Certain Cased Pencils From the People's Republic of China: Preliminary Results of Antidumping Duty Administrative Review, 68047-68053 [E9-30410]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 74, Number 244 (Tuesday, December 22, 2009)]
[Notices]
[Pages 68047-68053]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-30410]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]


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

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

DATES: Effective Date: December 22, 2009.
SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that the respondents in this review, for the 
period December 1, 2007, through November 30, 2008, have made sales of 
subject merchandise at less than normal value. If these preliminary 
results are adopted in the final results of this review, we will 
instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on all appropriate entries.
    The Department invites interested parties to comment on these 
preliminary results. The Department intends to issue the final results 
no later than 120 days from the publication date of this notice, 
pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended 
(``the Act'').

FOR FURTHER INFORMATION CONTACT: Alexander Montoro or Joseph Shuler, 
AD/CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-
0238 and (202) 482-1293, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On December 28, 1994, the Department published in the Federal 
Register an antidumping duty order on certain cased pencils 
(``pencils'') from the People's Republic of China (``PRC''). See 
Antidumping Duty Order: Certain Cased Pencils from the People's 
Republic of China, 59 FR 66909 (December 28, 1994). On December 1, 
2008, the Department published a notice of opportunity to request an 
administrative review of this order covering the period December 1, 
2007, through November 30, 2008. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity To Request 
Administrative Review, 73 FR 72764 (December 1, 2008). On December 9, 
2008, in accordance with 19 CFR 351.213(b), Shandong Rongxin Import and 
Export Co., Ltd. (``Rongxin''), a foreign exporter/producer, requested 
that the Department review its sales of subject merchandise. On 
December 31, 2008, the following exporters/producers requested reviews 
of themselves, in accordance with 19 CFR 351.213(b): China First Pencil 
Co., Ltd. (``China First''), Shanghai Three Star Stationery Industry 
Co., Ltd. (``Three Star''), and Orient International Holding Shanghai 
Foreign Trade Corporation (``SFTC''). On December 31, 2008, the 
petitioners \1\ requested a review of the following companies: China 
First (including subsidiaries Shanghai First Writing Instrument Co., 
Ltd. (``Fusite''); Shanghai Great Wall Pencil Co., Ltd. (``Great 
Wall''); and China First Pencil Fang Zheng Co., Ltd. (``Fang Zheng'')); 
Three Star; Guangdong Provincial Stationery & Sporting Goods Import & 
Export Corporation (``Guangdong Stationery''); Rongxin; Tianjin Custom 
Wood Processing Co., Ltd. (``Tianjin Wood''); Beijing Dixon Stationery 
Company Ltd. (``Dixon''); and Anhui Import & Export Co., Ltd. (``Anhui 
I&E'').
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    \1\ The petitioners include Sanford L.P., Musgrave Pencil 
Company, RoseMoon Inc., and General Pencil Company.
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    On February 2, 2009, the Department published a notice of 
initiation for this administrative review covering the companies listed 
in the requests received from the interested parties named above. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Requests for Revocation in Part, 74 FR 5821 (February 2, 
2009). On July 14, 2009, we extended the time limit for the preliminary 
results in this review until December 15, 2009. See Certain Cased 
Pencils From the People's Republic of China: Extension of Time Limit 
for Preliminary Results of the Antidumping Duty Administrative Review, 
74 FR 36164 (July 22, 2009).

Scope of the Order

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

Respondent Selection

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known

[[Page 68048]]

producer or exporter of the subject merchandise. However, section 
777A(c)(2) of the Act gives the Department discretion to limit its 
examination to a reasonable number of exporters or producers if it is 
not practicable to examine all exporters or producers involved in the 
review.
    On February 5, 2009, the Department released CBP data showing 
entries of the subject merchandise during the period of review 
(``POR'') under administrative protective order (``APO'') to all 
interested parties having an APO, and invited comments regarding the 
CBP data and respondent selection. The Department did not receive 
comments from any interested parties. On February 25, 2009, the 
Department issued its respondent selection memorandum after assessing 
its resources and determining that it could reasonably examine two 
exporters. See Memorandum to John M. Andersen, Acting Deputy Assistant 
Secretary for Antidumping and Countervailing Duty Operations, from 
Yasmin Nair, International Trade Compliance Analyst, AD/CVD Operations, 
Office 1, ``Selection of Respondents for the Antidumping Duty Review of 
Certain Cased Pencils from the People's Republic of China,'' February 
25, 2009. Pursuant to section 777A(c)(2)(B) of the Act, the Department 
selected China First and Three Star as mandatory respondents.
    The Department issued antidumping duty questionnaires to China 
First and Three Star on February 26, 2009. China First submitted the 
Section A Questionnaire Response on April 9, 2009, the Section C 
Questionnaire Response on April 27, 2009, and the Section D 
Questionnaire Response on May 12, 2009. Three Star submitted the 
Section A Questionnaire Response on April 9, 2009, the Section C 
Questionnaire Response on April 27, 2009, and the Section D 
Questionnaire Response on May 13, 2009. The Department issued 
supplemental questionnaires to China First and Three Star between July 
2009 and November 2009. Both companies timely filed their responses to 
those supplemental questionnaires.

Non-Market Economy Country Status

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

Surrogate Country and Surrogate Values

    When the Department investigates imports from an NME country and 
available information does not permit the Department to determine NV 
pursuant to section 773(a) of the Act, then, pursuant to section 
773(c)(4) of the Act, the Department bases NV on an NME producer's 
factors of production (``FOPs''), to the extent possible, valued in one 
or more market-economy countries that (1) are at a level of economic 
development comparable to that of the NME country, and (2) are 
significant producers of comparable merchandise. The Department 
determined that India, Indonesia, the Philippines, Colombia, Thailand, 
and Peru are countries comparable to the PRC in terms of economic 
development. See Memorandum from Kelly Parkhill, Acting Director, 
Office of Policy, to Susan H. Kuhbach, Director, Office 1, March 27, 
2009. On July 29, 2009, the Department invited the interested parties 
to comment on surrogate country selection and surrogate value data. See 
the Department's Letter to All Interested Parties, ``Antidumping Duty 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China: Request for Comments on Surrogate Country and 
Surrogate Value Selection,'' July 29, 2009. No parties provided 
comments with respect to selection of a surrogate country or surrogate 
values.
    As explained above, we determined that India is comparable to the 
PRC. Furthermore, India is a significant producer of comparable 
merchandise. See Memorandum from Alexander Montoro to the File, ``2007-
2008 Antidumping Duty Administrative Review on Certain Cased Pencils 
from the People's Republic of China: Selection of a Surrogate 
Country,'' December 15, 2009. Finally, it is the Department's practice 
to select an appropriate surrogate country based on the availability 
and reliability of data from those countries. In this instance, India 
has publicly available, reliable data. See Department Policy Bulletin 
No. 04.1: Non-Market Economy Surrogate Country Selection Process, March 
1, 2004.
    Therefore, because India is at a comparable level of economic 
development to the PRC, is a significant producer of comparable 
merchandise, and has publicly available and reliable data, we have 
selected India as the primary surrogate country for this review. The 
Department notes that India has been the primary surrogate country in 
past segments of this case.

Separate Rates Determination

    A designation as an NME remains in effect until it is revoked by 
the Department. See section 771(18)(c) of the Act. Accordingly, the 
Department begins with a rebuttable presumption that all companies 
within the country are subject to government control and, thus, should 
be assessed a single antidumping duty deposit rate (i.e., a country-
wide rate). See, e.g., Department Policy Bulletin 05.1: Separate-Rates 
Practice and Application of Combination Rates in Antidumping 
Investigations involving Non-Market Economy Countries, April 5, 2005; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value, and Affirmative Critical Circumstances, In Part: Certain Lined 
Paper Products From the People's Republic of China, 71 FR 53079 
(September 8, 2006); Final Determination of Sales at Less Than Fair 
Value and Final Partial Affirmative Determination of Critical 
Circumstances: Diamond Sawblades and Parts Thereof from the People's 
Republic of China, 71 FR 29303, 29307 (May 22, 2006) (``Diamond 
Sawblades'').
    It is the Department's policy to assign all exporters of the 
merchandise subject to review in NME countries a single rate unless an 
exporter can affirmatively demonstrate an absence of government 
control, both in law (de jure) and in fact (de facto), with respect to 
exports. See, e.g., Diamond Sawblades, 71 FR at 29307. Exporters can 
demonstrate this independence through the absence of both de jure and 
de facto government control over export activities. Id. The Department 
analyzes each entity exporting the subject merchandise under a test 
arising from the Final Determination of Sales at Less than Fair Value: 
Sparklers From the People's Republic of China, 56 FR 20588, 20589 (May 
6, 1991) (``Sparklers''), as further developed in Notice of Final 
Determination of Sales at Less Than Fair Value: Silicon Carbide From 
the People's Republic of China, 59 FR 22585, 22586-87 (May 2, 1994) 
(``Silicon Carbide''). However, if the Department determines that a 
company is wholly foreign-owned or located in a market economy 
(``ME''), then a separate rate analysis is not necessary to

[[Page 68049]]

determine whether it is independent from government control. See, e.g., 
Final Results of Antidumping Duty Administrative Review: Petroleum Wax 
Candles from the People's Republic of China, 72 FR 52355, 52356 
(September 13, 2007).
    In addition to the two mandatory respondents, the Department 
received separate rate applications or certifications from the 
following three companies: Dixon, Rongxin, and SFTC. The three 
remaining respondents for which a review was requested did not submit 
either a separate-rate application or certification. Consequently, 
Guangdong Stationery, Tianjin Wood, and Anhui I&E have not satisfied 
the criteria for separate rates for the POR and are considered as being 
part of the PRC-wide entity.
    In its separate rate application, Dixon reported that it is owned 
wholly by an entity located and registered in an ME country (i.e., the 
United States). Thus, because we have no evidence indicating that Dixon 
is under the control of the PRC government, a separate-rate analysis is 
not necessary to determine whether it is independent from government 
control, and we determine Dixon has met the criteria for the 
application of a separate rate. See Brake Rotors From the People's 
Republic of China: Final Results and Partial Rescission of Fifth New 
Shipper Review, 66 FR 44331 (August 23, 2001), results unchanged from 
Brake Rotors From the People's Republic of China: Preliminary Results 
and Partial Rescission of Fifth New Shipper Review, 66 FR 29080, 29081 
(May 29, 2001) (where the respondent was wholly owned by a U.S. 
registered company); Brake Rotors From the People's Republic of China: 
Final Results and Partial Rescission of Fourth New Shipper Review and 
Rescission of Third Antidumping Duty Administrative Review, 66 FR 27063 
(May 16, 2001) (where the respondent was wholly owned by a company 
located in Hong Kong), results unchanged from Brake Rotors From the 
People's Republic of China: Preliminary Results and Partial Rescission 
of the Fourth New Shipper Review and Rescission of the Third 
Antidumping Duty Administrative Review, 66 FR 1303, 1306 (January 8, 
2001); and Notice of Final Determination of Sales at Less Than Fair 
Value: Creatine Monohydrate From the People's Republic of China, 64 FR 
71104, 71105 (December 20, 1999) (where the respondent was wholly owned 
by persons located in Hong Kong).

Absence of De Jure Control

    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with the 
individual exporter's business and export licenses; (2) any legislative 
enactments decentralizing control of companies; and (3) any other 
formal measures by the government decentralizing control of companies. 
See Sparklers, 56 FR at 20589. The evidence provided by China First, 
Three Star, Rongxin, and SFTC supports a preliminary finding of de jure 
absence of government control.
    China First and Three Star have placed on the administrative record 
a copy of their business licenses. China First additionally submitted a 
copy of its articles of association on the record of this 
administrative review. None of these documents contain restrictions 
with respect to export activities.
    In their respective separate rates certifications, SFTC and Rongxin 
certified that during the POR: (1) As with the segment of the 
proceeding in which the firm was previously granted a separate rate 
(``previous Granting Period''), there were no government laws or 
regulations that controlled the firm's export activities; (2) the 
ownership under which the firm registered itself with the official 
government business license issuing authority remains the same as for 
the previous Granting Period; (3) the firm had a valid PRC Export 
Certificate of Approval, now referred to and labeled as a Registration 
Form for Foreign Trade Operator; (4) as in the previous Granting 
Period, in order to conduct export activities, the firm was not 
required by any level of government law or regulation to possess 
additional certificates or other documents related to the legal status 
and/or operation of its business beyond those discussed above; and (5) 
PRC government laws and legislative enactments applicable to SFTC and 
Rongxin remained the same as in the previous Granting Period. SFTC 
attached copies of its business license and foreign trade operator 
registration form to its separate rate certification to document the 
absence of de jure government control. Rongxin attached copies of its 
business license to its separate rate certification to document the 
absence of de jure government control.
    In prior cases, we have found an absence of de jure control absent 
proof on the record to the contrary. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Furfuryl Alcohol From 
the People's Republic of China, 60 FR 22544 (May 8, 1995) (``Furfuryl 
Alcohol''). We have no information in this proceeding that would cause 
us to reconsider this determination. Thus, we determine that the 
evidence on the record supports a preliminary finding of absence of de 
jure government control for China First, Three Star, SFTC, and Rongxin.

Absence of De Facto Control

    As stated in previous cases, there is some evidence that certain 
enactments of the PRC central government have not been implemented 
uniformly among different sectors and/or jurisdictions in the PRC. See 
Silicon Carbide, 59 FR at 22587. Therefore, the Department has 
determined that an analysis of de facto control is critical in 
determining whether respondents are, in fact, subject to a degree of 
government control which would preclude the Department from assigning 
separate rates.
    The Department typically considers the following four factors in 
evaluating whether a respondent is subject to de facto government 
control of its export functions: (1) Whether the export prices are set 
by, or subject to the approval of, a government agency; (2) whether the 
respondent has the authority to negotiate and sign contracts and other 
agreements; (3) whether the respondent has autonomy from the government 
in making decisions regarding the selection of management; and (4) 
whether the respondent retains the proceeds of its export sales and 
makes independent decisions regarding the disposition of profits or 
financing of losses. See Silicon Carbide, 59 FR at 22586-87, and 
Furfuryl Alcohol, 60 FR at 22545.
    China First and Three Star have asserted the following: (1) Each 
establishes its own export prices; (2) each negotiates contracts 
without guidance from any government entities or organizations; (3) 
each makes its own personnel decisions; and (4) each retains the 
proceeds of its export sales, uses profits according to its business 
needs, and has the authority to sell its assets and to obtain loans. 
Additionally, each respondent's questionnaire responses indicate that 
its pricing during the POR was not coordinated among exporters. As a 
result, there is a sufficient basis to preliminarily determine that 
China First (and its affiliates) and Three Star have demonstrated a de 
facto absence of government control of their export functions and they 
are both entitled to separate rates.
    The Department also conducted a separate rates analysis for SFTC 
and

[[Page 68050]]

Rongxin. SFTC certified the following: (1) There was no government 
participation in setting export prices; (2) the firm had independent 
authority to negotiate and sign export contracts; (3) the firm had 
autonomy from all levels of government in making decisions regarding 
the selection of management; (4) SFTC did not submit the names of its 
candidates for managerial positions to any governmental entity for 
approval; and (5) there were no restrictions on the use of export 
revenue. In our analysis of the information on the record, we found no 
information indicating the existence of government control of SFTC's 
export activities. See SFTC's submission of March 4, 2009. 
Consequently, we preliminarily determine that SFTC has met the criteria 
for the application of a separate rate.
    Rongxin certified the following: (1) The 10 largest shareholders of 
the firm and all of their shareholders had no significant relationship 
with a PRC state asset management company or the PRC national 
government or its ministries/agencies; (2) there was no government 
participation in setting export prices; (3) the firm had independent 
authority to negotiate and sign export contracts; (4) the firm had 
autonomy from all levels of government in making decisions regarding 
the selection of management; (5) Rongxin did not submit the names of 
its candidates for managerial positions to any governmental entity for 
approval; and (6) there were no restrictions on the use of export 
revenue. In our analysis of the information on the record, we found no 
information indicating the existence of government control of Rongxin's 
export activities. See Rongxin's submission of March 4, 2009. 
Consequently, we preliminarily determine that Rongxin has met the 
criteria for the application of a separate rate.

Application of Facts Available to China First

    Sections 776(a)(1) and (2) of the Act provide that, if necessary 
information is not available on the record, or if an interested party 
or any other person: (A) Withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
in a timely matter or in the form or manner requested subject to 
subsections 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 as provided in 
section 782(i) of the Act, the administering authority shall, subject 
to section 782(d) of the Act, use facts otherwise available in reaching 
the applicable determination.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department shall promptly inform the party submitting 
the response of the nature of the deficiency and shall, to the extent 
practicable, provide that party with an opportunity to remedy or 
explain the deficiency. Section 782(d) of the Act additionally states 
that if the party submits further information that is unsatisfactory or 
untimely, the administering authority may, subject to subsection (e), 
disregard all or part of the original and subsequent responses. Section 
782(e) of the Act provides that the Department shall not decline to 
consider information that is submitted by an interested party and is 
necessary to the determination but does not meet all the applicable 
requirements established by the administering authority if: (1) The 
information is submitted by the deadline established for its 
submission; (2) the information can be verified; (3) the information is 
not so incomplete that it cannot serve as a reliable basis for reaching 
the applicable determination; (4) the interested party has demonstrated 
that it acted to the best of its ability in providing the information 
and meeting the requirements established by the administering authority 
with respect to the information; and (5) the information can be used 
without undue difficulties.
    In calculating freight costs for certain FOPs, we are limited to 
the lesser of the weighted average actual distance between the supplier 
and the respondent, or the distance between the respondent and the 
port. See Sigma Corporation v. United States, 117 F.3d 1401, 1407-08 
(Fed. Cir. 1997) (``Sigma''). In its May 12, 2009, Section D 
Questionnaire Response, China First reported that six facilities were 
engaged in the production of subject merchandise. In its response, 
China First provided the distance between the facility and the closest 
port for two of these factories, Great Wall and China First. See 
Section C Questionnaire Response at 18. It did not provide the distance 
to the port for Fusite, Shanghai Glamor Chemistry Co., Ltd. 
(``Glamor''), China First Pencil Huadian Co., Ltd. (``Huadian''), and 
Fang Zheng. At page 18 of the April 9, 2009 Section A Questionnaire 
Response, China First reported the locations of these all six of its 
facilities, including the four for which we do not have reported 
distances. Three of these facilities are located in the same cities as 
the Great Wall and China First factories. Therefore, for these three 
facilities, we are assigning the same distance to port as was reported 
by China First for the Great Wall and China First factories. For the 
remaining facility, we are relying on the greater distance (as reported 
for the Great Wall factory) as the distance to port for purposes of 
calculating supplier distance for these FOPs. We intend to issue a 
supplemental questionnaire following these preliminary results to 
solicit specific information about the distances to port for these 
facilities. See Memorandum from Joseph Shuler, Analyst, Office 1, to 
the File, ``Analysis for the Preliminary Results of Antidumping Duty 
Administrative Review of Certain Cased Pencils from the People's 
Republic of China: China First Pencil Company, Ltd, December 15, 2009 
(``China First Preliminary Calculation Memorandum'').
    Additionally, for certain factors of production, China First 
reported the distances, but we are unable to calculate a weighted-
average distance because of differences in the reported units. 
Therefore, for these factors, we are using a simple average of the 
reported distances. See China First Preliminary Calculation Memorandum.

Fair-Value Comparisons

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

Export Price

    In accordance with section 772(a) of the Act, EP is ``the price at 
which subject merchandise is first sold (or agreed to be sold) before 
the date of importation by the producer or exporter of the subject 
merchandise outside of the United States to an unaffiliated purchaser 
in the United States or to an unaffiliated purchaser for exportation to 
the United States,'' as adjusted under section 772(c) of the Act. In 
accordance with section 772(a) of the Act, we used EPs for sales by 
China First and Three Star to the United States because the first sale 
to an unaffiliated party was made before the date of importation, and 
constructed export price methodology was not otherwise indicated. We 
based EP on the price to unaffiliated purchasers in the United States. 
In accordance with section 772(c)(2)(A) of the Act, we made deductions 
for movement expenses, where appropriate.

[[Page 68051]]

    For China First, movement expenses included expenses for foreign 
inland freight and foreign brokerage and handling.
    For Three Star, movement expenses included expenses for foreign 
inland freight, foreign brokerage and handling, where applicable, and 
international freight, where applicable. Certain of these services were 
provided by an NME vendor and thus, for the reasons explained in the 
section below, we based the amounts of the deductions for those 
movement charges on values from a surrogate country.
    For a detailed description of all adjustments, see China First 
Preliminary Calculation Memorandum; and Memorandum from Alexander 
Montoro, Analyst, Office 1, to the File, ``Analysis for the Preliminary 
Results of Antidumping Duty Administrative Review of Certain Cased 
Pencils from the People's Republic of China: Shanghai Three Star 
Stationery Industry Co., Ltd.'', December 15, 2009.
    We valued brokerage and handling using a simple average of the 
brokerage and handling costs reported in public submissions that were 
filed in three antidumping duty cases. Specifically, we averaged the 
public brokerage and handling expenses reported by Navneet Publications 
(India) Ltd. in the 2007-2008 administrative review of certain lined 
paper products from India, Essar Steel Limited in the 2006-2007 
antidumping duty administrative review of hot-rolled carbon steel flat 
products from India, and Himalya International Ltd. in the 2005-2006 
administrative review of certain preserved mushrooms from India. We 
calculated the inflation or deflation adjustments for those values 
using the wholesale price indices (``WPI'') for India as published in 
the International Financial Statistics (``IFS'') Online Service 
maintained by the Statistics Department of the International Monetary 
Fund at the Web site https://www.imfstatistics.org. See Memorandum from 
Alexander Montoro to File, ``Factor Valuation for the Preliminary 
Results Memorandum,'' December 15, 2009 (``Factor Valuation 
Memorandum'').

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine NV using a FOP methodology if the merchandise is exported 
from an NME country and the information does not permit the calculation 
of NV using home-market prices, third-country prices, or constructed 
value under section 773(a) of the Act.
    The Department will base NV on FOPs where the presence of 
government controls on various aspects of NMEs renders price 
comparisons and the calculation of production costs invalid under our 
normal ME methodologies. Therefore, we calculated NV based on FOPs in 
accordance with sections 773(c)(3) and (4) of the Act and 19 CFR 
351.408(c). The FOPs include: (1) Hours of labor required; (2) 
quantities of raw materials employed; (3) amounts of energy and other 
utilities consumed; and (4) representative capital costs. We used the 
FOPs reported by the respondents for materials, energy, labor, and 
packing.

Factor Valuations

    In accordance with section 773(c)(3) of the Act, we calculated NV 
based on FOPs reported by the respondents for the POR. We multiplied 
the reported per-unit factor quantities by publicly available Indian 
surrogate values. In selecting the surrogate values, we considered the 
quality, specificity, and contemporaneousness of the data.
    In accordance with section 773(c)(1) of the Act, for purposes of 
calculating NV, we attempted to value the FOPs using surrogate values 
that were in effect during the POR. If we were unable to obtain 
surrogate values that were in effect during the POR, we adjusted the 
values, as appropriate, to account for inflation or deflation between 
the effective period and the POR. We calculated the inflation or 
deflation adjustments for all factor values, except labor and 
utilities, using the India WPI as published in the IFS.
    When relying on prices of imports into India as surrogate values, 
we have disregarded prices that we have reason to believe or suspect 
may be subsidized. See Tapered Roller Bearings and Parts Thereof, 
Finished and Unfinished, From the People's Republic of China; Final 
Results of 1999-2000 Administrative Review, Partial Rescission of 
Review, and Determination Not To Revoke Order in Part, 66 FR 57420 
(November 15, 2001), and accompanying Issues and Decision Memorandum at 
Comment 1. We have found that Indonesia, South Korea, and Thailand 
maintain broadly available, non-industry-specific export subsidies. 
Accordingly, it is reasonable to infer that exports to all markets from 
those countries may be subsidized. See Certain Frozen Fish Fillets from 
the Socialist Republic of Vietnam: Preliminary Results and Preliminary 
Partial Rescission of Antidumping Duty Administrative Review, 70 FR 
54007, 54011 (September 13, 2005), results unchanged in Certain Frozen 
Fish Fillets From the Socialist Republic of Vietnam: Final Results of 
the First Administrative Review, 71 FR 14170 (March 21, 2006); and 
China Nat'l Machinery Import & Export Corp. v. United States, 293 F. 
Supp. 2d 1334, 1336 (Ct. Int'l. Trade 2003), aff'd 104 Fed. Appx. 183 
(Fed. Cir. 2004).
    In avoiding the use of prices that may be subsidized, the 
Department does not conduct a formal investigation to ensure that such 
prices are not subsidized. See H.R. Rep. 100-576 at 590-91 (1988), 
reprinted in 1988 U.S.C.C.A.N. 1547, 1623. Rather, the Department 
relies on information that is generally available at the time of its 
determination. Therefore, we have not used prices from those countries 
in calculating the Indian import-based surrogate values. See Factor 
Valuation Memorandum.
    As appropriate, we adjusted input prices by including freight costs 
to make them delivered prices. Specifically, we added to the Indian 
import surrogate values a surrogate freight cost calculated using the 
shorter of the reported distance from the domestic supplier to the 
factory or the distance from the nearest port of export to the factory, 
where appropriate. This adjustment is in accordance with the decision 
of the Court of Appeals for the Federal Circuit in Sigma.
    We valued the FOPs as follows:
    (1) Except where noted below, we valued all reported material, 
energy, and packing inputs using Indian import data from the World 
Trade Atlas for December 2007 through November 2008.
    (2) To value lindenwood pencil slats, we used publicly available, 
published U.S. prices for American basswood lumber because price 
information for Chinese lindenwood and American basswood is not 
available from any of the potential surrogate countries.\2\ The U.S. 
lumber prices for basswood for the period December 1, 2006, through 
November 30, 2007 are published in the Hardwood Market Report. We 
adjusted this value, to account for inflation between the effective 
period and the POR. For further discussion, see Factor Valuation 
Memorandum. We received additional factors valuation information from 
China First regarding slats processing. See China First's Third

[[Page 68052]]

Supplemental Questionnaire Response, December 4, 2009. Because these 
factors are already accounted for in the pencil slats surrogate value, 
we are not incorporating them in the calculation methodology to avoid 
double-counting. This is consistent with the methodology used to value 
pencil slats in previous administrative reviews.
---------------------------------------------------------------------------

    \2\ In the antidumping investigation of certain cased pencils 
from the PRC, the Department found Chinese lindenwood and American 
basswood to be virtually indistinguishable and thus used U.S. prices 
for American basswood to value Chinese lindenwood. See Notice of 
Final Determination of Sales at Less Than Fair Value: Certain Cased 
Pencils From the People's Republic of China, 59 FR 55625, 55632 
(November 8, 1994). This methodology was upheld by the Court of 
International Trade. See Writing Instrument Mfrs. Ass'n, Pencil 
Section, et. al. v. United States, 984 F. Supp. 629, 639 (Ct. Int'l. 
Trade 1997), aff'd 178 F.3d 1311 (Fed. Cir. 1998).
---------------------------------------------------------------------------

    (3) We valued electricity using price data for small, medium, and 
large industries, as published by the Central Electricity Authority of 
the Government of India in its publication titled ``Electricity Tariff 
& Duty and Average Rates of Electricity Supply in India,'' dated March 
2008. Those electricity rates represent actual country-wide, publicly-
available information on tax-exclusive electricity rates charged to 
industries in India. See Factor Valuation Memorandum.
    (4) We calculated the surrogate value for steam based upon the 
April 2007-March 2008 financial statement of Hindalco Industries 
Limited. See 1-Hydroxyethylidene-1, 1-Diphosphonic Acid from the 
People's Republic of China: Final Determination of Sales at Less than 
Fair Value, 74 FR 10545 (March 11, 2009), and accompanying Issues and 
Decision Memorandum at Comment 4. See Factor Valuation Memorandum.
    (5) For China First, we valued steam coal using data obtained for 
grade D non-long flame non-coking coal reported on the 2007 Coal India 
Data Web site. For Three Star, we valued steam coal using data obtained 
for grade B for non-long flame non-coking coal reported on the 2007 
Coal India Data Web site. See Factor Valuation Memorandum.
    (6) Section 351.408(c)(3) of the Department's regulations requires 
the use of a regression-based wage rate. Therefore, we valued labor 
using the regression-based wage rate for the PRC published on Import 
Administration's Web site. The source of the wage rate data on the 
Import Administration's Web site is the International Labour 
Organization, Geneva, Labour Statistics Database Chapter 5B: Wages in 
Manufacturing. See 2009 Calculation of Expected Non-Market Economy 
Wages, 74 FR 65092 (December 9, 2009), and see also Expected Wages of 
Selected NME Countries (revised October 2009) (available at https://ia.ita.doc.gov/wages/) and Factor Valuation Memorandum. Since 
this regression-based wage rate does not separate the labor rates into 
different skill levels or types of labor, we have applied the same wage 
rate to all skill levels and types of labor.
    (7) We derived ratios for factory overhead, depreciation, and 
selling, general and administrative expenses, interest expenses, and 
profit for the finished product using the 2006-2007 financial statement 
of Triveni Pencils Ltd. (``Triveni''), an Indian producer of pencils, 
in accordance with the Department's practice with respect to selecting 
financial statements for use in NME cases. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Chlorinated 
Isocyanurates From the People's Republic of China, 70 FR 24502 (May 10, 
2005), and accompanying Issues and Decision Memorandum at Comment 2. 
The Department prefers to derive financial ratios using data from those 
surrogate producers whose financial data is not distorted or otherwise 
unreliable. Reliance upon Triveni's financial statements is consistent 
with the 2006-2007 administrative review.
    (8) We valued inland truck freight expenses using a per-unit 
average rate calculated from data on the following publicly accessible 
Web site: https://www.infobanc.com/logistics/logtruck.htm. The logistics 
section of this Web site contains inland freight truck rates between 
many large Indian cities. Since the truck rate value is based on an 
annual per-unit rate and falls within the POR (August 2008 through July 
2009), we are treating the derived average rate as contemporaneous. For 
rail freight, we used 2006-2007 data from the publicly accessible Web 
site www.Indianrailways.gov.in/ to derive, where appropriate, input-
specific train rates on a rupees-per-kilogram per-kilometer basis 
(``Rs/kg/km''). Since the effective period for this rate falls within 
the POR, we have not inflated this rate.
    (9) For any sale with reported international freight, we used a 
surrogate international freight value from www.maerskline.com. See 
Factor Valuation Memorandum.
    For further discussion of the surrogate values we used for these 
preliminary results of review, see the Factor Valuation Memorandum, 
which is on file in the Central Records Unit (``CRU'') in Room 1117 of 
the main Department of Commerce building.

Currency Conversion

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

Preliminary Results of Review

    We preliminarily determine that the following margins exist for the 
period December 1, 2007, through November 30, 2008:

------------------------------------------------------------------------
                                                              Margin
                  Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
China First Pencil Company, Ltd. (which includes                   13.86
 subsidiaries Shanghai First Writing Instrument Co.,
 Ltd.; Shanghai Great Wall Pencil Co., Ltd.; and China
 First Pencil Fang Zheng Co., Ltd.).....................
Shanghai Three Star Stationery Industry Co., Ltd........           62.06
Beijing Dixon Stationery Company Ltd....................           37.96
Orient International Holding Shanghai Foreign Trade                37.96
 Corporation............................................
Shandong Rongxin Import and Export Co., Ltd.............           37.96
PRC-wide Entity \3\.....................................          114.90
------------------------------------------------------------------------

    As stated above in the ``Separate-Rates Determination'' section of 
this notice, Dixon, Rongxin, and SFTC qualify for a separate rate in 
this review. Moreover as stated above in the ``Respondent Selection'' 
section of this notice, we limited this review by selecting the largest 
exporters and did not select Dixon, Rongxin, and SFTC as mandatory 
respondents. Therefore, Dixon, Rongxin, and SFTC are being assigned 
dumping margins based on the calculated margins of mandatory 
respondents, in accordance with Department practice. Accordingly, we 
have assigned Dixon, Rongxin, and SFTC the simple-average of the 
dumping margins assigned to China First and Three Star.
---------------------------------------------------------------------------

    \3\ The PRC-wide entity includes Guangdong Stationery, Tianjin 
Wood, and Anhui I&E.
---------------------------------------------------------------------------

    The Department will disclose calculations performed for these 
preliminary results to the parties within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b).
    In accordance with 19 CFR 351.301(c)(3)(ii), for the final results 
of this administrative review, interested parties may submit publicly 
available information to value FOPs within 20 days after the date of 
publication of these preliminary results. Interested parties must 
provide the Department with supporting documentation for the publicly 
available information to value each FOP. Additionally, in accordance 
with 19 CFR 351.301(c)(1), for the final results of this administrative 
review, interested parties may submit factual information to rebut, 
clarify, or correct factual information submitted by an interested 
party less than ten days before, on, or after, the applicable

[[Page 68053]]

deadline for submission of such factual information. However, the 
Department notes that 19 CFR 351.301(c)(1) permits new information only 
insofar as it rebuts, clarifies, or corrects information recently 
placed on the record. The Department generally cannot accept the 
submission of additional, previously absent-from-the-record alternative 
surrogate value information pursuant to 19 CFR 351.301(c)(1). See 
Glycine from the People's Republic of China: Final Results of 
Antidumping Duty Administrative Review and Final Rescission, in Part, 
72 FR 58809 (October 17, 2007), and accompanying Issues and Decision 
Memorandum at Comment 2.
    An interested party may request a hearing within 30 days of 
publication of the preliminary results. See 19 CFR 351.310(c). 
Interested parties may submit written comments (case briefs) no later 
than 30 days after publication of these preliminary results of review, 
and rebuttal comments (rebuttal briefs), which must be limited to 
issues raised in the case briefs, within five days after the time limit 
for filing case briefs. See 19 CFR 351.309(c)(1)(ii) and 19 CFR 
351.309(d). Parties who submit arguments are requested to submit with 
the argument: (1) A statement of the issue; (2) a brief summary of the 
argument; and (3) a table of authorities. Further, the Department 
requests that parties submitting written comments provide the 
Department with a compact disk containing the public version of those 
comments. We will issue a memorandum identifying the date and time of a 
hearing, if one is requested.
    The Department will issue the final results of this administrative 
review, including the results of our analysis of the issues raised by 
the parties in their comments, within 120 days of publication of the 
preliminary results, pursuant to section 751(a)(3)(A) of the Act.

Assessment Rates

    Upon completion of this administration review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. The Department intends to issue assessment instructions to CBP 
15 days after the date of publication of the final results of review. 
For assessment purposes, we calculated exporter/importer-specific (or 
customer-specific) assessment rates for merchandise subject to this 
review.
    China First and Three Star did not report entered values for their 
U.S. sales. Therefore, we calculated a per-unit assessment rate for 
each importer (or customer) by dividing the total dumping margins for 
reviewed sales to that party by the total sales quantity associated 
with those transactions. For duty-assessment rates calculated on this 
basis, we will direct CBP to assess the resulting per-unit rate against 
the entered quantity of the subject merchandise. To determine whether 
the duty assessment rates are de minimis, in accordance with the 
requirement set forth in 19 CFR 351.106(c)(2), we calculated importer 
(or customer)--specific ad valorem ratios based on the estimated 
entered value. Where an importer-specific (or customer-specific) rate 
is de minimis (i.e., less than 0.50 percent), the Department will 
instruct CBP to liquidate that importer's (or customer's) entries of 
subject merchandise without regard to antidumping duties.
    As noted above, Dixon, Rongxin, and SFTC qualified for separate-
rate status, and will be assigned the simple-average dumping margin 
based on the calculated margins of mandatory respondents which are not 
de minimis or based on adverse facts available, in accordance with 
Department practice. We will instruct CBP to assess antidumping duties 
on those companies' entries equal to the margins those companies 
receive in the final results, regardless of the importer or customer.
    As explained above, the three remaining companies covered by this 
review, Guangdong Stationery, Tianjin Wood, and Anhui I&E, did not 
provide separate rate information. As a result, those three companies 
will be considered part of the PRC-wide entity, and their entries will 
be subject to the PRC-wide rate.

Cash Deposit Requirements

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

Notification to Interested Parties

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

    Dated: December 15, 2009.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. E9-30410 Filed 12-21-09; 8:45 am]
BILLING CODE 3510-DS-P