Certain Cased Pencils From the People's Republic of China; Final Results of Antidumping Duty Administrative Review

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]

Certain Cased Pencils From the People's Republic of China; Final

Results of Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration,

Department of Commerce.

ACTION: Notice of final results of antidumping duty administrative

review.

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SUMMARY: On September 11, 1998, the Department of Commerce (the

Department) published the preliminary results and partial rescission of

administrative review of the antidumping duty order on certain cased

pencils from the People's Republic of China (59 FR 66909 (December 28,

1994)), covering the period December 1, 1996, through November 30, 1997

(63 FR 48697). We gave interested parties an opportunity to comment on

our preliminary results. We received one comment from the petitioners,

the Pencil Section of the Writing Instrument Manufacturers Association

and its members (domestic producers of pencils). We received no

comments from respondents or other interested parties. Based on our

analysis of the comment received, there are no changes to these final

results of review from the preliminary results of review, where we

determined the existence of a country-wide dumping margin of 53.65

percent for this period of review (POR).

EFFECTIVE DATE: January 13, 1999.

FOR FURTHER INFORMATION CONTACT: Jack K. Dulberger or Wendy Frankel,

Antidumping/Countervailing Duty Enforcement Group II, Office Four,

Import Administration, U.S. Department of Commerce, 14th Street and

Constitution Avenue, NW Washington, DC 20230, telephone (202) 482-5505

and 482-5849, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

Unless otherwise indicated, all citations to the Tariff Act of

1930, as amended (the Act), are references to the provisions effective

January 1, 1995, the effective date of the amendments made to the Act

by the Uruguay Round Agreements Act (URAA). In addition, unless

otherwise indicated, all citations to the Department's regulations are

to the regulations set forth at 19 CFR part 351, 62 FR 27296 (May 19,

1997).

Period of Review

The POR is December 1, 1996 through November 30, 1997.

Scope of the Review

The products covered by this review are certain cased pencils of

any shape or dimension 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 this review are classified under

subheading 9609.10.00 of the Harmonized Tariff Schedule of the United

States (HTSUS). Specifically excluded from the scope of this order are

mechanical pencils, cosmetic pencils, pens, non-case crayons (wax),

pastels, charcoals, and chalks. Although the HTSUS subheading is

provided for convenience and customs purposes, our written description

of the scope of this review is dispositive.

Background

The antidumping duty order on pencils from the People's Republic of

China (PRC) was published on December 28, 1994 (59 FR 66909). On

September 11, 1998, the Department published in the Federal Register

the preliminary results of its review of this order for the POR

December 1, 1996 through November 30, 1997, (see 63 FR 48697)

(Preliminary Results). In the Preliminary Results, we rescinded the

review as to the companies which reported that they had no shipments of

subject merchandise during the POR (i.e., China First Pencil Company,

Ltd. (China First) and Guangdong Provincial Stationery & Sporting Goods

Import and Export Corporation (Guangdong)).

With respect to these companies, we confirmed, by conducting a data

query of the U.S. Customs Service (Customs) database, (see Preliminary

Results at 48698), that the only subject merchandise exported by the

exporters China First and Guangdong, respectively, to the United States

during the POR was merchandise excluded from the order (i.e.,

merchandise manufactured by the factories which received zero margins

in the less-than-fair-value (LTFV) investigation).1

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Therefore, these final results apply only to the PRC-wide entity, which

includes the remaining respondents in this review that did not reply to

our questionnaire and demonstrate that they are entitled to a rate

separate from the PRC entity. In response to an opportunity to comment

on our preliminary results, the petitioners submitted one comment on

October 13, 1998. We received no other comments from respondents or

other interested parties.

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\1\ China First exports of merchandise produced by China First

itself were originally excluded from this order. However, in

litigation brought to challenge the Notice of Final Determination of

Sales at Less Than Fair Value: Certain Cased Pencils from the

People's Republic of China, 59 FR 55625 (November 8, 1994), the

Department issued a remand determination which was subsequently

affirmed by the U.S. Court of International Trade (CIT). See Writing

Instrument Manufacturers Ass'n Pencil Section, et al., v. United

States, 984 F.Supp. 629 (CIT 1997) (Writing Instrument

Manufacturers). In this remand determination, the Department

determined, among other things, that merchandise exported and

produced by China First was, in fact, sold at less than fair value.

Therefore, as we stated in the Preliminary Results, (see Preliminary

Results at 48698, footnote 1), for entries of merchandise exported

and produced by China First and entered on or after November 23,

1997, there has been suspension of liquidation pending final and

conclusive disposition of the remand determination. See also the

Department's Notice of Court Decision: Certain Cased Pencils from

the People's Republic of China, 62 FR 65243 (December 11, 1997).

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Analysis of Comment Received

Comment

Petitioners assert that the Department's proposal to use the

recalculated petition rate as the facts available (FA) is

inappropriate. Petitioners argue that agency practice and the

applicable statutory provisions require that the FA rate be both

reliable and relevant. According to petitioners, the recalculated

petition rate applied by the Department in the preliminary results

fails to meet the reliability requirement because it is based on legal

error.

According to the petitioners, in calculating the revised petition

rate, the Department erred in failing to exclude data regarding certain

U.S. wood prices which were untimely submitted, with the result that

the recalculation of the ``petition rate'' was based on a fundamental

procedural flaw, thus rendering the exporter-specific rates and the

``PRC rate,'' which were premised on such recalculation, unreliable.

In the litigation arising from the LTFV investigation, the

petitioners have alleged this error, among others, in an appeal

currently pending in the U.S. Court of Appeals for the Federal Circuit.

The petitioners further contend that if they obtain a favorable

decision in this appeal, the recalculated ``PRC rate'' would be found

by the court to be in error and thus render the Department's use of

such rate illegal, in accordance with the ruling of D&L Supply Co. v.

United States, 113 F.3d 1220 (Fed. Cir. 1997) (D&L Supply), which

states ``that it is improper for Commerce to continue to use, as the

BIA [best information available] rate, an antidumping duty rate that

has been vacated as erroneous.''

Department's Position

We disagree with petitioners that the newly recalculated petition

rate is an inappropriate basis for FA in this case. Where the

Department must rely on FA because a respondent failed to cooperate to

the best of its ability in responding to a request for information,

section 776(b) of the Act authorizes the Department to make an

inference adverse to the interests of that respondent in choosing FA.

Section 776(b) of the Act also authorizes the Department to use as

adverse FA information derived from the petition, the final

determination in the investigation, a previous administrative review,

or other information placed on the record. Because information from

prior proceedings constitutes secondary information, section 776(c) of

the Act provides that the Department shall, to the extent practicable,

corroborate that secondary information from independent sources

reasonably at its disposal. See also, Statement of Administrative

Action (SAA) (H. Doc. 316, 103d Cong., 2nd Sess. 870), providing that

``corroborate'' means that the Department will satisfy itself that the

secondary information to be used has probative value. The SAA, at page

870, clarifies that the petition is ``secondary information.''

The Department, as indicated in the preliminary results of review,

has decided to use the petition in the LTFV investigation as the basis

for adverse FA. The Department ``recalculated'' the petition rate for

the first time during the LTFV investigation. Later, in litigation

arising out of that investigation, we requested that the CIT remand to

us two issues for further consideration: (1) Basswood prices; and (2)

valuation of slats and logs. In performing this remand, the Department

revised certain calculations; these revisions led to a change in the

recalculated petition rate (from 44.66 percent to 53.65 percent). This

second recalculation of the petition rate was then affirmed by the CIT

in Writing Instrument Manufacturers. We have therefore used this second

recalculation petition rate as the basis of FA, rather than the

original petition rate or the petition rate as adjusted by the

Department in making its final LTFV determination. This decision is in

accordance with the ruling by the U.S. Court of Appeals for the Federal

Circuit in D&L Supply, which states that it is inappropriate to use as

FA a rate determined to be inaccurate. See D&L Supply, 113 F.3d at

1222. We have ignored rates found to be inaccurate and have used a rate

that has been affirmed by the CIT. Thus, contrary to petitioners'

argument, our selection of FA is appropriate.

We have determined that there is no evidence on the record of this

case which would cause us to question the reliability of the newly

recalculated petition rate. Petitioners' claims against this rate,

which are based on evidence which is contained in the administrative

record of the LTFV investigation, are not properly before the

Department in this segment of the proceeding.

Final Results of the Review

Based on our analysis of this comment, we have determined that no

changes to the preliminary results are warranted for purposes of these

final results, and a margin of 53.65 percent exists for the PRC entity

for the period December 1, 1996 through November 30, 1997. This rate

applies to all exports of pencils from the PRC other than those

produced and exported by China First (because China First's exports

produced by China First were excluded from the order), those produced

by Three Star and exported by Guangdong (because Three Star's exports

produced by Guangdong were also excluded from the order), and those

exported by Shanghai Foreign Trade Corporation (SFTC), an exporter

which was previously determined to be entitled to a separate rate. The

weighted-average dumping margin for the period December 1, 1996,

through November 30, 1997 is as follows:

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Weighted average

Manufacturer/producer/exporter margin percent

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PRC Rate........................................... 53.65

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Customs shall assess antidumping duties on all appropriate entries.

The Department will issue appraisement instructions concerning the

respondent directly to Customs. Furthermore, the following deposit

requirements will be effective for all shipments of the subject

merchandise entered, or withdrawn from warehouse, for consumption on or

after the publication date of these final results of administrative

review, as provided for by section 751(a)(1) of the Act: (1) The cash

deposit rate for all Chinese exporters (including China First (with

respect to merchandise produced by anyone other than China First) and

Guangdong (with respect to merchandise produced by anyone other than

Three Star)), except for SFTC, will

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be the rate indicated above; (2) for merchandise exported by SFTC, the

cash deposit rate will continue to be the rate published in the final

LTFV determination; and (3) for non-PRC exporters of subject

merchandise from the PRC, the cash deposit rate will be the rate of

their suppliers. These deposit requirements, when imposed, shall remain

in effect until publication of the final results of the next

administrative review.

Upon completion of this review, we will direct Customs to assess an

ad valorem rate of 53.65 percent against the entered value of each

entry of subject merchandise during the POR for all firms except those

firms excluded from the order or entitled to a separate rate.

Notification to Interested Parties

This notice serves as a final reminder to importers of their

responsibility under section 19 CFR 351.402(f) of the Department's

regulations to file a certificate regarding the reimbursement of

antidumping duties prior to liquidation of the relevant entries during

this POR. Failure to comply with this requirement could result in the

Secretary's presumption that reimbursement of antidumping duties

occurred and the subsequent assessment of double antidumping duties.

This notice also serves as a reminder to parties subject to

administrative protective order (APO) of their responsibility

concerning the disposition of proprietary information disclosed under

APO in accordance with 19 CFR 353.34(d). Timely written notification of

the return, destruction, or conversion to judicial protective order of

APO materials is hereby requested. Failure to comply with the

regulations and the terms of the APO is a sanctionable violation.

This administrative review and notice are in accordance with

section 751(a)(1) of the Act (19 U.S.C. section 1675(a)(1)) and 19 CFR

351.221.

Dated: January 5, 1999.

Robert S. LaRussa,

Assistant Secretary for Import Administration.

[FR Doc. 99-694 Filed 1-12-99; 8:45 am]

BILLING CODE 3510-DS-P