69 FR 77990, December 29, 2004

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-504]

 
Petroleum Wax Candles From the People's Republic of China: Notice 
of Final Results of Antidumping Duty New Shipper Review

AGENCY: Import Administration, International Trade Administration, U.S. 
Department of Commerce.
SUMMARY: On August 3, 2004, the Department of Commerce (the Department) 
published the preliminary results of its new shipper review of the 
antidumping duty order on petroleum wax candles from the People's 
Republic of China (PRC) for Shandong Huihe Trade Co., Ltd. (Shandong 
Huihe). See Petroleum Wax Candles From the People's Republic of China: 
Notice of Preliminary Results of the Antidumping Duty New Shipper 
Review of Shandong Huihe, Ltd., 69 FR 46512 (Preliminary Results). The 
new shipper review covers the period August 1, 2002, through July 31, 
2003.
    Based on the Department's verification of Shandong Huihe's 
questionnaire responses and our consideration of the comments received, 
we have made changes to our analysis. Therefore, the final results 
differ from the Preliminary Results.

EFFECTIVE DATE: December 29, 2004.

FOR FURTHER INFORMATION CONTACT: Scott Lindsay, or Tom Gilgunn, AD/CVD 
Operations, Office 6, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington DC 20230; telephone (202) 482-0780, 
or (202) 482-4236, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On August 3, 2004, the Department published the preliminary results 
of its new shipper review of the antidumping duty order on petroleum 
wax candles from the PRC for Shandong Huihe. See Preliminary Results. 
This new shipper review covers the period August 1, 2002, through July 
31, 2003.
    Since the publication of the Preliminary Results, the following

[[Page 77991]]

events have occurred. On August 27, 2004, Shandong Huihe submitted its 
response to a supplemental questionnaire. The Department conducted 
verification of Shandong Huihe's responses in Jinan, China on October 
11-13, 2004. On October 22, 2004, the Department extended the final 
results of this review to 147 days from July 26, 2004, the date that 
the preliminary results were issued, or December 20, 2004. See 
Petroleum Wax Candles From the People's Republic of China: Extension of 
Time Limit for Final Results of New Shipper Review of Shandong Huihe 
Trade Co. Inc., 69 FR 60142. We received timely filed case and rebuttal 
briefs from Shandong Huihe and the National Candle Association 
(petitioners) on November 29, 2004, and December 2, 2004, respectively. 
The Department conducted a hearing for this new shipper review on 
December 9, 2004.

Scope of the Antidumping Duty Order

    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 of the United States (HTSUS) item 
3406.00.00. Although the HTSUS subheading is provided for convenience 
and customs purposes, our written description of the scope of this 
proceeding remains dispositive.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs are addressed in 
the Memorandum from Barbara E. Tillman, Acting Deputy Assistant 
Secretary for Import Administration, to James J. Jochum, Assistant 
Secretary for Import Administration: Issues and Decision Memorandum for 
the Final Results of the New Shipper Review of Petroleum Wax Candles 
From the People's Republic of China, dated December 20, 2004 (Decision 
Memo), which is hereby adopted by this notice.
    A list of the issues which parties have raised and to which we have 
responded, all of which are in the Decision Memo, is attached to this 
notice as an appendix. Parties can find a complete discussion of all 
issues raised in this review and the corresponding recommendations in 
this public memorandum, which is on file in the Central Records Unit, 
room B-099 of the main Department Building. In addition, a complete 
version of the Decision Memo can be accessed directly on the Web at 
http://ia.ita.doc.gov. The paper copy and electronic version of the 

Decision Memo are identical in content.

Changes Since the Preliminary Results Use of Adverse Facts Available

    Based on our analysis of information obtained during verification 
which occurred after the Preliminary Results, and of briefs and 
rebuttal briefs submitted by interested parties, we have changed our 
analysis for Shandong Huihe. For these final results, we are basing the 
margin for Shandong Huihe on adverse facts available (AFA). For a 
discussion of this change, refer to the Application of Facts Available 
section, below.

Application of Adverse Facts Available

    As further discussed below, pursuant to sections 776(a)(2)(B) and 
(C), 776(b), and 782(d) and (e) of the Tariff Act of 1930, as amended 
(the Act), the Department determines that the application of total 
adverse facts available is warranted for Shandong Huihe. Section 
776(a)(2) of the Act provides that, if an interested party (A) 
withholds information requested by the Department, (B) fails to provide 
such information by the deadline, or in the form and manner requested, 
(C) significantly impedes a proceeding, or (D) provides information 
that cannot be verified, the Department shall use, subject to sections 
782 (d) and (e) of the Act, facts otherwise available in reaching the 
applicable determination. Section 782(d) provides that the Department 
must inform the interested party of the nature of any deficiency in its 
response and, to the extent practicable, allow the interested party to 
remedy or explain such deficiency. Pursuant to section 782(e) of the 
Act, 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.
    We find that pursuant to sections 776(a)(2)(B) and (C) of the Act, 
we should apply facts available to exports by Shandong Huihe because 
Shandong Huihe failed to report in a timely manner information that was 
requested by the Department, and because Shandong Huihe took further 
action that impeded the Department's ability to conduct this 
proceeding.
    Shandong Huihe reported in response to the Department's inquiries 
about the location of its sales activities that, ``Huihe's 
administrative and sales office is located in Niuwang Village, Gaoxin 
District, Jinan City, Shandong Province, China.'' See Shandong Huihe's 
December 16, 2003, Section A questionnaire response at page 10. 
However, during verification, the Department learned that Shandong 
Huihe's sales manager, largest shareholder, and legal representative, 
the person able to enter Shandong Huihe into binding contracts, works 
at an office in Qingdao, 400 kilometers from Jinan. See Verification 
Report at page 6. Further, the Department also learned that the sales 
negotiations for Shandong Huihe's were conducted from the sales 
manager's office via telephone and telephonic facsimile; all of the 
relevant sales documents were created on the computer system located at 
this office; and, the sales manager's files for Shandong Huihe's sales 
are stored at this office. Id. at page 6. At no point in this new 
shipper review, prior to verification, did Shandong Huihe notify the 
Department of the existence of any additional sales offices, or seek 
guidance on the applicable reporting requirements as contemplated by 
section 782(c)(1) of the Act. Nor did Shandong Huihe report at the 
start of verification that it had an additional sales office in 
Qingdao, China. See Verification Report at page 1. Shandong Huihe thus 
failed to provide in a timely manner information requested by the 
Department within the meaning of section 776(a)(2)(B) of the Act.
    The Department finds that the application of facts available is 
warranted for another reason. Specifically, the Department finds that 
Shandong Huihe significantly impeded the proceeding by refusing to 
consent to an extension of the schedule so as to permit verification at 
the Qingdao office, where keys sales and export functions take place. 
Access to the facility where these functions take place was critical to 
the Department's ability to conduct a thorough verification of Shandong 
Huihe's responses, specifically, the bona fides of Shandong Huihe's 
sales, affiliations, and reported sales process. Shandong Huihe thus 
took specific action to prevent the Department from determining the 
reliability of central elements of its responses, thereby impeding this 
proceeding. That action itself warrants

[[Page 77992]]

the application of facts available pursuant to section 776(a)(2)(C) of 
the Act.
    While it is true that the Department does occasionally allow for 
off-site verifications, it does so only with full knowledge beforehand, 
and usually with a great deal of additional scrutiny. Shandong Huihe 
did not report the existence of its Qingdao sales office in its 
responses, and thus the Department was unaware of it until well into 
verification. Without being able to actually travel to this office and 
examine the company records and computer systems located there, the 
Department was left to rely solely on Shandong Huihe's assurances that 
it provided accurate and complete information.
    Furthermore, Shandong Huihe has not met the requirements of 
sections 782(d) and (e) of the Act. Section 782(d) is not applicable 
because information concerning the additional sales office was not 
submitted by the established deadline. The Department only discovered 
this information at verification. Similarly, section 782(e) of the Act 
has also not been satisfied since, on two separate occasions, Shandong 
Huihe failed to provide consent that would have enabled the 
verification team to conduct an on-site verification of the company-
specific information in Qingdao. Thus, Shandong Huihe has failed to 
satisfy the requirements of section 782(e), and subsections (1), (2), 
and (4) of the Act.
    Once the Department determines that the use of facts available is 
warranted, the Department must then determine whether an adverse 
inference is warranted pursuant to section 776(b) of the Act, which 
permits the Department to apply an adverse inference if it makes the 
additional finding that an interested party has failed to cooperate by 
not acting to the best of its ability to comply with the Department's 
requests for information.
    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 the respondent's conduct. See Nippon Steel 
Corp. v. United States, 337 F.3d 1373, 1382 (Fed. Cir. 2003). 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. 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 Pacific Giant, 223 
F. Supp. 2d. 1336, 1342 (2002), see also Tung Mung Dev. Co. v. US, 2001 
Ct. Intl. Trade LEXIS 94 at 89 (July 3, 2001). The Department also 
considers whether there is at issue a ``pattern of behavior.'' Borden, 
Inc. v. United States, 22 C.I.T. 1153, 1154 (1998).
    As discussed below, we determine that, within the meaning of 
section 776(b) of the Act, Shandong Huihe failed to cooperate by not 
acting to the best of its ability to comply with the Department's 
requests for information, and that the application of adverse facts 
otherwise available (AFA) is therefore warranted.
    On more than one occasion, Shandong Huihe failed to provide 
information when requested to do so by the Department. Specifically, 
Shandong Huihe never indicated prior to verification that it had an 
additional sales office in Qingdao and that it sales operations took 
place from that office. Moreover, at the start of verification, in 
response to the Department's request for corrections, Shandong Huihe 
did not report its additional sales office. See Verification Report at 
page 1.
    Shandong Huihe could possibly have remedied these deficiencies even 
after they were discovered by the Department, but it chose not to avail 
itself of that opportunity. During verification, the Department learned 
that Shandong Huihe conducted its sales operations out of its Qingdao, 
China office. See Verification Report at page 6. The Department made it 
clear to Shandong Huihe at that time that Shandong Huihe's failure to 
provide information about its Qingdao office in its responses greatly 
impaired the Department's ability to conduct a complete and accurate 
verification under section 782(I) of the Act. See Verification Report 
at page 6. Immediately, and again the following day, the Department 
requested that Shandong Huihe extend the verification schedule to allow 
verification of its sales and export information at its Qingdao office. 
The Department thus offered Shandong Huihe an opportunity to remedy its 
failure to provide requested information in a timely manner, but 
Shandong Huihe refused the Department's offer. And Shandong Huihe did 
not attempt to explain its reasons for refusing to work with the 
Department on this matter.
    In all new shipper reviews, the Department has a heightened 
obligation to make an exhaustive investigation into a respondent 
company's past and current affiliations, the bona fides of the sales by 
the respondent, and every aspect of the new shipper company and sales 
relevant to the review. The Department conducts verification to examine 
not only the documents supporting information on the record, but also 
to examine other records and the environment in which those documents 
and information were generated and maintained. Companies that seek to 
benefit from new shipper reviews have a responsibility to work with the 
Department to facilitate such in-depth inquiry. Plainly stated, 
Shandong Huihe neither did so nor did it attempt to explain why it 
would not do so. Thus, we find that Shandong Huihe's failed to 
cooperate to the best of its ability and, therefore, an adverse 
inference is warranted.
    Section 776(c) of the Act requires that the Department corroborate, 
to the extent practicable, secondary information which it applies as 
facts available. The SAA states that corroborate means that the 
Department will satisfy itself that the secondary information to be 
used has probative value. To corroborate information, the Department 
will explain the reliability and relevance of the information used. We 
are applying as AFA the highest rate from any segment of this 
administrative proceeding, which is the highest rate from the 2001-2002 
administrative review. See Amended Notice of Final Results of the 
Antidumping Duty Administrative Review: Petroleum Wax Candles From the 
Peoples Republic of China, 69 FR 20858 (April 19, 2004) (Amended 
Final). Unlike other types of information, such as input costs or 
selling expenses, there are no independent sources for calculated 
dumping margins. The only sources for calculated margins are 
administrative determinations. No information has been presented in the 
current review that calls into question the reliability of this 
information. Thus, the Department finds that the information is 
reliable.
    With respect to the relevance aspect of corroboration, the 
Department will consider information reasonably at its disposal to 
determine whether a margin continues to have relevance. Where 
circumstances indicate that the selected margin is not appropriate as 
adverse facts available, the Department will disregard the margin and 
determine an appropriate margin. For example, in Fresh Cut Flowers From 
Mexico: Final Results of Antidumping Administrative Review, 61 FR 6812 
(February 22, 1996), the Department disregarded the highest margin in 
that case as adverse best information available (the predecessor to 
facts available) because the margin was based on another company's 
uncharacteristic business expense

[[Page 77993]]

resulting in an unusually high margin. Similarly, the Department does 
not apply a margin that has been discredited. See D&L Supply Co. v. 
United States, 113 F.3d 1220, 1221 (Fed. Cir. 1997) (the Department 
will not use a margin that has been judicially invalidated). The 
information used in calculating this margin was based on sales and 
production data of a respondent in a prior review, together with the 
most appropriate surrogate value information available to the 
Department, chosen from submissions by the parties in that review, as 
well as gathered by the Department itself. Furthermore, the calculation 
of this margin was subject to comment from interested parties. See 
Amended Final. Moreover, as there is no information on the record of 
this review that demonstrates that this rate is not appropriately used 
as adverse facts available, we determine that this rate has relevance. 
As the rate is both reliable and relevant, we determine that it has 
probative value. Accordingly, we determine that the highest rate from 
any segment of this administrative proceeding (i.e., the calculated 
rate of 108.3 percent, which is the current PRC-wide rate and the rate 
currently applicable to other exporters) is in accord with section
    776(c)'s requirement that secondary information be corroborated to 
the extent practicable (i.e., that it have probative value).

Final Results of Review

    For these final results we determine that the following dumping 
margin exists:

------------------------------------------------------------------------
                                                                 Margin
                  Manufacturer and Exporter                    (percent)
------------------------------------------------------------------------
Shandong Huihe Trade Co. Ltd.................................     108.30
------------------------------------------------------------------------

Cash Deposit Requirements

    The Department will notify Customs and Border Protection (CBP) that 
bonding is no longer permitted to fulfill security requirements for 
shipments from Shandong Huihe of petroleum wax candles from the PRC 
entered, or withdrawn from warehouse, for consumption in the United 
States on or after the publication of this notice of final results of 
antidumping duty new shipper review in the Federal Register. Further, 
effective upon publication of this notice for all shipments of the 
subject merchandise exported by Shandong Huihe, and entered, or 
withdrawn from warehouse, for consumption, the cash deposit rate will 
be the PRC-wide rate of 108.30 percent ad valorem.

Assessment of Antidumping Duties

    The Department will instruct CBP to assess antidumping duties on 
all appropriate entries. Since we have reached the final results of 
this antidumping duty new shipper review with respect to Shandong 
Huihe, based on total AFA, the PRC-wide rate of 108.30 percent in 
effect at the time of entry applies to all exports of petroleum wax 
candles from the PRC by Shandong Huihe entered, or withdrawn from 
warehouse, for consumption during the period of review (August 1, 2002, 
through July 31, 2003). The Department will issue appropriate 
assessment instructions directly to CBP within 15 days of publication 
of this notice of final results of antidumping duty new shipper review.

Notification to Importers

    This notice also serves as a reminder to importers of their 
responsibility under section 351.402(f) of the Department's regulations 
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 also serves as a reminder to parties subject to 
administrative protective orders (APO) of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with section 351.305(a)(3) of the Department's 
regulations. Timely written notification of the return/destruction of 
APO material or conversion to judicial protective order is hereby 
requested. Failure to comply with the regulations and terms of an APO 
is a violation, which is subject to sanctions.
    We are issuing and publishing this determination and notice in 
accordance with sections 751(a)(2)(B) and 777(I)(1) of the Act.

    Dated: December 20, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.

Appendix

List of Issues

1. Whether the Department should apply adverse facts available (AFA) 
to Shandong Huihe;
2. The bona fides of Shandong Huihe's sale;
3. Shandong Huihe's eligibility as a new shipper.
[FR Doc. E4-3867 Filed 12-28-04; 8:45 am]