[Federal Register Volume 66, Number 6 (Tuesday, January 9, 2001)]
[Notices]
[Pages 1638-1642]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-604]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]


Certain Cased Pencils From the People's Republic of China; 
Preliminary Results and Rescission in Part of Antidumping Duty 
Administrative Review

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

ACTION: Notice of preliminary results and rescission in part of 
antidumping duty administrative review of certain cased pencils from 
the People's Republic of China.

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SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that sales by the respondent in this review 
covering the period December 1, 1998 through November 30, 1999, have 
been made below normal value (``NV''). In addition, we are 
preliminarily rescinding this review with respect to Three Star 
Stationery Industry Co., Ltd. If these preliminary results are adopted 
in our final results of review, we will instruct the U.S. Customs 
Service (``Customs'') to assess antidumping duties on all appropriate 
entries. Furthermore, we have reached a final determination to rescind 
the review with respect to Laizhou City Guangming Pencil-Making Lead 
Co., Ltd.
    The Department invites interested parties to comment on these 
preliminary results.

EFFECTIVE DATE: January 9, 2001.

FOR FURTHER INFORMATION CONTACT: Paul Stolz or Howard Smith, AD/CVD 
Enforcement, Office 4, Group II, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
4474, and 482-5193, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as

[[Page 1639]]

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 at 19 CFR part 351 (1999).

Period of Review

    The period of review (``POR'') is December 1, 1998 through November 
30, 1999.

Background

    On December 28, 1994, the Department published in the Federal 
Register (59 FR 66909) the antidumping duty order on certain cased 
pencils (``pencils''), from the People's Republic of China (``PRC''). 
On December 14, 1999, the Department published in the Federal Register 
(64 FR 69693) a notice of opportunity to request an administrative 
review of this order. On December 20, 1999, in accordance with 19 CFR 
351.213(b), Simmons Rennolds Associates, L.L.C., Incorporated and 
Laizhou City Guangming Pencil-Making Lead Co., Ltd., (``Laizhou''), a 
U.S. importer and a PRC producer, respectively, jointly requested that 
the Department conduct an administrative review of the order with 
respect to Laizhou. On January 3, 2000, in accordance with 19 CFR 
351.213(b), the Writing Instrument Manufacturers Association, Inc., 
Pencil Section; Sanford Corp.; Berol Corp.; General Pencil Co., Inc; 
J.R. Moon Pencil Co.; Tennessee Pencil Co.; and Musgrave Pencil Co., 
collectively, the petitioners, requested that we conduct an 
administrative review of exports of the subject merchandise made by 33 
named producers/exporters.
    On January 26, 2000, the Department published a notice in the 
Federal Register initiating an administrative review of all parties 
named in the above requests (65 FR 4228).
    On February 23, 2000, we issued antidumping duty questionnaires to 
all parties named in the notice of initiation for whom we were able to 
obtain addresses.\1\ In addition, on March 1, 2000, we issued a 
questionnaire to the PRC embassy in order to collect information 
relevant to the calculation of the PRC-wide rate. Only China First 
Pencil Co., Ltd. (``CFP'') Laizhou, and Three Star Stationary Co., Ltd. 
(Three Star) responded to our February 23, 2000, questionnaire. In its 
March 16, 2000, response to the Department's questionnaire, Three Star 
stated that it did not export pencils to the United States during the 
POR.
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    \1\ On March 6, 2000, we sent a letter to the PRC Minister of 
Foreign Trade and Economic Cooperation (MOFTEC) requesting that it 
deliver questionnaires for seven parties for whom we could not find 
addresses. On April 24, 2000, we sent a letter to MOFTEC requesting 
that it deliver questionnaires to 6 parties for whom questionnaires 
were returned to us as undeliverable due to incorrect addresses or 
contract information. We requested that MOFTEC contact us by May 30, 
2000 if it should not deliver any of these questionnaires and 
advised MOFTEC that if we did not receive its responses within the 
time provided, we would be required to base our findings with 
respect to these firms on facts available which could be adverse to 
the firms' interests. We did not receive any response from MOFTEC 
and we did not receive questionnaire responsesfrom these firms 
within the time limits.
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    Pursuant to section 751(a)(3)(A) of the Act, the Department may 
extend the deadline for completion of the preliminary results of an 
administrative review if it determines that it is not practicable to 
complete the preliminary results of a review within the statutory time 
limit of 245 days. On September 5, 2000, in accordance with the Act, 
the Department extended the time limit for the preliminary results of 
this review until December 30, 2000 (see Certain Cased Pencils from the 
People's Republic of China: Extension of Time Limit for Preliminary 
Results of Antidumping Duty Administrative Review, 65 FR 53701).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Verification

    As provided in section 782(i) of the Act, during September, 2000, 
the Department conducted verifications of CFP and Three Star 
Stationary. During the verifications, we followed standard procedures 
in order to test information submitted by the respondents. These 
procedures included on-site inspection of the manufacturers' 
facilities, examination of relevant sales and financial records, and 
selection of relevant source documentation as exhibits. Our 
verification findings are detailed in the report: Verification of the 
Sales Responses of China First Pencil Company, Ltd., and Three Star 
Stationary in the 1998-1999 Administrative Review of Certain Cased 
Pencils from the People's Republic of China (``Verification Report'') 
dated January 2, 2001, the public version of which is on file in the 
Department's Central Records Unit, Room B099, of the Main Commerce 
building (``CRU-Public File'').

Scope of Reviews

    Imports covered by this review are shipments of certain cased 
pencils of any shape or dimension which are writing and/or drawing 
instruments that feature cores of graphite or other materials, encased 
in wood and/or man-made materials, whether or not decorated and whether 
or not tipped (e.g., with erasers, etc.) in any fashion, and either 
sharpened or unsharpened. The pencils subject to this investigation are 
classified under subheading 9609.10.00 of the Harmonized Tariff 
Schedules of the United States (``HTSUS''). Specifically excluded from 
the scope of this investigation are mechanical pencils, cosmetic 
pencils, pens, non-cased crayons (wax), pastels, charcoals, and chalks.
    Although the HTSUS subheading is provided for convenience and 
customs purposes our written description of the scope of the order is 
dispositive.

Preliminary Partial Rescission

    We are preliminarily rescinding this review with respect to Three 
Star because the Department verified that Three Star did not export 
pencils to the United States during the POR.

Final Partial Rescission

    On June 8, 2000, we issued a letter to Laizhou stating our 
intention to rescind the review with respect to this company because it 
had not exported subject merchandise to the United States during the 
POR.\2\ We also invited all interested parties to comment on our stated 
intent to rescind the review with respect to Laizhou. On June 20, 2000, 
the petitioners submitted comments supporting the rescission while on 
July 14, 2000, Laizhou submitted comments objecting to the rescission. 
We have considered petitioners' and Laizhou's comments and have reached 
a final determination to rescind the review with respect to Laizhou. 
For a discussion of this issue, see the memorandum: Final Partial 
Rescission of Administrative Review, dated January 2, 2001 (CRU-Public 
File).
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    \2\ During the POR, Kaiyuan Group Corproration (``Kaiyuan'') 
exported pencils from the PRC to the United States that were 
produced by Laizhou; however, a review of Kaiyuan's U.S. sales of 
subject merchandies was not requested.
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Separate Rates Determination

    To establish whether a company operating in a non-market economy 
(``NME'') is sufficiently independent to be entitled to a separate 
rate, the Department analyzes each exporting entity under the test we 
established in the Final Determination of Sales at Less Than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991) (``Sparklers''), as amplified by the Final Determination of

[[Page 1640]]

Sales at Less Than Fair Value: Silicon Carbide from the People's 
Republic of China, 59 FR 22585 (May 2, 1994) (``Silicon Carbide''). 
Under this test, NME companies are entitled to separate, company-
specific margins when they can demonstrate an absence of government 
control, both in law and in fact, with respect to export activities. 
Evidence supporting, though not requiring, a finding of de jure absence 
of government control over export activities includes: (1) An absence 
of restrictive stipulations associated with the individual exporter's 
business and export licenses; (2) any legislative enactments 
decentralizing control of companies; and (3) any other formal measures 
by the government decentralizing control of companies. De facto absence 
of government control over exports is based on four factors: (1) 
Whether each exporter sets its own export prices independent of the 
government and without the approval of a government authority; (2) 
whether each exporter retains the proceeds from its sales and makes 
independent decisions regarding the disposition of profits or financing 
of losses; (3) whether each exporter has the authority to negotiate and 
sign contracts and other agreements; and (4) whether each exporter has 
autonomy from the government regarding the selection of management. See 
Silicon Carbide, 59 FR at 22587 and Sparklers 56 FR at 20589.
    In the Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cased Pencils From the People's Republic of China, 59 FR 
55625 (November 8, 1994), the Department granted a separate rate to 
CFP. While CFP received a separate rate in a previous segment of this 
proceeding, it is the Department's policy to evaluate separate rates 
questionnaire responses each time a respondent makes a separate rates 
claim, regardless of any separate rate the respondent received in the 
past. See Manganese Metal From the People's Republic of China, Final 
Results and Partial Rescission of Antidumping Duty Administrative 
Review, 63 FR 12441 (March 13, 1998). In the instant review, CFP 
submitted complete responses to the separate rates section of the 
Department's questionnaire. The evidence submitted in this review by 
CFP includes government laws and regulations on corporate ownership, 
business licences, and narrative information regarding the company's 
operations and selection of management. This evidence is consistent 
with the Department's findings in a previous review and supports a 
finding that control of companies in the PRC has been decentralized and 
that the respondent company's operations are, in fact, autonomous from 
the PRC government. Therefore, we preliminarily determine that CFP 
continues to be entitled to a separate rate.

Facts Available

China First

    The record in the instant review establishes that CFP failed to 
report a significant quantity of U.S. sales and thus significantly 
impeded the review. As a result, the Department has determined to apply 
a total facts available rate to CFP in accordance with sections 
776(a)(2)(A) and (C) of the Act. For further discussion, see the 
memorandum: Application of Total Facts Available for the Preliminary 
Results: China First Pencil Company, Ltd., dated January 2, 2001 
(``Facts Available Memorandum''); see also the Verification Report.
    Furthermore, section 776(b) of the Act provides that the Department 
may use an inference that is adverse to the interests of that party in 
selecting from among the facts otherwise available if the Department 
finds that an interested party has failed to cooperate by not acting to 
the best of its ability. Although CFP is entitled to a separate rate, 
CFP provided incomplete information, failed to provide information it 
had readily available, and misled the Department about the availability 
of sales/shipping documents. See verification report at page 17. As a 
result, the accuracy and completeness of CFP's submitted information is 
called into question. Furthermore, we have concluded that CFP failed to 
act to the best of its ability to cooperate with the Department. Thus, 
for the preliminarily results, we have made an inference that is 
adverse to CFP in selecting from among the facts available.
    The statute provides no clear obligation or preference for relying 
upon a particular source in choosing information to use as adverse 
facts available. Consistent with Department practice in cases where a 
respondent fails to cooperate to the best of its ability, and in 
keeping with section 776(b) of the Act, as adverse facts available we 
have applied a margin based on the highest margin used either in prior 
reviews or in the less-than-fair-value (``LTFV'') investigation. See 
e.g., Viscose Rayon Staple Fiber From Finland: Final Results of 
Antidumping Duty Administrative Review, 63 FR 32820, 32822 (June 16, 
1998) (Viscose Rayon Fiber). Therefore, as facts available we are 
applying the ``recalculated'' petition rate, 53.65 percent ad valorem, 
which is the highest margin used in this or any prior segment of this 
proceeding. See Certain Cased Pencils From the People's Republic of 
China; Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Amended Antidumping Duty Order in Accordance With Final Court 
Decision, 64 FR 25275 (May 11, 1999); and Facts Available Memorandum 
for further discussion.

Tianjin Stationery & Sporting Goods Imp. & Exp. Corp.

    On June 7, 2000, in letters to all non-responding parties to whom 
we issued antidumping duty questionnaires, we noted that the 
questionnaire deadline had passed without the Department having 
received either the party's response or a request to extend the 
deadline for responding. Also, we advised these parties that, pursuant 
to 19 CFR 351.302(d)(i), we would consider any information submitted 
after the deadline as untimely filed and would return it to the 
submitting party. Finally, we advised these parties that since we had 
not received their responses, we were required by section 776(a)(2)(B) 
of the Act to rely on facts available in our determination.
    Tianjin Stationery & Sporting Goods Imp. & Exp. Corp. (``Tianjin'') 
submitted a letter dated June 20, 2000 stating that although it had 
received our letter of June 7, 2000, it had not received our 
antidumping duty questionnaire. Tianjin asked that we re-send the 
questionnaire by mail, electronic mail, or facsimile.
    However, the Department's records indicate that both the letter of 
June 7, 2000, which Tianjin received, and the questionnaire were sent 
to the same address in the PRC. Moreover, the commercial courier which 
the Department used to transmit the questionnaire confirmed that the 
questionnaire was delivered to Tianjin and signed for on February 29, 
2000. Thus, we find that Tianjin received the Department's 
questionnaire but failed to respond. Tianjin's failure to respond to 
the questionnaire indicates that the company did not act to the best of 
its ability to comply with the Department's requests. Thus, pursuant to 
section 776(b) of the Act, we would normally rely on adverse facts 
available to determine the margin for Tianjin. However, because Tianjin 
did not submit any information in the instant review, we also 
preliminarily determine that Tianjin is not entitled to a separate rate 
and is therefore subject to the PRC country-wide rate described in the 
following section.

[[Page 1641]]

Country-Wide Rate

    The Department has determined that the use of facts available is 
appropriate for purposes of establishing the country-wide rate for the 
preliminary results of this review, pursuant to section 776(a)(2)(B) of 
the Act. The Act provides that the administering authority shall use 
facts otherwise available when an interested party ``fails to provide 
such information by the deadlines for the submission of the information 
or in the form and manner requested.'' On February 23, 2000, the 
Department sent a questionnaire to the PRC Embassy in order to collect 
information relevant to the calculation of the PRC-wide rate. The PRC 
Embassy never responded to our questionnaire. With respect to Tianjin, 
evidence on the record indicates that although Tianjin received the 
Department's questionnaire, it never responded, and thus, failed to act 
to the best of its ability to respond to this request for information. 
Further, as noted above, we requested that MOFTEC deliver the 
questionnaire to 13 firms for which we could not obtain valid 
addresses. MOFTEC did not notify us as to whether it was able to do so 
within the times limits and these firms did not respond to our 
questionnaire. Sixteen additional firms for which we have confirmation 
that they received our questionnaires, did not respond.
    Section 776(b) of the Act authorizes the Department to use adverse 
facts available whenever it finds that an interested party has failed 
to cooperate by not acting to the best of its ability to comply with 
the Department's requests for information. Because the PRC embassy did 
not respond to our questionnaire or advise us to send it to any other 
party, because Tianjin failed to respond to the Department's 
questionnaire in any way, because MOFTEC did not respond on behalf of 
the thirteen firms for which we could not obtain addresses, and because 
16 other firms to whom we sent questionnaires did not respond, we 
preliminarily determine that these entities did not act to the best of 
their abilities to comply with our requests. Therefore, pursuant to 
section 776(b) of the Act, we are relying on adverse facts available to 
determine the margins for the PRC-wide entity. Specifically, for 
adverse facts available for the PRC-wide entity, we have applied the 
highest rate from any prior segment of this proceeding, 53.65 percent, 
the ``recalculated'' petition rate from the LTFV investigation.

Corroboration

    Section 776(c) of the Act provides that when the Department resorts 
to facts otherwise available and relies on ``secondary information,'' 
the Department shall, to the extent practicable, corroborate that 
information from independent sources reasonably at the Department's 
disposal. The Statement of Administrative Action (H.R. Doc. 103-316 
(1994)) (``SAA'') states that ``corroborate'' means to determine that 
the information used has probative value. See SAA at 870. To 
corroborate secondary information, the Department will, to the extent 
practicable, examine the reliability and relevance of the information 
to be used.
    In this review, we are using, as adverse facts available, the 
highest margin from this or any prior segment of the proceeding. 
Specifically, we are using 53.65 percent, the ``recalculated'' petition 
rate, which was ``recalculated'' for the final determination in the 
investigation. See Certain Cased Pencils From the People's Republic of 
China; Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Amended Antidumping Order in Accordance With Final Court 
Decision, 64 FR 25275 (May 11, 1999).
    The rate we are using for adverse facts available constitutes 
secondary information within the meaning of the SAA. See SAA at 870. 
Section 776(c) of the Act provides that the Department shall, to the 
extent practicable, corroborate secondary information from independent 
sources reasonably at its disposal. The SAA provides that 
``corroborate'' means that the Department will satisfy itself that the 
secondary information to be used has probative value. The SAA at 870, 
however, states further that ``the fact that corroboration may not be 
practicable in a given circumstance will not prevent the agencies from 
applying an adverse inference.'' In addition, the SAA, at 869, 
emphasizes that the Department need not prove that the facts available 
are the best alternative information.
    To corroborate secondary information, to the extent practicable the 
Department will examine the reliability and relevance of the 
information to be used. The ``recalculated'' petition rate was 
corroborated by the Department in a prior segment of this proceeding 
and nothing on the record of the instant review calls into question the 
reliability of the ``recalculated'' rate. See Certain Cased Pencils 
From the People's Republic of China; Final Results of Antidumping 
Administrative Review, 63 FR 779 (January 7, 1998). With respect to the 
relevance aspect of corroboration, the Department will consider 
information reasonably at its disposal to determine whether a margin 
continues to have relevance. Nothing in the record of this review calls 
into question the relevancy of the selected margin. Furthermore, the 
rate has not been judicially invalidated. Thus it is appropriate to use 
the ``recalculated'' petition rate as adverse facts available in the 
instant review.

Preliminary Results of Review

    As a result of our review, we preliminarily determine that the 
following margins exist for the period December 1, 1998 through 
November 30, 1999:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
China First Pencil Co Ltd....................................      53.65
PRC-wide Rate................................................      53.65
------------------------------------------------------------------------

    The Department will disclose to parties to this proceeding the 
calculations performed in reaching the preliminary results within ten 
days of the date of announcement of the preliminary results. An 
interested party may request a hearing within 30 days of publication of 
the preliminary results. See 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the publication of this notice, 
or the first workday thereafter. Interested parties may submit written 
comments (case briefs) within 30 days of the date of publication of 
this notice, in accordance with 19 CFR 351.309(c)(1)(ii). Rebuttal 
comments (rebuttal briefs), which must be limited to issues raised in 
the case briefs, may be filed not later than 37 days after the date of 
publication of this notice. Parties who submit arguments are requested 
to submit with the argument (1) a statement of the issue, (2) a brief 
summary of the argument and (3) a table of authorities. Further, the 
Department requests that parties submitting written comments provide 
the Department with a diskette containing the public version of those 
comments. The Department will publish a notice of the final results of 
this administrative review, including the results of our analysis of 
the issues raised by the parties in their comments, within 120 days of 
publication of these preliminary results.
    The final results of this review shall be the basis for the 
assessment of antidumping duties on entries of merchandise covered by 
this review and for future deposits of estimated duties.

[[Page 1642]]

Duty Assessment Rates

    The Department shall determine, and Customs shall assess, 
antidumping duties on all appropriate entries. In the instant review, 
we based the importer-specific assessment rates on the facts available 
margin percentages listed above. These importer-specific rates will be 
assessed uniformly on all entries of each importer that were made 
during the POR. In accordance with 19 CFR 351.106 (c)(2), we will 
instruct Customs to liquidate without regard to antidumping duties any 
entries for which the assessment rate is de minimis, (i.e., less than 
0.5 percent). The Department will issue appraisement instructions 
directly to Customs.

Cash Deposit Requirements

    The following deposit requirements will be effective upon 
publication of the final results of this administrative review for all 
shipments of pencils from the PRC 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)(1) of the 
Act: (1) The cash deposit rates for the reviewed companies named above, 
will be the rates for those firms established in the final results of 
this administrative review; (2) for any previously reviewed PRC or non-
PRC exporter with a separate rate not covered in this review, the cash 
deposit rate will be the company-specific rates established for the 
most recent period; (3) for all other PRC exporters, the cash deposit 
rates will be the PRC-wide rates established in the final results of 
this review; and (4) the cash deposit rates for non-PRC exporters of 
subject merchandise from the PRC will be the rates applicable to the 
PRC supplier of that exporter. These deposit requirements, when 
imposed, shall remain in effect until publication of the final results 
of the next administrative review.

Notification to Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under section 351.402(f)(2) of the Department's 
regulations 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 determination in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: January 2, 2001.
Troy H. Cribb,
Assistant Secretary for Import Administration.
[FR Doc. 01-604 Filed 1-8-01; 8:45 am]
BILLING CODE 3510-DS-P