[Federal Register Volume 69, Number 8 (Tuesday, January 13, 2004)]
[Notices]
[Pages 1965-1970]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-699]


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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 the 
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 
period December 1, 2001, through November 30, 2002, have been made at 
prices less than normal value (NV). In addition, we are rescinding this 
review with respect to Guangdong Stationery & Sporting Goods Imports & 
Export Co., Ltd. (GSSG) because GSSG withdrew its request for an 
administrative review in a timely manner and no other interested party 
requested a review of GSSG. Furthermore, we are preliminarily 
rescinding this review with respect to Tianjin Custom Wood Processing 
Co., Ltd. (TCW) because TCW reported, and the Department confirmed, 
that it made no shipments of subject merchandise to the United States 
during the period of review (POR). If these preliminary results are 
adopted in the final results of this review, we will instruct U.S. 
Customs and Border Protection (CBP) to assess antidumping duties on all 
appropriate entries. The Department invites interested parties to 
comment on these preliminary results.

EFFECTIVE DATE: January 13, 2004.

FOR FURTHER INFORMATION CONTACT: Paul Stolz, Christopher Zimpo or Magd 
Zalok, 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, (202) 482-2747 and (202) 482-4162, respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

    The POR is December 1, 2001 through November 30, 2002.

Background

    On December 2, 2002, the Department published in the Federal 
Register a notice of ``Opportunity to Request Administrative Review'' 
of the antidumping duty order on certain cased pencils from the 
People's Republic of China (PRC), covering the period December 1, 2001, 
through November 30, 2002. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 67 FR 71533-34.
    On December 27, 2002, in accordance with 19 C.F.R. Sec. 351.213(b), 
a PRC exporter, Shandong Rongxin Import and Export Co., Ltd. (Rongxin), 
and a PRC producer of pencils, Laizhou City Guangming Pencil-Making 
Co., Ltd., requested an administrative review of the order on certain 
cased pencils from the PRC. On December 30, 2002, the Writing 
Instrument Manufacturers Association, a trade association composed of 
domestic pencil producers, and Sanford Corporation; Tennessee Pencil 
Company, Musgrave Pencil Company, Moon Products, Inc., and General 
Pencil Company (collectively, the petitioners), requested that the 
Department conduct an administrative review of exports of subject 
merchandise made by 12 producers/exporters.\1\ In addition, on December 
31, 2002, China First Pencil Company, Ltd. (CFP/Three Star\2\), Orient 
International Holding Shanghai Foreign Trade Co., Ltd. (SFTC) and GSSG 
requested reviews of their exports of subject merchandise to the United 
States.
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    \1\ The 12 producers/exporters covered by the petitioners' 
request are Rongxin, China First Pencil Company, Ltd./Shanghai Three 
Star Stationery Industry Corp., Orient International Holding 
Shanghai Foreign Trade Co., Ltd., Tianjin Custom Wood Processing 
Co., Ltd., Anhui Import/Export Group Corp., Beijing Light Industrial 
Products Import/Export Corporation, China National Light Industrial 
Products Import/Export Corp., Dalian Light Industrial Products 
Import/Export Corp., Liaoning Light Industrial Products Import/
Export Corp., Qingdao Light Industrial Products Import/Export Corp., 
Shandong Light Industrial Products Imports/Export Corp., and Sichuan 
Light Industrial Products Import/Export Corp.
    \2\ In the final results of the 1999 - 2000 administrative 
review of the order on certain cased pencils from the PRC, the 
Department determined that CFP and Shanghai Three Star Stationery 
Industry Corp. (Three Star) are sufficiently intertwined to warrant 
treating these two entities as a single entity for purposes of our 
antidumping analysis. This combined entity is referred to herein as 
CFP/Three Star. See Certain Cased Pencils from the People's Republic 
of China; Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 67 FR 48612,48613 (July 25, 2002).
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    The Department published a notice announcing its initiation of an 
antidumping duty administrative review covering the exports of the 
above-referenced companies during the POR. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Request 
for Revocation in Part, 68 FR 3009 (January 22, 2003).
    On January 15, 2003, we issued antidumping duty questionnaires to 
the exporters/producers subject to this review. In its February 21, 
2003 response to the Department's questionnaire, TCW stated that it did 
not export subject merchandise to the United States during the POR. On 
February 26, 2003, within 90 days of publication of the notice of 
initiation for this review, GSSG withdrew its request for an 
administrative review. CFP/Three Star, SFTC and Rongxin submitted 
timely questionnaire responses. The remaining exporters/producers did 
not submit questionnaire responses and did not request that we extend 
the applicable deadlines for doing so.
    Pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as 
amended (the Act),

[[Page 1966]]

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 19, 2003, in 
accordance with the Act, the Department extended the time limit for the 
preliminary results of this review until December 31, 2003. See Certain 
Cased Pencils from the People's Republic of China: Extension of Time 
Limit for Preliminary Results of Antidumping Duty Administrative 
Review, 68 FR 51551 (August 27, 2003).
    The Department is conducting this administrative review in 
accordance with section 751 of the Act.

Scope of the Order

    Imports covered by this order are shipments of certain cased 
pencils of any shape or dimension (except as noted below) 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 the order are classified under subheading 9609.10.00 of the 
Harmonized Tariff Schedule of the United States (HTSUS). Specifically 
excluded from the scope of the order are mechanical pencils, cosmetic 
pencils, pens, non-cased crayons (wax), pastels, charcoals, chalks, and 
pencils produced under U.S. patent number 6,217,242, from paper infused 
with scents by the means covered in the above-referenced patent, 
thereby having odors distinct from those that may emanate from pencils 
lacking the scent infusion. Also excluded from the scope of the order 
are pencils with all of the following physical characteristics: 1) 
length: 13.5 or more inches; 2) sheath diameter: not less than one-and-
one quarter inches at any point (before sharpening); and 3) core 
length: not more than 15 percent of the length of the pencil.
    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 of Review

    We are preliminarily rescinding this review with respect to TCW and 
Laizhou because they made no shipments of subject merchandise to the 
United States during the POR. The Department reviewed CBP data which 
indicate that these companies did not export subject merchandise to the 
United States during the POR.

Final Partial Rescission of Review

    In addition, we are rescinding this review with respect to GSSG 
because this company withdrew its request for review and no other 
interested party requested a review of GSSG. Pursuant to 19 C.F.R. 
Sec. 351.213(d)(1), the Department will rescind an administrative 
review, in whole or in part, if a party that requested a review 
withdraws the request within 90 days of the date of publication of the 
notice announcing initiation of the requested review. GSSG withdrew its 
request for review within the 90 day time limit. Accordingly, we are 
rescinding the administrative review of GSSG's exports of subject 
merchandise for the period December 1, 2001, through November 30, 2002, 
and will issue appropriate assessment instructions to CBP.

Verification

    As provided in section 782(i) of the Act, during August and 
September 2003, the Department conducted a verification of CFP/Three 
Star. During the verification of CFP/Three Star, the Department 
followed standard procedures in order to test the information submitted 
by the respondent. These procedures include 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 in the report: Verification of the 
Questionnaire Responses of China First Pencil Co., Ltd./Shanghai Three 
Star Stationery Industry Corp. in the 2001 - 2002 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 governmental 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 its export activities are sufficiently independent so 
that it should be granted a separate rate. Rongxin, CFP/Three Star and 
SFTC provided the separate rates information requested by the 
Department and reported that their export activities are not subject to 
governmental control.
    We examined the separate rates information provided by Rongxin, 
CFP/Three Star and SFTC 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 
governmental 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 
governmental control of its export activities so as 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 the 
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 the 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).
    Rongxin, CFP/Three Star and SFTC reported that the merchandise 
under

[[Page 1967]]

review was not subject to restrictive stipulations associated with 
their export licenses (e.g., pencils were not on the government's list 
of products subject to export restrictions or subject to special export 
licensing requirements). Rongxin, CFP/Three Star and SFTC submitted 
copies of their business licenses in their questionnaire responses. We 
found no inconsistencies with their statements regarding the absence of 
restrictive stipulations associated with their business licenses. 
Furthermore, Rongxin, CFP/Three Star and SFTC submitted copies of PRC 
legislation demonstrating the statutory authority for establishing the 
de jure absence of governmental control over the companies. Thus, the 
evidence on the record supports a preliminary finding of the absence of 
de jure governmental control based on: (1) an absence of restrictive 
stipulations associated with the business licenses of Rongxin, CFP/
Three Star and SFTC; 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 the 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 independentdecisions 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.
    Rongxin, CFP/Three Star and SFTC reported that they determine 
prices for sales of the subject merchandise based on market principles, 
the cost of the merchandise, and profit. Moreover, Rongxin, CFP/Three 
Star and SFTC stated that they negotiated the price directly with their 
customers. Also, Rongxin, CFP/Three Star and SFTC claimed that their 
prices are not subject to review or guidance from any governmental 
organization. In addition, the record indicates that Rongxin, CFP/Three 
Star and SFTC have the authority to negotiate and sign contracts and 
other agreements. Further, Rongxin, CFP/Three Star and SFTC 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, Rongxin, CFP/Three Star and SFTC reported that they 
have autonomy in making decisions regarding the selection of 
management. Rongxin, CFP/Three Star and SFTC indicated that their 
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 Rongxin, CFP/Three Star and SFTC .
    Finally, Rongxin, CFP/Three Star and SFTC reported that they retain 
the proceeds of their export sales, and their management determines how 
to use profits. There is no evidence on the record with respect to 
Rongxin, CFP/Three Star and SFTC to suggest that there is any 
governmental involvement in decisions regarding disposition of profits 
or financing of losses.
    Therefore, the evidence on the record supports a preliminary 
finding of the absence of de facto governmental control based on record 
statements and supporting documentation showing that: (1) Rongxin, CFP/
Three Star and SFTC set their own export prices independent of the 
government and without the approval of a governmental authority; (2) 
Rongxin, CFP/Three Star and SFTC have the authority to negotiate and 
sign contracts and other agreements; (3) Rongxin, CFP/Three Star and 
SFTC have adequate autonomy from the government regarding the selection 
of management; and (4) Rongxin, CFP/Three Star and SFTC 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 review by Rongxin, CFP/
Three Star and SFTC demonstrates an absence of governmental control, 
both in law and in fact, with respect to their exports of the 
merchandise under review, in accordance with the criteria identified in 
Sparklers and Silicon Carbide. Therefore, for purposes of these 
preliminary results, we are granting separate rates to Rongxin, CFP/
Three Star and SFTC .

Fair Value Comparisons

    To determine whether the respondents' sales of subject merchandise 
were made at less than NV, we compared 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 EPs for sales by Rongxin, CFP/Three Star and SFTC to the 
United States because the subject merchandise was sold directly to 
unaffiliated customers in the United States (or to unaffiliated 
resellers outside the United States with knowledge that the merchandise 
was destined for the United States) prior to importation and CEP 
methodology was not otherwise indicated. We made deductions from the 
net sales price for foreign inland freight and foreign brokerage and 
handling. Each of these services was provided by a NME vendor, and 
thus, as explained in the ``Normal Value'' section below, we based the 
deductions for these movement charges on values from a surrogate 
country.
    For the reasons stated in the ``Normal Value'' section below, we 
selected India as the surrogate country. 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). 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 these values 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

[[Page 1968]]

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. 19 C.F.R. Sec. 351.408 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 country. Because 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 19 C.F.R. 
Sec. 351.408(c).
    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 one or more market economy countries that are 
(1) at a level of economic development comparable to that of the PRC, 
and (2) significant producers 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. In instances 
where Indian surrogate value information was not available, we relied 
on Indonesian, Philippine, and U.S. values as noted below. Indonesia 
and the Philippines are also comparable to the PRC in terms of per 
capita gross national product and the national distribution of labor, 
and are significant producers of comparable merchandise. See Memorandum 
From Jeffrey May, Director, Office of Policy, to Holly Kuga, Senior 
Office Director, AD/CVD Enforcement, dated March 3, 2003, and 
Memorandum from Paul Stolz to File, dated December 30, 2003, which are 
in the CRU-Public File. We valued Chinese lindenwood, the type of wood 
used to produce pencils in the PRC, using publicly available, published 
U.S. prices for American basswood.\3\
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    \3\ In the antidumping investigation of certain cased pencils 
from the PRC, the Department found Chinese lindenwood and American 
basswood to be virtually indistinguishable and thus used U.S. prices 
for American basswood to value Chinese lindenwood. 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 
(November 8, 1994). This methodology was upheld by the Court of 
International Trade. 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, if we were unable to 
obtain surrogate values that were 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, as applicable, except 
labor, using the WPI for the appropriate surrogate country as published 
in International Financial Statistics. We valued the FOP as follows:
    (1) We valued Chinese lindenwood pencil slats using publicly 
available, published U.S. prices for American basswood lumber because 
price information for Chinese lindenwood and American basswood is not 
available from any of the potential surrogate countries. The U.S. 
lumber prices for basswood are published in the (copyright) 2002 
Hardwood Market Report for the period December 2001 through November 
2002.
    (2) We valued the following material inputs using Indian import 
data from the Monthly Statistics of the Foreign Trade of India (MSFTI) 
for December 2001 through November 2002: Acetone, alkyds resin, 
beeswax, black cores, butanes, butyl ester, calcium carbonate, castor 
oil, color cores, cellulose, erasers, dibutyl ester, diluent, dyestuff, 
ethanol, ethyl ester, ferrules, foam grips, foil, formaldehyde, 
glitter, glue, graphite powder, hardening oil, heat transfer film, 
kaolin clay, key chains, lithopone, malice acid ester, methyl benzene, 
nitro-paint/lacquer, penetrating agent, pigment, plastic, printing ink, 
propylene, pyroxylin, sawdust/wood, soap, soft agent, stearic acid, 
sticker paper, talcum powder, titanium, toppers, velvet wrap, wax and 
dye.
    (3) In accordance with 19 C.F.R. Sec. 351.408 (c)(1), we valued 
lacquer and the input materials used by CFP/Three Star to produce 
erasers at acquisition cost because these inputs were purchased from a 
market economy supplier and paid for using a market economy currency. 
Although one of CFP/Three Star's production facilities purchased black 
cores, color cores, and erasers from a market economy supplier using a 
market economy currency, we did not consider the acquisition cost 
reported for this facility in valuing cores, or erasers because CFP/
Three Star based the reported acquisition cost on selected purchases 
rather than all purchases during the POR. Therefore, we valued the 
cores and erasers that were purchased by CFP/Three Star from a market 
economy supplier using MSFTI and Indonesian data, respectively, for 
December 2001 through November 2002. See the Verification Report at 16 
for further details.
    (4) We valued the following packing materials using Indian import 
data from the MSFTI for December 2001 through November 2002: Cardboard 
cartons, master cartons, packing boxes, packing tape, pallets, paper 
labels, plastic boxes, plastic canisters, plastic shrink wrap, plastic 
straps, and polybags.
    (5) With respect to energy, we valued natural gas using Indonesian 
prices reported in Energy Prices and Taxes, Quarterly Statistics (Third 
Quarter 2002), published by the International Energy Agency. We valued 
electricity using the 2002 industry/commercial category-wise average 
tariff for electricity (U.S. dollars/kWh) used by Indian industrial 
enterprises from the publicly available Key World Energy Statistics 
(2002) (Energy Statistics), published by the International Energy 
Agency. We also valued diesel fuel and coal using the Indian value 
reported in Energy Statistics.
    (6) We valued water and steam using the Indian prices reported in 
Second Water Utilities Data Book (1997), published by the Asian 
Development Bank.
    (7) In accordance with 19 C.F.R. Sec. 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.
    (8) We derived ratios for factory overhead, selling, general and 
administrative (SG&A) expenses, and profit using the financial 
statements of Asia Wood International Corporation, a Philippine wood 
products producer. 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

[[Page 1969]]

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.
    (9) We used the following sources to value truck and rail freight 
services provided 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 and used in the 
less than fair value antidumping investigation of bulk aspirin from the 
PRC. 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. We 
adjusted these values, as appropriate, to account for inflation or 
deflation between the effective period and the POR.
    For further discussion of the surrogate values used in this review, 
see the 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 30, 2003), which is on file in the CRU-
Public File.

Use of Partial Facts Available

    Section 776(a)(1) of the Act provides for the use of facts 
available if information needed by the Department to make a 
determination is not on the record. In this review, CFP/Three Star 
failed to report certain sales of subject merchandise. (See the 
Verification Report at 6). Because the necessary information regarding 
the unreported sales is not on the record, the Department has resorted 
to the use of facts available in order to calculate the dumping margin 
on these sales.
    Pursuant to section 776(b) of the Act, when the Department uses 
facts available in reaching its determination, it may apply adverse 
inferences, if an interested party has failed to cooperate by not 
acting to the best of its ability to comply with a request for 
information. We have preliminarily determined that the record in this 
review does not indicate that CFP/Three Star failed to act to the best 
of its ability to comply with a request for information. While 
preparing reconciliation documentation requested by the Department at 
verification, company officials discovered that they failed to report a 
limited number of U.S. sales. Company officials explained that the 
omission occurred because the sales in question were made and invoiced 
shortly before the end of the POR but were posted in the company's 
accounting records for the period after the end of the POR. Given the 
limited number of transactions at issue and the level of cooperation 
received from company officials, we preliminarily determine that the 
use of an adverse inference in selecting from among the facts otherwise 
available is not warranted. As partial facts available, we 
preliminarily assigned to the unreported sales the weighted-average 
dumping margin calculated for CFP/Three Star's reported sales.

Use of Total Adverse Facts Available

    Eight producers/exporters named in the notice of initiation of this 
review did not respond to the Department's antidumping duty 
questionnaire. Because these entities failed to demonstrate that they 
are entitled to a separate rate, we are treating them as part of a 
single PRC-wide entity. Given that the eight producers/exporters, which 
are part of the PRC-wide entity, did not respond to the Department's 
antidumping duty questionnaire, we have preliminarily determined that 
these entities did not act to the best of their abilities to comply 
with our request for information. Therefore, pursuant to section 
776(a)and (b) of the Act, we are relying on adverse facts available to 
determine the dumping margin for the PRC-wide entity. Specifically, as 
adverse facts available, we have assigned to the PRC-wide entity, the 
highest dumping margin from any prior segment of this proceeding, 
114.90 percent, which is the current PRC-wide rate.

Corroboration

    Section 776(c) of the Act provides that when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation or review, it shall, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal. Secondary information is defined as 
``[i]nformation derived from the petition that gave rise to the 
investigation or review, the final determination concerning the subject 
merchandise, or any previous review under section 751 concerning the 
subject merchandise.'' See the Statement of Administrative Action 
(SAA), H.R. Doc. 103-316 at 870 (1994). Corroborate means that the 
Department will satisfy itself that the secondary information to be 
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, 
the SAA, at 869, emphasizes that the Department need not prove that the 
selected facts available are the best alternative information.
    In this review, we are using, as facts available, the weighted-
average dumping margin calculated for CFP/Three Star's reported sales 
and the highest dumping margin from this or any prior segment of the 
proceeding. The weighted-average dumping margin calculated for CFP/
Three Star's reported sales is not considered secondary information 
because it is based on information obtained during the course of this 
review. Therefore, the Department is not required to corroborate this 
margin. The highest dumping margin from this or any prior segment of 
the proceeding is the current PRC-wide rate of 114.90 percent. This 
rate was calculated in the 1999 - 2000 administrative review of the 
order on certain cased pencils from the PRC. See Notice of Amended 
Final Results and Partial Rescission of Antidumping Duty Administrative 
Review: Certain Cased Pencils from the People's Republic of China, 67 
FR 59049 (September 19, 2002). Therefore, the PRC-wide rate of 114.90 
percent constitutes secondary information within the meaning of the 
SAA. See SAA at 870. However, unlike other types of information, such 
as input costs or selling expenses, there are no independent sources 
for calculated dumping margins. Thus, in an administrative review, if 
the Department chooses, as facts available, a calculated dumping margin 
from a prior segment of the proceeding, it is not necessary to question 
the reliability of the margin if it was calculated from verified sales 
and cost data. The 114.90 percent PRC-wide rate is based on verified 
information provided by Kaiyuan Group Corporation in the 1999 - 2000 
administrative review of the order on certain cased pencils from the 
PRC. This rate has not been invalidated judicially. Therefore, we 
consider this rate to be reliable. 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 margin selected as adverse facts available. Moreover, 
the selected margin is the rate currently applicable to uncooperative 
exporters. Thus it is appropriate to use

[[Page 1970]]

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, 2001 through 
November 30, 2002:

------------------------------------------------------------------------
             Manufacturer/exporter                   Margin (percent)
------------------------------------------------------------------------
Shandong Rongxin Import and Export Co., Ltd....                    87.49
China First Pencil Company, Ltd. /Shanghai                         26.52
 Three Star Stationery Industry Corp...........
Orient International Holding Shanghai Foreign                      30.43
 Trade Co., Ltd................................
PRC-Wide Rate..................................                   114.90
------------------------------------------------------------------------

    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 C.F.R. Sec. 351.310(c). Interested 
parties may submit written comments (case briefs) within 30 days of 
publication of the preliminary results and rebuttal comments (rebuttal 
briefs), which must be limited to issues raised in the case briefs, 
within five days after the time limit for filing case briefs. See 19 
C.F.R. Sec. 351.309(c)(1)(ii) and 19 C.F.R. Sec. 351.309(d). 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. We will issue a 
memorandum identifying the date of a hearing, if one is requested. 
Unless the deadline is extended pursuant to section 751(a)(3)(A) of the 
Act, the Department will issue 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 the 
preliminary results. The assessment of antidumping duties on entries of 
merchandise covered by this review and future deposits of estimated 
duties shall be based on the final results of this review.

Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. We have calculated exporter-specific antidumping duty 
assessment rates for subject merchandise based on the ratio of the 
total amount of antidumping duties calculated for the examined sales to 
the total quantity of sales examined. We calculated exporter-specific 
assessment rates because there is no information on the record which 
identifies the importers of record. The Department will issue 
appropriate assessment instructions directly to CBP 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 CBP 
to assess the resulting assessment rates, calculated as described 
above, on each of the importer's entries during the review period.

Cash Deposit Requirements

    The following deposit requirements will apply to 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 or 
investigated PRC or non-PRC exporter, not covered in this review, with 
a separate rate, the cash deposit rate will be the company-specific 
rate established in the most recent segment of this proceeding; (3) for 
all other PRC exporters, the cash deposit rate will be the PRC-wide 
rate established in the final results of this review; and (4) the cash 
deposit rate for any non-PRC exporter of subject merchandise from the 
PRC will be the rate applicable to the PRC exporter that supplied 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 19 C.F.R. Sec. 351.402(f)(2) 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 
sectionssection 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 30, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-699 Filed 1-12-04; 8:45 am]
BILLING CODE 3510-DS-S