2011-19712. Uncovered Innerspring Units From the People's Republic of China: Preliminary Intent To Rescind New Shipper Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

On February 19, 2009, the Department of Commerce (the “Department”) published in the Federal Register the antidumping duty order on uncovered innerspring units (“innersprings”) from the People's Republic of China (“PRC”).^[1] The Department is conducting a new shipper review (“NSR”) of the Order, covering the period of review (“POR”) of February 1, 2010-July 31, 2010. As discussed below, we preliminarily determine that Foshan Nanhai Jiujiang Quan Li Spring Hardware Factory's (“Quan Li”) sale under review is not bona fide. As such, we are preliminarily rescinding the NSR for Quan Li.

EFFECTIVE DATES:

August 4, 2011.

FOR FURTHER INFORMATION CONTACT:

Paul Walker, 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].

SUPPLEMENTARY INFORMATION:

Background

On August 20, 2010, pursuant to section 751(a)(2)(B)(i) of the Tariff Act of 1930, as amended (the “Act”), and section 351.214(c) of the Department's regulations, the Department received a NSR request from Quan Li and Foshan Yongnuo Import & Export Co., Ltd. (“Yongnuo”). Quan Li certified that it was the producer of the subject merchandise upon which the request was based. Yongnuo certified that it was the exporter of the subject merchandise upon which the request was based. On October 6, 2010, the Department issued its original antidumping duty questionnaire. On October 7, 2010, the Department published a notice of initiation of the NSR of the Order for Quan Li and Yongnuo.^[2] Between November 5, 2010, and April 29, 2011, Quan Li and Yongnuo submitted responses to the original and supplemental sections A, C, D and Importer antidumping duty questionnaires.

On January 18, 2011, the Department sent interested parties a letter requesting comments on surrogate country selection and information pertaining to valuing factors of production. On April 25, 2011, we received surrogate country comments and surrogate value data from Quan Li and Yongnuo, as well as from Petitioner.^[3]

On March 28, 2011, the Department extended the deadline for the preliminary results of this review to June 1, 2011.^[4] On June 13, 2011, the Department extended the deadline for the preliminary results of this review to July 15, 2011.^[5] On July 20, 2011, the Department extended the deadline for the preliminary results of this review to July 26, 2011.^[6]

Scope of the Order

The merchandise subject to the order is uncovered innerspring units composed of a series of individual metal springs joined together in sizes corresponding to the sizes of adult mattresses (e.g., twin, twin long, full, full long, queen, California king and king) and units used in smaller constructions, such as crib and youth mattresses. All uncovered innerspring units are included in the scope regardless of width and length. Included within this definition are innersprings typically ranging from 30.5 inches to 76 inches in width and 68 inches to 84 inches in length. Innersprings for crib mattresses typically range from 25 inches to 27 inches in width and 50 inches to 52 inches in length.

Uncovered innerspring units are suitable for use as the innerspring component in the manufacture of innerspring mattresses, including mattresses that incorporate a foam encasement around the innerspring.

Pocketed and non-pocketed innerspring units are included in this definition. Non-pocketed innersprings are typically joined together with helical wire and border rods. Non-pocketed innersprings are included in this definition regardless of whether they have border rods attached to the perimeter of the innerspring. Pocketed innersprings are individual coils covered by a “pocket” or “sock” of a nonwoven synthetic material or woven material and then glued together in a linear fashion.

Uncovered innersprings are classified under subheading 9404.29.9010, 9404.29.9005 and 9404.29.9011 and have also been classified under subheadings 9404.10.0000, 7326.20.0070, 7320.20.5010, or 7320.90.5010 of the Harmonized Tariff Schedule of the United States (“HTSUS”). The HTSUS subheadings are provided for convenience and customs purposes only; the written description of the scope of the order is dispositive.

Bona Fides Analysis

Consistent with Department practice, we examined the bona fides of Quan Li's sale.^[7] In evaluating whether a sale in an NSR is commercially reasonable or typical of normal business practices, and therefore bona fide, the Department considers, inter alia, such factors as (a) The timing of the sale, (b) the price and quantity, (c) the expenses arising from the transaction, (d) whether the goods were resold at a profit, and (e) whether the transaction was made on an arm's length basis.^[8] Accordingly, the Department considers a number of factors in its bona fides analysis, “all of which may speak to the commercial realities surrounding an alleged sale of subject merchandise.” ^[9] In TTPC, the court also affirmed the Department's decision that any factor which indicates that the sale under consideration is not likely to be typical of those which the producer will make in the future is relevant,^[10] and found that the weight given to each factor investigated will depend on the circumstances surrounding the sale.^[11] Finally, in New Donghua, the CIT affirmed the Department's practice of evaluating the circumstances surrounding an NSR sale, so that a respondent does not unfairly benefit from an atypical sale and obtain a lower dumping margin than the producer's usual commercial practice would dictate.^[12] Where the Department finds that a sale is not bona fide, the Department will exclude the sale from its export price calculations.^[13]

Based on the totality of circumstances, we preliminarily find that the sale made by Quan Li during the POR was not a bona fide commercial transaction and should be excluded from the Department's calculations. Quan Li's POR quantity was atypical and its price was high. In addition, we sought information from the importer in order to evaluate the commercial reasonableness of the sale and to consider whether this sale is predictive of future commercial activity. The importer provided conflicting information, it has not substantiated its claims that the subject merchandise was resold for profit; and it has also said that it has no other purchases of subject merchandise. Because much of the factual information used in our analysis of the bona fides of the transaction involves business proprietary information, a full discussion of the basis for our preliminary finding that the sale is not bona fide is set forth in the Quan Li Bona Fides Memo.^[14] Because we have found Quan Li's sole sale to be not bona fide, we cannot rely on this sale to calculate a dumping margin and, therefore, there is no sale on which we can base this review and we are preliminarily rescinding Quan Li's NSR.^[15]

Preliminary Rescission of NSR

For the foregoing reasons, the Department preliminarily finds that Quan Li's sale is not bona fide and that this sale does not provide a reasonable, or reliable, basis for calculating a dumping margin. Because this non-bona fide sale was the only sale of subject merchandise during the POR, the Department is preliminarily rescinding the NSR of Quan Li.

Assessment Rates

Upon issuance of the final results, the Department will determine, and U.S. Customs and Border Protection (“CBP”) shall assess, antidumping duties on all appropriate entries. If we proceed to a final rescission of Quan Li's NSR, Quan Li's entry will be assessed at the rate entered.^[16] If we do not proceed to a final rescission of Quan Li's NSR, pursuant to section 351.212(b)(1) of the Department's regulations, we will calculate importer-specific (or customer) ad valorem duty assessment rates. We will instruct CBP to assess antidumping duties on all appropriate entries covered by this review if any importer-specific assessment rate calculated in the final results of this review is above de minimis. In either case, the Department intends to issue appropriate assessment instructions directly to CBP 15 days after publication of the final results of this review.

Cash Deposit Requirements

Effective upon publication of the final rescission of this NSR, or the final result of this NSR, we will instruct CBP to discontinue the option of posting a bond or security in lieu of a cash deposit for entries of subject merchandise by Quan Li, pursuant to section 751(a)(2)(B)(iii) of the Act and section 351.214(e) of the Department's regulations. If we proceed to a final rescission of this NSR, the cash deposit rate will continue to be the PRC-wide rate for Quan Li because the Department will not have determined an individual margin of dumping for Quan Li. If we issue final results for this NSR, we will instruct CBP to collect cash deposits, effective upon the publication of the final results, at the rates established therein.

Disclosure

The Department intends to disclose to parties of this proceeding the calculation performed in reaching the preliminary results within five days of the date of publication of this notice in accordance with section 351.224(b) of the Department's regulations.

Public Comment and FOP Data

In accordance with section 351.301(c)(3)(ii) of the Department's regulations, for the final results, interested parties may submit publicly available information to value factors of production (“FOP”) within 20 days after the date of publication of these preliminary results. Interested parties must provide the Department with supporting documentation for the publicly available information to value each FOP. Additionally, in accordance with section 351.301(c)(1) of the Department's regulations, for the final results of this NSR, interested parties may submit factual information to rebut, clarify, or correct factual information submitted by an interested party within ten days of the applicable deadline for submission of such factual information. However, the Department notes that section 351.301(c)(1) of the Department's regulations permits new information only insofar as it rebuts, clarifies, or corrects information recently placed on the record.^[17]

In accordance with section 351.309(c)(1)(ii) of the Department's regulations, interested parties may submit case briefs and/or written comments no later than 30 days after the date of publication of the preliminary results of this NSR. In accordance with section 351.309(d) of the Department's regulations, rebuttal briefs and rebuttals to written comments, limited to issues raised in such briefs or comments, may be filed no later than five days after the deadline for submitting the case briefs. The Department requests that interested parties provide an executive summary of each argument contained within the case briefs and rebuttal briefs.

Any interested party may request a hearing within 30 days of publication of these preliminary results.^[18] Requests should contain the following information: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of the issues to be discussed. Oral presentations will be limited to issues raised in the briefs. If we receive a request for a hearing, we intend to hold the hearing seven days after the deadline for submission of the rebuttal briefs at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

The Department intends to issue the final results of this NSR, which will include the results of its analysis raised in any such comments, within 90 days of publication of these preliminary results, pursuant to section 751(a)(2)(B)(iv) of the Act and section 351.214(i) of the Department's regulations.

Notification to Importers

This notice serves as a preliminary reminder to importers of its responsibility under section 351.402(f)(2) of the Department's regulations to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this POR. 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.

We are issuing and publishing these preliminary results in accordance with sections 751(a)(2)(B) and 777(i) of the Act, and sections 351.214(h) and 351.221(b)(4) of the Department's regulations.

Dated: July 26, 2011.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

Footnotes

1.  See Uncovered Innerspring Units from the People's Republic of China: Notice of Antidumping Duty Order, 74 FR 7661 (February 19, 2009) (“Order”).

2.  See Uncovered Innerspring Units from the People's Republic of China: Initiation of Antidumping Duty New Shipper Review, 75 FR 62107 (October 7, 2010).

3.  The petitioner is Leggett and Platt, Incorporated, hereafter referred to as “Petitioner.”

4.  See Uncovered Innerspring Units from the People's Republic of China: Extension of Preliminary Results of Antidumping Duty New Shipper Review, 76 FR 17107 (March 28, 2011).

5.  See Uncovered Innerspring Units from the People's Republic of China: Extension of Preliminary Results of Antidumping Duty New Shipper Review, 76 FR 34207 (June 13, 2011).

6.  See Uncovered Innerspring Units from the People's Republic of China: Extension of Preliminary Results of Antidumping Duty New Shipper Review, 76 FR 43263 (July 20, 2011).

7.  See, e.g., Honey from the People's Republic of China: Rescission and Final Results of Antidumping Duty New Shipper Reviews, 71 FR 58579 (October 4, 2006) and accompanying Issues and Decision Memorandum at Comment 1b.

8.  See Tianjin Tiancheng Pharmaceutical Co., Ltd. v. United States, 366 F. Supp. 2d 1246, 1249-1250 (CIT 2005) (“TTPC”).

9.  See Hebei New Donghua Amino Acid Co., Ltd. v. United States, 374 F. Supp. 2d 1333, 1342 (CIT 2005) (“ New Donghua”) (citing Fresh Garlic From the People's Republic of China: Final Results of Antidumping Administrative Review and Rescission of New Shipper Review, 67 FR 11283 (March 13, 2002), and accompanying Issues and Decision Memorandum: New Shipper Review of Clipper Manufacturing Ltd.).

10.  See TTPC, 366 F. Supp. 2d at 1250.

11.  Id. at 1263.

12.  New Donghua, 374 F. Supp. 2d at 1344.

13.  See TTPC, 366 F. Supp. 2d at 1249.

14.  See Memorandum to James C. Doyle, Director, Office 9, through Scot T. Fullerton, Program Manager, Office 9, from Paul Walker, Case Analyst, Office 9, First New Shipper Review of Uncovered Innerspring Units from the People's Republic of China: Bona Fide Analysis of Foshan Nanhai Jiujiang Quan Li Spring Hardware Factory's New Shipper Sale (“Quan Li Bona Fide Memo”).

15.  See Quan Li Bona Fide Memo, TTPC and New Donghua.

16.  See section 351.212(c) of the Department's regulations.

17.  See Glycine from the People's Republic of China: Final Results of Antidumping Duty Administrative Review and Final Rescission, in Part, 72 FR 58809 (October 17, 2007) and accompanying Issues and Decision Memorandum at Comment 2.

18.  See section 351.310(c) of the Department's regulations.