responses from the record. See Preliminary 
Determination, 68 FR at 71069. The withdrawal of such information 
significantly impeded this proceeding because the Department cannot 
determine a margin without responses to our questionnaires. In 
addition, we found that Armor failed to cooperate to the best of its 
ability. We assigned Armor the highest margin listed in the notice of 
initiation. See Notice of Initiation of Antidumping Duty Investigation: 
Thermal Transfer Ribbons From France, Japan and the Republic of Korea, 
68 FR 38305 (June

[[Page 10677]]

27, 2003). A complete explanation of the selection, corroboration, and 
application of adverse facts available can be found in the preliminary 
determination. See Preliminary Determination, 68 FR at 71070-71.Nothing 
has changed since the preliminary determination was issued that would 
affect the Department's selection and application of facts available. 
No interested parties commented on any aspect of our application of 
adverse facts available. Accordingly, for the final determination, we 
continue to use the highest margin stated in the notice of initiation 
for Armor. The ``All Others'' rate remains unchanged as well.

Analysis of Comments Received

    We received no comments from interested parties in response to our 
preliminary determination in this investigation, except for the 
comments on the country-of-origin issue, which are fully addressed 
above. We received no case briefs or rebuttal briefs. We did not hold a 
hearing because none was requested.

Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we are 
directing CBP to continue to suspend liquidation of all entries of TTR 
exported from France that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of the preliminary 
determination. CBP shall continue to require a cash deposit or the 
posting of a bond based on the estimated dumping margins shown below. 
The suspension of liquidation instructions will remain in effect until 
further notice.We determine that the following dumping margins exist:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Armor S.A..................................................        60.60
All Others.................................................        44.93
------------------------------------------------------------------------

International Trade Commission Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will determine, within 45 days, 
whether imports of subject merchandise from France are materially 
injuring, or threatening material injury to, an industry in the United 
States. If the ITC determines that material injury or threat of injury 
does not exist, this proceeding will be terminated and all securities 
posted will be refunded or canceled. If the ITC determines that such 
injury does exist, the Department will issue an antidumping duty order 
directing CBP officials to assess antidumping duties on all imports of 
the subject merchandise entered, or withdrawn from warehouse for 
consumption on or after the effective date of the suspension of 
liquidation.
    This notice also serves as a reminder to parties subject to APO of 
their responsibility concerning the disposition of proprietary 
information disclosed under APO in accordance with 19 CFR 351.305. 
Timely 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.
    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act.

    Dated: March 1, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-5163 Filed 3-5-04; 8:45 am]