[Federal Register Volume 67, Number 175 (Tuesday, September 10, 2002)]
[Notices]
[Pages 57384-57387]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-22992]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-504]


Notice of Preliminary Results of Antidumping Administrative 
Review: Petroleum Wax Candles From the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on petroleum wax 
candles from the People's Republic of China (PRC) in response to a 
request from Dongguan Fay Candle Co., Ltd. (Fay), a PRC producer and 
exporter of subject merchandise, and its U.S. importers, TIJID, Inc. 
(TIJID) (d/b/a DIJIT Inc.), and Palm Beach Home Accents, Inc., (Palm 
Beach), (collectively, ``respondents''). The review covers the period 
August 1, 2000 through July 31, 2001.
    We preliminarily determine that sales have been made below normal 
value (NV). The preliminary results are listed below in the section 
titled ``Preliminary Results of Review.'' If these preliminary results 
are adopted in our final results, we will instruct the U.S. Customs 
Service (Customs) to assess antidumping duties on imports into the 
United States of subject merchandise exported by Fay. Interested 
parties are invited to comment on these preliminary results. (See the 
``Preliminary Results of Review'' section of this notice.)

EFFECTIVE DATE: September 10, 2002.

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

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations are to the Tariff Act of 
1930, as amended (the Act). In addition, unless otherwise indicated, 
all citations to the Department's regulations are to 19 CFR part 351 
(2001).

Background

    The Department published in the Federal Register an antidumping 
duty order on petroleum wax candles from the PRC on August 28, 1986 (51 
FR 30686). On August 31, 2001, the Department received, in accordance 
with section 751(a)(2)(B) of the Act and section 351.213(b) of the 
Department's regulations, a timely request from respondents to conduct 
an administrative review of the antidumping duty order on petroleum wax 
candles from the PRC. On October 1, 2001, the Department published its 
initiation of this administrative review for the period August 1, 2000 
through July 31, 2001 (66 FR 49924). Because it was not practicable to 
complete the review within the initial time period, on April 18, 2002, 
the Department published an extension of the deadline for completion of 
the preliminary results of this administrative review until no later 
than September 3, 2002 (67 FR 19159).

Scope of the Antidumping Duty Order

    The products covered by this order are certain scented or unscented 
petroleum wax candles made from petroleum wax and having fiber or 
paper-cored wicks. They are sold in the following shapes: tapers, 
spirals, and straight-sided dinner candles; rounds, columns, pillars, 
votives; and various wax-filled containers. The products were 
classified under the Tariff Schedules of the United States (TSUS) item 
755.25, Candles and Tapers. The products are currently classified under 
the Harmonized Tariff Schedule of the United States (HTSUS) item 
3406.00.00. Although the HTSUS subheading is provided for convenience 
and customs purposes, our written description of the scope of this 
proceeding remains dispositive.

Period of Review

    The period of review (POR) is August 1, 2000 through July 31, 2001.

Application of Facts Available

    The Department conducted verification at Fay's factory in China 
from July 22 through 26, 2002. On July 22, 2002, respondents presented 
corrections to their questionnaire responses. The corrections included 
a previously unreported production order, which amounted to a 
significant increase in the production for the POR. The verification 
team proceeded with verification of the questionnaire responses, but 
indicated that it would

[[Page 57385]]

have to confer with Washington concerning whether the new information 
could be accepted. On July 26, 2002, after consulting with Washington, 
the team returned all documents relating to the new production data and 
halted the remainder of the verification in China. See Administrative 
Review of Petroleum Wax Candles from the Peoples Republic of China 
(PRC) (A-570-504): PRC Verification, Memorandum to the File, through 
Sally C. Gannon, from Mark Hoadley, Brett Royce, and Jessica Burdick 
(August 30, 2002) (PRC Verification Report), which is on file in the 
Central Records Unit (CRU), room B-099 of the main Department building; 
2000/2001 Administrative Review on Candles from the People Republic of 
China (A-570-504): Telephone Call Regarding Verification, Memorandum to 
the File from Sally C. Gannon (July 26, 2002).
    The next week, the Department informed respondents that it would 
proceed with the U.S. portion of the verification, and the Department 
and respondents agreed on August 12 through 15, 2002 as the dates for 
this verification. See 2000/2001 Administrative Review on Candles from 
the People Republic of China (A-570-504): Telephone Call Regarding 
Verification & Rejection of New Factual Information, Memorandum to the 
File, through Sally C. Gannon, from Jessica Burdick (July 31, 2002). On 
August 9, 2002, respondents called and informed the Department that 
they had made a decision not to proceed with the U.S. portion of the 
verification. See 2000/2001 Administrative Review on Candles from the 
People Republic of China (A-570-504): Telephone Call Regarding 
Verification dated August 9, 2002, Memorandum to the File from Sally C. 
Gannon (August 9, 2002). On August 9, 2002, respondents also filed a 
letter informing the Department of their decision not to participate in 
the U.S. verification.
    We find that, in accordance with section 776(a)(2)(D) of the Act, 
the use of facts available for respondents is appropriate for these 
preliminary results of review. Respondents' decision not to allow the 
Department to conduct an on-site U.S. verification prevented necessary 
information from being verified as provided in section 782(i), a 
condition specifically listed in section 776(a)(2)(D) as mandating the 
use of facts available. Once the Department determines that the use of 
facts available is warranted, section 776(b) of the Act further permits 
the Department to apply an adverse inference if it makes the additional 
finding that ``an interested party has failed to cooperate by not 
acting to the best of its ability to comply with a request for 
information.'' As stated above, the Department set a date for the U.S. 
portion of the verification that respondents agreed was acceptable. The 
respondents decided not to proceed with verification. The respondents 
did not ask that the verification be rescheduled, but simply stated 
that they would not proceed with the verification. Since the 
respondents cancelled the U.S. sales verification, the Department 
cannot rely on respondents' questionnaire responses to calculate a 
dumping margin for Fay. The U.S. sales verification is integral to our 
calculation because, without performing the U.S. sales verification, we 
were unable to complete the sales reconciliation as well as 
verification of total quantity and value, which are principle elements 
of the over all verification of respondents' questionnaire responses.
    Furthermore, while the Department was able to verify parts of the 
questionnaire responses in China, that information is inextricably 
linked with the information unverified in the United States. See PRC 
Verification Report. For example, the Department was able to verify 
several factors used in the production of candles; that information, 
however, is not usable if the Department is unable to verify which 
products were actually sold in the United States, a step in the 
verification process that would have taken place in the United States 
if verification had been allowed. Moreover, personnel at Fay stated 
that some items in the factors of production portion of the response 
would have to be verified, at least in part, in the United States. For 
example, they stated that additional documents we requested to confirm 
the amounts of dyes, fragrances, packaging and hang tags used in 
production were kept in Florida. In addition, as noted above, by not 
performing the U.S. sales verification, we were unable to complete the 
sales reconciliation as well as verification of total quantity and 
value, which are principle elements of the overall verification of 
respondents' questionnaire responses. Thus, the use of facts available 
is mandated for the total response of Fay and its importers. In other 
words, it is not possible to rely on the respondents' questionnaire 
responses to calculate a margin for Fay's exports, even using partial 
facts available ``plugs'' for U.S. sales data, which is the data for 
which respondents decided not to allow verification.
    Therefore, we determine that the respondents did not cooperate to 
the best of their ability and that the use of adverse facts available 
is appropriate under section 776(b). Accordingly, as adverse facts 
available, we have applied the calculated margin of 95.22 percent as 
published in Petroleum Wax Candles from the People's Republic of China: 
Notice of Final Results of New Shipper Review, 67 FR 41395 (June 18, 
2002) (Candles NSR). See Memorandum to Joseph A. Spetrini, Regarding 
the Application of Facts Available for Exports from Dongguan Fay Candle 
Co., Ltd. (September 3, 2002) for a complete discussion of the 
Department's decision to apply adverse facts available and the choice 
of the rate from the new shipper review.

Corroboration

    Section 776(c) of the Act provides that when the Department relies 
on the 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 (SAA), 
H.R. Doc. 103-316, 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. However, unlike other types of information, such as input 
costs or selling expenses, there are no independent sources for 
calculated dumping margins. The only source for calculated margins is 
administrative determinations. Thus, in an administrative review, if 
the Department chooses as total adverse facts available a calculated 
dumping margin from the current or a prior segment of the proceeding, 
it is not necessary to question the reliability of the margin for that 
time period. See, e.g., Grain-Oriented Electrical Steel From Italy; 
Preliminary Results of Antidumping Duty Administrative Review, 61 FR 
36551, 36552 (July 11, 1996). With respect to the relevance aspect of 
corroboration, however, the Department will consider information 
reasonably at its disposal to determine whether a margin continues to 
have relevance. Where circumstances indicate that the selected margin 
is not appropriate as adverse facts available, the Department will 
disregard the margin and determine an appropriate margin. For example, 
in Fresh Cut Flowers from Mexico: Final Results of Antidumping 
Administrative Review, 61 FR 6812 (February 22, 1996), the Department 
disregarded the highest margin in that case as adverse best information 
available (the predecessor to facts available) because the margin

[[Page 57386]]

was based on another company's uncharacteristic business expense 
resulting in an unusually high margin. Similarly, the Department does 
not apply a margin that has been discredited. See D & L Supply Co. v. 
United States, 113 F.3d 1220, 1221(Fed. Cir. 1997) (the Department will 
not use a margin that has been judicially invalidated). None of these 
unusual circumstances are present here.
    Accordingly, we determine that the new shipper rate is in accord 
with section 776(c)'s requirement that secondary information be 
corroborated, i.e., that it have probative value. The information used 
in the new shipper review to determine this margin was fully verified 
and subject to the comments of both respondents and petitioner 
throughout the review. Thus, it is based on the verified sales and 
production data of the respondents in that review, as well as on the 
most appropriate surrogate value information available to the 
Department, chosen from submissions by the parties in that review as 
well as information gathered by the Department itself. Moreover, as 
there is no information on the record of this review that demonstrates 
that this rate is not appropriately used as facts available for 
respondents, we determine that this rate has probative value.

Separate Rates

    Fay requested a separate, company-specific rate. In its 
questionnaire responses, Fay stated that it is an independent legal 
entity. To establish whether a company operating in an NME country is 
sufficiently independent to be eligible for a separate rate, the 
Department analyzes each exporting entity under the test established in 
Final Determination of Sales at Less Than Fair Value: Sparklers from 
the People's Republic of China, 56 FR 20588 (May 6, 1991), 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). 
Under this policy, exporters in NMEs are granted separate, company-
specific margins when they can demonstrate an absence of government 
control, 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 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. De facto absence 
of government control over exports is based on four factors: 1) whether 
each exporter sets its own export prices independently 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.
De Jure Control
    With respect to the absence of de jure government control over the 
export activities of the company reviewed, evidence on the record 
indicates that Fay's export activities are not controlled by the 
government. Fay submitted evidence of its legal right to set prices 
independently of all government oversight. The business license of the 
company indicates that it is permitted to engage in the exportation of 
candles. We find no evidence of de jure government control restricting 
this company's exportation of candles.
    The following laws, which have been placed on the record of this 
review, indicate a lack of de jure government control over privately-
owned companies, such as Fay, and that control over these enterprises 
rests with the enterprises themselves. The Administrative Regulations 
of the People's Republic of China Governing the Registration of Legal 
Corporations, issued on June 3, 1988 by the State Council of the PRC, 
and the Law of the People's Republic of China on Chinese-Foreign 
Cooperative Joint Ventures, promulgated on April 13, 1998 by Order No. 
4 of the President of the People's Republic of China and effective from 
April 13, 1998, all placed on the record of this review, provide that, 
to qualify as legal persons, companies must have the ``ability to bear 
civil liability independently'' and the right to control and manage 
their businesses. These regulations also state that, as an independent 
legal entity, a company is responsible for its own profits and losses. 
See, e.g., Notice of Final Determination of Sales at Less Than Fair 
Value: Manganese Metal from the People's Republic of China, 60 FR 56045 
(November 6, 1995) (Manganese Metal). Therefore, we preliminarily 
determine that there is an absence of de jure government control over 
export activity with respect to this firm.
De Facto Control
    With respect to the absence of de facto control over export 
activities, the information on the record indicates that the government 
has no involvement in the determination of export prices, profit 
distribution, marketing strategy, and contract negotiations. Our 
analysis indicates that there is no government involvement in the daily 
operations or the selection of management for this company. In 
addition, we found that Fay's pricing and export strategy decisions are 
not subject to any governmental review or approval, and that there are 
no governmental policy directives that affect these decisions. There 
are no restrictions on the use of export earnings. The company's 
general manager has the right to negotiate and enter into contracts, 
and may delegate this authority to employees within the company. There 
is no evidence that this authority is subject to any level of 
governmental approval. Fay has stated that its management is selected 
by its board of directors and/or its employees and that there is no 
government involvement in the selection process. Consequently, because 
evidence on the record indicates an absence of government control, both 
in law and in fact, over its export activities, we preliminarily 
determine that Fay has met the requirements for receiving a separate 
rate for purposes of this review.

Preliminary Results of Review

    As a result of our review, we preliminarily determine the 
antidumping margin for Fay, for the period of August 1, 2000 through 
July 31, 2001, to be as follows:

----------------------------------------------------------------------------------------------------------------
                Manufacturer/exporter                          Time period                     Margin
----------------------------------------------------------------------------------------------------------------
Dongguan Fay Candle Co., Ltd........................                8/1/00-7/31/01                        95.22%
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[[Page 57387]]

Cash Deposit Requirements

    If these preliminary results are not modified in the final results 
of this review, the following deposit rates will be effective upon 
publication of the final results of this administrative review for all 
shipments of petroleum wax candles from the PRC 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) the cash deposit rate 
for the reviewed company will be the rate established in the final 
results of this review; (2) for previously reviewed PRC and non-PRC 
exporters with separate rates, the cash deposit rate will be the 
company-specific rate established for the most recent period; (3) for 
all other PRC exporters, the rate will be the PRC-wide rate, which is 
currently 54.21 percent; and (4) for all 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 
rates, when imposed, shall remain in effect until publication of the 
final results of the next administrative review.

Comments and Hearing

    Any interested party may request a hearing within 30 days of 
publication of this notice in accordance with section 351.310(c) of the 
Department's regulations. Any hearing would normally be held 37 days 
after the publication of this notice, or the first workday thereafter, 
at the U.S. Department of Commerce, 14th Street and Constitution Avenue 
N.W., Washington, D.C. 20230. Individuals who wish to request a hearing 
must submit a written request within 30 days of the publication of this 
notice in the Federal Register to the Assistant Secretary for Import 
Administration, U.S. Department of Commerce, Room 1870, 14th Street and 
Constitution Avenue, NW, Washington, D.C. 20230. Requests for a public 
hearing should contain: (1) the party's name, address, and telephone 
number; (2) the number of participants; and, (3) to the extent 
practicable, an identification of the arguments to be raised at the 
hearing.
    Unless otherwise notified by the Department, interested parties may 
submit case briefs within 30 days of the date of publication of this 
notice in accordance with section 351.309(c)(ii) of the Department's 
regulations. As part of the case brief, parties are encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited. Rebuttal briefs, which must 
be limited to issues raised in the case briefs, must be filed within 
five days after the case brief is filed. If a hearing is held, an 
interested party may make an affirmative presentation only on arguments 
included in that party's case brief and may make a rebuttal 
presentation only on arguments included in that party's rebuttal brief. 
Parties should confirm by telephone the time, date, and place of the 
hearing 48 hours before the scheduled time. The Department will issue 
the final results of this administrative review, which will include the 
results of its analysis of issues raised in the briefs, within 120 days 
from the date of publication of these preliminary results, unless the 
time limit is extended.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and Customs shall assess, antidumping duties on all 
appropriate entries. In accordance with 19 CFR 351.212(b)(1), we have 
calculated an exporter/importer (or customer)-specific assessment rate 
for merchandise subject to this review. The Department will issue 
appropriate assessment instructions directly to Customs within 15 days 
of publication of the final results of review. If these preliminary 
results are adopted in the final results of review, we will direct 
Customs to assess the resulting assessment rates, where appropriate, 
against the entered Customs values for the subject merchandise on each 
of the importer's/customer's entries during the review period.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 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.
    This administrative review and this notice are issued and published 
in accordance with sections 751(a)(1) and 777 (i)(1) of the Act.

    Dated: September 3, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-22992 Filed 9-9-02; 8:45 am]
BILLING CODE 3510-DS-S