[Federal Register Volume 69, Number 234 (Tuesday, December 7, 2004)]
[Notices]
[Pages 70638-70644]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3477]



[[Page 70638]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-831]


Fresh Garlic from the People's Republic of China: Preliminary 
Results of Antidumping Duty Administrative Review and Rescission in 
Part

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: In response to requests from interested parties, the 
Department of Commerce (the Department) is conducting an administrative 
review of the antidumping duty order on fresh garlic from the People's 
Republic of China (PRC). The period of review for this administrative 
review is November 1, 2002, through October 31, 2003.
    Three companies named in the initiation of this review made no 
exports or sales of the subject merchandise during the period of review 
and, consequently, we are rescinding the review for these companies. In 
addition, we are rescinding our review of a fourth company because the 
petitioners withdrew their request for a review of that company. We are 
also rescinding our review of a fifth company because its sale to the 
United States is not eligible for review. Therefore, this review covers 
twelve manufacturers/exporters of the subject merchandise.
    We preliminarily determine that nine of these companies have made 
sales in the United States at prices below normal value. Further, we 
preliminarily determine that the remaining three companies are not 
entitled to separate rates and have assigned them the rate for the PRC-
wide entity.
    We invite interested parties to comment on these preliminary 
results. Parties who submit comments are requested to submit with each 
argument a statement of the issue and a brief summary of the argument.

EFFECTIVE DATE: December 7, 2004.

FOR FURTHER INFORMATION CONTACT: Coleen Schoch or Brian Ledgerwood, 
China/NME Unit, Office of AD/CVD Operations, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230; telephone 
(202) 482-4551 or (202) 482-3836, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On November 3, 2003, the Department published a notice of 
opportunity to request an administrative review of the antidumping duty 
order on fresh garlic from the PRC. See Antidumping or Countervailing 
Duty Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 68 FR 62279. On December 24, 2003, we published 
the Notice of Initiation of Antidumping and Countervailing Duty 
Administrative Reviews (68 FR 74550), in which we initiated the 2002-
2003 administrative review of the antidumping duty order on fresh 
garlic from the PRC.
    On July 15, 2004, we extended the deadline for the issuance of the 
preliminary results of the administrative review by 120 days, until 
November 29, 2004 (69 FR 42418). We are conducting this review in 
accordance with section 751(a)(1) of the Tariff Act of 1930, as amended 
(the Act).

Scope of the Order

    The products subject to the antidumping duty order are all grades 
of garlic, whole or separated into constituent cloves, whether or not 
peeled, fresh, chilled, frozen, provisionally preserved, or packed in 
water or other neutral substance, but not prepared or preserved by the 
addition of other ingredients or heat processing. The differences 
between grades are based on color, size, sheathing, and level of decay.
    The scope of this order does not include the following: (a) garlic 
that has been mechanically harvested and that is primarily, but not 
exclusively, destined for non-fresh use; or (b) garlic that has been 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed.
    The subject merchandise is used principally as a food product and 
for seasoning. The subject garlic is currently classifiable under 
subheadings 0703.20.0010, 0703.20.0020, 0703.20.0090, 0710.80.7060, 
0710.80.9750, 0711.90.6000, and 2005.90.9700 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheadings 
are provided for convenience and customs purposes, the written 
description of the scope of this proceeding is dispositive. In order to 
be excluded from the antidumping duty order, garlic entered under the 
HTSUS subheadings listed above that is (1) mechanically harvested and 
primarily, but not exclusively, destined for non-fresh use or (2) 
specially prepared and cultivated prior to planting and then harvested 
and otherwise prepared for use as seed must be accompanied by 
declarations to U.S. Customs and Border Protection (CBP) to that 
effect.

Separate Rates

    The Department has treated the PRC as a non-market-economy (NME) 
country in all past antidumping investigations (see, e.g., 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), and Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Non-
Frozen Apple Juice Concentrate from the People's Republic of China, 65 
FR 19873 (April 13, 2000)) and in prior segments of this proceeding. A 
designation as an NME remains in effect until it is revoked by the 
Department. See section 771(18)(C) of the Act. Accordingly, there is a 
rebuttable presumption that all companies within the PRC are subject to 
government control and, thus, should be assessed a single antidumping 
duty rate.
    It is the Department's standard policy to assign all exporters of 
the merchandise subject to review in NME countries a single rate unless 
an exporter can affirmatively demonstrate an absence of government 
control, both in law (de jure) and in fact (de facto), with respect to 
exports. To establish whether a company is sufficiently independent to 
be entitled to a separate, company-specific rate, the Department 
analyzes each exporting entity in an NME country under the test 
established in the Final Determination of Sales at Less than Fair 
Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 
6, 1991), as amplified by the Notice of 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).
    For the reasons discussed in the section below entitled ``The PRC-
Wide Rate and Use of Facts Otherwise Available,'' we have determined 
that Jinxiang Hongyu Freezing and Storing Co., Ltd. (Hongyu), Linyi 
Sanshan Import and Export Trading Co., Ltd. (Linyi Sanshan), and 
Tancheng County Dexing Foods Co., Ltd. (Dexing Foods) do not qualify 
for a separate rate and are instead part of the PRC entity.
    Jinxiang Dong Yun Freezing Storage Co., Ltd. (Dong Yun), Fook Huat 
Tong Kee Pte., Ltd. (FHTK), Huaiyang Hongda Dehydrated Vegetable 
Company (Hongda), Jinan Yipin Corporation, Ltd. (Jinan Yipin), Linshu 
Dading Private Agricultural Products Co., Ltd. (Linshu Dading), Sunny 
Import & Export Limited (Sunny), Taian Ziyang Food Co., Ltd (Ziyang), 
Jining Trans-High Trading Co., Ltd. (Trans-High), and Zhengzhou Harmoni 
Spice Co., Ltd. (Harmoni), all provided the requested

[[Page 70639]]

separate-rate information in their responses to our original and 
supplemental questionnaires. Accordingly, consistent with &, 61 FR 
56570 (April 30, 1996), we performed separate-rates analyses to 
determine whether each producer/exporter is independent from government 
control.
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; (3) any other formal 
measures by the government decentralizing control of companies.
    With the exception of Hongyu, Lingi Sanshan, and Dexing Foods, each 
respondent has placed on the record a number of documents to 
demonstrate absence of de jure control including the ``Foreign Trade 
Law of the People's Republic of China'' and the ``Administrative 
Regulations of the People's Republic of China Governing the 
Registration of Legal Corporations.'' The Department has analyzed such 
PRC laws and found that they establish an absence of de jure control. 
See, e.g., Preliminary Results of New Shipper Review: Certain Preserved 
Mushrooms From the People's Republic of China, 66 FR 30695 (June 7, 
2001). We have no information in this proceeding that would cause us to 
reconsider this determination.
2. Absence of De Facto Control
    Typically, the Department 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 subject 
to, the approval of a governmental authority; (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 its management; (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding disposition of profits or 
financing of losses. See Silicon Carbide at 22587.
    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 at 22586-22587. 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.
    FHTK and Harmoni reported that they are wholly owned by foreign 
entities; Sunny and Ziyang reported that they are limited-liability 
companies owned by private investors. Hongda, Dong Yun, Jinan Yipin, 
Linshu Dading, and Trans-High reported that they are limited-liability 
companies. Each has asserted the following: (1) There is no government 
participation in setting export prices; (2) sales managers and 
authorized employees have the authority to bind sales contracts; (3) 
they do not have to notify any government authorities of management 
selections; (4) there are no restrictions on the use of export revenue; 
(5) each is responsible for financing its own losses. The questionnaire 
responses of FHTK, Hongda, Jinan Yipin, Trans-High, Dong Yun, Linshu 
Dading, Sunny, Ziyang, and Harmoni do not suggest that pricing is 
coordinated among exporters. During our analysis of the information on 
the record, we found no information indicating the existence of 
government control. Consequently, we preliminarily determine that FHTK, 
Hongda, Jinan Yipin, Trans-High, Dong Yun, Linshu Dading, Sunny, 
Ziyang, and Harmoni have met the criteria for the application of a 
separate rate.

Partial Rescission of Administrative Review

    In response to our December 30, 2003, letter requesting quantity 
and value information, three companies responded that they had made no 
exports of the subject merchandise during the period of review (POR). 
These companies were Clipper Manufacturing Ltd. (Clipper), Shandong 
Heze International Trade and Developing Co. (Shandong Heze), and 
Shanghai Ever Rich Trade Company (Ever Rich). These individual 
responses are discussed in and attached to the Questionnaire Response 
Memorandum to Laurie Parkhill, dated November 29, 2004 (Questionnaire 
Response Memo). Each of the companies responded that they were not 
producers or exporters of the subject merchandise during the POR. We 
examined CBP data to confirm that none of them was listed as a 
manufacturer or exporter of the subject merchandise on entries during 
the POR. In addition, there is no information on the record to indicate 
that these companies had sales or exports of subject merchandise during 
the POR. As a result, we find that Clipper, Shandong Heze, and Ever 
Rich made no entries, exports, or sales of the subject merchandise 
during the POR that are subject to the administrative review. 
Therefore, in accordance with 19 CFR 351.213(d)(3), we are rescinding 
our review with respect to these three companies.
    On January 13, 2004, the petitioners withdrew their request for an 
administrative review of Xiangcheng Yisheng Foodstuffs Co. (Yisheng). 
Therefore, we are rescinding our review of Yisheng for this POR, 
pursuant to 19 CFR 351.213(d)(1).
    We are also rescinding our review of H&T Trading Company (H&T). H&T 
requested a new shipper review and administrative review at the same 
time. In the course of our initial examination of the new shipper 
request, we discovered that H&T was a Hong Kong-based exporter that 
purchased the subject merchandise from a Chinese supplier, Jining 
Jinshan. Additional information demonstrated that Jining Jinshan had 
knowledge H&T would export the subject merchandise it purchased to the 
United States. Pursuant to section 772(a) of the Act, the first party 
in the chain of distribution with knowledge of its U.S. destination is 
the appropriate party to review. See Fresh Garlic from the People's 
Republic of China: Preliminary Results of Antidumping Duty 
Administrative Review, Partial Rescission of Administrative Review, and 
Intent to Rescind Administrative Review in Part, 68 FR 4758, 4759 
(January 30, 2003). Because of this knowledge and the fact that the 
sale between Jining Jinshan and H&T was the first non-intra-NME sale in 
the chain of distribution, the transaction between Jining Jinshan and 
H&T is the appropriate basis for determining the export price. 
Therefore, review of H&T is not appropriate and the Department is now 
rescinding its initiation of the review of H&T. Further, the Department 
did not receive a request for an administrative review of Jining 
Jinshan prior to or during the anniversary month of the publication of 
the antidumping duty order. See 19 CFR 351.214(d). See Memorandum from 
Mark Ross to Laurie Parkhill Regarding Intent to Rescind the 
Administrative Review with Respect to H&T Trading Company (January 29, 
2004).

The PRC-Wide Rate and Use of Facts Otherwise Available

    All respondents were given the opportunity to respond to the 
Department's questionnaire. As explained above, we received 
questionnaire responses from FHTK, Hongda, Jinan Yipin, Trans-High, 
Dong Yun, Linshu Dading, Sunny, Ziyang,

[[Page 70640]]

and Harmoni and we have calculated a separate rate for each of these 
companies. The PRC-wide rate applies to all entries of subject 
merchandise except for entries from companies that have received their 
own rate based on the final results of a prior segment of this 
proceeding (e.g., Jinan Yipin). As discussed below, we have decided to 
treat Hongyu, Linyi Sanshan, and Dexing Foods as part of the PRC-wide 
entity.
    Hongyu, Linyi Sanshan, and Dexing Foods did not respond to the 
Department's questionnaire. Section 776(a)(2) of the Act provides that, 
if an interested party or any other person (A) withholds information 
that has been requested by the administering authority, or (B) fails to 
provide such information by the deadlines for the submission of the 
information or in the form and manner requested, subject to subsections 
(c)(1) and (e) of section 782, the Department shall, subject to section 
782(d), use the facts otherwise available in reaching the applicable 
determination under this title. Furthermore, under section 782(c) of 
the Act, a respondent has the responsibility not only to notify the 
Department if it is unable to provide requested information but also to 
provide a ``full explanation and suggested alternative forms.'' Because 
Hongyu, Linyi Sanshan, and Dexing Foods did not respond to the 
questionnaire, we find that, in accordance with sections 776(a)(2)(A) 
and (B) of the Act, the use of total facts available is appropriate. 
See, e.g., Final Results of Antidumping Duty Administrative Review for 
Two Manufacturers/ Exporters: Certain Preserved Mushrooms from the 
People's Republic of China, 65 FR 50183, 50184 (August 17, 2000).
    Section 776(b) of the Act provides that, if the Department finds 
that an interested party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information,'' the 
Department may use information that is adverse to the interests of the 
party as facts otherwise available. Adverse inferences are appropriate 
``to ensure that the party does not obtain a more favorable result by 
failing to cooperate than if it had cooperated fully.'' See Statement 
of Administrative Action (SAA) accompanying the Uruguay Round 
Agreements Act (URAA), H. Doc. No. 103-316, at 870 (1994). Section 
776(b) of the Act authorizes the Department to use as adverse facts 
available information derived from the petition, the final 
determination from the less-than-fair-value (LTFV) investigation, a 
previous administrative review, or any other information placed on the 
record.
    On December 30, 2003, the Department issued its antidumping duty 
questionnaire to Hongyu, Linyi Sanshan, and Dexing Foods. We confirmed 
that the questionnaires we sent to Hongyu and Linyi Sanshan were 
delivered and accepted on January 6, 2004. We also confirmed that a 
representative of Dexing Foods picked up its questionnaire from the 
main Commerce building. See Questionnaire Response Memo. Because they 
did not provide responses to the Department's questionnaire, the 
Department is unable to determine whether Hongyu, Linyi Sanshan, and 
Dexing Foods are eligible for a separate rate. Thus, Hongyu, Linyi 
Sanshan, and Dexing Foods have not rebutted the presumption of 
government control and are presumed to be part of the PRC entity.
    The PRC entity (including Hongyu, Linyi Sanshan, and Dexing Foods) 
failed to cooperate to the best of its ability in this administrative 
review, thus making the use of an adverse inference appropriate. 
Therefore, in accordance with the Department's practice, as adverse 
facts available, we have preliminarily assigned to the PRC entity the 
rate of 376.67 percent.
    Section 776(c) of the Act requires that the Department corroborate, 
to the extent practicable, a figure which it applies as facts 
available. To corroborate information, the Department examines whether 
it is both reliable and relevant. Throughout the history of this 
proceeding, the highest rate ever determined is 376.67 percent; it is 
currently the PRC-wide rate and was calculated based on information 
contained in the petition. See Notice of Final Determination of Sales 
at Less Than Fair Value: Fresh Garlic from the People's Republic of 
China, 59 FR 49058, 49059 (September 26, 1994). The information 
contained in the petition was corroborated, to the extent practicable, 
for the preliminary results of the first administrative review. See 
Fresh Garlic from the People's Republic of China; Preliminary Results 
of Antidumping Duty Administrative Review and Partial Termination of 
Administrative Review, 61 FR 68229, 68230 (December 27, 1996). Further, 
it was corroborated in subsequent reviews to the extent that the 
Department referred to the history of corroboration and found that the 
Department received no information that warranted revisiting the issue. 
See Fresh Garlic from the People's Republic of China: Final Results of 
Antidumping Administrative Review and Rescission of New Shipper Review, 
67 FR 11283 (March 13, 2002). Similarly, no information has been 
presented in the current review that calls into question the 
reliability of this information. Thus, the Department finds that the 
information is reliable.
    With respect to the relevance aspect of corroboration, the 
Department stated in Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, from Japan, and Tapered Roller Bearings, Four 
Inches or Less in Outside Diameter, and Components Thereof, from Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews, 61 FR 57391, 57392 
(November 6, 1996) (TRBs), that it will ``consider information 
reasonably at its disposal as to whether there are circumstances that 
would render a margin irrelevant. 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.'' See TRBs, 61 FR at 57392. See also Fresh Cut Flowers from 
Mexico; Preliminary Results of Antidumping Duty Administrative Review, 
61 FR 6812, 6814 (February 22, 1996) (disregarding the highest margin 
in the case as best information available because the margin was based 
on another company's uncharacteristic business expense resulting in an 
extremely high margin). The rate we are using for this review is the 
rate currently applicable to Hongyu, Linyi Sanshan, Dexing Foods, and 
all exporters subject to the PRC-wide rate. Further, there is no 
information on the administrative record of the current review that 
indicates the application of this rate would be inappropriate or that 
the margin is not relevant. Therefore, for all sales of subject 
merchandise exported by Hongyu, Linyi Sanshan, and Dexing Foods we have 
applied, as adverse facts available, the 376.67 percent margin from a 
prior administrative review of this order and have satisfied the 
corroboration requirements under section 776(c) of the Act. See 
Persulfates from the People's Republic of China: Preliminary Results of 
Antidumping Duty Administrative Review, 66 FR 18439, 18441 (April 9, 
2001) (employing a petition rate used as adverse facts available in a 
previous segment as adverse facts available in the current review).

Export Price

    For FHTK, Hongda, Trans-High, Dong Yun, Linshu Dading, Sunny, and 
Ziyang we based the U.S. price on export price (EP), in accordance with 
section 772(a) of the Act, because the first sale to an unaffiliated 
purchaser was made prior

[[Page 70641]]

to importation and constructed export price (CEP) was not otherwise 
warranted by the facts on the record. We calculated EP based on the 
packed price from the exporter to the first unaffiliated customer in 
the United States.
    For FHTK, we made no adjustments to the gross unit price.
    For Hongda, we deducted foreign inland freight, international 
freight, and marine insurance from the gross unit price, in accordance 
with section 772(c) of the Act.
    For Trans-High, we deducted foreign inland freight and foreign 
brokerage and handling expenses from the gross unit price, in 
accordance with section 772(c) of the Act.
    For Dong Yun, we deducted foreign inland freight from production 
facility to port of exit, brokerage and handling expenses, 
international freight, and marine insurance expenses.
    For Linshu Dading, we deducted foreign inland freight, foreign 
brokerage and handling expenses, international ocean freight, marine 
insurance, U.S. brokerage and handling, U.S. import duties, and U.S. 
inland freight expenses from the gross unit price, in accordance with 
section 772(c) of the Act.
    For Sunny, we made deductions, where appropriate, of foreign inland 
freight, foreign brokerage and handling, international ocean freight, 
U.S. brokerage and handling, import duties, U.S. warehousing expenses, 
demurrage charges, and U.S. inland freight expenses from the gross unit 
price, in accordance with section 772(c) of the Act.
    For Ziyang, we deducted foreign inland freight and foreign 
brokerage and handling expenses from the gross unit price, in 
accordance with section 772(c) of the Act.
    As all foreign inland freight, foreign warehousing, foreign 
brokerage and handling, and marine insurance expenses (where 
applicable) were provided by PRC service providers or paid for in 
renminbi, we valued these services using Indian surrogate values (see 
``Factors of Production'' section below for further discussion). Where 
applicable, we used the reported expense for international freight 
because the respondents used market-economy freight carriers and paid 
in a market-economy currency. See ``Memorandum to the File'' regarding 
the factors valuation for the preliminary results of the administrative 
review (November 29, 2004) (FOP Memorandum).

Constructed Export Price

    In accordance with section 772(b) of the Act, we used CEP 
methodology when the first sale to an unaffiliated purchaser occurred 
after importation of the merchandise into the United States. We 
calculated the CEP for Jinan Yipin and Harmoni because the sales were 
made by their U.S. affiliates to unaffiliated U.S. customers. We based 
CEP on packed, delivered, or ex-warehouse prices to the first 
unaffiliated purchaser in the United States.
    For Jinan Yipin, we made adjustments to the gross unit price for 
foreign inland freight from processing facility to port of exit, 
international ocean freight, U.S. inland freight from port to customer, 
other U.S. transportation expenses, U.S. brokerage and handling 
expenses, U.S. warehousing expenses, and U.S. import duties.
    In accordance with section 772(d)(1) of the Act, we also deducted 
those selling expenses associated with economic activities occurring in 
the United States, including direct selling expenses, credit expenses, 
billing adjustments, inventory carrying costs and indirect selling 
expenses. We also made an adjustment for profit in accordance with 
section 772(d)(3) of the Act.
    For Harmoni, we made deductions, where appropriate, from the gross 
unit price to account for movement expenses, foreign inland freight 
from plant to distribution warehouse, foreign brokerage and handling, 
international ocean freight, and U.S. brokerage and handling expenses.
    In accordance with section 772(d)(1) of the Act, we also deducted 
those selling expenses associated with economic activities occurring in 
the United States, including credit expenses, commissions, inventory 
carrying costs, and indirect selling expenses. We also made an 
adjustment for profit in accordance with section 772(d)(3) of the Act.
    Because some movement expenses were provided by NME companies, we 
valued those charges based on surrogate values in India. See FOP 
Memorandum.
    For a more detailed explanation of the company-specific adjustments 
that we made in the calculation of the dumping margins for these 
preliminary results, see the company-specific preliminary results 
analysis memoranda, dated November 29, 2004, on file in the Central 
Records Unit (CRU), Room B-099.

Normal Value

1. Surrogate Country

    When investigating imports from an NME country, section 773(c)(1) 
of the Act directs the Department to base normal value, in most 
circumstances, on the NME producer's factors of production valued in a 
surrogate market-economy country or countries considered to be 
appropriate by the Department. In accordance with section 773(c)(4) of 
the Act, in valuing the factors of production, the Department shall 
use, to the extent practicable, the prices or costs of factors of 
production in one or more market-economy countries that are at a level 
of economic development comparable to the NME country and are 
significant producers of comparable merchandise. The sources of the 
surrogate factor values are discussed under the ``Factor Valuations'' 
section below.
    The Department has determined that India, Indonesia, Sri Lanka, the 
Philippines, Morocco, and Egypt are countries comparable to the PRC in 
terms of economic development. See Memorandum to Laurie Parkhill from 
Ron Lorentzen regarding the request for a list of surrogate countries 
(June 18, 2004). In addition to being among the countries comparable to 
the PRC in economic development, India is a significant producer of the 
subject merchandise. We have used India as the surrogate country and, 
accordingly, have calculated normal value using Indian prices to value 
the PRC producers' factors of production, when available and 
appropriate. We have obtained and relied upon publicly available 
information. See Memorandum to Laurie Parkhill Re: Selection of 
Surrogate Country (November 29, 2004).
    In accordance with 19 CFR 351.301(c)(3)(ii), for the final results 
of an administrative review and a new shipper review, interested 
parties may submit publicly available information to value the factors 
of production until 20 days following the date of publication of these 
preliminary results.

2. Methodology

    The Department's general policy, consistent with section 
773(c)(1)(B) of the Act, is to calculate normal value using each of the 
factors of production (FOPs) that a respondent consumes in the 
production of a unit of the subject merchandise. There are 
circumstances, however, in which the Department will modify its 
standard FOP methodology, choosing to apply a surrogate value to an 
intermediate input instead of the individual FOPs used to produce that 
intermediate input. In some cases, a respondent may report factors used 
to produce an intermediate input that accounts for an insignificant 
share of total output. When the potential increase in accuracy to the 
overall calculation that results from valuing each of the factors of 
production is

[[Page 70642]]

outweighed by the resources, time, and effort such an analysis would 
place on all parties to the proceeding, the Department has valued the 
intermediate input directly using a surrogate value. See, e.g., Final 
Determination of Sales at Less Than Fair Value: Coumarin From the 
People's Republic of China, 59 FR 66895-01 (December 28, 1994).
    Also, there are circumstances in which valuing the FOPs used to 
yield an intermediate product would lead to an inaccurate result 
because the Department would not be able to account for a significant 
element of cost adequately in the overall factors buildup. In this 
situation, the Department would also value the intermediate input 
directly. For example, in a recent case, the Department determined 
that, if it were to value the respondent's factors used in extracting 
iron ore, an input to wire rod, it would not account sufficiently for 
the associated capital costs, given that the surrogate company it used 
for valuing overhead did not have mining operation. See Notice of Final 
Determination of Sales at Less Than Fair Value: Carbon and Certain 
Alloy Steel Wire Rod from Ukraine, 67 FR 55785 (August 30, 2002), and 
Final Determination of Sales at Less Than Fair Value: Certain Hot-
Rolled Carbon Steel Flat Products from the People's Republic of China, 
66 FR 49632 (September 28, 2001).
    In other cases, after careful consideration of the record, the 
Department has determined that valuing the intermediate input for the 
production of subject merchandise will lead to a more accurate result 
than valuing the individual FOPs. See Certain Frozen Fillets from the 
Socialist Republic of Vietnam: Notice of Preliminary Determination of 
Sales at Less Than Fair Value 68 FR 498, 449 (January 31, 2003), and 
Certain Frozen Fillets from the Socialist Republic of Vietnam: Notice 
of Final Determination of Sales at Less Than Fair Value, 68 FR 37116 
(June 16, 2003).
    In this review, we determine that it is appropriate to apply a 
modified FOP methodology with respect to certain respondents. We 
conducted a full analysis of the information put on the record by the 
interested parties and conducted independent research into standard 
garlic-growing procedures in the PRC. See Memorandum from Steve 
Williams to the File Re: Research on Chinese Production and Costs 
(November 29, 2004) (Research Memo). Based on the information discussed 
in this memo, as well as all the information currently on the record, 
the divergent usage rates provided by certain respondents do not appear 
to be realistic or credible.
    More specifically, the Department has determined that the FOPs 
pertaining to the usage of pesticides, herbicides, and/or seed by 
certain respondents were extremely questionable and, in some instances, 
not credible. Two internet-published articles regarding garlic 
production in the PRC, Garlic Production Technology Regulations, 
produced by the Kuming Tong Safe Science and Technology Company, and 
Environmentally Safe Garlic Production Technology Regulations, produced 
by Hebei Standards, provided objective ranges for the common commercial 
usage of these particular factors. See Research Memo at Attachments 1 
and 2. In addition, the Department observed major discrepancies among 
the FOPs reported by different respondents. The Department also found 
large differences in the water-usage factors reported by certain 
respondents located in the same area, but it could not find reliable 
third-party data with which to compare the factors. It is the 
Department's position that, if FOPs reported to the Department appear 
highly improbable and lack credibility, it has an obligation to address 
the resultant inadequacy in its calculations.
    In light of the above, the Department finds that the FOP 
methodology is insufficient to provide an accurate result for certain 
respondents, based on the unreliability of their reported FOP usage 
rates. In order to calculate a more accurate margin for these 
companies, the Department has chosen to apply the intermediate-product 
FOP methodology to those respondents with questionable FOPs. The 
respondents affected are Trans-High, Ziyang, Dong Yun, FHTK, and 
Hongda. For a complete explanation of the Department's analysis, see 
Memorandum from Edward Yang to Barbara E. Tillman Re: Modification of 
Factors-of-Production Methodology (November 29, 2004).
    The Department is re-opening the record of this segment to the 
interested parties for 21 days after the publication of these 
preliminary results in order to obtain additional independent third-
party information regarding the disparate usage rates which these five 
respondents have provided. The Department will fully consider any 
additional information before completing the final results of this 
administrative review.
    With respect to the remaining respondents, we find that the 
standard FOP analysis remains appropriate. See Certain Preserved 
Mushrooms from the People's Republic of China: Final Results of Sixth 
Antidumping Duty New Shipper Review and Final Results and Partial 
Rescission of the Fourth Antidumping Duty Administrative Review, 69 FR 
54635 (September 9, 2004), and accompanying Issues and Decision 
Memorandum at Comment 3 (concerning the application of a modified 
analysis only to certain respondents, as appropriate).

3. Factors of Production

    Section 773(c)(1) of the Act provides that the Department shall 
determine the normal value using a FOP methodology if (1) the 
merchandise is exported from an NME country and (2) the information 
does not permit the calculation of normal value using home-market 
prices, third-country prices, or constructed value under section 773(a) 
of the Act. Factors of production include the following elements: (1) 
hours of labor required, (2) quantities of raw materials employed, (3) 
amounts of energy and other utilities consumed, and (4) representative 
capital costs. Except as discussed above, we used FOPs reported by the 
respondents for materials, energy, labor, and packing. We valued all 
the input factors using publicly available, published information, as 
discussed in the ``Surrogate Country'' and ``Factor Valuations'' 
sections of this notice.

4. Factor Valuations

    In accordance with section 773(c) of the Act, we calculated normal 
value based on FOPs reported by the respondents for the POR. To 
calculate normal value, we multiplied the reported per-unit factor 
quantities by publicly available surrogate values in India with the 
exception of the surrogate value for ocean freight, which we obtained 
from an international freight company. In selecting the surrogate 
values, we considered the quality, specificity, and contemporaneity of 
the data. As appropriate, we adjusted input prices by including freight 
costs to make them delivered prices. We calculated these freight costs 
based on the shortest reported distance from the domestic supplier to 
the factory and Indian surrogate values. This adjustment is in 
accordance with the decision in Sigma Corporation v. United States, 117 
F. 3d 1401, 1407-08 (Fed. Cir. 1997). We converted prices reported in 
Indian rupees (Rs) to US dollars (USDs) using the average exchange rate 
obtained from the official Import Administration Web site (http://ia.ita.doc.gov/exchange/india.txt). For a detailed description of all 
the surrogate values we used, see the FOP Memorandum.
    For those Indian rupee values not contemporaneous with the POR, we

[[Page 70643]]

adjusted for inflation using wholesale price indices for India 
published in the International Monetary Fund's International Financial 
Statistics. Surrogate-value data or sources to obtain such data were 
obtained from the petitioners, the respondents, and the Department's 
research.
    Except as specified below, we valued raw material inputs using the 
weighted-average unit import values derived from the World Trade Atlas, 
provided by the Global Trade Information Services, Inc. The source of 
these values contemporaneous with the POR, was the Directorate General 
of Commercial Intelligence and Statistics of the Indian Ministry of 
Commerce and Industry. We valued garlic seed based on pricing data from 
the NHRDF News Letter, published by India's National Horticultural 
Research and Development Foundation. We valued diesel fuel based on 
data from the International Energy Agency's Energy Prices & Taxes: 
Quarterly Statistics (Third Quarter, 2003). We valued electricity based 
on data from the International Energy Agency's Energy Prices & Taxes: 
Quarterly Statistics (First Quarter, 2003). We valued water using the 
water tariff rate reported on the Municipal Corporation of Greater 
Mumbai's Web site. See http://www.mcgm.gov.in/Stat%20&%20Fig/Revenue.htm.
    The respondents reported packing inputs consisting of plastic nets/
mesh bags, paper cartons, plastic packing bands, tape, wood used for 
producing pallets, nails used for producing pallets, plastic jars, 
plastic jar lids, nitrogen gas, antiseptic, metal clips, bubble wrap, 
labels, glue, and cardboard. All of these inputs were valued using 
import data from the World Trade Atlas that covered the POR.
    For labor, consistent with 19 CFR 351.408(c)(3), we used the most 
recent PRC regression-based wage rate that appears on the website for 
Import Administration (http://ia.ita.doc.gov/wages/corrected00wages/corrected00wages.htm). The source of the wage-rate data for the Import 
Administration's Web site is the International Labor Organization's 
Yearbook of Labour Statistics 2002 (Geneva, 2002), chapter 5B: Wages in 
Manufacturing.
    For land, we used the value published in the Punjab State 
Development Report. We valued cold storage using the surrogate 
electricity value if the cold-storage facility was located at the 
production facility. If the respondent's cold storage was located off-
site, we used a value based on a rate from ``Local traders to import 
generator fitted containers,'' an article from Dawn Wire Service (May 
19, 1995).
    The respondents claimed an adjustment for revenue earned on the 
sale of garlic sprouts. We find that sprouts are a by-product of garlic 
and deducted an offset amount from normal value. As a surrogate value 
for the sale of sprouts in the PRC, we used an average of Indian 
wholesale prices for green onions published by the Azadpur Agricultural 
Produce Marketing Committee in its February 17, 2003, March 21, 2003, 
April 25, 2003, and May 30, 2003, Azadpur Agricultural Produce 
Marketing Committee Bulletins.
    We valued the truck rate based on an average of truck rates that 
were published in the Indian publication Chemical Weekly during the 
POR. We valued foreign brokerage and handling charges based on a value 
calculated for the LTFV investigation of certain hot-rolled carbon 
steel flat products from India. For ocean freight, we used the value 
provided by Linshu Dading from Maersk Sealand (www.maersksealand.com) 
in its November 1, 2002, through April 30, 2003, new shipper review and 
this administrative review for the movement of containers from the PRC 
to the east and west coasts of the United States. We used these quotes 
to calculate a surrogate freight rate for each coast. For marine 
insurance, we relied on rate quotes from RJG Consultants 
(www.rjgconsultants.com) dating from the POR for the movement of 
refrigerated containers from the PRC to the east and west coasts of the 
United States.
    As discussed in the FOP Memorandum, the respondents and the 
petitioners submitted the publicly available financial information of 
six companies. We concluded that the financial information of Parry 
Agro Industries Limited (``Parry Agro''), a tea producer in India, was 
most representative of the financial experiences of the respondent 
companies for which we applied the FOP methodology because it produced 
and processed a product that was not highly processed or preserved 
prior to its sale. Thus, to value factory overhead, and selling, 
general and administrative expenses we used rates based on data taken 
from the 2003/2004 financial statements of Parry Agro. Parry Agro's 
2002/2003 and 2003/2004 financial statements did not report a profit. 
Thus, for purposes of these preliminary results we are applying the 
profit ratio that was reported on its 2001/2002 financial statements. 
We also concluded that the financial information of Mahabaleshwar Honey 
Producers Co-Operative Society Ltd. (``MHPC''), a non-integrated Indian 
honey processor, was most representative of the financial experiences 
of the respondents for which we applied the intermediate-product FOP 
methodology because it is the only company on record which we know with 
certainty processes an intermediate product. Thus, to value factory 
overhead, selling, general, and administrative expenses, and profit, we 
used rates based on data taken from the 2003-2004 financial statements 
of MHPC. See the FOP Memorandum for a more complete discussion of the 
Department's analysis.

Preliminary Results of the Review

    We preliminarily determine that the following dumping margins exist 
for the period November 1, 2002, through October 31, 2003:

            Fresh Garlic From the People's Republic of China
------------------------------------------------------------------------
                                                       Weighted-average
                Manufacturer/Exporter                  percentage margin
------------------------------------------------------------------------
Jinan Yipin Corporation, Ltd.36.75..................
Jinxiang Dong Yun Freezing Storage Co., Ltd.........              101.51
Fook Huat Tong Kee Pte., Ltd........................               90.27
Huaiyang Hongda Dehydrated Vegetable Company........               33.52
Linshu Dading Private Agricultural Products Co.,                   58.26
 Ltd................................................
Sunny Import & Export Limited.......................               27.24
Taian Ziyang Food Co., Ltd..........................               61.43
Jining Trans-High Trading Co., Ltd..................               26.18
Zhengzhou Harmoni Spice Co., Ltd....................               41.28
PRC-wide rate*......................................              376.67
------------------------------------------------------------------------
* Includes Jinxiang Hongyu Freezing and Storing Co., Ltd., Linyi Sanshan
  Import and Export Trading Co., Ltd., and Tancheng County Dexing Foods
  Co., Ltd.

    Case briefs or other written comments in at least six copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than 30 days after new factual information is submitted for the 
record. Pursuant to 19 CFR 351.309(d)(2), rebuttal briefs are due no 
later than five days after the submission of case briefs. A list of 
authorities used, a table of contents, and an executive summary of 
issues should accompany any briefs submitted to the Department. 
Executive summaries should be limited to five pages total, including 
footnotes. In accordance with 19 CFR 351.310, we will hold a public

[[Page 70644]]

hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. Interested parties who 
wish to request a hearing, or to participate if one is requested, must 
submit a written request to the Assistant Secretary for Import 
Administration, U.S. Department of Commerce, Room 1870, within 30 days 
after the date of publication of the preliminary results of this review 
in the Federal Register. Requests should contain the following 
information: (1) The party's name, address, and telephone number; (2) 
the number of participants; and (3) a list of the issues to be 
discussed. Oral presentations will be limited to issues raised in the 
briefs. If we receive a request for a hearing, we plan to hold the 
hearing three days after the deadline for submission of the rebuttal 
briefs at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230.

Extension of Time for the Final Results of Administrative Review

    The issues in these preliminary results of review present a number 
of complex factual and legal questions pertaining to the Department's 
methods of calculating the antidumping duties in this case. Therefore, 
it is not practicable to complete the review within the time limits 
mandated by section 751(a)(3)(A) of the Act. Consequently, we are 
extending the time limit for the completion of the final results of 
this review, including our analysis of issues raised in any case or 
rebuttal briefs, until May 30, 2005. See section 751(a)(3) of the Act 
and 19 CFR 351.213(h)(1).

Assessment Rates

    Upon completion of this administrative review, the Department shall 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. In accordance with 19 CFR 351.212(b)(1), we have calculated, 
whenever possible, an exporter/importer (or customer)-specific 
assessment rate or value for merchandise subject to this review. With 
respect to CEP sales for which entered values were reported, for these 
preliminary results we divided the total dumping margins for the 
reviewed sales by the total entered value of those reviewed sales for 
each applicable importer. For duty-assessment rates calculated on this 
basis, we will direct the CBP to assess the resulting percentage margin 
against the entered customs values for the subject merchandise on each 
of the applicable importer's/customer's entries during the review 
period.
    With respect to sales for which entered values were not reported, 
for these preliminary results, we divided the total dumping margins for 
each exporter's importer/customer by the total number of units the 
exporter sold to that importer/customer. For assessment amounts 
calculated on this basis, we will direct CBP to assess the resulting 
per-unit dollar amount against each unit of merchandise in each of that 
importer's/customer's entries during the review period.

Cash-Deposit Requirements

    The following cash-deposit requirements will be effective upon 
publication of the final results of the administrative review for 
shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date, as 
provided for by section 751(a)(2)(C) of the Act: (1) for subject 
merchandise exported by the respondents, the cash-deposit rate will be 
that established in the final results of review; (2) for all other PRC 
exporters of subject merchandise which have not been found to be 
entitled to a separate rate, the cash-deposit rate will be the PRC-wide 
rate of 376.67 percent; (3) for all non-PRC exporters of subject 
merchandise, the cash-deposit rate 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 also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during the POR. 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 these preliminary results of review 
in accordance with sections 751(a)(3) and 777(i) of the Act and 19 CFR 
351.213(d)(4).

    Dated: November 29, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. E4-3477 Filed 12-6-04; 8:45 am]
BILLING CODE 3510-DS-S