E6-12809. Notice of Final Affirmative Countervailing Duty Determination and Final Negative Critical Circumstances Determination: Certain Lined Paper Products from India

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

We determine that countervailable subsidies are being provided to producers and exporters of certain lined paper products from India. For information on the estimated subsidy rates, see the “Suspension of Liquidation” section of this notice. Moreover, we determine that critical circumstances do not exist with regard to exports of CLPP from India. See the “Critical Circumstances” section below.

EFFECTIVE DATE:

August 8, 2006.

FOR FURTHER INFORMATION CONTACT:

Robert Copyak, AC/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 4012, 14^th Street and Constitution Avenue, N.W., Washington, D.C. 20230; Telephone: [phone].

SUPPLEMENTARY INFORMATION:

Background

This investigation covers 12 programs and the following manufacturer/exporters: Aero Exports (Aero), Kejriwal Exports, a division of Kejriwal Paper Limited (Kejriwal), and Navneet Publications India Ltd. (Navneet).

On February 15, 2006, the Department of Commerce (the Department) published in the Federal Register its preliminary affirmative determination in the countervailing duty investigation of certain lined paper products from India. See Notice of Preliminary Affirmative Countervailing Duty Determination and Preliminary Negative Critical Circumstances Determination: Certain Lined Paper Products from India, 71 FR 7196 (February 15, 2006) (Preliminary Determination).

We invited interested parties to comment on the Preliminary Determination. On June 14, 2006, we received comments from petitioners and respondents.¹ On June 19, 2006, we received rebuttal comments from petitioners and respondents.

Period of Investigation

The period of investigation (POI) is April 1, 2004, through March 31, 2005.

Critical Circumstances

As explained in the Preliminary Determination, petitioners requested that, pursuant to 19 CFR 351.206, the Department make an expedited finding that critical circumstances exist with respect to imports of lined paper products from India. In the Preliminary Determination, we determined that critical circumstances did not exist. See Preliminary Determination, 71 FR at 7917. For purposes of this final determination, we continue to find that critical circumstances do not exist as petitioners' allegation does not provide a sufficient factual basis for making an affirmative finding. See Memorandum to Stephen J. Claeys, Deputy Assistant Secretary for Import Administration, from: Melissa G. Skinner, Director, Operations, Office 3: Final Negative Critical Circumstances Determination, (July 31, 2006) (publicly on file in the Central Records Unit (CRU), Room B-099 of the main building of the Commerce Department).

Scope of the Investigation

For scope information, see Appendix I.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this investigation are addressed in the “Issues and Decision Memorandum” (Decision Memorandum) dated July 31, 2006, which is hereby adopted by this notice. A list of issues that parties have raised and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix II. Parties can find a complete discussion of all issues raised in this investigation and the corresponding recommendations in this public memorandum, which is on file in the CRU. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/​frn. The paper copy and electronic version of the Decision Memorandum are identical in content.

Suspension of Liquidation

In accordance with section 705(c)(1)(B)(i)(I) of the Tariff Act fo 1930 (as amended) (the Act), we have calculated individual rates for the companies under investigation. For the period April 1, 2004, through March 31, 2005, we determine the net subsidy rates for the investigated companies are as follows:

Producer/Exporter	Net Subsidy Rate
Aero Exports (Aero)	7.05 percent ad valorem
Kejriwal Exports, a division of Kejriwal Paper Limited (Kejriwal)	de minimis
Navneet Publications India Ltd. (Navneet)	10.24 percent ad valorem
All Others Rate	9.42 percent ad valorem

To calculate the “All Others” rate, we weight averaged the individual rates of Aero, Kejriwal, and Navneet by each company's respective sales of subject merchandise made to the United States during the POI, pursuant to section 705(c)(5)(A) of the Act.

In accordance with our preliminary affirmative determination, we instructed U.S. Customs and Border Protection (CBP) to suspend liquidation of all entries of certain lined paper products from India, which were entered or withdrawn from warehouse, for consumption on or after February 15, 2006, the date of the publication of our Preliminary Determination in the Federal Register. In accordance with section 703(d) of the Act, we instructed the CBP to discontinue the suspension of liquidation for merchandise entered on or after June 15, 2006, but to continue the suspension of liquidation of entries made between February 15, 2006, and June 14, 2006.

With the exception of Kejriwal, we will reinstate suspension of liquidation under section 706(a) of the Act for all entries if the International Trade Commission (ITC) issues a final affirmative injury determination and will require a cash deposit of estimated countervailing duties for such entries of merchandise in the amounts indicated above. Because we have determined that Kejriwal's net subsidy rate is de minimis, we will direct CBP to terminate the suspension of liquidation for Kejriwal's shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after February 15, 2006, the publication date of the Preliminary Determination, and to release any bond or other security, and refund any cash deposit.

If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.

ITC Notification

In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided that the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (APO), without the written consent of the Assistant Secretary for Import Administration.

If the ITC determines that material injury, or threat of material injury, does not exist, these proceedings will be terminated. If however, the ITC determines that such injury does exist, we will issue a countervailing duty order.

Return or Destruction of Proprietary Information

In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Failure to comply is a violation of the APO.

This determination is published pursuant to sections 705(d) and 777(i) of the Act.

Dated: July 31, 2006.

David M. Spooner,

Assistant Secretary for Import Administration.

Appendix I

Scope of the Investigation

The scope of this investigation includes certain lined paper products, typically school supplies (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) composed of or including paper that incorporates straight horizontal and/or vertical lines on ten or more paper sheets (there shall be no minimum page requirement for looseleaf filler paper) 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;
• 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: pre-printed 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 (“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.), measuring 6 inches by 9 inches;

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

• Fly^TM 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 Fly^TM pen-top computer. The product must bear the valid trademark Fly^TM (products found to be bearing an invalidly licensed or used trademark are not excluded from the scope).
• Zwipes^TM: 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 Zwipes^TM 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 Zwipes^TM (products found to be bearing an invalidly licensed or used trademark are not excluded from the scope).
• FiveStar®Advance^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 0.019 inches (within normal manufacturing tolerances) and rear cover is 0.028 inches (within normal manufacturing tolerances). Integral with the stitching that attaches the polyester spine covering, is captured 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®Advance^TM (products found to be bearing an invalidly licensed or used trademark are not excluded from the scope).
• FiveStar Flex^TM: 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 0.019 inches (within normal manufacturing tolerances) and rear cover is 0.028 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 Flex^TM (products found to be bearing an invalidly licensed or used trademark are not excluded from the scope).

Merchandise subject to this investigation is typically imported under headings 4820.10.2050, 4810.22.5044, 4811.90.9090, 4820.10.2010, 4820.10.2020 of the Harmonized Tariff Schedule of the United States (“HTSUS”). During the investigation additional HTS codes may be identified. The tariff classifications are provided for convenience and customs purposes; however, the written description of the scope of the investigation is dispositive.

Appendix II - Issues and Decision Memorandum

I. Summary

A. General Comments

Comment 1. Treatment of Contingent Liability Benefits Under the Export Promotion Capital Goods Scheme (EPCGS)

Comment 2. Valuation of DEPS Benefits

B. Navneet

Comment 3: Benchmark Used Under the EPCGS Program

Comment 4: Benchmark Used for Navneet Under the Pre-Shipment Export Financing Program

Comment 5: Navneet's Use of the 80 HHC Income Tax Exemption

Comment 6: Denominator Used to Calculate Navneet's Net Subsidy Rate Under the Pre-Shipment Export Financing Program

Comment 7: Denominator Used to Calculate Navneet's Net Subsidy Rate Under the Duty-Free Replenishment Certificate (DFRC) Scheme

C. Kejriwal

Comment 8: Benchmark Used to Calculate Countervailable Benefits Received by Kejriwal under the Post-Shipment Export Financing Program

Comment 9: Fulfillment of Export Obligation Under the EPCGS

D. Aero

Comment 10: Countervailability of the Advance License Program (ALP)

Comment 11: Program-Wide Changes With Respect to the ALP

Comment 12: Attribution of Subsidies Aero Received under the Post-Shipment Export Financing Program

II. Subsidies Valuation Information

A. Benchmark for Short-Term Loans

B. Benchmark for Long-Term Loans Issued

III. Critical Circumstances

IV. Analysis Of Programs

A. Programs Determined to Confer Subsidies

1. Pre- and Post-Shipment Export Financing

2. Export Promotion Capital Goods Scheme (EPCGS)

3. Duty Entitlement Passbook Scheme (DEPS)

4. Duty Free Replenishment Certificate (DFRC) Scheme

5. Advance License Program (ALP)

6. Income Tax Exemption Scheme under 80HHC (80HHC)

B. Programs Determined Not to be Used

1. Export Processing Zones (EPZ) and Export Oriented Units (EOU)

2. Income Tax Exemption Scheme (Sections 10A and 10B)

3. Market Development Assistance (MDA)

4. Status Certificate Program

5. Market Access Initiative

6. State of Gujarat Sales Tax Incentives

7. State of Maharashtra Sales Tax Incentives

V. Total Ad Valorem Rates

VI. Analysis Of Comments

Footnotes

1.  Petitioners are the Association of American School Paper Suppliers.