E7-6635. Certain Tissue Paper from the People's Republic of China: Preliminary Results and Preliminary Rescission, In Part, of Antidumping Duty Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to requests from interested parties, the Department of Commerce (the Department) is conducting the first administrative review of the antidumping duty order on certain tissue paper (tissue paper) from the People's Republic of China (PRC). The period of review (POR) is September 21, 2004, through February 28, 2006. We have preliminarily determined that two of the three respondents made sales of the subject merchandise at prices below normal value.

EFFECTIVE DATE:

April 9, 2007.

FOR FURTHER INFORMATION CONTACT:

Kristina Horgan or Bobby Wong, AD/CVD Operations, Office 9, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: [phone] or [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

On March 30, 2005, the Department published in the Federal Register an antidumping duty order covering tissue paper from the PRC. See Notice of Amended Final Determination of Sales at Less than Fair Value and Antidumping Duty Order: Certain Tissue Paper Products from the People's Republic of China, 70 FR 16223 (March 30, 2005) (Tissue Paper Order). On March 2, 2006, the Department published a Notice of Opportunity to Request Administrative Review of Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation, 71 FR 10642 (March 2, 2006).

On March 30, 2006, Cleo Inc., an importer of subject merchandise, requested, in accordance with 19 CFR 351.213(b), an administrative review of the antidumping duty order on tissue paper from the PRC for China National Aero-Technology Import & Export Xiamen Corp. (China National), Putian City Hong Ye Paper Products Co., Ltd. (Hong Ye), and Putian City Chengxiang Qu Li Feng (Chengxiang) covering the POR. On March 31, 2006, Seaman Paper Company of Massachusetts, Inc., petitioner, requested, in accordance with 19 CFR 351.213(b), an administrative review of the antidumping duty order on tissue paper from the PRC for 16 companies. The companies are: AR Printing and Packaging (AR P&P); China National; Fujian Naoshan Paper Industry Group Co., Ltd. (Naoshan); Fuzhou Magicpro Gifts Co., Ltd. (Magicpro); Giftworld Enterprise Co., Ltd. (Giftworld); Guilin Qifeng Paper Co., Ltd. (Guilin Qifeng); Goldwing Co., Ltd. (Goldwing); Kepsco, Inc. (Kepsco); Max Fortune Industrial Limited; Foshan Sansico Co., Ltd., PT Grafitecindo Ciptaprima, PT Printec Perkasa, PT Printec Perkasa II, PT Sansico Utama, Sansico Asia Pasific Limited (collectively, the Sansico Group); and Vietnam Quijiang Paper Co., Ltd. (Quijiang).

On March 31, 2006, Samsam Productions Ltd. (Samsam) requested, in accordance with 19 CFR 351.213(b), an administrative review of the antidumping duty order on tissue paper from the PRC for itself and its affiliated Chinese supplier Guangzhou Baxi Printing Products Co., Ltd., as did Max Fortune Industrial Limited and Max Fortune (FETDE) Paper Products Co., Ltd. (collectively, Max Fortune). On April 28, 2006, the Department initiated an administrative review of the above-mentioned 20 companies. See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 71 FR 25145 (April 28, 2006) (Initiation Notice).

On May 10, 2006, Naoshan submitted a letter to the Department claiming it had no shipments of subject merchandise to the United States during the POR. On May 10, 2006, the Department issued quantity and value questionnaires to 18 companies for which the review was initiated, and on May 11, 2006, the Department issued quantity and value questionnaires to the remaining two companies, Naoshan and Magicpro. On May 15, 2006, the Department sent another quantity and value questionnaire to PT Printec Perkasa II using an alternate address. On May 22, 2006, Samsam and Max Fortune submitted separate quantity and value questionnaires, as requested by the Department, indicating that each company had sales of subject merchandise during the POR. On May 24, 2006, Naoshan stated again that it had no shipments of subject merchandise during the POR. On May 30, 2006, petitioner submitted comments on Naoshan's May 10, 2006, submission, requesting that the Department seek further information regarding its claims of no shipments of subject merchandise during the POR.

On June 5, 2006, the Department sent a second quantity and value questionnaire to Kepsco, China National, Guilin Qifeng, Hong Ye, Giftworld, MagicPro, and Chengxiang, asking them to respond and informing the companies that, in failing to respond, the Department might find them uncooperative and use facts available with an adverse inference to determine the appropriate antidumping duty margins. On June 23, 2006, the Department issued a letter to the Chinese Ministry of Commerce requesting its assistance in finding a correct address for MagicPro; however, the Department received no response.

On July 3, 2006, the Department stated in a memorandum to the file that only three companies had replied to its quantity and value questionnaires indicating that they had sales of subject merchandise during the POR; therefore, the Department issued questionnaires to these companies: Guilin Qifeng and Quijiang,¹ Max Fortune, and Samsam. See Memorandum to The File, through Carrie Blozy, Program Manager, AD/CVD Operations, Office 9, from Bobby Wong, Case Analyst, AD/CVD Operations, Office 9, regarding Certain Tissue Paper Products from the People's Republic of China: Respondent Questionnaires (July 3, 2006). On July 17, 2006, Naoshan reiterated on the record that it had no shipments of subject merchandise during the POR and replied to petitioner's May 30, 2006, comments. On July 18, 2006, the Department outlined, in a memorandum to the file, the various steps it took to attempt to deliver the quantity and value questionnaire to Magicpro, and indicated that it had not succeeded in its various attempts. On July 18, 2006, the Department placed letters from Goldwing and AR P&P on the record, in which each company stated that it had no shipments of subject merchandise during the POR. On July 20, 2006, the Department sent a letter to Naoshan stating that our research had indicated that Naoshan had shipments of subject merchandise during the POR and requested that the company respond to the research finding.

On July 24, 2006, petitioner requested that the Department extend the deadline for withdrawing requests for specific producers and exporters in the instant review. On July 26, 2006, in accordance with 19 CFR 351.213(d)(1), the Department granted an extension for withdrawing requests until August 25, 2006. On July 31, 2006, Guilin Qifeng submitted a Section A response to the Department's questionnaire. On August 15, 2006, Naoshan replied to the Department's July 20, 2006, request for further information. On August 23, 2006, Guilin Qifeng submitted Section C and D responses to the Department. On August 25, 2006, petitioner filed a letter withdrawing its request for review of five companies: Naoshan, Magicpro, Guilin Qifeng, Goldwing, and AR P&P.

On September 11, 2006, we invited interested parties to comment on the Department's surrogate country selection and/or to submit publicly available information to value the factors of production. On September 29, 2006, the Department rescinded this review with respect to Naoshan, Magicpro, Guilin Qifeng, Goldwing, and AR P&P because the only requesting party withdrew its request for review in a timely manner. See Certain Tissue Paper Products from the People's Republic of China: Notice of Partial Rescission of Antidumping Duty Administrative Review, 71 FR 57471 (September 29, 2006). On October 10, 2006, petitioner submitted comments with regard to surrogate country selection. On October 24, 2006, in accordance with section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.213(h)(2), the Department extended the deadline for the preliminary results of review until February 16, 2007. See Certain Tissue Paper Products from the People's Republic of China: Extension of Time Limit for Preliminary Results of the First Administrative Review, 71 FR 62249 (October 24, 2006). On October 27, 2006, the Department extended the time limit for submitting surrogate country and surrogate value comments.

On November 6, 2006, the Department, in response to petitioner's November 3, 2006, request to reopen the record of the review to submit new factual information, extended the opportunity to submit new factual information. On November 27, 2006, the Department received a letter from the law firm of Grunfeld, Desiderio, Lebowitz, Silverman, and Klestadt LLP, notifying the Department that it had withdrawn its representation of Samsam. On December 6, 2006, we received surrogate value comments from Max Fortune. Petitioner commented on surrogate values on December 11, 2006.

On January 4, 2007, the Department received a letter from Grunfeld, Desiderio, Lebowitz, Silverman, and Klestadt LLP notifying the Department that it was again representing Samsam in the instant review. On January 23, 2007, in accordance with section 751(a)(3)(A) of the Act and 19 CFR 351.213(h)(2), the Department further extended the deadline for the preliminary results of review until April 2, 2006. See Certain Tissue Paper Products from the People's Republic of China: Extension of Time Limit for Preliminary Results of the First Administrative Review, 72 FR 2859 (January 23, 2007).

On March 22, 2007, petitioner submitted comments on Max Fortune's dye and ink factors of production allocation. On March 23, 2007, petitioner submitted comments on the bona fides nature of Samsam's POR sales. On March 30, 2007, petitioner also submitted comments on Max Fortune paper making division's financial statements. On April 2, 2007, Samsam replied to petitioner's March 23, 2007, comments.²

During the course of the administrative review, the Department also received timely filed original and supplemental questionnaire responses from Max Fortune and Samsam.

Quijiang

In response to the Department's quantity and value questionnaire, on May 25, 2006, Quijiang stated that it had no shipments of subject merchandise during the POR. After the Department issued a full questionnaire to Guilin Qifeng and Quijiang on July 3, 2006, Quijiang asked the Department on July 12, 2006, to clarify how it should reply to the antidumping duty questionnaire, as it stated it had no shipments of subject merchandise during the POR on May 25, 2006. On July 18, 2006, the Department informed Quijiang, in a memorandum to the file, that “to the extent that it did not sell or resell the subject merchandise to the United States during the POR, {it}is not required to submit a response to the Department's July 3, 2006, antidumping questionnaire.” See Memorandum to The File, through Carrie Blozy, Program Manager, AD/CVD Operations, Office 9, from Kristina Boughton, Senior International Trade Compliance Analyst, AD/CVD Operations, Office 9, regarding First Antidumping Duty Administrative Review of Certain Tissue Paper Products from the People's Republic of China: Clarification of Respondent Selection (July 18, 2006). As noted above, while Guilin Qifeng submitted responses to the Department's questionnaire before the review was rescinded for Guilin Qifeng, it did so only on behalf of itself and not on behalf of its affiliate, Quijiang.

The Sansico Group

In response to the Department's quantity and value questionnaire, on May 22, 2006, the Sansico Group submitted a letter to the Department claiming each of its affiliated companies had no shipments of subject merchandise during the POR. On May 30, 2006, petitioner submitted comments on the Sansico Group's May 22, 2006, submission, requesting that the Department seek further information from the Sansico Group regarding its claims of no shipments of subject merchandise during the POR. On June 7, 2006, the Sansico Group responded to the petitioner's comments on its claim of no shipments during the POR.

In response to the Department's opening of the record to new factual information, as mentioned above, on November 13, 2006, petitioner submitted comments analyzing the Sansico Group's production and export activities. On December 22, 2006, petitioner resubmitted, at the Department's request, the November 13, 2006, submission with revised bracketing. On January 3, 2007, the Sansico Group responded to the petitioner's comments on its export and production activities, restating that it did not export Chinese-origin tissue paper to the United States. On January 8, 2007, the Department issued a supplemental questionnaire to the Sansico Group regarding its POR export and production activities. On January 29, 2007, the Sansico Group submitted its response to the Department's supplemental questionnaire. On February 8, 2007, the Department received petitioner's comments on the Sansico Group's supplemental response. On March 23, 2007, petitioner submitted additional comments on the Sansico Group and its claims of no shipments. On April 2, 2007, the Sansico Group replied to petitioner's March 23, 2007, comments.³

China National, Hong Ye, Chengxiang, Kepsco, and Giftworld

In its first quantity and value questionnaire, the Department established a deadline of May 22, 2006, for submitting such responses; however, the Department did not receive responses from China National, Hong Ye, Chengxiang, Kepsco, and Giftworld. The Department sent follow-up quantity and value questionnaires to each of the above-referenced firms on June 5, 2006, requesting a response within five days of the receipt of the June 5 letter. The Department also noted in this letter that it might resort to facts available with an adverse inference if the companies failed to file a response. See Letters to China National, Hong Ye, Chengxiang, Kepsco, and Giftworld from Carrie Blozy, Program Manager, AD/CVD Operations, Office 9, regarding Certain Tissue Paper from the People's Republic of China: Quantity and Value Follow-Up Questionnaire (June 5, 2006). Although China National, Hong Ye, Chengxiang, Kepsco, and Giftworld received the initial questionnaire and the follow-up letter, which included the quantity and value questionnaire, Hong Ye, Chengxiang, Kepsco, and Giftworld did not reply to the Department. See Memorandum to the File, from Bobby Wong, International Trade Compliance Analyst, AD/CVD Operations, Office 9, regarding Antidumping Duty Administrative Review of Certain Tissue Paper Products from the People's Republic of China: Proof of Delivery to China National, Hong Ye, Chengxiang, Kepsco, and Giftworld (April 2, 2007).

On June 28, 2006, the Department placed a facsimile it received from China National on the record, in which the company stated that it would not participate in the review. See Memorandum to the File, from Bobby Wong, International Trade Compliance Analyst, AD/CVD Operations, Office 9, regarding Antidumping Duty Administrative Review of Certain Tissue Paper Products from the People's Republic of China: Notice of non-participation by China National Aero-Technology Import & Export Xiamen Corporation (June 28, 2006).

Scope of the Order

The tissue paper products subject to this order are cut-to-length sheets of tissue paper having a basis weight not exceeding 29 grams per square meter. Tissue paper products subject to this order may or may not be bleached, dye-colored, surface-colored, glazed, surface decorated or printed, sequined, crinkled, embossed, and/or die cut. The tissue paper subject to this order is in the form of cut-to-length sheets of tissue paper with a width equal to or greater than one-half (0.5) inch. Subject tissue paper may be flat or folded, and may be packaged by banding or wrapping with paper or film, by placing in plastic or film bags, and/or by placing in boxes for distribution and use by the ultimate consumer. Packages of tissue paper subject to this order may consist solely of tissue paper of one color and/or style, or may contain multiple colors and/or styles.

The merchandise subject to this order does not have specific classification numbers assigned to them under the Harmonized Tariff Schedule of the United States (HTSUS). Subject merchandise may be under one or more of several different subheadings, including: 4802.30; 4802.54; 4802.61; 4802.62; 4802.69; 4804.31.1000; 4804.31.2000; 4804.31.4020; 4804.31.4040; 4804.31.6000; 4804.39; 4805.91.1090; 4805.91.5000; 4805.91.7000; 4806.40; 4808.30; 4808.90; 4811.90; 4823.90; 4820.50.00; 4802.90.00; 4805.91.90; 9505.90.40. The tariff classifications are provided for convenience and customs purposes; however, the written description of the scope of this order is dispositive.⁴

Excluded from the scope of this order are the following tissue paper products: (1) tissue paper products that are coated in wax, paraffin, or polymers, of a kind used in floral and food service applications; (2) tissue paper products that have been perforated, embossed, or die-cut to the shape of a toilet seat, i.e., disposable sanitary covers for toilet seats; (3) toilet or facial tissue stock, towel or napkin stock, paper of a kind used for household or sanitary purposes, cellulose wadding, and webs of cellulose fibers (HTSUS 4803.00.20.00 and 4803.00.40.00).

Preliminary Partial Rescission of Administrative Review

Pursuant to 19 CFR 351.213(d)(3), we have preliminarily determined that Quijiang⁵ and the Sansico Group made no shipments of subject merchandise during the POR of this administrative review. In making this determination, the Department examined PRC tissue paper shipment data maintained by CBP. Based on the information obtained from CBP, we found no entries of subject merchandise during the POR manufactured and/or exported by Quijiang or the Sansico Group to the United States. The Department also issued no-shipment inquiries to CBP in March 2007 asking CBP to provide any information contrary to our findings of no entries of subject merchandise for Quijiang and the Sansico Group during the POR. We received no response from CBP. See Memorandum to The File, from Kristina Horgan, Senior International Trade Analyst, AD/CVD Operations, Office 9, regarding 2004-2006 Administrative Review of Certain Tissue Paper Products from the People's Republic of China: CBP No Shipment E-mail Inquiries (April 2, 2007).

Petitioner has alleged that the Sansico Group is selling Chinese-origin tissue paper via its Indonesian facilities. The Sansico Group has stated on the record, and provided supporting evidence, that none of its companies exported Chinese-origin subject merchandise to the United States during the POR. The Department has analyzed record information and preliminarily finds that the Sansico Group did not export subject merchandise to the United States during the POR. However, the Department may solicit additional information prior to the final results of this review from the Sansico Group to confirm the veracity of its no shipment claims.

Therefore, based on the results of our corroborative CBP query, indicating no shipments of subject merchandise by Quijiang or the Sansico Group during the POR, as well as Quijiang's and the Sansico Group's claim that each had no subject shipments, we are preliminarily rescinding the administrative review, in accordance with 19 CFR 351.213(d)(3), with respect to Quijiang and the Sansico Group.

Separate Rates

In proceedings involving non-market economy (NME) countries, the Department begins with a rebuttable presumption that all companies within the country are subject to government control and, thus, should be assigned a single antidumping duty rate unless an exporter can affirmatively demonstrate an absence of government control, both in law (de jure) and in fact (de facto), with respect to its export activities. See Notice of Final Determination of Sales at Less Than Fair Value: Sparklers from the People's Republic of China, 56 FR 20588 (May 6, 1991) (Sparklers). In this review Max Fortune and Samsam submitted information indicating that they are both wholly owned Hong Kong-registered companies in support of their claims for company-specific rates. See Letter to the Department of Commerce from Samsam, regarding Certain Tissue Paper from the People's Republic of China: Samsam Productions Ltd. Section A Questionnaire Response (August 2, 2006); see also Letter to the Department of Commerce from Max Fortune, regarding Certain Tissue Paper from the People's Republic of China: Max Fortune's Section A Questionnaire Response (July 31, 2006).

Consequently, because evidence on the record indicates an absence of government control, both in law and in fact, over each respondent's export activities, we preliminarily determine that Max Fortune and Samsam have each met the criteria for the application of a separate rate consistent with past practice. See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Synthetic Indigo From the People's Republic of China, 64 FR 69723 (December 14, 1999), unchanged in Synthetic Indigo From the People's Republic of China; Notice of Final Determination of Sales at Less Than Fair Value, 65 FR 25706 (May 3, 2000).

Use of Facts Otherwise Available and the PRC-Wide Rate

For the reasons outlined below, we have applied total adverse facts available to China National, Hong Ye, Chengxiang, Kepsco, and Giftworld. Section 776(a)(2) of the Act provides that, if an interested party: (A) withholds information that has been requested by the Department; (B) fails to provide such information in a timely manner or in the form or manner requested subject to sections 782(c)(1) and (e) of the Act; (C) significantly impedes a proceeding under the antidumping statute; or (D) provides such information but the information cannot be verified, the Department shall, subject to section 782(d) of the Act, use facts otherwise available in reaching the applicable determination.

By failing to respond to the Department's requests for information (i.e., responding to the quantity and value questionnaire) and by not allowing the Department to conduct verification, China National, Hong Ye, Chengxiang, Kepsco, and Giftworld, respectively, have not proven they are free of government control and are, therefore, not eligible to receive a separate rate. In the Initiation Notice, the Department stated that if one of the companies on which we initiated a review does not qualify for a separate rate, all other exporters of tissue paper from the PRC who have not qualified for a separate rate are deemed to be covered by this review as part of the single PRC-wide entity of which the named exporter is a part. See Initiation Notice at n.1. For these preliminary results, China National, Hong Ye, Chengxiang, Kepsco, and Giftworld will all be considered part of the PRC-wide entity, subject to the PRC-wide rate.

According to section 776(b) of the Act, if the Department 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,” 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.” See Statement of Administrative Action (SAA) accompanying the Uruguay Round Agreements Act (URAA), H.R. Rep. No. 103-316, Vol. 1 at 870 (1994).

As explained above, the PRC-wide entity (including China National, Hong Ye, Chengxiang, Kepsco, and Giftworld) did not respond to the Department's requests for information. Therefore, the PRC-wide entity did not cooperate to the best of its ability. Because the PRC-wide entity did not cooperate to the best of its ability in the proceeding, the Department finds it necessary, pursuant to sections 776(a)(2)(A),(B) and (C) and 776(b) of the Act, to use adverse facts available (AFA) as the basis for these preliminary results of review for the PRC-wide entity.

Selection of AFA Rate

In deciding which facts to use as AFA, section 776(b) of the Act and 19 CFR 351.308(c)(1) authorize the Department to rely on information derived from (1) the petition, (2) a final determination in the investigation, (3) any previous review or determination, or (4) any information placed on the record. In reviews, the Department normally selects, as AFA, the highest rate on the record of any segment of the proceeding. See, e.g., Freshwater Crawfish Tail Meat from the People's Republic of China: Notice of Final Results of Antidumping Duty Administrative Review, 68 FR 19504 (April 21, 2003). The Court of International Trade (CIT) and the Federal Circuit have consistently upheld the Department's practice in this regard. See Rhone Poulenc, Inc. v. United States, 899 F.2d 1185, 1190 (Fed. Circ. 1990) (Rhone Poulenc); NSK Ltd. v. United States, 346 F. Supp. 2d 1312, 1335 (CIT 2004) (upholding a 73.55 percent total AFA rate, the highest available dumping margin from a different respondent in a LTFV investigation); see also Kompass Food Trading Int'l v. United States, 24 CIT 678, 689 (2000) (upholding a 51.16 percent total AFA rate, the highest available dumping margin from a different, fully cooperative respondent); and Shanghai Taoen International Trading Co., Ltd. v. United States, 360 F. Supp 2d 1339, 1348 (CIT 2005) (upholding a 223.01 percent total AFA rate, the highest available dumping margin from a different respondent in a previous administrative review).

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.” See 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's practice also ensures “that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully.” See SAA at 870; see also Final Determination of Sales at Less than Fair Value: Certain Frozen and Canned Warmwater Shrimp from Brazil, 69 FR 76910 (December 23, 2004); D&L Supply Co. v. United States, 113 F. 3d 1220, 1223 (Fed. Cir. 1997). In choosing the appropriate balance between providing respondents with an incentive to respond accurately and imposing a rate that is reasonably related to the respondent's prior commercial activity, selecting the highest prior margin “reflects a common sense inference that the highest prior margin is the most probative evidence of current margins, because, if it were not so, the importer, knowing of the rule, would have produced current information showing the margin to be less.” Rhone Poulenc, 899 F.2d at 1190. Consistent with the statute, court precedent, and its normal practice, the Department has assigned the rate of 112.64 percent, the highest rate on the record of any segment of the proceeding, to the PRC-wide entity (including China National, Hong Ye, Chengxiang, Kepsco, and Giftworld) as AFA. See, e.g., Tissue Paper Order. As discussed further below, this rate has been corroborated.

Corroboration of Secondary Information Used as AFA

Section 776(c) of the Act requires that the Department corroborate, to the extent practicable, a figure which it applies as AFA. To be considered corroborated, information must be found to be both reliable and relevant. We are applying as AFA the highest rate from any segment of this proceeding, which is the rate currently applicable to all exporters subject to the PRC-wide rate. The AFA rate in the current review (i.e., the PRC-wide rate of 112.64 percent) represents the highest rate from the petition in the LTFV investigation. See Tissue Paper Order.

For purposes of corroboration, the Department will consider whether that margin is both reliable and relevant. The AFA rate we are applying for the current review was corroborated in the LTFV investigation. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Tissue Paper Products from the People's Republic of China, 70 FR 7475 (February 14, 2005). Moreover, no information has been presented in the current review that calls into question the reliability of this information.

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 AFA, 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, 6814 (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 resulting in an unusually high margin. The information used in calculating this margin was based on sales and production data submitted by the petitioner in the LTFV investigation, together with the most appropriate surrogate value information available to the Department chosen from submissions by the parties in the LTFV investigation. Furthermore, the calculation of this margin was subject to comment from interested parties in the proceeding. As there is no information on the record of this review that demonstrates that this rate is not appropriate for use as AFA, we determine that this rate has relevance.

As the 112.64 percent rate is both reliable and relevant, we determine that it has probative value and is corroborated to the extent practicable, in accordance with section 776(c) of the Act. Therefore, we have assigned this AFA rate to exports of the subject merchandise by the PRC-wide entity.

Normal Value Comparisons

To determine whether the respondents' sales of the subject merchandise were made at prices below normal value, we compared their United States prices to normal values, as described in the “U.S. Price” and “Normal Value” sections of this notice.

U.S. Price

Export Price

For Max Fortune, we based U.S. price on export price (EP) in accordance with section 772(a) of the Act, because the first sale to an unaffiliated purchaser was made prior to importation, and constructed export price (CEP) was not otherwise warranted by the facts on the record. We calculated EP based on the packed price from the exporter to the first unaffiliated customer in the United States. Where applicable, for Max Fortune, we deducted foreign inland freight, insurance, foreign brokerage and handling expenses, ocean freight, and marine insurance from the starting price (gross unit price), in accordance with section 772(c) of the Act.

Constructed Export Price

For Samsam, we calculated CEP in accordance with section 772(b) of the Act, because sales were made on behalf of the PRC-based company by its U.S. affiliate to unaffiliated purchasers. We based CEP on FOB prices to the first unaffiliated purchaser in the United States. Where appropriate, for Samsam, we made deductions from the starting price (gross unit price) for movement expenses in accordance with section 772(c)(2)(A) of the Act, which included foreign inland freight, international freight, U.S. freight from the port to the warehouse, and U.S. duties.

In accordance with section 772(d)(1) of the Act, we also deducted for Samsam those selling expenses associated with economic activities occurring in the United States, including credit expenses, inventory carrying costs, and indirect selling expenses. We also made an adjustment for profit in accordance with section 772(d)(3) of the Act.

For both Max Fortune and Samsam, where foreign inland freight, insurance, or foreign brokerage and handling were provided by PRC service providers or paid for in renminbi, we valued these services using Indian surrogate values (see “Factors of Production” section below for further discussion). For those expenses that were provided by a market-economy provider and paid for in market-economy currency, we used the reported expense, pursuant to 19 CFR 351.408(c)(1).

Normal Value

NME Country

In every case conducted by the Department involving the PRC, the PRC has been treated as an NME country. See, e.g., Honey from the People's Republic of China: Final Results and Final Rescission, in Part, of Antidumping Duty Administrative Review, 71 FR 34893 (June 16. 2006). Pursuant to section 771(18)(C)(i) of the Act, any determination that a foreign country is an NME country shall remain in effect until revoked by the administering authority. See, e.g., Freshwater Crawfish Tail Meat from the People's Republic of China: Notice of Final Results of Antidumping Duty Administrative Review, 71 FR 7013 (February 10, 2006). None of the parties to this proceeding have contested such treatment. Accordingly, we calculated normal value (NV) in accordance with section 773(c) of the Act, which applies to NME countries.

Surrogate Country

Section 773(c)(4) of the Act requires the Department to value an NME producer's factors of production, to the extent possible, in one or more market-economy countries that (1) are at a level of economic development comparable to that of the NME country, and (2) are significant producers of comparable merchandise. India is among the countries comparable to the PRC in terms of overall economic development. See Letter to All Interested Parties from Carrie Blozy, Program Manager, AD/CVD Operations, Office 9, regarding Certain Tissue Paper from the People's Republic of China: Request for Comments on Surrogate Country and Surrogate Values (September 11, 2006). In addition, based on publicly available information placed on the record (e.g., production data), India is a significant producer of comparable merchandise. See Memorandum to The File, through James C. Doyle, Director, AD/CVD Operations, Office 9, Import Administration, and Christopher D. Riker, Program Manager, AD/CVD Operations, Office 9, from Catherine Bertrand, Senior International Trade Analyst, AD/CVD Operations, Office 9, regarding Antidumping Duty Administrative Review of Certain Tissue Paper from the People's Republic of China: Selection of a Surrogate Country (April 2, 2007). Accordingly, we have selected India as the surrogate country for purposes of valuing the factors of production because it meets the Department's criteria for surrogate-country selection. See Id. Where Indian import statistics were unavailable, i.e., paraffin oil, the Department has used Indonesian import statistics, as published by the World Trade Atlas (WTA), based on the fact that Indonesia is economically comparable and a producer of comparable merchandise. See Id.

Factors of Production

In accordance with section 773(c) of the Act, we calculated NV based on the factors of production which included, but were not limited to: (A) hours of labor required; (B) quantities of raw materials employed; (C) amounts of energy and other utilities consumed; and (D) representative capital costs, including depreciation. We used the factors of production reported by the producer for materials, energy, labor, and packing. To calculate NV, we multiplied the reported unit factor quantities by publicly available Indian surrogate values.

Certain of Max Fortune's inputs into the production of the merchandise under review were purchased from market economy suppliers and paid for in market economy currencies. We used the reported weight-averaged market economy prices to value the appropriate input when the item was paid for in a market economy currency and accounted for a significant portion of the total purchases of that input. For purposes of the preliminary results, we have determined that only two of Max Fortune's reported market economy purchases accounted for a significant portion of total purchases of that input and, therefore, have used the reported purchase prices for those two inputs in our calculation. See Memorandum to the File, through Christopher D. Riker, Program Manager, AD/CVD Operations, Office 9, from Kristina Horgan, Senior International Trade Analyst, AD/CVD Operations, Office 9, regarding Max Fortune Industrial Limited and Max Fortune (FETDE) Paper Products Co., Ltd. (collectively, Max Fortune) Analysis Memorandum for the Preliminary Results of Review (April 2, 2007).

Max Fortune also reported by-product sales. With respect to the application of the by-product offset to normal value, consistent with the Department's determination in Diamond Sawblades from the PRC, because our surrogate financial statements refers to income from by-product sales and because Max Fortune reported that it sold its by-product, we will deduct the surrogate value of the by-product from normal value. This is consistent with accounting principles based on a reasonable assumption that if a company sells a by-product, the by-product necessarily incurs expenses for overhead, SG&A, and profit. See Final Determination of Sales at Less Than Fair Value and Final Partial Affirmative Determination of Critical Circumstances: Diamond Sawblades and Parts Thereof from the People's Republic of China, 71 FR 29303 (May 22, 2006), and accompanying Issues and Decision Memorandum at Comment 9 (unchanged in Notice of Amended Final Determination of Sales at Less Than Fair Value: Diamond Sawblades and Parts Thereof from the People's Republic of China, 71 FR 35864 (June 22, 2006)).

Normally, the Department prefers to use factors of production data that accurately represent the quantity of inputs consumed on a control number (CONNUM)-specific basis. In the present case, however, Max Fortune has indicated that its records for dye and ink consumption in the papermaking and paper printing stages of production do not permit it to report the FOP data in a manner consistent with the Department's requests. While we prefer greater specificity in the reporting of these factors of production, for these preliminary results, we have used Max Fortune's reported aggregate consumption in the calculation of normal value, subject to verification.

In selecting the surrogate values, we considered the quality, specificity, and contemporaneity of the data, in accordance with our normal practice. See, e.g., Fresh Garlic From the People's Republic of China: Final Results of Antidumping Duty New Shipper Review, 67 FR 72139 (December 4, 2002), and accompanying Issues and Decision Memorandum at Comment 6; and Final Results of First New Shipper Review and First Antidumping Duty Administrative Review: Certain Preserved Mushrooms From the People's Republic of China, 66 FR 31204 (June 11, 2001), and accompanying Issues and Decision Memorandum at Comment 5. When we used publicly available import data from the Ministry of Commerce of India (Indian Import Statistics) for September 2004 through February 2006, as published by the WTA, to value inputs sourced domestically by PRC suppliers, we added a surrogate cost for freight using the shorter of the reported distance from the domestic supplier to the factory or the distance from the closest seaport to the factory. See Sigma Corp. v. United States, 117 F.3d 1401, 1408 (Fed. Cir. 1997). When we used non-import surrogate values for factors sourced domestically by PRC suppliers (e.g., coal, market economy purchased inputs), we based freight for this input on the actual distance from the input supplier to the site at which the input was consumed.

Additionally, in instances where we relied on Indian import data to value inputs, in accordance with the Department's practice, we excluded imports from both NME countries and countries deemed to maintain broadly available, non-industry-specific subsidies which may benefit all exporters to all export markets (i.e., Indonesia, South Korea, and Thailand) from our surrogate value calculations. See, e.g., Tapered Roller Bearings and Parts Thereof, Finished and Unfinished, From the People's Republic of China; Final Results of 1999-2000 Administrative Review, Partial Rescission of Review, and Determination Not to Revoke Order in Part, 66 FR 57420 (November 15, 2001) and accompanying Issues and Decision Memorandum at Comment 1; see also Memorandum to the File, through James C. Doyle, Director, Office 9, and Christopher D. Riker, Program Manager, AD/CVD Operations, Office 9, from Bobby Wong, International Trade Analyst, AD/CVD Operations, Office 9, and Kristina Horgan, Senior International Trade Analyst, AD/CVD Operations, Office 9, regarding Factors of Production Valuation Memorandum for the Preliminary Results of Antidumping Administrative Review of Certain Tissue Paper from the People's Republic of China (April 2, 2007) (Factor Valuation Memo). This memorandum is on file in the Central Records Unit (CRU), room B-099 of the Department building.

Where we could not obtain publicly available information contemporaneous with the POR to value factors of production, we inflated the surrogate value using the Indian Wholesale Price Index (WPI), as published in the International Financial Statistics of the International Monetary Fund, for those surrogate values in Indian rupees to be contemporaneous with the POR. We also made currency conversions, where necessary, pursuant to 19 CFR 351.415, to U.S. dollars using the daily exchange rate corresponding to the reported date of each sale. We relied on the daily exchanges rates posted on the Import Administration Web site (http://www.trade.gov/​ia/​). See Factor Valuation Memo.

Specifically, the Department used Indian Import Statistics to value the raw material⁶ and packing material inputs that Max Fortune and Samsam used to produce the merchandise under review during the POR, except where listed below. For a detailed description of all surrogate values used for respondents, see Factor Valuation Memo.

To value paraffin oil, also known as kerosene, we used Indonesian import statistics, as published by the WTA, instead of Indian Import Statistics, because India did not import this input during the POR.

To value water, we calculated the average water rates from various regions as reported by the Maharashtra Industrial Development Corporation, http://midcindia.org, dated June 1, 2003. We inflated the value for water using the POR average WPI rate. See Factor Valuation Memo.

We valued diesel, electricity and coal using the rates provided by the OECD's International Energy Agency's publication: Key World Energy Statistics from 2004 and 2005. For diesel, the prices are based on 2004 and 2005 first quarter prices of automotive diesel fuel retail prices. For electricity, the prices are based on 2002 fourth quarter prices; we inflated the value for electricity using the POR average WPI rate. For coal, the prices are based on 2004, 2005, and 2006 first quarter prices. See Factor Valuation Memo.

Consistent with the determination in the LTFV investigation, to value the surrogate financial ratios of factory overhead, selling, general & administrative expenses, and profit, the Department relied on the publicly available information in the financial statements for Pudumjee Pulp & Paper Mills Ltd. (Pudumjee) for fiscal year 2005-2006, submitted by petitioner on December 11, 2006. The annual report covers the period April 1, 2005, to March 31, 2006 and includes data for the 2004-2005 fiscal year as well, covering the entire POR. We determine that Pudumjee's financial statements are appropriate for use in these preliminary results because Pudumjee is a producer of comparable merchandise and its financial data are contemporaneous with the POR. See Factor Valuation Memo.

Because of the variability of wage rates in countries with similar levels of per capita gross national product, 19 CFR 351.408(c)(3) requires the use of a regression-based wage rate. Therefore, to value the labor input, we used the PRC's regression-based wage rate published by Import Administration on its Web site, http://www.trade.gov/​ia/​. We note that this wage rate is calculated in accordance with the Department's revised methodology. See Expected Non Market Economy Wages: Request for Comments on 2006 Calculation, 72 FR 949 (January 9, 2007) and Antidumping Methodologies: Market Economy Inputs, Expected Non Market Economy Wages, Duty Drawback, and Request for Comments, 71 FR 6176 (October 19, 2006). See also Factor Valuation Memo.

To value truck freight, we calculated a weighted-average freight cost based on publicly available data from www.infreight.com, an Indian inland freight logistics resource Web site. See Factor Valuation Memo.

To value brokerage and handling, we used a simple average of the publicly summarized version of the average value for brokerage and handling expenses reported in the U.S. sales listings in Essar Steel Ltd.'s (Essar) February 28, 2005, Section C submission in the antidumping duty review of certain hot-rolled carbon steel flat products from India, for which the POR was December 1, 2003, through November 30, 2004; information from Agro Dutch Industries Ltd.'s (Agro Dutch) May 25, 2005, Section C submission, taken from the administrative review of preserved mushrooms from India, for which the POR was February 1, 2004, through January 31, 2005; and information from Kejriwal Paper Ltd.'s (Kejriwal) January 9, 2006, Section C submission, taken from the investigation of certain lined paper from India, for which the POR was July 1, 2004, through June 30, 2005. See Certain Hot-Rolled Carbon Steel Flat Products From India: Preliminary Results of Antidumping Duty Administrative Review, 71 FR 2018 (January 12, 2006); Certain Preserved Mushrooms From India: Final Results of Antidumping Duty Administrative Review, 71 FR 10646 (March 2, 2006); and Notice of Final Determination of Sales at Less Than Fair Value, and Negative Determination of Critical Circumstances: Certain Lined Paper Products from India, 71 FR 45012 (August 8, 2006). See also Factor Valuation Memo.

In accordance with 19 CFR 351.301(c)(3)(ii), for the preliminary results of this administrative review, interested parties may submit publicly available information to value the factors of production until 20 days following the date of publication of these preliminary results.

Preliminary Results of Review

We preliminarily determine that the following antidumping duty margins exist:

Individually Reviewed Exporters
Max Fortune Ltd.	0.15%%
Samsam Productions Ltd.	115.24%%

PRC-Wide Rate
PRC-Wide Rate (including China National, Hong Ye, Chengxiang, Kepsco, and Giftworld)	112.64%%

For details on the calculation of the antidumping duty weighted-average margin for each company, see the respective company's analysis memorandum for the preliminary results of the first administrative review of the antidumping duty order on tissue paper from the PRC, dated April 2, 2007. Public versions of these memoranda are on file in the CRU.

Assessment Rates

Pursuant to 19 CFR 351.212(b), the Department will determine, and CBP shall assess, antidumping duties on all appropriate entries. The Department intends to issue appropriate assessment instructions directly to CBP 15 days after publication of the final results of this review. For assessment purposes, where possible, we calculated importer-specific assessment rates for tissue paper from the PRC via ad valorem duty assessment rates based on the ratio of the total amount of the dumping margins calculated for the examined sales to the total entered value of those same sales. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any assessment rate calculated in the final results of this review is above de minimis. The final results of this review shall be the basis for the assessment of antidumping duties on entries of merchandise covered by the final results of these reviews and for future deposits of estimated duties, where applicable.

Cash Deposit Requirements

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 for by section 751(a)(2)(C) of the Act: (1) for the exporters listed above, the cash deposit rate will be established in the final results of this review (except, if the rate is zero or de minimis, i.e., less than 0.5 percent, no cash deposit will be required for that company); (2) for previously investigated or reviewed PRC and non-PRC exporters not listed above that have separate rates, the cash deposit rate will continue to be the exporter-specific rate published for the most recent period; (3) for all PRC exporters of subject merchandise which have not been found to be entitled to a separate rate, the cash deposit rate will be the PRC-wide rate of 112.64 percent; and (4) for all non-PRC exporters of subject merchandise which have not received their own rate, the cash deposit rate will be the rate applicable to the PRC exporters that supplied that non-PRC exporter. These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review.

Schedule for Final Results of Review

The Department will disclose calculations performed in connection with the preliminary results of this review within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). Any interested party may request a hearing within 30 days of publication of this notice in accordance with 19 CFR 351.310(c). Any hearing will normally be held 37 days after the publication of this notice, or the first workday thereafter, at the U.S. Department of Commerce, 14^th Street and Constitution Avenue, NW, Washington, DC 20230. Individuals who wish to request a hearing must submit a written request within 30 days of the publication of this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, 14^th Street and Constitution Avenue, NW, Washington, DC 20230. Requests for a public hearing should contain: (1) the party's name, address, and telephone number; (2) the number of participants; and (3) to the extent practicable, an identification of the arguments to be raised at the hearing.

Unless otherwise notified by the Department, interested parties may submit case briefs within 30 days of the date of publication of this notice in accordance with 19 CFR 351.309(c)(ii). As part of the case brief, parties are encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited in accordance with 19 CFR 351.309(c)(2)(ii). Rebuttal briefs, which must be limited to issues raised in the case briefs, must be filed within five days after the case brief is filed in accordance with 19 CFR 351.309(d). The Department will issue the final results of this review, which will include the results of its analysis of issues raised in the briefs, not later than 120 days after the date of publication of this notice in accordance with section 751(a)(2)(B)(iv) of the Act and 19 CFR 351.213(h)(1).

Notification to Importers

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 these review periods. 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 administrative review and this notice are published in accordance with sections 751(a)(1) and 777(i)(1) of the Act.

Dated: April 2, 2007.

Stephen J. Claeys,

Deputy Assistant Secretary for Import Administration.

Footnotes

1.  We note that Guilin Qifeng and Quijiang are affiliated parties. See Section A Questionnaire Response from Guilin Qifeng (July 31, 2006) at 9. The Department issued one questionnaire addressed to both companies.

2.  Because these parties submitted these comments just before the preliminary results, the Department was not able to consider these comments for the preliminary results. However, the Department will consider these comments for the final results.

3.  Because parties submitted these comments just before the preliminary results, the Department was not able to consider these comments for the preliminary results. However, the Department will consider these comments for the final results.

4.  On January 30, 2007, at the direction of U.S. Customs and Border Protection (CBP), the Department added the following HTSUS classifications to the AD/CVD module for tissue paper: 4802.54.3100, 4802.54.6100, and 4823.90.6700. However, we note that the six-digit classifications for these numbers were already listed in the scope.

5.  We note that Quijiang is the respondent in a concurrent anti-circumvention inquiry in tissue paper from the PRC. See Certain Tissue Paper Products from the People's Republic of China: Notice of Initiation of Anti-circumvention Inquiry, 71 FR 53662 (September 12, 2006).

6.  Regarding the surrogate value for dyes and inks, the Department used an average of three types of dyes and inks as there was not more specific information regarding the types of dyes and inks used by respondents' on the record. The Department intends to ask respondents for more specific information on the composition of the dyes and inks used in the production process after the preliminary results.