65 FR 50183 August 17, 2000 A-570-851 AR: 1998-2000 Public Document IAI/2: DJG MEMORANDUM FOR: Troy H. Cribb Acting Assistant Secretary for Import Administration FROM: Richard W. Moreland Deputy Assistant Secretary for Import Administration SUBJECT: Issues and Decision Memorandum for the Administrative Review of Certain Preserved Mushrooms from the People's Republic of China - May 7, 1998, through January 31, 2000; Final Results Summary We have analyzed the comments of interested parties in the May 7, 1998, through January 31, 2000, administrative review of the antidumping duty order on certain preserved mushrooms from the People's Republic of China for two manufacturer/exporters. Our analysis of the comments resulted in no change to our preliminary results for these final results. We recommend that you approve the position we have developed in the "Discussion of the Issues" section of this memorandum. Below is the complete list of the issues in this review for which we received comments and rebuttal comments by interested parties: Comment 1: Whether Reviewed Entries Are Within the Scope of the Order Comment 2: Use of Adverse Facts Available Comment 3: Enjoined Entries During the "Critical Circumstances" Period Background On June 30, 2000, the Department of Commerce (the Department) published the preliminary results of the administrative review of the antidumping duty order on certain preserved mushrooms from the People's Republic of China (PRC) for two manufacturer/exporters Mei Wei Food Industry Co., Ltd. (Mei Wei) and Tak Fat Trading Co. (Tak Fat) during the period May 7, 1998, through January 31, 2000 (65 FR 40609) (Preliminary Results). We invited interested parties to comment on our preliminary results. On July 10, 2000, we received comments from the respondents. The petitioners submitted rebuttal comments on July 17, 2000. DISCUSSION OF THE ISSUES Comment 1: Whether Reviewed Entries Are Within the Scope of the Order Mei Wei and Tak Fat assert that they did not export subject merchandise during the period of review (POR) and therefore an administrative review of their exports is inappropriate. Consistent with their position in the scope inquiry concerning Tak Fat's exports of "marinated" mushrooms, Mei Wei and Tak Fat maintain that their "marinated" mushroom product is outside the scope of the antidumping duty order on certain preserved mushrooms from the PRC. Mei Wei and Tak Fat claim that the Department erred in its final scope determination of June 19, 2000, which found that their "marinated" mushroom product fell within the scope of this order. They assert that this scope determination is likely to be the subject of litigation before the Court of International Trade (CIT) (1). Accordingly, Mei Wei and Tak Fat contend that the Department should refrain from issuing the final results of this review until there is a final judicial resolution on the scope ruling. In addition, Mei Wei and Tak Fat contend that, even assuming the Department's final scope ruling is upheld, the Department may not apply its scope ruling to entries prior to the April 28, 2000, preliminary scope ruling, which was the first point at which the respondents were notified that their merchandise was covered by the order. Mei Wei and Tak Fat assert that the Department's scope ruling was subject to the notice requirements of 5 USC 552(a)(1)(D), and therefore, the Department cannot conduct an administrative review and assess antidumping duties on merchandise for which no prior notice of inclusion in the antidumping duty order was given. The petitioners note that, as the Department's June 19, 2000, scope ruling confirmed that the Mei Wei and Tak Fat product is subject merchandise, this ruling is the law and must be respected as such for purposes of this proceeding as a whole. Although the respondents may appeal the scope ruling, the petitioners assert that what an interested party might do with respect to a different segment of the proceeding is irrelevant with regard to the Department's conduct of this administrative review. The petitioners continue that the Department is required to issue the final results of this administrative review under the statutory timetable, without regard to prospective litigation in another segment of the proceeding. Accordingly, the petitioners conclude, this administrative review with respect to Mei Wei and Tak Fat has been properly conducted under the statute and the Department's regulations. Department's Position: In the scope inquiry, the Department ruled that the merchandise exported by Mei Wei and Tak Fat is subject to the antidumping duty order on certain preserved mushrooms from the PRC. Therefore, Mei Wei's and Tak Fat's exports of the merchandise during the POR are properly considered in this administrative review. That Mei Wei and Tak Fat disagree with the Department's June 19, 2000, scope ruling and are appealing the decision to the CIT is irrelevant for the purposes of these final results. In their May 5, 2000, letter, Mei Wei and Tak Fat acknowledge exporting "marinated" mushrooms to the United States during the POR. As discussed in detail in our April 28, 2000, preliminary scope ruling as well as the final ruling, we have determined that these exports are covered by the antidumping duty order. In accordance with the statute, we are issuing the final results of the administrative review of those exports that were entered during the POR. While the respondents have the right to appeal our scope ruling, their appeal does not prevent us from carrying out our statutory obligations to conduct this administrative review as provided in section 751(a)(1) of the Act. With regard to the respondents' claim that the Department may not apply the scope ruling to entries prior to the date of the preliminary scope ruling, this point was addressed in detail in the July 19, 2000, scope ruling. (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, at 11-14.) Mei Wei and Tak Fat were well aware that this merchandise might fall within the scope of the antidumping duty order on certain preserved mushrooms from the PRC when they requested a scope inquiry on January 6, 2000. In the course of that proceeding, the respondents were made aware that the antidumping duty order on certain preserved mushrooms from the PRC may apply to their product. Indeed, in cases of affirmative scope rulings, 19 CFR 351.225(l) requires the suspension, or continuation of the suspension, of liquidation from the date of initiation of the scope inquiry. The CIT has recognized that scope rulings may be applied to all entries of subject merchandise. Timken v. United States, 20 CIT 1115; 937 F. Supp. 953 (1996). Furthermore, under 19 CFR 351.225(l)(4), the Department, where practicable, will include sales of the product at issue in a scope inquiry for purposes of the review of an order and will seek information regarding such sales, if, within 90 days of initiation of the review, the Department issues a final scope ruling that the product is included in the scope. In this case, the initiation of the review was published on March 30, 2000, and the final scope ruling on the product exported by Tak Fat and Mei Wei was made on June 19, 2000, well within the 90-day regulatory window for collecting sales data on this merchandise. Therefore, the respondents' claim that the Department cannot conduct an administrative review and assess dumping duties on entries of this merchandise made during the POR is without merit. Comment 2: Use of Adverse Facts Available Mei Wei and Tak Fat contend that the use of adverse facts available in not warranted because they did not fail to cooperate with the Department in this review. According to the respondents, based on the factual record at the initiation of this review and at the time the initial questionnaire response was due, they believed that their product was outside the scope of the antidumping duty order and therefore their participation in the review was unnecessary. Given this belief and the ambiguity in the scope prior to the Department's scope ruling, Mei Wei and Tak Fat claim that application of adverse facts available here is inappropriate, consistent with the Department's treatment in Notice of Final Determination of Sales at Less Than Fair Value: Small Diameter Circular Seamless Carbon and Alloy Steel Standard Line and Pressure Pipe from Italy, 60 FR 31981, 31987, June 19, 1995 (Italian Pipe). Moreover, Mei Wei and Tak Fat assert that it is premature to penalize them when the scope of the order has not been judicially determined, which may affirm the respondents' position that their product was outside the scope of the order and therefore no review of their exports should have been conducted. The petitioners respond that the Department properly applied adverse facts available to Mei Wei and Tak Fat, in full accordance with the applicable law. The petitioners note that the Department properly requested information from Mei Wei and Tak Fat, but both explicitly refused to cooperate by failing to provide the requested information, as stated in their May 5, 2000, letter (2). The petitioners dispute the respondents' contention that the scope was ambiguous or unclear, given the Department's conduct of the scope inquiry under 19 CFR 351.225(k)(1), as requested by the respondents themselves. In support of their position, the petitioners cite several examples of case and judicial precedence for applying adverse facts available to a respondent which refuses to provide the requested data, or withdraws from a review, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Persulfates from the People's Republic of China, 62 FR 27222, 27224 (May 19, 1997). Department's Position: Through refusal to respond to our questionnaire, as they specifically stated in the May 5, 2000, letter, Mei Wei and Tak Fat failed to cooperate to the best of their ability. Consistent with our practice in such cases, as cited by the petitioners, adverse inferences are warranted under section 776(b) of the Act. Accordingly, for the reasons stated therein we affirm our preliminary results of applying the PRC-wide rate to the POR entries exported by Mei Wei and Tak Fat. See Preliminary Results, 65 FR at 40610-40611. The scope issue in this proceeding differs from that in Italian Pipe cited by the respondents. In the Italian Pipe case, numerous scope issues arose in the course of that investigation, requiring analysis and clarification in the final determination. Those issues gave rise to ambiguity and a certain amount of confusion until the final determination in that proceeding. For that reason, the Department did not apply adverse facts available (then known as "best information available") where a respondent did not report all of its sales due to misinterpretation of the scope. In this review, there is no such ambiguity in the scope. The scope issue raised by Mei Wei and Tak Fat was addressed in the scope inquiry segment of the proceeding, with the Department's preliminary scope ruling issued prior to the deadline for submitting the questionnaire responses in this review. We note that the respondents' notification of their refusal to participate in this review occurred on May 5, 2000, a week after the Department's preliminary scope ruling on April 28, 2000, and four months after Mei Wei, Tak Fat, and others submitted their request on January 6, 2000, for a scope ruling. Well before the questionnaire responses were due in this review, Mei Wei and Tak Fat were aware that the classification of their product as outside the scope of the order was in dispute, as demonstrated by the petitioners's comments submitted in the scope segment during March 2000. On March 29, 2000, the Department issued the antidumping questionnaire in this review with a due date of May 4, 2000. Even considering the April 28, 2000, date when the Department issued its preliminary scope ruling, Mei Wei and Tak Fat had ample time from that date to request an extension of the deadline to submit their questionnaire responses in this review. Thus, their claim that they had insufficient notice of the Department's interpretation of the scope must be rejected. Finally, there is no basis in law or precedent for the Department's suspension of an antidumping duty investigation or review pending the outcome of prospective litigation in a separate segment of the proceeding, as correctly observed by the petitioners. The Department must conduct and complete this review in accordance with the applicable statute and regulations (i.e., section 751 of the Act and 19 CFR 351.213). Therefore, we are issuing the final results of this review within 120 days after the publication of our preliminary results, in accordance with section 775(a)(3)(A) of the Act. Comment 3: Enjoined Entries During the "Critical Circumstances" Period Tak Fat has appealed the Department's final affirmative "critical circumstances" determination in the underlying less-than-fair-value investigation (63 FR 72255, 72259 (December 31, 1998)) to the CIT (Tak Fat v. United States, CIT no. 99-03-00143). The Department's affirmative determination followed the tie vote of the International Trade Commission, pursuant to section 771(11) of the Act. Tak Fat is arguing before the CIT that this "tie vote" provision of the Act does not apply to critical circumstances findings. The CIT has not yet ruled on this case. In the meantime, the CIT has issued an injunction on the liquidation of Tak Fat's exports that were entered, or withdrawn from warehouse, for consumption on or after May 7, 1998, through August 4, 1998 (i.e., the critical circumstances period). Tak Fat and Mei Wei argue that the Department must delay issuing the final results of this review, and withhold any liquidation instructions covering entries made during the critical circumstances period, until there is a final and conclusive outcome in the CIT proceeding. The respondents add that issuance of assessment instructions on entries during the critical circumstances period would violate the terms of the court injunction. See also, LG Electronics v. U.S., 991 F. Supp. 668 (CIT 1997). The petitioners state that the Department is required by statute to issue its final results of this review within 120 days of publication of its preliminary results (see section 775(a)(3)(A) of the Act), and therefore it cannot postpone the issuance of the final results. The petitioners acknowledge that the CIT injunction prevents the liquidation of the respondents' entries during the critical circumstances period; however, they assert that there is no prohibition on the Department's issuance of liquidation instructions for the remainder of the POR. Accordingly, the petitioners conclude, there is no basis to suspend the Department's issuance of its final results of this review due to the injunction on the liquidation of some of the reviewed entries. Department's Position: That the liquidation of certain entries under review are enjoined at this time does not preclude us in any way from conducting an administrative review and issuing our final results of the review in accordance with the antidumping duty statute and the Department's regulations. As stated above, the statute requires us to issue the final results of this review within 120 days of the publication of the preliminary results. There is no exemption or exception in the case of an injunction on the liquidation of certain entries. Following the publication of these final results, the Department will, of course, respect the injunction, of which it has already notified the Customs Service, and refrain from issuing liquidation instructions on the entries covered by the injunction until the litigation is completed. That is, we will issue instructions to the Customs Service to liquidate at the PRC-wide rate all entries of subject merchandise exported by Tak Fat or Mei Wei during the period August 5, 1998, through January 31, 2000, only, pending the conclusion of the litigation. RECOMMENDATION: Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the final results of this review in the Federal Register. AGREE____ DISAGREE___ ______________________ Troy H. Cribb Acting Assistant Secretary For Import Administration _______________________ Date ____________________________________________________________________ footnotes: 1. On July 17, 2000, subsequent to the filing of their case brief, Mei Wei and Tak Fat filed a summons at the CIT on the Department's June 19, 2000, scope ruling. 2. The petitioners noted in their rebuttal brief that the Department incorrectly referred to this letter in the Preliminary Results as being dated March 5, 2000. The petitioners are correct.