[Federal Register Volume 74, Number 4 (Wednesday, January 7, 2009)]
[Notices]
[Pages 673-681]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-00062]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]


Certain Cased Pencils from the People's Republic of China; 
Preliminary Results and Partial Rescission of Antidumping Duty 
Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that the respondents in this review, covering 
the period December 1, 2006, through November 30, 2007, have made sales 
of subject merchandise at less than normal value. If these preliminary 
results are adopted in the final results of this review, we will 
instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on all appropriate entries. The Department invites 
interested parties to comment on these preliminary results.

EFFECTIVE DATE: January 7, 2009.

FOR FURTHER INFORMATION CONTACT: Alexander Montoro or David Layton, AD/
CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone (202) 482-0238 
and (202) 482-0371, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On December 28, 1994, the Department published an antidumping duty 
order on certain cased pencils from the People's Republic of China 
(``PRC''). See Antidumping Duty Order: Certain Cased Pencils from the 
People's Republic of China, 59 FR 66909 (December 28, 1994).
    On December 3, 2007, the Department published a notice of 
``Opportunity to Request Administrative Review'' of the antidumping 
duty order on certain cased pencils from the PRC covering the period of 
review (``POR'') December 1, 2006, through November 30, 2007. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 72 FR 
67889 (December 3, 2007). On December 26, 2007, in accordance with 19 
CFR 351.213(b), Shandong Rongxin Import and Export Co., Ltd. 
(``Rongxin''), a PRC exporter/producer, requested a review of itself. 
On December 31, 2007, the following exporters/producers requested 
reviews of themselves in accordance with 19 CFR 351.213(b): China First 
Pencil Co., Ltd. (``China First''), Shanghai Three Star Stationery 
Industry Corp. (``Three Star''), and Oriental International Holding 
Shanghai Foreign Trade Co., Ltd. (``SFTC''). On December 31, 2007, the 
petitioners \1\ requested a review of the following companies: China 
First (including subsidiaries Shanghai First Writing Instrument Co., 
Ltd. (``Shanghai First''), Shanghai Great Wall Pencil Co., Ltd. 
(``Great Wall''), and China First Pencil Fang Zheng Co., Ltd. (``Fang 
Zheng''), Three Star, Guangdong Provincial Stationery & Sporting Goods 
Import & Export Corporation (``Guangdong''), Rongxin, Tianjin Custom 
Wood Processing Co., Ltd. (``Tianjin''), Beijing Dixon Stationery 
Company Ltd. (``Dixon''), and Anhui Import & Export Co., Ltd. 
(``Anhui'').
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    \1\ The petitioners include Sanford L.P., Musgrave Pencil 
Company, RoseMoon Inc., and General Pencil Company.
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    On January 28, 2008, the Department published a notice of 
initiation for this administrative review covering the companies listed 
in the requests received from interested parties. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Request 
for Revocation in Part, 73 FR 4829 (January 28, 2008). On May 6, 2008, 
the petitioners requested that the Department conduct verification of 
the information the Department will rely upon in the final results of 
this review. On August 25, 2008, we extended the time limit for the 
preliminary results in this review until December 30, 2008. See Certain 
Cased Pencils from the People's Republic of China: Extension of Time 
Limit for the Preliminary Results of the Antidumping Duty 
Administrative Review, 73 FR 49993 (August 25, 2008).

Respondent Selection

    Section 777A(c)(1) of the Tariff Act of the 1930, as amended (``the 
Act''), directs the Department to calculate individual dumping margins 
for each known producer or exporter of the subject merchandise. Because 
it was not practicable for the Department to individually examine all 
of the companies covered by the review, the Department limited its 
examination to a reasonable number of producers/exporters, accounting 
for the greatest possible export volume, pursuant to section 
777A(c)(2)(B) of the Act. Therefore, the Department selected China 
First, Three Star, and Rongxin as the mandatory respondents in this 
review. See Memorandum from Alexander Montoro, International Trade 
Compliance Analyst, to Susan H. Kuhbach, Director of AD/CVD Operations 
Office 1, entitled ``Selection of Respondents for the Antidumping Duty 
Review of Certain Cased Pencils from the People's Republic of China,'' 
June 17, 2008.

Partial Rescission

    On July 3, 2008, Dixon requested that the Department rescind the 
administrative review with respect to Dixon and certified that it had 
no exports, sales or entries of subject merchandise to the United 
States during the POR. We reviewed CBP import data and found no 
evidence that Dixon had any shipments of subject merchandise during the 
POR. See Memorandum from Alexander Montoro to the File, entitled 
``Intent to Rescind in Part the Antidumping Duty Administrative

[[Page 674]]

Review on Certain Cased Pencils from the People's Republic of China'', 
August 7, 2008, (``Intent to Rescind Memo''). In addition, on July 17, 
2008, we made a ``No Shipments Inquiry'' to CBP to confirm that there 
were no exports of subject merchandise by Dixon during the POR. We 
asked CBP to notify us within ten days if CBP ``has contrary 
information and is suspending liquidation'' of subject merchandise 
exported by Dixon. CBP did not reply with contrary information. The 
Department provided interested parties in this review until August 14, 
2008, to submit comments on the Intent to Rescind Memo. No interested 
party submitted any comments. Accordingly, we are preliminarily 
rescinding this review with respect to Dixon.

Non-Market Economy Country Status

    In every case conducted by the Department involving the PRC, the 
PRC has been treated as a non-market economy (``NME'') country. In 
accordance with section 771(18)(C)(i) of the Act, any determination 
that a foreign country is an NME country shall remain in effect until 
revoked by the administering authority. See, e.g., Brake Rotors From 
the People's Republic of China: Final Results and Partial Rescission of 
the 2004-2005 Administrative Review and Notice of Rescission of 2004-
2005 New Shipper Review, 71 FR 66304 (November 14, 2006). None of the 
parties to this proceeding has contested such treatment. Accordingly, 
we calculated normal value (``NV'') in accordance with section 773(c) 
of the Act, which applies to NME countries.

Surrogate Country and Surrogate Values

    Section 773(c)(1) of the Act directs the Department to base NV on 
the NME producer's factors of production (``FOPs''), valued in a 
surrogate market economy country or countries considered to be 
appropriate by the Department if NV cannot be determined pursuant to 
section 773(a) of the Act. In accordance with section 773(c)(4) of the 
Act, the Department valued the FOPs, to the extent possible, using the 
costs of the FOPs in one or more market-economy countries that are at a 
level of economic development comparable to that of the PRC and are 
significant producers of comparable merchandise. The Department 
determined that India, Indonesia, the Philippines, Colombia and 
Thailand are countries comparable to the PRC in terms of economic 
development. See Memorandum from Carole Showers, Acting Director, 
Office of Policy, to Susan H. Kuhbach, Director, Office 1, July 9, 
2008.
    On November 14, 2008, the Department solicited comments on 
surrogate country selection from interested parties. The Department 
received comments from the petitioners on November 26, 2008. On 
November 26, 2008, the Department also received surrogate-value 
information from the petitioner, China First, and Three Star. On 
December 5, 2008, and December 8, 2008, the Department received 
rebuttal factual information and comments on factor valuation from the 
petitioners and China First and Three Star (``China First-Three 
Star''), respectively. For a detailed discussion of the Department's 
selection of surrogate values and financial ratios, see ``Factor 
Valuations'' section below. See also Memorandum from the Team to the 
File, entitled ``2006-2007 Antidumping Duty Administrative Review of 
Certain Cased Pencils from the People's Republic of China: Factor 
Valuation for the Preliminary Results'', December 30, 2008, (``Factor 
Valuation Memorandum''), which is on file in the Central Records Unit 
(``CRU'') in Room 1117 of the main Department of Commerce building.
    We determined that India is comparable to the PRC in terms of per 
capita gross national product and the national distribution of labor. 
Furthermore, India is a significant producer of comparable merchandise. 
See Memorandum from Alexander Montoro to the File entitled, ``2006-2007 
Antidumping Duty Administrative Review on Certain Cased Pencils from 
the People's Republic of China: Selection of a Surrogate Country,'' 
December 30, 2008.
    Moreover, it is the Department's practice to select an appropriate 
surrogate country based on the availability and reliability of data 
from these countries. See Department Policy Bulletin No. 04.1: Non-
Market Economy Surrogate Country Selection Process, dated March 1, 
2004. The Department finds India to be a reliable source for surrogate 
values because India is at a comparable level of economic development 
pursuant to section 773(c)(4) of the Act, is a significant producer of 
comparable merchandise, and has publicly available and reliable data. 
Furthermore, the Department notes that India has been the primary 
surrogate country in past segments, and the only surrogate value data 
submitted on the record are from Indian sources. Given the above facts, 
the Department has selected India as the primary surrogate country for 
this review.

Scope of the Order

    Imports covered by the order are shipments of certain cased pencils 
of any shape or dimension (except as described below) which are writing 
and/or drawing instruments that feature cores of graphite or other 
materials, encased in wood and/or man-made materials, whether or not 
decorated and whether or not tipped (e.g., with erasers, etc.) in any 
fashion, and either sharpened or unsharpened. The pencils subject to 
the order are currently classifiable under subheading 9609.10.00 of the 
Harmonized Tariff Schedule of the United States (``HTSUS''). 
Specifically excluded from the scope of the order are mechanical 
pencils, cosmetic pencils, pens, non-cased crayons (wax), pastels, 
charcoals, chalks, and pencils produced under U.S. patent number 
6,217,242, from paper infused with scents by the means covered in the 
above-referenced patent, thereby having odors distinct from those that 
may emanate from pencils lacking the scent infusion. Also excluded from 
the scope of the order are pencils with all of the following physical 
characteristics: (1) length: 13.5 or more inches; (2) sheath diameter: 
not less than one-and-one quarter inches at any point (before 
sharpening); and (3) core length: not more than 15 percent of the 
length of the pencil.
    In addition, pencils with all of the following physical 
characteristics are excluded from the scope of the order: novelty jumbo 
pencils that are octagonal in shape, approximately ten inches long, one 
inch in diameter before sharpening, and three-and-one eighth inches in 
circumference, composed of turned wood encasing one-and-one half inches 
of sharpened lead on one end and a rubber eraser on the other end.
    Although the HTSUS subheading is provided for convenience and 
customs purposes, the written description of the scope of the order is 
dispositive.

Affiliation - China First and Three Star

    To the extent that section 771(33) of the Act does not conflict 
with the Department's application of separate rates and enforcement of 
the NME provision, section 773(c) of the Act, the Department will 
determine that exporters and/or producers are affiliated if the facts 
of the case support such a finding.\2\ For the reasons discussed

[[Page 675]]

below, we find that this condition has not prevented us from examining 
in this administrative review whether China First and its subsidiary 
producers\3\ are affiliated with Three Star.
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    \2\ See, e.g., Certain Preserved Mushrooms From the People's 
Republic of China; Preliminary Results of Antidumping Duty 
Administrative Review, 71 FR 64930, 64934 (November 6, 2006) 
(unchanged in the final results, 72 FR 44827 (August 9, 2007)), and 
Certain Preserved Mushrooms From the People's Republic of China: 
Preliminary Results and Partial Rescission of Fifth Antidumping Duty 
Administrative Review, 70 FR 10965, 10969 (March 7, 2005) 
(``Mushrooms Fifth Review Prelim'') (unchanged in the final results, 
70 FR 54361 (September 14, 2005)).
    \3\ China First's pencil-producing subsidiaries include the 
following companies: Shanghai First, Great Wall, and Fang Zheng.
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    In prior administrative reviews involving China First and Three 
Star, the Department found China First to be affiliated with Three Star 
as a result of Shanghai Light Industry, Ltd.'s (``SLI'') direct 
oversight and control over both China First and Three Star.\4\
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    \4\ See, e.g., Certain Cased Pencils from the People's Republic 
of China; Final Results and Partial Rescission of Antidumping Duty 
Administrative Review,71 FR 38366 (July 6, 2006) and accompanying 
Issues and Decision Memorandum at Comment 7.
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    In this review, as in past administrative reviews, China First and 
Three Star claim that they are not affiliated and should not be 
collapsed. These respondents contend that SLI's transfer of its 
oversight responsibilities for China First and Three Star to the 
Huangpu District State Assets Administration Office (``HSAAO'') on 
October 11, 2005, and September 8, 2005, respectively, is additional 
evidence of their non-affiliation.\5\
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    \5\ See page 2 of Three Star's section A response, and pages A-4 
and A-5 of China First's section A response, August 1, 2008.
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    Based on our analysis, we preliminarily find that China First and 
its pencil-producing subsidiaries are affiliated with Three Star, 
pursuant to section 771(33)(F) of the Act, because of the common 
control exercised by HSAAO. See Memorandum From Team to Susan H. 
Kuhbach, Director, Office 1, entitled ``Certain Cased Pencils from the 
People's Republic of China: Whether to Continue To Collapse China First 
and its Pencil-Producing Subsidiaries with Three Star,'' December 30, 
2008 (``Affiliation/Collapsing Memo''). The basis of our finding is 
that the facts have not changed from previous reviews in which we found 
these parties to be affiliated.
    In the four most recent administrative reviews of Pencils from 
China, the Department found China First and Three Star to be 
affiliated, in large part based on: (1) a 1997 public filing by China 
First that indicated that China First's shareholders voted to merge 
with Three Star; and (2) common oversight of the two firms by SLI, a 
government-owned assets management entity. Throughout the four reviews, 
both companies consistently asserted that the 1997 merger was not 
implemented and that the two companies, are in, fact unaffiliated 
competitors. However, neither China First nor Three Star was able to 
document that the 1997 shareholder decision to merge was reversed.
    In this review, China First and Three Star continue to claim that 
the merger was never completed, but have yet to provide documents 
specifically supporting this claim. The only change is the transfer of 
SLI's administrative oversight of China First and Three Star to HSAAO. 
China First and Three Star describe the oversight duties and asset 
management of HSAAO to be essentially the same as those of SLI. 
Therefore, we preliminarily determine that common control of China 
First and Three Star continues and that they are affiliated under 
section 771(33)(F) of the Act.
    The Department intends to obtain additional information on the 
relationship of these companies for consideration in the final results.

Collapsing - China First and Three Star

    Pursuant to 19 CFR 351.401(f), the Department will collapse 
producers and treat them as a single entity where (1) those producers 
are affiliated, (2) the producers have production facilities for 
producing similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities, and (3) there is a significant potential for 
manipulation of price or production. We also note that the rationale 
for collapsing, to prevent manipulation of price and/or production (see 
19 CFR 351.401(f)), applies to both producers and exporters, if the 
facts indicate that producers of like merchandise are affiliated as a 
result of their mutual relationship with an exporter.
    To the extent that this provision does not conflict with the 
Department's application of separate rates and enforcement of the NME 
provision, section 773(c) of the Act, the Department will collapse two 
or more affiliated entities in a case involving an NME country if the 
facts of the case warrant such treatment. Furthermore, we note that the 
factors listed in 19 CFR 351.401(f)(2) are not exhaustive in the 
context of an NME investigation or administrative review, other factors 
unique to the relationship of business entities within the NME may lead 
the Department to determine that collapsing is either warranted or 
unwarranted, depending on the facts of the case. See Hontex 
Enterprises, Inc. v. United States, 248 F. Supp. 2d 1323, 1342 (Ct. 
Int'l. Trade 2003) (noting that the application of collapsing in the 
NME context may differ from the standard factors listed in the 
regulation).
    In summary, if there is evidence of significant potential for 
manipulation or control between or among producers which produce 
similar and/or identical merchandise, but may not all produce their 
product for sale to the United States, the Department may find such 
evidence sufficient to apply the collapsing criteria in an NME context 
in order to determine whether all or some of those affiliated producers 
should be treated as one entity. See, e.g., Mushrooms Fifth Review 
Prelim, 70 FR at 10971 (unchanged in final results, 70 FR 54361 
(September 14, 2005)); and 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, 54637 (September 
9, 2004), and accompanying Issues and Decision Memorandum at Comment 1.
    As noted above in the ``Affiliation - China First and Three Star'' 
section of this notice, we find a sufficient basis to conclude that 
China First and its pencil-producing subsidiaries and Three Star are 
affiliated through the common control by HSAAO, pursuant to section 
771(33)(F) of the Act. All of China First's three pencil-producing 
subsidiaries and Three Star produced cased pencils during the POR, 
which would be subject to the antidumping duty order if this 
merchandise entered the United States (see FOP data submitted by China 
First and Three Star in their section D responses, August 18, 2008). 
Therefore, we find that the first and second collapsing criteria are 
met because in addition to being affiliated, these producers have 
production facilities for producing similar or identical products, such 
that no retooling at any of the three facilities is required in order 
to restructure manufacturing priorities.
    Finally, we find that the third collapsing criterion is met in this 
case because, a significant potential for manipulation of price or 
production exists among China First and Three Star. In determining 
whether a significant potential for manipulation exists, the 
regulations provide that the Department may consider various factors, 
including (1) the level of common ownership, (2) the extent to which 
managerial employees or board members of one firm sit on the board of 
directors of an affiliated firm, and (3) whether the operations of the 
affiliated firms are intertwined. See Gray Portland Cement and Clinker 
From Mexico: Final Results of Antidumping Duty Administrative

[[Page 676]]

Review, 63 FR 12764, 12774 (March 16, 1998) and Notice of Final 
Determination of Sales at Less Than Fair Value: Collated Roofing Nails 
From Taiwan, 62 FR 51427, 51436 (October 1, 1997). See Affiliation/
Collapsing Memo for further discussion. In this case, there is a 
significant potential for manipulation of price or production because 
China First and Three Star have common ownership as demonstrated by the 
fact that HSAAO has administrative oversight over both of them.
    For the reasons explained more fully in the Affiliation/Collapsing 
Memo and pursuant to 19 CFR 351.401(f), we have preliminarily collapsed 
China First and its pencil-producing subsidiaries with Three Star.

Separate Rates Determination

    A designation as an NME remains in effect until it is revoked by 
the Department. See section 771(18)(c) of the Act. Accordingly, the 
Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and, thus, should 
be assessed a single antidumping duty deposit rate (i.e., a country-
wide rate). See Notice of Final Determination of Sales at Less Than 
Fair Value, and Affirmative Critical Circumstances, In Part: Certain 
Lined Paper Products From the People's Republic of China, 71 FR 53079 
(September 8, 2006); Final Determination of Sales at Less Than Fair 
Value and Final Partial Affirmative Determination of Critical 
Circumstances: Diamond Sawblades and Parts Thereof from the People's 
Republic of China, 71 FR 29303 (May 22, 2006).
    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 Final Determination of Sales at Less than Fair Value: 
Sparklers From the People's Republic of China, 56 FR 20588 (May 6, 
1991) (``Sparklers''), as amplified by 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'').
    Regarding the mandatory respondents, China First and Three Star are 
a joint stock limited company and a company ``owned by all of the 
people,'' respectively.\6\ A portion of China First's shares are held 
in trust in part by HSAAO, which is also owned by ``all of the 
people.''\7\ HSAAO, as trustee, has oversight over Three Star's assets. 
As discussed above in the ``Collapsing-China First and Three Star'' 
section of this notice, we are preliminarily treating China First and 
Three Star as a collapsed entity. Consequently, we are considering 
whether the collapsed entity as a whole is entitled to a separate rate. 
This decision is specific to the facts presented in this review and is 
based on several considerations, including the structure of the 
collapsed entity, the level of control between/among affiliates, and 
the level of participation by each affiliate in the proceeding. Given 
the unique relationships which arise in NMEs between individual 
companies and the government, a separate rate will be granted to the 
collapsed entity only if the facts, taken as a whole, support such a 
finding.
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    \6\ See page A-2 of China First's August 1, 2008, Section A 
Response and page 2 of Three Star's August 1, 2008 Section A 
Response.
    \7\ See page A-5 of China First's August 1, 2008, Section A 
Response.
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    The other mandatory respondent, Rongxin, is a limited liability 
company.
    Five respondents subject to this review were not selected as 
mandatory respondents.\8\ We issued separate rate applications and 
certifications to all five of these companies. One of these 
respondents, Dixon, requested rescission on the basis that it had no 
shipments in the POR, as discussed above. SFTC filed its separate rate 
certification on July 24, 2008. The remaining three non-mandatory 
respondents did not submit either a separate rates certification or 
application. One of these three companies, Tianjin, qualified for a 
separate rate in an earlier administrative review. See Certain Cased 
Pencils from the People's Republic of China; Final Results and Partial 
Rescission of Antidumping Duty Administrative Review, 68 FR 43082, 
43084 (July 21, 2003). However, because Tianjin did not submit a 
separate rate certification in the instant review, it will now be 
treated as part of the PRC-wide entity. Consequently, Anhui, Guangdong, 
and Tianjin have not satisfied the criteria for separate rates for the 
POR and are considered as being part of the PRC-wide entity.
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    \8\ Dixon, SFTC, Anhui, Guangdong, and Tianjin.
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    Our analysis of whether the export activities of Rongxin, the China 
First/Three Star collapsed entity, and SFTC are independent from 
government control follows.

Absence of De Jure Control

    The Department considers the following criteria in determining 
whether an individual company may be granted a separate rate: (1) an 
absence of restrictive stipulations associated with the individual 
exporter's business and export licenses; (2) any legislative enactments 
decentralizing control of companies; and (3) any other formal measures 
by the government decentralizing control of companies. See Sparklers, 
56 FR at 20589.
    The China First Three Star collapsed entity and Rongxin have placed 
on the administrative record the following documents to demonstrate 
absence of de jure control: the 1994 ``Foreign Trade Law of the 
People's Republic of China;'' the ``Company Law of the PRC,'' effective 
as of July 1, 1994; and ``The Enterprise Legal Person Registration 
Administrative Regulations,'' promulgated on June 13, 1988. In other 
cases involving products from the PRC, these and other respondents have 
submitted the following additional documents to demonstrate absence of 
de jure control, and the Department has placed these additional 
documents on the record of this segment, as well: the ``Law of the 
People's Republic of China on Industrial Enterprises Owned by the Whole 
People,'' adopted on April 13, 1988; and the 1992 ``Regulations for 
Transformation of Operational Mechanisms of State-Owned Industrial 
Enterprises.'' See December 30, 2008, memorandum to the file which 
places the above-referenced laws on the record of this segment.
    In its separate rates certification, SFTC certified that during the 
POR: (1) as with the segment of the proceeding in which the firm was 
previously granted a separate rate (``previous Granting Period''), 
there were no government laws or regulations that controlled the firm's 
export activities; (2) the ownership under which the firm registered 
itself with the official government business license issuing authority 
remains the same as for the previous Granting Period; (3) the firm had 
a valid PRC Export Certificate of Approval, now referred to and labeled 
as a Registration Form for Foreign Trade Operator; (4) as in the 
previous Granting Period, in order to conduct export activities, the 
firm was not required by any level of government law or regulation to 
possess additional certificates or other documents related to the legal 
status and/or operation of its business beyond those discussed above; 
and (5) PRC government laws and legislative enactments applicable to 
SFTC remained the same as in the

[[Page 677]]

previous Granting Period. SFTC attached copies of its business license 
and foreign trade operator registration form to its separate 
certification to document the absence of government de jure control.
    As in prior cases, we have analyzed these laws and have found them 
to sufficiently establish an absence of de jure control of joint 
ventures and companies owned by ``all of the people'' absent proof on 
the record to the contrary. See, e.g., Notice of Final Determination of 
Sales at Less Than Fair Value: Furfuryl Alcohol From the People's 
Republic of China, 60 FR 22544 (May 8, 1995) (``Furfuryl Alcohol''). We 
have no information in this proceeding that would cause us to 
reconsider this determination. Thus, we find that the evidence on the 
record supports a preliminary finding of absence of de jure government 
control for SFTC, China First-Three Star (``the China First-Three Star 
collapsed entity''), and Rongxin based on: (1) an absence of 
restrictive stipulations associated with the exporter's business 
license; (2) the legal authority on the record decentralizing control 
over the respondent, as demonstrated by the PRC laws placed on the 
record of this review; and (3) other formal measures by the government 
decentralizing control of companies.

Absence of De Facto Control

    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, 59 FR at 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 
government control which would preclude the Department from assigning 
separate rates.
    The Department typically considers the following four factors in 
evaluating whether a respondent is subject to de facto government 
control of its export functions: (1) whether the export prices are set 
by, or subject to the approval of, a government agency; (2) whether the 
respondent has the authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87, and 
Furfuryl Alcohol, 60 FR at 22545.
    The affiliates in the China First-Three Star collapsed entity 
(where applicable) and Rongxin all have asserted the following: (1) 
each establishes its own export prices; (2) each negotiates contracts 
without guidance from any government entities or organizations; (3) 
each makes its own personnel decisions; and (4) each retains the 
proceeds of its export sales, uses profits according to its business 
needs, and has the authority to sell its assets and to obtain loans. 
Additionally, each respondent's questionnaire responses indicate that 
its pricing during the POR was not coordinated among exporters. As a 
result, there is a sufficient basis to preliminarily determine that 
each respondent listed above (including the China First-Three Star 
collapsed entity as a whole) has demonstrated a de facto absence of 
government control of its export functions and is each entitled to a 
separate rate. Consequently, we have preliminarily determined that each 
of these respondents has met the criteria for the application of a 
separate rate. Moreover, with respect to the affiliates included in the 
China First-Three Star collapsed entity, we have assigned to all of 
them the same antidumping rate in these preliminary results for the 
above-mentioned reasons.
    The Department also conducted a separate rates analysis for SFTC. 
SFTC certified the following: (1) there is no government participation 
in setting export prices; (2) the firm has independent authority to 
negotiate and sign export contracts; (3) the firm had autonomy from all 
levels of government in making decisions regarding the selection of 
management; (4) SFTC did not submit the names of its candidates for 
managerial positions to any governmental entity for approval; and (5) 
there are no restrictions on the use of export revenue. During our 
analysis of the information on the record, we found no information 
indicating the existence of government control of SFTC's export 
activities. See SFTC's submission of July 24, 2008. Consequently, we 
preliminarily determine that SFTC has met the criteria for the 
application of a separate rate.

Fair-Value Comparisons

    To determine whether the respondents' sales of subject merchandise 
were made at less than NV, we compared the NV to individual export 
price (``EP'') transactions in accordance with section 777A(d)(2) of 
the Act. See ``Export Price'' and ``Normal Value'' sections of this 
notice, below.

Export Price

    In accordance with section 772(a) of the Act, EP is ``the price at 
which merchandise is first sold (or agreed to be sold) before the date 
importation by the producer or exporter of the subject merchandise 
outside of the United States to an unaffiliated purchaser in the United 
States to an unaffiliated purchaser for exportation to the United 
States,'' as adjusted under section 772(c) of the Act. In accordance 
with section 772(a) of the Act, we used EPs for sales by the China 
First-Three Star collapsed entity and Rongxin to the United States 
because the subject merchandise was sold directly to unaffiliated 
customers in the United States (or to unaffiliated resellers outside 
the United States with knowledge that the merchandise was destined for 
the United States) prior to importation, and constructed export price 
methodology was not otherwise indicated. We based EP on free-on-board 
port or delivered prices to unaffiliated purchasers in the United 
States. In accordance with section 772 (c)(2)(A) of the Act, we made 
deductions for movement expenses, where appropriate. Movement expenses 
included expenses for foreign inland freight from plant to port of 
exportation, foreign brokerage and handling where applicable, 
international freight. Foreign inland freight and foreign brokerage and 
handling were provided by an NME vendor and, thus, as explained in the 
section below, we based the amounts of the deductions for these 
movement charges on values from a surrogate country.
    For international freight, we used the reported expenses because 
the respondents used market-economy freight carriers and/or paid for 
those expenses in a market-economy currency. For certain sales, Rongxin 
used a market-economy carrier, which it paid in U.S. dollars. In China 
First-Three Star's case, it used an NME carrier, but paid for the 
services in a market-economy currency. All of the respondents reported 
that they incurred no marine insurance expenses on their sales to the 
United States. For a detailed description of all adjustments, see 
Memorandum from Nancy Decker, Program Manager, Office 1, to the File 
entitled ``Analysis for the Preliminary Results of Antidumping Duty 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China: China First Pencil Company, Ltd., Shanghai Three 
Star Stationery Industry Corp.'' (``China First-Three Star Preliminary 
Calculation Memorandum''), December 30, 2008, and ``Analysis for the 
Preliminary

[[Page 678]]

Results of Antidumping Duty Administrative Review of Certain Cased 
Pencils from the People's Republic of China: Shandong Rongxin Import 
and Export Co. Ltd.'' (``Rongxin Preliminary Calculation Memorandum''), 
December 30, 2008.
    We valued brokerage and handling using a simple average of the 
brokerage and handling costs that were reported in public submissions 
that were filed in three antidumping duty cases. Specifically, we 
averaged the public brokerage and handling expenses reported by: Agro 
Dutch Industries Ltd. in the antidumping duty administrative review of 
certain preserved mushrooms from India; Kejirwal Paper Ltd. in the less 
than fair value investigation of certain lined paper products from 
India; and Essar Steel in the antidumping duty administrative review of 
hot-rolled carbon steel flat products from India. See Certain Preserved 
Mushrooms From India: Final Results of Antidumping Duty Administrative 
Review, 71 FR 10646 (March 2, 2006); see also Notice of Preliminary 
Determination of Sales at Less Than Fair Value, Postponement of Final 
Determination, and Affirmative Preliminary Determination of Critical 
Circumstances in Part: Certain Lined Paper Products From India, 71 FR 
19706 (April 17, 2006) (unchanged in final results, 71 FR 45012 (August 
8, 2006)), and Certain Hot-Rolled Carbon Steel Flat Products From 
India: Preliminary Results of Antidumping Duty Administrative Review, 
71 FR 2018, 2021 (January 12, 2006) (unchanged in final results, 71 FR 
40694 (July 18, 2006)). We identify the source used to value foreign 
inland freight in the ``Normal Value'' section of this notice, below. 
We adjusted these values, as appropriate, to account for inflation or 
deflation between the effective period and the POR. We calculated the 
inflation or deflation adjustments for these values using the wholesale 
price indices (``WPI'') for India as published in the International 
Financial Statistics (``IFS'') Online Service maintained by the 
Statistics Department of the International Monetary Fund at the website 
http://www.imfstatistics.org.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine NV using an factor of production (``FOP'') methodology if the 
merchandise is exported from an NME country and the information does 
not permit the calculation of NV using home-market prices, third-
country prices, or constructed value under section 773(a) of the Act.
    The Department will base NV on FOPs because the presence of 
government controls on various aspects of these NME economies renders 
price comparisons and the calculation of production costs invalid under 
our normal methodologies. Therefore, we calculated NV based on FOPs in 
accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 
351.408(c). The FOPs include: (1) hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital costs. We used the 
FOPs reported by respondents for materials, energy, labor, and packing.
    In accordance with 19 CFR 351.408(c)(1), when a producer sources an 
input from a market-economy (``ME'') country and pays for it in ME 
currency, the Department will normally value the factor using the 
actual price paid to the market-economy supplier for the input. See 19 
CFR 351.408(c)(1). Where a portion of the input is purchased from a 
market-economy supplier and the remainder from an NME supplier, the 
Department will normally use the price paid for the input sourced from 
market-economy suppliers to value all of the input, provided the volume 
of the market-economy input as a share of total purchases from all 
sources is ``meaningful.'' See Antidumping Duties; Countervailing 
Duties; Final Rule, 62 FR 27296, 27366 (May 19, 1997); Shakeproof v. 
United States, 268 F.3d 1376, 1382 (Fed. Cir. 2001); 19 CFR 
351.408(c)(1); see also Antidumping Methodologies: Market Economy 
Inputs, Expected Non-Market Economy Wages, Duty Drawback; and Request 
for Comments, 71 FR 61716, 61716-61719 (October 19, 2006) regarding the 
Department's flexible 33 percent threshold for market economy inputs. 
In this administrative review, Three Star, one of the companies in the 
collapsed China First-Three Star entity, reports purchasing four market 
economy inputs. However, the volume of three of the four market economy 
purchases did not exceed the threshold percentage that the Department 
normally considers ``meaningful'' when these purchases were compared to 
the combined NME purchases of the same inputs by the collapsed Chin 
First-Three Star entity. See China First-Three Star Preliminary 
Calculation Memorandum.
    With regard to both the Indian import-based surrogate values and 
the ME input values, we have disregarded prices that we have reason to 
believe or suspect may be subsidized. See Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, From the People's Republic of 
China; Final Results of 1999-2000 Administrative Review, Partial 
Rescission of Review, and Determination Not To Revoke Order in Part, 66 
FR 57420 (November 15, 2001), and accompanying Issues and Decision 
Memorandum at Comment 1. We have found that India, Indonesia, South 
Korea, and Thailand maintain broadly available, non-industry-specific 
export subsidies, and it is reasonable to infer that exports to all 
markets from these countries may be subsidized. See Certain Frozen Fish 
Fillets From the Socialist Republic of Vietnam: Preliminary Results and 
Preliminary Partial Rescission of Antidumping Duty Administrative 
Review, 70 FR 54007, 54011 (September 13, 2005) (unchanged in final 
results, 71 FR 14170 (March 21, 2006)); and China Nat'l Machinery 
Import & Export Corp. v. United States, 293 F. Supp. 2d 1334, 1336 (Ct. 
Int'l. Trade 2003), aff'd 104 Fed. App 183 (Fed. Cir. 2004).
    In avoiding the use of prices that may be subsidized, the 
Department does not conduct a formal investigation to ensure that such 
prices are not subsidized. See H.R. Rep. 100-576 at 590-91 (1988), 
reprinted in 1988 U.S.C.C.A.N. 1547, 1623. Rather, the Department bases 
its decision on information that is available to it at the time it is 
making its determination. Therefore, we have not used prices from these 
countries either in calculating the Indian import-based surrogate 
values or in calculating ME input values. See Factor Valuation 
Memorandum.

Factor Valuations

    In accordance with section 773(c)(3) of the Act, we calculated NV 
based on FOPs reported by the respondents for the POR. We multiplied 
the reported per-unit factor quantities by publicly available Indian 
surrogate values. In selecting the surrogate values, we considered the 
quality, specificity, and contemporaneousness of the data.
    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we attempted to value the FOPs using surrogate values 
that were in effect during the POR. If we were unable to obtain 
surrogate values that were in effect during the POR, we adjusted the 
values, as appropriate, to account for inflation or deflation between 
the effective period and the POR. We calculated the inflation or 
deflation adjustments for all factor values, as applicable, except 
labor, using the WPI for the appropriate surrogate country as published 
in the IFS.
    As appropriate, we adjusted input prices by including freight costs 
to make them delivered prices. Specifically, we

[[Page 679]]

added to the Indian import surrogate values a surrogate freight cost 
calculated using the shorter of the reported distance from the domestic 
supplier to the factory or the distance from the nearest port of export 
to the factory where appropriate (i.e., where the sales terms for the 
ME inputs were not delivered to the factory). This adjustment is in 
accordance with the decision of the Court of Appeals for the Federal 
Circuit in Sigma Corp. v. United States, 117 F.3d 1401 (Fed. Cir. 
1997). We valued the FOPs as follows:
    (1) Except where noted below, we valued all reported material, 
energy, and packing inputs using Indian import data from the World 
Trade Atlas (``WTA'') for December 2006 through November 2007.
    (2) To value lindenwood pencil slats, we used publicly available, 
published U.S. prices for American basswood lumber because price 
information for Chinese lindenwood and American basswood is not 
available from any of the potential surrogate countries.\9\ The U.S. 
lumber prices for basswood for the period December 1, 2006, through 
November 30, 2007.are published in the Hardwood Market Report. We 
intend to obtain additional information on this issue after the 
preliminary results. For further discussion see Factor Valuation 
Memorandum.
---------------------------------------------------------------------------

    \9\ In the antidumping investigation of certain cased pencils 
from the PRC, the Department found Chinese lindenwood and American 
basswood to be virtually indistinguishable and thus used U.S. prices 
for American basswood to value Chinese lindenwood. See Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Cased 
Pencils From the People's Republic of China, 59 FR 55625, 55632 
(November 8, 1994). This methodology was upheld by the Court of 
International Trade. See Writing Instrument Mfrs. Ass'n Pencil 
Section, et. al. v. United States, 984 F. Supp. 629, 639 (Ct. Int'l. 
Trade 1997), aff'd 178 F.3d 1311 (Fed. Cir. 1998).
---------------------------------------------------------------------------

    (3) The China First-Three Star collapsed entity reported that some 
of its purchases of specific inputs were sourced from ME countries and 
paid for in ME currencies. Pursuant to 19 CFR 351.408(c)(1), we used 
the actual price paid by the China First-Three Star collapsed entity 
for one of these inputs. Where applicable, we also adjusted these 
values to account for freight costs incurred between the supplier and 
respondent. See Factor Valuation Memorandum, Analysis for the 
Preliminary Results of the Antidupming Duty Administrative Review of 
Certain Cased Pencils from the People's Republic of China: China First 
Pencil Company, Ltd. (``China First'') and Shanghai Three Star 
Stationery Industry Corp. (``Three Star''), December 30, 2008, and 
Analysis for the Preliminary Results of the Antidupming Duty 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China: Shandong Rongxin Import & Export Co. (``Rongxin'')., 
December 30, 2008. As noted above, we found that the ME purchases of 
the other three inputs reported by the China First-Three Star collapsed 
entity did not account for a high enough percentage of the collapsed 
entity's total purchases of those inputs to be meaningful.
    (4) We valued electricity using price data for small, medium, and 
large industries, as published by the Central Electricity Authority of 
the Government of India in its publication titled ``Electricity Tariff 
& Duty and Average Rates of Electricity Supply in India,'' dated July 
2006. These electricity rates represent actual country-wide, publicly-
available information on tax-exclusive electricity rates charged to 
industries in India. Since the rates are not contemporaneous with the 
POI, we inflated the values using the WPI. See Factor Valuation 
Memorandum.
    (5) We valued steam using the data as calculated by the Department 
in the Certain New Pneumatic Off-The-Road Tires from the People's 
Republic of China: Final Affirmative Determination of Sales at Less 
Than Fair Value and Partial Affirmative Determination of Critical 
Circumstances,73 FR 40485 (July 15, 2008) and accompanying Issues and 
Decision Memorandum at Comment 11. We adjusted this value, as 
appropriate, to account for inflation between the effective period and 
the POR.
    (6) Section 351.408(c)(3) of the Department's regulations requires 
the use of a regression-based wage rate. Therefore, we valued labor 
using the regression-based wage rate for China published on IA's 
website. The source of the wage rate data on the Import 
Administration's website is the International Labour Organization 
(``ILO''), Geneva, Labour Statistics Database Chapter 5B: Wages in 
Manufacturing. See Expected Wages of Selected NME Countries (revised 
November 2008) (available at http://ia.ita.doc.gov/wages/index.html). 
Since this regression-based wage rate does not separate the labor rates 
into different skill levels or types of labor, we have applied the same 
wage rate to all skill levels and types of labor.
    (7) We derived ratios for factory overhead, depreciation, and 
selling, general and administrative expenses, interest expenses, and 
profit for the finished product using the 2006-2007 (``FY 06-07 FS'') 
financial statement of Triveni Pencils Ltd. (``Triveni''), an Indian 
producer of pencils, in accordance with the Department's practice with 
respect to selecting financial statements for use in NME cases (see, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value: 
Chlorinated Isocyanurates From the People's Republic of China, 70 FR 
24502 (May 10, 2005), and accompanying Issues and Decision Memorandum 
at Comment 2). The Department prefers to derive financial ratios using 
data from those surrogate producers whose financial data will not be 
distorted or otherwise unreliable.
    In prior reviews of this product, the Department derived the 
surrogate financial ratios from the financial statement of Camlin Ltd. 
(``Camlin''), an Indian producer of pencils and other products. See, 
e.g., Certain Cased Pencils From the People's Republic of China; 
Preliminary Results of Antidumping Duty Administrative Review, 71 FR 
70949 (December 7, 2006) (``Prelim PRC Pencils 2004-2005 AR'') 
(unchanged in the final results, 72 FR 27074 (May 14, 2007)). However, 
we have used Triveni's FY 06-07 FS for purposes of the preliminary 
results of this review because Triveni pencils, whereas Camlin produces 
pencils and an array of other art supplies. Because of this, Triveni is 
a better match with our Chinese respondents who also primarily produce 
pencil producers. Consequently, we find Triveni's FY 06-07 report to be 
more reliable and less distortive than Camlin's financial data. In 
addition, India is our primary surrogate country and Triveni is an 
Indian producer of the subject merchandise. Therefore, for both the 
China First-Three Star collapsed entity and Rongxin, we have applied 
the ratios taken from Triveni's FY 06-07 FS statement to the 
respondents' calculated costs for materials, labor, and energy.
    (8) We valued inland truck freight expenses using a per-unit 
average

[[Page 680]]

rate calculated from data on the following website: http://www.infobanc.com/logistics/logtruck.htm. The logistics section of this 
website contains inland freight truck rates between many large Indian 
cities. For certain Rongxin sales where inland freight was provided by 
``ferry,'' we were unable to find sufficiently recent barge rates and, 
therefore, we substituted inland truck rates. See Factor Valuation 
Memorandum. Since the truck rate value is not contemporaneous with the 
POI, we deflated the rate using WPI. For Rongxin we used 2006-2007 data 
from the website www.Indianrailways.gov to derive, where appropriate, 
input-specific train rates on a rupees per kilogram per kilometer 
basis(Rs/kg/km''). Rongxin also reported transportation by 
cart for one input which we disregarded because the distance involved 
was insignificant. See China First-Three Star Preliminary Calculation 
Memorandum. For further discussion of the surrogate values we used for 
these preliminary results of review, see the Factor Valuation 
Memorandum, which is on file in the Central Records Unit (``CRU'') in 
Room 1117 of the main Department of Commerce building.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales, as certified by the Federal Reserve Bank.

Preliminary Results of Review

    We preliminarily determine that the following margins exist for the 
period December 1, 2006, through November 30, 2007:

------------------------------------------------------------------------
                                                                Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
China First Pencil Company, Ltd. (which includes its               33.26
 affiliates China First Pencil Fang Zheng Co., Shanghai
 First Writing Instrument Co., Ltd., and Shanghai Great Wall
 Pencil Co., Ltd.), and Shanghai Three Star Stationery
 Industry Corp.\10\.........................................
Shandong Rongxin Import & Export Co., Ltd...................        8.53
Orient International Holding Shanghai Foreign Trade Co.,           20.90
 Ltd........................................................
PRC-wide Entity\11\.........................................      114.90
------------------------------------------------------------------------
\10\ For this review, we consider China First Pencil Company, Ltd.,
  China First Pencil Fang Zheng Co., Shanghai First Writing Instrument
  Co., Ltd., Shanghai Great Wall Pencil Co., Ltd., and Shanghai Three
  Star Stationery Industry Corp. to constitute a single entity as stated
  on page A-1 of China First's August 1, 2008, Section A Response.
\11\ The PRC-wide entity includes Anhui Import Export Co., Ltd.,
  Guangdong Provincial Stationeryand Sporting Goods Import Export
  Corporation, and Tianjin Custom Wood Processing Co., Ltd.

    As stated above in the ``Separate-Rates Determination'' section of 
this notice, SFTC qualifies for a separate rate in this review. 
Moreover as stated above in the ``Respondent Selection'' section of 
this notice, we limited this review by selecting the largest exporters 
and did not select SFTC as a mandatory respondent. Therefore, SFTC is 
being assigned a dumping margin based on the calculated margins of 
mandatory respondents which are not de minimis or based on adverse 
facts available, in accordance with Department practice. Accordingly, 
we have assigned SFTC the simple-average of the dumping margins 
assigned to the China First-Three Star collapsed entity and Rongxin.
    The Department will disclose calculations performed for these 
preliminary results to the parties within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b).
    In accordance with 19 CFR 351.301(c)(3)(ii), for the final results 
of this administrative review, interested parties may submit publicly 
available information to value FOPs within 20 days after the date of 
publication of these preliminary results. Interested parties must 
provide the Department with supporting documentation for the publicly 
available information to value each FOP. Additionally, in accordance 
with 19 CFR 351.301(c)(1), for the final results of this administrative 
review, interested parties may submit factual information to rebut, 
clarify, or correct factual information submitted by an interested 
party less than ten days before, on, or after, the applicable deadline 
for submission of such factual information. However, the Department 
notes that 19 CFR 351.301(c)(1) permits new information only insofar as 
it rebuts, clarifies, or corrects information recently placed on the 
record. The Department generally cannot accept the submission of 
additional, previously absent-from-the-record alternative surrogate 
value information pursuant to 19 CFR 351.301(c)(1). See Glycine from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Final Rescission, in Part, 72 FR 58809 
(October 17, 2007) and accompanying Issues and Decision Memorandum at 
Comment 2.
    An interested party may request a hearing within 30 days of 
publication of the preliminary results. See 19 CFR 351.310(c). 
Interested parties may submit written comments (case briefs) within 
seven days of issuance of the verification report and rebuttal comments 
(rebuttal briefs), which must be limited to issues raised in the case 
briefs, within five days after the time limit for filing case briefs. 
See 19 CFR 351.309(c)(1)(ii) and 19 CFR 351.309(d). Parties who submit 
arguments are requested to submit with the argument: (1) a statement of 
the issue; (2) a brief summary of the argument; and (3) a table of 
authorities. Further, the Department requests that parties submitting 
written comments provide the Department with a diskette containing the 
public version of those comments. We will issue a memorandum 
identifying the date of a hearing, if one is requested.
    The Department will issue the final results of this administrative 
review, including the results of our analysis of the issues raised by 
the parties in their comments, within 120 days of publication of the 
preliminary results, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

    Upon completion of this administration review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. The Department intends to issue assessment instructions to CBP 
15 days after the date of publication of the final results of review. 
Pursuant to 19 CFR 351.212(b)(1), we will calculate importer- or 
customer-specific ad valorem duty assessment rates based on the ratio 
of the total amount of the dumping margins calculated for the examined 
sales to the total entered value of those same sales. To determine 
whether the duty assessment rates are de minimis (i.e., less than 0.50 
percent), in accordance with the requirement set forth in 19 CFR 
351.106(c)(2), we will calculate customer-specific ad valorem ratios 
based on export prices.
    We will instruct CBP to assess antidumping duties on all 
appropriate entries covered by this review if any importer- or 
customer-specific assessment rate calculated in the final

[[Page 681]]

results of this review is above de minimis.
    For entries of the subject merchandise during the POR from 
companies not subject to this review, we will instruct CBP to liquidate 
them at the cash deposit rate in effect at the time of entry. The final 
results of this review shall be the basis for the assessment of 
antidumping duties on entries of merchandise covered by the final 
results of this review and for future deposits of estimated duties, 
where applicable.
    For the China First-Three Star collapsed entity and Rongxin, we 
have calculated customer-specific antidumping duty assessment amounts 
for subject merchandise based on the ratio of the total amount of 
antidumping duties calculated for the examined sales to the total 
quantity of sales examined. We calculated these assessment amounts 
because there is no information on the record which identifies entered 
values or the importers of record for the U.S. sales of the China 
First-Three Star collapsed entity and Rongxin.
    As noted above, SFTC, the company that met the separate rate 
application status, will be assigned the simple-average dumping margin 
based on the calculated margins of mandatory respondents which are not 
de minimis or based on adverse facts available, in accordance with 
Department practice. We will instruct CBP to assess antidumping duties 
on this company's entries equal to the margin this company receives in 
the final results, regardless of the importer or customer.
    The other three companies, Anhui, Guangdong and Tianjin, did not 
provide separate rate information. Therefore, the Department finds that 
they are not entitled to a separate rate. As a result, these three 
companies will be considered part of the PRC-wide entity, subject to 
the PRC-wide rate.
    For Dixon, for which this review is preliminarily rescinded, 
antidumping duties shall be assessed at rates equal to the cash-deposit 
of estimated. antidumping duties required at the time of entry, or 
withdrawal form warehouse, for consumption, in accordance with 19 CFR 
351.212(c)(2).

Cash Deposit Requirements

    The following cash-deposit requirements will apply to all shipments 
of certain cased pencils from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for the reviewed 
companies named above will be the rates for those firms established in 
the final results of this administrative review; (2) for any previously 
reviewed or investigated PRC or non-PRC exporter, not covered in this 
review, with a separate rate, the cash deposit rate will be the 
company-specific rate established in the most recent segment of this 
proceeding; (3) for all other PRC exporters, the cash deposit rate will 
be the PRC-wide rate established in the final results of this review; 
and (4) the cash-deposit rate for any non-PRC exporter of subject 
merchandise from the PRC will be the rate applicable to the PRC 
exporter that supplied that exporter. These deposit requirements, when 
imposed, shall remain in effect until further notice.

Notification to Interested Parties

    This notice serves as a preliminary reminder to importers of their 
responsibility under 19 CFR 351.402(f)(2) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing the preliminary results determination 
in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: December 30, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E9-00062 Filed 1-6-09; 8:45 am]
BILLING CODE 3510-DS-S