Certain Cased Pencils From the People's Republic of China: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 2337-2344 [2011-627]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 76, Number 9 (Thursday, January 13, 2011)]
[Notices]
[Pages 2337-2344]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-627]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-827]


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

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

DATES: Effective Date: January 13, 2011.
SUMMARY: The Department of Commerce (``the Department'') has 
preliminarily determined that the respondents in this review, for the 
period December 1, 2008, through November 30, 2009, 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 is also rescinding this review for those foreign 
producers/exporters for which requests for review were timely 
withdrawn. For the

[[Page 2338]]

companies for which this review is rescinded, antidumping duties shall 
be assessed at rates equal to the cash deposit of estimated antidumping 
duties required at the time of entry, or withdrawal from warehouse, for 
consumption.
    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: Patricia Tran, Mahnaz Khan or David 
Layton, AD/CVD Operations, Office 1, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone 
(202) 482-1503, (202) 482-0914 or (202) 482-0371, 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, 
2009, the Department published a notice of opportunity to request an 
administrative review of this order covering the period December 1, 
2008, through November 30, 2009. See Antidumping or Countervailing Duty 
Order, Finding, or Suspended Investigation; Opportunity to Request 
Administrative Review, 74 FR 62743 (December 1, 2009). On December 4, 
2009, 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 28, 2009, in accordance with 19 CFR 351.213(b), Beijing Fila 
Dixon Stationery Company Ltd. (``Beijing Dixon''), a foreign exporter, 
requested that the Department review its sales of subject merchandise. 
On December 31, 2009, the following exporters/producers requested 
reviews of themselves, in accordance with 19 CFR 351.213(b): Shanghai 
Three Star Stationery Industry Co., Ltd. (``Three Star''), Orient 
International Holding Shanghai Foreign Trade Corporation (``SFTC''), 
and China First Pencil Co., Ltd. (``China First'') and its affiliated 
companies including Shanghai First Writing Instrument Co., Ltd. 
(``FST''), Fang Zheng Ltd. (``Fang Zheng''), Shanghai Great Wall Pencil 
Co. Ltd. (``Great Wall'') and China First Pencil Huadian Co., Ltd. 
(``Huadian'').\1\
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    \1\ The Department sent a letter to China First on January 13, 
2010, asking China First to provide a complete list of its 
affiliated companies. China First responded on January 15, 2010, 
stating that its affiliated companies subject to the review are FST, 
Fang Zheng, Great Wall and Huadian. On March 1, 2010, SFTC withdrew 
its December 31, 2009 request for a review.
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    On January 29, 2010, 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, Request for Revocation in Part, and Deferral of Initiation of 
Administrative Review, 75 FR 4770, 4772 (January 29, 2010). On March 
29, 2010, China First and its affiliated companies, and Three Star 
withdrew their December 31, 2009 requests for a review.
    The Department issued antidumping duty questionnaires to Rongxin 
and Beijing Dixon on April 6, 2010. Rongxin submitted its Section A 
Questionnaire Response on May 6, 2010, and its Section C and Section D 
Questionnaire Responses on May 28, 2010. Beijing Dixon submitted its 
Section A Questionnaire Response on April 23, 2010, its Section C 
Questionnaire Response on May 12, 2010, and its Section D Questionnaire 
Response on May 12, 2010. The Department issued supplemental 
questionnaires to Rongxin and Beijing Dixon between June 2010 and 
December 2010. Both companies timely filed their responses to those 
supplemental questionnaires.
    On September 3, 2010, we extended the time limit for the 
preliminary results in this review until January 7, 2011. See Certain 
Cased Pencils From the People's Republic of China: Extension of Time 
Limit for Preliminary Results of the Antidumping Duty Administrative 
Review, 75 FR 54089 (September 3, 2010).

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.

Partial Rescission of Review

    The Department's regulations at 19 CFR 351.213(d)(1) provide that 
the Department will rescind an administrative review, in part, if a 
party that requested a review withdraws the request within 90 days of 
the date of publication of the notice of initiation of the requested 
review. As explained above, SFTC withdrew its request for a review on 
March 1, 2010. On March 29, 2010, China First and its affiliated 
companies, and Three Star withdrew their requests for a review. These 
withdrawals occurred within the 90-day deadline, and no other party 
requested a review with respect to these companies. Therefore, the 
Department is rescinding this administrative review with regard to 
SFTC, China First and its affiliated companies, and Three Star.

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

[[Page 2339]]

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 (``ME'') 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, Ukraine, Thailand, 
and Peru are countries comparable to the PRC in terms of economic 
development. See Memorandum from Carole Showers, Director, Office of 
Policy, to Brandon Farlander, Program Manager, Office 1, entitled 
``Request for a List of Surrogate Countries for Administrative Review 
of the Antidumping Duty Order on Certain Cased Pencils from the 
People's Republic of China (``PRC''),'' dated April 14, 2010. On April 
15, 2010, the Department invited the interested parties to comment on 
surrogate country selection and to submit surrogate value data. On 
September 1 and on September 27, 2010, the Department extended the 
deadline for submission of publicly available information to value 
factors. See the Department's Letters to All Interested Parties, 
``Certain Cased Pencils from the People's Republic of China: Deadlines 
for Surrogate Country and Surrogate Value Comments,'' dated April 15, 
2010 and September 1, 2010, and Memorandum to the File from David 
Layton, ``2008/2009 Administrative Review of Certain Cased Pencils from 
the People's Republic of China: Extension Request from Rongxin Import & 
Export Co., Ltd. Regarding the Submission of Surrogate Values,'' dated 
September 27, 2010. Beijing Dixon submitted publicly available 
information to value factors on October 15, 2010, and November 22, 
2010. Rongxin submitted publicly available information on June 25, 
2010, and October 18, 2010. Both respondents also provided certain 
surrogate value information in their supplemental responses.
    As explained above, we determined that India is comparable to the 
PRC. Furthermore, India is a significant producer of comparable 
merchandise. See Memorandum from Mahnaz Khan to the File, ``2008-2009 
Antidumping Duty Administrative Review on Certain Cased Pencils from 
the People's Republic of China: Selection of a Surrogate Country,'' 
dated January 7, 2011. 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 proceeding.

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 an ME, then a separate 
rate analysis is not necessary to 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).
    The Department received a separate rate certification from Rongxin 
on February 26, 2010, and a separate rate certification from Beijing 
Dixon on March 5, 2010. China First, Three Star, and SFTC requested an 
extension until March 29, 2010, to file a separate rate certification 
before withdrawing their respective requests for a review. 
Consequently, SFTC, China First, and Three Star never filed separate 
rate certifications before the March 29, 2010 deadline.
    In its separate rate application, Beijing 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 Beijing 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 Beijing Dixon has 
met the criteria for the application of a separate rate. See 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), unchanged in 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); Brake Rotors From the People's 
Republic of China: Preliminary Results and Partial Rescission of the 
Fourth New Shipper

[[Page 2340]]

Review and Rescission of the Third Antidumping Duty Administrative 
Review, 66 FR 1303, 1306 (January 8, 2001) (where the respondent was 
wholly owned by a company located in Hong Kong), unchanged in 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); 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 Rongxin 
supports a preliminary finding of de jure absence of government 
control.
    Rongxin has placed on the administrative record a copy of its 
business license and articles of association.\2\ Neither of these 
documents contains restrictions with respect to export activities.
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    \2\ See Rongxin's Separate Rate Certification submission dated 
February 26, 2010, and Rongxin's Section A submission dated May 6, 
2010.
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    In its separate rates certification, 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 law or regulation at any level of government 
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 Rongxin remained the same as in the previous Granting 
Period.
    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 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.
    Rongxin has asserted the following: (1) It establishes its own 
export prices; (2) it negotiates contracts without guidance from any 
government entities or organizations; (3) it makes its own personnel 
decisions; and (4) it 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, Rongxin's questionnaire 
responses indicate that its pricing during the POR was not coordinated 
with other exporters. As a result, there is a sufficient basis to 
preliminarily determine that Rongxin has demonstrated a de facto 
absence of government control of its export functions and it is 
entitled to a separate rate.

Fair-Value Comparisons

    To determine whether Rongxin's 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. To determine whether Beijing Dixon's sales were made at less 
than NV, we compared constructed export price (``CEP'') to NV as 
described in the ``Constructed Export Price'' section of the 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 
Rongxin to the United States because the first sale to an unaffiliated 
party was made before the date of importation, and CEP 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 Rongxin's foreign 
inland freight and foreign brokeage and handling where appropriate.
    We valued brokerage and handling using a price list of export 
procedures necessary to export a standardized cargo of goods in India. 
The price list is compiled based on a survey case study of the 
procedural requirements for trading a standard shipment of goods by 
ocean transport in India as reported in Doing Business 2010: India, 
published by the World Bank. See Memorandum from David Layton to File, 
``Factor Valuation for the Preliminary Results Memorandum,'' dated 
January 7, 2011 (``Factor Valuation Memorandum'').

Constructed Export Price

    In accordance with section 772(a) of the Act, CEP is the price at 
which the subject merchandise is first sold (or agreed to be sold) in 
the United States before or after the date of importation by or for the 
account of the producer or exporter of such merchandise or by a seller 
affiliated with the producer or

[[Page 2341]]

exporter, to a purchaser not affiliated with the producer or exporter, 
as adjusted under subsections (c) and (d). In its questionnaire 
responses, Beijing Dixon stated that it made CEP sales through its U.S. 
affiliate, Dixon Ticonderoga Company. In accordance with section 772(a) 
of the Act, we used CEP for Beijing Dixon's U.S. sales because all 
sales to unaffiliated customers were made after the date of importation 
and by its U.S. affiliate.
    The Department calculated CEP based on the packed, delivered prices 
to unaffiliated purchasers in the United States, net of billing 
adjustments, rebates and early payment discounts. We adjusted these 
prices for movement expenses, including foreign inland freight, 
international freight, marine insurance, foreign and U.S. brokerage and 
handling (U.S. brokerage and handling was reported as three ``other 
transportation expense'' categories), U.S. customs duties, U.S. inland 
freight from port to warehouse and U.S inland shipment insurance in 
accordance with section 772(c)(2)(A) of the Act.
    In accordance with section 772(d)(1) of the Act, we deducted from 
Beijing Dixon's starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including imputed credit expenses, applicable advertising expenses, 
commissions, royalties and indirect selling expenses. We also made an 
adjustment for profit in accordance with section 772(d)(3) of the Act. 
For a detailed description of all adjustments, see Memorandum from 
Mahnaz Khan to the File, ``Analysis for the Preliminary Results of 
Antidumping Duty Administrative Review of Certain Cased Pencils from 
the People's Republic of China: Beijing Fila Dixon Stationery Company 
Ltd.,'' dated January 7, 2011 (``Beijing Dixon Preliminary Calculation 
Memo'').
    For our CEP adjustments for Beijing Dixon, we valued foreign 
brokerage and handling, and foreign inland truck rates using the same 
surrogate values described above in the ``Export Price'' section.
    For its calculation of the CEP, the Department changed certain data 
in Beijing Dixon's U.S. sales database. Beijing Dixon reported no 
payment date for certain observations in the U.S. sales database. For 
these observations, the Department, as is its practice, applied as the 
payment date May 20, 2010, the deadline for submission of factual 
information in this administrative review as provided in 19 CFR 
351.301(b)(2). We have also calculated the credit expense for each of 
the specific observations with missing payment dates based on the May 
20, 2010 payment date. See Beijing Dixon Preliminary Calculation Memo 
at 3-4. We have not yet requested clarification from Beijing Dixon 
regarding the missing payment dates, but intend to do so after these 
preliminary results.

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.
    In accordance with 19 CFR 351.408(c)(1), when a producer sources an 
input from an ME country and pays for it in ME currency, the Department 
will normally value the factor using the actual price paid to the ME 
supplier for the input. See 19 CFR 351.408(c)(1). Where a portion of 
the input is purchased from an ME supplier and the remainder from an 
NME supplier, the Department will normally use the price paid for the 
input sourced from ME suppliers to value all of the input, provided the 
volume of the ME input as a share of total purchases from all sources 
is ``meaningful.'' See Antidumping Duties; Countervailing Duties, 62 FR 
27296, 27366 (May 19, 1997); Shakeproof Assembly Components, Div. of 
Ill. Tool Works, Inc. v. United States, 268 F.3d 1376, 1382 (Fed. Cir. 
2001); 19 CFR 351.408(c)(1); see also Antidumping Methodologies: Market 
Economy Inputs, Expected Non-Market Economy Wages, Duty Drawback; and 
Request for Comments, 71 FR 61716, 61716-61719 (October 19, 2006) 
(regarding the Department's flexible 33 percent threshold for ME 
inputs). In this administrative review, Beijing Dixon reports 
purchasing four ME material inputs in volumes that exceed the threshold 
percentage that the Department normally considers ``meaningful.'' See 
Beijing Dixon Preliminary Calculation Memorandum. At the Department's 
request, Beijing Dixon provided documentation to support its claim that 
these four inputs were obtained from ME sources. See Sections C & D 
First and Second Supplemental Questionnaire Response of Beijing Fila 
Dixon Stationery Company, Ltd., dated September 10, 2010, at Exhibits 
Supplemental C-12 and D-5-D-9. Accordingly, we have calculated NV for 
these preliminary results using the ME prices paid by Beijing Dixon for 
these four inputs to value the relevant factors.

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. Except as noted 
above for Beijing Dixon's ME inputs, 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 Wholesale Price Index as published in the 
International Monetary Fund's International Financial Statistics.
    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,

[[Page 2342]]

54011 (September 13, 2005), 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 (``Federal Circuit'') 
in Sigma Corp. v. United States, 117 F.3d 1401, 1407-08 (Fed. Cir. 
1997). See also Department Policy Bulletin No. 10.2: Inclusion of 
International Freight Costs When Import Prices Constitute Normal Value, 
November 1, 2010.
    We valued the FOPs as follows:
    (1) Except where noted below, we valued all reported material and 
packing inputs using Indian import data from the Global Trade Atlas for 
December 2008 through November 2009.
    (2) We calculated the slats surrogate value using data from ``Paper 
and Stationery.'' \3\ The slats, for which values were reported in 
``Paper and Stationery,'' are used for pencil production and are made 
from Ajanta, valued at Rs. 210 per 1000 cubic feet, and Vatta II, 
valued at Rs. 200 per 1000 cubic feet. We averaged the values for 
Ajanta and Vatta II to arrive at a surrogate value of Rs. 205 per 1000 
cubic feet. We converted Rupees-per-1000 cubic-feet to Rupees-per-
kilogram. We adjusted this value to account for inflation between the 
effective period and the POR. See Attachment 4 of the Factor Valuation 
Memorandum for the calculation of the surrogate values for slats.
---------------------------------------------------------------------------

    \3\ See ``Pencil Industry in India--A Robust Future,'' Divya 
Jha, in ``Paper & Stationery Samachar'' (Delhi, November 2008), an 
Indian trade journal (``Paper and Stationery'') at 54, attached as 
Exhibit 3 to Rongxin's June 25, 2010 Surrogate Value Submission.
---------------------------------------------------------------------------

    (3) We calculated separate surrogate values for black and color 
cores, and, for valuation purposes, distinguished between regular and 
thick core dimensions. We obtained surrogate values for black and color 
cores from ``Paper and Stationery.'' \4\ We adjusted these values to 
account for inflation between the effective period and the POR. See 
Attachment 4 of the Factor Valuation Memorandum for the calculation of 
the surrogate values for black and color cores.
---------------------------------------------------------------------------

    \4\ See id.
---------------------------------------------------------------------------

    (4) We valued electricity using price data for small, medium, and 
large industries, as published by the Central Electricity Authority of 
the Government of India in its publication titled ``Electricity Tariff 
& Duty and Average Rates of Electricity Supply in India,'' dated 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.
    (5) For Rongxin, we valued steam coal using data obtained for grade 
E non-long flame non-coking coal reported on the 2007 Coal India Data 
website. For Beijing Dixon, we valued steam coal using data obtained 
for grade C long flame non-coking coal reported on the 2007 Coal India 
Data Web site. See Factor Valuation Memorandum.
    (6) On May 14, 2010, the Federal Circuit in Dorbest Ltd. v. United 
States, 604 F.3d 1363, 1372 (Fed. Cir. 2010), found that the 
``{regression-based{time}  method for calculating wage rates {as 
stipulated by 19 CFR 351.408(c)(3){time}  uses data not permitted by 
{the statutory requirements laid out in section 773 of the Act (i.e., 
19 U.S.C. 1677b(c)){time} .'' The Department is continuing to evaluate 
options for determining labor values in light of the recent Federal 
Circuit decision. However, for these preliminary results, we have 
calculated an hourly wage rate to use in valuing the respondents' 
reported labor input by averaging industry-specific earnings and/or 
wages in countries that are economically comparable to the PRC and that 
are significant producers of comparable merchandise. Our methodology is 
described below.
    The Department is valuing labor using a simple average, industry-
specific wage rate derived from earnings or wage data reported under 
Chapter 5B by the International Labor Organization (``ILO''). 
Specifically, the Department has calculated the wage rate as a simple 
average of the data provided to the ILO under Sub-Classification 36 of 
the ISIC-Revision 3 standard by countries determined to be both 
economically comparable to the PRC and significant producers of 
comparable merchandise. The Department finds the two-digit description 
under ISIC-Revision 3 (``Manufacture of Furniture; Manufacturing 
n.e.c.'') to be the best available information for valuing the 
respondents' labor input because it is specific and derived from 
industries that produce merchandise comparable to the subject 
merchandise. Consequently, we averaged the ILO industry-specific wage 
rate data or earnings data available from the following countries found 
to be economically comparable to the PRC and to be significant 
producers of comparable merchandise: Ecuador, Egypt, Indonesia, Jordan, 
Peru, Philippines, and Thailand. On this basis, the Department 
calculated a simple average, industry-specific wage rate of $1.23 for 
these preliminary results. For further information on the calculation 
of the wage rate, see Factor Valuation Memorandum.
    (7) We derived ratios for factory overhead, depreciation, 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. 
Reliance upon Triveni's financial statements is consistent with the 
2007-2008 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 website 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 with 
the POR. For rail freight, we used 2006-2007 data from the publicly 
accessible website https://www.Indianrailways.gov.in/ to derive, where 
appropriate, input-specific train rates on a rupees-per-kilogram per-

[[Page 2343]]

kilometer basis (``Rs/kg/km''). The Department is not inflating the 
2006-2007 rail freight data from the https://www.Indianrailways.gov.in 
website since these rates are currently published on their website, and 
the website does not have any updated rail freights for the POR. 
Therefore, the Department continues to treat these rail freights on the 
https://www.Indianrailways.gov.in Web site as contemporaneous with the 
POR in this administrative review.

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, 2008, through November 30, 2009:

------------------------------------------------------------------------
                                                                Margin
                          Exporter                             (percent)
------------------------------------------------------------------------
Beijing Dixon Stationery Company Ltd........................        0.00
Shandong Rongxin Import and Export Co., Ltd.................        0.17
------------------------------------------------------------------------

    As stated above in the ``Separate Rates Determination'' section of 
this notice, Dixon and Rongxin each qualify for a separate rate in this 
review.
    The Department will disclose calculations performed for these 
preliminary results to the parties within five days of the date of 
publication of this notice in accordance with 19 CFR 351.224(b).
    In accordance with 19 CFR 351.301(c)(3)(ii), for the final results 
of this administrative review, interested parties may submit publicly 
available information to value FOPs within 20 days after the date of 
publication of these preliminary results. Interested parties must 
provide the Department with supporting documentation for the publicly 
available information to value each FOP. Additionally, in accordance 
with 19 CFR 351.301(c)(1), for the final results of this administrative 
review, interested parties may submit factual information to rebut, 
clarify, or correct factual information submitted by an interested 
party less than ten days before, on, or after, the applicable deadline 
for submission of such factual information. However, the Department 
notes that 19 CFR 351.301(c)(1) permits new information only insofar as 
it rebuts, clarifies, or corrects information recently placed on the 
record. The Department generally cannot accept the submission of 
additional, previously absent-from-the-record alternative surrogate 
value information pursuant to 19 CFR 351.301(c)(1). See Glycine from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Final Rescission, in Part, 72 FR 58809 
(October 17, 2007), and accompanying Issues and Decision Memorandum at 
Comment 2.
    An interested party may request a hearing within 30 days of 
publication of the preliminary results. See 19 CFR 351.310(c). 
Interested parties may submit written comments (case briefs) 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(s); (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.
    Rongxin did not report entered values for its 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.
    For the companies for which this review is rescinded, antidumping 
duties shall be assessed at rates equal to the cash deposit of 
estimated antidumping duties required at the time of entry, or 
withdrawal from warehouse, for consumption, in accordance with 19 CFR 
351.212.(c)(1)(i). The Department intends to issue appropriate 
assessment instructions regarding entries of the rescinded companies 
directly to CBP 15 days after publication of this notice.

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

[[Page 2344]]

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: January 7, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2011-627 Filed 1-12-11; 8:45 am]
BILLING CODE 3510-DS-P