Honey from the People's Republic of China: Final Results and Final Rescission, In Part, of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On December 27, 2004, the Department published the Preliminary Results of the second administrative review of the antidumping duty order on honey from the People's Republic of China (“PRC”) (69 FR 77184). This review covers nine exporters or producer/exporters: (1) Zhejiang Native Produce and Animal By-Products Import & Export Group Corp. (“Zhejiang”); (2) Shanghai Eswell Enterprise Co., Ltd. (“Eswell”); (3) Wuhan Bee Healthy Company, Ltd. (“Wuhan Bee”); (4) Jinfu Trading Co., Ltd. (“Jinfu”); (5) Sichuan-Dujiangyan Dubao Bee Industrial Co., Ltd. (“Dubao”); (6) Inner Mongolia Autonomous Region Native Produce and Animal By-Products Import & Export Corp. (“Inner Mongolia”); (7) Shanghai Xiuwei International Trading Co., Ltd. (“Shanghai Xiuwei”); (8) Shanghai Shinomiel International Trade Corporation (“Shanghai Shinomiel”); and (9) Kunshan Foreign Trade Company (“Kunshan”), and exports of the subject merchandise to the United States during the period December 1, 2002 through November 30, 2003.

Based on our analysis of the record, including factual information obtained since the Preliminary Results, we have made changes to the margin calculations for Zhejiang, Eswell, Wuhan Bee, and Jinfu. Based on Dubao's non-cooperation after the Preliminary Results, we have applied total adverse facts available to all of Dubao's sales during the POR. Therefore, the final results differ from the Preliminary Results. See “Final Results of Review” section below

EFFECTIVE DATE:

July 6, 2005.

FOR FURTHER INFORMATION CONTACT:

Anya Naschak or Kristina Boughton at (202) 482-6375 or (202) 482-8173, respectively; AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

Background

We published in the Federal Register the Preliminary Results of the second administrative review on December 27, 2004. See Honey from the People's Republic of China: Preliminary Results, Partial Rescission, and Extension of Final Results of Second Antidumping Duty Administrative Review, 69 FR 77184 (December 27, 2004) (“Preliminary Results”). The period of review (“POR”) is December 1, 2002 through November 30, 2003.

Since the Preliminary Results the following events have occurred:

On January 10, 2005, Dubao informed the Department that it wished to withdraw from this administrative review. On January 12, 2005, the Department issued a letter informing Dubao that the request to withdraw from the review was well after the deadline for submitting such requests, and petitioners in this case had not withdrawn their request for review. The Department also informed Dubao that, because of Dubao's failure to respond to three outstanding supplemental questionnaires and the Department's inability to conduct verification of information submitted by Dubao, the Department may find Dubao to have failed to cooperate to the best of its ability pursuant to section 776(b) of the Tariff Act of 1930, as amended (“the Act”), and provided Dubao with an additional opportunity to submit the requested information. The Department received no response from Dubao.

From February 28, 2005 through March 4, 2005, the Department conducted verification of Wuhan Bee's sales and factors of production information at Wuhan Bee's facility in Wuhan. See Memorandum to the File from Case Analysts: Verification of U.S. Sales and Factors of Production for Respondent Wuhan Bee Healthy Co., Ltd., dated April 14, 2005 (“Wuhan Bee HM Verification Report”).

From March 7, 2005 through March 11, 2005, the Department conducted verification of Shanghai Eswell's sales and factors of production information at Shanghai Eswell's facility in Shanghai, and at Shanghai Eswell's unaffiliated producer, Nanjing Lishui Changli Bees Product Co., Ltd.'s (“Nanjing Changli”). See Memorandum to the File from Case Analysts: Verification of Sales of Shanghai Eswell Enterprise Co., Ltd. and of Factors of Production for Nanjing Lishui Changli Bees Product Co., Ltd.'s in the Antidumping Duty Administrative Review of Honey from the People's Republic of China, dated April 15, 2005 (“Eswell HM Verification Report”). From March 24, 2005 to March 25, 2005, the Department conducted verification of Shanghai Eswell's and Eswell America, Inc.'s (“Eswell America”) (collectively “Eswell”) sales information at Shanghai Eswell's claimed U.S. affiliate, Eswell America, in Los Angeles. See Memorandum to the File from Case Analysts: Verification of Sales of Eswell America, Inc. in the Antidumping Duty Administrative Review of Honey from the People's Republic of China, dated April 15, 2005 (“Eswell US Verification Report”).

From April 27, 2005 through April 29, 2005, the Department conducted verification of Wuhan Bee's claimed U.S. affiliate in Wisconsin. See Memorandum to the File from Carrie Blozy and Kristina Boughton: Verification of U.S. Sales and Further Manufacturing Expenses for Respondent Wuhan Bee Healthy Co., Ltd (Wuhan Bee), as reported by Presstek Inc., Pure Sweet Honey Farm Inc., and Pure Food Ingredients, dated May 6, 2005 (“Wuhan Bee U.S. Verification Report”).

We invited parties to comment on our Preliminary Results. We received a case brief from respondents Zhejiang, Eswell, Wuhan Bee, and Jinfu on May 4, 2005. We also received a case brief from the American Honey Producers Association and the Sioux Honey Association (collectively, “petitioners”), on May 4, 2005. The Department rejected respondents' case brief on May 5, 2005, and May 9, 2005, because the brief contained untimely submitted new information. Respondents refilled their case brief on May 10, 2005. We received a rebuttal brief from petitioners on May 13, 2005. The Department also requested comment on a number of issues, including the verification of Wuhan Bee's claimed U.S. affiliate, the methodology for constructing an export price (“EP”) database for Wuhan Bee and Shanghai Eswell, additional information with respect to the surrogate value of raw honey, and on calculating a per-unit assessment and cash deposit rate for the final results. We received comments from parties on each of these issues.

On June 3, 2005, we held a public hearing in this review. On June X, 2005, the Department submitted a letter to respondents and petitioners requesting comments on its proposed redaction of certain sur-rebuttal comments made by respondents in the public hearing. We received comments from parties on these proposed redactions on June 20, 2005.

Scope of the Order

The products covered by this order are natural honey, artificial honey containing more than 50 percent natural honey by weight, preparations of natural honey containing more than 50 percent natural honey by weight, and flavored honey. The subject merchandise includes all grades and colors of honey whether in liquid, creamed, comb, cut comb, or chunk form, and whether packaged for retail or in bulk form.

The merchandise subject to this order is currently classifiable under subheadings 0409.00.00, 1702.90.90, and 2106.90.99 of the Harmonized Tariff Schedule of the United States (“HTSUS”). Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise under order is dispositive.

Partial Rescission of Administrative Review

In the Preliminary Results, the Department issued a notice of intent to rescind this administrative review with respect to Kunshan, as we found that there were no entries of subject merchandise during the POR. See Preliminary Results, 69 FR at 77186. The Department received no comments on this issue. Therefore, the Department is rescinding this administrative review with respect to Kunshan.

Separate Rates

Zhejiang, Eswell, Wuhan Bee, Jinfu, and Dubao have requested separate, company-specific antidumping duty rates. In our Preliminary Results, we found that Zhejiang, Eswell, Wuhan Bee, Jinfu, and Dubao had met the criteria for the application of a separate antidumping duty rate. See Preliminary Results. Also in the Preliminary Results, we found that Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel did not respond in a complete and timely manner to the Department's requests for information, and hence do not qualify for a separate rate. The Department did not receive comments on this issue prior to these final results. See also “The PRC-Wide Rate and Application of Facts Otherwise Available” section below.

Since the Preliminary Results, the Department requested additional information from Dubao and stated its intent to complete a verification of Dubao. See Preliminary Results, 69 FR 77186. The Department was unable to verify the information submitted by Dubao because Dubao withdrew from this administrative review, and therefore Dubao is subject to adverse facts available and shall be deemed to be part of the PRC-wide entity. See The PRC-Wide Rate and Application of Adverse Facts Available section below.

We have not received any information since the Preliminary Results with respect to Zhejiang, Eswell, Wuhan Bee, and Jinfu which would warrant reconsideration of our separate-rates determination with respect to these companies. Therefore, we have assigned individual dumping margins to Zhejiang, Eswell, Wuhan Bee, and Jinfu for this review period.

Analysis of Comments Received

All issues raised in the briefs are addressed in the Issues and Decision Memorandum for the Final Results in the 2002/2003 Administrative Review of Honey from the People's Republic of China from Barbara E. Tillman, Acting Deputy Assistant Secretary to Joseph A. Spetrini, Acting Assistant Secretary, dated June 27, 2005 (“Issues and Decision Memorandum”), which is hereby adopted by this notice. A list of the issues raised, all of which are in the Issues and Decision Memorandum, is attached to this notice as Appendix I. Parties can find a complete discussion of all issues raised in the briefs and the corresponding recommendations in this public memorandum, which is on file in the Central Records Unit (“CRU”), room B-099 of the Herbert H. Hoover Building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly on the Web at http://ia.ita.doc.gov/frn/index.html. The paper copy and electronic version of the Issues and Decision Memorandum are identical in content.

Shipments by Wuhan Bee

During the POR, the Department discovered a discrepancy between Wuhan Bee's reported U.S. sales database quantity and value and U.S. Customs and Border Protection (“CBP”) information. See Supplemental Questionnaire to Wuhan Bee from the Department of Commerce, dated January 6, 2005, and two memorandums to the file, dated January 6, 2005, and May 11, 2005. The CBP information indicated that Wuhan Bee appeared to have entries of subject merchandise into the United States during the POR that were not accounted for in its reported U.S sales database.

The Department took several steps with regard to this issue. First, the Department requested the entry documents associated with these sales from CBP and noted discrepancies between these invoices and Wuhan Bee's invoices. See “Memorandum to the File: Wuhan Bee Healthy Co., Ltd. (Wuhan Bee) Invoices,” dated June 10, 2005. Next, the Department conducted extensive completeness tests during Wuhan Bee's verification in China, in addition to standard verification procedures. In addition to conducting a reconciliation of Wuhan Bee's total reported sales value and quantity during the POR to its financial records, the Department also reconciled the reported sales values and total volume of shipments reported to the Department to all bills of lading, VAT receipts, raw material withdrawals, raw material inputs, and payment deposits. The Department did not find any evidence, based on these exhaustive completeness tests, that the additional sales had been made by Wuhan Bee.

Finally, the Department extensively interviewed company officials, at the verifications in both China and Wisconsin, regarding the discrepancy and the steps Wuhan Bee had taken regarding this matter. Company officials claimed that they reported these sales to CBP as fraudulent entries, and that they did not produce or ship these entries. They also outlined the steps they took with the U.S. Food and Drug Administration (“FDA”) and CBP regarding the matter, e.g., providing a list of all of Wuhan Bee's legitimate entries during a certain time period at FDA's behest, meeting with FDA personnel, and hiring a law firm to handle the matter with the CBP. Company officials said that, to their knowledge, however, there had yet to be a resolution to this matter.¹

The Department was unable to find any evidence that Wuhan Bee or its claimed affiliates, Presstek Inc. (“Presstek”), Pure Sweet Honey Farm Inc. (“PSH”), and Pure Food Ingredients (“PFI”), produced, shipped, invoiced, or received payment for these additional entries. Therefore, for these final results, the Department finds that these sales were not in fact Wuhan Bee sales and will instruct the CBP to liquidate these entries at the PRC-wide rate.

Changes Since the Preliminary Results

Based on the comments received from the interested parties, we have made changes to the margin calculation for Zhejiang, Eswell, Wuhan Bee, and Jinfu. For a discussion of these changes, See the Issues and Decision Memorandum. For the final results, we have updated our selection of a surrogate value for raw honey, based on new information placed on the record following the Preliminary Results. See the Issues and Decision Memorandum at Comment 1.

For the final results, we revised our calculation of surrogate financial ratios for factory overhead, selling, general and administrative expenses (“SG&A”), and profit, to use the more contemporaneous 2003/2004 annual report from the Mahabaleshwar Honey Producers Cooperative (“MHPC”), and applied these new ratios in our margin calculations. See the Issues and Decision Memorandum at Comment 2 and 3.

We revised our calculation of surrogate home market brokerage and handling expenses to be consistent with recent Department determinations. See the Issues and Decision Memorandum at Comment 4.

We revised our calculation of CEP profit for Zhejiang, and Shanghai Eswell to use the surrogate profit ratio from MHPC's financial statements in accordance with the Department's practice. See, e.g., the Issues and Decision Memorandum at Comment 5.

We revised our classification of certain of Wuhan Bee's sales to Presstek from constructed export price (“CEP”) to export price (“EP”). See the Issues and Decision Memorandum at Comment 11, and below under “Wuhan Bee Affiliation.” For the remaining CEP sales by Wuhan Bee to Presstek, the Department has applied adverse facts available. See the Issues and Decision Memorandum at Comment 13, and “The PRC-Wide Rate and Application of Facts Otherwise Available” section, below.

Affiliation

With respect to Wuhan Bee, the Department has reversed its finding in the Preliminary Results that Wuhan Bee and its U.S. reseller were affiliated parties for the entire POR. Wuhan Bee has claimed that it is affiliated with Presstek, PSH, and PFI within the meaning of section 771(33) of the Act. Section 771(33) of the Act states that affiliated persons include: (A) members of a family, including brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants, (B) any officer or director of an organization and such organization, (C) partners, (D) employer and employee, (E) any person directly or indirectly owning, controlling, or holding with power to vote, five percent or more of the outstanding voting stock or shares of any organization and such organization, (F) two or more persons directly or indirectly controlling, controlled by, or under common control with, any person, (G) any person who controls any other person and such other person. For purposes of this paragraph, a person shall be considered to control another person if the person is legally or operationally in a position to exercise restraint or direction over the other person. To find affiliation between companies, the Department must find that at least one of the criteria listed above is applicable to the respondents.

Although no party in this case is questioning whether or not Wuhan Bee was in fact affiliated with Presstek, PSH, and PFI at some point during the POR within the meaning of Section 771(33), we note that the effective date of this affiliation is in question, and is significant to this proceeding for purposes of determining whether Wuhan Bee's U.S. sales made on various dates should be treated as “export price” sales or “constructed export price” sales. Wuhan Bee claims that it was affiliated with Presstek, PSH, and PFI throughout the entire POR, such that all of its POR sales should be treated as CEP sales. In support of this contention, Wuhan Bee has provided documentation it claims establishes that it had a close supplier relationship with Presstek, PSH, and PFI during the entire POR and that this close supplier relationship is sufficient to find affiliation between the parties. Petitioners claim that, if the Department were to find Wuhan Bee and Presstek, PSH, and PFI affiliated at any point during the POR, then the date of affiliation should be September 30, 2003, when Wuhan Bee recorded the ownership interest purchase by Presstek, PSH, and PFI's president in its normal books and records.

In considering for purposes of these final results whether Wuhan Bee was affiliated with Presstek, PSH, and PFI under section 771(33) of the Act, we analyzed all information on the record regarding the possible affiliations between PSH and Presstek, between Wuhan Bee and Presstek, and between Wuhan Bee and PSH. In particular, we considered whether Wuhan Bee and Presstek were affiliated from the beginning of the POR and whether the investment of the individual who was the president of Presstek, PSH, and PFI which led to that individual's board membership in Wuhan Bee resulted in a common control relationship between the parties at any time during the POR. See “Memorandum to James C. Doyle: Administrative Review of the Antidumping Duty Order on Honey from the People's Republic of China (PRC): Analysis of the Relationship and Treatment of Sales between Wuhan Bee Healthy Co., Ltd. and Presstek Inc., Pure Sweet Honey Farm Inc., and Pure Foods Ingredients, Inc.” (June 27, 2005) (“Wuhan Bee Affiliation Memo”) and accompanying Issue and Decision Memo at Comment 11.

Based on an analysis of the information on the record, the Department has determined that Wuhan Bee and Presstek, PSH, and PFI were not “affiliated” within the meaning of sections 771(33)(E) or (G) during the POR, and that they only became affiliated within the meaning of section 771(33)(F) of the Act when the Wuhan Bee board membership of the president of Presstek, PSH, and PFI became effective on July 20, 2003. At that point, Wuhan Bee, Presstek, PSH, and PFI came under the common control of that individual, and thus became affiliated with each other. Therefore, the Department has determined that, for purposes of these final results, all sales between Wuhan Bee and Presstek prior to July 20, 2003, will be examined on an EP basis, while all sales on or after this date will be examined on a CEP basis. See “The PRC-Wide Rate and Application of Facts Otherwise Available” section of this notice and accompanying Issue and Decision Memo at Comment 11 and 12 for further discussion.

The PRC-Wide Rate and Application of Facts Otherwise Available

As explained above, Eswell, Jinfu, Wuhan Bee, and Zhejiang (collectively “separate rate companies”) each have obtained a separate rate. The PRC-wide rate applies to all entries of subject merchandise except for entries from PRC producers/exporters that have their own calculated rate. See “Separate Rates” section above.

Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel:

The Department did not receive comments on its preliminary determination to apply adverse facts available (“AFA”) to the PRC-wide entity (including Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel). Therefore, we have not altered our decision to apply total AFA to the PRC-wide entity (including Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel) for these final results, in accordance with sections 776(a)(2)(A) and (B), as well as section 776(b) of the Tariff Act of 1930, as amended (“the Act”). For a complete discussion of the Department's decision to apply total AFA for Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel, See Preliminary Results, 69 FR at 77188-77190. Furthermore, as stated in the Preliminary Results, the Department determined that, because Inner Mongolia, Shanghai Xiuwei, and Shanghai Shinomiel did not respond to our requests for information regarding separate rates, these companies do not merit separate rates. See Separate Rates section, above.

Facts Available:

Section 776(a)(2) of the Act provides that, if an interested party or any other person: (A) withholds information that has been requested by the administering authority; (B) fails to provide such information by the deadlines for the submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782; (C) significantly impedes a proceeding under this title; or (D) provides such information but the information cannot be verified as provided in section 782(i), the Department shall, subject to section 782(d) of the Act, use the facts otherwise available in reaching the applicable determination under this title. Where the Department determines that a response to a request for information does not comply with the request, section 782(d) of the Act provides that the Department shall promptly inform the party submitting the response of the nature of the deficiency and shall, to the extent practicable, provide that party with an opportunity to remedy or explain the deficiency. Section 782(d) further states that, if the party submits further information that is unsatisfactory or untimely, the administering authority may, subject to subsection (e), disregard all or part of the original and subsequent responses. Section 782(e) of the Act provides that the Department shall not decline to consider information that is submitted by an interested party and is necessary to the determination but does not meet all the applicable requirements established by the administering authority if (1) the information is submitted by the deadline established for its submission, (2) the information can be verified, (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination, (4) the interested party has demonstrated that it acted to the best of its ability in providing the information and meeting the requirements established by the administering authority with respect to the information, and (5) the information can be used without undue difficulties.

Wuhan Bee:

Wuhan Bee responded to the Department's original questionnaire and several supplemental questionnaires, reporting its sales on a CEP basis, and the Department calculated a margin using CEP methodology for Wuhan Bee in the Preliminary Results, based on Wuhan Bee's claimed affiliation with Presstek, PSH, and PFI. However, based on the findings discussed above under “Affiliation,” in the Wuhan Affiliation Memo, and the Issues and Decision Memorandum at Comment 11, the Department has determined for these final results that Wuhan Bee did not become affiliated with Presstek and PSH until July 20, 2003, eight months into the POR. Based on these findings, the Department has classified all of Wuhan Bee's entered sales prior to the date of affiliation (July 20, 2003) as EP transactions. The Department has continued to classify all Wuhan Bee invoiced sales dated between July 20, 2003, and November 30, 2003, (the end of the POR) as CEP transactions.

Because Wuhan Bee provided a CEP sales database in response to the Department's questionnaire, however, the record does not contain an EP sales database that can be used in calculating a margin for the sales now classified as EP sales. Therefore, the Department finds that it is necessary to use facts available in determining the margin for these sales, in accordance with section 776(a)(1) of the Act. Moreover, because the Department made its determination that the sales should be accorded EP treatment after the Preliminary Results, it was not practicable for the Department to request that Wuhan Bee provide an EP sales database so late in the review and after verification; thus, section 782(d) of the Act does not apply.

As noted above, section 782(e) of the Act provides that the Department shall not decline to consider information that is submitted by an interested party and is necessary to the determination but does not meet all the applicable requirements established by the administering authority if (1) the information is submitted by the deadline established for its submission, (2) the information can be verified, (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination, (4) the interested party has demonstrated that it acted to the best of its ability in providing the information and meeting the requirements established by the administering authority with respect to the information, and (5) the information can be used without undue difficulties. During its verification of Wuhan Bee, the Department collected information on invoices for all entries of subject merchandise made by Wuhan Bee into the United States during the POR. See Wuhan Bee HM Verification Report. Therefore, as facts otherwise available, and in accordance with section 782(e) of the Act, as a proxy for an EP U.S. sales database, the Department has determined to use the fully verified invoice price and quantity data for sales from Wuhan Bee to Presstek based on the invoice list collected at verification. Interested parties in this review commented on this methodology as discussed in the Issues and Decision Memorandum at Comment 12, and agree with the Department's proposed methodology. See also, Wuhan Bee Final Analysis Memo.

The invoiced sales dated on or after affiliation began are appropriately classified as CEP sales. However, the Department has determined that it cannot rely on Wuhan Bee's reported CEP sales databases for the period after July 20, 2003, because it was unable to verify significant portions of the CEP data submitted by Wuhan Bee. Therefore, pursuant to section 776(a)(2)(D) of the Act, the Department has determined to use the facts otherwise available in determining the margins for Wuhan Bee's CEP sales.

At the verification of Presstek, PSH, and PFI in Wisconsin, the Department was unable to verify the quantity of subject merchandise sold by PSH to unaffiliated parties because of pervasive errors in Wuhan Bee's reported blend ratios. See The Issues and Decision Memorandum at Comment 13 for a further discussion of the Department's verification findings. The blend ratios represent the percentage of Chinese honey in the total honey blend that was sold to PSH's U.S. customers. Wuhan Bee relied on its blend ratios to determine whether an invoice line item represented a sale of subject merchandise. Wuhan Bee itself notes in its December 3, 2004, submission that “1 MT of Chinese honey may be imported and then split into 5 portions of 20% Chinese honey, blended with non-subject merchandise, and resold under 5 invoices.” Wuhan Bee further explains that, in this example, “1 MT of Chinese honey is blended into 5 batches at a 20% blend prior to resale {and} only 20% of the honey that was sold was Chinese.” See Comments on Preliminary Results Calculation Methodology for Wuhan Bee, dated December 3, 2004. Therefore, without accurate blend ratios, the Department has no way of determining the quantity of subject merchandise included in a given sale. Respondent admitted for the first time at the CEP verification that the underlying assumptions it used to report PSH's sales of subject merchandise were faulty, and that contrary to its statements prior to verification it was never able to report “a one-to-one ratio relationship” between the quantity of subject merchandise blended to produce each product listed as a separate line item on the PSH invoice and the quantity of subject merchandise sold under that line item. See Respondent's Refiling of Wuhan Bee's Case Brief, dated May 24, 2005, at 18. The Department gave Wuhan Bee ample opportunity prior to verification to modify its blend ratios or explain any problems it had with these data (issuing supplemental questionnaires on the CEP sales and further manufacturing expenses associated with the blending operations on October 20, 2004, and accepting Wuhan Bee's comments regarding the blend ratios on March 15, 2005), but Wuhan Bee did not approach the Department with these concerns prior to verification. Moreover, as detailed in the Issues and Decision Memo at Comment 13, the Department was also unable to verify other portions of Wuhan Bee's sales database during the CEP verification. See The Issues and Decision Memorandum at Comment 13 for further discussion of this issue.

Pursuant to section 776(a)(2)(D) of the Act, the Department may use facts otherwise available when a party submits information that cannot be verified as provided in section 782(i). In addition, in accordance with section 782(d), the Department gave Wuhan Bee several opportunities to address problems it may have had in substantiating its blend ratios based on the books and records maintained in its normal course of business (as discussed in detail in the Issues and Decision Memo at Comment 13). The Department therefore finds, pursuant to section 776(a)(2)(C) of the Act, that Wuhan Bee has significantly impeded the Department's ability to conduct this proceeding with respect to Wuhan Bee's CEP sales by failing to submit accurate data. Therefore, the application of facts available is warranted with respect to Wuhan Bee's reported CEP sales.

Dubao:

Dubao responded to the Department's original questionnaire and several supplemental questionnaires, and the Department calculated a company-specific margin for Dubao in the Preliminary Results. In the Preliminary Results the Department stated its intent to verify the information submitted by Dubao. See Preliminary Results 69 FR at 77186. In addition, as stated in the “Background” section of this notice, the Department requested additional information from Dubao on January 3, 2005, due to “concerns regarding the status of Dubao's relationship with its customers, the status of its customers as legitimate importers of record, and when and how Dubao received payment for its sales,” as noted in the Preliminary Results, Id. at 77191 and in the Proprietary Analysis Memorandum to the File from Anya Naschak, Case Analyst, dated December 15, 2004. This supplemental questionnaire included four questions regarding returns of Dubao's merchandise, how and from whom Dubao received payment from its customers, and inconsistencies contained in Dubao's response with respect to its customers. This information was critical to the Department's analysis of the accuracy and veracity of Dubao's responses for the final results this administrative review, and was required to be submitted to the Department prior to its verification of Dubao's responses at its facilities in Baoji and Dujiangyan, PRC. In addition, this supplemental questionnaire included questions that the Department requested Dubao forward to its bank regarding the disposition of funds related to Dubao's sales. The Department also issued questionnaires to Dubao's customers, containing seventeen questions related to their purchases of subject merchandise from Dubao.

Despite providing Dubao with ample time to collect the requested information, the Department did not receive any of the requested information from Dubao. After the issuance of these questionnaires, the Department received a letter from Dubao withdrawing from this administrative review. See Letter from Dubao dated January 10, 2005 (“Dubao Withdrawal Letter”). The Department issued a letter to Dubao on January 12, 2005, in which it provided Dubao with an additional opportunity to respond to the Department's request for information, informing Dubao that, because its request to withdraw from the review had come in well after the deadline for making such requests, and because petitioners had not withdrawn their request for an administrative review, the Department would be proceeding with this administrative review with respect to Dubao. See Letter from James C. Doyle, Office Director, to Dubao, dated January 12, 2005. In this letter the Department noted that, because of Dubao's failure to respond to the Department's supplemental questionnaire and the Department's inability to conduct verification of the information submitted by Dubao to date pursuant to section 782(i)(2) of the Act, the Department might find Dubao to have failed to cooperate by not acting to the best of its ability, pursuant to section 776(b) of the Act.

The Department provided Dubao with another opportunity to provide the requested information, which was critical to the Department's analysis for these final results. Dubao again failed to provide the information requested, and did not respond to the Department's January 12, 2005, letter. Although the Department supplied Dubao with numerous opportunities to respond to the Department's additional requests for information, Dubao refused to submit any information in response to these supplemental questionnaires, did not permit verification, and withdrew from this administrative review. The Department therefore finds, pursuant to section 776(a)(2)(A), (B), (C), and (D) of the Act, that Dubao has repeatedly withheld information requested by the Department, failed to timely provide requested information, significantly impeded the Department's ability to conduct this proceeding, and, by withdrawing from the review, prevented the verification of the information it had earlier provided. Therefore, the application of facts available is warranted with respect to Dubao.

Application of an Adverse Inference:

Section 776(b) of the Act provides that, in selecting from among the facts available, the Department may use an inference that is adverse to the interests of the respondent if it determines that a party has failed to cooperate to the best of its ability. 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 (“SAA”) accompanying the URAA, H. Doc. No. 316, 103d Cong., 2d Session at 870 (1994). In determining whether a respondent has failed to cooperate to the best of its ability, the Department need not make a determination regarding the willfulness of a respondent's conduct. See Nippon Steel Corp. v. United States, 337 F. 3d 1373, 1382-1393 (Fed. Cir. 2003) (“Nippon Steel”). Furthermore, “an affirmative finding of bad faith on the part of the respondent is not required before the Department may make an adverse inference.” Antidumping Duties; Countervailing Duties: Final Rule, 62 FR 27296, 27340 (May 19, 1997). Instead, the courts have made clear that the Department must articulate its reasons for concluding that a party failed to cooperate to the best of its ability, and explain why the missing information is significant to the review. Id.

In determining whether a party failed to cooperate to the best of its ability, the Department considers whether a party could comply with the request for information, and whether a party paid insufficient attention to its statutory duties. See Tung Mung Dev. Co. v. United States, 223 F. Supp. 2d 1336, 1342 (August 6, 2002). Furthermore, the Department also considers the accuracy and completeness of submitted information, and whether the respondent has hindered the calculation of accurate dumping margins. See Certain Welded Carbon Steel Pipes and Tubes from Thailand: Final Results of Antidumping Duty Administrative Review, 62 FR 53808, 53819-53820 (October 16, 1997).

The United States Court of Appeals has held that, if a respondent “fails to provide {requested} information by the deadlines for submission,” Commerce shall fill in the gaps with “facts otherwise available.” The focus of section 776(a) of the Act is respondent's failure to provide information. The reason for the failure is of no moment. As a separate matter, section 776(b) of the Act permits Commerce to “use an inference that is adverse to the interests of {a respondent} in selecting from among the facts otherwise available,” only if Commerce makes the separate determination that the respondent “has failed to cooperate by not acting to the best of its ability to comply.” The focus of 776(b) of the Act is respondent's failure to cooperate to the best of its ability, not its failure to provide requested information. See Nippon Steel, 337 F. 3d at 1382.

In Nippon Steel, the Federal Circuit held that “the statutory mandate that a respondent act to the 'best of its ability' requires the respondent to do the maximum it is able to do.” See Nippon Steel, 337 F.3d at 1382.

An adverse inference may include reliance on information derived from the petition, the final determination in the investigation, any previous review, or any other information placed on the record. See section 776(b) of the Act. It is the Department's practice to assign the highest rate from any segment of a proceeding as total adverse facts available when a respondent fails to cooperate to the best of its ability. See, e.g., Stainless Steel Plate in Coils from Taiwan; Preliminary Results and Rescission in Part of Antidumping Duty Administrative Review, 67 FR 5789 (February 7, 2002) (“Consistent with Department practice in cases where a respondent fails to cooperate to the best of its ability, and in keeping with section 776(b)(3) of the Act, as adverse facts available, we have applied a margin based on the highest margin from any prior segment of the proceeding.”).

Wuhan Bee

Pursuant to Section 776(b), the Department finds that Wuhan Bee has failed to cooperate to the best of its ability with regard to its reported CEP data. The court has consistently found that it is a respondent's responsibility to build an accurate record, as the information necessary to calculate accurate margins is in the sole possession of respondents. See Mannesmanrohren-Werke AG v. United States, 120 F. Supp. 2d 1075 (CIT 2000). In addition, in Nippon Steel, 337 F. 3d at 1382, the court stated that “an adverse inference may not be drawn merely from a failure to respond, but only under circumstances in which it is reasonable for Commerce to expect that more forthcoming responses should have been made.” In the instant case, Wuhan Bee had ample opportunity to inform the Department of problems it may have encountered in reporting accurate blend ratios. Moreover, as late into the proceeding as March 15, 2005, it claimed that the reported ratios were accurate and reported based on Presstek/PSH's books and records, and thus Wuhan Bee impeded the Department's ability to assist Wuhan Bee in finding a means to report accurate blend ratio data.

At verification, the Department discovered that the blend ratios could not be verified using data maintained in their normal books and records, and only then did respondent admit that it had reported inaccurate blend ratios. The blend ratios are essential to the calculation of a dumping margin because the blend ratios determine whether a particular sale of honey is of subject or non-subject merchandise. Without confidence in these data, we cannot accurately say whether all U.S. sales of subject merchandise were reported and, within individual sales, whether the correct quantity of subject merchandise was reported.

Wuhan Bee could have informed the Department at the onset of this administrative review that it was having difficulty constructing a complete, accurate database based on the books and records of Presstek/PSH. Wuhan Bee failed to do so at any point in this proceeding, prior to the Department's discoveries at verification. Wuhan Bee therefore failed to do the maximum it was able to do, consistent with Nippon Steel.

Therefore, pursuant to section 776(b) of the Act, we find that Wuhan Bee failed to act to the best of its ability with respect to its CEP sales; we therefore find it appropriate to use an inference that is adverse to the interests of Wuhan Bee in selecting from among the facts otherwise available with respect to the valuation of those CEP sales. By doing so, we ensure that the companies that fail to cooperate will not obtain a more favorable result by failing to cooperate than had they cooperated fully in this review. In accordance with the Department's practice, we have assigned the rate of 183.80 percent, as adverse facts available, to the portion of Wuhan Bee's entries during the POR that were entered and sold on a CEP basis through PSH. Because we cannot rely on the reported CEP sales quantity (since we have found the quantity data to be unreliable), we have used the quantity of honey invoiced from Wuhan Bee to Presstek from July 17, 2003 through November 30, 2003, as a proxy for the total quantity of subject merchandise sold by Presstek to unaffiliated customers during this period. See below for a discussion of the probative value of the 183.80 percent rate.

Dubao/PRC-Wide Entity

As discussed above, Dubao is appropriately considered to be part of the PRC-wide entity because its separate rate eligibility could not be verified. Furthermore, because the PRC-wide entity did not provide information necessary to the instant proceeding, it is necessary that we review the PRC-wide entity. In doing so, we note that Section 776(a)(1) of the Act mandates that the Department use the facts available if necessary information is not available on the record of an antidumping proceeding. In addition, we find that an element of the PRC-wide entity (Dubao) did not respond to our requests for information, the necessary information was not provided, that the information that was provided was unable to be verified, and an element of the PRC-wide entity (Dubao) has failed to act to the best of its ability in providing the requested information. Therefore, we find it necessary, under section 776(a)(2) of the Act, to continue to use facts otherwise available as the basis for the final results of this review for the PRC-wide entity.

Pursuant to section 776(b) of the Act, we find that the PRC-wide entity failed to cooperate by not acting to the best of its ability to comply with requests for information. As noted above, an element of the PRC-wide entity (Dubao) informed the Department that it would not participate further in this review, and did not provide any of the requested information, despite repeated requests that it do so. This information was in the sole possession of the respondents, and could not be obtained otherwise. Thus, because the PRC-wide entity refused to participate fully in this proceeding, we find it appropriate to use an inference that is adverse to the interests of the PRC-wide entity in selecting from among the facts otherwise available. By doing so, we ensure that the companies that are part of the PRC-wide entity will not obtain a more favorable result by failing to cooperate than had they cooperated fully in this review.

As above stated, the PRC-wide entity (including Dubao, Shanghai Xiuwei, Inner Mongolia, and Shanghai Shinomiel) did not respond to our requests for information or otherwise submitted unreliable information. Because the PRC-wide entity did not respond to our request for information or otherwise submitted unreliable information, we find it necessary, under sections 776(a)(2) and 776(b) of the Act, to use adverse facts available as the basis for these final results of review for the PRC-wide entity. In accordance with the Department's practice, we have assigned to the PRC-wide entity (including Dubao, Inner Mongolia, Shanghai Xiuwei, Shanghai Shinomiel, and Dubao) the rate of 183.80 percent as AFA. See, e.g., Rescission of Second New Shipper Review and Final Results and Partial Rescission of First Antidumping Duty Administrative Review: Brake Rotors from the People's Republic of China, 64 FR 61581, 61584 (November 12, 1999). In selecting a rate for adverse facts available, the Department selects a rate that is sufficiently adverse “as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner.” See Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors from Taiwan, 63 FR 8909, 8932 (February 23, 1998). This rate is the highest dumping margin from any segment of this proceeding and was established in the less-than-fair-value investigation based on information contained in the petition, and corroborated in the final results of the first administrative review. See e.g., Notice of Final Determination of Sales at Less Than Fair Value; Honey from the PRC, 66 FR 50608 (October 4, 2001); Honey from the People's Republic of China: Preliminary Results of First Antidumping Duty Administrative Review, 68 FR 69988 (December 16, 2003); and reinforced in Honey from the People's Republic of China: Final Results of First Antidumping Duty Administrative Review, 69 FR 24128 (May 3, 2004). For the reasons stated in the Preliminary Results, 69 FR 77190, the Department continues to find this rate to be both reliable and relevant, and, therefore, to have probative value in accordance with the Statement of Administrative Action, H.R. Doc. 103-316 (“SAA”). See SAA at 870. The Department received no comments on the Department's preliminary analysis of this rate for purposes of these final results. Therefore, the Department determines that the PRC-wide rate of 183.80 is still reliable, relevant, and has probative value within the meaning of section 776(c) of the Act.

Final Results of Review

We determine that the following antidumping duty margins exist:

For details on the calculation of the antidumping duty weighted-average margin for each company, see the respective company's Analysis Memorandum for the Final Results of the Second Administrative Review of the Antidumping Duty Order on Honey from the People's Republic of China, dated June 27, 2005. Public Versions of these memoranda are on file in the CRU.

Assessment of Antidumping Duties

The Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department will issue appropriate assessment instructions directly to CBP within 15 days of publication of the final results of this review. For assessment purposes, where possible, we calculated importer-specific assessment rates for honey from the PRC on a per-unit basis.³ Specifically, we divided the total dumping margins (calculated as the difference between normal value and export price or constructed export price) for each importer by the total quantity of subject merchandise sold to that importer during the POR to calculate a per-unit assessment amount. In this and future reviews, we will direct CBP to assess importer-specific assessment rates based on the resulting per-unit (i.e., per-kilogram) rates by the weight in kilograms of each entry of the subject merchandise during the POR.

Cash Deposits

For this and all subsequent review segments, we will establish and collect a per-kilogram cash deposit amount which will be equivalent to the company-specific dumping margin published in this and all future reviews. The following cash-deposit requirements will be effective upon publication of these final results for shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results, as provided by section 751(a)(2)(C) of the Act: (1) for subject merchandise exported by Shanghai Eswell, Jinfu, Wuhan Bee, and Zhejiang, we will establish a per-kilogram cash deposit rate which will be equivalent to the company-specific cash deposit established in this review; (2) the cash deposit rate for PRC exporters who received a separate rate in a prior segment of the proceeding will continue to be the rate assigned in that segment of the proceeding (except for Dubao, Inner Mongolia, and Shanghai Xiuwei, whose cash-deposit rates have changed in this review to the PRC-wide entity rate, as noted below); (3) for all other PRC exporters of subject merchandise which have not been found to be entitled to a separate rate (including Dubao, Shanghai Xiuwei, Inner Mongolia, and Shanghai Shinomiel), the cash-deposit rate will be the PRC-wide rate of 183.80 percent; (4) for all non-PRC exporters of subject merchandise, the cash-deposit rate will be the rate applicable to the PRC supplier of that exporter.

These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

Notification to Interested Parties

This notice also serves as the final reminder to importers of their responsibility under 19 CFR 351.402(f) 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 in the subsequent assessment of double antidumping duties.

This notice also serves as the only reminder to parties subject to administrative protective order (“APO”) of their responsibility concerning the return/destruction or conversion to judicial protective order of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

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

Appendix I

List of Issues

General Issues

Comment 1: Appropriate Surrogate Value for Honey

Comment 2: Appropriate Surrogate Value for Financial Ratios

Comment 3: Calculation of the MHPC Financial Ratios

Comment 4: Brokerage and Handling Expenses

Comment 5: Recalculation of Constructed Export Price (“CEP”) Profit

Comment 6: Calculation of the Surrogate Wage Rate

Comment 7: Calculation of Assessment and Cash Deposit Rate

Company-Specific Issues

Jinfu-Related Issue:

Comment 8: Classification of Jinfu's U.S. Sales

Shanghai Eswell-Related Issues

Comment 9: Calculation of the Assessment Rates for Shanghai Eswell

Comment 10: Classification of Shanghai Eswell's U.S. Sales

Wuhan Bee-Related Issues

Comment 11: Classification of Wuhan Bee's U.S. Sales

Comment 12: Use of EP sales for Wuhan Bee

Comment 13: Application of Adverse Facts Available to Wuhan Bee