[Federal Register Volume 71, Number 194 (Friday, October 6, 2006)]
[Notices]
[Pages 59075-59078]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-16613]


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DEPARTMENT OF COMMERCE

International Trade Administration

A-570-504


Later-Developed Merchandise Anticircumvention Inquiry of the 
Antidumping Duty Order on Petroleum Wax Candles from the People's 
Republic of China: Affirmative Final Determination of Circumvention of 
the Antidumping Duty Order

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

ACTION: Notice of Affirmative Final Determination of Circumvention of 
Antidumping Duty Order

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Final Determination

    We determine that candles composed of petroleum wax and over fifty 
percent or more palm and/or other vegetable oil-based waxes (``mixed-
wax candles'') are later-developed merchandise and thus, are 
circumventing the antidumping duty order on petroleum wax candles from 
the People's Republic of China (``PRC'') under the later-developed 
merchandise provision, pursuant to section 781(d) of the Tariff Act of 
1930, as amended (``the Act''). See Notice of Antidumping Duty Order: 
Petroleum Wax Candles from the People's Republic of China, 51 FR 30686 
(August 28, 1986) (``Order''). In addition, we determine that mixed-wax 
candles containing any amount of petroleum are covered by the scope of 
the Order. We are also rescinding the concurrently initiated\1\ minor 
alterations anticircumvention inquiry.\2\ See Memorandum from Stephen 
J. Claeys, Deputy Assistant Secretary, Import Administration to David 
M. Spooner, Assistant Secretary, Import Administration, Subject: Issues 
and Decision Memorandum for the Later-Developed Merchandise 
Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum 
Wax Candles from the People's Republic of China, (September 29, 2006) 
(``Issues and Decision Memorandum'').
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    \1\ See Notice of Initiation Anticircumention Inquiries of 
Antidumping Duty Order: Petroleum Wax Candles from the People's 
Republic of China, 70 FR 10962 (March 7, 2005) (``Initiation 
Notice'').
    \2\ The Department received a separate request from Petitioners 
on October 12, 2004, to initiate an inquiry to determine whether 
pursuant to section 781(c) of the Act, candles containing palm or 
vegetable-based waxes as the majority ingredient and exported to the 
United States are circumventing the antidumping duty order on 
petroleum wax candles from the PRC under the minor alterations 
provision.

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EFFECTIVE DATE: October 6, 2006.

FOR FURTHER INFORMATION CONTACT: Alex Villanueva or Julia Hancock, AD/
CVD Operations, Office 9, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC, 20230; telephone: (202) 482-
3208 and (202) 482-1394, respectively.

SUPPLEMENTARY INFORMATION:

Background:

    On June 2, 2006, the Department of Commerce (``the Department'') 
published the preliminary circumvention determination. See Notice of 
Affirmative Preliminary Determination of Circumvention of Antidumping 
Duty Order: Later-Developed Merchandise Anticircumvention Inquiry of 
the Antidumping Duty Order on Petroleum Wax Candles from the People's 
Republic of China, 71 FR 32033 (June 2, 2006) (``Preliminary 
Determination''). Additionally, on June 2, 2006, the Department 
requested that interested parties submit comments and information 
addressing certain areas of the analysis. See Letter to all Interested 
Parties, from Edward C. Yang, Senior Enforcement Coordinator, China/NME 
Unit, Import Administration, RE: Anticircumvention Inquiry on Later-
Developed Merchandise: Petroleum Wax Candles from the People's Republic 
of China, (June 2, 2006) (``June 2, 2006, Letter'').
    On June 23, 2006, the Department received comments and information 
from the following eight parties: (1) the National Candle Association 
(``Petitioners''); (2) China Chamber of Commerce for Importers and 
Exporters of Foodstuffs, Native Products and Animal By-Products, the 
China Daily Chemical Association and their common members, (i.e., 
Dalian Gift Co., Ltd., Kingking A.C. Co., Ltd., Shanghai Autumn Light 
Enterprise Co., Ltd., Aroma Consumer Products (Hangzhou) Co., Ltd., 
Amstar Business Company Limited, Zhongshan Zhongnam Candle Manufacturer 
Co., Ltd., and Jiaxing Moonlite Candle Art Co., Ltd.) (``CCCFNA''); (3) 
Candle Corporation of America (``CCA''); (4) Target Corporation 
(``Target''); (5) Bed Bath & Beyond, Christmas Tree Shops, Inc. and 
Christmas Tree Shops' subsidiary Nantucket Distributing, Inc.; (6) 
Amscan, Inc. (``Amscan''); (7) Shonfeld USA, Inc. (``Shonfeld'') and 
(8) CVS Stores (``CVS'').\3\
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    \3\ Bed Bath & Beyond, Christmas Tree Shops, Inc. and Christmas 
Tree Shops' subsidiary Nantucket Distributing, Inc, Amscan, Shonfeld 
and CVS submitted virtually identical information and comments with 
the only difference being each entity's responses to some of the 
Department's questions contained in the June 2, 2006, letter.
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    On July 7, 2006, the Department received case briefs from the 
following parties: (1) Petitioners; (2) CCCFNA; (3) CCA; (4) Target; 
(5) Smart Marketing, Kate Aspen, and Wisconsin Cheeseman (``SKW''); (6) 
Christmas Tree Shops, Inc. and Christmas Tree Shops' subsidiary 
Nantucket Distributing, Inc.;\4\ (7) Amscan; (8) CVS and (9) 
Shonfeld.\5\
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    \4\ Although Bed Bath & Beyond submitted comments and new 
information with Christmas Tree Shops' subsidiary Nantucket 
Distributing, Inc., it did not file a case brief.
    \5\ Christmas Tree Shops, Inc. and Christmas Tree Shops' 
subsidiary Nantucket Distributing, Inc., Amscan, CVS, and Shonfeld 
submitted four individual briefs containing identical arguments. 
These parties will be hereinafter be referred to as 
``Merchandisers.''
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    On July 13, 2006, Petitioners submitted a letter stating that 
Target's case brief contained significant portions of untimely 
submitted new, non-publicly available information and should be 
resubmitted without the new information. On July 17, 2006, the 
Department informed parties that it was keeping the new information 
contained within Target's case brief and extended the deadline for 
parties to submit rebuttal briefs until July 24, 2006.

[[Page 59076]]

    On July 24, 2006, the Department received rebuttal case briefs from 
the following parties: (1) Petitioners; (2) CCCFNA; (3) CCA and (4) 
Target. On July 27, 2006, Target submitted a letter stating that 
Petitioners' rebuttal brief contained significant portions of untimely 
submitted new, non-publicly available information and should be 
resubmitted without the new information. On July 28, 2006, the 
Department informed parties that it was keeping the new information 
contained within Petitioners' rebuttal brief and provided parties an 
opportunity to rebut Petitioners' new information with additional 
coents and information. On August 3, 2006, CCCFNA and CCA\6\ submitted 
additional comments and information.
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    \6\ In its new factual information comments, CCA stated that 
Petitioners' factual information should be rejected by the 
Department as untimely new factual information. According to CCA, 
Petitioners had ample opportunity to submit factual information to 
bolster their argument during the course of this anticircumvention 
inquiry. Additionally, CCA states that Petitioners have twice 
ignored the Department's schedule for submitting factual information 
and submitted factual information past the established deadline. See 
CCA's Response to Petitioners' New Factual Information, (August 3, 
2006) at 3. Moreover, CCA argues that Petitioners have not provided 
any justification for submitting this untimely new information and 
as such, the Department should reject Petitioners' new information 
for the final results of this anticircumvention inquiry.
    However, for the final determination, the Department has kept 
Petitioners' factual information on the record.
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Scope Of Order

    The products covered by this order are certain scented or unscented 
petroleum wax candles made from petroleum wax and having fiber or 
paper-cored wicks. They are sold in the following shapes: tapers, 
spirals, and straight-sided dinner candles; round, columns, pillars, 
votives; and various wax-filled containers. The products were 
classified under the Tariff Schedules of the United States (``TSUS'') 
755.25, Candles and Tapers. The products covered are currently 
classified under the Harmonized Tariff Schedule of the United States 
(``HTSUS'') item 3406.00.00. Although the HTSUS subheading is provided 
for convenience purposes, our written description remains dispositive. 
See Order and Notice of Final Results of the Antidumping Duty New 
Shipper Review: Petroleum Wax Candles from the People's Republic of 
China, 69 FR 77990 (December 29, 2004).

Final Rescission Of Minor Alterations Anticircumvention Inquiry

    Due to the issuance of the affirmative final determination that 
mixed-wax candles are a later-developed product, the minor alterations 
anticircumvention inquiry, pursuant to section 781(c) of the Act, has 
been rescinded as the products subject to that inquiry have already 
been determined to be within the scope of the Order, pursuant to the 
instant inquiry under section 781(d) of the Act.

Later-Developed Merchandise

Statutory Provisions

    Section 781(d) of the Act provides that the Department may find 
circumvention of an antidumping duty order when merchandise is 
developed after an investigation is initiated (``later-developed 
merchandise''). In conducting anticircumvention inquiries under section 
781(d)(1) of the Act, the Department must examine the following 
criteria: (A) whether the later-developed merchandise has the same 
general physical characteristics as the merchandise with respect to 
which the order was originally issued (``earlier product''); (B) 
whether the expectations of the ultimate purchasers of the later-
developed merchandise are the same as for the earlier product; (C) 
whether the ultimate use of the earlier product and the later-developed 
merchandise is the same; (D) whether the later-developed merchandise is 
sold through the same channels of trade as the earlier product; and (E) 
whether the later-developed merchandise is advertised and displayed in 
a manner similar to the earlier product.
    In addition, section 781(d)(2) of the Act also states that the 
administering authority may not exclude later-developed merchandise 
from a countervailing or antidumping duty order merely because the 
merchandise (A) is classified under a tariff classification other than 
that identified in the petition or the administering authority's prior 
notices during the proceeding, or (B) permits the purchaser to perform 
additional functions, unless such additional functions constitute the 
primary use of the merchandise, and the cost of the additional 
functions constitute more than a significant proportion of the total 
cost of production of the merchandise.

Legislative History and Case Precedent

    The statute does not provide further guidance in defining the 
meaning of further development. The only other source of guidance 
available is the brief discussion of later-developed products in the 
legislative history for section 781(d) of the Act, which although 
addressing later-developed products with respect to the ITC's injury 
analysis, we find is also relevant to the Department's analysis. The 
Conference Report on H.R. 3, Omnibus Trade and Competitiveness Act of 
1988 defines a later-developed product as a product that has been 
produced as a result of a ``significant technological advancement or a 
significant alteration of the merchandise involving commercially 
significant changes.'' See H.R. Conf. Rep No. 576, 100th Cong., 2d 
Sess. (1988), reprinted in 134 Cong. Rec. H2031, H2305 (daily ed. April 
20, 1988) (emphasis added). In addition, in the first section 781(d) 
determination involving portable electric typewriters, the Department 
also cited a U.S. Senate report:
    [lsqb]s[rsqb]ection 781(d) was designed to prevent circumvention 
of an existing order through the sale of later developed products or 
of products with minor alterations that contain features or 
technologies not in use in the class or kind of merchandise imported 
into the United States at the time of the original investigation.
See S. Rep No. 40., 100\th\ Cong., 1\st\ Sess. 101 (1987).
Additionally, the Department noted the following:
    The Senate amendment is designed to address the application of 
outstanding antidumping and countervailing duty orders to 
merchandise that is essentially the same merchandise subject to an 
order, but was developed after the original investigation was 
initiated. Sec. 323(a) of Sen. amendment to H.R. 3, October 6, 1987. 
H.R. Conf. Rep No. 576, 100\th\ Cong., 2d Sess. (1988), reprinted in 
134 Cong. Rec. H2031, H2305 (daily ed. April 20, 1988).
    The language of the statute and legislative history makes clear 
that for any product to be considered later-developed it must be an 
advancement of the original product subject to the investigation, as 
opposed to a product recently found to be within the scope of the 
order.
See Portable Electric Typewriters from Japan: Preliminary Scope Ruling, 
55 FR 32107, 32114 (August 7, 1990) (``PET Prelim'') (emphasis added).
    In addition to the legislative history, prior later-developed 
merchandise cases also provide further guidance, foremost of which is 
that the Department has considered ``commercial availability'' at the 
time of the underlying less-than-fair-value (``LTFV'') investigation in 
some form in its prior later-developed merchandise anticircumvention 
inquiries: PET Final; EMD Final; and EPROMs Final. See Portable 
Electric Typewriters from Japan: Final Scope Ruling, 55 FR 47358 
(November 13, 1990) (``PET Final''); Electrolytic Manganese Dioxide 
from Japan: Final Scope Ruling, 57 FR 395 (January 6, 1992) (``EMD 
Final''); and

[[Page 59077]]

Eraseable Programmable Read Only Memories from Japan: Final Scope 
Ruling, 57 FR 11599 (April 6, 1992) (``EPROMS Final''). In each case, 
the Department addressed the ``commercial availability'' of the later-
developed merchandise in some capacity, such as the product's presence 
in the commercial market or whether the product was fully 
``developed,'' i.e., tested and ready for commercial production.\7\
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    \7\ The fourth later-developed merchandise inquiry conducted by 
the Department was Television Receiving Sets, Monochrome and Color, 
from Japan. In that inquiry, the Department found that hand-held LCD 
televisions (LCD TVs) were later-developed merchandise. See 
Television Receiving Sets, Monochrome and Color, from Japan: Final 
Scope Ruling, 56 FR 66841 (December 26, 1991) (``TV Final''). In its 
final determination, the Department reviewed LCD TVs based upon the 
later-developed merchandise provision and noted that the LCD TV 
technology did not exist at the time the original product 
descriptions were developed. If the technology did not exist, the 
Department concluded, LCD TVs could not have been ``commercially 
available'' at the time of the investigation. In other later-
developed merchandise inquiries, such as EPROMs Final, the 
Department addressed ``commercial availability'' in some form as a 
factor in its later-developed merchandise analysis because the 
technology to ``develop'' the new product existed at the time of the 
original investigation. See EPROMs Final, 57 FR at 11602-3.
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    Based upon the legislative history of the anticircumvention 
provision and prior later-developed merchandise inquiries, the 
Department continues to include a ``commercial availability'' standard 
in its analysis of this proceeding, as was indicated in the Preliminary 
Determination. See Preliminary Determination, 71 FR at 32038. As noted 
above, both the legislative history and prior later-developed 
merchandise inquiries place emphasis on evaluating the ``commercial 
availability'' of the specific product to determine whether that 
product is later-developed, pursuant to section 781(d) of the Act. 
Accordingly, the Department will evaluate whether mixed-wax candles 
were not ``commercially available'' at the time of the LTFV 
investigation in order to be properly considered later-developed 
merchandise.

Analysis

    We have analyzed the information, comments, and rebuttal comments 
of interested parties in this anticircumvention inquiry. Based on all 
of the information on the record, the Department considered whether the 
merchandise subject to this anticircumvention inquiry was ``developed'' 
as a result of a significant technological development or a significant 
alteration of the merchandise involving commercially significant 
changes. In the Preliminary Determination, the Department found that 
the technology required to produce the kind of mixed-wax candles at 
issue was hydrogenation, but that the Department had serious concerns 
that required further inquiry regarding the precise significant 
technological advancement that allowed for the commercial sale of 
mixed-wax candles.\8\ See Preliminary Determination at 32038-40. After 
examining the information received since the Preliminary Determination, 
the Department finds that the record does not support a conclusion that 
there was a clear technological development which permitted the 
commercial appearance of mixed-wax candles. However, as discussed 
above, the relevant legislative history indicates a second, disjunctive 
permissible condition for finding a product to be later-developed: 
whether there was a significant alteration of the merchandise involving 
commercially significant changes. The Department finds that this 
standard has been met. In this case, primarily through a large number 
of submitted patents, manuals, and brochures, the record supports that 
there has been a sustained and significant series of scientific studies 
since the LTFV investigation centered on the composition of waxes and 
the application of those waxes to candle-making. See Evidence 
Memorandum for further discussion. As such, it is evident that the 
composition of the wax content of a candle is a significant constituent 
component of the candle and, accordingly, changes to the content in 
excess of 50 percent of the total wax are significant. Moreover, the 
record also supports that the addition of vegetable and/or palm-oil 
based waxes to previously 100 percent petroleum wax candles is 
commercially significant. First, such a capability permits a 
manufacturer to optimize candle production to take into account varying 
input costs with obvious commercial benefits. See CCA's New Factual 
Information Submission, (June 23, 2006) at Exhibit 7. Second, although 
such an addition yields a comparable product properly considered within 
the scope of the Order, as discussed in Comments 5 and 6 of the Issues 
and Decision Memorandum, creative marketing has begun to highlight the 
vegetable or palm-oil based wax component of mixed-wax candles to 
create a new niche market centered on renewable resources or health 
concerns. This second aspect of the significant change to the candle 
composition, in that it creates a new marketing possibility, while not 
creating a separate class of merchandise, also has commercial 
significance. Based on this analysis, the Department finds that the one 
of the two requisite conditions for finding that a product is later-
developed has been satisfied. Accordingly, the Department finds that 
this can be categorized as a ``significant alteration of the 
merchandise involving commercially significant changes,'' and thus, 
satisfies one of the legislative history's criterion for finding these 
mixed-waxed candles are later-developed merchandise, pursuant to the 
section 781(d) of the Act. See Issues and Decisions Memorandum, at 
Comment 3.
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    \8\ Hydrogenation of oils is essentially chemically modifying 
palm and vegetable oils through heat, the addition of hydrogen and 
other catalysts, to form a carbon chain chemistry that allows the 
long chains to fit closely together so that the oil can be converted 
into wax.
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    Additionally, based on further information and evidence submitted 
by parties, the Department considered whether mixed-wax candles were 
``commercially available'' at the time of the LTFV investigation. In 
the Preliminary Determination, the Department found that, due to the 
limited data, it was unable to establish that mixed-wax candles were 
available at the time of the LTFV investigation. See Preliminary 
Determination, 71 FR at 32040. Since the Preliminary Determination, the 
Department has not received any information, either through relevant 
product brochures, annual sales data, or any other information, that 
allows it to definitively conclude that mixed-wax candles were 
available in the market at the time of the LTFV investigation. See 
Issues and Decisions Memorandum, at Comment 4. As a result of our 
analysis, we continue to find that U.S. imports of mixed-wax candles 
are later-developed products of the subject merchandise, within the 
meaning of section 781(d) of the Act.
    Moreover, based on further comments and evidence submitted by 
parties, the Department considered whether mixed-wax candles were 
within the scope of the Order. In the Preliminary Determination, the 
Department found that, because the Department had only limited 
information with which to establish a distinction, if any, between 
subject and non-subject mixed-wax candles, it concluded that mixed-wax 
candles containing up to 87.80 percent non-petroleum wax were within 
the scope of the Order. See Preliminary Determination, 71 FR at 32040. 
Since the Preliminary Determination, no information on the record 
indicates that mixed-wax candles above a certain percentage are not 
sufficiently different

[[Page 59078]]

from other in-scope mixed-wax candles and petroleum wax candles to draw 
a useful distinction. Additionally, there is further evidence on the 
record demonstrating that mixed-wax candles are produced in proportions 
higher than 87.80 percent non-petroleum wax. Accordingly, we find that 
mixed-wax candles containing any amount of petroleum wax are within the 
scope of the Order.
    However, we recognize that there may be types of mixed-wax candles 
containing a given amount of vegetable-based wax that places these 
mixed-wax candles outside the scope of the Order. Therefore, we note 
that interested parties may submit a scope request, pursuant to 351.225 
of the Department's regulations, regarding whether a certain type of 
mixed-wax candle is outside the scope of the Order. See Issues and 
Decision Memorandum, at Comments 5 and 6.
    Consequently, pursuant to section 781(d) of the Act, we continue to 
find that mixed-wax candles containing any amount of petroleum wax are 
later-developed merchandise and are within the scope of the Order.
    All issues raised by the interested parties to which we have 
responded are listed in the Appendix to this notice and addressed in 
the Issues and Decision Memorandum, which is hereby adopted by this 
notice. Parties can find a complete discussion of the issues raised in 
this inquiry and the corresponding recommendation in this public 
memorandum, which are on file in the Central Records Unit (``CRU''), 
Room B-099 of the main Department of Commerce building. In addition, a 
complete version of the Issues and Decision Memorandum can be accessed 
directly on the internet at http://ia.ita.doc.gov/. The paper copy and 
electronic version of the Issues and Decision Memorandum are identical 
in content.

Continuation Of Suspension Of Liquidation

    Section 351.225(l)(2) of the Department's regulations states: ``If 
liquidation has not been suspended, the Secretary will instruct the 
Customs Service to suspend liquidation and to require a cash deposit of 
estimated duties, at the applicable rate, for each unliquidated entry 
of the product entered, or withdrawn from warehouse, for consumption on 
or after the date of initiation of the scope inquiry.'' In accordance 
with section 351.225(l)(2) of the Department's regulations, we will 
continue to instruct U.S. Customs and Border Protection (``CBP'') to 
suspend liquidation of all entries of mixed-wax candles containing any 
amount of petroleum wax, from the People's Republic of China that were 
entered, or withdrawn from warehouse, for consumption on or after 
February 25, 2005, the date of initiation of this anticircumvention 
inquiry. See Notice of Affirmative Preliminary Determination of 
Circumvention of Antidumping Duty Order: Anti-Circumvention Inquiry of 
the Antidumping Duty Order on Certain Pasta from Italy, 63 FR 18364, 
18366 (April 15, 1998); Notice of Affirmative Final Determination of 
Circumvention of Antidumping Duty Order: Anti-Circumvention Inquiry of 
the Antidumping Duty Order on Certain Pasta from Italy, 63 FR 54672, 
54675-6 (October 13, 1998).
    In the Preliminary Determination, the merchandise subject to 
suspension of liquidation were mixed-wax candles containing up to 87.80 
percent of non-petroleum wax. See Preliminary Determination, 71 FR at 
32043-4. However, in this determination, the Department has found that 
mixed-wax candles containing any amount of petroleum wax are within the 
scope of the Order. See Issues and Decision Memorandum, at Comments 5 
and 6. Section 351.225(l)(3) of the Department's regulations states:
    If the Secretary issues a final scope ruling under either 
paragraph (d) or (f)(4) of this section, to the effect that the 
product in question is included within the scope of the order, any 
suspension of liquidation under paragraph (l)(1) or (l)(2) of this 
section will continue. Where there has been no suspension of 
liquidation, the Secretary will instruct the Customs Service to 
suspend liquidation and to require a cash deposit of estimated 
duties at the applicable rate, for each unliquidated entry of the 
product entered, or withdrawn from warehouse, for consumption on or 
after the date of initiation of the scope inquiry.
    Because the Department in the Preliminary Determination did not 
suspend liquidation for those entries of mixed-wax candles containing 
an amount of non-petroleum wax greater than 87.80 percent, with the 
publication of this notice, the Department hereby suspends liquidation 
of those entries of mixed-wax candles containing any amount of 
petroleum wax that were entered, or withdrawn from warehouse, for 
consumption on or after February 25, 2005, the date of initiation of 
this anticircumvention inquiry, pursuant to section 351.225(l)(3) of 
the Department's regulations. Accordingly, the merchandise subject to 
suspension of liquidation based on this determination are mixed-wax 
candles containing any amount of petroleum wax. CBP shall require a 
cash deposit in the amount of 108.30 percent for all such unliquidated 
entries, which is the most recently calculated PRC-wide rate. See 
Amended Notice of Final Results of Antidumping Duty Administrative 
Review: Petroleum Wax Candles from the People's Republic of China, 69 
FR 20858, 20859 (April 19, 2004).
    This suspension of liquidation will remain in effect until further 
notice.

Notice To Parties

    This notice also serves as the only reminder to parties subject to 
the administrative protective orders (``APO'') of their responsibility 
concerning the return or destruction of proprietary information 
disclosed under APO in accordance with section 351.305 of the 
Department's regulations. Timely written notification of the return/
destruction of APO materials or conversion to judicial protective order 
is hereby requested. Failure to comply with the regulations and terms 
of an APO is a violation which is subject to sanction.
    This final circumvention determination is in accordance with 
section 781(d) of the Act and 19 CFR 351.225(j).

    Dated: September 29, 2006.
Stephen J. Claeys,
Acting Assistant Secretary for Import Administration.
[FR Doc. E6-16613 Filed 10-5-06; 8:45 am]
BILLING CODE 3510-DS-S