[Federal Register Volume 75, Number 200 (Monday, October 18, 2010)]
[Notices]
[Pages 63814-63822]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-26186]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-901]


Certain Lined Paper Products From the People's Republic of China: 
Notice of Preliminary Results of the Antidumping Duty Administrative 
Review

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

SUMMARY: The Department of Commerce (``the Department'') is conducting 
the third administrative review of the antidumping duty order on 
certain lined paper products (``CLPP'') from the People's Republic of 
China (``PRC'') with respect to four producers/exporters for the period 
September 1, 2008, through August 31, 2009. If these preliminary 
results are adopted in our final results of this review, we will 
instruct U.S. Customs and Border Protection (``CBP'') to assess 
antidumping duties on all appropriate entries of subject merchandise 
during the period of review.
    Interested parties are invited to comment on these preliminary 
results. We intend to issue the final results no later than 120 days 
from the date of publication of this notice, pursuant to section 
751(a)(3)(A) of the Tariff Act of 1930, as amended (``the Act'').

DATES: Effective Date: October 18, 2010.

FOR FURTHER INFORMATION CONTACT: Cindy Lai Robinson or Stephanie Moore, 
AD/CVD Operations, Office 3, Import Administration, International Trade 
Administration, Department of Commerce, 14th Street and Constitution 
Avenue, NW., Washington, DC 20230; telephone: (202) 482-3797 or (202) 
482-3692, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On September 1, 2009, the Department of Commerce (``the 
Department'') published in the Federal Register the notice of the 
``Opportunity to Request Administrative Review'' of the antidumping 
duty order on certain lined paper products from People's Republic of 
China, for the period September 1, 2008, through August 31, 2009. See 
Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation: Opportunity to Request Administrative Review, 74 FR 
45179 (September 1, 2009). On September 28, 2009, we received a review 
request from the ``Watanabe Group'' (consisting of Watanabe Paper 
Products (Shanghai) Co., Ltd. (``Watanabe Shanghai''); Watanabe Paper 
Products (Linqing) Co., Ltd. (``Watanabe Linqing''); and Hotrock 
Stationery (Shenzhen) Co., Ltd. (``Hotrock Shenzhen'')) (hereafter 
referred to as ``Watanabe'' or the Watanabe Group). On September 30, 
2009, we received a

[[Page 63815]]

request from petitioner \1\ to review the following four companies: 
Shanghai Lian Li Paper Products Co. Ltd. (``Lian Li''); Hwa Fuh 
Plastics Co., Ltd./Li Teng Plastics (Shenzhen) Co., Ltd. (``Hwa Fuh/Li 
Teng''); Leo's Quality Products Co., Ltd./Denmax Plastic Stationery 
Factory (``Leo/Denmax''); and the Watanabe Group. On October 26, 2009, 
we published the notice of initiation of this antidumping duty 
administrative review with respect to the above four companies. See 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 74 FR 54956 (October 26, 
2009) (``Initiation Notice'').
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    \1\ The petitioner is the Association of American School Paper 
Suppliers (``AASPS'').
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Respondents and Questionnaires

    On November 9, 2009, we issued a questionnaire to Hwa Fuh/Li Teng, 
Leo/Denmax, Lian Li, and the Watanabe Group via FedEx Express.
    On November 6, 2009, and January 13, 2010, Lian Li and Leo/Denmax 
submitted letters, respectively, certifying that they did not export 
the subject merchandise to the United States during the period of 
review (``POR''). Both Lian Li and Leo/Denmax requested that the 
Department rescind the administrative review with respect to each 
company.
    On December 11, 2009, subsequent to the notification from FedEx 
Express that the questionnaire package to Hwa Fuh/Li Teng was not 
deliverable because of an invalid address and phone number in Shenzhen, 
China, we resent the Department's original questionnaire to Hwa Fuh's 
address in Taichung, Taiwan. In the December 11, 2009, letter, we 
requested that Hwa Fuh (in Taiwan) forward the questionnaire to Li Teng 
(in Shenzhen). During November and December 2009, we also made three 
attempts to contact Hwa Fuh/Li Teng by phoning Hwa Fuh/Li Teng numbers 
in Shenzhen China and in Taichung Taiwan. However, we were unable to 
reach Hwa Fuh/Li Teng.
    On December 16, 2009, Watanabe submitted its section A response to 
the Department's original questionnaire, to which petitioner submitted 
its comments on January 15, 2010. On January 8, 2010, Watanabe 
submitted its sections C and D responses to the Department's original 
questionnaire, to which petitioner provided its comments on February 2, 
2010. Watanabe also submitted separate rate application on January 8, 
2010. On March 19, 2010, the Department issued first supplemental 
questionnaire to Watanabe, which provided its response on April 21, 
2010. On May 7, 2010, petitioner provided its comments on Watanabe's 
first supplemental response. On May 24, 2010, the Department issued its 
second supplemental questionnaire to Watanabe, which provided its 
response on June 21, 2010, and on July 2, 2010, the Department issued 
its third supplemental questionnaire to Watanabe, which provided its 
response on July 12, 2010. On July 16, 2010, petitioner provided its 
comments on Watanabe's second supplemental response and comments on the 
upcoming verification. On July 16, 2010, the Department issued sales 
and factors of production verification agendas to Watanabe. On July 19, 
2010, the petitioner provided additional pre-verification comments with 
respect to Watanabe.
    The Department conducted sales and factors of production 
verification of Watanabe from July 26 through 30, 2010 in Shanghai, 
China. On August 11, 2010, we received Watanabe's minor correction 
provided at the outset of the verification.
    On August 27, 2010, the petitioner submitted comments concerning 
Watanabe's questionnaire responses and the verification on those 
responses. This letter contained certain business proprietary 
information (``BPI'') that called into question the reliability of the 
documents reviewed at verification and taken as exhibits and therefore, 
the reliability of Watanabe's response. On September 2, 2010, 
petitioners met Department officials to discuss these comments.\2\ On 
September 3, 2010, the Department issued a letter to Watanabe 
requesting rebuttal comments to the petitioner's August 27, 2010, 
allegations.
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    \2\ See September 2, 2010, Ex Parte Memorandum
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    Watanabe submitted its rebuttal comments on September 10, 2010. In 
its comments, Watanabe did not address these allegations directly as it 
claimed that it did not have access to certain BPI documents.
    On September 20, 2010, the petitioner submitted a letter which 
authorized release of certain documents to Watanabe. On September 21, 
2010, the Department issued a letter to Watanabe asking them to 
specifically address the allegations contained in the petitioner's 
August 27, 2010 letter.
    On September 28, 2010, Watanabe submitted a letter in response to 
the Department's September 21, 2010 letter. Watanabe submitted certain 
factual information and repeated arguments made in its previous letter. 
See ``Adverse Facts Available'' (``AFA'') section below for a detailed 
discussion.

Period of Review

    The period of review (``POR'') is September 1, 2008, through August 
31, 2009.

Case Calendar

    On May 18, 2010, the Department extended the time limits for the 
preliminary results. See Certain Lined Paper Products from India and 
People's Republic of China: Extension of Time Limits for the 
Preliminary Results of Antidumping Duty Administrative Reviews, 75 FR 
27706 (May 18, 2010). Additionally, as explained in the memorandum from 
the Deputy Assistant Secretary for Import Administration, the 
Department has exercised its discretion to toll deadlines for the 
duration of the closure of the Federal Government from February 5, 
through February 12, 2010. Thus, all deadlines in this segment of the 
proceeding have been extended by seven days. See Memorandum to the 
Record from Ronald Lorentzen, DAS for Import Administration, regarding 
``Tolling of Administrative Deadlines As a Result of the Government 
Closure During the Recent Snowstorm,'' dated February 12, 2010. The 
revised deadline for the preliminary results of this review is October 
7, 2010.\3\
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    \3\ Where a statutory deadline falls on a weekend, federal 
holiday, or any other day when the Department is closed, the 
Department will continue its longstanding practice of reaching the 
determination on the next business day. In this instance, the 
preliminary results will be released no later than October 8, 2010.
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Surrogate Country and Factors

    On March 3, 2010, the Department sent interested parties a letter 
requesting comments on the surrogate country and information pertaining 
to valuing factors of production (``FOPs''). On April 19, 2010, 
Watanabe submitted surrogate value comments regarding various Indian 
sources. On June 21 and July 30, 2010, the petitioner submitted 
surrogate value information for use in the preliminary results. On July 
6, 2010, Watanabe submitted comments objecting to the petitioner's June 
21, 2010 submission as being untimely. On July 15, 2010, the petitioner 
submitted rebuttal comments with respect to Watanabe's objection 
comment. The petitioner argued that the deadline set by the Department 
was applicable to the preliminary results and it did not apply to the 
final results.

Scope of the Order

    The scope of this order includes certain lined paper products, 
typically school supplies (for purposes of this scope definition, the 
actual use of or

[[Page 63816]]

labeling of these products as school supplies or non-school supplies is 
not a defining characteristic) composed of or including paper that 
incorporates straight horizontal and/or vertical lines on ten or more 
paper sheets (there shall be no minimum page requirement for looseleaf 
filler paper) including but not limited to such products as single- and 
multi-subject notebooks, composition books, wireless notebooks, 
looseleaf or glued filler paper, graph paper, and laboratory notebooks, 
and with the smaller dimension of the paper measuring 6 inches to 15 
inches (inclusive) and the larger dimension of the paper measuring 8\3/
4\ inches to 15 inches (inclusive). Page dimensions are measured size 
(not advertised, stated, or ``tear-out'' size), and are measured as 
they appear in the product (i.e., stitched and folded pages in a 
notebook are measured by the size of the page as it appears in the 
notebook page, not the size of the unfolded paper). However, for 
measurement purposes, pages with tapered or rounded edges shall be 
measured at their longest and widest points. Subject lined paper 
products may be loose, packaged or bound using any binding method 
(other than case bound through the inclusion of binders board, a spine 
strip, and cover wrap). Subject merchandise may or may not contain any 
combination of a front cover, a rear cover, and/or backing of any 
composition, regardless of the inclusion of images or graphics on the 
cover, backing, or paper. Subject merchandise is within the scope of 
this order whether or not the lined paper and/or cover are hole 
punched, drilled, perforated, and/or reinforced. Subject merchandise 
may contain accessory or informational items including but not limited 
to pockets, tabs, dividers, closure devices, index cards, stencils, 
protractors, writing implements, reference materials such as 
mathematical tables, or printed items such as sticker sheets or 
miniature calendars, if such items are physically incorporated, 
included with, or attached to the product, cover and/or backing 
thereto.
    Specifically excluded from the scope of this order are:
    <bullet> Unlined copy machine paper;
    <bullet> Writing pads with a backing (including but not limited to 
products commonly known as ``tablets,'' ``note pads,'' ``legal pads,'' 
and ``quadrille pads''), provided that they do not have a front cover 
(whether permanent or removable). This exclusion does not apply to such 
writing pads if they consist of hole-punched or drilled filler paper;
    <bullet> Three-ring or multiple-ring binders, or notebook 
organizers incorporating such a ring binder provided that they do not 
include subject paper;
    <bullet> Index cards;
    <bullet> Printed books and other books that are case bound through 
the inclusion of binders board, a spine strip, and cover wrap;
    <bullet> Newspapers;
    <bullet> Pictures and photographs;
    <bullet> Desk and wall calendars and organizers (including but not 
limited to such products generally known as ``office planners,'' ``time 
books,'' and ``appointment books'');
    <bullet> Telephone logs;
    <bullet> Address books;
    <bullet> Columnar pads & tablets, with or without covers, primarily 
suited for the recording of written numerical business data;
    <bullet> Lined business or office forms, including but not limited 
to: pre-printed business forms, lined invoice pads and paper, mailing 
and address labels, manifests, and shipping log books;
    <bullet> Lined continuous computer paper;
    <bullet> Boxed or packaged writing stationery (including but not 
limited to products commonly known as ``fine business paper,'' 
``parchment paper'', and ``letterhead''), whether or not containing a 
lined header or decorative lines;
    <bullet> Stenographic pads (``steno pads''), Gregg ruled (``Gregg 
ruling'' consists of a single- or double-margin vertical ruling line 
down the center of the page. For a six-inch by nine-inch stenographic 
pad, the ruling would be located approximately three inches from the 
left of the book.), measuring 6 inches by 9 inches;
    Also excluded from the scope of this order are the following 
trademarked products:
    <bullet> Fly \TM\ lined paper products: A notebook, notebook 
organizer, loose or glued note paper, with papers that are printed with 
infrared reflective inks and readable only by a Fly\TM\ pen-top 
computer. The product must bear the valid trademark Fly\TM\ (products 
found to be bearing an invalidly licensed or used trademark are not 
excluded from the scope).
    <bullet> Zwipes\TM\: A notebook or notebook organizer made with a 
blended polyolefin writing surface as the cover and pocket surfaces of 
the notebook, suitable for writing using a specially-developed 
permanent marker and erase system (known as a Zwipes\TM\ pen). This 
system allows the marker portion to mark the writing surface with a 
permanent ink. The eraser portion of the marker dispenses a solvent 
capable of solubilizing the permanent ink allowing the ink to be 
removed. The product must bear the valid trademark Zwipes\TM\ (products 
found to be bearing an invalidly licensed or used trademark are not 
excluded from the scope).
    <bullet> FiveStar [supreg]Advance\TM\: A notebook or notebook 
organizer bound by a continuous spiral, or helical, wire and with 
plastic front and rear covers made of a blended polyolefin plastic 
material joined by 300 denier polyester, coated on the backside with 
PVC (polyvinyl chloride) coating, and extending the entire length of 
the spiral or helical wire. The polyolefin plastic covers are of 
specific thickness; front cover is 0.019 inches (within normal 
manufacturing tolerances) and rear cover is 0.028 inches (within normal 
manufacturing tolerances). Integral with the stitching that attaches 
the polyester spine covering, is captured both ends of a 1'' wide 
elastic fabric band. This band is located 2\3/8\'' from the top of the 
front plastic cover and provides pen or pencil storage. Both ends of 
the spiral wire are cut and then bent backwards to overlap with the 
previous coil but specifically outside the coil diameter but inside the 
polyester covering. During construction, the polyester covering is sewn 
to the front and rear covers face to face (outside to outside) so that 
when the book is closed, the stitching is concealed from the outside. 
Both free ends (the ends not sewn to the cover and back) are stitched 
with a turned edge construction. The flexible polyester material forms 
a covering over the spiral wire to protect it and provide a comfortable 
grip on the product. The product must bear the valid trademarks 
FiveStar [supreg]Advance \TM\ (products found to be bearing an 
invalidly licensed or used trademark are not excluded from the scope).
    <bullet> FiveStar Flex\TM\: A notebook, a notebook organizer, or 
binder with plastic polyolefin front and rear covers joined by 300 
denier polyester spine cover extending the entire length of the spine 
and bound by a 3-ring plastic fixture. The polyolefin plastic covers 
are of a specific thickness; front cover is 0.019 inches (within normal 
manufacturing tolerances) and rear cover is 0.028 inches (within normal 
manufacturing tolerances). During construction, the polyester covering 
is sewn to the front cover face to face (outside to outside) so that 
when the book is closed, the stitching is concealed from the outside. 
During construction, the polyester cover is sewn to the back cover with 
the outside of the polyester spine cover to the inside back cover. Both 
free ends (the ends not sewn to the cover and back) are stitched with a 
turned edge construction. Each

[[Page 63817]]

ring within the fixture is comprised of a flexible strap portion that 
snaps into a stationary post which forms a closed binding ring. The 
ring fixture is riveted with six metal rivets and sewn to the back 
plastic cover and is specifically positioned on the outside back cover. 
The product must bear the valid trademark FiveStar Flex\TM\ (products 
found to be bearing an invalidly licensed or used trademark are not 
excluded from the scope).
    Merchandise subject to this order is typically imported under 
headings 4820.10.2050, 4810.22.5044, 4811.90.9090, 4820.10.2010, 
4820.10.2020 of the Harmonized Tariff Schedule of the United States 
(``HTSUS''). The HTSUS headings are provided for convenience and 
customs purposes; however, the written description of the scope of this 
order is dispositive.

Claims of No Shipments by Lian Li and Leo/Denmax

    Lian Li and Leo/Denmax filed no shipment certifications indicating 
that they did not export subject merchandise to the United States 
during the POR. On November 9, 2009, we conducted an internal query of 
the U.S. Customs and Border Protection (``CBP'') entry data with 
respect to both companies. The CBP data entry confirms Lian Li and Leo/
Denmax's claims of no shipments. However, we found that Lian Li's 
manufacturer ID number was used by other producers/reporters and 
therefore, appeared on the entry data. On November 13, 2009, we 
requested that CBP provide entry packets for those entries where Lian 
Li's ID appeared on the entry data. We received the entry packets from 
CBP on November 24 and December 4, 2009. We found no evidence from the 
CBP entry data packets that Lian Li had any entries, exports, or sales 
to the United States of subject merchandise during the POR.
    On December 11, 2009, the petitioner submitted comments on Lian 
Li's November 6, 2009, letter. We rejected the petitioner's December 
11, 2009, letter because the submission over bracketed certain 
information which is public in nature. On December 22, 2009, the 
petitioner resubmitted its comments claiming that Lian Li might have 
shipped subject merchandise to the United States as a ``Free and 
Dutiable'' Type ``01'' entry, i.e., printed matter.\4\
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    \4\ The petitioner provided an import manifest from the Port 
Import Export Reporting Service (``PIERS'') which pertains to 
shipment of goods listed as ``printed matter'' that entered into the 
United States in December 2008. The petitioner points out that the 
commodity description indicates that the goods were produced and/or 
shipped by Lian Li. The petitioner argues that because Lian Li is 
assigned a very low antidumping duty rate, the potential for 
manipulation of entry form data and product classification data is 
very real. Therefore, the petitioner requests that the Department 
query CBP both generally and with specific reference to Lian Li's 
CBP code for antidumping purposes (A-570-901-010) and the company's 
manufacturer ID, and to release the data provided by CBP to parties 
so that these parties can comment on the results of the CBP query. 
See the petitioner's submission dated December 11, 2009.
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    Because printed matter is not subject merchandise under the CLPP 
Order,\5\ the Department directed petitioner to CBP in regards to any 
concerns of possible manipulation of entry data and product 
classification by Lian Li.
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    \5\ See Notice of Amended Final Determination of Sales at Less 
Than Fair Value: Certain Lined Paper Products from the People's 
Republic of China; Notice of Antidumping Duty Orders: Certain Lined 
Paper Products from India, Indonesia and the People's Republic of 
China; and Notice of Countervailing Duty Orders: Certain Lined Paper 
Products from India and Indonesia, 71 FR 56949 (September 28, 2006) 
(``CLPP Order'').
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    In addition, on January 28, 2010, we sent CBP a ``No Shipments 
Inquiry'' with regard to Lian Li and Leo/Denmax. The inquiry requested 
that the CBP report within 10 days of receipt of the message any 
entries from the two companies. See Message from the Department to CBP, 
dated January 28, 2010. We have not received any entry information from 
CBP within the time limit.
    Furthermore, on March 29, 2010, the Department issued a second 
letter to Lian Li and Leo/Denmax requesting further clarification as to 
whether they have not sold or shipped, directly or indirectly, any 
lined paper products (both subject and non-subject) to the United 
States during the POR. Lian Li provided its response on April 12, 2010, 
confirming no shipments or no knowledge of third country transshipments 
of subject merchandise to the United States during the POR. On April 
15, 2010, Leo/Denmax also submitted a letter to recertify that it did 
not have any exports, sales, or entries, either directly or indirectly, 
of subject merchandise to the United States during the POR. Leo/Denmax 
again requested that the Department rescind the administrative review 
with respect to Leo/Denmax.
    With regard to the Lian Li and Leo/Denmax claims of no shipments, 
our practice since implementation of the 1997 regulations concerning 
no-shipment respondents has been to rescind the administrative review 
if the respondent certifies that it had no shipments and we have 
confirmed through our examination of CBP data that there were no 
shipments of subject merchandise during the POR. See Antidumping 
Duties; Countervailing Duties, 62 FR 27296, 27393 (May 19, 1997), and 
Oil Country Tubular Goods from Japan: Preliminary Results of 
Antidumping Duty Administrative Review and Partial Rescission of 
Review, 70 FR 53161, 53162 (September 7, 2005), unchanged in Oil 
Country Tubular Goods from Japan: Final Results and Partial Rescission 
of Antidumping Duty Administrative Review, 71 FR 95 (January 3, 2006). 
As a result, in such circumstances, we normally instruct CBP to 
liquidate any entries from the no-shipment company at the deposit rate 
in effect on the date of entry.
    In our May 6, 2003, ``automatic assessment'' clarification, we 
explained that, where respondents in an administrative review 
demonstrate that they had no knowledge of sales through resellers to 
the United States, we would instruct CBP to liquidate such entries at 
the all-others rate applicable to the proceeding. See Antidumping and 
Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 
FR 23954 (May 6, 2003).
    Based on Lian Li's and Leo/Denmax's assertion of no shipments and 
confirmation of that claim by CBP data, we preliminarily determine that 
Lian Li and Leo/Denmax had no sales to the United States during the 
POR.
    Because ``as entered'' liquidation instructions do not alleviate 
the concerns which the May 2003 clarification was intended to address, 
we find it appropriate in this case to instruct CBP to liquidate any 
existing entries of merchandise produced by Lian Li and Leo/Denmax and 
exported by other parties at the PRC-wide entity rate should we 
continue to find at the time of our final results that Lian Li and Leo/
Denmax had no shipments of subject merchandise from the PRC. See, e.g., 
Certain Frozen Warmwater Shrimp from India: Partial Rescission of 
Antidumping Duty Administrative Review, 73 FR 77610, 77612 (December 
19, 2008). In addition, the Department finds that it is more consistent 
with the May 2003 clarification not to rescind the review in part in 
these circumstances but, rather, to complete the review with respect to 
Lian Li and Leo/Denmax and issue appropriate instructions to CBP based 
on the final results of the review. See the Assessment Rates section of 
this notice below.

Preliminary Partial Rescission

    With respect to HwaFu/Li Teng, the Department was unable to find 
correct addresses for Hwa Fu/Li Teng. Specifically, the Department made 
five different attempts to deliver the questionnaire, but was unable to 
find a valid address for the company. See

[[Page 63818]]

Memorandum to the File from Cindy Robinson, Senior International Trade 
Analyst, AD/CVD Operations, Office 3, regarding ``Antidumping Duty 
Administrative Review of Certain Lined Paper Products from the People's 
Republic of China: Proof of Non-Delivery to Hwa Fu/Li Teng.'' dated 
October 7, 2010. Therefore, the Department preliminarily rescinds the 
review with respect to these companies, in accordance with our 
practice. See, e.g., Silicon Metal from the People's Republic of China: 
Preliminary Results and Preliminary Partial Rescission of Antidumping 
Duty Administrative Review 73 FR 12378, March 7, 2008.

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of information provided by Watanabe in the administrative review of the 
order on subject merchandise from the PRC using standard verification 
procedures, including the examination of relevant sales and factors of 
production information, financial records, and the selection and review 
of original documentation containing relevant information. Our 
verification results are outlined in the public version of our 
verification report dated October 7, 2010, which is on file in the CRU.

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. See, 
e.g., Honey from the People's Republic of China: Preliminary Results 
and Partial Rescission of Antidumping Duty Administrative Review, 70 FR 
74764 (December 16, 2005) (unchanged in final).\6\ Pursuant to 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., Freshwater Crawfish Tail Meat from 
the People's Republic of China: Notice of Preliminary Results of 
Antidumping Duty Administrative Review, 70 FR 58672 (October 7, 2005) 
(unchanged in final); \7\ and Carbazole Violet Pigment 23 from the 
People's Republic of China: Preliminary Results of Antidumping Duty 
Administrative Review and Rescission in Part, 71 FR 65073, 65074 
(November 7, 2006) (unchanged in final).\8\ None of the parties to this 
proceeding has contested such treatment. Accordingly, we calculated NV 
in accordance with section 773(c) of the Act, which applies to NME 
countries.
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    \6\ See Honey from the People's Republic of China: Final Results 
and Final Rescission, in Part, of Antidumping Duty Administrative 
Review, 71 FR 34893 (June 16, 2006).
    \7\ See Freshwater Crawfish Tail Meat from the People's Republic 
of China: Notice of Final Results of Antidumping Duty Administrative 
Review, 71 FR 7013 (February 10, 2006).
    \8\ See Carbazole Violet Pigment 23 from the People's Republic 
of China: Final Results of Antidumping Duty Administrative Review 
and Rescission in Part, 72 FR 26589 (May 10, 2007).
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Separate Rate 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, there 
is a rebuttable presumption that all companies within the PRC are 
subject to government control and, thus, should be assessed a single 
antidumping duty rate. See 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 (May 22, 2006).
    In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate rate status in NME investigations. See Initiation Notice. 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. To establish 
whether a company is sufficiently independent to be entitled to a 
separate, company-specific rate, the Department analyzes each exporting 
entity in an NME country under the test established in Notice of Final 
Determination of Sales at Less than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''), 
as amplified by Notice of Final Determination of Sales at Less Than 
Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 
22585 (May 2, 1994) (``Silicon Carbide'').
    However, if the Department determines that a company is wholly 
foreign-owned or located in a market economy, then a separate rate 
analysis is not necessary to determine whether it is independent from 
government control. It is the Department's practice to require a party 
to submit evidence that it operates independently of the state-
controlled entity in each segment of a proceeding in which it requests 
separate rate status. The process requires exporters to submit a 
separate-rate status application. See Tapered Roller Bearings and Parts 
Thereof, Finished or Unfinished, from the People's Republic of China: 
Final Results of 2005-2006 Administrative Review and Partial Rescission 
of Review, 72 FR 56724 (October 4, 2007), Peer Bearing Co. Changshan v. 
United States, 587 F.Supp. 2d 1319, 1324-25 (CIT 2008) (affirming the 
Department's determination in that review).
    As discussed below, we preliminarily determine not to rely on 
Watanabe's responses. Therefore, we preliminarily determine that the 
Watanabe Group has not demonstrated that it operates free from 
government control. Thus, we find that for purposes of the preliminary 
results of this review, the Watanabe Group is part of the PRC-wide 
entity.

Application of Facts Available

    We find that there is credible evidence on the record that 
documents submitted by Watanabe at verification are either inaccurate, 
internally inconsistent, or are otherwise unreliable. Petitioner 
submitted invoices that are corroborated by Watanabe's own records and 
show that Watanabe's claimed sales and payment values do not tie to its 
own internal bookkeeping. Because we relied on these books and records 
during our verification of the information in Watanabe's questionnaire 
response, we have concluded that the information in the questionnaire 
response is not useable for purposes of these preliminary results. 
Although Watanabe provided some explanation that they claim renders 
petitioner's allegation invalid, we find that Watanabe's explanations 
do not sufficiently address the discrepancies raised by petitioner that 
implicate the veracity of Watanabe's financial information. Because 
this issue arose fairly late in the proceeding, i.e., less than two 
months prior to the deadline for these preliminary results, we find 
that we may need to collect additional information in order to more 
fully evaluate this issue for purposes of the final results.
    On August 27, 2010, the petitioner filed a letter claiming that 
evidence contained in its submission showed that, at the very least, 
Watanabe submitted false invoices at verification that do not tie to 
its own records and are physically different from invoices petitioner 
submitted, which it sought directly from its membership. Petitioner

[[Page 63819]]

argued that (1) although filed after the regulatory deadline for 
submission of information to rebut, clarify, or correct factual 
information, consistent with prior practice, the Department should 
nonetheless accept the information that demonstrates that fraudulent 
documents have been submitted, consistent with the Department's 
practice in Certain Oil Country Tubular Goods; and (2) the information 
it submitted has critical implications for the veracity of Watanabe's 
financial information such that the Department cannot use Watanabe's 
data for purposes of the preliminary results. See e.g., Letter to Hon. 
Gary F. Locke from petitioner, re: Certain Oil Country Tubular Goods 
from the People's Republic of China (Feb. 22, 2010) Case No. A-570-943; 
Memo to All interested Parties from Wendy J. Frankel, re: Release of 
Customs & Border Protection Information (March 9, 2010) Case No. A-570-
943.
    Petitioner specifically cited to the invoices it submitted and the 
supplied payment documentation at Verification Exhibit 14 at page 1 
Watanabe provided to establish that the sales and payment values do not 
tie to Watanabe's own internal records.
    On September 3, 2010, we asked Watanabe to address the petitioner's 
August 27 allegation that Watanabe provided false documentation 
(including falsified invoices) during the Department's verification.
    On September 10, 2010, Watanabe submitted its response, claiming 
that petitioner's submission should be rejected as untimely. It further 
contended that the Department should not decline to rely on the 
verification documents Watanabe provided. Watanabe went on to argue 
that because petitioner claimed proprietary treatment for vast portions 
of the information provided, it and its legal representative and 
accountants could not see the information. Watanabe asserted that it is 
unable to meaningfully respond and, as such, the Department should 
refuse to consider the information. Watanabe also argued petitioner's 
reference to verification exhibits in the absence of a verification 
report is pure speculation as to its contents. Further, Watanabe argued 
that the documents petitioner refers to relate to third country sales, 
which it claims are irrelevant to the Department's inquiry into U.S. 
sales and the mere allegation that such third country sales were 
diverted to the United States is insufficient. Finally, Watanabe argued 
that petitioner should be made to explain how it came to be informed 
about confidential verification exhibits.
    Regarding the payment for the invoices, Watanabe explained that 
invoice value and payments do not necessarily need to correspond to 
each other on a one-to-one basis for a variety of reasons, e.g., it is 
common practice for some invoices to be partially paid in different 
payments or that one payment might cover more than one invoice. 
Moreover, there may be quality disputes between buyer and seller, or 
simply a breach of faith by the buyer. Such discrepancies can sometimes 
result in adjustments at the end of the accounting period.
    On September 20, 2010, per Watanabe's request to reveal the 
confidential information so that it may substantively comment, in 
accordance with 19 CFR 351.306(a)(5), petitioner authorized the 
Department to release directly to Watanabe, for comment, invoices that 
it had attached to its August 27, 2010 submission. On September 21, 
2010, the Department issued a letter to Watanabe releasing those 
invoices to Watanabe and again requested that they respond to 
petitioner's allegation that Watanabe provided false documentation 
during the Department's recent verification of Watanabe's questionnaire 
response. On September 24, 2010, due to a national holiday, Watanabe 
requested an extension for a period of one week from the date the 
company reopens, which was not provided.
    On September 30, 2010, Watanabe submitted a letter in which it 
repeated many of the arguments raised in its September 10, 2010 letter. 
Watanabe also asserted that the information provided by petitioner was 
fabricated and is therefore unknown to it; because of this, Watanabe 
argued that it could not adequately respond to these allegations. In 
addition, Watanabe provided certain Customs data of record to establish 
that it had properly reported all of its sales.

Analysis

    Watanabe has made a number of arguments about why the Department 
should reject petitioner's allegations, each of which are addressed 
below.
    Watanabe argues that the factual information submitted by 
petitioners was untimely filed. While we agree that this filing was 
past the deadlines in 19 CFR 351.301(b)(2) and (c)(1), the Department 
has the discretion under 19 CFR 351.203(b) to extend any deadline for 
good cause. Given the significance of the issues raised by petitioners, 
we extended the deadline for factual information, and accepted 
petitioner's allegation and information, and requested that Watanabe 
respond.
    Watanabe also argues that petitioner should be made to explain how 
it came to be informed about confidential verification exhibits. 
However, in letters dated August 30, 2010, and September 17, and 20, 
2010, petitioner adequately explained how it had obtained the new 
factual information that it had submitted, specifying that it had been 
done without explaining or providing any data to its membership. There 
has been no allegation of an APO violation nor is there any evidence of 
improper treatment of BPI on the record of this case.
    Watanabe argues that petitioner's arguments are without merit as 
they are taken out of context because the verification report had not 
been issued at the time. We agree that it is unfortunate that this 
issue arose before the verification report had been issued. However, in 
accordance with standard practice, Watanabe served the petitioner a 
copy of the verification exhibits within 5 days of the conclusion of 
verification. As discussed below, it is clear from the exhibits that 
they were obtained as part of the standard verification procedures of 
``Quantity and Value Reconciliation'' and ``Completeness Tests.'' The 
procedures and the relevant discussion of factual information are in 
the October 7, 2010, Verification Report.
    Additionally, Watanabe claims that it is unable to adequately 
respond these allegations because Watanabe itself was unable to access 
to certain information. This claim is without merit. The issues raised 
by petitioner relate directly to Watanabe's own proprietary information 
contained in the verification exhibits. Both in the public and Watanabe 
proprietary version of petitioner's August 27, 2010, letter, and in the 
Department's letters of September 3, and 21, 2010, the factual bases of 
the petitioner's allegation is clear.
    As to the merits of petitioner's allegations, petitioner supplied 
invoices which they claimed correspond to invoices related to third-
country sales reviewed at verification and provided as verification 
exhibits. Specifically, petitioner points to the similarity between the 
products listed, quantities and other details in the two sets of 
invoices. However, they note the significant differences in payment 
amounts between the two sets of invoices. Additionally, petitioner 
provided documentation demonstrating payment in the amount listed on 
the petitioner-provided invoice and receipt of that amount as recorded 
in Watanabe supplied payment documentation at Verification Exhibit 14 
at page 1. For three of Watanabe's third-country sales,

[[Page 63820]]

petitioner provided documentation demonstrating payment in the amount 
listed on the invoices petitioner provided and not those provided by 
Watanabe. This raises a fundamental question about the reliability of 
the documents reviewed at verification.
    The invoices in question were reviewed as part verification 
procedure called ``Quantity and Value Reconciliation'' and 
``Completeness Tests'' which is a procedure done to test whether the 
total quantity and value of sales reported by the respondent tie to 
their books and records. This is one of the central elements of 
verification--to ensure that respondent reported all the necessary 
sales. The total sales of a company include sales to the United States, 
the home market, and third countries. Without this step, we have no way 
of determining whether all the U.S. sales during the POR were properly 
reported. As detailed in the verification report, we selected sample 
transactions from Watanabe's list of total sales and reviewed them to 
determine if they were properly reported. This list identified the 
total quantity and value for each transaction. Thus, the invoices we 
reviewed showed total revenue based on the prices listed on them. This 
list of total sales, including the quantity and value, was then tied to 
Watanabe's 2008 and 2009 Financial Statements.
    To date, Watanabe's substantive response to the presentation of 
these invoices and payment data by petitioner is to provide a copy of 
one Customs data record. This is intended to support the value as 
reported on one of the invoices provided by Watanabe at verification, 
to claim that the allegations of petitioner appears to be based on 
made-up documents, and to claim that frequently, customers pay amounts 
that differ from the invoiced amount.
    Watanabe has not, however, addressed why the specific amount on 
invoices petitioner provided tie directly to Watanabe's payment 
records. Petitioner specifically cited to these invoices and the 
payment documents Watanabe provided as Verification Exhibit 14 at page 
1 to show that the sales and payment values do not tie to Watanabe's 
own internal records, but to the invoices provided by petitioner. 
Watanabe's answers provide possible explanations as to why the payment 
amount on invoices it provided may not appear in its ledgers, but do 
not adequately explain why instead the payment amounts on invoices 
petitioner provided are clearly identifiable in the Watanabe-supplied 
payment documentation at Verification Exhibit 14 at page 1.
    While Watanabe questions the existence of any motive to 
misreporting third country sales and attempts to impugn the behavior of 
petitioner, we are not satisfied with its response to the allegations.
    Regardless of the motives of either party, we preliminarily 
determine that petitioner has provided credible evidence of 
misreporting of sales values by Watanabe. The fact that the total 
revenue associated with the invoiced amounts petitioner submitted tied 
to the company book and records tends to show that the prices on the 
invoices reviewed at verification are incorrect, thus fundamentally 
calling into question the reliability of Watanabe's records. As such, 
these records do not appear to be a reliable basis to use for our 
calculations. It is Watanabe's responsibility to provide a clear 
explanation of what is the basis for these different invoices, and how 
these differences can be explained and clearly tied to the records 
examined at verification so that we can determine that such records are 
reliable. Petitioner provided to Watanabe invoices it obtained from the 
members of its association, and linked the invoiced amount to the 
payment documentation Watanabe supplied as Verification Exhibit 14 at 
page 1.
    Watanabe has not refuted the evidence showing the values on the 
invoices petitioner provided tie to Watanabe's own records. Because 
Watanabe has failed to provide an adequate explanation at the time of 
these preliminary results, we have relied on facts available for 
purposes of these preliminary results. However, as this issue has 
arisen late in the proceeding and there were certain constraints 
associated with proprietary treatment, we will continue to probe this 
issue further for purposes of the final results.
    Section 776(a) of the Act provides that the Department will apply 
``facts otherwise available'' (``FA'') if, inter alia, necessary 
information is not available on the record or an interested party: (1) 
Withholds information that has been requested by the Department; (2) 
fails to provide such information within the deadlines established, or 
in the form or manner requested by the Department, subject to 
subsections (c)(1) and (e) of section 782 of the Act; (3) significantly 
impedes a proceeding; or (4) provides such information, but the 
information cannot be verified.
    According to section 776(b) of the Act, if the Department finds 
that an interested party fails to cooperate by not acting to the best 
of its ability to comply with requests for information, the Department 
may use an inference that is adverse to the interests of that party in 
selecting from the facts otherwise available. See also India Lined 
Paper AR1 Final; Notice of Final Results of Antidumping Duty 
Administrative Review: Stainless Steel Bar from India, 70 FR 54023, 
54025-26 (September 13, 2005); and Notice of Final Determination of 
Sales at Less Than Fair Value and Final Negative Critical 
Circumstances: Carbon and Certain Alloy Steel Wire Rod from Brazil, 67 
FR 55792, 55794-96 (August 30, 2002). Adverse inferences are 
appropriate ``to ensure that the party does not obtain a more favorable 
result by failing to cooperate than if it had cooperated fully.'' See 
Statement of Administrative Action accompanying the Uruguay Round 
Agreements Act, H.R. Rep. No. 103-316, Vol. 1, at 870 (1994) (``SAA''), 
reprinted in 1994 U.S.C.C.A.N. 4040, 4198-99. Furthermore, 
``affirmative evidence of bad faith on the part of a respondent is not 
required before the Department may make an adverse inference.'' See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27340 (May 19, 1997); see also Nippon Steel Corp. v. United States, 337 
F.3d 1373, 1382-83 (Fed. Cir. 2003) (``Nippon'').
    We find that the PRC-wide entity, including Watanabe, did not act 
to the best of its ability in this proceeding, within the meaning of 
section 776(b) of the Act, because it failed to respond to the 
Department's requests for information and failed to provide any 
additional information. Based on all of the above, the Department 
preliminarily finds that adverse inference is warranted in selecting 
from the facts otherwise available. See Nippon, 337 F.3d at 1382-83.
    Section 776(b) of the Act provides that the Department may use as 
AFA information derived from: (1) The petition; (2) the final 
determination in the investigation; (3) any previous review; or (4) any 
other information placed on the record. The Department's practice, when 
selecting an AFA rate from among the possible sources of information, 
has been to ensure that the margin is sufficiently adverse ``as to 
effectuate the statutory purposes of the adverse facts available rule 
to induce respondents to provide the Department with complete and 
accurate information in a timely manner.'' See, e.g., Certain Steel 
Concrete Reinforcing Bars from Turkey; Final Results and Rescission of 
Antidumping Duty Administrative Review in Part, 71 FR 65082, 65084 
(November 7, 2006).
    To ensure that the margin is sufficiently adverse so as to induce

[[Page 63821]]

cooperation, we have preliminarily assigned to the PRC-wide entity, 
including Watanabe, the rate of 258.21 percent, the highest rate on the 
record of this proceeding. This rate was assigned to the PRC-wide 
entity in the investigation of CLPP from the PRC. See Notice of Amended 
Final Determination of Sales at Less Than Fair Value: Certain Lined 
Paper Products from the People's Republic of China; Notice of 
Antidumping Duty Orders: Certain Lined Paper Products from India, 
Indonesia and the People's Republic of China; and Notice of 
Countervailing Duty Orders: Certain Lined Paper Products from India and 
Indonesia, 71 FR 56949 (September 28, 2006). As explained below, this 
rate has been corroborated.

Corroboration of Secondary Information

    Section 776(c) of the Act provides that, when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation or review, it shall, to the extent 
practicable, corroborate that information from independent sources that 
are reasonably at its disposal. Secondary information is defined as 
information derived from the petition that gave rise to the 
investigation or review, the final determination concerning the subject 
merchandise, or any previous review under section 751 of the Act 
concerning the subject merchandise. See SAA at 870. Corroborate means 
that the Department will satisfy itself that the secondary information 
to be used has probative value. Id. To corroborate secondary 
information, the Department will, to the extent practicable, examine 
the reliability and relevance of the information to be used. See 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews: Tapered Roller Bearings 
and Parts Thereof, Finished and Unfinished from Japan, and Tapered 
Roller Bearings Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan, 61 FR 57391, 57392 (November 6, 1996) (unchanged 
in the final determination), Final Results of Antidumping Duty 
Administrative Reviews and Termination in Part: Tapered Roller Bearings 
and Parts Thereof, Finished and Unfinished from Japan, and Tapered 
Roller Bearings Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan, 62 FR 11825 (March 13, 1997). Independent sources 
used to corroborate such evidence may include, for example, published 
price lists, official import statistics and customs data, and 
information obtained from interested parties during the particular 
investigation. See Notice of Preliminary Determination of Sales at Less 
Than Fair Value: High and Ultra-High Voltage Ceramic Station Post 
Insulators from Japan, 68 FR 35627 (June 16, 2003) (unchanged in final 
determination) Notice of Final Determination of Sales at Less Than Fair 
Value: High and Ultra High Voltage Ceramic Station Post Insulators from 
Japan, 68 FR 62560 (November 5, 2003); and Notice of Final 
Determination of Sales at Less Than Fair Value: Live Swine From Canada, 
70 FR 12181, 12183-84 (March 11, 2005).
    The AFA rate selected here is from the original investigation and 
was applied to Watanabe in the second Administrative Review. This rate 
was calculated based on information contained in the petition, which 
was corroborated for the final determination. No additional information 
has been presented in the current review which calls into question the 
reliability of the information. Therefore, the Department finds that 
the information continues to be reliable.

Preliminary Results of the Review

    The Department has determined that the following preliminary 
dumping margin exists for the period September 1, 2008, through August 
31, 2009:

------------------------------------------------------------------------
                                                      Weighted-average
               Producer/manufacturer                       margin
------------------------------------------------------------------------
PRC-Wide Rate (which includes the Watanabe Group).               258.21%
------------------------------------------------------------------------

Disclosure and Public Hearing

    The Department will disclose to parties the calculations performed 
in connection with these preliminary results within five days of the 
date of publication of this notice. See 19 CFR 351.224(b). Because, as 
discussed above, we intend to seek additional information, we will 
establish the briefing schedule at a later time, and will notify 
parties of the schedule in accordance with 19 CFR 351.309. Parties who 
submit case briefs or rebuttal briefs in this proceeding are requested 
to submit with each argument: (1) A statement of the issue; (2) a brief 
summary of the argument; and (3) a table of authorities. See 19 CFR 
351.309(c)(2).
    Pursuant to 19 CFR 351.310(c), interested parties who wish to 
request a hearing, or to participate if one is requested, must submit a 
written request to the Assistant Secretary for Import Administration, 
Room 1117, within 30 days of the date of publication of this notice. 
Requests should contain: (1) The party's name, address and telephone 
number; (2) the number of participants; and (3) a list of issues to be 
discussed. Id. Issues raised in the hearing will be limited to those 
raised in the respective case briefs. The Department will issue the 
final results of this administrative review, including the results of 
its analysis of the issues raised in any written briefs, not later than 
120 days after the date of publication of this notice, pursuant to 
section 751(a)(3)(A) of the Act.

Assessment Rates

    Upon issuance of the final results, the Department will determine, 
and CBP shall assess, antidumping duties on all appropriate entries 
covered by this review. The Department intends to issue assessment 
instructions to CBP 15 days after the publication date of the final 
results of this review. We will instruct CBP to liquidate the Watanabe 
Group's appropriate entries at the PRC-wide rate of 258.21 percent.

Cash Deposit Requirements

    The following cash deposit requirements will be effective upon 
publication of the notice of final results of the administrative review 
for all shipments of CLPP from the PRC entered, or withdrawn from 
warehouse, for consumption on or after the date of publication, as 
provided by section 751(a)(2)(C) of the Act: (1) For previously 
reviewed or investigated companies not listed above that have separate 
rates, the cash-deposit rate will continue to be the company-specific 
rate published for the most recent period; (2) for all other PRC 
exporters of subject merchandise, which have not been found to be 
entitled to a separate rate, the cash-deposit rate will be PRC-wide 
rate of 258.21 percent; and (3) for all non-PRC exporters of subject 
merchandise, the cash-deposit rate will be the rate applicable to the 
PRC

[[Page 63822]]

exporter that supplied that non-PRC exporter. These deposit 
requirements, when imposed, shall remain in effect until further 
notice.

Notification to Importers

    This notice also 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.
    This determination is issued and published in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

     Dated: October 7, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-26186 Filed 10-15-10; 8:45 am]
BILLING CODE 3510-DS-P