[Federal Register Volume 73, Number 36 (Friday, February 22, 2008)]
[Notices]
[Pages 9769-9772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-3387]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-475-818]


Certain Pasta From Italy: Notice of Preliminary Results of 
Antidumping Duty Changed Circumstances Review and Intent To Reinstate 
the Antidumping Duty Order

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
antidumping changed circumstances review with respect to Pasta Lensi 
S.r.l. (Lensi), a producer/exporter of pasta from Italy, and American 
Italian Pasta Company (AIPC), Lensi's corporate parent and importer of 
subject merchandise produced by Lensi. The Department preliminarily 
determines that Lensi made sales at less than normal value (NV) during 
the 2002-2003 period of review (POR), that, consequently, Lensi no 
longer qualifies for revocation based upon three consecutive reviews 
resulting in de minimis margins, and that the order should be 
reinstated on certain pasta from Italy related to subject merchandise 
produced and exported by Lensi. We will instruct U.S. Customs and 
Border Protection (CBP) to suspend liquidation of all entries of 
subject merchandise produced and exported by Lensi entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register. Interested parties 
are invited to comment on these preliminary results.

Effective Date: February 22, 2008.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds, AD/CVD Operations, 
Office 3, Import Administration, U.S. Department of Commerce, Room 
4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230; 
telephone: (202) 482-6071.

SUPPLEMENTARY INFORMATION: 

Background

    On November 19, 2007, pursuant to section 751(b) of the Tariff Act 
of 1930, as amended (the Act), the Department initiated an antidumping 
changed circumstances review with respect to Lensi and AIPC. See 
Certain Pasta from Italy: Notice of Initiation of Antidumping Duty 
Changed Circumstances Review, 72 FR 65010 (November 19, 2007) 
(Initiation of Pasta from Italy). On December 3, 2007, AIPC and Pasta 
Lensi submitted comments regarding the antidumping changed 
circumstances review.

Scope of the Order

    Imports covered by this order are shipments of certain non-egg dry 
pasta in packages of five pounds four ounces or less, whether or not 
enriched or fortified or containing milk or other optional ingredients 
such as chopped vegetables, vegetable purees, milk, gluten, diastasis, 
vitamins, coloring and flavorings, and up to two percent egg white. The 
pasta covered by this scope is typically sold in the retail market, in

[[Page 9770]]

fiberboard or cardboard cartons, or polyethylene or polypropylene bags 
of varying dimensions.
    Excluded from the scope of this order are refrigerated, frozen, or 
canned pastas, as well as all forms of egg pasta, with the exception of 
non-egg dry pasta containing up to two percent egg white. Also excluded 
are imports of organic pasta from Italy that are accompanied by the 
appropriate certificate issued by the Instituto Mediterraneo Di 
Certificazione, by Bioagricoop Scrl, by QC&I International Services, by 
Ecocert Italia, by Consorzio per il Controllo dei Prodotti Biologici, 
by Associazione Italiana per l'Agricoltura Biologica, or by Instituto 
per la Certificazione Etica e Ambientale (ICEA) are also excluded from 
this order.
    The merchandise subject to this order is currently classifiable 
under items 1902.19.20 and 1901.90.9095 of the Harmonized Tariff 
Schedule of the United States (HTSUS). Although the HTSUS subheading is 
provided for convenience and customs purposes, the written description 
of the merchandise subject to the order is dispositive.

Preliminary Results of Changed Circumstances Review

    In their submissions, Lensi and AIPC acknowledge that, contrary to 
the Notice of Final Results of the Seventh Administrative Review of the 
Antidumping Duty Order on Certain Pasta from Italy and Determination to 
Revoke in Part, 70 FR 6832 (February 9, 2005) (Seventh Review of Pasta 
from Italy), Lensi did, in fact, make sales at less than NV during the 
2002 through 2003 review period. As a result, Lensi was not entitled to 
the de minimis rate it received in the Seventh Review of Pasta from 
Italy. Nor was Lensi entitled to revocation from the order because it 
did not satisfy the criteria of having made sales at not less than NV 
for a period of at least three consecutive years. Therefore, we have 
sufficient information on the record to make a preliminary finding with 
respect to reinstatement of the order. We preliminarily determine that 
Lensi was not entitled to revocation from the order and, therefore, we 
are preliminarily reinstating the order with respect to certain pasta 
produced and exported by Lensi.
    Section 776(a)(2) of the Act provides that, if an interested party 
or any other person withholds information requested by the 
administering authority, fails to provide such information by the 
deadlines for submission of the information and in the form or manner 
requested, subject to subsections (c)(1) and (e) of section 782 of the 
Act, significantly impedes a proceeding under this title, or provides 
such information but the information cannot be verified as provided in 
section 782(i) of the Act, the administering authority shall use, 
subject to section 782(d) of the Act, facts otherwise available in 
reaching the applicable determination.
    As is clear from Lensi's and AIPC's submissions, during the course 
of the seventh administrative review of the antidumping duty order on 
pasta from Italy, Lensi withheld information requested by the 
administering authority, failed to provide such information by the 
deadlines for submission of the information and in the form or manner 
requested, and significantly impeded the proceeding. Therefore, 
consistent with section 776(a)(2) of the Act, we preliminarily 
determine to use facts otherwise available to determine the margin of 
dumping.
    AIPC and Lensi note that they have made a full voluntary disclosure 
to the Department and argue that, on that basis, the Department should 
use Lensi's own ``corrected'' data to determine the appropriate cash 
deposit rate. In their December 3, 2007, submissions, AIPC and Lensi 
explain that AIPC has reviewed its 2002-2003 questionnaire responses, 
interviewed available company personnel, and worked with outside legal 
counsel of its internal audit committee to determine if the reporting 
discrepancy was a single occurrence or if there were other similarly 
misreported transactions. In addition, AIPC states that on September 7, 
2007, it completed its internal preparation of its restated financial 
statements, which include the 2002-2003 period. According to AIPC, this 
process has led it to conclude that there are no other transactions or 
adjustments similar to that already reported to the Department. 
Therefore, Lensi and AIPC propose that for purposes of recalculating 
the dumping margin from the Seventh Review of Pasta from Italy and 
establishing a margin to be applied to Lensi, the Department should 
rely on the information originally withheld by AIPC. Specifically, AIPC 
suggests that the Department rely on the proposed programming language 
included in its December 3, 2007, submission to incorporate the 
information that was not reported during the course of the Seventh 
Review of Pasta from Italy.
    In its submissions to the Department, AIPC did not disclose that in 
October 2005 it determined that its previously issued consolidated, 
audited statements for the 2002, 2003, 2004 fiscal years and its 
unaudited statements for each of the fiscal quarters in such years, 
should no longer be relied upon.\1\ Nor did AIPC disclose in its 
submissions to the Department that by June 9, 2006, it concluded that 
its financial statements for the 2000 and 2001 fiscal years should also 
be restated.\2\ Thus, it appears that the problem with AIPC/Lensi's 
books and records involves more than a few minor adjustments.
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    \1\ See American Italian Pasta Company to Withdraw and Restate 
Historical Financial Statements, AIPC press release dated October 
27, 2005.
    \2\ See American Italian Pasta Company Outlines Status of Audit 
Committee Investigation, Company Financial Statement Review and 
Pending Restatement, AIPC press release dated June 9, 2006.
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    We also do not agree with AIPC's claim that, as a result of its 
internal audit, it is reasonable to accept AIPC's conclusion that the 
data discrepancy in the Seventh Review of Pasta from Italy constitutes 
the only misreported transaction reported to the Department. We find 
that, as recently as January 2008, AIPC has not reissued the final 
version of its historical financial statements, nor has AIPC issued the 
final version of its July 1, 2005, quarterly report to the U.S. 
Securities and Exchange Commission (SEC), or any subsequent quarterly 
or annual reports. Though AIPC states in its December 3, 2007, 
submission that it has completed its internal preparation of its 
restated financial statements, including the 2002-2003 period examined 
in the Seventh Review of Pasta from Italy, information in AIPC's 
September 7, 2007, press release indicates that the financial 
statements for fiscal year 2004 and earlier periods are currently 
subject to review by AIPC's registered public accounting firm and the 
SEC. The press release further states that:

    The statements by the Company regarding the status of the 
preparation of the Company's historical financial statements and the 
impairment charges for its fiscal year 2005 and for its fiscal year 
2006 are forward-looking. Actual results or events could differ 
materially. The differences could be caused by a number of factors, 
including, but not limited to, the review and/or audit of the 
Company's financial statements by its independent registered public 
accounting firm, the SEC staff review, and the conclusions reached 
regarding financial reporting.\3\
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    \3\ See American Italian Pasta Company Announces Completion of 
Audit Committee Investigation, Announces Updated Impairment Charges, 
and Updates Restatement Process, AIPC press release dated September 
7, 2007.

Therefore, we preliminarily determine that AIPC's books and records 
leading up to and including the period covered by the Seventh Review of 
Pasta from Italy cannot be relied upon for purposes of this changed 
circumstances review.

[[Page 9771]]

    Moreover, irrespective of the reliability of AIPC's revised data, 
we preliminarily determine that Lensi and AIPC should not be able to 
use this antidumping changed circumstances review as an opportunity to 
replace misreported data that AIPC should have accurately reported to 
the Department in the first instance as part of the seventh 
administrative review. Allowing Lensi and AIPC to revise misreported 
data over five years after Lensi was revoked from the antidumping duty 
order contradicts the Department's longstanding practice of requiring 
respondents to submit accurate and timely data in accordance with the 
deadlines of the relevant segment of the proceeding. See, e.g., Tianjin 
Mach. Imp. & Exp. Corp. v. United States, 353 F. Supp. 2d 1294, 1303-
1306 (CIT 2005), where the Court found that a two-month delay in 
providing corrected information is sufficient for imposing an adverse 
facts available (AFA) rate. Furthermore, permitting Lensi and AIPC to 
revise the misreported data several years after the completion of the 
segment of the proceeding would establish a troubling precedent that 
could enable respondents to manipulate the results of a segment of 
proceeding and undermine the ability of the Department to conduct and 
complete a proceeding based on timely and accurate information. Under 
Lensi's proposed approach, future respondents could withhold 
information or submit false information to the Department and then, 
having viewed the Department's final decision, determine whether it is 
in their interest to seek a revision to the duty rate by providing the 
Department with revised information that they claim constitutes the 
definitive and accurate data set.
    AIPC and Lensi note that they have made a full voluntary disclosure 
to the Department and argue that, on that basis, the application of an 
allegedly arbitrarily high cash deposit rate--such as the 11.26 percent 
all-others cash deposit rate or even 7.36 percent, the highest weighed-
average margin calculated in the seventh review--would serve no 
purpose, would be a disincentive to other companies considering a 
possible voluntary disclosure, would not protect the integrity of the 
Department's proceedings, would be punitive, and violates basis 
fairness in that AIPC's innocent shareholders would be penalized 
multiple times for the same conduct.
    We are aware that, as AIPC and Lensi note, other Federal agencies 
have policies and/or regulations related to voluntary disclosure.\4\ 
For example, the Department's Bureau of Industry and Security views 
voluntary disclosure as a mitigating factor when considering what 
sanctions will be sought. However, the mitigating effect of voluntary 
disclosure is diminished, if not completely eliminated, where the 
disclosure does not occur before any other U.S. agency has learned the 
same or similar information from another source and has commenced an 
investigation or inquiry.\5\
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    \4\ Export Administration Regulations: Enforcement and 
Protective Measures, 15 CFR 764.5 (2005), Voluntary Self-disclosure; 
Incentives for Self-Policing: Discovery, Disclosure, Correction and 
Prevention of Violations, 65 FR 19618 (April 11, 2000); Foreign 
Assets Control Office: Economic Sanctions Enforcement Procedures for 
Banking Institutions, 71 FR 1971 (Jan. 12, 2006); Amendments to the 
International Traffic in Arms Regulations, 71 FR 20534 (April 21, 
2006); and SEC Administrative Proceedings File No. 3-12310 (May 31, 
2006).
    \5\ Id., particularly, Export Administration Regulations: 
Enforcement and Protective Measures, 15 CFR 764.5 (2005), Voluntary 
Self-disclosure; Incentives for Self-Policing: Discovery, 
Disclosure, Correction and Prevention of Violations, 65 FR 19618 
(April 11, 2000).
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    According to AIPC's own admission, AIPC has been cooperating with 
an inquiry by the SEC since 2005.\6\ Therefore, Lensi/AIPC's voluntary 
disclosure to the Department in August 2006 comes more than one year 
after another U.S. agency had learned of the same or similar 
information. Therefore, we preliminarily determine that, given the 
circumstances, the facts of this case do not warrant treatment of Lensi 
and AIPC's voluntary disclosure as a mitigating factor in considering 
from among the facts otherwise available.
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    \6\ See December 7, 2006, letter to the Secretary from AIPC and 
Lensi. See also, American Italian Pasta Company Delays Third Quarter 
Earnings Release and Filing of Form 10-Q, AIPC press release dated 
August 9, 2005.
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    Section 776(b) of the Act provides that, if the administering 
authority finds that an interested party failed to cooperate by not 
acting to the best of its ability to comply with a request for 
information, in reaching the applicable determination, the 
administering authority may use an inference that is adverse to the 
interests of that party in selecting from among the facts otherwise 
available. Lensi and AIPC failed to act to the best of their ability to 
comply with a request for information. The disclosure by Lensi and AIPC 
did not occur in the context of any proceeding, thus it does not 
diminish Lensi's failure to act to the best of its ability during the 
seventh review. The Department's well established policy, as upheld by 
the courts, is to make an adverse inference when selecting among the 
facts available for parties, such as Lensi, that failed to act to the 
best of their ability, regardless of whether the failure was caused by 
intent or by inattentiveness, carelessness, or inadequate record 
keeping. See Nippon Steel Corporation v. United States, 337 F.3d 1373, 
1382 (Fed. Cir. Aug. 8, 2003).
    For purposes of determining the margin of dumping in the seventh 
review and for establishing a cash deposit rate, the Department has 
selected as AFA the weighted-average margin of 45.59 percent ad 
valorem. The 45.49 percent margin is the margin assigned to Barilla 
during the first and fourth administrative reviews and to PAM in the 
sixth review. See, e.g., Notice of Final Results of Antidumping Duty 
Administrative Review, Partial Rescission of Antidumping Duty 
Administrative Review and Revocation of Antidumping Duty Order in Part: 
Certain Pasta From Italy, 67 FR 300 (January 3, 2002) (Fourth Review of 
Pasta from Italy); see also Notice of Final Results of the Sixth 
Administrative Review of the Antidumping Duty Order on Certain Pasta 
from Italy and Determination Not to Revoke in Part, 69 FR 6255 
(February 10, 2004) (Sixth Review of Pasta from Italy).
    Section 776(c) of the Act states that when the Department relies on 
secondary information for purposes of determining the dumping margin 
rather than on information obtained in the course of an investigation 
or review, the Department shall, to the extent practicable, corroborate 
that information from independent sources that are reasonable.\7\ In 
accordance with section 776(c) of the Act, the Department may 
corroborate an AFA rate using a respondent's own transaction-specific 
margins or margins from other respondents. See Ta Chen Pipe, Inc. v. 
United States, 298 F.3d, 1330, 1339-40 (Fed. Cir. 2002) (Ta Chen); see 
also NSK Ltd v. United States, 346 F. Supp. 2d 1312, 1331-36 (Ct. Int'l 
Trade 2004) (NSK Ltd.) and Shanghai Taoen International Trading Co. v. 
United States, 360 F. Supp. 2d 1339, 1348 (Ct. Int'l Trade 2005) 
(Shanghai Taoen). However, as discussed above, we have determined that 
the information submitted by Lensi during the seventh review and the 
two prior review

[[Page 9772]]

segments in which it participated is unreliable and cannot serve as the 
basis for determining the actual margin of dumping.
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    \7\ The Uruguay Round Agreements Act Statement of Administrative 
Action H.R. Doc. No. 103-316, vol. 1, (1994) (SAA) describes 
secondary information as ``information derived from the petition 
that gave rise to the investigation or review, the final 
determination concerning subject merchandise, or any previous review 
under section 751 concerning the subject merchandise.'' See SAA at 
870.
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    Because we have determined that the information submitted by Lensi 
during the seventh review and prior reviews is not reliable, we looked 
to information submitted by other respondents during the seventh review 
for corroboration of the AFA rate. See February 12, 2008, Memorandum to 
the File, from Eric B. Greynolds, Program Manager, Office 3, 
Operations, RE: Corroboration of Adverse Facts Available Rate for 
Lensi, S.p.A. (AFA Corroboration Memorandum). The transaction-specific 
margins from other respondents from the seventh review represent ``a 
reasonably accurate estimate'' of Lensi's dumping activity in the 
Seventh Review of Pasta from Italy, absent any other reliable data upon 
which to calculate Lensi's margin. See F.lli de Cecco Di Filippo Fara 
S. Martino S.p.A. v. United States, 216 F.3d 1027, 1032 (Fed. Cir. 
2000) (F.lli de Cecco); see also section 776(c) of the Act which states 
that, when relying on secondary information, the Department shall, ``to 
the extent practicable, corroborate that information from independent 
sources that are reasonably at their disposal.'' Thus, with respect to 
the reliability of secondary information, the standard established in 
the statute and interpreted by the Court is not one of perfection but 
rather one that requires reasonable accuracy. In any case, any 
potential inaccuracy in the information used to corroborate the AFA 
rate applied to Lensi is the result of Lensi's own actions. Thus, the 
Department determines that the transaction-specific margins of other 
respondents from the seventh review corroborate to the extent 
practicable the 45.59 percent AFA margin. See Ta Chen, 298 F.3d at 
1339; see also NSK Ltd., 346 F. Supp. 2d at 1331-36; and Shanghai 
Taoen, 360 F. Supp. 2d at 1348 (affirming corroboration by using 
respondent's own transaction-specific margins from prior reviews or 
transaction-specific margins from other respondents). As recognized by 
the Federal Circuit, so long as the data are corroborated, the 
Department has ``discretion to choose which sources and facts it will 
rely on to support an adverse inference.'' See F.lli de Cecco, 216 F.3d 
at 1032. In this case, the Department has exercised this discretion in 
a reasonable manner by corroborating the respondent's AFA rate with the 
transaction-specific margins of other respondents from the seventh 
review. See Ta Chen, 298 F.3d at 1278-79; see also NSK Ltd., 346 F. 
Supp. 2d at 1331-36; and Shanghai Taoen, 360 F. Supp. 2d at 1348.
    Since we have preliminarily determined that Lensi made sales at 
less than NV during the 2002-2003 POR and was not entitled to 
revocation, the antidumping duty order is hereby provisionally 
reinstated, and we will instruct CBP to suspend liquidation of all 
entries of subject merchandise produced and exported by Lensi entered, 
or withdrawn from warehouse, for consumption on or after the date of 
publication of this notice in the Federal Register.\8\
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    \8\ We note that over five years has passed since Lensi was 
revoked from the antidumping duty order. During this time, Lensi's 
entries have not been subject to suspension by the CBP and have not 
been subject to a cash deposit rate.
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    Furthermore, a cash deposit requirement of 45.59 percent will be in 
effect for all shipments of the subject merchandise produced and 
exported by Lensi that are entered, or withdrawn from warehouse, for 
consumption on or after the publication date of this notice. A cash 
deposit requirement shall remain in effect until publication of the 
final results of the next administrative review unless the Department 
finds that Lensi was entitled to revocation from the order in the final 
results of this changed circumstances review.
    Any interested party may request a hearing within 30 days of 
publication of this notice. Any hearing, if requested, will be held no 
later than 44 days after the date of publication of this notice, or the 
first workday thereafter. Case briefs from interested parties may be 
submitted not later than 30 days after the date of publication of this 
notice. Rebuttal briefs, limited to the issues raised in those 
comments, may be filed not later than five days after the deadline for 
filing case briefs. See 19 CFR 531.309, 310. All written comments shall 
be submitted in accordance with 19 CFR 351.303. Persons interested in 
attending the hearing, if one is requested, should contact the 
Department for the date and time of the hearing. The Department will 
publish the final results of this changed circumstances review, 
including the results of its analysis of issues raised in any written 
comments.
    The Department will complete this review within 270 days of the 
date on which it initiated the changed circumstances review. In 
accordance with 19 CFR 351.216(e), the final results of the changed 
circumstances review will set forth the factual and legal conclusions 
upon which our results are based and a description of any action 
proposed based on those results.
    This notice is in accordance with sections 751(b)(1) and 777(i) of 
the Act and 19 CFR 351.216 and 351.222.

    Dated: February 12, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
 [FR Doc. E8-3387 Filed 2-21-08; 8:45 am]
BILLING CODE 3510-DS-P