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Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Affirmative Preliminary Determination of Critical Circumstances in Part: Certain Lined Paper Products From India

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

The U.S. Department of Commerce (“the Department”) preliminarily determines that certain lined paper products from India (“CLPP”) are being, or are likely to be, sold in the United States at less than fair value, as provided in section 733(b) of the Tariff Act of 1930, as amended (“the Act”). Interested parties are invited to comment on this preliminary determination. Pursuant to requests from interested parties, we are postponing for 30 days the final determination and extending the provisional measure from a four-month period to not more than six months. Accordingly, we will make our final determination not later than 105 days after publication of the preliminary determination.

EFFECTIVE DATE:

April 17, 2006.

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FOR FURTHER INFORMATION CONTACT:

Christopher Hargett, Joy Zhang, or James Terpstra, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-4161, (202) 482-1168, or (202) 482-3965, respectively.

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SUPPLEMENTARY INFORMATION:

Background

On October 6, 2005, the Department of Commerce (“the Department”) initiated an antidumping duty investigation of certain lined paper products from India. See Initiation of Start Printed Page 19707Antidumping Duty Investigations: Certain Lined Paper Products From India, Indonesia, and the People's Republic of China, 70 FR 58374 (October 6, 2005) (“Initiation Notice”). The petitioner in this investigation is the Association of American School Paper Suppliers and its individual members (MeadWestvaco Corporation; Norcom, Inc.; and Top Flight, Inc.) (“petitioner”).

The Department set aside a period of time for parties to raise issues regarding product coverage and encouraged all parties to submit comments within 20 calendar days of publication of the Initiation Notice. See Initiation Notice, 70 FR at 58374; see also Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19,1997) (“Final Rule”).

On October 31, 2005, the United States International Trade Commission (“ITC”) preliminarily determined that there is a reasonable indication that imports of CLPP from the People's Republic of China (“China”), India and Indonesia are materially injuring the U.S. industry and the ITC notified the Department of its findings. See Certain Lined Paper School Supplies from China, India, and Indonesia, Investigation Nos. 701-TA-442-443 and 731-TA-1095-1097 (Preliminary), 70 FR 62329 (October 31, 2005) (“ITC Preliminary Report”).

On November 8, 2005, the Department issued its antidumping questionnaire to the following three respondents: Aero Exports (“Aero”), Kejriwal Paper Limited (“Kejriwal”), and Navneet Publications (India) Ltd. (“Navneet”), specifying that the responses to Section A and Sections B-D would be due on November 29 and December 15, 2005, respectively.[1] We received responses to Sections A-D of the antidumping questionnaire and issued supplementary questionnaires as referenced below. On November 28, 2005, petitioner alleged that critical circumstances existed with regard to imports from Indonesia, China, and India.

On December 16, 2005 the Department received section A questionnaire responses from Aero, Kejriwal, and Navneet. The Department subsequently issued a supplemental questionnaire to Aero, Kejriwal and Navneet. See Section A-D Supplemental Questionnaire, dated January 27, 2006. On February 21, 2006, the Department received the first supplemental questionnaire responses for Sections A-D from Aero, Kejriwal and Navneet. On February 23, 2006, the Department issued a second supplemental questionnaire for Section D to Aero. On February 24, 2006, the Department issued a second supplemental questionnaire for Section D to Kejriwal and Navneet. On March 29, 2006, the Department received the third Supplemental D questionnaire response from Aero, Kejriwal and Navneet.

In its section A response, Kejriwal stated that it had neither home market nor third country sales during the period of investigation (“POI”). See Kejriwal's Section A Questionnaire Response, dated December 16, 2005, at 4. Kejriwal reiterated that it did not sell subject merchandise in the ordinary course of trade in its home market during the POI. See Kejriwal Exports Section A - D Supplemental Questionnaire Response, dated February 21, 2006, at Exhibit SB-1. As a result, the Department must use constructed value (“CV”) in its calculation of normal value (“NV”). For a discussion of the Department's calculation of CV, see the “Constructed Value” section below.

Period of Investigation

The POI is July 1, 2004, to June 30, 2005. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition.

Scope of Investigation

The scope of this investigation includes certain lined paper products, typically school supplies,[2] composed of or including paper that incorporates straight horizontal and/or vertical lines on ten or more paper sheets,[3] 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 investigation 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 investigation are:

  • unlined copy machine paper;
  • 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;
  • three-ring or multiple-ring binders, or notebook organizers incorporating such a ring binder provided that they do not include subject paper;
  • index cards;
  • printed books and other books that are case bound through the inclusion of binders board, a spine strip, and cover wrap;
  • newspapers;
  • pictures and photographs;
  • desk and wall calendars and organizers (including but not limited to such products generally known as “office planners,” “time books,” and “appointment books”);
  • telephone logs;
  • address books;Start Printed Page 19708
  • columnar pads & tablets, with or without covers, primarily suited for the recording of written numerical business data;
  • lined business or office forms, including but not limited to: preprinted business forms, lined invoice pads and paper, mailing and address labels, manifests, and shipping log books;
  • lined continuous computer paper;
  • boxed or packaged writing stationary (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;
  • Stenographic pads (“steno pads”), Gregg ruled,[4] measuring 6 inches by 9 inches;

Also excluded from the scope of this investigation are the following trademarked products:

  • FlyTM 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 FlyTM pen-top computer. The product must bear the valid trademark FlyTM.[5]
  • ZwipesTM: 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 ZwipesTM 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 ZwipesTM.[6]
  • FiveStar®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 (poly vinyl chloride) coating, and extending the entire length of the spiral or helical wire. The polyolefin plastic covers are of specific thickness; front cover is .019 inches (within normal manufacturing tolerances) and rear cover is .028 inches (within normal manufacturing tolerances). Integral with the stitching that attaches the polyester spine covering, is captured by 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®AdvanceTM.[7]
  • FiveStar FlexTM: 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 .019 inches (within normal manufacturing tolerances) and rear cover is .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 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 FlexTM.[8]

Merchandise subject to this investigation is typically imported under headings 4820.10.2050, 4810.22.5044, and 4811.90.9090 of the Harmonized Tariff Schedule of the United States (HTSUS).[9] The tariff classifications are provided for convenience and customs purposes; however, the written description of the scope of the investigation is dispositive.

Scope Comments

In the Initiation Notice, we set aside a period of time for parties to raise issues regarding product coverage and encouraged all parties to submit comments within 20 calendar days of publication of the Initiation Notice. See Final Rule.

On October 28, 2005, Continental Accessory Corporation (“Continental”) submitted timely scope comments in which it argued that the Department should issue a ruling that the scope of this investigation does not cover “fashion stationery,” a niche lined paper product. Continental argued that fashion stationery is substantially different from subject commodity-grade lined paper products because of differences in physical appearance, production methods, costs, consumer expectations, and other factors. Continental also argued that none of the domestic petitioners has the capability of manufacturing fashion stationery in the United States.

On November 16, 2005, petitioner submitted rebuttal comments. Petitioner argued that what Continental refers to as “stationery” and “fashion goods” is actually nothing more than notebooks. Contrary to Continental's allegation, petitioner claimed that these “fashion” notebooks are “substantially produced” within the United States. Petitioner further asserted that the language of the scope includes certain lined paper products regardless of the material used for a front or back cover, regardless of the inclusion of material on the front and cover, and regardless of the binding materials. Petitioner also argued that Continental's claim that fashion notebooks “are not intended to be included with covered merchandise” is baseless. See letter from petitioner entitled “Certain Lined Paper Products from India, Indonesia, and the People's Republic of China: Response to Scope Comments,” dated November 16, 2005, at 2. Petitioner stated that Continental Start Printed Page 19709had provided no evidence to demonstrate that the purchaser views fashion notebooks as a higher value product. Lastly, petitioner noted that the ITC had already rejected Continental's claims that its fashion books are not within the scope of the domestic like product or should be treated as a separate like product. See ITC Preliminary Report.

As further discussed in the March 20, 2006, memorandum entitled “Scope Exclusion Request: Continental Accessory Corporation,” on file in Import Administration's Central Records Unit, Room 1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230 (“CRU”), we denied Continental's request that its “fashion” notebooks be excluded from the scope of the investigation.

Use of Facts Otherwise Available

For the reasons discussed below, we determine that the use of adverse facts available (“AFA”) is appropriate for the preliminary determination with respect to Aero and Navneet.

A. Use of Facts Available

Section 776(a)(2) of the Act provides that, if an interested party withholds information requested by the administering authority, fails to provide such information by the deadlines for submission of the information and in the form or manner requested, subject to subsections (c)(1) and (e) of section 782 of the Act, significantly impedes a proceeding under this title, or provides such information but the information cannot be verified as provided in section 782(i), the administering authority shall use, subject to section 782(d) of the Act, facts otherwise available in reaching the applicable determination. Section 782(d) of the Act provides that, if the administering authority determines that a response to a request for information does not comply with the request, the administering authority shall promptly inform the responding party and provide an opportunity to remedy the deficient submission. Section 782(e) of the Act further states that the Department shall not decline to consider submitted information if all of the following requirements are met: (1) the information is submitted by the established deadline; (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; and (5) the information can be used without undue difficulties.

As discussed in detail below, the Cost of Production (“COP”) questionnaire responses submitted by Aero and Navneet are not useable for purposes of calculating accurate less-than-fair-value (“LTFV”) margins. The original antidumping questionnaire was issued on November 8, 2005. Since the issuance of the initial questionnaire to Aero and Navneet, we have granted both parties numerous extensions up to and including the submission of the third supplemental questionnaire response which was received on March 29, 2006. Over a five-month period, we have carefully and repeatedly identified the numerous significant deficiencies and errors where we needed more complete information in order to understand the reported information. Throughout this process, there has been a consistent pattern of non-responsiveness and confusing, incomplete, and inconsistent information provided by Aero and Navneet. As a result of numerous, serious deficiencies, we are unable to adequately determine whether the cost information contained in these responses reasonably and accurately reflects the costs incurred by these companies to produce the subject merchandise. Without this information, we cannot accurately calculate LTFV margins for these companies.

Aero

In accordance with section 776 of the Act, the Department preliminarily determines that the use of total AFA is warranted with respect to Aero. Throughout the course of this investigation, Aero has repeatedly failed to submit information and data on the record of this proceeding in a timely and proper manner. Generous extensions of time were given to Aero to respond to our section D questionnaire. The Department provided several opportunities for Aero to submit critical information and the Department extended deadlines to allow Aero the time to respond completely to the Department's questionnaire and supplemental questionnaires. Three sets of supplemental questionnaires were issued, repeatedly asking the same detailed questions that remained unanswered from the previous supplemental questionnaire. After the issuance of the three supplemental questionnaires, the Department is left with critical information absent from the record. In addition, questions still remain unanswered as to the accuracy and reliability of the reported cost information. Because Aero has withheld requested information, failed to provide such information by the deadlines in the form and manner required, impeded this investigation, and reported information that could not be verified, the Department may resort to facts otherwise available, in reaching its preliminary determination, pursuant to sections 776(a)(2)(A),(B),(C) and (D) of the Act. Due to the fact that most of the reasons regarding the use of facts available for Aero are considered business proprietary information, please see the Memorandum from Sheikh M. Hannan to Neal Halper entitled “Use of Adverse Facts Available for the Preliminary Determination - Aero Exports,” dated April 7, 2006, on file in the CRU.

Navneet

In accordance with section 776 of the Act, the Department preliminarily determines that the use of total AFA is warranted with respect to Navneet. The Department identified the major deficiencies with Navneet's submitted cost responses early in this proceeding and despite the Department's repeated requests, these deficiencies were not rectified by Navneet. As discussed in the memorandum mentioned below, Navneet failed to 1) provide various reconciliation schedules (i.e., the overall cost reconciliation, the overall quantity reconciliation, and the overall purchased paper reconciliation) and explanations of reconciling amounts; 2) provide a consistent explanation for its product cost calculation methodology that demonstrates the link between its reported costs and its normal books and records; and 3) provide complete supporting documentation for the matching product control number (“CONNUM”) cost build-up schedules. Without this information, the Department is unable to determine whether Navneet accounted for all its production costs relating to the merchandise under investigation. The Department is unable to rely on Navneet's submitted costs. Moreover, based on the statements made by Navneet and the exhibits provided in its questionnaire responses, it is apparent that Navneet departed from the product costs recorded in its normal books and records when calculating its reported product costs to the Department. Thus, the costs the Department should be using, the per-unit costs from its normal books and records, are not on the record of this proceeding. Section 773(f)(1)(A) of the Act requires that companies normally use their normal books and records in reporting costs for an antidumping investigation. Finally, we note that Navneet failed to provide the POI job order worksheet reconciliation, Start Printed Page 19710which the Department requested to determine whether Navneet relied on its normal books and records and that its reported costs reconciled to those records. Because necessary information from Navneet is not available on the record, the use of facts available for the preliminary determination is warranted pursuant to section 776(a)(1) of the Act. Furthermore, because Navneet has withheld requested information, failed to provide such information by the deadlines in the form and manner required, impeded this investigation, and reported information that could not be verified, the use of facts available for the preliminary determination is warranted pursuant to sections 776(a)(2)(A),(B),(C) and (D) of the Act. For further discussion, please refer to the Memorandum from Oh Ji to Neal Halper, entitled “Use of Adverse Facts Available for the Preliminary Determination - Navneet Publications (India) Ltd.,” dated April 7, 2006, on file in the CRU.

B. Application of Adverse Inferences for Facts Available

In applying adverse inferences to facts otherwise available, section 776(b) of the Act provides that, if the administering authority finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority, in reaching the applicable determination under this title, the administering authority may use an inference adverse to the interests of that party in selecting from among the facts otherwise available. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Circular Welded Carbon-Quality Line Pipe From Mexico, 69 FR 59892 (October 6, 2004); see also Notice of Preliminary Determination of Sales at Less Than Fair Value, Postponement of Final Determination, and Affirmative Preliminary Determination of Critical Circumstances in Part: Prestressed Concrete Steel Wire Strand From Mexico, 68 FR 42378 (July 17, 2003).

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. Doc. No. 103-316, at 870 (1994) (“SAA”). Furthermore, “{a}ffirmative evidence of bad faith, or willfulness, on the part of a respondent is not required before the Department may make an adverse inference.” See Final Rule.

Despite repeated requests for information concerning Aero and Navneet's costs, including extensions of time granted to submit the necessary information, neither company provided useable cost data. The series of supplemental questionnaire responses submitted by Aero and Navneet continued to remain inadequate where certain critical information questioned the accuracy and reliability of the reported cost information as well as a lack of various reconciliation schedules and explanations. The respondents were on notice as to the consequences of failing to adequately respond to the supplemental questionnaires. The Department finds that Aero and Navneet have failed to cooperate to the best of their ability because they continued to be non-responsive, despite repeated requests to provide critical data regarding their costs. Consequently, the Department has preliminarily determined that, in selecting from among the facts otherwise available, an adverse inference is warranted. See Section 776(b) of the Act; see also Notice of Final Determination of Sales at Less than Fair Value: Circular Seamless Stainless Steel Hollow Products from Japan, 65 FR 42985 (July 12, 2000), where the Department applied total AFA because the respondents failed to respond to the antidumping questionnaire.

C. Selection and Corroboration of Information Used as Facts Available

Where the Department applies AFA because a respondent failed to cooperate by not acting to the best of its ability to comply with a request for information, section 776(b) of the Act authorizes the Department to rely on information derived from the petition, a final determination, a previous administrative review, or other information placed on the record. See also 19 CFR 351.308(c) and SAA at 829-831. In this case, because we are unable to calculate a margin based on Aero's and Navneet's own data and because an adverse inference is warranted, we have assigned to Aero and Navneet the highest individual margin calculated in this proceeding based on the data reported by a respondent in this investigation, rather than the margins alleged in the petition. See Memorandum to the File from the Team entitled, “Preliminary Determination in the Antidumping Duty Investigation of Certain Lined Paper Products from India: Selection of Total Adverse Facts-Available Rate,” (Corroboration Memo) dated April 7, 2006.

When using facts otherwise available, section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition), it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. The SAA clarifies that “corroborate” means the Department will satisfy itself that the secondary information to be used has probative value. See SAA at 870. The Department's regulations state that 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 19 CFR 351.308(d) and SAA at 870. For the purposes of this investigation, to the extent appropriate information was available, we reviewed the adequacy and accuracy of the information in the petition during our pre-initiation analysis. See Office of AD/CVD Operations Initiation Checklist, dated September 29, 2005 (“Initiation Checklist”), on file in the CRU.

In accordance with section 776(c) of the Act and to the extent practicable, for this preliminary determination, we examined record evidence in an effort to corroborate the margins in the Initiation Notice, i.e., to determine whether those margins have probative value. We find that the estimated margins we set forth in the Initiation Notice do not have probative value. See Corroboration Memo. Therefore, in selecting AFA with respect to Aero and Navneet, we have applied the margin rate of 110.43 percent, the highest individual rate calculated in this proceeding.

Date of Sale

Section 351.401(i) of the Department's regulations states that the Department will normally use the date of invoice, as recorded in the producer's or exporter's records kept in the ordinary course of business, as the date of sale. However, the Department may use a date other than the date of invoice if the alternative better reflects the date on which the material terms of sales (e.g., price and quantity) are established.

Kejriwal reported the date of invoice as the date of sale for the U.S. market, reflecting the Department's stated preference. Kejriwal stated that the invoice date is the only date entered in the accounting records.

The Department is preliminarily using the invoice date as the date of sale for U.S. sales. We intend to examine this issue at verification, and will incorporate our findings in our analysis for the final determination, if we determine that another date, other than Start Printed Page 19711invoice date, is the appropriate date of sale.

Fair Value Comparisons

To determine whether Kejriwal's sales of CLPP from India to the United States were made at LTFV, we compared the export price (“EP”) to NV, as described in the “Export Price” and “Normal Value” sections of this notice. In accordance with section 777A(d)(1)(A)(i) of the Act, we compared POI weighted-average EP to CV. See discussion below.

Export Price

Section 772(a) of the Act defines EP as the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter outside of the United States to an unaffiliated purchaser for exportation to the United States, as adjusted under subsection (c).

During the POI, Kejriwal made direct sales to unaffiliated customers in the United Sates. Therefore, we have applied the EP methodology, in accordance with section 772(a) of the Act, for sales that were produced and exported by Kejriwal from India to the first unaffiliated purchaser in the United States prior to importation. We based EP on the packed price to unaffiliated purchasers in the United States. In accordance with section 772(c)(2)(A) of the Act, we made deductions for movement expenses, where appropriate, for foreign inland freight from the plant to the distribution warehouse, warehousing, foreign inland freight from plant/warehouse to the port of exportation, foreign inland insurance, foreign brokerage and handling, U.S. brokerage and handling, international freight, and U.S. inland freight from port to warehouse. In addition, we deducted billing adjustments and discounts from EP, where appropriate.

Normal Value

A. Home Market Viability and Comparison Market Selection

In order to determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV (i.e., the aggregate volume of home market sales of the foreign like product is equal to or greater than five percent of the aggregate volume of U.S. sales), we compared Kejriwal's volume of home market sales of the foreign like product to the volume of U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(C) of the Act.

Section 773(a)(1)(C)(i) of the Act applies to the Department's determination of NV if the foreign like product is not sold (or offered for sale) for consumption in the exporting country. When sales in the home market are not viable, section 773(a)(1)(B)(ii) of the Act provides that sales to a particular third country market may be utilized if: (1) the prices in such market are representative; (2) the aggregate quantity of the foreign like product sold by the producer or exporter in the third country market is five percent or more of the aggregate quantity of the subject merchandise sold in or to the United States; and (3) the Department does not determine that a particular market situation in the third country market prevents a proper comparison with the U.S. price.

Kejriwal reported that it made no sales to the home market and no sales to a third country. See Kejriwal's Section A Response, dated December 16, 2005 at 4; see also Kejriwal's Section A-D questionnaire responses, dated February 21, 2006, at SB-1. Therefore, for Kejriwal, we used CV as the basis for calculating NV, in accordance with section 773(a)(4) of the Act, for all sales.

B. Level of Trade

Kejriwal reported sales only to unaffiliated distributors in the U.S. market, and no sales to either the home or third country markets. In the U.S. market, they reported only one level of trade. The selling functions, customer category, and the level of selling expenses for each type of sale was consistent for all distributors in the U.S. However, all of Kejriwal's sales are compared to CV and a level-of-trade adjustment is not necessary.

C. Calculation of Normal Value Based on Constructed Value

In accordance with section 773(a)(4) of the Act, we based Kejriwal's NV on CV. In accordance with section 773(e) of the Act, we calculated CV based on the sum of Kejriwal's cost of materials and fabrication for the foreign like product, plus amounts for selling, general, and administrative expenses (“SG&A”), profit, and U.S. packing costs. We calculated the cost of materials and fabrication based on the CV information provided by Kejriwal in its section D response. We disallowed Kejriwal's claimed offsets for duty-free replenishment certificates and excise duty rebated. We have recalculated Kejriwal's general and administrative (“G&A”) expense ratio based on G&A expenses for the year ending March 31, 2005, incurred by Kejriwal Paper Ltd. only and not those of the Kejriwal Group. In doing so, we have removed the imputed cost of newsprint from Kejriwal's reported cost of goods sold denominator. We also added sundry expenses to our calculation of the G&A expense ratio. We recalculated Kejriwal's interest expense ratio to include sundry expenses in the cost of goods sold denominator and have removed the imputed cost of newsprint from the cost of goods sold denominator. Because Kejriwal does not have Indian sales of the foreign like product or third country sales, the Department does not have comparison market selling expenses or profit to use in its calculations, as directed by section 773(e) of the Act. As an alternative, the Department has used as selling expenses and profit for Kejriwal, data from the March 31, 2005, financial statements of Kanoi Paper Industries Limited (“Kanoi”). Kanoi sells merchandise within the same general category of products as the foreign like product in the Indian market. See Memorandum from Laurens Van Houten to Neal Halper, Director, Office of Accounting, Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Determination- Kejriwal, dated April 7, 2006 (“COP/CV Memo”).

Currency Conversion

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

All Others Rate

Section 735(c)(5)(A) of the Act provides that, where the estimated weighted-average dumping margins established for all exporters and producers individually investigated are zero or de minimis or are determined entirely under section 776 of the Act, the Department may use any reasonable method to establish the estimated “all others” rate for exporters and producers not individually investigated. The “all others” rate is derived exclusive of all de minimis margins and margins based entirely on facts available. Kejriwal is the only respondent in this investigation for which the Department has calculated a company-specific rate that is not based entirely on facts available. Therefore, for purposes of determining the “all others” rate and pursuant to section 735(c)(5)(A) of the Act, we are using the dumping margin calculated for Kejriwal, as referenced in the “Suspension of Liquidation” section below.Start Printed Page 19712

Critical Circumstances

A. Aero, Navneet, and Kejriwal

On November 28, 2005, petitioner requested that the Department make an expedited finding that critical circumstances exist with respect to CLPP from India. Petitioner alleged that there is a reasonable basis to believe or suspect that critical circumstances exist with respect to the subject merchandise. Petitioner based its allegation on evidence of retailers engaging in negotiations that would cause a surge of imports of subject merchandise into the United States from December 2005 through February 2006 (in advance of the preliminary determination date) in order to avoid duties.

Since this allegation was filed earlier than the deadline for the Department's preliminary determination, we must issue our preliminary critical circumstances determination not later than the preliminary determination. See 19 CFR 351.206(c)(2); see also Policy Bulletin 98/4 regarding Timing of Issuance of Critical Circumstances Determinations, 63 FR 55364 (October 15, 1998).

Section 733(e)(1) of the Act provides that the Department will preliminarily determine that critical circumstances exist if there is a reasonable basis to believe or suspect that: (A) (i) there is a history of dumping and material injury by reason of dumped imports in the United States or elsewhere of the subject merchandise; or (ii) the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value and that there was likely to be material injury by reason of such sales, and (B) there have been massive imports of the subject merchandise over a relatively short period.

In determining whether the relevant statutory criteria have been satisfied, the Department considered: (i) the evidence presented in the petitioners' November 28, 2005, submission, (ii) exporter-specific shipment data submitted by Kejriwal on February 21, 2006, and (iii) the ITC Preliminary Report.

To determine whether there is a history of injurious dumping of the merchandise under investigation, in accordance with section 733(e)(1)(A)(i) of the Act, the Department normally considers evidence of an existing antidumping duty order on the subject merchandise in the United States or elsewhere to be sufficient. See Preliminary Determinations of Critical Circumstances: Steel Concrete Reinforcing Bars From Ukraine and Moldova, 65 FR 70696 (November 27, 2000). Petitioner makes no statement concerning a history of dumping of CLPP from India. Moreover, we are not aware of any antidumping order on CLPP from India in any other country. Therefore, the Department finds no history of injurious dumping of CLPP from India pursuant to section 733(e)(1)(A)(i) of the Act.

To determine whether the person by whom, or for whose account, the merchandise was imported knew or should have known that the exporter was selling the subject merchandise at less than its fair value, in accordance with section 733(e)(1)(A)(ii) of the Act, the Department normally considers margins of 25 percent or more for export price sales, or 15 percent or more for constructed export price transactions, sufficient to impute knowledge of dumping. See Preliminary Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from the People's Republic of China, 62 FR 31972, 31978 (June 11, 1997). For the reasons explained above, we have assigned a margin of 110.43 percent to Aero and Navneet. Based on this margin, we have imputed importer knowledge of dumping for Aero and Navneet. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Affirmative Preliminary Determination of Critical Circumstances: Wax and Wax/Resin Thermal Transfer Ribbons from Japan, 68 FR 71077 (December 22, 2003) (“TTR from Japan”). However, because the preliminary dumping margin for Kejriwal's EP sales is less than 25 percent, we preliminarily determine that the knowledge criterion has not been met.

In determining whether there is a reasonable basis to believe or suspect that an importer knew or should have known that there was likely to be material injury by reason of dumped imports, consistent with section 733(e)(1)(A)(ii) of the Act, the Department normally will look to the preliminary injury determination of the ITC. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils From Japan, 64 FR 30574, 30578 (June 8, 1999) (“Stainless Steel from Japan”). The ITC preliminarily found material injury to the domestic industry due to imports of CLPP from India, which are alleged to be sold in the United States at less than fair value and, on this basis, the Department may impute knowledge of likelihood of injury to these respondents. See ITC Preliminary Report. Thus, we determine that the knowledge criterion for ascertaining whether critical circumstances exist has been satisfied.

Since Aero and Navneet have met the first prong of the critical circumstances test, according to section 733(e)(1)(A)(i) of the Act, we must examine whether imports from Aero and Navneet were massive over a relatively short period. Section 733(e)(1)(B) of the Act provides that the Department will preliminarily determine that critical circumstances exist if there is a reasonable basis to believe or suspect that there have been massive imports of the subject merchandise over a relatively short period.

Section 351.206(h)(1) of the Department's regulations provides that, in determining whether imports of the subject merchandise have been “massive,” the Department normally will examine: (i) the volume and value of the imports; (ii) seasonal trends; and (iii) the share of domestic consumption accounted for by the imports. In addition, 19 CFR 351.206(h)(2) provides that an increase in imports of 15 percent during the “relatively short period” of time may be considered “massive.”

Section 351.206(i) of the Department's regulations defines “relatively short period” as normally being the period beginning on the date the proceeding begins (i.e., the date the petition is filed) and ending at least three months later. The Department's regulations also provide, however, that if the Department finds that importers, exporters, or producers had reason to believe, at some time prior to the beginning of the proceeding, that a proceeding was likely, the Department may consider a period of not less than three months from that earlier time.

On February 21, 2006, Aero, Kejriwal, and Navneet filed company-specific monthly import data for shipments of subject merchandise to the United States for January 2003 through January 2006. However, we are disregarding the information reported by Aero and Navneet because, as noted above, we are applying AFA to Aero and Navneet and their company-specific data will not be subject to verification. Therefore, the Department must base its determination on facts available. Moreover, because of Aero and Navneet's failure to cooperate to the best of their ability, we have made an adverse inference that there were massive imports from Aero and Navneet over a relatively short period. See TTR from Japan, 68 FR at 71077.

In this case, the Department is unable to use information supplied by U.S. Customs and Border Protection (“CBP”) to corroborate whether massive imports occurred because the HTS numbers listed in the scope of the investigation Start Printed Page 19713are basket categories that include non-subject merchandise and, thus, do not permit the Department to make an accurate analysis. See Stainless Steel from Japan, 64 FR at 30585. In addition, the SAA states that, “{t}he fact that corroboration may not be practicable in a given circumstance will not prevent the agencies from applying an adverse inference under subsection (b).” See SAA at 870.

Accordingly, we preliminarily find critical circumstances exist with respect to Aero and Navneet. In regard to Kejriwal, we examined Kejriwal's reported shipments, which show that this company only exported subject merchandise to the United States for the period of August 2004 - July 2005. Kejriwal reported that it made no shipments to the United States subsequent to the filing date of the petition. The data reported by Kejriwal does not show a surge and there is no data to compare the seasonal trends. See Kejriwal's Section A-C questionnaire response, dated April 3, 2006, exhibit SA-1, (revised). Therefore, we preliminarily find that critical circumstances do not exist for Kejriwal.

B. All Others

It is the Department's normal practice to conduct its critical circumstances analysis of companies in the “all others” group based on the experience of investigated companies. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars from Turkey, 62 FR 9737, 9741 (March 4, 1997), where the Department found that critical circumstances existed for the majority of the companies investigated and concluded that critical circumstances also existed for companies covered by the “all others” rate. However, the Department does not automatically extend an affirmative critical circumstances determination to companies covered by the “all others” rate. See Stainless Steel from Japan, 64 FR at 30585. Instead, the Department considers the traditional critical circumstances criteria with respect to the companies covered by the “all others” rate.

First, in determining whether there is a reasonable basis to believe or suspect that an importer knew or should have known that the exporter was selling CLPP at less than fair value, we look to the “all others” rate. See TTR from Japan, 68 FR at 71077. The dumping margin for the “all others” category, 22.53 percent, is less than the 25 percent threshold necessary to impute knowledge of dumping consistent with 733(e)(1)(A)(ii) of the Act. Second, based on the ITC's preliminary material injury determination, we also find that importers knew or should have known that there would be material injury from the dumped merchandise consistent with 19 CFR 351.206. See ITC Preliminary Report.

Finally, with respect to massive imports, we are unable to base our determination on our findings for Aero and Navneet because our determination for Aero and Navneet was based on AFA. Consistent with TTR from Japan, we have not inferred adverse facts, that massive imports exist for “all others” because, unlike Aero and Navneet, the “all others” companies have not failed to cooperate to the best of their ability in this investigation. Therefore, an adverse inference with respect to shipment levels by the “all others” companies is not appropriate.

Generally, the Department's approach is to examine CBP data on overall imports from the country in question to see if the Department could ascertain whether an increase in shipments occurred within a relatively short period following the point at which importers had reason to believe that a proceeding was likely. See Notice of Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel Products from Japan, 64 FR 24329 (May 6, 1999); see also Notice of Final Determinations of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products From Argentina, Japan and Thailand, 65 FR 5520, 5527 (February 4, 2000). However, we are unable to rely on information supplied by CBP because in this investigation the HTS numbers listed in the scope of the investigation are basket categories that include non-subject merchandise. Lacking information on whether there was a massive import surge for the “all others” category, we are unable to determine whether there have been massive imports of CLPP from the producers included in the “all others” category. See TTR from Japan, 68 FR at 71077.

Consequently, the criteria necessary for determining affirmative critical circumstances have not been met. Therefore, we have preliminarily determined that critical circumstances do not exist for imports of CLPP from India for companies in the “all others” category.

Verification

As provided in section 782(i) of the Act, we intend to verify all information relied upon in making our final determination for Kejriwal.

Suspension of Liquidation

In accordance with section 733(d)(2) of the Act, we are directing CBP to suspend liquidation of all entries of CLPP from India that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. Additionally, for Aero and Navneet, we are instructing CBP to suspend the liquidation of entries made on or after 90 days prior to the publication of this notice in accordance with section 733(e)(2) of the Act. We are also instructing CBP to require a cash deposit or the posting of a bond equal to the weighted-average dumping margin, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice.

The weighted-average dumping margins are as follows:

Manufacturer/ExporterWeighted Average Margin (percent)
Aero Exports110.43
Kejriwal Paper Limited22.53
Navneet Publications (India) Ltd.110.43
All Others22.53

Disclosure

We will disclose the calculations used in our analysis to parties in this proceeding in accordance with 19 CFR 351.224(b).

ITC Notification

In accordance with section 733(f) of the Act, we have notified the ITC of the Department's preliminary affirmative determination. If the Department's final determination is affirmative, the ITC will determine before the later of 120 days after the date of this preliminary determination or 45 days after our final determination whether imports of CLPP from India are materially injuring, or threaten material injury to, the U.S. industry. Because we have postponed the deadline for our final determination to 105 days from the date of the publication of this preliminary determination, the ITC will make its final determination within 45 days of our final determination.

Public Comment

Interested parties are invited to comment on the preliminary determination. Interested parties may submit case briefs to the Department no later than seven days after the date of the issuance of the final verification report in this proceeding. Rebuttal briefs, the content of which is limited to the issues raised in the case briefs, must Start Printed Page 19714be filed within five days from the deadline date for the submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Further, we request that parties submitting briefs and rebuttal briefs provide the Department with a copy of the public version of such briefs on diskette. In accordance with section 774 of the Act, the Department will hold a public hearing, if requested, to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by an interested party. If a request for a hearing is made in this investigation, the hearing will tentatively be held two days after the rebuttal brief deadline date at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230, at a time and in a room to be determined. Parties should confirm by telephone, the date, time, and location of the hearing 48 hours before the scheduled date.

Interested parties who wish to request a hearing, or to participate in a hearing if one is requested, must submit a written request to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, within 30 days of the 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 the issues to be discussed. At the hearing, oral presentations will be limited to issues raised in the briefs.

Postponement of Final Determination and Extension of Provisional Measures

Pursuant to section 735(a)(2) of the Act, on March 30, 2006, Aero, Kejriwal and Navneet requested that in the event of an affirmative preliminary determination in this investigation, the Department postpone its final determination by 30 days. At the same time, Aero, Kejriwal and Navneet requested that the Department extend by 30 days the application of the provisional measures prescribed under 19 CFR 351.210(e)(2). In accordance with section 733(d) of the Act and 19 CFR 351.210(b), because (1) our preliminary determination is affirmative, (2) the requesting exporter accounts for a significant proportion of exports of the subject merchandise, and (3) no compelling reasons for denial exist, we are granting their request and are postponing the final determination until no later than 105 days after the publication of this notice in the Federal Register. Suspension of liquidation will be extended accordingly.

This determination is issued and published pursuant to sections 733(f) and 777(i)(1) of the Act.

Start Signature

Dated: April 7, 2006.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

End Signature End Supplemental Information

Footnotes

1.  Section A of the questionnaire requests general information concerning a company's corporate structure and business practices, the merchandise under investigation that it sells, and the manner in which it sells that merchandise in all of its markets. Section B requests a complete listing of all home market sales or, if the home market is not viable, of sales in the most appropriate third-country market. Section C requests a complete listing of U.S. sales. Section D requests information on the cost of production of the foreign like product and the constructed value of the merchandise under investigation. Section E requests information on further manufacturing.

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2.  For purposes of this scope definition, the actual use of or labeling these products as school supplies or non-school supplies is not a defining characteristic.

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3.  There shall be no minimum page requirement for looseleaf filler paper.

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4.  “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.

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5.  Products found to be bearing an invalidly licensed or used trademark are not excluded from the scope.

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6. Products found to be bearing an invalidly licensed or used trademark are not excluded from the scope.

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7.  Products found to be bearing an invalidly licensed or used trademark are not excluded from the scope.

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8.  Products found to be bearing an invalidly licensed or used trademark are not excluded from the scope.

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9.  During the investigation additional HTS codes may be identified.

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[FR Doc. E6-5690 Filed 4-14-06; 8:45 am]

BILLING CODE 3510-DS-S