[Federal Register Volume 70, Number 194 (Friday, October 7, 2005)]
[Notices]
[Pages 58690-58694]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-5541]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-844, C-560-819]


Notice of Initiation of Countervailing Duty Investigations: 
Certain Lined Paper Products from India (C-533-844) and Indonesia (C-
560-819)

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

ACTION: Initiation of countervailing duty investigation.

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SUMMARY: The Department of Commerce is initiating countervailing duty 
investigations to determine whether manufacturers, producers, or 
exporters of certain lined paper products from India and Indonesia 
receive countervailable subsidies.

EFFECTIVE DATE: October 7, 2005.

FOR FURTHER INFORMATION CONTACT: Maura Jeffords and Eric B. Greynolds 
(India) or Indonesia, David Layton or David Neubacher (Indonesia) 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-
0371 and (202) 482-5823,(202) 482-3146 and (202) 482-6071,(202) or 482-
0371 and (202) 482-5823, respectively.

SUPPLEMENTARY INFORMATION:

Initiation of Investigations

The Petitions

    Between September 9 and September 26, 2005, the Department of 
Commerce (``the Department'') received Petitions, and amendments to the 
Petitions, (``the Petitions'') filed in proper form by Association of 
American School Suppliers (``Petitioner'').
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended by the Uruguay Round Agreements Act (effective January 1, 1995) 
(``the Act''), Petitioner alleges that manufacturers, producers, or 
exporters of certain lined paper products (``certain lined CLPP paper'' 
or ``subject merchandise'') from India and Indonesia receive 
countervailable subsidies within the meaning of section 701 of the Act, 
and that such imports are materially injuring, or threatening material 
injury, to an industry in the United States. On September 21, 2005, the 
Department issued a memo clarifying that the official filing date of 
the Petitions was September 9, 2005. See Memorandum from the Team to 
Acting Deputy Assistant Secretary Barbara Tillman: Decision Memorandum 
Concerning Filing Date of Petitions, September 21, 2005, (explaining 
that the proper file date is September 9, 2005, as it was filed at the 
ITC after the noon deadline on the previous day).
    The Department finds that Petitioner filed the Petitions on behalf 
of the domestic industry because they are interested parties, as 
defined in sections 771(9)(E) and (F) of the Act, and have demonstrated 
sufficient industry support in accordance with section 702(c)(4)(A) of 
the Act. See infra, ``Determination of Industry Support for the 
Petitions.''

Scope of Investigation

    See Appendix I.

Comments on Scope of Investigations

    During our review of the Petitions, we discussed the scope with 
Petitioner to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as discussed in the 
preamble to the Department's regulations, we are setting aside a period 
for interested parties to raise issues regarding product coverage. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 
27323 (1997). The Department encourages all interested parties to 
submit such comments within 20 calendar days of publication of this 
initiation notice. Comments should be addressed to Import 
Administration's Central Records Unit (``CRU'') in Room 1870, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230 - Attn: James Terpstra. The period of scope 
consultations is intended to provide the Department with ample 
opportunity to consider all comments and consult with interested 
parties prior to the issuance of the preliminary determinations.

[[Page 58691]]

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department 
invited representatives of the Governments of India and Indonesia for 
consultations with respect to the Petitions. The Department held 
consultations with the Government of Indonesia on September 23, 2005. 
The points raised in the consultations are described in the 
consultation memorandum to the file dated September 26, 2005, and in 
the Government of Indonesia's September 22, 2005, and September 26, 
2005, submissions to the Department, both of which are on file in the 
CRU. The Government of India declined the Department's invitation for 
consultations.\1\
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    \1\ See Memorandum to the File from Maura Jeffords Regarding 
Subject Consultations and the Government of India (GOI), Sept. 22, 
2005.
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Determination of Industry Support for the Petitions

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 702(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (1) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(2) determine industry support using a statistically valid sample.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the Act directs the 
Department to look to producers and workers who account for production 
of the domestic like product. The ITC, which is responsible for 
determining whether ``the domestic industry'' has been injured, must 
also determine what constitutes a domestic like product in order to 
define the industry. While both the Department and the ITC must apply 
the same statutory definition regarding the domestic like product (see 
section 771(10) of the Act), they do so for different purposes and 
pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
domestic like product, such differences do not render the decision of 
either agency contrary to the law. See USEC, Inc. v. United States, 132 
F. Supp. 2d 1 (CIT 2001) (citing Algoma Steel Corp. Ltd. v. United 
States, 688 F. Supp. 639, 642-44 (CIT 1988)).
    Section 771(10) of the Act defines the domestic like product as ``a 
product that is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, Petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigation. See Indonesia Initiation Checklist, India Initiation 
Checklist at Attachment II (Industry Support). Based on our analysis of 
the information submitted in the Petitions we have determined that 
there is a single domestic like product, certain lined paper products, 
which is defined further in the ``Scope of the Investigations'' section 
in Appendix I, and we have analyzed industry support in terms of that 
domestic like product.
    Our review of the data provided in the petition and other 
information readily available to the Department indicates that 
Petitioner has established industry support representing at least 25 
percent of the total production of the domestic like product, and more 
than 50 percent of the production of the domestic like product produced 
by that portion of the industry, requiring no further action by the 
Department pursuant to section 702(c)(4)(D) of the Act. In addition, 
the Department received no opposition to the Petitions from domestic 
producers of the like product. Therefore, the domestic producers (or 
workers) who support the Petitions account for at least 25 percent of 
the total production of the domestic like product, and the requirements 
of section 702(c)(4)(A)(i) of the Act are met. Furthermore, the 
domestic producers who support the Petitions account for more than 50 
percent of the production of the domestic like product produced by that 
portion of the industry expressing support for or opposition to the 
Petitions. Thus, the requirements of section 702(c)(4)(A)(ii) of the 
Act also are met. Accordingly, the Department determines that the 
Petitions were filed on behalf of the domestic industry within the 
meaning of section 702(b)(1) of the Act. See Indonesia Initiation 
Checklist and India Initiation Checklist at Attachment II (Industry 
Support).
    The Department finds that Petitioner filed these petitions on 
behalf of the domestic industry because it is an interested party as 
defined in sections 771(9)(E) and (F) of the Act and it has 
demonstrated sufficient industry support with respect to the 
countervailing duty investigations that it is requesting the Department 
initiate. See Indonesia Initiation Checklist and India Initiation 
Checklist.

Injury Test

    Because India and Indonesia are each a ``Subsidies Agreement 
Country'' within the meaning of section 701(b) of the Act, section 
701(a)(2) of the Act applies to these investigations. Accordingly, the 
ITC must determine whether imports of the subject merchandise from 
India and Indonesia materially injure, or threaten material injury to, 
a U.S. industry.

Allegations and Evidence of Material Injury and Causations

    With regard to India and Indonesia, Petitioner alleges that the 
U.S. industry producing the domestic like product is being materially 
injured, and is threatened with material injury, by reason of the 
individual and cumulative imports of the subject merchandise. 
Petitioner contends that the industry's injured condition is 
illustrated by the decline in its customer base, market share, domestic 
shipments, prices and profit. We have assessed the allegations and 
supporting evidence regarding material injury and causation, and we 
have determined that these allegations are properly supported by 
adequate evidence and meet the statutory requirements for initiation. 
See Indonesia Initiation Checklist, India Initiation Checklist at 
Attachment III (Injury).

Initiation of Countervailing Duty Investigations

    Section 702(b) of the Act requires the Department to initiate a 
countervailing duty proceeding whenever an interested party files a 
petition on behalf of an industry that (1) alleges the elements 
necessary for an imposition of a duty under section 701(a) of the Act 
and (2) is accompanied by information reasonably available to 
Petitioner supporting the allegations.

[[Page 58692]]

    The Department has examined the countervailing duty petitions on 
certain lined paper products from India and Indonesia and found that 
they comply with the requirements of section 702(b) of the Act. 
Therefore, in accordance with section 702(b) of the Act, we are 
initiating countervailing duty investigations to determine whether 
manufacturers, producers, or exporters of certain lined paper products 
from India and Indonesia receive countervailable subsidies. For a 
discussion of evidence supporting our initiation determination, see 
Indonesia Initiation Checklist and India Initiation Checklist.
    We are including in our investigations the following programs 
alleged in the Petitions to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in India and 
Indonesia:
I. India:
A. Duty Entitlement Passbook Scheme (``DEPS'')
B. Export Processing Zones and Export Oriented Units
    1. Duty Free Import of Capital Goods and Raw Materials
    2. Reimbursement of Central Sales Tax Paid on Domestically-Sourced 
Materials
    3. Duty Drawback on Furnace Oil Sourced from Domestic Companies
C. Pre-Shipment and Post Shipment Export Financing
D. Income Tax Exemption Schemes under Sections 10A, 10B and 80 HHC
E. Export Promotion Capital Goods Scheme (``EPCGS'')
G. Market Access Initiative
H. Market Development Assistance
I. Status Certificate Program
J. State Programs
    1. State of Gujarat Sales Tax Program
    2. State of Maharashtra Sales Tax Program
II. Indonesia
A. Provision of Logs at Less Than Adequate Remuneration
    1. Provision of Fiber at Preferential Rates
    2. Government Ban on Log Exports
B. Subsidized Funding for Reforestation (Hutan Tanaman Industria or HTI 
Program)
C. Accelerated Depreciation
    We are not including in our investigation the following programs 
alleged to benefit producers and exporters of the subject merchandise 
in Indonesia:
A. Non-Enforcement of Banking Regulations at Conglomerate-Owned 
Financial Institutions
    Petitioner alleges that the Government of Indonesia's non-
enforcement of its laws intended to ensure prudent lending and the 
solvency of lending institutions permitted financial institutions 
controlled by forest industry conglomerates to provide credit to 
producers of the subject merchandise which would not have otherwise 
been available. In particular, Petitioner asserts that Sinar Mas/APP's 
affiliated bank, Bank Internasional Indonesia (BII), made loans to its 
affiliates that exceeded the legal loan exposure limit of the bank to 
any one affiliated company.
    Petitioner provided insufficient information regarding the 
existence of a financial contribution or specificity.
B. Government Protection from Bankruptcy
    Sinar Mas/APP had amassed an estimated debt of $13.4 to $13.9 
billion in high yield bonds and loans from several domestic and 
international financial institutions and Export Credit Agencies (ECAs). 
In March 2001, Sinar Mas/APP unilaterally ceased all of its debt 
payments. Of this estimated debt, $1.3 billion was owed to BII. In May 
2001, the BII and the Sinar Mas/APP debt owed to the bank were placed 
under the control of the Indonesian Bank Restructuring Agency (IBRA), a 
government entity created under the Indonesian Ministry of Finance. In 
assuming the Sinar Mas/APP debt, IBRA received a lien on all Sinar Mas/
APP assets, which gave the agency first rights to Sinar Mas/APP assets. 
Because IBRA never attempted to exercise its liens, Petitioner alleges 
that IBRA provided a shield for Sinar Mas/APP preventing foreign 
creditors from collecting on the estimated $12.6 billion or forcing 
Sinar Mas/APP into bankruptcy. Sinar Mas/APP continued to operate 
without any changes to ownership.
    Petitioner provided insufficient information regarding the 
existence of a financial contribution or specificity.
C. Invalidation of Bonds Through Court Action
    Sinar Mas/APP sued in Indonesian court to invalidate bonds it had 
issued with an estimated value of $550 million. The bonds were 
registered with the U.S. Securities and Exchange commission, 
underwritten by Morgan Stanley, and held by international investors. 
The District Court of Kuala Tungkal ruled that the bonds were invalid 
on the grounds that they were concocted by the foreign institutions to 
earn excessive fees. Therefore, the court ruled that Sinar Mas/APP did 
not have to repay the $550 million in bonds or the accrued interest to 
its creditors.
    Petitioner provided insufficient information regarding the 
financial contribution or specificity. Moreover, according to the 
information provided by Petitioner, the financial institutions still 
have the option of appealing the Indonesian court decision. Therefore, 
the judicial process in this claim has not finished its course.
D. Tax Holidays, Import Duty Exemption and Other Tax Benefits
    The Department found in Indonesian Textiles\2\ that the Indonesian 
Ministry of Finance may grant industries a variety of tax benefits, 
such as tax holidays, exemption from capital stamp duties and different 
levels of exemption from corporate taxes. The industries approved for 
the tax benefits are deemed ``priority'' industries by the Ministry of 
Finance and also are listed on two priority lists called Daftar Skala 
Priorities (DSP).
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    \2\ See Preliminary Affirmative Countervailing Duty 
Determinations; Certain Textile Mills Products and Apparel from 
Indonesia, 49 FR 49672 (December 12, 1984) (Indonesian Textiles).
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    We do not plan to investigate these alleged subsidies because they 
were recurring subsidies which occurred in 1983, 22 years ago, and 
there has been no new information provided by Petitioner to indicate 
that these programs are still in existence.
E. Working Capital Export Credits
    Beginning in June 1983, Indonesian state and private banks offered 
working capital export credits to domestic companies exporting goods 
other than gas and oil. The banks decided which companies could borrow 
and the interest rate to charge. The Department preliminarily found 
this to be a countervailable subsidy.
    We do not plan to investigate these alleged subsidies because they 
were recurring subsidies which occurred in 1983, 22 years ago, and 
there has been no new information provided by Petitioner to indicate 
that these programs are still in existence.
Other
A. Provision of Capital on Preferential Terms Prior to the Indonesian 
Financial Crisis
    In its September 9th filing, Petitioner alleged that preferential 
financing was provided to the forest industry during the 1990's and 
included information regarding loans to Bob Hasan's Kalimanis Group. In 
its September 22nd submission, Petitioner stated that it did not know 
whether any members of the Bob Hasan Group produced or exporter subject 
merchandise, and reserved the right to provide additional information.

[[Page 58693]]

Therefore, we are not including this allegation in our investigation at 
this time.

Distribution of Copies of the Petitions

    In accordance with section 702(b)(4)(A)(i) of the Act, a copy of 
the public version of the Petitions has been provided to the Government 
of India and Government of Indonesia. We will attempt to provide a copy 
of the public version of the Petition to each exporter named in the 
Petition, as provided for under 19 CFR 351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiations, as required by section 
702(d) of the Act.

Preliminary Determinations by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of these initiations, whether there is a 
reasonable indication that imports of certain lined paper products from 
India and Indonesia are causing material injury, or threatening to 
cause material injury, to a U.S. industry. See section 703(a)(2) of the 
Act. A negative ITC determination will result in the investigations 
being terminated; otherwise, these investigations will proceed 
according to statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(I) of 
the Act.

    Dated: September 29, 2005.
Barbara E. Tillman,
Acting Assistant Secretaryfor Import Administration.

Appendix I

Scope of the Investigation

The scope of this investigation includes certain lined paper products, 
typically school supplies,\1\ composed of or including paper that 
incorporates straight horizontal and/or vertical lines on ten or more 
paper sheets,\2\ including but not limited to such products as single- 
and multi-subject notebooks, composition books, wireless notebooks, 
looseleaf or glued filler paper, graph paper, and laboratory notebooks, 
and with the smaller dimension of the paper measuring 6 inches to 15 
inches (inclusive) and the larger dimension of the paper measuring 8-3/
4 inches to 15 inches (inclusive). Page dimensions are measured size 
(not advertised, stated, or ``tear-out'' size), and are measured as 
they appear in the product (i.e., stitched and folded pages in a 
notebook are measured by the size of the page as it appears in the 
notebook page, not the size of the unfolded paper). However, for 
measurement purposes, pages with tapered or rounded edges shall be 
measured at their longest and widest points. Subject lined paper 
products may be loose, packaged or bound using any binding method 
(other than case bound through the inclusion of binders board, a spine 
strip, and cover wrap). Subject merchandise may or may not contain any 
combination of a front cover, a rear cover, and/or backing of any 
composition, regardless of the inclusion of images or graphics on the 
cover, backing, or paper. Subject merchandise is within the scope of 
this petition whether or not the lined paper and/or cover are hole 
punched, drilled, perforated, and/or reinforced. Subject merchandise 
may contain accessory or informational items including but not limited 
to pockets, tabs, dividers, closure devices, index cards, stencils, 
protractors, writing implements, reference materials such as 
mathematical tables, or printed items such as sticker sheets or 
miniature calendars, if such items are physically incorporated , 
included with, or attached to the product, cover and/or backing 
thereto.
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    \1\ For purposes of this scope definition, the actual use of or 
labeling these products as school supplies or non-school supplies is 
not a defining characteristic.
    \2\ There shall be no minimum page requirement for looseleaf 
filler paper.
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Specifically excluded from the scope of this petition are:
 unlined copy machine paper;
 writing pads with a backing (including but not limited to 
products commonly known as ``tablets,'' ``note pads,'' ``legal pads,'' 
and ``quadrille pads''), provided that they do not have a front cover 
(whether permanent or removable). This exclusion does not apply to such 
writing pads if they consist of hole-punched or drilled filler paper;
 three-ring or multiple-ring binders, or notebook organizers 
incorporating such a ring binder provided that they do not include 
subject paper;
 index cards;
 printed books and other books that are case bound through the 
inclusion of binders board, a spine strip, and cover wrap;
 newspapers;
 pictures and photographs;
 desk and wall calendars and organizers (including but not 
limited to such products generally known as ``office planners,'' ``time 
books,'' and ``appointment books'');
 telephone logs;
 address books;
 columnar pads & tablets, with or without covers, primarily 
suited for the recording of written numerical business data;
 lined business or office forms, including but not limited to: 
preprinted business forms, lined invoice pads and paper, mailing and 
address labels, manifests, and shipping log books;
 lined continuous computer paper;
 boxed or packaged writing stationary (including but not 
limited to products commonly known as ``fine business paper,'' 
``parchment paper, `` and ``letterhead''), whether or not containing a 
lined header or decorative lines;
 Stenographic pads (``steno pads''), Gregg ruled,\3\ measuring 
6 inches by 9 inches;
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    \3\ ``Gregg ruling'' consists of single- or double-margin 
vertical ruling line down the center of the page. For a six-inch by 
nine-inch stenographic pad, the ruling would be located 
approximately three inches from the left of the book.
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Also excluded from the scope of these investigations are the following 
trademarked products:
 Fly\TM\ lined paper products: A notebook, notebook organizer, 
loose or glued note paper, with papers that are printed with infrared 
reflective inks and readable only by a Fly\TM\ pen-top computer. The 
product must bear the valid trademark Fly\TM\.\4\
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    \4\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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 Zwipes\TM\: A notebook or notebook organizer made with a 
blended polyolefin writing surface as the cover and pocket surfaces of 
the notebook, suitable for writing using a specially-developed 
permanent marker and erase system (known as a Zwipes\TM\ pen). This 
system allows the marker portion to mark the writing surface with a 
permanent ink. The eraser portion of the marker dispenses a solvent 
capable of solubilizing the permanent ink allowing the ink to be 
removed. The product must bear the valid trademark Zwipes\TM\.\5\
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    \5\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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 FiveStar[reg]Advance\TM\: A notebook or notebook organizer 
bound by a continuous spiral, or helical, wire and with plastic front 
and rear covers made of a blended polyolefin plastic material joined by 
300 denier polyester, coated on the backside with PVC (poly vinyl 
chloride) coating, and extending the entire length of the spiral or 
helical wire. The polyolefin plastic covers are of specific thickness; 
front cover is .019 inches (within normal manufacturing tolerances) and 
rear cover is .028 inches (within normal manufacturing tolerances). 
Integral with the stitching that attaches the polyester spine covering, 
is captured both ends of a 1'' wide elastic fabric band. This band is 
located 2-3/8'' from the top of the front

[[Page 58694]]

plastic cover and provides pen or pencil storage. Both ends of the 
spiral wire are cut and then bent backwards to overlap with the 
previous coil but specifically outside the coil diameter but inside the 
polyester covering. During construction, the polyester covering is sewn 
to the front and rear covers face to face (outside to outside) so that 
when the book is closed, the stitching is concealed from the outside. 
Both free ends (the ends not sewn to the cover and back) are stitched 
with a turned edge construction. The flexible polyester material forms 
a covering over the spiral wire to protect it and provide a comfortable 
grip on the product. The product must bear the valid trademarks 
FiveStar[reg]Advance\TM\.\6\
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    \6\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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 FiveStar Flex\TM\: A notebook, a notebook organizer, or binder 
with plastic polyolefin front and rear covers joined by 300 denier 
polyester spine cover extending the entire length of the spine and 
bound by a 3-ring plastic fixture. The polyolefin plastic covers are of 
a specific thickness; front cover is .019 inches (within normal 
manufacturing tolerances) and rear cover is .028 inches (within normal 
manufacturing tolerances). During construction, the polyester covering 
is sewn to the front cover face to face (outside to outside) so that 
when the book is closed, the stitching is concealed from the outside. 
During construction, the polyester cover is sewn to the back cover with 
the outside of the polyester spine cover to the inside back cover. Both 
free ends (the ends not sewn to the cover and back) are stitched with a 
turned edge construction. Each ring within the fixture is comprised of 
a flexible strap portion that snaps into a stationary post which forms 
a closed binding ring. The ring fixture is riveted with six metal 
rivets and sewn to the back plastic cover and is specifically 
positioned on the outside back cover. The product must bear the valid 
trademark FiveStar Flex\TM\.\7\
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    \7\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
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Merchandise subject to this investigation is typically imported under 
headings 4820.10.2050, 4810.22.5044, 4811.90.9090 of the Harmonized 
Tariff Schedule of the United States (HTSUS).\8\ The tariff 
classifications are provided for convenience and U.S. Customs and 
Border Protection purposes; however, the written description of the 
scope of the investigation is dispositive.
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    \8\ During the investigation additional HTS codes may be 
identified.
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[FR Doc. E5-5541 Filed 10-6-05; 8:45 am]
BILLING CODE 3510-DS-S