Heavy Forged Hand Tools, Finished or Unfinished, With or Without Handles, From the People's Republic of China: Preliminary Results of Administrative Reviews and Preliminary Partial Rescission of Antidumping Duty Administrative Reviews, 11580-11590 [E6-3296]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 45 (Wednesday, March 8, 2006)]
[Notices]
[Pages 11580-11590]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-3296]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-803]


Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China: Preliminary Results of 
Administrative Reviews and Preliminary Partial Rescission of 
Antidumping Duty Administrative Reviews

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the ``Department'') is conducting 
administrative reviews of the antidumping duty orders on heavy forged 
hand tools, finished or unfinished, with or without handles, from the 
People's Republic of China (``PRC''). These reviews cover imports of 
subject merchandise from eighteen manufacturers and/or exporters. We 
preliminarily find that certain manufacturers and/or exporters sold 
subject merchandise at less than normal value (``NV'') during the 
period of review (``POR''). We are preliminarily rescinding the reviews 
for all four orders for Shanghai Xinike Trading Company (``SXT''), for 
the order on hammers/sledges for Shandong Huarong Machinery Co., Ltd. 
(``Huarong'') and Iron Bull Industrial Co., Ltd. (``Iron Bull''), and 
also for the order on picks/mattocks for Huarong and Iron Bull. In 
addition, we are preliminarily rescinding the review for Iron Bull with 
respect to the axes/adzes order. If these preliminary results are 
adopted in our final results of review, we will instruct U.S. Customs 
and Border Protection (``CBP'') to assess antidumping duties on all 
appropriate entries. We will issue the final review results no later 
than 120 days from the date of publication of this notice.

EFFECTIVE DATE: March 8, 2006.

FOR FURTHER INFORMATION CONTACT: Matthew Renkey (Respondents Huarong 
and Tianjin Machinery Import & Export Corporation (``TMC'')), Cindy 
Robinson (Respondent Iron Bull), and Nicole Bankhead (Respondent 
Shandong Machinery Import & Export Company (``SMC'')), AD/CVD 
Operations, Office 9, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
2312, (202) 482-3797 and (202) 482-9068, respectively.

SUPPLEMENTARY INFORMATION:

Period of Review

    The POR is February 1, 2004, through January 31, 2005.

Case History

General

    On February 19, 1991, the Department published in the Federal 
Register four antidumping duty orders on heavy forged hand tools 
(``HFHTs'') from the PRC. See Antidumping Duty Orders: Heavy Forged 
Hand Tools, Finished or Unfinished, With or Without Handles From the 
People's Republic of China, 56 FR 6622 (February 19, 1991). Imports 
covered by these orders comprise the following classes or kinds of 
merchandise: (1) Hammers and sledges with heads over 1.5 kg (3.33 
pounds) (hammers/sledges); (2) bars over 18 inches in length, track 
tools and wedges (bars/wedges); (3) picks/mattocks; and (4) axes/adzes. 
See the ``Scope of the Antidumping Duty Orders'' section below for the 
complete description of subject merchandise.
    On February 1, 2005, the Department published an opportunity to 
request a review on all four antidumping duty orders on HFHTs from the 
PRC. See Antidumping or Countervailing Duty Order, Finding, or 
Suspended Investigation; Opportunity To Request Administrative Review, 
70 FR 5136 (February 1, 2005). On February 25, 2005, the following 
companies requested an administrative review for certain orders: 
Huarong for the axes/adzes and bars/wedges order, SMC for bars/wedges 
and hammers/sledges, TMC for axes/adzes, hammers/sledges, and picks/
mattocks, SXT for all four orders, and Iron Bull for all four orders. 
On February 28, 2005, the Petitioner requested administrative reviews 
of 16 companies,\1\ covering all four antidumping duty orders. On March 
23, 2005, the Department initiated the 14th administrative review of 
HFHTs from the PRC, for twenty-one companies in the axes/adzes and 
bars/wedges orders, and twenty companies in the hammers/sledges and 
picks/mattocks orders. See Initiation of Antidumping and Countervailing 
Duty Administrative Reviews and Requests for Revocation in Part 
(``Initiation''), 70 FR 14643 (March 23, 2005).
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    \1\ Lianing Machinery Import and Export Corp (``LMC''), LIMAC, 
Huarong, Shandong Jinma Industrial Group Company (``Jinma''), SMC, 
Tianjin Machinery Import and Export Corporation (``TMC''), Changzhou 
Light Industrial Tools, Laoling Pangu Tools, Leiling Zhengtai Tools 
Co., Ltd, Jiangsu Sainty International Group Co., Ltd., Shanghai 
J.E. Tools, Shanxi Tianli Industries Co., Ltd. (``Shanxi Tianli''), 
Jafsam Metal Products (``Jafsam''), Suqian Foreign Trade Corp., 
Suqian Telee Tools, and Laiwu Zhongtai Forging.
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    On June 9, 2005, the Department transferred certain documents from 
the 13th Administrative Review of HFHTs on to the record of this 
review. See Memo to the File from Hallie Noel Zink, Case Analyst: Heavy 
Forged Hand Tools from the People's Republic of China--Document 
Transfer, dated June 9, 2005. On June 28, 2005, the Department placed 
TMC's verification report from the 13th Administrative Review of HFHTs 
on to the record of the instant review. See Memo to the File from 
Hallie Noel Zink, Case Analyst: Heavy Forged Hand Tools from the 
People's Republic of China--Document Transfer, dated June 28, 2005.
    On October 21, 2005, the Department extended the time limit for the 
preliminary results of the instant review on HFHTs from the PRC. See 
Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China: Extension of Time Limit 
for the Preliminary Results of the Antidumping Duty Administrative 
Review, 70 FR 62095 (October 28, 2005).

Duty Absorption

    On April 5, 2005, the Petitioner requested that the Department 
conduct a duty absorption review to determine whether all initiated 
companies have absorbed antidumping duties in accordance with 19 CFR 
351.213(j)(2004). On May 31, 2005, the Department issued a memo to the 
file stating that because the antidumping duty orders on HFHTs from the 
PRC have been in effect since 1991, they are ``transition orders'' in 
accordance with section 751(c)(6)(C) of the Act, and therefore the 
Department cannot not make a duty absorption determination. See Memo to 
the File, from Hallie Zink, Case Analyst, through Alex Villanueva, 
Program Manager, re: Duty Absorption Request, dated May 18, 2005.

Questionnaires and Responses

    On April 6, 2005, the Department issued Section A, C and D of the

[[Page 11581]]

antidumping duty questionnaire to all companies for which the 
Department initiated administrative reviews. On April 22, 2005, 
Shandong Jinma Industrial Group Co., Ltd. (``Jinma''), informed the 
Department that it had no shipments during the POR. Also on April 22, 
2005, Jafsam, a company included in the Initiation, made an entry of 
appearance. On April 27, 2005, Shanxi Tianli faxed the Department a 
letter requesting an extension to respond to the Department's April 6, 
2005, questionnaire. See Memo to the File from Javier Barrientos, Case 
Analyst, Antidumping Duty Questionnaire Section A: Shanxi Tianli 
Industries Co., Ltd. Extension, dated April 28, 2005, for more 
information regarding our attempts to contact Shanxi Tianli.
    On May 2, 2005, the Department re-sent Section A, C and D of the 
antidumping questionnaire to all parties that had either not received 
the Department's first questionnaire or had not responded to the first 
questionnaire. See Memo to the File from Irene Gorelik, case analyst, 
14th Administrative Review of Heavy Forged Hand Tools from the PRC, 
14th Administrative Review: Antidumping Duty Questionnaire, dated May 
4, 2005, for more information regarding the Department's re-sending of 
the antidumping duty questionnaire; see also Memo to the File from 
Javier Barrientos, case analyst, 14th Review of Heavy Forged Hand Tools 
from the PRC: Initial Questionnaires Time Line, dated July 1, 2005 
(``14th AR Timeline''). On May 5, 2005, Respondents Huarong, SMC, and 
TMC stated that they are the same companies as those with slightly 
different names for which the Petitioner requested reviews. Thus, 
eighteen companies remained in the instant review. On May 10, 2005, 
Huarong, SMC, TMC, SXT, Iron Bull and Jafsam submitted copies of 
Chinese laws and regulations that relate to their separate rate status. 
On May 12, 2005, Shanxi Tianli, SXT and Jafsam withdrew from the 
instant review on HFHTs. Therefore, there were fifteen companies 
remaining, ten of which did not respond to the Department's 
questionnaire, one company, Jinma, that stated that it had no shipments 
during the POR, and four companies participating. See 14th AR Timeline 
for further details on the companies that did not respond and the Jinma 
section below for further details regarding Jinma's statement that it 
had no shipments.
    On May 13, 2005, the Department received Section A responses from 
SMC, TMC, Iron Bull and Huarong, collectively ``Respondents.'' On May 
27, 2005, the Department received Section C responses from SMC and TMC, 
and a Section C and D questionnaire response from Huarong. On June 3, 
2005, the Department received Section D questionnaire responses from 
SMC and TMC, a Section C response from Iron Bull, and a response to 
Appendices V and VII from Huarong. On June 6, 2005, Iron Bull submitted 
its Section D response. On June 9, 2005, the Department requested that 
Iron Bull, SMC and TMC submit responses to Appendix VII of the initial 
questionnaire, issued on April 6, 2005, and that Iron Bull resubmit its 
Section C response. On June 16, 2005, Iron Bull, TMC and SMC submitted 
responses to Appendix VII of the Department's June 9, 2005, 
questionnaire. On June 9, 2005, the Department issued the first 
supplemental Section C questionnaire to Iron Bull, identifying numerous 
deficiencies. Iron Bull submitted its response on June 23, 2005. On 
June 22, 2005, the Department issued supplemental Section A 
questionnaires to TMC, SMC, Huarong and Iron Bull.
    On July 1, 2005, the Department issued supplemental Section C and D 
questionnaires to TMC, SMC, Huarong and a second Section C supplemental 
questionnaire to Iron Bull. Between July 21, 2005, and July 27, 2005, 
SMC, Huarong, TMC and Iron Bull submitted their supplemental Section A 
questionnaire responses. On July 29, 2005, Huarong and SMC submitted 
their supplemental Section C and D questionnaire responses.
    On August 3, 2005, Huarong and SMC submitted their Section C and D 
databases. On August 5, 2005, TMC submitted its supplemental Section C 
and D questionnaire response. On August 8, 2005, Iron Bull submitted 
its supplemental Section C and D database. On August 9, 2005, the 
Department sent Jinma a supplemental questionnaire concerning its April 
22, 2005, letter. On August 11, 2005, the Department issued TMC a 
second supplemental Section A questionnaire. On August 19, 2005, the 
Department issued Iron Bull a second supplemental Section A 
questionnaire. On August 25, 2005, the Department issued Iron Bull a 
third supplemental Section C questionnaire, again outlining numerous 
deficiencies. On August 30, 2005, Jinma stated that it would no longer 
participate in the instant review.
    On September 1, 2005, the Department issued TMC a supplemental 
Section C questionnaire, and TMC submitted its second supplemental 
Section A questionnaire response. On September 2, 2005, Iron Bull 
submitted its third supplemental Section C questionnaire response. On 
September 8, 2005, Iron Bull submitted an unsolicited Section C and D 
response. On September 27, 2005, the Department issued TMC a third 
supplemental Section A questionnaire along with a second supplemental 
Section D questionnaire.
    On October 3, 2005, the Department issued Huarong a supplemental 
Section A, C and D supplemental questionnaire. On October 13, 2005, the 
Department sent Huarong additional questions. On October 17, 2005, the 
Department issued SMC an additional Section C and D questionnaire. On 
October 24, 2005, the Petitioner submitted deficiency comments on SMC 
and TMC's previous questionnaire responses. On October 25, 2005, TMC 
submitted its supplemental Section A and D responses and SMC submitted 
its supplemental Section A questionnaire response. On October 31, 2005, 
Huarong submitted its supplemental Section A, C and D questionnaire 
response.
    On November 7, 2005, the Petitioner submitted deficiency comments 
on Iron Bull's previous questionnaire responses and also provided 
factual rebuttal information. SMC also submitted its supplemental 
Section C and D questionnaire response on November 7, 2005, and 
provided additional data on November 8, 2005. On November 9, 2005, the 
Petitioner submitted deficiency comments on Huarong's previous 
questionnaire responses. Also on November 9, 2005, SMC resubmitted its 
November 7, 2005, questionnaire responses correcting certain 
bracketing. On November 10, 2005, the Department sent an importer/
customer in the instant review a questionnaire (``Customer A''). On 
November 14, 2005, Council Tool, an interested party, submitted 
deficiency comments on Iron Bull's previous questionnaire responses. On 
November 15, 2005, SMC submitted its supplemental Section A 
questionnaire response. On November 16, 2005, SMC submitted its ocean 
freight calculations. On November 21, 2005, the Department sent Huarong 
a supplemental Section A, C and D questionnaire. On November 23, 2005, 
SMC submitted its Section C and D questionnaire responses and the 
Department sent TMC a supplemental Section A, C and D questionnaire. On 
November 29, 2005, the Department received a response to the importer 
questionnaire from Importer A.
    On December 5, 2005, SMC submitted its supplemental Section A 
questionnaire response. On December 6, 2005, Importer A provided 
supplemental information to its previous response. On December 12, 
2005, Huarong submitted its supplemental Section A, C and D

[[Page 11582]]

questionnaire response and the Department sent SMC a supplemental 
questionnaire regarding its sales to third countries. On December 14, 
2005, SMC submitted its supplemental Section C and D questionnaire 
response. On December 15, 2005, TMC submitted its supplemental Section 
A, C and D questionnaire response. On December 19, 2005, SMC submitted 
its response pertaining to third country sales. On December 21, 2005, 
TMC submitted its Section C and D database. On December 22, 2005, SMC 
submitted additional Section C and D data. On December 23, 2005, the 
Petitioner submitted deficiency comments regarding Importer A's 
response. On December 29, 2005, the Department sent SMC a supplemental 
Section A questionnaire requesting constructed export price (``CEP'') 
information. On December 30, 2005, SMC submitted an updated factors of 
production (``FOP'') database for Laiwu.
    On January 5, 2006, the Department sent SMC a supplemental Section 
A questionnaire. On January 9, 2006, TMC submitted a supplemental 
Section C and Appendix VII questionnaire response. On January 17, 2006, 
the Petitioner submitted deficiency comments regarding TMC's 
questionnaire responses. On January 18, 2006, the Department sent SMC a 
letter requesting that it reconfigure its databases so they could be 
converted to SAS. On January 20, 2006, SMC submitted its supplemental 
Section A questionnaire response, its updated U.S. and FOP databases, 
and its CEP questionnaire response. On January 23, 2006, the Department 
issued Huarong and TMC supplemental Section A, C and D questionnaires. 
On January 25, 2006, the Department sent SMC a letter again requesting 
its CEP data and SMC also submitted additional Section A information. 
On January 26, 2006, the Department sent Huarong a letter requesting 
that it correct errors in its FOP database and SMC submitted hard 
copies of its updated databases submitted on January 20, 2006. On 
January 30, 2006, SMC submitted its second response to the Department's 
request for CEP data and the Petitioner submitted deficiency comments 
regarding SMC's previous questionnaire responses.
    On February 3, 2006, Huarong and TMC submitted partial responses to 
the Department's January 23, 2006, supplemental questionnaires. On 
February 7, 2006, the Department issued SMC a supplemental Section A, C 
and D questionnaire and the Petitioner submitted provided comments on 
other case issues for the Department to consider in its preliminary 
results. On February 9, 2006, the Department sent Iron Bull a letter 
regarding certain information the Department had obtained from CBP. On 
February 15, 2006, Huarong and TMC submitted the remainder of their 
responses to the Department's January 23, 2006, supplemental 
questionnaires and the Council Tool Company, a domestic interested 
party, submitted comments for the Department to consider in the 
preliminary results. On February 17, 2006, the Department sent a letter 
again requesting affiliated party sales information from SMC and also 
sent a questionnaire to Customer A, through its counsel, requesting its 
downstream sales data and information about its bankruptcy status. On 
February 21, 2006, Iron Bull submitted its response to the Department's 
February 9, 2006, letter. On February 22, 2006, Customer A requested an 
extension until March 6, 2006, to respond to the Department's February 
17, 2006, questionnaire, which the Department granted on February 24, 
2006. On February 23, 2006, SMC responded to the Department's February 
17, 2006, questionnaire. On February 24, 2006, SMC submitted its 
response to the Department's February 7, 2006, questionnaire.

Surrogate Values and Other Comments

    On February 7, 2006, the Petitioner submitted surrogate values. On 
February 14, 2006, the Department released its surrogate country 
selection memorandum, choosing India as the primary surrogate country. 
See Memorandum from Matthew Renkey, Case Analyst, through James C. 
Doyle, Office Director, Office 9, to The File, 14th Administrative 
Review of Heavy Forged Hand Tools from the People's Republic of China 
(``PRC''): Selection of a Surrogate Country (``Surrogate Country 
Memo''), dated February 14, 2006.

Scope of the Antidumping Duty Orders

    The products covered by these orders are HFHTs from the PRC, 
comprising the following classes or kinds of merchandise: (1) Hammers 
and sledges with heads over 1.5 kg (3.33 pounds); (2) bars over 18 
inches in length, track tools and wedges; (3) picks and mattocks; and 
(4) axes, adzes and similar hewing tools. HFHTs include heads for 
drilling hammers, sledges, axes, mauls, picks and mattocks, which may 
or may not be painted, which may or may not be finished, or which may 
or may not be imported with handles; assorted bar products and track 
tools including wrecking bars, digging bars and tampers; and steel wood 
splitting wedges. HFHTs are manufactured through a hot forge operation 
in which steel is sheared to required length, heated to forging 
temperature, and formed to final shape on forging equipment using dies 
specific to the desired product shape and size. Depending on the 
product, finishing operations may include shot blasting, grinding, 
polishing and painting, and the insertion of handles for handled 
products. HFHTs are currently provided for under the following 
Harmonized Tariff System of the United States (``HTSUS'') subheadings: 
8205.20.60, 8205.59.30, 8201.30.00 and 8201.40.60. Specifically 
excluded from these investigations are hammers and sledges with heads 
1.5 kg. (3.33 pounds) in weight and under, hoes and rakes, and bars 18 
inches in length and under. The HTSUS subheadings are provided for 
convenience and Customs purposes. The written description remains 
dispositive.
    The Department has issued eight conclusive scope rulings regarding 
the merchandise covered by these orders: (1) On August 16, 1993, the 
Department found the ``Max Multi-Purpose Axe,'' imported by the Forrest 
Tool Company, to be within the scope of the axes/adzes order; (2) on 
March 8, 2001, the Department found ``18-inch'' and ``24-inch'' pry 
bars, produced without dies, imported by Olympia Industrial, Inc. and 
SMC Pacific Tools, Inc., to be within the scope of the bars/wedges 
order; (3) on March 8, 2001, the Department found the ``Pulaski'' tool, 
produced without dies by TMC, to be within the scope of the axes/adzes 
order; (4) on March 8, 2001, the Department found the ``skinning axe,'' 
imported by Import Traders, Inc., to be within the scope of the axes/
adzes order; (5) on December 9, 2004, the Department found the 
``MUTT,'' imported by Olympia Industrial, Inc., under HTSUS 
8205.59.5510, to be within the scope of the axes/adzes order; (6) on 
May 23, 2005, the Department found 8-inch by 8-inch and 10-inch by 10-
inch cast tampers, imported by Olympia Industrial, Inc. to be outside 
the scope of the orders; (7) on September 22, 2005, following remand, 
the U.S. Court of International Trade affirmed the Department's 
determination that cast picks are outside the scope of the order; and 
(8) on October 14, 2005, the Department found the Mean Green Splitting 
Machine, imported by Avalanche Industries, under HTSUS 8201.40.60, to 
be within the scope of the bars/wedges order.

[[Page 11583]]

Preliminary Partial Rescission

    In accordance with 19 CFR 351.213(d)(3), we are preliminarily 
rescinding the review of Huarong with respect to the hammers/sledges 
and picks/mattocks orders, and Iron Bull with respect to the hammers/
sledges, axes/adzes, and picks/mattocks orders, since Huarong reported 
that they made no shipments of subject hammers/sledges and picks/
mattocks, and Iron Bull reported that they made no shipments of 
hammers/sledges, axes/adzes, and picks/mattocks.
    On February 9, 2006, based on entry records the Department obtained 
from CBP, the Department requested clarification from Iron Bull as to 
whether it exported subject merchandise under the axes/adzes and picks/
mattocks orders.
    On February 21, 2006, the Department received clarification from 
Iron Bull that the entry records obtained by the Department were for 
sales of non-subject merchandise during the POR. Therefore, for these 
preliminary results, the Department finds that Iron Bull did not make 
sales of subject merchandise during the POR for the axes/adzes and 
picks/mattocks orders. However, the Department intends to request 
additional information from Iron Bull to support its statements that 
these entry records are for non-subject merchandise.
    Our examination of shipment data from CBP for Huarong confirmed 
that there were no entries for Huarong of hammers/sledges or picks/
mattocks during the POR. Consequently, because there is no evidence on 
the record to indicate that Huarong and Iron Bull had sales of subject 
merchandise in these orders during the POR, we are preliminarily 
rescinding the reviews of these orders for Huarong and Iron Bull. In 
addition, we are also preliminarily rescinding the review of SXT in 
accordance with 19 CFR 351.213(d)(1) because it withdrew from the 
instant review within 90 days of when the Initiation was published. See 
SXT withdrawal, dated May 12, 2005.

Separate Rates Determination

    The Department has treated the PRC as a non-market economy 
(``NME'') country in all previous antidumping cases. See, i.e., 
Automotive Replacement Glass Windshields From the People's Republic of 
China: Final Results of Administrative Review, 70 FR 54355 (September 
14, 2005). It is the Department's policy to assign all exporters of the 
merchandise subject to review that are located in NME countries a 
single antidumping duty rate unless an exporter can demonstrate an 
absence of governmental control, both in law (de jure) and in fact (de 
facto), with respect to its export activities. To establish whether an 
exporter is sufficiently independent of governmental control to be 
entitled to a separate rate, the Department analyzes the exporter using 
the criteria established in the 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 in the 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''). Under the separate rates criteria established in these 
cases, the Department assigns separate rates to NME exporters only if 
they can demonstrate the absence of both de jure and de facto 
governmental control over their export activities.

Absence of De Jure Control

    Evidence supporting, though not requiring, a finding of the absence 
of de jure governmental control over export activities includes: (1) An 
absence of restrictive stipulations associated with an 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 at 
20589.
    In previous reviews of the HFHTs orders, the Department granted 
separate rates to SMC, Huarong and TMC. See, i.e., Heavy Forged Hand 
Tools, Finished or Unfinished, With or Without Handles, From the 
People's Republic of China: Final Results of Antidumping Duty 
Administrative Reviews, Final Partial Rescission of Antidumping Duty 
Administrative Reviews, and Determination Not To Revoke in Part, 69 FR 
55581 (September 15, 2004) (``Final Results of the 12th Review''); 
Heavy Forged Hand Tools, Finished or Unfinished, With or Without 
Handles, From the People's Republic of China: Notice of Amended Final 
Results of Antidumping Duty Administrative Reviews, 69 FR 69892 
(December 1, 2004) (``Amended Final Results of the 12th Review''). 
However, it is the Department's policy to evaluate separate rates 
questionnaire responses each time a Respondent makes a separate rates 
claim, regardless of whether the Respondent received a separate rate in 
the past. See, e.g., Manganese Metal From the People's Republic of 
China, Final Results and Partial Rescission of Antidumping Duty 
Administrative Review, 63 FR 12441 (March 13, 1998). In the instant 
reviews, SMC, Huarong, TMC and Iron Bull each submitted complete 
responses to the separate rates section of the Department's 
questionnaire. The evidence submitted in the instant review by these 
Respondents includes government laws and regulations on corporate 
ownership, business licences and narrative information regarding the 
companies' operations and selection of management. The evidence 
provided by SMC, Huarong, TMC, and Iron Bull supports a finding of a de 
jure absence of governmental control over their export activities 
because: (1) There are no controls on exports of subject merchandise, 
such as quotas applied to, or licenses required for, exports of the 
subject merchandise to the United States; and (2) the subject 
merchandise does not appear on any government list regarding export 
provisions or export licensing.

Absence of De Facto Control

    The absence of de facto governmental control over exports is based 
on whether the Respondent: (1) Sets its own export prices independent 
of the government and other exporters; (2) retains the proceeds from 
its export sales and makes independent decisions regarding the 
disposition of profits or financing of losses; (3) has the authority to 
negotiate and sign contracts and other agreements; and (4) has autonomy 
from the government regarding the selection of management. See Silicon 
Carbide, 59 FR at 22587; Sparklers, 56 FR at 20589; see also Notice of 
Final Determination of Sales at Less Than Fair Value: Furfuryl Alcohol 
from the People's Republic of China, 60 FR 22544, 22545 (May 8, 1995).
    In their questionnaire responses, SMC, Huarong, TMC and Iron Bull 
submitted evidence indicating an absence of de facto governmental 
control over their export activities. Specifically, this evidence 
indicates that: (1) Each company sets its own export prices independent 
of the government and without the approval of a government authority; 
(2) each company retains the proceeds from its sales and makes 
independent decisions regarding the disposition of profits or financing 
of losses; (3) each company has a general manager, branch manager or 
division manager with the authority to negotiate and bind the company 
in an agreement; (4) the general manager is selected by the board of 
directors or company employees, and the general manager appoints the 
deputy managers and the manager of each department; and (5) there is no 
restriction on any of the companies use of export revenues.

[[Page 11584]]

Therefore, the Department has preliminarily found that SMC, Huarong, 
TMC and Iron Bull have established prima facie that they qualify for 
separate rates under the criteria established by Silicon Carbide and 
Sparklers.

Affiliation

    Based upon information on the record, the Department has 
preliminarily determined that SMC is affiliated with one of its United 
States customers, Customer A. Specifically, the Department finds that 
SMC and Customer A are affiliated through their joint ownership of 
another PRC company involved in the production and export of subject 
merchandise. See Memorandum from Nicole Bankhead, Case Analyst, through 
Alex Villanueva, Program Manager, Office 9, to James C. Doyle, 
Director, Office 9, 14th Administrative Review of the Antidumping Duty 
Order on Heavy Forged Hand Tools, Finished or Unfinished, With or 
Without Handles, from the People's Republic of China: Affiliation, 
dated February 28, 2006 (``SMC Affiliation Memo'') for further details 
regarding this issue. Based on this affiliation, the Department 
requested that SMC report the downstream sales from its affiliate, 
Customer A, to the first unaffiliated customer. See SMC section below 
for further details regarding the reporting of CEP sales.

Use of Facts Available

    Section 776(a)(2) of the Act, provides that, if an interested 
party: (A) Withholds information that has been requested by the 
Department; (B) fails to provide such information in a timely manner or 
in the form or manner requested, subject to sections 782(c)(1) and (e) 
of the Act; (C) significantly impedes a proceeding under the 
antidumping statute; or (D) provides such information but the 
information cannot be verified, the Department shall, subject to 
subsection 782(d) of the Act, use facts otherwise available in reaching 
the applicable determination.
    Furthermore, section 776(b) of the Act states that ``if the 
administrating authority finds that an interested party has failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information from the administering authority or the 
Commission, the administering authority or the Commission (as the case 
may be), in reaching the applicable determination under this title, may 
use an inference that is adverse to the interests of that party in 
selecting from among the facts otherwise available.'' See also 
Statement of Administrative Action (``SAA'') accompanying the Uruguay 
Round Agreements Act (``URAA''), H.R. Rep. No. 103-316 at 870 (1994).
    In the instant reviews, Jinma, SMC, Huarong, TMC and Iron Bull 
significantly impeded both our ability to complete the review of the 
bars/wedges order, the hammers/sledges order, the picks/mattocks and 
the axes/adzes order which we conducted pursuant to section 751 of the 
Act, and to impose the correct antidumping duties, as mandated by 
section 731 of the Act. As discussed below, although SMC, Huarong, TMC 
and Iron Bull are entitled to separate rates, we preliminarily find 
that their failure to cooperate with the Department to the best of 
their ability in responding to the Department's request for information 
warrant the use of AFA in determining dumping margins for their sales 
of merchandise subject to certain HFHTs orders.

SMC

1. SMC's Unreported Sales of Axes/Adzes and Picks/Mattocks

    Between May 13, 2005, and July 21, 2005, SMC reported that it only 
had sales of subject merchandise in the bars/wedges and hammers/sledges 
orders and thus only reported the sales and FOP data for these two 
orders. However, based on information in the Entry Summary CBP Form 
7501s (``7501s'') provided by SMC in its July 21, 2005, supplemental 
Section A questionnaire response, the Department asked SMC whether 
certain merchandise identified on its 7501s was subject merchandise 
classified in the picks/mattocks and/or axes/adzes orders. SMC 
responded that it was subject merchandise classified under the axes/
adzes and picks/mattocks orders, which was purchased from another 
supplier and sold to the United States in very small quantities during 
the POR. SMC further explained that it had ``determined to give up the 
opportunity for obtaining a low AD margin for these products.'' SMC 
provided the Q&V of its sales in the axes/adzes and picks/mattocks 
orders but not the sales and FOP data.
A. Use of Facts Available
    Section 776(a)(2)(A) of the Act, provides that, if an interested 
party withholds information that has been requested by the Department, 
the Department may use facts otherwise available in making its 
determination. Similarly, section 776(a)(2)(C) of the Act states that 
the Department may, if an interested party ``significantly impedes a 
proceeding'' under the antidumping statute, use facts otherwise 
available in reaching the applicable determination. In this case, SMC 
withheld its sales and FOP data with respect to its U.S. sales of axes/
adzes and picks/mattocks. SMC's failure to provide such data has 
significantly impeded our ability to complete the administrative 
review, pursuant to section 751 of the Act, and calculate the correct 
antidumping duties, as required by section 731 of the Act. Therefore, 
pursuant to sections 776(a)(2)(A) and (C) of the Act, we find it 
appropriate to base SMC's dumping margin for axes/adzes and picks/
mattocks on facts available.
B. Application of Adverse Inferences for Facts Available
    In this case, an adverse inference is warranted because SMC 
originally stated that it did not have sales of either axes/adzes or 
picks/mattocks to the United States during the POR. Only after 
reviewing SMC's 7501s did the Department find that SMC did have sales 
of what appeared to be subject merchandise axes/adzes and picks/
mattocks. SMC then refused to provide the relevant U.S. sales and FOP 
data. By not providing the Department with such data, SMC necessarily 
failed to cooperate to the best of its ability to respond to the 
Department's request for information. Moreover, section 776(b) of the 
Act indicates that an adverse inference may include reliance on 
information derived from the petition, the final determination in the 
less-than-fair-value (``LTFV'') investigation, any previous 
administrative review, or any other information placed on the record. 
As AFA, we are assigning to SMC's sales of axes/adzes the rate of 
193.95 percent, a calculated rate from the instant review, and to its 
sales of picks/mattocks the PRC-wide rate of 98.77 percent, which was 
used in the most recently completed administrative review of this 
antidumping order. See Heavy Forged Hand Tools, Finished or Unfinished, 
With or Without Handles, From the People's Republic of China: Final 
Results of Antidumping Duty Administrative Reviews, Final Rescission 
and Partial Rescission of Antidumping Duty Administrative Reviews, 70 
FR 54897 (September 19, 2005) (``Final Results of the 13th Review'').

2. SMC's Inability To Provide CEP Data for the Hammers/Sledges and 
Bars/Wedges Orders

    For the reasons explained below, and pursuant to sections 
776(a)(2)(A) and 776(a)(2)(B) of the Act, the Department has 
preliminarily determined that the use of partial facts available is 
warranted for SMC's affiliated party

[[Page 11585]]

sales to Customer A. On December 29, 2005, the Department issued SMC a 
questionnaire stating that the Department may find SMC affiliated with 
one of its United States customers, Customer A, and therefore requested 
that SMC report Customer A's sales to the first unaffiliated United 
States customer from Customer A and respond to the CEP section of the 
Department's original Section C questionnaire. See the Department's 
Supplemental questionnaire dated December 29, 2005 (``Dec. 29th 
Questionnaire''). On January 12, 2006, SMC requested an extension from 
January 17, 2006, until January 24, 2006, to respond to the Dec. 29th 
Questionnaire. The Department granted SMC a three-day extension until 
January 20, 2006, to provide the requested CEP data.
    On January 20, 2006, SMC submitted its response to the Dec. 29th 
Questionnaire. SMC stated that it was unable to obtain information from 
Customer A because Customer A formally filed for Chapter 11 Bankruptcy 
on January 13, 2006, and was unable to respond to SMC's request. SMC 
noted that it tried to construct a CEP database based on available 
information, but was unsuccessful. SMC also provided the Chapter 11 
Bankruptcy filing for Customer A.
    On January 25, 2006, the Department sent SMC a letter again 
requesting the CEP data from Customer A in order for the Department to 
calculate accurate margins. The Department further requested that SMC 
provide documentation supporting its assertions regarding its attempts 
to contact Customer A and also proffer reasonable alternatives for 
establishing a CEP database if it was not provided.
    SMC submitted its response to the Department's January 25, 2006, 
letter on January 30, 2006. According to SMC, it was unable to collect 
the requested data because, given the bankruptcy proceeding, Customer A 
could not respond to SMC's requests for data. SMC stated that it had 
been notified by Customer A that it had been advised by the U.S. 
trustee for the bankruptcy case that Customer A plans to completely 
liquidate its assets and put in permanent storage all materials by 
March 24, 2006. Accordingly, Customer A ``cannot report the requested 
sales `to the first unaffiliated customer.' '' See SMC's January 30, 
2006, second CEP questionnaire response. SMC further noted that it is 
unable to proffer a reasonable alternative for establishing a CEP 
database. Therefore, we preliminarily determined that the use of 
partial neutral facts available is appropriate for SMC's CEP sales 
through Customer A in accordance with sections 776(a)(2)(A) and 
776(a)(2)(B) of the Act.
A. Use of Facts Available
    The Department preliminarily finds that SMC, along with its 
affiliated U.S. customer, has acted to the best of its ability, and 
therefore we have not used an adverse inference, as provided under 
section 776(b) of the Act, to SMC's CEP sales. Specifically, though SMC 
was unable to provide the requested downstream sale information from 
Customer A, SMC documented its multiple attempts to gather this 
information from Customer A via fax, email, telephone calls and 
certified letters. See SMC's January 30, 2006, second CEP questionnaire 
response. In addition, SMC stated that it attempted to construct a CEP 
database based on available information, but was unable to do so. 
Furthermore, SMC has responded to all of the Department's 
questionnaires in the instant review and has thus participated to the 
best of its ability. Therefore, as neutral facts available for the 
preliminary results, the Department is applying the weighted average 
margin calculated for SMC's sales to its unaffiliated customers for its 
sales to its affiliated customer, Customer A. See Analysis for the 
Preliminary Results of Heavy Forged Hand Tools from the People's 
Republic of China: Shandong Machinery Import&Export Company, dated 
February 28, 2006.
    However, as stated above in the Questionnaires and Responses 
section, the Department has sought additional information from both SMC 
and Customer A regarding CEP sales and Customer A's bankruptcy. SMC 
submitted its response on February 23, 2006, but SMC was still unable 
to provide the requested CEP sales and provided no additional 
information regarding Customer A's bankruptcy status. Furthermore, 
Customer A requested an extension until March 6, 2006, which the 
Department granted, to respond to the Department's February 17, 2006, 
questionnaire. Therefore, the Department intends to revisit the 
application of facts available in the final results.

Huarong

    During the instant POR, Huarong had an agreement with a PRC company 
under which the PRC company would act as an ``agent'' for the vast 
majority of Huarong's U.S. sales of bars/wedges. When making ``agent'' 
sales, Huarong conducted all of the negotiations with the U.S. customer 
regarding price and quantity, and arranged for the foreign inland 
freight, international freight and marine insurance associated with 
these sales. However, Huarong used the ``agent's'' invoice for export/
import purposes, with a commission paid to the ``agent.'' Huarong's 
entries were thus identified to CBP as being from Huarong's ``agent,'' 
entered at the ``agent's'' lower cash deposit rate, and would possibly 
have been liquidated at an assessment rate far less than would be 
appropriate for a sale made by Huarong. For a complete discussion of 
the Department's decision to apply AFA to Huarong for the bars/wedges 
order, see Memorandum from Matt Renkey, case analyst, and Alex 
Villanueva, program manager, through James C. Doyle, Director, AD/CVD 
Operations, Office 9 to the File, 14th Administrative Review of Heavy 
Forged Hand Tools from the People's Republic of China: Application of 
Adverse Facts Available to Shandong Huarong Machinery Corporation Ltd., 
dated February 28, 2006 (``Huarong AFA Memo'').

A. Use of Facts Available

    Section 776(a)(2)(C) of the Act states that the Department may, if 
an interested party ``significantly impedes a proceeding'' under the 
antidumping statute, use facts otherwise available in reaching the 
applicable determination. In this case, Huarong's invoice scheme with 
its ``agent'' has impeded our ability to conduct the administrative 
review, pursuant to section 751 of the Act, and calculate the correct 
antidumping duties, as required by section 731 of the Act. Therefore, 
pursuant to section 776(a)(2)(C) of the Act, we find it appropriate to 
base Huarong's dumping margin for bars/wedges on facts available.

B. Application of Adverse Inferences for Facts Available

    In this case, an adverse inference is warranted because: (1) 
Huarong misrepresented the nature of its arrangement with the ``agent'' 
by portraying that company as a bona fide agent for the vast majority 
of Huarong's sales of bars/wedges to the United States; and (2) Huarong 
participated in a scheme that would have resulted in circumvention of 
the antidumping duty order by evading payment of the applicable cash 
deposit rates and would have evaded payment of its assessment rates. By 
engaging in a scheme designed to avoid the Department's calculation, 
Huarong necessarily failed to cooperate to the best of its ability to 
respond to the Department's request for information. Moreover, section 
776(b) of the Act indicates that an adverse inference may include 
reliance on information derived from the petition, the final 
determination in the LTFV

[[Page 11586]]

investigation, any previous administrative review, or any other 
information placed on the record. As AFA, we are assigning to Huarong's 
sales of bars/wedges the rate of 139.31 percent, the highest rate 
applied to bars/wedges, which is also the PRC-wide rate, published in 
the most recently completed administrative review of this antidumping 
order. See Final Results of the 13th Review; see also Huarong AFA Memo.

TMC

    During the instant period under review, TMC had agreements with 
several other PRC companies under which TMC would act as an ``agent'' 
for those companies' U.S. sales of bars/wedges, hammers/sledges and 
axes/adzes. Even though it was purportedly the ``agent'' for these 
sales, TMC neither negotiated the price and quantity with the U.S. 
customer, nor arranged the foreign inland freight, international 
freight and marine insurance associated with these sales, 
responsibilities an agent would perform. Rather, TMC performed nominal 
administrative tasks and permitted these companies simply to use TMC's 
invoices when exporting their subject bars/wedges, hammers/sledges and 
axes/adzes to the United States during the POR. Entries from these 
companies were thus identified to CBP as being from TMC, entered at 
TMC's lower cash deposit rate, and would have possibly been liquidated 
at an assessment rate far less than would be appropriate. For a 
complete discussion of the Department's decision to apply AFA to TMC 
for the bars/wedges, hammers/sledges, and axes/adzes orders, see 
Memorandum from Matt Renkey, case analyst, and Alex Villanueva, program 
manager, through James C. Doyle, Director, AD/CVD Operations, Office 9 
to the File, 14th Administrative Review of Heavy Forged Hand Tools from 
the People's Republic of China: Application of Adverse Facts Available 
to Tianjin Machinery Import & Export Corporation., dated February 28, 
2006 (``TMC AFA Memo'').

A. Use of Facts Available

    Section 776(a)(2)(C) of the Act states that the Department may, if 
an interested party ``significantly impedes a proceeding'' under the 
antidumping statute, use facts otherwise available in reaching the 
applicable determination. In this case, TMC's participation in an 
invoice scheme with other companies has impeded our ability to conduct 
the administrative review, pursuant to section 751 of the Act, and to 
calculate the correct antidumping duties, as required by section 731 of 
the Act. Therefore, pursuant to section 776(a)(2)(C) of the Act, we 
find it appropriate to base TMC's dumping margin for bars/wedges, 
hammers/sledges and axes/adzes on facts available.

B. Application of Adverse Inferences for Facts Available

    Pursuant to section 776(b) of the Act, an adverse inference is 
warranted because: (1) TMC misrepresented the nature of its arrangement 
with these other companies by portraying itself as a bona fide sales 
agent for the majority of the other companies' sales of bars/wedges, 
hammers/sledges and axes/adzes to the United States; and (2) TMC 
participated in a scheme that would have resulted in circumvention of 
three antidumping duty orders. By engaging in a scheme designed to 
avoid the Department's calculation, TMC necessarily failed to cooperate 
to the best of its ability to respond to the Department's request for 
information. As a result, TMC participated in a scheme allowing other 
companies to evade payment of the accurate and applicable cash deposit 
rates and to evade the proper and applicable assessment rates. In 
accordance with Section 776(b) of the Act, as AFA, we are assigning an 
AFA rate of 139.31 percent to TMC's sales of merchandise covered by the 
antidumping duty order on bars/wedges, an AFA rate of 45.42 percent to 
TMC's sales of merchandise covered by the antidumping duty order on 
hammers/sledges and an AFA rate of 193.95 percent to TMC's sales of 
merchandise covered by the antidumping duty order on axes/adzes. See 
Final Results of the 13th Review; see also TMC AFA Memo.

Iron Bull

    Between May and September 2005, Iron Bull was given four 
opportunities (including the original Section C questionnaire) to 
provide and revise its U.S. sales database. After reviewing Iron Bull's 
four Section C responses and its submitted U.S. sales database, we find 
that each one of Iron Bull's U.S. sales databases was unique and 
uncorrelated with its previously submitted U.S. sales database. We also 
find that all four of Iron Bull's responses were not clear and lacked 
narrative explanation, and all four of its U.S. sales databases 
contained numerous significant errors. Therefore, we have concluded 
that Iron Bull's responses and databases are unreliable and cannot be 
used to calculate an antidumping duty margin for its sales of bars/
wedges for these preliminary results.
    In addition, Iron Bull's own merchandise was claimed under other 
manufacturers' names on the CBP form 7501. Therefore, Iron Bull's U.S. 
sales database is incomplete, and Iron Bull and its affiliated U.S. 
importer appear to have used other manufacturers' IDs to avoid paying a 
higher dumping duty rate.
    Moreover, we find that Iron Bull's agent sales scheme is 
mischaracterized and misrepresented and its agreement with its agent 
allowed its affiliated U.S. importer to evade paying the correct cash 
deposits, and potentially evade paying the correct amount of 
antidumping duties, thereby undermining the integrity of the 
antidumping duty administrative review process and impeding our ability 
to conduct the administrative review. For a complete discussion of the 
Department's decision to apply AFA to Iron Bull for the bars/wedges and 
other orders, see Memorandum from Cindy Robinson, case analyst, and 
Alex Villanueva, program manager, through James C. Doyle, Director, AD/
CVD Operations, Office 9 to the File, 14th Administrative Review of 
Heavy Forged Hand Tools from the People's Republic of China: 
Application of Adverse Facts Available to Iron Bull Industrial Co., 
Ltd., dated February 28, 2006 (``Iron Bull AFA Memo'').

A. Use of Facts Available

    Section 776(a)(2)(C) of the Act states that the Department may, if 
an interested party ``significantly impedes a proceeding'' under the 
antidumping statute, use facts otherwise available in reaching the 
applicable determination. In this case, Iron Bull also repeatedly 
failed to provide the requested information in the form or manner 
requested by the Department in accordance with section 776(a)(2)(B)of 
the Act. Pursuant to section 782(d) of the Act, the Department provided 
three additional opportunities for Iron Bull to correct its U.S. sales 
database since its original Section C submission, but Iron Bull 
continued to submit unclear, inconsistent, unreliable, and unusable 
information. In accordance with section 782(e) of the Act, the 
Department has determined to disregard all of Iron Bull's original and 
subsequent responses.
    In addition, Iron Bull and its affiliated U.S. importer used other 
manufacturers' IDs and claimed the antidumping duty rates of those 
manufacturers for subject merchandise produced and sold by Iron Bull to 
avoid the cash deposit rates in effect during the POR and to circumvent 
the antidumping duty order. We find that Iron Bull and its U.S. 
affiliated

[[Page 11587]]

importer impeded our ability to complete this administrative review 
under section 751 of the Act and to impose the correct antidumping 
duties, as mandated by section 731 of the Act.
    Finally, Iron Bull's invoice scheme with its ``agent'' has impeded 
our ability to conduct the administrative review, pursuant to section 
751 of the Act, and calculate the correct antidumping duties, as 
required by section 731 of the Act. Therefore, pursuant to section 
776(a)(2)(C) of the Act, we find it appropriate to base Iron Bull's 
dumping margin for bars/wedges on facts available.

B. Application of Adverse Inferences for Facts Available

    In this case, an adverse inference is warranted because Iron Bull 
repeatedly failed to provide the requested information in the form or 
manner requested by the Department in accordance with section 
776(a)(2)(B)of the Act, despite repeated and clear instructions from 
the Department. By not providing the Department a timely, clear, 
reliable, and usable U.S. sales database for bars and wedges, Iron Bull 
necessarily failed to cooperate to the best of its ability to respond 
to the Department's request for information.
    Furthermore, as noted, Iron Bull and its affiliated U.S. importer 
used another manufacturer's ID and applied that manufacturer's lower 
cash deposit rate, and possibly lower assessment rates, to Iron Bull's 
self-produced bars and wedges. Iron Bull misrepresented the nature of 
its arrangement with the ``agent'' by portraying that company as a bona 
fide agent for certain Iron Bull's sales of bars/wedges to the United 
States. Iron Bull's participation in the ``agent'' sales scheme 
resulted in circumvention of the antidumping duty order. By engaging in 
a scheme designed to avoid the Department's calculation, Iron Bull 
necessarily failed to cooperate to the best of its ability to respond 
to the Department's request for information.
    Moreover, section 776(b) of the Act indicates that an adverse 
inference may include reliance on information derived from the 
petition, the final determination in the LTFV investigation, any 
previous administrative review, or any other information placed on the 
record. As AFA, we are assigning to Iron Bull's sales of bars/wedges 
the rate of 139.31 percent, the highest rate applied to bars/wedges, 
which is also the PRC-wide rate.

PRC-Wide Entity and Non-Responding Companies \2\
---------------------------------------------------------------------------

    \2\ LMC, LIMAC, Jinma, Changzhou Light Industrial Tools, Laoling 
Pangu Tools, Leiling Zhengtai Tools Co., Ltd., Jiangsu Sainty 
International Group Co., Ltd., Shanghai J.E. Tools, Shanxi Tianli, 
Jafsam, Suqian Foreign Trade Corp., Suqian Telee Tools, and Laiwu 
Zhongtai Forging, collectively ``non-responding companies.''
---------------------------------------------------------------------------

    As mentioned in the ``Case History'' section above, the Department 
initiated these administrative reviews of the axes/adzes and bars/
wedges orders for twenty-one PRC companies, and the hammers/sledges and 
picks/mattocks orders for twenty PRC companies. On April 6, 2005, the 
Department issued Section A, C and D of the antidumping duty 
questionnaires to all companies for which the Department initiated 
administrative reviews. See Initiation. Out of these companies, only 
SMC, TMC, Iron Bull, and Huarong, provided information demonstrating 
that they are entitled to a separate rate; therefore, the remaining 
companies are not entitled to a separate rate. Thus, we consider the 
thirteen companies that did not respond to the Department's 
questionnaires to be part of the PRC-wide entity. See 14th AR Timeline. 
In accordance with sections 776(a)(2)(A) and (B), as well as section 
776(b) of the Act, we are assigning total AFA to the PRC-wide entity.
    Under section 782(c) of the Act, a respondent has a responsibility 
not only to notify the Department if it is unable to provide the 
requested information but also to provide a full explanation as to why 
it cannot provide the information and suggest alternative forms in 
which it is able to submit the information. Because these companies did 
not establish their entitlement to a separate rate and failed to 
provide requested information, we find that, in accordance with 
sections 776(a)(2)(A) and (B) of the Act, it is appropriate to base the 
PRC-wide margin in these reviews on facts available. See, e.g., Final 
Results of Antidumping Duty Administrative Review for Two 
Manufacturers/ Exporters: Certain Preserved Mushrooms from the People's 
Republic of China, 65 FR 50183, 50184 (August 17, 2000).
    Section 776(b) of the Act permits the Department to use as AFA 
information derived in the LTFV investigation or any prior review. In 
selecting an AFA rate, where warranted, the Department's practice has 
been to assign respondents who fail to cooperate with the Department's 
requests for information the highest margin determined for any party in 
the LTFV investigation or in any administrative review. See, e.g., 
Stainless Steel Plate in Coils from Taiwan; Preliminary Results and 
Rescission in Part of Antidumping Duty Administrative Review, 67 FR 
5789 (February 7, 2002). As AFA, we are assigning to the PRC-wide 
entity's sales of axes/adzes, bars/wedges, hammers/sledges, and picks/
mattocks the rates of 193.95, 139.31, 45.42, and 98.77 percent, 
respectively.

Corroboration

    Section 776(c) of the Act requires that the Department corroborate, 
to the extent practicable, secondary information used as facts 
available. Secondary information is defined as ``information derived 
from the petition that gave rise to the investigation or review, the 
final determination concerning the subject merchandise, or any previous 
review under section 751 concerning the subject merchandise.'' See SAA 
at 870 and 19 CFR 351.308(d).
    The SAA further provides that the term ``corroborate'' means that 
the Department will satisfy itself that the secondary information to be 
used has probative value. See SAA at 870. Thus, to corroborate 
secondary information, the Department will, to the extent practicable, 
examine the reliability and relevance of the information used. However, 
unlike other types of information, such as input costs or selling 
expenses, there are no independent sources for calculated dumping 
margins. The only sources for calculated margins are administrative 
determinations. The rate selected as AFA for bars/wedges was 
calculated, i.e., derived from verified information provided by TMC 
during the 1998-1999 administrative review, and was corroborated and 
used as the PRC-wide and AFA rate in the previous administrative 
review. Id. The AFA rate we are applying for the order on hammers/
sledges was applied as ``best information available'' (the predecessor 
to AFA) during the LTFV investigation for the sole respondent China 
National Machinery Import & Export Corporation, and was again 
corroborated and used as the PRC-wide and AFA rate in the 13th review. 
Id. The AFA rate we are applying for the order on picks/mattocks was 
calculated in the fifth review, became the PRC-wide and AFA rate in the 
seventh review, and has been used since. See, e.g., Final Results of 
the 13th Review. No information has been presented in the current 
review that calls into question the reliability of the information used 
for these AFA rates. Thus, the Department finds that the information is 
reliable.
    With respect to the relevance aspect of corroboration, the 
Department will consider information reasonably at its disposal to 
determine whether a margin

[[Page 11588]]

continues to have relevance. Where circumstances indicate that the 
selected margin is not appropriate as AFA, the Department will 
disregard the margin and determine an appropriate margin. For example, 
in Fresh Cut Flowers from Mexico: Final Results of Antidumping 
Administrative Review, 61 FR 6812 (February 22, 1996), the Department 
disregarded the highest margin in that case as adverse best information 
available (the predecessor to facts available) because the margin was 
based on another company's uncharacteristic business expense resulting 
in an unusually high margin. Similarly, the Department does not apply a 
margin that has been discredited. See D&L Supply Co. v. United States, 
113 F.3d 1220, 1221 (Fed. Cir. 1997) (the Department will not use a 
margin that has been judicially invalidated). None of these unusual 
circumstances are present with respect to the rates being used here. 
Moreover, the rates selected for axes/adzes, bars/wedges, hammers/
sledges, and picks/mattocks are the rates currently applicable to the 
PRC-wide entity. The Department assumes that if an uncooperative 
respondent could have demonstrated a lower rate, it would have 
cooperated. See Rhone Poulenc, Inc. v. United States, 899 F2d 1185 
(Fed. Cir. 1990); cf. Ta Chen Stainless Steel Pipe, Inc. v. United 
States, 24 CIT 841 (2000) (respondents should not benefit from failure 
to cooperate).
    The information used in calculating these margins was based on 
sales and production data of respondents in the current review or a 
prior review, together with the most appropriate surrogate value 
information available to the Department, chosen from submissions by the 
parties in that review, as well as gathered by the Department itself, 
or on ``best information available'' from the LTFV investigation. 
Furthermore, the calculations were subject to comment from interested 
parties in the proceeding. See Final Results of the 13th Review. 
Moreover, as there is no information on the record of this review that 
demonstrates that these rates are not appropriate to use as AFA, we 
determine that these rates have relevance. As these rates are both 
reliable and relevant, we determine that they have probative value. 
Accordingly, the selected rates of 193.95 percent for axes/adzes, 
139.31 percent for bars/wedges, 45.42 percent for hammers/sledges, and 
98.77 percent for picks/mattocks, the highest rates from any segment of 
this administrative proceeding (i.e., the calculated and current PRC-
wide rate for each order) have been corroborated, to the extent 
practicable and as necessary, in accordance with section 776(c) of the 
Act.

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base normal value (``NV''), 
in most circumstances, on the NME producer's factors of production, 
valued in a surrogate market-economy country or countries considered to 
be appropriate by the Department. In accordance with section 773(c)(4) 
of the Act, in valuing the factors of production, the Department shall 
utilize, to the extent possible, the prices or costs of factors of 
production in one or more market-economy countries that are at a level 
of economic development comparable to that of the NME country and are 
significant producers of comparable merchandise. The sources of the 
surrogate values we have used in this investigation are discussed under 
the ``Normal Value'' Section below.
    As discussed in the ``Separate Rates'' section, the Department 
considers the PRC to be an NME country. The Department has treated the 
PRC as an NME country in all previous antidumping proceedings. 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. We have no evidence suggesting 
that this determination should be changed. Therefore, we treated the 
PRC as an NME country for purposes of these reviews and calculated NV 
by valuing the FOP in a surrogate country.
    The Department determined that India, Indonesia, Sri Lanka, 
Philippines, and Egypt are countries comparable to the PRC in terms of 
economic development. See Memorandum from Ron Lorentzen, Office of 
Policy, Acting Director, to Alex Villanueva, Program Manager: 
Antidumping Duty Administrative Review of Heavy Forged Hand Tools 
(``Hand Tools'') from the People's Republic of China (PRC): Request for 
a List of Surrogate Countries, dated May 5, 2005. We select an 
appropriate surrogate country based on the availability and reliability 
of data from the countries. See Department Policy Bulletin No. 04.1: 
Non-Market Economy Surrogate Country Selection Process (``Policy 
Bulletin''), dated March 1, 2004. In this case, we have found that 
India is a significant exporter of comparable merchandise, merchandise 
classified under HTSUS subheadings 8205.20, 8205.59, 8201.30, and 
8201.40, the subheadings applicable to subject hand tools, and is at a 
similar level of economic development pursuant to 733(c)(4) of the Act. 
See Surrogate Country Memo.

U.S. Price

    The Department is calculating dumping margins for the picks/
mattocks order for TMC, the axes/adzes order for Huarong, and the bars/
wedges and hammers/sledges orders for SMC. There is no record evidence 
that these companies engaged in the ``agent'' sale scheme described 
above with respect to these sales. In accordance with section 772(a) of 
the Act, the Department calculated export prices (``EPs'') for sales to 
the United States for the participating Respondents receiving 
calculated rates because the first sale to an unaffiliated party was 
made before the date of importation and the use of constructed EP 
(``CEP'') was not otherwise warranted. We calculated EP based on the 
price to unaffiliated purchasers in the United States. In accordance 
with section 772(c) of the Act, as appropriate, we deducted from the 
starting price to unaffiliated purchasers foreign inland freight, 
brokerage and handling, international freight, marine insurance, 
warehousing, and containerization. For the Respondents receiving 
calculated rates, each of these services was either provided by a NME 
vendor or paid for using a NME curren