Notice of Preliminary Affirmative Countervailing Duty Determination and Preliminary Negative Critical Circumstances Determination: Certain Lined Paper Products From India, 7916-7924 [06-1419]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 31 (Wednesday, February 15, 2006)]
[Notices]
[Pages 7916-7924]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-1419]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-533-844]


Notice of Preliminary Affirmative Countervailing Duty 
Determination and Preliminary Negative Critical Circumstances 
Determination: Certain Lined Paper Products From India

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

SUMMARY: The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to 
producers and exporters of certain lined paper products from India. For 
information on the estimated subsidy rates, see the ``Suspension of 
Liquidation'' section of this notice.

DATES: Effective Date: February 15, 2006.

FOR FURTHER INFORMATION CONTACT: Robert Copyak, Maura Jeffords, or John

[[Page 7917]]

Conniff, Office of AD/CVD Operations Office 3, Import Administration, 
U.S. Department of Commerce, Room 4014, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230; telephone: (202) 482-2209, (202) 
482-3146, and (202) 482-1009, respectively.

SUPPLEMENTARY INFORMATION:

Case History

    The petition in this investigation was filed on September 9, 2005, 
by the Association of American School Suppliers (Petitioner).\1\ This 
investigation was initiated on September 29, 2005. See Notice of 
Initiation of Countervailing Duty Investigations: Certain Lined Paper 
Products from India (C-533-844) and Indonesia (C-560-819), 70 FR 58690 
(Oct. 7, 2005).
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    \1\ The petition and amendments were filed between September 9 
and September 26, 2005. On September 21, 2005, the Department issued 
a memorandum clarifying that the official filing date of the 
petition was September 9, 2005. See Memorandum from the Team to 
Acting Deputy Assistant Secretary Barbara Tillman: Decision 
Memorandum Concerning Filing Date of Petition, Sept. 21, 2005.
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    On October 20, 2005, Petitioner timely requested a 65-day 
postponement of the preliminary determination for this investigation.
    Due to the large number of producers and exporters of lined paper 
products in India, we determined that it is not possible to investigate 
each producer or exporter individually and selected three producers/
exporters of certain lined paper products: Aero Exports (Aero), 
Kejriwal Paper Limited (Kejriwal), and Navneet Publications (Navneet). 
See Memorandum from the Team, through Office Director Melissa Skinner, 
to Deputy Assistant Secretary Stephen J. Claeys: Lined Paper Products 
from India Respondent Selection or Aggregation, October 25, 2005. On 
October 25, 2005, we issued our initial questionnaire to the Government 
of India (GOI) and requested that the GOI forward the relevant sections 
of the initial questionnaire to the selected respondents.
    On November 8, 2005, the Department extended the deadline for the 
preliminary determination by 65 days to no later than February 6, 2006, 
in accordance with section 703(c)(1)(A) of the Tariff Act of 1930, as 
amended (the Act). See Certain Lined Paper Products from India and 
Indonesia: Extension of Time Limit for Preliminary Determinations in 
the Countervailing Duty Investigations, 70 FR 67668 (Nov. 8, 2005).
    On November 28, 2005, the Department initiated a review on new 
subsidy allegations.\2\ See Memorandum from the Team, through Program 
Manager Eric B. Greynolds, to Office Director Melissa G. Skinner: New 
Subsidy Allegations, November 28, 2005. On November 30, 2005, we issued 
a questionnaire regarding the newly alleged subsidies to the GOI. On 
November 28, 2005, Petitioner alleged that U.S. retailers of subject 
merchandise were in negotiations to import large volumes of subject 
merchandise prior to the Department's preliminary determination. 
Petitioner, therefore, requested that pursuant, to 19 CFR 351.206, the 
Department make an expedited finding that critical circumstances exist 
with respect to imports of lined paper products from India.
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    \2\ See Petitioner's New Subsidy Allegations Submission, Oct. 
27, 2005.
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    On November 30, 2005, the Department issued its New Subsidy 
Allegations questionnaire to the GOI. On December 15, 2005, the GOI 
submitted its response to our initial questionnaire. On December 16, 
2005, Navneet submitted its response to our initial questionnaire. On 
December 19, 2005, Aero and Kejriwal submitted their responses to our 
initial questionnaire. On January 5, 2006, we issued a questionnaire 
regarding the new subsidy allegations to the three respondent 
companies. Between January 11 and January 25, 2006, we issued 
supplemental questionnaires to the three respondent companies. Between 
January 6 and January 31, 2006, the GOI and the three respondent 
companies submitted responses to the questionnaires regarding the new 
subsidy allegations and the subsequent supplemental questionnaires.

Scope of the Investigation

    For scope information, see Appendix I.

Injury Test

    Because India is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, the International Trade 
Commission (ITC) is required to determine whether imports of the 
subject merchandise from India materially injure, or threaten material 
injury to, a U.S. industry. On October 31, 2005, the ITC published its 
preliminary determination that there is a reasonable indication that an 
industry in the United States is materially injured by reason of 
imports from India and Indonesia of subject merchandise. See Certain 
Lined Paper School Supplies From China, India and Indonesia, USITC Pub. 
3811, Inv. Nos. 701-TA-442-443 and 731-TA-1095-1097, (Oct. 2005) 
(Prelim.).

Critical Circumstances

    As stated above, Petitioner requested that, pursuant to 19 CFR 
351.206, the Department make an expedited finding that critical 
circumstances exist with respect to imports of lined paper products 
from India. In order to evaluate Petitioner's critical circumstance 
allegation, we determined to monitor imports of paper from India and to 
request that U.S. Customs and Border Protection (CBP) compile 
information on an expedited basis regarding entries of Indian lined 
paper. We also requested shipment data for the relevant time periods 
from respondents. See Memorandum to Stephen J. Claeys, Deputy Assistant 
Secretary for Import Administration, from Susan H. Kuhbach, Director, 
Office 1, Melissa G. Skinner, Director, Office 3, and Wendy J. Frankel, 
Director, Office 8, January 31, 2006. See also Respondents' 
Supplemental Questionnaire, January 24, 2006.
    We have preliminarily determined that critical circumstances do not 
exist for subject imports of paper from India. See Memorandum to 
Stephen J. Claeys, Deputy Assistant Secretary for Import 
Administration, from: Melissa G. Skinner, Director, Operations, Office 
3: Preliminary Negative Critical Circumstances Determination, February 
6, 2006 (publicly on file in room B-099 of the Central Records Unit 
(CRU) in the main building of the Commerce Department). Specifically, 
the Department found that the Petitioner's allegation does not in 
itself provide a sufficient factual basis for making an affirmative 
finding. The Department will continue to seek import data and will 
place any such relevant data on the record of the investigation for 
consideration by the Department in its final critical circumstances 
determination.

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is April 1, 2004, through March 31, 2005, which corresponds 
to the most recently completed fiscal year for all of the respondents. 
See 19 CFR 351.204(b)(2).

Subsidies Valuation Information

Benchmarks for Loans and Discount Rate

    Aero and Kejriwal reported using a rupee-denominated short-term 
loan program. For those programs requiring the application of a 
benchmark interest rate, 19 CFR 351.505(a)(1) provides a

[[Page 7918]]

preference for using an interest rate that the company could have 
obtained on a comparable loan in the commercial market. Aero provided 
company-specific information on its rupee-denominated short-term 
commercial loans outstanding during the POI. Thus, in accordance with 
19 CFR 351.505(a)(3)(i), we are using these interest rates as company-
specific benchmarks for purposes of calculating benefits arising to 
Aero from the rupee-denominated short-term loan programs we find 
countervailable. Kejriwal did not report any company-specific 
commercial loan information that could be evaluated for use as a 
benchmark. As a result, we used as our benchmark a national average 
rupee-denominated short-term interest rate for India, as reported in 
the International Monetary Fund's (IMF) publication International 
Financial Statistics.\3\ Our reliance on interest rate information from 
the IMF is consistent with our approach in past Indian proceedings. See 
Final Affirmative Countervailing Duty Determination: Polyethylene 
Terephthalate Film, Sheet, and Strip from India, 67 FR 34905 (May 16, 
2002) (PET Film), and the accompanying Issues and Decision Memorandum, 
at ``Octroi Refund Scheme'' (PET Film Decision Memo).
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    \3\ We did not use the interest rate information the GOI 
provided in its December 15, 2005 questionnaire response because the 
information did not cover the POI.
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    Navneet reported using a dollar-denominated short-term loan 
program. Our practice when loans are denominated in a foreign currency, 
in accordance with 19 CFR 351.505(a)(2)(i), is to use a foreign 
currency benchmark. See, e.g., Certain Pasta From Turkey: Final Results 
of Countervailing Duty Administrative Review, 66 FR 64398 (Dec. 13, 
2001), and accompanying Issues and Decision Memorandum, at ``Benchmark 
Interest Rates for Short-term Loans.'' Pursuant to 19 CFR 
351.505(a)(3)(i), in constructing our benchmark, we first examined 
whether Navneet received comparable commercial financing that was 
outstanding during the POI. Navneet reported several commercial U.S. 
dollar-denominated loans in the benchmark section of its initial 
questionnaire response. See Navneet's December 16, 2005, Questionnaire 
Response, at Exh. 7. However, 19 CFR 351.505(a)(2)(ii) states that the 
Department will not consider a loan provided by a government-owned 
special purpose bank to be a commercial loan for purposes of selecting 
a loan to compare with a government-provided loan. Based on the 
evidence regarding the loans in question reported by Navneet, we find 
that they constitute loans from a government-owned special purpose bank 
within the meaning of 19 CFR 351.505(a)(2)(ii) and, therefore, are not 
suitable for use as benchmarks. As a result, for Navneet, we used the 
dollar-denominated short-term interest rate for the United States 
reported in International Financial Statistics as our benchmark. For 
the final determination, we will continue to seek dollar-denominated 
benchmark loan information for short-term lending in India.
    For those programs requiring a rupee-denominated discount rate or 
the application of a rupee-denominated, long-term benchmark interest 
rate, it is our practice to use as benchmarks company-specific, 
weighted-average interest rates of comparable commercial long-term, 
rupee-denominated loans that were actually obtained by the company. PET 
Film Decision Memo, at II.A.2 ``Benchmark for Loans and Discount 
Rate.'' If company-specific long-term loan data were not provided by 
the respondent company, we then look to use publicly available, 
published average long-term interest rates as benchmark interest rates. 
Id. If such long-term interest rate data is not available, we then use, 
as surrogates, other publicly available published interest rates 
applicable to the country under investigation.
    In this investigation, Aero provided long-term rupee-denominated 
commercial loan information. Therefore, where possible, we used Aero's 
company-specific long-term loans for benchmark purposes. We did not use 
any long-term loans that had unpaid interest or principal payments 
because we do not consider such loans to be comparable loans under 
section 771(5)(E)(ii) of the Act and 19 CFR 351.505(a)(2)(i).
    For some years, Aero did not provide company-specific long-term 
loan data. Kejriwal and Navneet did not provide any company-specific 
long-term loan data. Pursuant to 19 CFR 351.505(a)(3)(ii), we used 
national average interest rates for those years in which the 
respondents did not report company-specific interest rates on 
comparable commercial loans. Because long-term publicly available 
interest rates were not available, we used national average interest 
rates for short-to-medium-term, rupee-denominated financing from 
private creditors in International Financial Statistics. This approach 
is consistent with the Department's practice. See id.; and Final 
Affirmative Countervailing Duty Determination: Certain Hot-Rolled 
Carbon Steel Flat Products from India, 66 FR 49635 (Sept. 28, 2001) 
(HRC Investigation), and the accompanying Issues and Decision 
Memorandum at II.C. ``Benchmark for Loans and Discount Rate'' (HRC 
Investigation Decision Memo). We will continue to seek long-term 
benchmark interest rates for purposes of the final determination.

Allocation Period

    Under 19 CFR 351.524(d)(2)(i), we will presume the allocation 
period for non-recurring subsidies to be the average useful life (AUL) 
of renewable physical assets for the industry concerned, as listed in 
the Internal Revenue Service's (IRS) 1977 Class Life Asset Depreciation 
Range System, as updated by the Department of the Treasury. The 
presumption will apply unless a party claims and establishes that these 
tables do not reasonably reflect the AUL of the renewable physical 
assets for the company or industry under investigation, and the party 
can establish that the difference between the company-specific or 
country-wide AUL for the industry under investigation is significant, 
pursuant to 19 CFR 351.524(d)(2)(ii). For assets used to manufacture 
products such as lined paper, the IRS tables prescribe an AUL of 13 
years.
    In their questionnaire responses, Aero, Kejriwal, and Navneet each 
stated that it would not attempt to rebut the regulatory presumption by 
meeting the criteria set forth in 19 CFR 351.524(d)(2)(iii) and 
calculating company-specific AULs. Thus, for each of the three 
respondent companies, we will use the IRS AUL of 13 years to allocate 
any non-recurring subsidies for purposes of this preliminary 
determination.

I. Programs Preliminarily Determined To Be Countervailable

A. GOI Programs

1. Pre- and Post-Shipment Export Financing
    The Reserve Bank of India (RBI), through commercial banks, provides 
short-term pre-shipment export financing, or ``packing credits,'' to 
exporters. Upon presentation of a confirmed export order or letter of 
credit to a bank, companies may receive pre-shipment loans for working 
capital purposes. Exporters may also establish pre-shipment credit 
lines upon which they may draw as needed. Credit line limits are 
established by commercial banks based upon a company's creditworthiness 
and past export performance, and may be denominated

[[Page 7919]]

either in Indian rupees or in foreign currency. Commercial banks 
extending export credit to Indian companies must, by law, charge 
interest on this credit at rates capped by the RBI. For post-shipment 
export financing, exporters are eligible to receive post-shipment 
short-term credit in the form of discounted trade bills or advances by 
commercial banks at preferential interest rates to finance the period 
between the date of shipment of exported merchandise and payment from 
export customers (``transit period'').
    The Department has previously determined that this export financing 
is countervailable to the extent that the interest rates are set by the 
GOI and are lower than the rates exporters would have paid on 
comparable commercial loans. See PET Film Decision Memo, at II.A.1 
``Pre-Shipment and Post-Shipment Export Financing.'' Specifically, the 
Department determined that the GOI's issuance of financing at 
preferential rates constituted a financial contribution pursuant to 
section 771(5)(D)(i) of the Act. Id. The Department further determined 
that the interest savings under this program conferred a benefit 
pursuant to section 771(5)(E)(ii) of the Act. In addition, the 
Department determined this program, which is contingent upon exports, 
to be specific within the meaning of section 771(5A)(B) of the Act. Id. 
No new information or evidence of changed circumstances have been 
presented in this investigation to warrant reconsideration of this 
finding.
    Aero reported its rupee-denominated, pre- and post-shipment export 
loans outstanding during the POI. Navneet reported its dollar-
denominated, pre-shipment export loans outstanding during the POI. 
Kejriwal reported its rupee-denominated, pre-shipment export loans 
outstanding during the POI and provided information indicating the 
amount of rupee-denominated post-shipment financing the company had 
outstanding during the POI.
    To calculate the benefit conferred by these pre-shipment and post-
shipment loans, we compared the actual interest paid on the loans with 
the amount of interest that would have been paid at the benchmark 
interest rates. We used a rupee- or dollar-denominated benchmark, as 
appropriate (see ``Subsidies Valuation Information'' section above). 
Where the benchmark interest exceeds the actual interest paid, the 
difference constitutes the benefit. For pre-shipment loans, we 
calculated the company-specific program rates by dividing the benefit 
received by the company during the POI by the company's total exports 
during the POI.
    Because post-shipment loans are granted for particular shipments, 
our practice is to treat them as tied to particular markets, in 
accordance with 19 CFR 351.525(b)(2). See Preliminary Affirmative 
Countervailing Duty Determination and Alignment with Final Antidumping 
Determination: Bottle-Grade Polyethylene Terephthalate (PET) Resin from 
India, 69 FR 52866, 52871 (Aug. 30, 2004). To calculate a company's 
subsidy rate for this program, we divide the benefit received by the 
company during the POI by the company's exports of subject merchandise 
to the United States during the POI.
    For Kejriwal, we were able to conduct this calculation accordingly. 
Aero, however, appears to have reported its post-shipment loans for all 
shipments to all destinations. Therefore, for purposes of this 
preliminary determination, we did not apply our standard methodology. 
Rather, we divided the total benefit Aero received during the POI by 
Aero's total exports of all products to all destinations during the 
POI. At verification, we will examine the post-shipment loan data 
provided by Aero.
    We preliminarily determine the countervailable subsidy rate under 
the pre-shipment export financing program for Aero to be 0.85 percent 
ad valorem during the POI, 0.66 percent ad valorem during the POI for 
Navneet, and 0.03 percent ad valorem during the POI for Kejriwal. We 
preliminarily determine the countervailable subsidy rate under the 
post-shipment export financing program for Aero to be 0.04 percent ad 
valorem during the POI and 0.77 percent ad valorem during the POI for 
Kejriwal.
2. Export Promotion Capital Goods Scheme (EPCGS)
    The EPCGS provides for a reduction or exemption of customs duties 
and an exemption from excise taxes on imports of capital goods. Under 
this program, producers may import capital equipment at five percent 
customs duty, subject to an export obligation equal to eight times the 
duty saved to be fulfilled over a period of eight years (12 years where 
the CIF value is Rs. 100 Crore \4\) from the date the license was 
issued. For failure to meet the export obligation, a company is subject 
to payment of all or part of the duty reduction, depending on the 
extent of the export shortfall, plus penalty interest.
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    \4\ A crore is equal to 10,000,000 rupees.
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    In prior proceedings, we determined that import duty reductions 
provided under the EPCGS constituted a countervailable export subsidy. 
See, e.g., PET Film Decision Memo, at section II.A.4 ``EPCGS.'' 
Specifically, the Department found that under the EPCGS program, the 
GOI provides a financial contribution under section 771(5)(D)(ii) of 
Act, in the form of revenue foregone that otherwise would be due. The 
tax savings confer a benefit, as defined by section 771(5)(E) of the 
Act. Also, this program is specific under section 771(5A)(B) of the Act 
because it is contingent upon export performance. No new information or 
evidence of changed circumstances has been provided with respect to 
this program. Therefore, we continue to find that import duty 
reductions provided under the EPCGS are countervailable export 
subsidies.
    Aero, Navneet, and Kejriwal reported that they received import duty 
deductions under the EPCGS program. We have determined the benefit 
under this program in accordance with our findings and treatment in 
other Indian CVD proceedings. Id. at cmt. 5; and HRC Investigation 
Decision Memo, at section I.E ``Export Promotion of Capital Goods 
Scheme (EPCGS).'' Under the Department's approach, there are two types 
of benefits under the EPCGS program. The first benefit is the amount of 
unpaid duties that would have to be paid to the GOI if the export 
requirements are not met. The repayment of this liability is contingent 
on subsequent events, and in such instances, it is the Department's 
practice to treat any balance on an unpaid liability as an interest-
free loan. See 19 CFR 351.505(d)(1).
    Because Aero, Navneet, and Kejriwal had not yet met their export 
obligations specified in their EPCGS licenses by the end of the POI, we 
preliminarily determine that the companies had outstanding contingent 
liabilities during the POI. We further determine that the amount of the 
contingent liability to be treated as an interest-free loan is the 
amount of the import duty reduction or exemption for those EPCGS 
licenses for which Aero, Navneet, and Kejriwal applied but, as of the 
end of the POI, had not received a waiver of their obligations to repay 
the duties from the GOI.
    Accordingly, for those unpaid duties for which Aero, Navneet, and 
Kejriwal have yet to fulfill their export obligations, we determine the 
benefit to be the interest that they would have paid during the POI had 
they borrowed the full amount of the duty reduction at the time of 
import. Pursuant to 19 CFR 351.505(d)(1), we used a long-term interest 
rate as our benchmark to calculate the benefit of a contingent

[[Page 7920]]

liability interest-free loan because the event upon which repayment of 
the duties depends (i.e., the date of expiration of the time period for 
Aero, Navneet, and Kejriwal to fulfill their export commitments) occurs 
at a point in time more than one year after the date the capital goods 
were imported. Specifically, we used the long-term benchmark interest 
rate for Aero, Navneet, and Kejriwal, as described in the ``Subsidies 
Valuation'' section, supra. The rate used corresponded to the year in 
which the companies imported the item under the program. Consistent 
with our policy, absent acknowledgment in the form of an official 
letter from the GOI that the liability has been eliminated, we continue 
to treat benefits of these licenses as contingent liabilities. See, 
e.g., See Final Results of Countervailing Duty Administrative Review: 
Certain Hot-Rolled Carbon Steel Flat Products from India, 69 FR 26549 
(May 13, 2004) (HRC First Review Final), and accompanying Issues and 
Decision Memorandum, at II.A.2 ``Export Promotion of Capital Goods 
Scheme (EPCGS)'' (HRC First Review Decision Memo).
    The second benefit is the waiver of duty on imports of capital 
equipment covered by those EPCGS licenses for which export requirements 
have been met. Navneet reported that it imported machinery under the 
EPCGS in the years prior to the POI and during the POI. Upon 
importation under these licenses, Navneet received reduced import duty 
liabilities and agreed to the export obligations prescribed under the 
program, as noted above. For certain licenses, Navneet reported that it 
had completed its export obligation under the EPCGS program, thereby 
eliminating the outstanding contingent liabilities on the corresponding 
duty exemptions. However, as explained above, in keeping with our 
practice, we have only accepted those claims that are accompanied by 
official letters from the GOI indicating that the companies have met 
their export obligations. Thus, for purposes of calculating the 
benefit, we treated licenses without accompanying letters from the GOI 
as contingent liabilities.
    For those licenses for which Navneet demonstrated that it had 
completed its export obligations, we followed our methodology set forth 
in the HRC First Review Final and treated the import duty savings as 
grants received in the year in which the GOI waived the contingent 
liability on the import duty exemptions. In accordance with 19 CFR 
351.524(b)(2), for each of the grant amounts, we performed the 0.5 
percent test to determine whether the benefit should be fully expensed 
in the year of receipt or allocated over the AUL used in this 
proceeding pursuant to the grant allocation methodology set forth in 19 
CFR 351.524(d)(1).
    Aero, Navneet and Kejriwal reported that they paid application fees 
in order to obtain their EPCGS licenses. We preliminarily determine 
that the application fees paid qualify as an ``application fee, 
deposit, or similar payment paid in order to qualify for, or to 
receive, the benefit of the countervailable subsidy.'' See Section 
771(6)(A) of the Act. As a result, we have offset the benefit in an 
amount equal to the fees paid.
    To calculate the subsidy rate, we summed the benefits from the 
waived licenses, which we determined conferred a benefit in the form of 
a grant and those licenses that have yet to be waived, which we 
determine conferred a benefit in the form of contingent liability 
loans. With respect to licenses related to imports of capital goods 
during the POI, we prorated the contingent liability by the actual 
number of days the contingent liability was in effect during the POI. 
See HRC First Review Decision Memo, at II.A.2, ``Export Promotion of 
Capital Goods Scheme (EPCGS),'' and cmt. 4. We divided the total 
benefits to Aero, Navneet, and Kejriwal under the program by the 
companies' respective total export sales during the POI. On this basis, 
we preliminarily determine the net countervailable subsidy from this 
program to be 0.05 percent ad valorem for Aero, 1.00 percent ad valorem 
for Navneet, and 0.05 percent ad valorem for Kejriwal.
3. Duty Entitlement Passbook Scheme (DEPS)
    India's DEPS was enacted on April 1, 1997, as a successor to the 
Passbook Scheme (PBS). As with PBS, the DEPS enables exporting 
companies to earn import duty exemptions in the form of passbook 
credits rather than cash. All exporters are eligible to earn DEPS 
credits on a post-export basis, provided that the GOI has established a 
standard input/output norm (SION) for the exported product. DEPS 
credits can be used for any subsequent imports, regardless of whether 
they are consumed in the production of an export product. DEPS credits 
are valid for twelve months and are transferable after the foreign 
exchange is realized from the export sales on which the DEPS credits 
are earned. With respect to subject merchandise, the GOI has 
established a SION for the paper industry.
    Companies reported earning credits up to 9 percent of the free on 
board (FOB) value of their export shipments during the POI. The 
Department has previously determined that the DEPS is countervailable. 
For example in PET Film, the Department determined that under the DEPS, 
a financial contribution, as defined under section 771(5)(D)(ii) of the 
Act, is provided because (1) the GOI provides credits for the future 
payment of import duties; and, (2) the GOI does not have in place and 
does not apply a system that is reasonable and effective for the 
purposes intended to confirm which inputs, and in what amounts, are 
consumed in the production of the exported products. PET Film Decision 
Memo, at II.A.2 ``DEPS.'' Therefore, under 19 CFR 351.519(a)(4) and 
section 771(5)(E) of the Act, the entire amount of import duty 
exemption earned during the POI constitutes a benefit. Finally, this 
program can only be used by exporters and, therefore, is specific under 
section 771(5A)(B) of the Act. Id. No new information or evidence of 
changed circumstances has been presented in this investigation to 
warrant reconsideration of this finding. Therefore, we continue to find 
that the DEPS is countervailable.
    Aero and Navneet reported earning DEPS credits on shipments of 
paper made during the POI. Aero also reported that it sold a DEPS 
credit during the POI that it earned prior to the period and that 
subsequent to the POI it sold a DEPS credit earned during the period. 
Navneet indicated that during the POI it sold all of the DEPS credits 
it earned during the period. Kejriwal indicated that it did not earn or 
sell any DEPS credits during the POI.
    We have previously determined that this program provides a 
recurring benefit under 19 CFR 351.519(c). See HRC Investigation. In 
accordance with past practice and pursuant to 351.519(b)(2), we find 
that benefits from the DEPS program are conferred as of the date of 
exportation of the shipment for which the pertinent DEPS credits are 
earned. See, e.g., Final Affirmative Determination: Certain Cut-to-
Length Carbon-Quality Steel Plate from India, 64 FR 73131 (Dec. 29, 
1999) (CTL Plate from India), and accompanying Issues and Decision 
Memorandum, at cmt. 4 (CTL Decision Memo) (explaining that for programs 
such as the DEPS, ``we calculate the benefit on an ``earned'' basis 
(that is upon export) where it is provided as a percentage of the value 
of the exported merchandise on a shipment-by-shipment basis and the 
exact amount of the exemption is known.'').

[[Page 7921]]

    For those DEPS credits that Aero and Navneet earned during the POI, 
we followed our past practice and calculated the benefit under the DEPS 
program by multiplying the FOB value of each export shipment to the 
United States during the POI by the relevant percentage of DEPS credit 
allowed under the program. We then subtracted as an allowable offset 
the actual amount of application fees paid for each license in 
accordance with section 771(6) of the Act. See CTL Plate from India, 64 
FR at 73134.
    As indicated above, both Aero and Navneet sold DEPS credits during 
the POI. It is the Department's practice to treat DEPS credits as 
financial contributions that, for purposes of measuring the benefit, 
are received on the date on which they are earned because it is at this 
point that recipients of value-based DEPS credits know the amount of 
the duty exemption or benefit they have received. See CTL Decision 
Memorandum, at cmt. 4. Furthermore, 19 CFR 351.503(c) states that in 
determining whether a benefit is conferred, the Department ``* * * is 
not required to consider the effect of the government action on the 
firm's performance, including its prices or output, or how the firm's 
behavior otherwise is altered'' (emphasis added). The Preamble to the 
Department's regulations explains that:

    In analyzing whether a benefit exists, we are concerned with 
what goes into a company, such as enhanced revenues and reduced-cost 
inputs in the broad sense that we have used the term, not with what 
the company does with the subsidy. Countervailing Duties; Final 
Rule, 63 FR 65348, 65361 (Nov. 25, 2998) (providing the rationale 
for 19 CFR 351.503(c)).

    Given that the Department treats benefits under the DEPS program as 
recurring subsidies that are received on the date of export (e.g., when 
they are earned) and that 19 CFR 351.503(c) directs the Department not 
to track what companies do with their subsidies after they have 
received them, we preliminary determine that the benefit under the DEPS 
program is equal to the amount of DEPS credit at the time of receipt, 
regardless of whether the license is subsequently sold after the date 
of receipt.\5\ Thus, for DEPS credits that were earned and subsequently 
sold during or after the POI, we calculated the benefit based on the 
amount of credits earned, as described above, and not the amount for 
which the credits were sold. In keeping with this approach, we did not 
countervail sales of DEPS credits that were earned prior to the POI and 
sold during the POI. Accordingly, we calculated Aero and Navneet's 
benefit under the DEPS program based on the amount of DEPS credit 
earned during the POI, and not on the amount sold.
---------------------------------------------------------------------------

    \5\ We note that this approach differs from how we treat sales 
of quantity-based licenses, such as those that exist udner the 
advance license program. See, e.g., CTL Plate from India, 64 FR at 
73135.
---------------------------------------------------------------------------

    Because DEPS credits are earned on a shipment-by-shipment basis, in 
calculating the benefit from the DEPS program, we normally calculate 
the net subsidy rate by dividing the benefit earned on subject 
merchandise export shipments to the United States by total sales of 
subject merchandise to the United States during the POI. See CTL Plate 
from India, 64 FR at 73134. In the case of Aero, we have followed this 
calculation methodology. However, Navneet has claimed that it is unable 
to separately report its subject and non-subject sales of paper to the 
United States and, thus, has reported the DEPS credits it earned on 
sales of all paper made to the United States during the POI. As a 
result, we have divided the benefit Navneet earned during the POI on 
subject and non-subject paper shipments to the United States by 
Navneet's total export sales to the United States during the POI. For 
the final determination we will further examine this calculation and 
the appropriateness of dividing by total export sales to the United 
States.
    On this basis, we preliminarily determine the net countervailable 
subsidy from the DEPS program to be 0.34 percent ad valorem for Aero 
and 5.39 percent ad valorem for Navneet.
4. Duty Free Replenishment Certificate (DFRC)
    The DFRC scheme was introduced by the GOI in 2001 and is 
administered by the Director-General for Foreign Trade (DGFT). The DFRC 
is a duty replenishment scheme that is available to exporters for the 
subsequent import of inputs used in the manufacture of goods without 
payment of basic customs duty. In order to receive a license, which 
entitles the recipient subsequently to import duty free certain inputs 
used in the production of the exported product, as identified in a 
SION, within the following 24 months, a company must: (1) Export 
manufactured products listed in the GOI's export policy book and 
against which there is a SION for inputs required in the manufacture of 
the export product based on quantity; and (2) have realized the payment 
of export proceeds in the form of convertible foreign currency. See The 
Ministry of Commerce and Industry Directorate General of Foreign Trade 
Policy 2004-2009, sect. 4.2. The application must be filed within six 
months of the realization of the profits. DFRC licenses are 
transferrable, yet the transferee is limited to importing only those 
products and in the quantities specified on the license. Id.
    Although 19 CFR 351.519(b)(2) provides that the Secretary will 
normally consider any benefit from a duty drawback or exemption program 
as having been received as of the date of exportation, we preliminary 
find that an exception to this normal practice is warranted here in 
view of the unique manner in which this program operates. Specifically, 
a company may not submit an application for a DFRC license until the 
proceeds of the sale are realized. The license, once granted, specifies 
the quantity of the particular inputs that the bearer may subsequently 
import duty free. In HRC First Review Final, we noted that the benefits 
from another duty exemption program, the DEPS, were conferred as of the 
date of exportation of the shipment because it is at that point that 
``the amount of the benefit is known by the exporter.'' See HRC First 
Review Decision Memo, at II.A.4 ``Duty Entitlement Passbook Scheme.'' 
However, in the case of the DFRC, the company does not know at the time 
of export the value of the duty exemption that it will ultimately 
receive. It only knows the quantity of the inputs it will likely be 
able to import duty free if its application for a DFRC license is 
granted. Unlike the DEPS, under the DFRC, the respondent will only know 
the total value of the duty exemption when it subsequently uses that 
license to import the specified products duty free or sells it. 
Therefore, we preliminarily determine that the date of receipt is 
linked to when the company uses the certificate to import an input duty 
free or, in the case in which the company sells the certificate, the 
date of sale.
    During the POI, no companies reported importing using a DFRC 
license or exporting against a DFRC license. However, Aero, Navneet, 
and Kejriwal reported selling DFRC licenses. The Department has 
previously determined that the sale of quantity-based import licenses 
confers a countervailable export subsidy. See, e.g., CTL Plate from 
India, 64 FR 73131, 73134; Certain Iron-Metal Castings from India: 
Final Results of Countervailing Duty Administrative Review, 63 FR 64050 
(Nov. 18, 1998); and Certain Iron-Metal Castings from India: Final 
Results of Countervailing Duty Administrative Review, 62 FR 32297, 
32298 (June 13, 1997). Therefore, in accordance with

[[Page 7922]]

section 771(5A)(B) of the Act, we determine that the sale of DFRC 
licenses is an export subsidy and that a financial contribution is 
provided, under section 771 5(D)(ii) of the Act, in the form of the 
revenue foregone. We further find that the sales of the licenses 
conferred a benefit under section 771 (5)(E) of the Act.
    To calculate the countervailable benefits conferred to Aero, 
Navneet and Kejriwal, respectively on their sales of DFRC licenses, we 
identified the proceeds Aero, Navneet and Kejriwal each realized from 
sales of DFRC licenses during the POI (net of application fees). We 
then calculated the net subsidy rate by dividing the total benefit by 
each company's total value of exports to the United States during the 
POI. On this basis, we determine the net countervailable subsidy rate 
for this program to be 3.09 percent for Aero, 0.12 percent ad valorem 
for Navneet, and 1.35 percent ad valorem for Kejriwal. For the Final 
Determination, we will continue to examine whether calculating the net 
subsidy rate by dividing the total benefit using the companies' total 
exports to the U.S. as the denominator is appropriate. Further, given 
the way this program operates, we also invite parties to comment on 
whether application of 19 CFR 351.519 or 19 CFR 351.514 is most 
appropriate.
5. Advance License Program (ALP)
    Under the ALP, exporters may import, duty free, specified 
quantities of materials required to produce products that are 
subsequently exported. Companies, however, remain contingently liable 
for the unpaid duties until they have exported the finished products. 
The quantities of imported materials and exported finished products are 
linked through SIONs established by the GOI. See Ministry of Commerce 
and Industry Directorate General of Foreign Trade Policy 2004-2009, at 
sect. 4.1.
    The Department previously found the 1997-2002 Export/Import 
Guidelines underlying the ALP not to be countervailable. See PET Film 
Decision Memo, at II.B.1 ``Advance Licenses;'' see also HRC 
Investigation, 66 FR 49635 (Sept. 28, 2001) and HRC Investigation 
Decision Memo at ``Advance Licenses.'' However, in the recent PET Film 
Prelim, the Department examined the 2002-2007 Export/Import Policy 
Guidelines underlying the ALP and found the program to be 
countervailable because the GOI does not have in place and does not 
apply a system that is reasonable and effective for the purposes 
intended, in accordance with 19 CFR 351.519(a)(4). See Preliminary 
Results and Rescission in Part of Countervailing Duty Administrative 
Review: Polyethylene Terephthalate Film, Sheet and Strip from India, 70 
FR 46483, 46486-87 (Aug. 10, 2005) (PET Film Prelim). In the PET Film 
Prelim, the Department found that the GOI could not demonstrate that 
the ALP was implemented and monitored effectively. The Department also 
determined that the ALP was countervailable because the program permits 
companies to meet their export requirements through ``deemed exports'' 
(i.e., sales within India that are categorized as exports even though 
there appears to be no tangential link to exports). See PET Film 
Prelim, 70 FR at 46487. The Department also found that the ALP was 
countervailable because the GOI could not demonstrate how the PET Film 
SIONs used to determine the duty exemptions were calculated or that 
there was a requirement that the SIONs be updated.
    Only Aero reported using the ALP during the POI. Upon examination 
of the ALP in this investigation, we find that the systemic 
deficiencies found in PET Film Prelim remain in place. While the GOI 
reported that the SIONs for the lined paper industry have been updated, 
we note that the changes occurred after the POI. Further, Chapter 4 of 
the Ex-Im Handbook permits deemed exports to be used to meet a 
manufacturer's export commitment under the DFRC. The GOI also reported 
that it has not verified the export fulfillment of any of the 
respondents in this case.
    Therefore, we preliminarily determine that the ALP confers 
countervailable subsidies because: (1) A financial contribution, as 
defined under section 771(5)(D)(ii) of the Act, is provided under the 
program, as the GOI provides the respondents with an exemption of 
import duties; (2) the GOI does not have in place and does not apply a 
system that is reasonable and effective for the purposes intended under 
19 CFR 351.519(a)(4), to confirm which inputs, and in what amounts, are 
consumed in the production of the exported products, and thus the 
entire amount of import duty exemption earned by the respondent 
constitutes a benefit under section 771(5)(E) of the Act; and (3) this 
program is contingent upon export and, therefore, is specific under 
section 771(5A)(B) of the Act. However, as the Department stated in PET 
Film Prelim, we will continue to examine this program and if a party in 
this proceeding is able to provide information with respect to the 
systemic deficiencies identified above, the Department will reconsider 
our determination that the ALP is countervailable. See PET Film Prelim, 
70 FR at 46487. Pursuant to 19 CFR 351.519(c), exemptions of import 
duties on imports consumed in production provide a recurring benefit. 
Thus, we treated the benefit provided under the ALP as a recurring 
benefit. To calculate the subsidy rate, we subtracted from the total 
amount of exempted duties under the ALP during the POI the actual 
amount of application fees paid for each license in accordance with 
section 771(6) of the Act (in order to receive the benefits of the ALP, 
companies must pay application fees). We then divided the resulting net 
benefit by Aero's total value of exports of lined paper products. We 
preliminarily determine the net countervailable subsidy provided to 
Aero under the ALP to be 2.55 percent ad valorem.

II. Programs Preliminarily Determined To Be Not Used

    We preliminarily determine that the producers/exporters of certain 
lined paper products did not apply for or receive benefits during the 
POI under the programs listed below.

GOI Programs

A. Export Processing Zones (EPZ) and Export Oriented Units (EOU)
B. Income Tax Exemption Scheme (Sections 10A, 10B, and 80HHC)
C. Market Development Assistance (MDA)
D. Status Certificate Program
E. Market Access Initiative

State Government Programs

A. State of Gujarat Sales Tax Incentives
B. State of Maharashtra Sales Tax Incentives

    For purposes of this preliminary determination, we have relied on 
the GOI and respondent companies' responses to preliminarily determine 
non-use of the programs listed above. During the course of 
verification, the Department will examine whether these programs were 
used by respondent companies during the POI.

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted prior to making our final determination.

Suspension of Liquidation

    In accordance with section 703(d)(1)(A)(i) of the Act, we have 
determined individual rates for Aero, Kejriwal, and Navneet. To 
calculate the ``all others'' rate, we weight-averaged the individual 
rates of Aero, Kejriwal, and Navneet by each company's respective 
exports of subject

[[Page 7923]]

merchandise to the United States during the POI. See e.g., PET Film, 67 
FR 34905 and HRC Investigation, 66 FR at 49636. These rates are 
summarized in the table below:

------------------------------------------------------------------------
                                                           Subsidy rate
                    Producer/exporter                       ad valorem
------------------------------------------------------------------------
Aero Exports............................................            6.92
Kejriwal Paper Limited..................................            2.20
Navneet Publications....................................            7.17
All Others..............................................            5.99
------------------------------------------------------------------------

    In accordance with section 703(d)(1)(B) of the Act, we are 
directing U.S. Customs and Border Protection (CBP) to suspend 
liquidation of all entries of the subject merchandise from India, which 
are entered or withdrawn from warehouse, for consumption on or after 
the date of the publication of this notice in the Federal Register, and 
to require a cash deposit or the posting of a bond for such entries of 
the merchandise in the amounts indicated above. This suspension will 
remain in effect until further notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and non-proprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    In accordance with section 705(b)(2) of the Act, if our final 
determination is affirmative, the ITC will make its final determination 
within 45 days after the Department makes its final determination.

Notification of Parties

    In accordance with 19 CFR 351.224(b), the Department will disclose 
to the parties the calculations for this preliminary determination 
within five days of its announcement. Unless otherwise notified by the 
Department, interested parties may submit case briefs within 50 days of 
the date of publication of the preliminary determination in accordance 
with 19 CFR 351.309(c)(i). As part of the case brief, parties are 
encouraged to provide a summary of the arguments not to exceed five 
pages and a table of statutes, regulations, and cases cited. Rebuttal 
briefs, which must be limited to issues raised in the case briefs, must 
be filed within five days after the case brief is filed. See 19 CFR 
351.309(d).
    In accordance with 19 CFR 351.310(c), we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on this preliminary determination. Individuals who wish to 
request a hearing must submit a written request within 30 days of the 
publication of this notice in the Federal Register to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, 14th Street and Constitution Avenue, NW., Washington, DC 20230. 
Parties will be notified of the schedule for the hearing and parties 
should confirm by telephone the time, date, and place of the hearing 48 
hours before the scheduled time. Requests for a public hearing should 
contain: (1) Party's name, address, and telephone number; (2) the 
number of participants; and, (3) to the extent practicable, an 
identification of the arguments to be raised at the hearing.
    This determination is issued and published pursuant to sections 
703(f) and 777(i) of the Act.

    Dated: February 6, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

    The scope of this investigation includes certain lined paper 
products, typically school supplies,\6\ composed of or including 
paper that incorporates straight horizontal and/or vertical lines on 
ten or more paper sheets,\7\ including but not limited to such 
products as single- and multi-subject notebooks, composition books, 
wireless notebooks, looseleaf or glued filler paper, graph paper, 
and laboratory notebooks, and with the smaller dimension of the 
paper measuring 6 inches to 15 inches (inclusive) and the larger 
dimension of the paper measuring 8\3/4\ inches to 15 inches 
(inclusive). Page dimensions are measured size (not advertised, 
stated, or ``tear-out'' size), and are measured as they appear in 
the product (i.e., stitched and folded pages in a notebook are 
measured by the size of the page as it appears in the notebook page, 
not the size of the unfolded paper). However, for measurement 
purposes, pages with tapered or rounded edges shall be measured at 
their longest and widest points. Subject lined paper products may be 
loose, packaged or bound using any binding method (other than case 
bound through the inclusion of binders board, a spine strip, and 
cover wrap). Subject merchandise may or may not contain any 
combination of a front cover, a rear cover, and/or backing of any 
composition, regardless of the inclusion of images or graphics on 
the cover, backing, or paper. Subject merchandise is within the 
scope of this investigation whether or not the lined paper and/or 
cover are hole punched, drilled, perforated, and/or reinforced. 
Subject merchandise may contain accessory or informational items 
including but not limited to pockets, tabs, dividers, closure 
devices, index cards, stencils, protractors, writing implements, 
reference materials such as mathematical tables, or printed items 
such as sticker sheets or miniature calendars, if such items are 
physically incorporated, included with, or attached to the product, 
cover and/or backing thereto. Specifically excluded from the scope 
of this investigation are:
---------------------------------------------------------------------------

    \6\ For purposes of this scope definition, the actual use or 
labeling of these products as school supplies or non-school supplies 
is not a defining characteristic.
    \7\ There shall be no minimum page requirement for looseleaf 
filler paper.
---------------------------------------------------------------------------

     Unlined copy machine paper;
     Writing pads with a backing (including but not limited 
to products commonly known as ``tablets,'' ``note pads,'' ``legal 
pads,'' and ``quadrille pads''), provided that they do not have a 
front cover (whether permanent or removable). This exclusion does 
not apply to such writing pads if they consist of hole-punched or 
drilled filler paper;
     Three-ring or multiple-ring binders, or notebook 
organizers incorporating such a ring binder provided that they do 
not include subject paper;
     Index cards;
     Printed books and other books that are case bound 
through the inclusion of binders board, a spine strip, and cover 
wrap;
     Newspapers;
     Pictures and photographs;
     Desk and wall calendars and organizers (including but 
not limited to such products generally known as ``office planners,'' 
``time books,'' and ``appointment books'');
     Telephone logs;
     Address books;
     Columnar pads & tablets, with or without covers, 
primarily suited for the recording of written numerical business 
data;
     Lined business or office forms, including but not 
limited to: preprinted business forms, lined invoice pads and paper, 
mailing and address labels, manifests, and shipping log books;
     Lined continuous computer paper;
     Boxed or packaged writing stationary (including but not 
limited to products commonly known as ``fine business paper,'' 
``parchment paper, `` and ``letterhead''), whether or not containing 
a lined header or decorative lines;
     Stenographic pads (``steno pads''), Gregg ruled,\8\ 
measuring 6 inches by 9 inches;
    Also excluded from the scope of this investigation are the 
following trademarked products:
---------------------------------------------------------------------------

    \8\ ``Gregg ruling'' consists of a single- or double-margin 
vertical ruling line down the center of the page. For a six-inch by 
nine-inch stenographic pad, the ruling would be located 
approximately three inches from the left of the book.
---------------------------------------------------------------------------

     FlyTM lined paper products: A notebook, 
notebook organizer, loose or glued note paper, with papers that are 
printed with infrared reflective inks and readable only by a 
FlyTM

[[Page 7924]]

     Pen-top computer. The product must bear the valid 
trademark FlyTM \9\
---------------------------------------------------------------------------

    \9\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
---------------------------------------------------------------------------

     ZwipesTM: A notebook or notebook organizer 
made with a blended polyolefin writing surface as the cover and 
pocket surfaces of the notebook, suitable for writing using a 
specially-developed permanent marker and erase system (known as a 
ZwipesTM pen). This system allows the marker portion to 
mark the writing surface with permanent ink. The eraser portion of 
the marker dispenses a solvent capable of solubilizing the permanent 
ink allowing the ink to be removed. The product must bear the valid 
trademark ZwipesTM.\10\
---------------------------------------------------------------------------

    \10\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
---------------------------------------------------------------------------

     FiveStar[supreg]AdvanceTM: A notebook or 
notebook organizer bound by a continuous spiral, or helical, wire 
and with plastic front and rear covers made of a blended polyolefin 
plastic material joined by 300 denier polyester, coated on the 
backside with PVC (poly vinyl chloride) coating, and extending the 
entire length of the spiral or helical wire. The polyolefin plastic 
covers are of specific thickness; front cover is .019 inches (within 
normal manufacturing tolerances) and rear cover is .028 inches 
(within normal manufacturing tolerances). Integral with the 
stitching that attaches the polyester spine covering, is captured at 
both ends of a 1 wide elastic fabric band. This band is 
located 2\3/8\ from the top of the front plastic cover 
and provides pen or pencil storage. Both ends of the spiral wire are 
cut and then bent backwards to overlap with the previous coil but 
specifically outside the coil diameter but inside the polyester 
covering. During construction, the polyester covering is sewn to the 
front and rear covers face to face (outside to outside) so that when 
the book is closed, the stitching is concealed from the outside. 
Both free ends (the ends not sewn to the cover and back) are 
stitched with a turned edge construction. The flexible polyester 
material forms a covering over the spiral wire to protect it and 
provide a comfortable grip on the product. The product must bear the 
valid trademarks FiveStar[supreg]AdvanceTM.\11\
---------------------------------------------------------------------------

    \11\ Products found to be bearing an invalidly licensed or used 
trademark are not excluded from the scope.
---------------------------------------------------------------------------

     FiveStar FlexTM: A notebook, a notebook 
organizer, or binder with plastic polyolefin front and rear covers 
joined by a 300 denier polyester spine cover extending the entire 
length of the spine and bound by a 3-ring plastic fixture. The 
polyolefin plastic covers are of a specific thickness; front cover 
is .019 inches (within normal manufacturing tolerances) and rear 
cover is .028 inches (within normal manufacturing tolerances). 
During construction, the polyester covering is sewn to the front 
cover face to face (outside to outside) so that when the book is 
closed, the stitching is concealed from the outside. During 
construction, the polyester cover is sewn to the back cover with the 
outside of the polyester spine cover to the inside back cover. Both 
free ends (the ends not sewn to the cover and back) are stitched 
with a turned edge construction. Each ring within the fixture is 
comprised of a flexible strap portion that snaps into a stationary 
post which forms a closed binding ring. The ring fixture is riveted 
with six metal rivets and sewn to the back plastic cover and is 
specifically positioned on the outside back cover. The product must 
bear the valid trademark FiveStar FlexTM.\12\
---------------------------------------------------------------------------

    \12\ Products found to be bearing an invalidly licensed or used 
trademark are not exclused from the scope.
---------------------------------------------------------------------------

    Merchandise subject to this investigation is typically imported 
under headings 4820.10.2050, 4810.22.5044, and 4811.90.9090 of the 
Harmonized Tariff Schedule of the United States (HTSUS).\13\ The 
tariff classifications are provided for convenience and U.S. Customs 
purposes; however, the written description of the scope of the 
investigation is dispositive.

    \13\ During the investigation additional HTSUS subheadings may 
be identified.
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[FR Doc. 06-1419 Filed 2-14-06; 8:45 am]
BILLING CODE 3510-DS-P