Notice of Preliminary Results of Antidumping Duty Administrative Review and Partial Recission of Review: Petroleum Wax Candles From the People's Republic of China

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Preliminary Results of Antidumping Duty Administrative Review and Partial Recission of Review

EFFECTIVE DATE:

September 7, 2000.

FOR FURTHER INFORMATION CONTACT:

Martin Odenyo or Robert M. James, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW. Washington, DC 20230; telephone: (202) 482-5254, or (202) 482-0649, respectively.

Applicable Statute and Regulations

Unless otherwise indicated, all citations to the Tariff Act of 1930, as amended (the Tariff Act) are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Act by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department of Commerce's (the Department's) regulations are to 19 CFR part 351 (April 1, 2000).

SUPPLEMENTARY INFORMATION:

Background

On August 11, 1999, the Department published in the Federal Register at 64 FR 43649 a “Notice of Opportunity to Request an Administrative Review” of the antidumping duty order on petroleum wax candles from the People's Republic of China (PRC) covering the period August 1, 1998, through July 31, 1999.

On August 13, 1999, in accordance with 19 CFR 351.213(b), counsel for three PRC companies requested that we conduct an administrative review. These three companies are Shanghai Gift and Travel Products Import and Export Corporation (Shanghai), Liaoning Native Product Import and Export Corporation (Liaoning), and Tianjin Native Produce Import and Export Group Corporation, Ltd. (Tianjin). On August 31, 1999, the National Candle Association (petitioner) requested that we conduct an administrative review of twenty-two specific producers/exporters: CNACC (Zhejiang Imports & Export Co., Ltd., Shanghai Ornate Candle Art Co., Ltd., China Overseas Trading Dalian Corp., Jilin Province Arts and Crafts, China Hebei Boye Great Nation Candle Co., Ltd., Taizhou Sungod Gifts Co., Ltd., Zhejiang Native Produce & Animal By-Products, Import & Export Corp., Cnart China Gifts Import & Export Corp., Liaoning Light Industrial Products Import & Export Corp., Jintan Foreign Trade Corp., Jiangsu Yixing Foreign Trade Corp., Tonglu Tiandi, Zhongnam Candle, China Packaging Import & Export Liaoning Co., Kwung's International Trade Co., Ltd., Shanghai Gift & Travel Products Imp. & Exp. Corp., Liaoning Native Product Import & Export Corporation, Tianjin Native Produce Imp. & Exp. Group Corp. Ltd., Candle World Industrial Co., Fu Kit, Shanghai Zhen Hua, and Universal Candle Company, Ltd. We published a notice of initiation of this antidumping duty administrative review for these companies (respondents) on October 1, 1999, at 64 FR 53318.

On October 15, 1999, we issued questionnaires to the each of the twenty-two respondents. In response to our request for information, Jilin Province Arts and Crafts (Jilin) reported that it had no sales or shipments during the POR. Our review of Customs import data indicated that there were no entries by Jilin during the POR. See Memorandum to the File, July 31, 2000. Accordingly, we are rescinding the review with respect to Jilin.

Only five respondents responded to section A of the antidumping questionnaire. Liaoning, Tianjin, and Shanghai submitted responses to section A on November 29, 1999, Universal Candle Company, Ltd. (Universal) submitted its response on December 20, 1999, and Rich Talent Trading, Ltd. (Rich Talent) submitted its response on December 21, 1999. Liaoning, Tianjin, and Universal responded to sections C and D of the questionnaire in March 2000. Tianjin submitted a corrected version of these documents on April 24, 2000. Rich Talent did not submit a response to sections C and D of the questionnaire, nor has the company responded to any further requests for information by the Department. On February 28, 2000, Shanghai formally notified the Department that it would no longer participate in this review. Accordingly, the Department considers Rich Talent, Shanghai, and the remaining sixteen named companies that failed to respond to our antidumping questionnaires to be uncooperative respondents, as discussed further below.

The Department issued supplemental section A questionnaires to Rich Talent, Liaoning, Tianjin, and Universal on March 21, 2000. We received responses from Liaoning, Tianjin, and Universal in April, 2000. The Department issued supplemental sections C and D questionnaires and a second supplemental section A questionnaire to the respondents in May, 2000. Liaoning, Tianjin and Universal submitted responses to these supplemental questionnaires in June, 2000. As discussed above, Rich Talent did not respond to any of the Department's supplemental questionnaires.

On April 18, 2000, the Department published in the Federal Register a notice of extension of the time limit for the preliminary determination in this review (65 FR 20800). This notice extended the preliminary determination until August 30, 2000, and listed the four respondents which to date had responded to the Department's questionnaire.

On March 21, 2000, the Department invited interested parties to provide publicly available information (PAI) for valuing the factors of production and for surrogate country selection. We received a joint response from Liaoning and Tianjin on April 24, 2000. Petitioner submitted a rebuttal to the respondents' submission on May 8, 2000. On June 16, 2000, we selected India as the surrogate country for the PRC in this review.

Scope of Review

The products covered by this order are certain scented or unscented petroleum wax candles made from petroleum wax and having fiber or paper-cored wicks. They are sold in the following shapes: tapers, spirals, and straight-sided dinner candles; rounds, columns, pillars, votives; and various wax-filled containers. The products were classified under the Tariff Schedules of the United States (TSUS) item 755.25, Candles and Tapers. The products are currently classified under the Harmonized Tariff Schedule (HTS) item 3406.00.00. Although the HTS subheading is provided for convenience and customs purposes, our written description of the scope of this proceeding remains dispositive.

Use of Facts Otherwise Available

The Department preliminarily determines that the twenty-one respondents in this review should be assigned a dumping margin based upon the facts otherwise 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 administering authority shall, subject to section 782(d), use the facts otherwise available in reaching the applicable determination under this title.” The Department has determined that the use of facts available is appropriate for the eighteen respondents that failed wholly to respond to our questionnaires since they withheld information necessary to complete this review and did not act to the best of their ability. See, e.g., Sulfanilic Acid From the People's Republic of China; Final Results of Antidumping Duty Administrative Review, 65 FR 13366, 13367 (March 13, 2000). Similarly, based on the facts in this review, described as follows, the Department has preliminarily determined that the use of facts available is warranted for Liaoning, Tianjin, and Universal. These three respondents withheld information necessary to complete this review, failed to provide such information by the deadlines in the form and manner requested, and submitted unverifiable information. Therefore, pursuant to section 776(a)(2) (A), (B), and (D) of the Tariff Act, the Department will use the facts otherwise available to determine the appropriate antidumping margins for these companies in this review.

We determine that the questionnaire responses submitted by Liaoning, Tianjin, and Universal are deficient and contain unreliable and unverifiable data which cannot be used as the basis of a calculated dumping margin. These three respondents did not respond adequately to the original and supplemental questionnaires which instructed the respondents to explain and provide sample calculations of the methodologies used to construct the response to section D of the questionnaire. Where such information was submitted, it was often either incomplete or contradictory to the point that serious concerns remain regarding the basic reliability of the data.

Throughout the majority of this administrative review leading up to our preliminary results, Universal insisted that all of its POR shipments were not subject to the antidumping order, and stated that all in-scope candles were produced and shipped from Hong Kong, as opposed to mainland China. During the period that Universal maintained this position, the company did not submit any sales data pertaining to sales of subject merchandise from mainland China. Furthermore, although the Department requested information relating to Universal's worldwide legal and operational affiliations, Universal's initial responses were minimal. Finally, after the Department repeatedly requested such information, Universal began submitting basic information pertaining to affiliations and sales of what it referred to as “potentially subject merchandise.” Universal's supplemental responses included numerous new and often contradictory sales data and information on affiliations which did not reconcile with previous submissions (e.g. local subcontracting, overseas business relationships). The contradictory information on the record suggests that Universal may have had sales of subject merchandise during the POR. However, the wholly incomplete and contradictory information submitted by Universal provides the Department with no basis for determining an accurate margin, and as such, is unverifiable.

With respect to reported costs of production, Universal initially stated that it keeps production records for its facilities in mainland China. However, contrary to the company's earlier statements, Universal subsequently claimed that it does not maintain PRC production records, since the maintenance of such records is not required by law in the PRC. Accordingly, Universal's reported raw material input and labor amounts are based upon estimates, using samples of those candles still available to the company, rather than based upon actual company records. See April 13, 2000 supplemental section A response at 10; June 14, 2000, second supplemental section A response at 2 and 19; and May 31, 2000 supplemental section D response at 10. In many instances the estimated quantity of the primary raw material input, paraffin wax, was inconsistent with the net weight of the product as reported in the response to section C of the questionnaire. Thus, Universal failed to provide verifiable factors of production data, and the information it did submit was often contradictory.

With respect to Liaoning and Tianjin, two of the three factories which supplied Liaoning with its subject merchandise did not respond to the Department's request for information. We noted in our May 3, 2000 supplemental section C questionnaire that the Department may rely on facts otherwise available as a substitute for the missing information. In addition, in response to many basic supplemental questions, Liaoning and Tianjin both failed to provide the information requested, stating that such factor of production information was unknown or was not available at the time. Specifically, in response to numerous fundamental questions from the Department, Liaoning and Tianjin responded either “unknown”, “not available at this time”, or “as soon as it becomes available, the information will be submitted.” However, the type of information the Department requested was standard business information typically maintained by most businesses, and representative of the type of information the Department has asked of Chinese companies in previous administrative reviews (e.g. methodologies used to allocate the reported factors data). Moreover, as stated previously, Liaoning and Tianjin, through counsel, requested that the Department initiate this antidumping review. The antidumping order for this case was issued in 1986, and Liaoning, Tianjin, and Universal should have anticipated that the Department would require verifiable production and sales information to complete its analysis in any subsequent reviews. (For more detailed information on these three companies' questionnaire responses, see petitioner comments filed on June 16, 2000).

As previously described, the Department granted numerous requests for extensions of time to the respondents in order for the companies to supply the Department with the necessary information for a calculation of a reliable antidumping margin. Despite these extensions, the responses from Liaoning, Tianjin, and Universal were wholly inadequate and contained much unsubstantiated, and unverifiable information. This information is too incomplete to serve as a reliable basis for reaching a determination in this review within the meaning of section 782(e) of the Tariff Act. Therefore, we preliminarily determine that these three respondents failed to cooperate by not acting to the best of their ability. As previously noted, we similarly find that the eighteen uncooperative respondents failed to act to the best of their ability. Under section 782(c) of the Tariff Act, a respondent has a responsibility not only to notify the Department if it is unable to provide requested information, but also to provide a “full explanation and suggested alternative forms.” The uncooperative respondents that failed to respond to our requests for information did not comply with this provision of the statute. Therefore, we determine that all twenty-one respondents, both those which initially responded to our questionnaires, and those which did not, failed to cooperate by not acting to the best of their ability.

Additionally, section 776(b) of the Tariff Act provides that, if the Department finds an interested party “has failed to cooperate by not acting to the best of its ability to comply with a request for information,” the Department may use information that is adverse to the interests of the party as facts otherwise available. 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.” Statement of Administrative Action (“SAA”) accompanying the URAA, H.R. Doc. No. 103-316 at 870 (1994). It is reasonable to assume that if the eighteen respondents that did not respond at all could have demonstrated that their actual dumping margins were lower than the PRC-wide rate established in the less-than-fair value (LTFV) investigation, they would have participated in this review and attempted to do so. Furthermore, the Department, in assigning adverse facts available to Liaoning, Tianjin, and Universal, is aware that “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) (Final Rule).

Section 776(b) of the Tariff Act authorizes the Department to use as adverse facts available “secondary information,” including information derived from the petition, the final determination from the LTFV investigation, a previous administrative review, or any other information placed on the record. Section 776(b) of the Tariff Act requires the Department to corroborate, to the extent practicable, secondary information used as facts available. The SAA further provides that “corroborate” means simply that the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870. Thus, to corroborate secondary information, the Department will examine the reliability and relevance of the information used.

The Department's practice when selecting an adverse rate from among the possible sources of information is to ensure that the margin is sufficiently adverse “as to effectuate the purpose of the facts available role to induce respondents to provide the Department with complete and accurate information in a timely manner.” Static Random Access Memory Semiconductors from Taiwan; Final Determination of Sales at Less than Fair Value, 63 FR 8909, 8932 (February 23, 1998). The Department also considers the extent to which a party may benefit from its own lack of cooperation in selecting a rate. See Roller Chain, Other than Bicycle, from Japan; Notice of Final Results and Partial Recission of Antidumping Duty Administrative Review, 62 FR 60472, 60477 (November 10, 1997).

In accordance with Department practice, as adverse facts available we have preliminarily assigned these exporters the highest dumping margin determined in any segment of this proceeding (54.21 percent), which is the PRC-wide rate established in the LTFV investigation, and is the only rate available for use as facts available. See Antidumping Duty Order: Petroleum Wax Candles From the People's Republic of China, 51 FR 30686 (August 28, 1986). With respect to corroboration of this margin we note that, unlike other types of information, such as input costs or selling expenses, there are no independent sources for calculated dumping margins. Thus, in an administrative review, if the Department chooses as total adverse facts available a calculated dumping margin from a prior segment of the proceeding, it is not necessary to question the reliability of the margin for that time period. See Grain-Oriented Electrical Steel From Italy; Preliminary Results of Antidumping Duty Administrative Review, 61 FR 36551, 36552 (July 11, 1996). With respect to the relevance aspect of corroboration, however, the Department will consider information reasonably at its disposal to determine whether a margin continues to have relevance. Accordingly, we have used the highest calculated margin from any prior segment of the proceeding as the margin for these preliminary results because there is no evidence on the record indicating that such a calculated margin is not appropriate as adverse facts available. This rate is currently applicable to all exports of subject merchandise. Thus, if any respondent could demonstrate that its margin is lower, we presume that it would have cooperated in attempting to do so.

Separate Rates

The Department presumes that a single dumping margin is appropriate for all exporters in a non-market economy (NME) country. See Final Determination of Sales at Less Than Fair Value: Silicon Carbide from the People's Republic of China, 59 FR 22585 (May 2, 1994). The Department may, however, consider requests for a separate rate from individual exporters. Liaoning, Tianjin, and Universal responded to the separate rates section of the antidumping questionnaire.

We preliminarily determine that Liaoning, Tianjin, Universal and the remaining eighteen respondents are not eligible for a separate rate due to our preliminary determination that the most appropriate antidumping margin is based upon total adverse facts available. Although Liaoning, Tianjin, and Universal initially responded to the separate rates section of the questionnaire, their responses were so wholly inadequate and unreliable that they did not establish that separate rates were warranted.

Preliminary Results of Review

We preliminarily determine that the following dumping margins exists for the period August 1, 1998, through July 30, 1999:

An interested party may request a hearing within 30 days of publication of these preliminary results. See 19 CFR 351.310(c). Any hearing, if requested, will be held 44 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of these preliminary results of review. Rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than 37 days after the date of publication. Parties who submit arguments are requested to submit with the argument (1) a statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, we would appreciate it if parties submitting written comments would provide the Department with an additional copy of the public version of any such comments on diskette. The Department will issue the final results of this administrative review, which will include the results of its analysis of issues raised in any such comments, within 120 days of publication of these preliminary results.

The Department shall determine, and the Customs Service shall assess, antidumping duties on all appropriate entries. This rate will be assessed uniformly on all entries of subject merchandise made during the POR. The Department will issue appraisement instructions directly to the Customs Service.

Furthermore, the following cash deposit requirements will be effective upon publication of the final results of this administrative review for all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication date, as provided by section 751(a)(1) of the Tariff Act: (1) For previously reviewed or investigated companies that have a separate rate and for which no review was requested, the cash deposit rate will continue to be the company-specific rate published for the most recent period; (2) for all other PRC exporters, the cash deposit rate will be the rate established in the final results of this administrative review; and (3) the cash deposit rate for non-PRC exporters will be the rate applicable to the PRC supplier of the exporter. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative reviews.

This notice also serves as a preliminary 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 the subsequent assessment of double antidumping duties.

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