[Federal Register Volume 62, Number 84 (Thursday, May 1, 1997)]
[Notices]
[Pages 23758-23760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11383]



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DEPARTMENT OF COMMERCE

International Trade Administration
[A-570-831]


Fresh Garlic From the People's Republic of China; Final Results 
of Antidumping Duty Administrative Review and Partial Termination of 
Administrative Review

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

ACTION: Notice of Final Results of Antidumping Duty Administrative 
Review and Partial Termination of Administrative Review.

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SUMMARY: On December 27, 1996, the Department of Commerce published the 
preliminary results and partial termination of administrative review of 
the antidumping order on fresh garlic from the People's Republic of 
China. The review covers 159 producers/exporters of subject 
merchandise. The period of review is July 11, 1994, through October 31, 
1995.
    We gave interested parties an opportunity to comment on the 
preliminary results. Our analysis of the comments we received resulted 
in no change in our preliminary results for these final results. The 
final dumping margin is listed below the section entitled ``Final 
Results of the Review.''

EFFECTIVE DATE: May 1, 1997.

FOR FURTHER INFORMATION CONTACT: Andrea Chu or Thomas O. Barlow, Office 
of AD/CVD Enforcement, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
4733.

SUPPLEMENTAL INFORMATION:

Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the current regulations, as amended by the interim regulations 
published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On December 27, 1996, we published the preliminary results and 
partial termination of administrative review (61 FR 68229) of the 
antidumping duty order on fresh garlic from the PRC (November 16, 1994, 
59 FR 59209). Because we determined that (1) The review of Top Pearl 
should be terminated, and (2) the other PRC producers/exporters failed 
to submit responses to our questionnaires, we preliminarily determined 
to use facts otherwise available for cash deposit and assessment 
purposes for all PRC producers/exporters of the subject merchandise. We 
invited parties to comment on our Preliminary Results. We received 
comments from Top Pearl and a rebuttal brief on behalf of petitioners. 
A hearing was requested by Top Pearl but was subsequently canceled at 
its request. We have conducted this administrative review in accordance 
with section 751 of the Act.

Scope of the Review

    The products subject to this antidumping duty order are all grades 
of garlic, whole or separated into constituent cloves, whether or not 
peeled, fresh, chilled, frozen, provisionally preserved, or packed in 
water or other neutral substance, but not prepared or preserved by the 
addition of other ingredients or heat processing. The differences 
between grades are based on color, size, sheathing and level of decay.
    The scope of this order does not include: (a) garlic that has been 
mechanically harvested and that is primarily, but not exclusively, 
destined for non-fresh use; or (b) garlic that has been specially 
prepared and cultivated prior to planting and then harvested and 
otherwise prepared for use as seed.
    The subject merchandise is used principally as a food product and 
for seasoning. The subject garlic is currently classifiable under 
subheadings 0703.20.0000, 0710.80.7060, 0710.80.9750, 0711.90.6000, and 
2005.90.9500 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and customs purposes, our written description of the scope of this 
proceeding is dispositive.
    In order to be excluded from the antidumping duty order, garlic 
entered under the HTSUS subheadings listed above that is (1) 
Mechanically harvested and primarily, but not exclusively, destined for 
non-fresh use or (2) specially prepared and cultivated prior to 
planting and then harvested and otherwise prepared for use as seed must 
be accompanied by declarations to the Customs Service to that effect.

Analysis of Comments Received

    Comment 1: Top Pearl disagrees with the Department's preliminary 
determination that Top Pearl is not the appropriate respondent for this 
review. It asserts that the issue before the Department is whether 
Shandong Wallong Import & Export Co. (Wallong) knew the destination of 
the merchandise at the time of the sale between Wallong and Top Pearl 
and argues that the sales process and evidence on record demonstrate 
that Wallong did not know the destination at the time of sale.
    Top Pearl presents a chronology of the sales process to support its 
position that Wallong did not know the destination of the merchandise 
at the time of sale and argues that it is the Department's practice to 
give the original exporter a margin only if the exporter knew or had 
reason to know at the time of sale the destination of the shipment 
(citing Final Determination of Sales at Less Than Fair Value: Manganese 
Sulfate From the People's Republic of China, 60 FR 52155 (October 5, 
1995) (Manganese), and Notice of Final Determination of Sales at Less 
Than Fair Value; Polyvinyl Alcohol From the People's Republic of China, 
62 FR 14063 (March 29, 1996) (PVA). Top Pearl asserts that, although 
certain documents in Manganese indicated the United States as the 
destination of the shipment, that was not sufficient to demonstrate 
that respondent had knowledge of the ultimate destination at the time 
of sale. Top Pearl further asserts that in PVA the Department excluded 
sales to a Hong Kong trading company where none of the sales documents 
showed information to identify the United States as the ultimate 
destination at the time of sale and prior to shipment.
    Top Pearl claims that none of the sales contracts between Top Pearl 
and Wallong make any reference to the destination of the sale and that, 
at the time Top Pearl made the sale to the U.S. customer, Wallong did 
not know of the sale. Top Pearl further claims that when it contracted 
with Shangdong Huangpu Group Corporation (Huangpu), a Chinese garlic 
producer, neither Huangpu nor Wallong knew the destination of the 
merchandise. Top Pearl notes that only after the sale was made did Top 
Pearl instruct Wallong to change the terms of sale to indicate a U.S. 
port. Top Pearl argues that, like Manganese, the invoice made by 
Wallong to Top Pearl does not prove Wallong knew the destination 
because it was issued after Top Pearl's sale to the U.S. customer and 
after Top Pearl's purchase from Wallong. Top Pearl further argues that, 
like PVA, none of the sales documents on record show information 
identifying the United States as the ultimate destination of the

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merchandise. Top Pearl concludes, therefore, that the Department should 
calculate an individual margin for Top Pearl since Wallong did not know 
the destination of the shipment at the time of sale.
    Petitioners assert that it is clear that Wallong sold the garlic to 
Top Pearl and that this sale meets the requirements of section 772(a) 
of the Act. Petitioners maintain that it was appropriate to treat 
Wallong's sale to Top Pearl as a U.S. sale, given that the Department 
must examine the sale from the non-market economy (NME) exporter to the 
intermediate-country reseller (citing the Department's November 22, 
1996, memorandum, Partial Termination of 1994-95 Administrative Review 
of Fresh Garlic from the PRC, (termination memo). Petitioners claim 
that the date of sale is the date upon which the essential terms of 
price and quantity become fixed by agreement of the parties and remain 
unchanged (citing PVA from Taiwan, 61 FR 14064, 14067-68 and Stainless 
Steel Bar from India, 62 FR 4029 (1997) (Stainless Bar)).
    Petitioners maintain that the record evidence establishes that the 
date Wallong invoiced Top Pearl, and thereby confirmed the revised 
terms of sale, is the actual date of sale between Wallong and Top 
Pearl. Petitioners claim, therefore, Top Pearl's statement that the 
invoice was issued after the date of sale is incorrect, given that the 
invoice established the date of sale.
    Petitioners also maintain that additional record evidence 
demonstrates that Wallong knew the destination of the merchandise at 
the time of sale. Petitioners note that correspondence between Top 
Pearl and Wallong and the invoice issued by Wallong indicate the United 
States as the destination, contrary to Top Pearl's assertion that none 
of the contracts with Wallong make reference to the destination of the 
sale. Petitioners also note that Top Pearl's questionnaire and 
supplemental responses indicate that, as exporter of the merchandise, 
Wallong supplied destination-specific export documents which alone show 
it had knowledge of the destination prior to sale (also citing Certain 
Headwear from the People's Republic of China, 54 FR 11983, 11987-88 
(1989)).
    Department's Position: We fully addressed the issue of the proper 
respondent in reseller or ``middleman'' sales situations in our 
termination memo. As we stated in the memo, section 772(a) of the Act 
permits us to use the price from a producer to a middleman if the 
producer knew the merchandise was intended for sale to the United 
States under terms of sale fixed on or before the date of importation 
(see termination memo at 2-3). We further stated that we have 
interpreted the relevant price in such a sales situation to be the 
price at which the first party in the chain of distribution who has 
knowledge of the U.S. destination sells the merchandise. However, we 
explained that this practice is restricted with regard to NME cases, 
since we will not base export price on internal transactions between 
two companies located in the NME country.
    Applying these principles to the facts of this case, we determined 
that, although Huangpu had knowledge of the U.S. destination of the 
merchandise and is the first party in the distribution chain, its 
transaction with Wallong was an internal transaction between two 
companies located in an NME country and inappropriate for review. We 
further determined that the party after Huangpu in the distribution 
chain is Wallong and that there was ample evidence to indicate that 
Wallong had knowledge of the U.S. destination of the merchandise when 
it sold the merchandise to Top Pearl. Therefore, our determinations 
remain unchanged for these final results.
    As indicated above, the appropriate starting point for application 
of our knowledge test is the transaction between Wallong and Top Pearl 
because the sale from Wallong to Top Pearl is the first market-based 
sale in the chain of distribution for export to the United States. 
Based on the evidence of record, the essential terms of the transaction 
between Top Pearl and Wallong were established no earlier than June 30, 
1994, when Top Pearl advised Wallong of new delivery terms and price 
which subsequently did not change. It is also clear from the record 
that by this date Wallong had knowledge that the destination of the 
merchandise was the United States (see June 30, 1994 letter from Top 
Pearl to Wallong). In this case it is irrelevant that the invoice from 
Wallong was issued after the date of sale because Wallong had knowledge 
of the destination when the parties finally agreed on the essential 
terms, as evidenced by the fact that the transaction was ultimately 
consummated according to those terms. Top Pearl erroneously argues that 
the few documents to which it refers in Manganese were determinative of 
the Department's decision not to treat the sale in question as a U.S. 
sale; all of the relevant sales documents in that case failed to 
disclose the United States as the ultimate destination. In addition, 
the record in this case indicates that Wallong knew the destination 
prior to invoicing Top Pearl and shipping the merchandise. Our decision 
in PVA is in accord with our actions here, given that in this case the 
documents indicate the United States as the destination of the 
merchandise. Because the sale from Wallong to Top Pearl is the first 
market-based sale in the chain of distribution for export to the United 
States, we have maintained our position that the export transaction by 
Wallong to Top Pearl, not by Top Pearl to the unaffiliated U.S. 
customer, is the appropriate basis for determining the export price and 
that, accordingly, Top Pearl is not an appropriate respondent in this 
review.
    Finally, we disagree with Top Pearl that we should assign it a 
separate rate. Because Top Pearl is not a proper respondent in this 
review, the issue is moot.
    Comment 2: Top Pearl claims that if the Department had questions 
concerning the sales process it could have sent a supplemental 
questionnaire and conducted a verification to resolve such matters.
    Petitioners assert that there is no basis for verification because 
the documents that form the basis for the Department's preliminary 
results are clear on their face and conclusively establish that, 
because Wallong sold the garlic to Top Pearl knowing it was destined 
for the United States, Top Pearl is not the appropriate respondent in 
this review.
    Department's Position: Our decision to terminate the review with 
regard to Top Pearl was based on record evidence supplied by Top Pearl. 
We have no reason to dispute the veracity or reliability of the 
information and find it sufficient to support our position that it is 
inappropriate to review Top Pearl's transaction with the U.S. customer.
    In addition, contrary to respondent's claim, on March 29, 1996, we 
sent a supplemental questionnaire to Top Pearl. In the supplemental 
questionnaire, we inquired about Top Pearl's organizational structure 
and export licenses, as well as sales process, specifically with 
respect to Huangpu's and Wallong's knowledge of the destination of the 
subject merchandise. We did not send additional questionnaires to Top 
Pearl as we determined that Top Pearl is not the appropriate respondent 
in this review.

Final Results of the Review

    As a result of our review, we determine that a margin of 376.67 
percent exists for all producers/exporters of the subject merchandise 
from the PRC for the period July 11, 1994 through October 31, 1995.
    The Department shall determine, and the Customs Service shall 
assess,

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antidumping duties on all appropriate entries. The Department will 
issue appraisement instructions directly to the Customs Service.
    Furthermore, the following cash deposit requirements will be 
effective upon publication of these final results for all shipments of 
the subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the publication date, as provided for by 
section 751(a)(1) of the Act: (1) for all PRC exporters, all of which 
were found not to be entitled to separate rates, the cash deposit will 
be 376.67 percent; and (2) for other non-PRC exporters of subject 
merchandise from the PRC, the cash deposit rate will be the rate 
applicable to the PRC supplier of that exporter. These deposit 
requirements shall remain in effect until publication of the final 
results of the next administrative review.
    This notice serves as a reminder to importers of their 
responsibility under 19 CFR 353.26 to file a certificate regarding the 
reimbursement of antidumping duties prior to liquidation of the 
relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    This notice also serves as a reminder to parties subject to 
administrative protective orders (APO) of their responsibility 
concerning disposition of proprietary information disclosed under APO 
in accordance with 19 CFR 353.34(d). Timely written notification of the 
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 administrative review and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 353.22.

    Dated: April 25, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-11383 Filed 4-30-97; 8:45 am]
BILLING CODE 3510-DS-P