[Federal Register Volume 67, Number 12 (Thursday, January 17, 2002)]
[Notices]
[Pages 2402-2408]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-1269]


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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 respondents in this review, covering the

[[Page 2403]]

period December 1, 1999, through November 30, 2000, have been made 
below normal value (NV). In addition, we are preliminarily rescinding 
this review with respect to Three Star Stationery Industry Co., Ltd. 
(Three Star) and Guangdong Provincial Stationary & Sporting Goods 
Import and Export Corporation (GSSG). If these preliminary results are 
adopted in the final results of this review, we will instruct the U.S. 
Customs Service (Customs) to assess antidumping duties on all 
appropriate entries. The Department invites interested parties to 
comment on these preliminary results.

EFFECTIVE DATE: January 17, 2002.

FOR FURTHER INFORMATION CONTACT: Michele Mire, Crystal Crittenden, or 
Paul Stolz, 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) 482-4711, (202) 482-0989, and (202) 482-4474, 
respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended, (the Act) are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the regulations at 19 CFR part 351 (2000).

Period of Review

    The period of review (POR) is December 1, 1999 through November 30, 
2000.

Background

    On December 20, 2000, the Department published in the Federal 
Register a notice of ``Opportunity to Request an Administrative 
Review'' of the antidumping duty order on certain cased pencils from 
the People's Republic of China (PRC), covering the period December 1, 
1999 through November 30, 2000. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 65 FR 79802-02 (December 20, 2000).
    On December 21, 2000, in accordance with 19 CFR 351.213(b), the 
respondent, Kaiyuan Group Corporation (Kaiyuan), requested an 
administrative review of its exports of subject merchandise to the 
United States during the POR. On December 29, 2000, China First Pencil 
Co., Ltd. (CFP) requested an administrative review of its exports of 
subject merchandise to the United States. In addition, on January 2, 
2001, 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 an additional 37 producers/exporters. The 
Department published a notice of initiation of this review on January 
31, 2001. See Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Requests for Revocation in Part, 66 FR 21 
(January 31, 2001).
    On February 12, 2001, 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 6, 2001, we issued a 
questionnaire to the PRC embassy in order to collect information 
relevant to the calculation of the PRC-wide rate. CFP, Orient 
International Holding Shanghai Foreign Trade Corporation (OIHSFTC), 
Kaiyuan, GSSG, and Three Star responded to our February 12, 2001, 
questionnaire. In their March 21, 2001, response to the Department's 
questionnaire, Three Star and GSSG stated that they did not export 
subject merchandise to the United States during the POR. Specifically, 
Three Star stated that it had no exports of subject merchandise to the 
United States. GSSG stated that it shipped pencils to the United States 
during the POR which were produced by Three Star. GSSG noted that this 
was not subject merchandise because GSSG was excluded from the 
antidumping duty order with respect to merchandise it exported which 
was produced by Three Star.
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    \1\ On February 9, 2001, we sent a letter to the PRC Ministry of 
Foreign Trade and Economic Cooperation (MOFTEC) requesting that it 
deliver questionnaires to twelve parties for whom we could not find 
addresses. On August 7, 2001, we sent a letter to MOFTEC repeating 
our request that MOFTEC deliver the questionnaires to the twelve 
parties. We also requested that it deliver questionnaires to 5 
parties for whom questionnaires were returned to us as undeliverable 
due to incorrect addresses or contact information. We requested that 
MOFTEC contact us by August 24, 2001, if it could not deliver any of 
these questionnaires and advised MOFTEC that if we did not receive 
its response 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. The China Chamber of 
Commerce For Import & Export of Light Industrial Products and Arts--
Crafts (CCCLA) faxed us on August 21, 2001, informing us that MOFTEC 
had asked it to transmit questionnaires to listed parties but could 
contact only two companies: China National Light Industrial Products 
Import/Export Corp. (CNLIP) and Jianngsu Light Industrial Products 
Import and Export Group Corp. (JP). However, we did not receive 
questionnaire responses from these firms.
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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 August 6, 2001, in accordance with the Act, the 
Department extended the time limit for the preliminary results of this 
review until December 1, 2001 (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). On 
November 28, 2001, the deadline was extended a second time until 
December 31, 2001 (see Certain Cased Pencils from the People's Republic 
of China: Extension of Time Limit for Preliminary Results of 
Antidumping Duty Administrative Review, 66 FR 63018).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Review

    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 and GSSG because they made no shipments of subject merchandise to 
the United States during the POR. The Department reviewed Customs data 
which indicates that Three Star and GSSG did not export subject 
merchandise to the United States during the POR.

[[Page 2404]]

Verification

    As provided in section 782(i) of the Act, during October 2001, the 
Department conducted verifications of OIHSFTC and its suppliers. The 
Department intends to conduct verifications of CFP, GSSG, Three Star 
and Kaiyuan subsequent to the publication of these preliminary results. 
During the verification of OIHSFTC and its suppliers, 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 OIHSFTC in the 1999-2000 Administrative Review 
of Certain Cased Pencils from the People's Republic of China 
(Verification Report), 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).

Separate Rates Determination

    In proceedings involving nonmarket economy (NME) countries, the 
Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and thus should be 
assessed a single antidumping duty deposit rate. It is the Department's 
policy to assign all exporters of merchandise subject to investigation 
in a NME country this single rate, unless an exporter can demonstrate 
that it is sufficiently independent so as to be entitled to a separate 
rate. OIHSFTC, CFP and Kaiyuan provided the separate rates information 
requested by the Department and reported that their export activities 
are not subject to government control.
    We examined the separate rates information provided by OIHSFTC, CFP 
and Kaiyuan in order to determine whether the companies are eligible 
for a separate rate. The Department's separate rates test which is used 
to determine whether an exporter is independent from government control 
does not consider, in general, macroeconomic/border-type controls, 
e.g., export licenses, quotas, and minimum export prices, particularly 
if these controls are imposed to prevent dumping. The test focuses, 
rather, on controls over the investment, pricing, and output decision-
making process at the individual firm level. See Certain Cut-to-Length 
Carbon Steel Plate from Ukraine: Final Determination of Sales at Less 
than Fair Value, 62 FR 61754, 61757 (November 19, 1997); Tapered Roller 
Bearings and Parts Thereof, Finished and Unfinished, from the People's 
Republic of China: Final Results of Antidumping Duty Administrative 
Review, 62 FR 61276, 61279 (November 17, 1997).
    To establish whether a firm is sufficiently independent from 
government control of its export activities to be entitled to a 
separate rate, the Department analyzes each entity exporting the 
subject merchandise under a test arising out of 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 Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide from 
the People's Republic of China, 59 FR 22585 (May 2, 1994) (Silicon 
Carbide). In accordance with the separate rates criteria, the 
Department assigns separate rates in NME cases only if respondents can 
demonstrate the absence of both de jure and de facto governmental 
control over export activities.

1. Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
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. 
See Sparklers, 56 FR at 20508 (May 6, 1991).
    OIHSFTC, CFP and Kaiyuan reported that the subject merchandise was 
not restricted to any government list regarding export provisions or 
export licensing, and was not subject to export quotas during the POR. 
OIHSFTC, CFP and Kaiyuan submitted copies of their business licenses in 
their questionnaire responses. We inspected OIHSFTC's original business 
license at verification. We found no inconsistencies with their 
statements regarding the absence of restrictive stipulations associated 
with their business licenses. Furthermore, OIHSFTC, CFP and Kaiyuan 
submitted copies of PRC legislation demonstrating the statutory 
authority for establishing the de jure absence of government control 
over the companies. Thus, we believe that the evidence on the record 
supports a preliminary finding of absence of de jure governmental 
control based on: (1) An absence of restrictive stipulations associated 
with the business licenses of OIHSFTC, CFP and Kaiyuan; and (2) the 
applicable legislative enactments decentralizing control of PRC 
companies.

2. Absence of De Facto Control

    The Department typically considers four factors in evaluating 
whether a respondent is subject to de facto governmental control of its 
export functions: (1) Whether the export prices are set by or are 
subject to the approval of a governmental agency; (2) whether the 
respondent has authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87 (May 2, 
1994); see also Notice of Final Determination of Sales at Less Than 
Fair Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 
22544, 22545 (May 8, 1995).
    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide, 56 FR at 22587 (May 2, 1994). Therefore, the 
Department has determined that an analysis of de facto control is 
critical in determining whether respondents are, in fact, subject to a 
degree of governmental control which would preclude the Department from 
assigning separate rates.
    OIHSFTC, CFP and Kaiyuan reported that they determine prices for 
sales of the subject merchandise based on the cost of the merchandise, 
movement expenses, overhead, profit, and the market situation in the 
United States. Moreover, OIHSFTC, CFP and Kaiyuan stated that they 
negotiated the price directly with their customers. Also, OIHSFTC, CFP 
and Kaiyuan claimed that their prices are not subject to review or 
guidance from any governmental organization. In addition, the record 
indicates that OIHSFTC, CFP and Kaiyuan have the authority to negotiate 
and sign contracts and other agreements. Further, OIHSFTC, CFP and 
Kaiyuan claimed that their negotiations are not subject to review or 
guidance from any governmental organization. Finally, there is no 
evidence on the record to suggest that there is any governmental 
involvement in the negotiation of their contracts.
    Furthermore, CFP and Kaiyuan reported that they have autonomy in 
making decisions regarding the selection of management. CFP and

[[Page 2405]]

Kaiyuan claimed that its selection of management is not subject to 
review or guidance from any governmental organization and there is no 
evidence on the record to suggest that there is any governmental 
involvement in the selection of the management of CFP and Kaiyuan. 
Although there is evidence on the record indicating that the Shanghai 
State Assets Administration plays an indirect role in the appointment 
of OIHSFTC management, we do not find that this constitutes de facto 
government control of the business operations of the company relating 
to its export activity.
    Finally, OIHSFTC, CFP and Kaiyuan reported that they retain the 
proceeds of their export sales, they use profits according to their 
business needs, and their management determines how to allocate 
profits. There is no evidence on the record to suggest that there is 
any governmental involvement in decisions regarding disposition of 
profits or financing of losses.
    Therefore, we find that the evidence on the record supports a 
preliminary finding of absence of de facto governmental control based 
on record statements and supporting documentation showing that: (1) 
OIHSFTC, CFP and Kaiyuan set their own export prices independent of the 
government and without the approval of a government authority; (2) 
OIHSFTC, CFP and Kaiyuan have the authority to negotiate and sign 
contracts and other agreements; (3) OIHSFTC, CFP and Kaiyuan have 
adequate autonomy from the government regarding the selection of 
management; and (4) OIHSFTC, CFP and Kaiyuan retain the proceeds from 
their sales and make independent decisions regarding the disposition of 
profits or financing of losses.
    The evidence placed on the record of this investigation by OIHSFTC, 
CFP and Kaiyuan demonstrates an absence of government control, both in 
law and in fact, with respect to their exports of the merchandise under 
investigation, in accordance with the criteria identified in Sparklers 
and Silicon Carbide. Therefore, for the purposes of this preliminary 
determination, we are granting a separate rate to OIHSFTC, CFP and 
Kaiyuan.\2\
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    \2\ 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) (LTFV), the Department granted 
separate rates to CFP and Shanghai Foreign Trade Corporation (SFTC). 
In December of 1999, SFTC was merged into Orient International 
(Holding) Co., Ltd. (OIH) and was renamed Orient International 
Holding Shanghai Foreign Trade Co., Ltd. (OIHSFTC). While CFP and 
OIHSFTC received separate rates 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).
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Country-Wide Rate

    As noted below, Anhui, CNLIP and JP failed to respond to the 
Department's questionnaire. As these exporters do not qualify for 
separate rates, they will continue to be subject to the PRC country-
wide rate of 53.65 percent.

Normal Value Comparisons

    To determine whether the respondents' sales of subject merchandise 
were made at less than normal value (NV), we compared for all 
responding entities, the export price (EP) to NV, as described in the 
Export Price and Normal Value sections of this notice, below.

Export Price

    In accordance with section 772(a) of the Act, the Department 
calculated an EP for sales to the United States because the subject 
merchandise was sold directly to an unaffiliated customer in the United 
States prior to importation and constructed export price methodology 
was not otherwise indicated. We made deductions from the sales price 
for foreign inland freight, foreign brokerage and handling, and 
domestic inland insurance. Each of these services was provided by a NME 
vendor, and thus, we based the deductions for these movement charges on 
surrogate values.
    We valued foreign brokerage and handling using Indian values that 
were reported in the public version of the questionnaire response 
placed on the record in Certain Stainless Steel Wire Rod from India; 
Preliminary Results of Antidumping Duty Administrative and New Shipper 
Review, 63 FR 48184 (September 9, 1998) (India Wire Rod). We valued 
domestic inland insurance using the Department's recently revised Index 
of Factor Values for Use in Antidumping Duty Investigations Involving 
Products from the PRC (available on the Department's website). We 
identify the source used to value foreign inland freight in the Normal 
Value section of this notice, below. We adjusted these values, as 
appropriate, to account for inflation or deflation between the 
effective period and the POR. We calculated the inflation or deflation 
adjustments for all factor values, except labor, using the wholesale 
price indices (WPI) for India as published in the International 
Monetary Fund's (IMF's) publication, International Financial 
Statistics.

Normal Value

    For exports from NME countries, section 773(c)(1) of the Act 
provides that the Department shall determine NV using a factors of 
production (FOP) methodology if: (1) The subject merchandise is 
exported from a NME country, and (2) available information does not 
permit the calculation of NV using home-market prices, third-country 
prices, or constructed value under section 773(a) of the Act. Section 
351.408 of the Department's regulations sets forth the methodology used 
by the Department to calculate the NV of merchandise exported from NME 
countries. In every case conducted by the Department involving the PRC, 
the PRC has been treated as a NME. Since none of the parties to this 
proceeding contested such treatment, we calculated NV in accordance 
with section 773(c)(3) and (4) of the Act and section 351.408(c) of the 
Department's regulations.
    In accordance with section 773(c)(3) of the Act, the FOPs utilized 
in producing pencils include, but are not limited to: (1) Hours of 
labor required; (2) quantities of raw materials employed; (3) amounts 
of energy and other utilities consumed; and (4) representative capital 
costs, including depreciation. In accordance with section 773(c)(4) of 
the Act, the Department valued the FOPs, to the extent possible, using 
the costs of the FOP in a market economy that is (1) at a level of 
economic development comparable to the PRC, and (2) a significant 
producer of comparable merchandise. We determined that India is 
comparable to the PRC in terms of per capita gross national product and 
the national distribution of labor. Furthermore, India is a significant 
producer of comparable merchandise. See Memorandum From Jeff May, 
Director, Office of Policy, to Holly Kuga, Senior Office Director, AD/
CVD Enforcement, dated July 30, 2001, which is on file in the CRU-
Public File. In instances where Indian surrogate value information was 
not available, we relied on Indonesian values and, as noted below, U.S. 
values. Indonesia is also comparable to the PRC in terms of per capita 
gross national product and the national distribution of labor, and it 
is a significant producer of comparable merchandise. We valued Chinese 
Lindenwood, the wood product used to produce pencils in the PRC, using 
U.S. publicly available, published prices for American Basswood because 
price information for Chinese Lindenwood

[[Page 2406]]

and for American Basswood is not available elsewhere.\3\
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    \3\ Chinese Lindenwood and American Basswood are virtually the 
same type of wood. U.S. prices for American Basswood were used to 
value Chinese Lindenwood in the Less Than Fair Value Investigation. 
See Notice of Final Determination of Sales at Less Than Fair Value; 
Certain Cased Pencils from the People's Republic of China, 59 FR 
55625, 55632 (1994). This methodology was upheld by the Court of 
International Trade on remand. See Writing Instrument Manufacturers 
Association, Pencil Section, et al. v. United States, Slip Op. 97-
151 (Ct. Int'l. Trade, Nov. 13, 1997) at 16.
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    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we attempted to value the FOPs using surrogate values 
that were in effect during the POR. However, when we were unable to 
obtain the surrogate values in effect during the POR, we adjusted the 
values, as appropriate, to account for inflation or deflation between 
the effective period and the POR. We calculated the inflation or 
deflation adjustments for all factor values, except labor, using the 
wholesale price indices (WPI) for India as published in the 
International Monetary Fund's (IMF's) publication, International 
Financial Statistics. We valued the FOP as follows:
    (1) We calculated a surrogate value for Chinese Lindenwood Pencil 
Slats based on the publicly available U.S. lumber prices for Basswood 
published in the Sec. 2001 Hardwood Market Report for the 
period December 1999 to November 2000.
    (2) We valued Chinese Lindenwood Logs using prices for grade 2 U.S. 
basswood, kiln dried, 9/4 lumber prices set forth in the Sawlog 
Bulletin for the period January 2000 to November 2000.
    (3) We valued the following material inputs based on Indian import 
data from the Monthly Statistics of the Foreign Trade of India (MSFTI) 
for April-August 2000 \4\: graphite, kaolin clay, bees wax, mixed wax, 
wax, clear wax, lacquer, paint, dipping lacquer, glue, clear glue, 
foil, sealing paper, stearic acid, printing ink, key chain, plastic, 
foam grip, glitter, talcum powder, heat transfer film, pigment, dye, 
dyestuff, diluent, hardening oil, and cellulose.
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    \4\ We note that we were unable to collect surrogate value data 
for certain months of the POR. We intend to continue to research and 
gather this data for the final results of this review.
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    (4) We valued the following material inputs based on Indian import 
data from the MSFTI for January-December 2000: black cores, color 
cores, raw pencils, erasers, and ferrules.
    (5) We valued the following material inputs based on Indonesian 
import data from the Foreign Trade Statistical Bulletin of Indonesia 
(FTSBI) for January-December, 2000: petrol wax, tallow, paraffin wax, 
emulsified paraffin wax.
    (6) In accordance with section 351.408(c)(1) of the Department's 
regulations, we valued solid glue at the actual purchase price because 
it was purchased from a market economy in U.S. Dollars.
    (7) We valued the following packing materials based on Indian 
import data from MSFTI for April-August, 2000: paperboard blister cards 
(sleeves), inner paperboard boxes, master paperboard cartons, pencil 
paperboard packaging, non-corrugated paper cartons, cardboard boxes, 
inner paper boxes, cards, sticker paper, corrugated cardboard, PVC 
covers for blister cards, plastic shrink wrap, plastic film, plastic 
strips, poly bags, plastic twisty, plastic canisters, plastic boxes, 
packing tape and paper labels.
    (8) We valued energy inputs as follows. We valued coal based on 
Indian import data from MSFTI for April-August 2000. We valued steam 
based on Asian Development Bank data published in October, 1997. We 
valued electricity based on the 1998/1999 consumer category-wise 
average tariff of electricity (paise/kWh) for industrial enterprises 
from the publicly available 1999-2000 ``Energy Data Directory & 
Yearbook'' published by Tata Energy Research Institute.
    (9) In accordance with 19 CFR 351.408(c)(3) we valued labor using a 
regression-based wage rate for the PRC listed in the Import 
Administration Web site under ``Expected Wages of Selected NME 
Countries.'' See http://ia.ita.doc.gov/wages.
    (10) We derived ratios for factory overhead, selling, general and 
administrative (SG&A) expenses, and profit using information reported 
for 1999-2000 in the Reserve Bank of India Bulletin of March 31, 2001. 
From this information, we were able to calculate factory overhead as a 
percentage of direct materials, labor, and energy expenses; SG&A 
expenses as a percentage of the total cost of manufacturing; and profit 
as a percentage of the sum of the total cost of manufacturing and SG&A 
expenses.
    (11) We used the following sources to value truck and rail freight 
services incurred to transport the finished product to the port and 
direct materials, packing materials, and coal from the suppliers of the 
inputs to the producers. We valued truck freight services using the 
1999 rate quotes reported by Indian freight companies. See Notice of 
Final Determination of Sales at Less Than Fair Value: Bulk Aspirin From 
the People's Republic of China, 65 FR 33805 (May 25, 2000). We valued 
rail freight services using the April 1995 rates published by the 
Indian Railway Conference Association.
    For further discussion of the surrogate values used in this review, 
see Memorandum From The Team Regarding Selection of Surrogate Values 
for Factors of Production for the Preliminary Results of the 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China, (December 31, 2001), which is on file in the CRU-
Public File.

Facts Available

    On August 7, 2001, 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.
    Anhui Light Industrial Products Import/Export Corporation (Anhui) 
submitted a letter dated August 20, 2001, indicating that it would not 
respond to the Department's questionnaire.
    On August 21, 2001 the Department received a facsimile from the 
CCCLA stating that MOFTEC entrusted CCCLA to transmit the Department's 
questionnaires to listed respondents. CCCLA stated that it could 
contact only two firms: CNLIP and JP. CNLIP and JP, however, failed to 
respond to the Department's questionnaire.
    For non-responding parties that received the Department's 
questionnaire but failed to respond, including Anhui, CNLIP and JP, the 
Department is applying adverse facts available.
    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 these 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. Moreover, we have determined that these firms are 
not eligible for separate rate status. Therefore, they are all being 
treated as part of the PRC-wide

[[Page 2407]]

entity. 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, which is the current PRC-wide rate. This 
rate was 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 current PRC-wide rate. 
This rate was the 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 ``recalculated'' petition rate constitutes secondary 
information within the meaning of the SAA. See SAA at 870. This rate is 
currently applicable to all exporters that do not have separate rates 
and was corroborated by the Department in a prior segment of this 
proceeding. Further, 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. Moreover, 
the rate used is the rate currently applicable to the uncooperative 
exporters. Assigning a lower rate to these firms would reward them for 
their failure to cooperate. Thus it is appropriate to use the selected 
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, 1999 through 
November 30, 2000:

------------------------------------------------------------------------
                                                                Margin
                   Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
China First Pencil Co., Ltd................................        59.81
Orient International Holding Shanghai Foreign Trade Co.,           76.46
 Ltd.......................................................
Kaiyuan Group Corporation..................................       223.60
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 these preliminary results. An 
interested party may request a hearing within 30 days of publication of 
these preliminary results. See 19 CFR 351.310(c). We will issue a 
memorandum detailing the dates of a hearing, if any, and deadlines for 
submission of case briefs/written comments and rebuttal briefs or 
rebuttals to written comments, limited to issues raised in such briefs 
or comments, after verification of CFP, GSSG, Three Star and Kaiyuan. 
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 issue the final results of these administrative 
reviews, which will include the results of its analysis of issues 
raised in interested party 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.

Duty Assessment Rates

    Upon completion of this review, the Department shall determine, and 
the U.S. Customs Service shall assess, antidumping duties on all 
appropriate entries. The Department will issue appraisement 
instructions directly to Customs upon completion of this review. For 
assessment purposes, for CFP, OIHSFTC and Kaiyuan we calculated 
importer-specific assessment rates for pencils from the PRC. We divided 
the total dumping margin (calculated as the difference between NV and 
CEP) for the importer by the entered value of the reviewed sale. Where 
the importer-specific assessment rate is above de minimis, we will 
direct U.S. Customs to assess the resulting ad valorem rate against the 
entered value of the entry of the subject merchandise by that importer 
during the POR. For exporters subject to the PRC-wide rate, we will 
instruct Customs to assess the PRC-wide rate against the entered value 
of the subject merchandise.

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

[[Page 2408]]

sections section 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 31, 2001.
Susan Kuhbach,
Acting Assistant Secretary for Import Administration.
[FR Doc. 02-1269 Filed 1-16-02; 8:45 am]
BILLING CODE 3510-DS-P