03-19754. Certain Preserved Mushrooms From the People's Republic of China: Intent To Rescind Antidumping Duty New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of intent to rescind antidumping duty new shipper review.

SUMMARY:

In response to requests from Xiamen Zhongjia Imp. & Exp. Co., Ltd. and Zhangzhou Longhai Minhui Industry and Trade Co., Ltd., the Department of Commerce initiated a new shipper review of the antidumping duty order on certain preserved mushrooms from the People's Republic of China. The period of review is February 1, 2002, through July 31, 2002.

For the reasons discussed below, we intend to rescind the new shipper review with respect to both companies listed above. We invite interested parties to comment on this intent to rescind.

EFFECTIVE DATE:

August 4, 2003.

FOR FURTHER INFORMATION CONTACT:

Brian C. Smith, Davina Hashmi, or James Mathews, Office of AD/CVD Enforcement 1, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC, 20230; telephone: [phone], and [phone], respectively.

SUPPLEMENTARY INFORMATION:

Background

The Department of Commerce (“the Department”) initiated a new shipper review covering Xiamen Zhongjia Imp. & Exp. Co., Ltd. (“Zhongjia”), and Zhangzhou Longhai Minhui Industry and Trade Co., Ltd. (“Minhui”), on September 30, 2002. This initiation was based on, among other things, each company's certification that it was both the exporter and producer of the subject merchandise for which it requested a new shipper review. See Certain Preserved Mushrooms from the People's Republic of China: Initiation of New Shipper Antidumping Duty Review, 67 FR 62438 (October 7, 2002) (“Initiation Notice”). On October 8, 2002, the Department issued the antidumping duty questionnaire to both companies.

During the period December 2002 through July 2003, the Department received responses to sections A, C, and D of the Department's original and two supplemental questionnaires from Zhongjia and Minhui. In these responses, Zhongjia and Minhui revealed that they were not the producer of the subject merchandise they exported to the United States during the period of review (“POR”).

Scope of the Order

The products covered by this order are certain preserved mushrooms whether imported whole, sliced, diced, or as stems and pieces. The preserved mushrooms covered under this order are the species Agaricus bisporus and Agaricus bitorquis. “Preserved mushrooms” refer to mushrooms that have been prepared or preserved by cleaning, blanching, and sometimes slicing or cutting. These mushrooms are then packed and heated in containers including, but not limited to, cans or glass jars in a suitable liquid medium, including, but not limited to, water, brine, butter or butter sauce. Preserved mushrooms may be imported whole, sliced, diced, or as stems and pieces. Included within the scope of this order are “brined” mushrooms, which are presalted and packed in a heavy salt solution to provisionally preserve them for further processing.

Excluded from the scope of this order are the following: (1) All other species of mushroom, including straw mushrooms; (2) all fresh and chilled mushrooms, including “refrigerated” or “quick blanched mushrooms”; (3) dried mushrooms; (4) frozen mushrooms; and (5) “marinated,” “acidified” or “pickled” mushrooms, which are prepared or preserved by means of vinegar or acetic acid, but may contain oil or other additives.^[1]

The merchandise subject to this order is classifiable under subheading: 2003.10.0127, 2003.10.0131, 2003.10.0137, 2003.10.0143, 2003.10.0147, 2003.10.0153, and 0711.51.0000 of the Harmonized Tariff Schedule of the United States (“HTS”). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive.

Intent To Rescind Review

For the reasons stated below, we intend to rescind the new shipper review with respect to Zhongjia and Minhui.

Specifically, we intend to rescind the new shipper review with respect to both companies because neither exporter provided us with the proper certification, pursuant to 19 CFR 351.214(b)(2)(ii)(B), for entitlement to a new shipper review.

In order to qualify for a new shipper review under 19 CFR 351.214(b)(2)(ii), a company which is an exporter but not the producer of the subject merchandise for which it requests such a review must provide, among other things, (1) a certification that it did not export subject merchandise to the United States during the period of investigation (“POI”), and (2) a certification from the person or company which produced or supplied the subject merchandise that the producer or supplier did not export the subject merchandise to the United States during the POI (see 19 CFR 351.214(2)(ii)(A) and (B)).

As the basis for initiating this new shipper review, both Zhongjia and Minhui each stated and certified in its request for review that it was the exporter and producer of the subject merchandise. Therefore, for purposes of initiating this review and based on the certifications provided by both Zhongjia and Minhui in accordance with 19 CFR 351.214(b)(2)(i), the Department was led to believe that both companies also produced the merchandise for which each requested a review (see page 1 of Zhongjia's August 30, 2002, submission and page 1 of Minhui's August 30, 2002, submission). Zhongjia and Minhui appeared to be in compliance with the certification requirements for a new shipper which was both an exporter and producer of the subject merchandise for which the new shipper review request had been filed, and it was on this basis the Department initiated a new shipper review for each company (see 19 CFR 351.214(b)(i) and Initiation Notice, 68 FR at 62439). Relying on the certification provided by each respondent, the Department issued instructions to the U.S. Bureau of Customs and Border Protection (“BCBP”) in accordance with section 751(a)(2)(B) of the Tariff Act of 1930, as amended (“the Act”), which allowed, at the option of the importer, the posting, until the completion of the review, of a bond or security in lieu of a cash deposit for each entry of the subject merchandise for which each respondent was both the producer and exporter (see Initiation Notice, 67 FR at 62439).

During the course of conducting this review and in response to the Department's original and supplemental questionnaires, however, both companies provided factors of production data which indicated that neither company was the producer of the subject merchandise it reported in its U.S. sales listing (see page 5 of Zhongjia's December 4, 2002, Section A questionnaire response, page 2 of Zhongjia's December 4, 2002, Section D questionnaire response, and pages 8 through 14 of Zhongjia's July 3, 2003, second supplemental questionnaire response; see page 5 of Minhui's December 4, 2002, Section A questionnaire response, page 2 of Minhui's December 4, 2002, Section D response, and pages 9 through 11 of Minhui's July 3, 2003, second supplemental questionnaire response). This data conflicted with each company's certification, for purposes of initiation, that it was both the exporter and producer of the merchandise subject to this review. Consequently, Zhongjia and Minhui misstated the facts when each claimed in its respective new shipper review request that it was both the exporter and producer of the merchandise subject to this review.

Because Zhongjia and Minhui did not provide a certification from the respective producers of the subject merchandise they sold or exported to the United States during the POR in accordance with 19 CFR 351.214(b)(2)(ii)(B), neither respondent met the minimum requirements for an entitlement to a new shipper review. Had we realized that these exporters were not also the producers of the merchandise for which they were requesting a new shipper review at the initiation stage, we would not have initiated this review. The certification omission is fundamental to the initiation decision, and the exporters' failure to provide the necessary certifications, in addition to their misleading statements contained within the submitted certifications that these exporters were also “producers” of subject merchandise, would have led the Department to determine not to initiate a new shipper review of these exporters.

Consequently, the Department determines that it should not conduct further a review that was initiated based on faulty data (see, e.g., Fresh Garlic from the People's Republic of China: Partial Rescission of Antidumping Duty New Shipper Review, 67 FR 65782 (October 28, 2002)). To do so permits manipulation of the new shipper review provision and allows parties, such as Zhongjia and Minhui, to reap the benefit of the new shipper bonding provision without meeting the minimal threshold requirements for entitlement to the new shipper review process (see Import Administration Policy Bulletin Number 03.2, entitled “Combination Rates in New Shipper Reviews,” dated March 4, 2003). Indeed, if an exporter ships to the United States merchandise produced by another entity but, because of mis-certification, its importers receive the bond benefit for its self-produced merchandise during the new shipper review, then the wrong exporter/producer combination benefits from the bonding privilege as long as the new shipper review continues. Thus, rescission of the new shipper review rectifies this problem.

Because each respondent exporter's certification contained in its August 30, 2002, request for a new shipper review did not also contain a certification from the producer of the subject merchandise as required by 19 CFR 351.214(b)(2)(ii)(B), which each respondent was required to provide because neither company produced the merchandise subject to this review, as affirmed by the information contained in subsequent questionnaire responses, we find that there is a sufficient basis to rescind this new shipper review with respect to both companies for the reasons outlined above.

Comment Period

Interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Import Administration, Room B-099, within 30 days of the date of 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 issues to be discussed. See 19 CFR 351.310(c). Any hearing, if requested, will be held on September 10, 2003. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Issues raised in the hearing will be limited to those raised in case briefs and rebuttal briefs. Case briefs from interested parties may be submitted not later than August 27, 2003. Rebuttal briefs, limited to issues raised in the case briefs, will be due not later than September 3, 2003. Parties who submit case briefs or rebuttal briefs in this proceeding are requested to submit with each argument (1) a statement of the issue and (2) a brief summary of the argument. Parties are also encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited.

The Department will issue its final decision, including the results of its analysis of issues raised in any such written briefs or at the hearing, if held, not later than 90 days after the date of issuance of this notice.

Notification

If we rescind this review, bonding will no longer be permitted to fulfill security requirements for shipments from Minhui or Zhongjia of certain preserved mushrooms from the PRC entered, or withdrawn from warehouse, for consumption on or after the publication date of the final rescission notice. The cash deposit rate required for subject merchandise from the PRC NME entity (including Zhongjia and Minhui), entered or withdrawn from warehouse, for consumption on or after the publication of the final rescission notice will continue to be the PRC-wide rate of 198.63 percent. These deposit requirements shall remain in effect until publication of the final results of the next administrative review.

This preliminary rescission notice is in accordance with sections 751(a)(2)(B) and 777(i) of the Act and 19 CFR 351.214.

Dated: July 28, 2003.

Joseph A. Spetrini,

Acting Assistant Secretary for Grant Aldonas, Under Secretary.

Footnotes

1.  On June 19, 2000, the Department affirmed that “marinated,” “acidified,” or “pickled” mushrooms containing less than 0.5 percent acetic acid are within the scope of the antidumping duty order. See “Recommendation Memorandum—Final Ruling of Request by Tak Fat, et al. for Exclusion of Certain Marinated, Acidified Mushrooms from the Scope of the Antidumping Duty Order on Certain Preserved Mushrooms from the People's Republic of China,” dated June 19, 2000.