[Federal Register: October 30, 1996 (Volume 61, Number 211)]
[Notices]
[Page 55957-55965]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
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DEPARTMENT OF COMMERCE
[A-538-802]
Shop Towels From Bangladesh; Final Results of Antidumping Duty
Administrative Review
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AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of final results of antidumping duty administrative
review.
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SUMMARY: On May 6, 1996, the Department of Commerce published the
preliminary results of its administrative review of the antidumping
duty order on shop towels from Bangladesh. The review covers six shop
towel producers that exported this merchandise to the United States
during the period March 1, 1994, through February 28, 1995.
Based on our analysis of the comments received on our preliminary
results, we have made changes to our calculations for the final
results. The review indicates the existence of dumping margins for
certain firms during the review period.
EFFECTIVE DATE: October 30, 1996.
FOR FURTHER INFORMATION CONTACT: Davina Hashmi, Matthew Rosenbaum or
Kris Campbell, International Trade Administration, U.S. Department of
Commerce, Washington, DC 20230; telephone (202) 482-4733.
[[Page 55958]]
SUPPLEMENTARY INFORMATION:
The Applicable Statute
Unless otherwise indicated, all citations to the Tariff Act of
1930, as amended (the Act), are references to the provisions effective
January 1, 1995, the effective date of the amendments made to the Act
by the Uruguay Round Agreements Act (URAA). In addition, unless
otherwise indicated, all citations to the Department's regulations are
to the current regulations, as amended by the interim regulations
published in the Federal Register on May 11, 1995 (60 FR 25130).
Background
On May 6, 1996, the Department of Commerce (the Department)
published in the Federal Register (61 FR 20231), the preliminary
results of its 1994-1995 administrative review of the antidumping duty
order on Shop Towels from Bangladesh (57 FR 9688 (March 20, 1992)). We
gave interested parties an opportunity to comment on the preliminary
results and received case briefs and rebuttal briefs from the
petitioner, Milliken & Company (Milliken), and two respondents, Greyfab
and Hashem. We held a public hearing on July 11, 1996, as requested by
Greyfab and Hashem.
In the preliminary results we calculated profit for constructed
value (CV) under section 773(e)(2)(B)(iii) of the Act. We used this
method because we had no information on actual profit amounts earned by
the exporters in connection with the production and sale of the
merchandise for consumption in the home market or any information that
would permit us to use any of the alternatives for calculating profit
under section 773(e)(2) of the Act. We could not calculate the ``profit
cap'' prescribed by section 773(e)(2)(B)(iii) based on sales for
consumption in the ``foreign country'' of merchandise that is in the
same general category of products as the subject merchandise because we
had no such information. Instead, we applied another reasonable method
under 773(e)(2)(B)(iii). For each of the five responding companies, the
only facts available for the preliminary results were the amounts for
profit earned and realized by the individual respondent as shown in
each company's financial statements, profit earned solely on sales to
the United States. Hence, we used these profits in our calculation of
CV.
As a result of the comments we received and the discussion at the
public hearing, we requested additional information from petitioner,
Milliken, and respondents relevant to the calculation of the profit
rate. We received a submission containing factual information regarding
profit from two respondents (Greyfab and Hashem) on July 26, 1996. We
received comments from petitioner regarding respondents' submission on
August 8, 1996. For these final results, we are using the actual profit
amounts of textile mills that sold the same general category of
products as the subject merchandise in the home market during the POR
(see Comment 7, below).
The Department has completed this administrative review in
accordance with section 751 of the Act.
Scope of Review
This administrative review covers six firms for the period March 1,
1994, through February 28, 1995: Eagle Star Mills, Ltd. (Eagle Star);
Greyfab Bangladesh Ltd. (Greyfab); Hashem International (Hashem);
Khaled Textile Cotton Mills, Ltd. (Khaled); Shabnam Textiles (Shabnam);
and Sonar Cotton Mills (BD), Ltd. (Sonar).
The product covered by this administrative review is shop towels.
Shop towels are absorbent industrial wiping cloths made from a loosely
woven fabric. The fabric may be either 100-percent cotton or a blend of
materials. Shop towels are currently classifiable under item numbers
6307.10.2005 and 6307.10.2015 of the Harmonized Tariff Schedule (HTS).
Although HTS subheadings are provided for convenience and customs
purposes, our written description of this proceeding remains
dispositive.
Analysis of Comments Received
Comment 1: Respondents Greyfab and Hashem contend that the method
the Department used to calculate profit in the preliminary results of
review is unreasonable because, in calculating an amount for profit,
the Department imputed certain credit and interest expenses in its
calculation of selling, general and administrative expenses (SG&A)
which are not reflected in the company's financial statements rather
than accounting for actual credit and interest expenses. Respondents
contend that, if the Department makes an adjustment for imputed credit
and interest expenses, it should also reduce the reported profit by the
amount of such imputed expenses. Respondents purport that, under the
Department's methodology in the preliminary results, the Department
used profit to increase the normal value yet, at the same time, for the
purpose of determining costs the Department rejected the profit data on
the basis that it is overstated.
Milliken responds that the Department is under no obligation under
section 773(e)(2)(B)(iii) of the Act to adjust the amount for profit
recorded in the respondents' financial statements to take into account
imputed SG&A expenses. Petitioner argues further that, since the record
does not contain any data concerning company profits on home market
sales and because the only data available are profit amounts recorded
in respondent's financial statements, the Department properly used that
data and, in addition, the statute does not require the Department to
evaluate each aspect of that data or to adjust them. Milliken cites the
Final Determination of Sales at Less Than Fair Value: Pure Magnesium
from the Russian Federation, 60 FR 16440, 16447 (March 30, 1995), and
claims that, in that case, the Department rejected petitioner's claim
that certain elements of the surrogate value for factory overhead
should be adjusted to make it more accurate.
Department's Position: We agree with Milliken that we are under no
obligation to adjust the amount for profit recorded in the respondents'
financial statements to take into account imputed SG&A expenses. As
discussed in response to additional comments below, however, we have
not used respondents' U.S. sales experience to calculate profit in
these final results, and therefore this issue is moot.
Comment 2: The respondents contend that the Department's profit
methodology in the preliminary results is unreasonable in that, for the
purpose of calculating CV, the Department calculated an average profit
based on the total profit realized on sales to the United States.
Respondents state that the Department added the average profit to the
normal value for sales of that same merchandise. Respondents indicate
that, if there is any variation in price on those sales, sales that
earn a profit below the average level of profits will always yield a
dumping margin under this methodology. In addition, respondents contend
that the Department will always find dumping margins using this
methodology because, as prices rise, profit will also increase,
resulting in an upward adjustment to CV. Therefore, respondents argue,
this methodology forces the company to lower its U.S. prices in order
to lower the dumping margin of the company, which is contrary to the
very purpose of the antidumping statute.
Milliken argues that the methodology the Department used to
determine the profit calculations is lawful and reasonable and is in
accordance with section 773(e)(2)(B) of the Act. Milliken suggests
that, given the absence of other
[[Page 55959]]
data in this case and the fact that the only profit data available to
the Department was the profit information reported in respondents'
financial statements, the Department had no alternative but to use this
information as facts available in determining the profit respondents
earned on sales made to the United States.
Milliken contends that the Statement of Administrative Action (SAA)
provides four principles which support the Department's profit
calculation in the preliminary results: the statute does not establish
any hierarchy among the alternative choices for determining profit and
the Department's use of any particular method should depend upon the
facts of each case and available data; there is a strong preference to
use the actual company records of respondents in order to ensure that
the source of the data is reliable, independent, in accordance with
generally accepted accounting principles, and capable of verification;
the use of alternative methods to determine profit in CV situations
should not diminish the antidumping relief due the domestic industry;
in determining profit on the basis of the third method set forth in
section 773(e)(2)(B)(iii) of the Act the Department should not make an
adverse inference in applying the facts available unless the company in
question withheld information the Department requested.
Milliken asserts that, absent home market profit data, the
Department relied upon actual, audited company data in accordance with
the SAA. In addition, Milliken contends that the methodology the
Department used to calculate profit in its preliminary results meets
the guidelines set forth in the SAA which, in turn, ensures that the
domestic industry is not unfairly disadvantaged by the absence of data
on the record. Milliken states that respondents are in a better
position to obtain profit information on home market sales than is the
Department. Therefore, given respondents' interest in the Department's
calculation of profit, Milliken contends that respondents should have
submitted this profit information on the record in a timely manner.
Milliken states that, since respondents have no home market or
third-country sales and since the Department had no other profit
information on the record, the Department's reliance on respondents'
profit made on export sales of shop towels to the United States was
reasonable and lawful, as the law provides for the use of ``any other
reasonable method'' to calculate profit on the basis of facts
available. Milliken therefore purports that, given the data presently
on the record and the fact that the Department addressed the SAA's
concerns of using independent and reliable data (e.g., audited
financial statements prepared in accordance with generally accepted
accounting principles), the Department properly calculated profit for
CV.
Milliken disagrees with respondents' claim in this case that the
Department's profit determination would require Greyfab, for example,
to lower prices on exports of non-subject merchandise to the United
States in order to reduce its dumping margin in future reviews.
Milliken claims that the Department must determine profit under section
773(e)(2)(B)(iii) and not worry about what might happen in future
reviews.
Department's Position: We agree with the respondents that it is
inappropriate to calculate profit for addition to CV based on the
respondents' U.S. sales. The statute is clear that we must derive
profit on the basis of home market or third-country sales. As indicated
earlier, after the hearing we gave parties an opportunity to provide
additional information which we have analyzed. See our responses to
Comments 3, 5 and 7.
Comment 3: Respondents contend that the Department's use of profit
realized on U.S. sales to calculate CV is contrary to section
773(e)(2)(B)(iii) of the Act because the profit level on U.S. sales
exceeds the profit ``cap'' prescribed by the Act. Respondents state
that, because none of the respondents sell the foreign like product for
consumption in Bangladesh, the costs and profit amounts in the
financial statements relate only to U.S. sales. Given this situation,
respondents assert, the only alternative the Department may use is an
amount for profit and SG&A based on any other reasonable method, in
accordance with section 773(e)(2)(B)(iii) of the Act.
Respondents identify three statutory alternatives for calculating
SG&A and profit for addition to CV, all of which rely on data gathered
on sales and production of merchandise for consumption in the home
market. Respondents also cite the statutory requirement that the amount
allowed for profit may not exceed the amount normally realized by
exporters or producers for consumption in the foreign country of
merchandise that is in the same general category of products as the
subject merchandise. Respondents contend that this provision
establishes a profit ``cap'' which limits the amount the Department may
use as profit in its CV calculations. Respondents object to the
Department's decision not to calculate a profit cap because it had no
information on sales in the home market of the same general category of
merchandise as shop towels upon which to base the calculation.
Respondents argue that, since they do not sell shop towels or any other
textile product for consumption in Bangladesh, the above-mentioned
statutory alternatives are not available in this case.
Respondents contend that the information they provided in the case
brief supersedes and is more reasonable to use than the information
that is already on the record. Respondents urge the Department to
replace the methodology it used in determining the profit level and
profit cap in the preliminary results of review with the information in
the case brief. According to respondents, there is publicly available
information that establishes that there is little or no profit realized
on sales of textiles in Bangladesh, including several World Bank
reports, a report prepared by the Bangladesh Bureau of Statistics which
is compiled in the ordinary course of its governmental functions, and
several audited financial statements of privately held companies which
are listed in the Bangladesh stock exchange.
Respondents argue that the SAA indicates that unprofitable sales
can be considered in establishing the profit cap. Respondents contend
that, given that information from reliable, independent sources
supports the finding that there is no profit normally realized on sales
of textiles in Bangladesh, the statute requires that in the calculation
of CV the profit cap must be equal to zero.
Milliken states that the information which respondents submitted in
their case briefs regarding the level of profitability of textile
producers in Bangladesh is untimely, out-of-date, unreliable and
inappropriate for determining profit under section 773(e)(2)(B)(iii).
In the event the Department considers the information for its final
results, Milliken asserts that the World Bank reports cannot be used
because they relate to the experience of state-owned enterprises
(SOEs), which cannot be compared with respondents' experience. Milliken
explains that, unlike SOEs, respondents are privately owned enterprises
located in export zones which benefit from superior infrastructure and
greater efficiency than SOEs. Milliken states that, because
respondents' companies are very different from SOEs, the Department
should not use the information in the
[[Page 55960]]
World Bank reports to determine profits or to establish the profit cap.
Department's Position: Because we indicated at the public hearing
for this proceeding that we would accept the new information and allow
interested parties to comment on the issue of profit calculation, we
have accepted the information respondents included in their case
briefs. Under these circumstances, the Department clearly has the
discretion to accept new information. Indeed, 19 CFR 353.31 (b) (1)
indicates that the Department has the discretion to ``request any
person to submit factual information at any time during the
proceeding'' except under certain circumstances not applicable in this
case.
According to section 773(e)(2)(B) of the Act, the Department has
three alternatives if actual data are not available with respect to
actual amounts incurred and realized by the specific exporter being
reviewed for SG&A expenses and for profit, in connection with the
production and sale of a foreign like product, in the ordinary course
of trade, for consumption in the foreign country. The first two methods
refer to costs and profits based on production and sales for
consumption in the foreign country, which is the home market. The third
option allows for the calculation of costs and profit to be made using
any other reasonable method, except that the amount allowed for profit
may not exceed the amount normally realized by exporters or producers
in connection with the sale, for consumption in the foreign country, of
merchandise that is in the same general category of products as the
subject merchandise. Because all three options require use of an amount
which reflects profit in connection with sales for consumption in the
foreign country, we cannot calculate profit based on respondents' data
in this case since none of the respondents sold shop towels or other
merchandise in the home market.
We disagree with the respondents' contention that we should apply a
zero-level profit cap based on the information they submitted. These
data do not constitute the best source for information on which we
would base the profit cap given that respondents provided more reliable
information in their post-hearing submission (see Comment 7, below).
The profit figures listed for SOEs in the reports are for 1989 through
1993, a period that is prior to the POR.
The Bangladesh Bureau of Statistics report lists gross sales
margins for several Bangladesh industries, including the textile,
apparel and accessory industry. However, this report covered the 1989
through 1990 period, which is a period not contemporaneous with the POR
and precedes the POR by four years. The data that we used is preferable
since it is closer in time to the POR.
The annual report that the respondents submitted in their case
brief includes the financial statements of a Bangladesh textile
company. However, as indicated in the notes to the accounts for the
year ended December 31, 1995, this company only made export sales.
Hence, since this company does not sell any merchandise in Bangladesh,
for the same reasons that we cannot use the profit data of the
respondents in this case, we cannot use the information in this
company's financial statement.
Therefore, for these final results, we have not relied on the
information respondents submitted in the case brief.
Comment 4: Respondents contend that, by using their own profit
levels on sales to the United States as facts available, the Department
drew an adverse inference against the companies which is inappropriate,
given their participation in this review. Respondents state that they
raised the question of the calculation of profit to the Department
earlier in the administrative review process, but the Department did
not make any attempt to develop information on the record, request such
information, or implement the statutorily required cap. Therefore,
respondents contend, the Department penalized them by applying facts
available. Respondents state that the law requires that the Department
make some minimal effort to obtain this information on the record in
order to implement all of its statutory obligations.
Milliken argues that the SAA prescribes that, in calculating
profit, the Department may use any other reasonable method based on the
facts available. Milliken states that the Department properly used the
only profit data that was available on the record.
Department's Position: As discussed below, we have changed our
profit calculation from that which we used in the preliminary results
and are, therefore, not relying on the United States profit experience
as facts available. Therefore, respondents' argument is no longer
relevant.
Comment 5: Respondents contend that, if the Department does not
consider the submitted information to be sufficient for purposes of
determining the profit cap, the Department should still use the
information submitted in respondents' case brief as facts otherwise
available. Respondents state that, by using such information as facts
otherwise available, the Department would be adhering to both the
statute and the SAA. Respondents argue that they have not withheld such
information as it relates to the calculation of the profit cap nor have
they failed to provide such information, but, rather, the Department
erred by not requesting information concerning the statutory profit cap
or the profitability of producers selling textile products in the home
market.
Milliken contends that, if the Department changes its methodology
of calculating profit for the final results of review, the Department
should provide Milliken with a description of the methodology employed
in the calculation of CV and an explanation of why it was selected, as
directed in the SAA, as well as an opportunity to submit comments on
such possible changes prior to its issuance of the final results.
Department's Position: We have determined, as discussed below, that
information submitted by respondents after their submission of the case
briefs is reasonable to use as a profit cap and have not relied on the
information submitted in the case briefs as facts otherwise available.
Regarding a change in the methodology, we have explained in these final
results how and why we have made changes. In addition, petitioner had
an opportunity to comment on all information on the record regarding
the profit issue.
Comment 6: Respondents state that the statute does not preclude the
Department from using the eight-percent rate from the pre-URAA statute
as the ``law of the case'', absent other available data on the sales
and profitability of Bangladesh textile companies in the home market.
Respondents assert that using the eight-percent profit level as the law
of the case is reasonable and that its use is more defensible than use
of actual profit realized on the sale of the same merchandise which is
alleged to have been dumped in the United States.
Milliken states that the new law no longer provides for a statutory
eight-percent minimum profit to be used in the calculation of CV.
Milliken argues that it is, therefore, unlawful to use the eight-
percent profit rate as suggested by respondents.
Department's Position: Because we are conducting this review under
the Act which became effective on January 1, 1995, we no longer have an
eight-percent minimum profit figure as a statutory instruction for use
in CV calculations under section 773(e)(2)(B).
[[Page 55961]]
Although we used the eight-percent minimum in previous reviews of this
order under the pre-URAA statute, we do not have the discretion under
section 773(e)(2)(B) to apply eight percent as ``law of the case''.
Comment 7: In their post-hearing submission, respondents Greyfab
and Hashem provided several documents regarding the profits of
Bangladesh textile producers. The submission includes a certificate
from the president of the Bangladesh Specialized Textile Mills and
Power Loom Industries Association (Textile Association) regarding the
state of the power-loom-weaving subsector of the textile sector in the
Bangladesh economy, a summary from a report on the power-loom
subsector, an executive summary of a final report on the textile power-
loom-weaving subsector prepared for the Bangladesh Tariff Commission in
December 1995, and financial statements of four textile companies
located in Bangladesh.
Respondents contend that the certificate from the president of the
Textile Association indicates that the Bangladesh textile weaving
industry in the private sector is ``sick,'' suggesting that expected
net profit for the textile and power-loom industries is eight percent
or lower.
The Tariff Commission report, according to the respondents,
identifies problems in the power-loom-weaving subsector and suggests
changes in the country's tariff structure to help rehabilitate the
industry, which is plagued by a number of problems.
The respondents contend that annual reports for the 1995 fiscal
year for two textile companies, the 1994 fiscal year for a third
company, and for the 1993 fiscal year for a fourth company indicate
that the companies had a net loss for the relevant periods (although
the company for which the respondents submitted the 1993 annual report
showed a profit in 1992 and 1993).
Regarding the reports from the Textile Association and the Tariff
Commission, Milliken contends that the material contained in the
exhibits are overly broad, speculative and of little value. Milliken
claims that the report does not identify the types of entities that
comprise the textile industry and whether they are state-owned. If they
are state-owned, claims Milliken, their operations cannot be properly
compared to the producers in this case. Milliken also claims that the
eight-percent profit rate cited by the respondents is merely a
projection and that the company's reported profits might include
profits on export sales in addition to home market sales.
Milliken contends that two of the annual reports do not clearly
state whether the company only sells the same merchandise of the same
general product category as shop towels or whether they export their
merchandise. Petitioner claims that, for one of those companies, the
annual report states that no production was made since August 1994,
which would render the company's net profit results aberrational and
not reasonable for the calculation of profit for the Department's CV
purposes. For another company, Milliken claims that the annual report
refers to 1992 and 1993, years which are outside the POR, and that the
company is a yarn spinner and not a weaver of fabric. As a result,
Milliken contends that the Department cannot use the data from this
company. Milliken claims that the final company's figures cannot be
used because the company is engaged in yarn-spinning operations, not
fabric weaving, and that the product is not in the same general
category of products as shop towels. In addition, Milliken claims this
company's data cannot be used because the company began commercial
production on January 1, 1994, and had production problems that led to
a low capacity-utilization rate. Hence, Milliken claims, the company's
1994 results are unreliable for determining profit in this case. In
addition, Milliken claims that there is a good reason to believe that
the company's operations also include export sales.
Department's Position: We have determined that the financial
statements of three companies provide data from which, in accordance
with section 773(e)(2)(B)(iii) of the Act, we can reasonably calculate
profit for these final results. In light of our alternatives in this
case, this information provides a reasonable method to use in
calculating profit because we are using the actual profit amounts of
textile mills that sold merchandise that is in the same general
category of products as the subject merchandise in the home market
during the POR.
Respondents' post-hearing submission included a summary of a report
on the power-loom-weaving subsector of the textile sector in the
Bangladesh and an adjoining certificate of the state of the Bangladesh
textile industry. There was no useful information in the report summary
or in the certificate. Specifically, the report summary did not
indicate any specific profit figures for the textile industry in
Bangladesh. While this report summary did include an earnings forecast
it is not clear which sector of the industry is covered by this
forecast, nor does the report summary indicate the source of this
forecast or the time period it covers. It is not clear if this forecast
covers textile companies that export or sell textiles in Bangladesh.
Hence, since this report summary does not list any specific profit
information for Bangladesh shop towels or the same general category of
products, we did not use the report summary in our calculation of
profit.
The Bangladesh Tariff Commission report respondents submitted did
not list any profit figures or any other data which we could use in the
calculation of profit for this case.
The respondents submitted three sets of financial statements
covering the POR from companies located in Bangladesh that, according
to the annual reports, are in the textile industry. These companies
produce yarn, cotton products, and weaving products, which are in the
same general category of products as the subject merchandise. It is
also clear that these companies sell merchandise in Bangladesh.
Therefore, because this information reflects profit amounts normally
realized by exporters or producers in connection with sales for
consumption in the foreign country of merchandise that is in the same
general category of products as the subject merchandise, use of this
information constitutes a reasonable method for calculating an amount
for profit in accordance with section 773(e)(2)(B)(iii) of the Act.
One company produces textiles in Bangladesh and incurred a loss in
its weaving unit for the period July 1, 1994 through June 30, 1995,
which includes a portion of the POR. While we do not know whether this
company actually produced shop towels, its financial statements
indicate that it sold woven products, which are in the same general
category of products as the subject merchandise. The second company is
also a textile company that sells cloth, a product in the same general
category of products as the subject merchandise, in Bangledesh. In its
profit and loss statement, this company posted a loss for the period of
October 1, 1993 through September 30, 1994, which includes a portion of
the POR. Although this company closed its factory in August 1994, we
have used its data for the 1993-94 fiscal year because that coincides
partially with the POR. The third company's annual report indicates
that it supplied high-quality cotton and polyester yarn to Bangladesh
knitting mills, and its half-yearly results showed that it made a
profit during the period October 1994 though March 1995. This entire
period, except for one month, falls within the POR. The respondents
also provided an annual report for a fourth textile company in
Bangladesh.
[[Page 55962]]
However, we did not use this company's data since the annual report is
for the 1993 calendar year, which ends before the POR begins.
For these final results of review, we have calculated a profit
amount of 3.05 percent by using a simple average of the profit ratios
of the three Bangladesh textile companies that operated during some or
all of the POR. The three profit ratios, which we derived from the
annual reports of the companies, as described above, were zero, zero,
and 9.148 percent.
Comment 8: Greyfab contends that, in determining the profit earned
during the POR, the Department incorrectly used the profit figure which
included cumulative profit generated from the prior period not covered
by this administrative review. Greyfab states that the Department
should exclude the profit earned from the prior period from the
calculation of profit.
Department's Position: Given our revised profit calculation in
these final results, Greyfab's argument is no longer relevant.
Comment 9: Greyfab contends that the Department improperly
calculated the total imputed interest expense for Greyfab's loan from
its directors. Respondent indicates that, in its calculation, the
Department used a total annual interest expense figure and divided this
figure by a cost of production figure based on an eight-month period.
Greyfab states that the Department should calculate the total imputed
interest expense using an equivalent period.
Department's Position: We disagree with Greyfab. It is the
Department's practice to calculate a net interest expense factor based
on a respondent's full-year audited financial statements for the year
that most closely corresponds to the POR. See e.g., Shop Towels from
Bangladesh; Final Results of Antidumping Duty Administrative Review, 60
FR 48966, 48967 (September 21, 1995); see also Final Determination of
Sales at Less Than Fair Value; Canned Pineapple Fruit from Thailand, 60
FR 29553, 29569 (June 5, 1995). The auditor's report in Greyfab's
financial statements indicates that the profit and loss statement is
``for the year ended on that date'' (February 28, 1995). However, the
heading of the profit and loss and the trading account statements
suggest that they cover a period from July 1994 to February 1995. Due
to conflicting evidence in Greyfab's financial statements, we were
unable to determine with certainty whether the profit and loss and the
trading account statements do, in fact, cover only eight months. We
therefore computed the interest expense factor using a full-year's
imputed interest expense.
Comment 10: Hashem contends that the Department improperly imputed
an interest expense on its loan to its directors. Hashem argues that
this loan is reported as an asset in the company's balance sheet and
the nature of the loan is explained in its supplemental questionnaire
response. Hashem states that, for the final results, the Department
should not impute an interest expense on an asset.
Department's Position: We agree with Hashem. Thus, for these final
results, we did not impute an interest expense on the loan in question.
Comment 11: Milliken states that respondents indicated in their
questionnaire responses and supplemental questionnaire responses that
they incur both yarn wastage and yield loss in the manufacture of shop
towels. Milliken argues that respondents did not report any amounts for
yarn wastage or yield loss in their CV calculations. Milliken also
notes that there was a percentage for wastage incurred in the
production of shop towels specified in a tolling contract between Sonar
and a certain export company. Milliken asserts that, as a result, the
Department should use the rate specified in that contract as facts
available in the calculation of CV for each of the respondents as the
rate can serve as both a reliable and objective measure for yarn loss.
Hashem contends that its reported material cost figures do not
assume a 100% manufacturing yield and that a waste factor was, in fact,
built into its reported material costs. Hashem explains that a portion
of the finished towel consists of sizing material added to the yarn
during the production process. Further, Hashem states that its material
cost figures are based on the assumption that one full kilogram of
cotton is contained in each kilogram of shop towels produced.
Respondents also state that Milliken misunderstands the manner in
which Hashem has calculated its material costs. Hashem asserts that,
contrary to Milliken's claim that the cotton yarn which constitutes the
finished shop towel is valued at a rate applicable to sizing material,
Hashem has calculated the value of sizing material present in the towel
at a rate applicable to cotton yarn. Hashem further asserts that, by
employing this calculation, it overstates the amount of cotton yarn in
the towel which, in essence, includes a waste factor in the reported
material cost figures. Hashem contends that, consequently, there is no
basis for rejecting its methodology in lieu of an unrelated contract
made between two other producers.
Greyfab asserts that it calculates material costs in the same
manner in which Hashem calculates material costs. Greyfab argues that,
similar to Hashem, it reported material costs which include a waste
factor. Respondents state that, given the manner in which material
costs were reported, there is no basis to artificially increase such
costs.
Department's Position: We agree with Milliken that we should
increase the total cost of materials to account for wastage incurred,
but not by the full amount Milliken suggests because that amount is not
indicative of the actual amount of wastage incurred by respondents
during the POR. During the course of this administrative review,
respondents indicated on the record that they incur a minimal yield
loss in the production of shop towels. Hashem, Greyfab and Shabnam also
indicated that they have accounted for the wastage by adding a cost for
sizing materials to their total material costs. However, an amount that
respondents claim to be equivalent to sizing materials does not
accurately represent an amount for wastage incurred. Respondents did
not provide any information on the record that would indicate that the
cost of sizing materials is equivalent to the cost of the actual
wastage incurred. Because we have no information on the record
indicating the actual amount of waste incurred by each company, in
accordance with section 776(a) of the Act, we must add a waste factor.
Therefore, as facts available, we have added a waste factor to each
respondent's CV calculation. We are not adding an amount equal to the
waste factor that Milliken suggested in its case brief because that
amount was extrapolated from a tolling agreement between Sonar and a
certain export company which is not likely to be indicative of the
actual amount of wastage incurred by respondents during the POR.
Rather, as facts available, we have increased each respondent's total
material cost by a waste factor equal to the difference between the
average waste factor reported by Greyfab and Hashem's average amount
for the sizing material that it built into its reported material costs.
Comment 12: Milliken states that Khaled submitted data for the
1993-94 POR rather than data for the current 1994-95 POR in its
questionnaire response to the Department. Milliken contends that the
Department should apply facts available to Khaled's response because
the company failed to submit relevant POR cost and sales data to the
Department. In addition, Milliken
[[Page 55963]]
indicates that Khaled submitted new sales and cost data relevant to the
current POR in its supplemental questionnaire response. Milliken argues
that this new data should be rejected because it was not properly filed
with the Department or served to Milliken, thus depriving Milliken of
its opportunity to comment on the submission and check the accuracy of
the data submitted. Milliken asserts that, because Khaled did not
submit reliable POR data, the Department must rely on facts available
and should use the rate established for Khaled in the most recently
completed administrative review.
Department's Position: For these final results, the Department
analyzed the 1994-95 sales and cost data Khaled submitted on April 18,
1996, in response to the Department's supplemental questionnaire.
Khaled's data was submitted within the time limits set by the
Department for submission of supplemental information and prior to the
Department's issuance of its preliminary results.
In the interest of fairness to the parties and calculating dumping
margins as accurately as possible, it is appropriate for the Department
to accept and analyze the data rather than to use the 1993-94 data. In
fact, Khaled attempted to submit a questionnaire response containing
data for the 1994-95 POR in August 1995, but did not submit it
properly. Thus, the Department did not accept it. However,
subsequently, on April 18, 1996, Khaled did submit properly the 1994-95
data to the Department for this 1994-95 administrative review.
Milliken does not explain the basis for its allegations that
Khaled's April 18, 1996 submission was improperly served on Milliken
and improperly filed with the Department. Furthermore, the Department
has no record evidence demonstrating that Khaled's submission was
improperly served or filed. Moreover, Khaled submitted to the
Department a certificate indicating that it served its response on all
of the interested parties. Therefore, the Department has not deemed the
April 18, 1996 submission to have been improperly served or filed.
Because the information was timely filed and because Milliken has not
provided adequate reasons for rejecting the 1994-95 data, the
Department has accepted the April 18, 1996 submission for the final
results.
Comment 13: Milliken contends that Sonar failed to properly serve
its questionnaire response on Milliken. In addition, Milliken argues
that Sonar's reported CV data cannot be reconciled with its financial
statements. Milliken argues that there are numerous problems with
Sonar's supplemental questionnaire response. Milliken states, for
instance, that there were discrepancies between Sonar's CV worksheet
and its audited CV of Shop Towels statement with regard to cost
categories or amounts. In addition, Milliken asserts that Sonar failed
to adequately explain in its supplemental questionnaire response why
these statements do not reconcile. Also, Milliken contends that Sonar
does not provide enough cost and other information associated with its
contractual agreement with a certain export company. For these reasons,
Milliken argues that Sonar failed to provide a complete and accurate
response and therefore the Department should assign to Sonar the same
margin established for the company in the prior administrative review.
In addition, Milliken states that the Department incorrectly
adjusted Sonar's reported CV costs to reflect only subject merchandise.
Thus, if the Department accepts Sonar's response, Milliken argues that
the Department should modify the adjustment to Sonar's CV costs by
correcting the errors it alleges the Department made in adjusting
Sonar's CV for the preliminary results.
Department's Position: Milliken indicated for the first time in May
1996 that it was not properly served with Sonar's questionnaire
response and that the alleged improper service should be a basis on
which the Department should disregard its calculation of the dumping
margin. Milliken's notification of alleged improper service was more
than six months after the deadline passed for respondent to submit its
response. The burden rested on Milliken to inform the Department of
improper service at or around the time the responses were due to the
Department, as the Department has no other way to become aware of an
alleged improper service. Indeed, the questionnaire response submitted
by Sonar included a certificate of service which indicated to the
Department that it had been properly served. Even if Milliken had, on a
timely basis, succeeded in establishing on the record that it had, in
fact, been improperly served, the Department would not have been
precluded from accepting the submission at issue. See Color Television
Receivers, Except for Video Monitors, From Taiwan; Final Results of
Antidumping Duty Administrative Review; 56 FR 31378 (July 10, 1991)
(wherein petitioners argued that they were improperly served comments
by respondents; the Department accepted the comments, and, noting that
they had been filed with the Department on a timely basis, permitted
petitioner, which had notified the Department in a timely manner of the
improper service, to have extra time to file its comments). Therefore,
because the record indicates that Sonar's questionnaire response was
served properly on Milliken and because Milliken did not inform the
Department in a timely manner of the alleged defective service, we have
relied upon the record and have concluded that Sonar's questionnaire
response was, in fact, served on Milliken properly and timely.
Regarding Milliken's contention that the CV worksheet reported in
Sonar's response does not reconcile with the CV statement submitted
with the audited financial statements in the company's original
response, in a supplemental questionnaire prior to issuance of the
preliminary results, we asked Sonar to explain certain inconsistencies.
In our supplemental questionnaire, consistent with section 782 of the
Act, we requested that Sonar clarify and correct certain deficiencies
in its original response. Pursuant to this request, Sonar submitted, in
a timely manner, further information concerning most of the
deficiencies in the original questionnaire response.
We indicated in our preliminary results that we were unable to
incorporate Sonar's supplemental response into the calculations for the
preliminary results because of the statutory due date. Therefore, in
our preliminary results, while the company originally calculated CV
using a factor representative of all merchandise produced and exported,
we adjusted the CV worksheet to reflect, as closely as we could
determine, the sales of subject merchandise. These adjustments are the
concern of Milliken's comments.
Since issuance of the preliminary results, we have examined Sonar's
supplemental response. Sonar indicated in the supplemental response
that the expenses it reported in its original CV worksheet pertain
solely to subject merchandise. Sonar also indicated in its supplemental
questionnaire response that the reported audited financial statements
are not limited to subject merchandise, since the company's revenues
are derived from sales of kitchen towels and dish towels in addition to
shop towels. Therefore, certain items in both the company's CV
worksheet and audited financial statements do not match since the
company's financial statements also reflect, in addition to the sale of
subject merchandise, the sale of other merchandise.
[[Page 55964]]
While we are satisfied that the majority of Sonar's response
reflects accurately sales of subject merchandise as well as the costs
incurred to produce that merchandise, we have found a discrepancy in
Sonar's response regarding its reported material costs for producing
subject merchandise which it did not explain or clarify in the
supplemental response, even though we requested clarification. More
specifically, we have identified that Sonar's reported materials costs,
a component of CV, is highly inconsistent with its other cost data. As
a consequence, we are not confident that we can rely upon Sonar's
reported material costs for producing the subject merchandise in
determining the final results. Therefore, pursuant to 782(d)(1) of the
Act we are disregarding Sonar's reported material costs because Sonar
did not adequately explain its cost of materials figure. Accordingly,
pursuant to section 776(a) of the Act we are using the facts available
to assign the amount for materials cost in our calculation of CV. We
are not making an adverse inference in determining these costs pursuant
to 776(b) of the Act because we have determined that Sonar acted to the
best of its ability to comply with requests for information in this
proceeding. As facts available for calculating Sonar's cost of
materials for the POR, we used the average cost of materials per
kilogram that the four other participating respondents reported in
their responses as part of their calculation of CV. In the Final
Determination of Sales at Less Than Fair Value: Canned Pineapple From
Thailand, 60 FR 29553, 29559-62 (June 5, 1995) (Pineapple), we used an
average of proprietary cost figures of three respondents in assigning
facts available for one company. As in Pineapple, we find that adequate
safeguards to protect the confidentiality of the data are present. In
Pineapple we used certain proprietary data from three respondents such
that no one respondent's proprietary data was vulnerable to disclosure
(see also Final Results of Antidumping Finding Administrative Review:
Elemental Sulphur from Canada, 61 FR 8239 (March 4, 1996)). In this
case we are using proprietary data from four respondents, which
adequately protects each respondent's proprietary data.
Also, in reviewing the supplemental response, we determined that
Sonar had not adjusted its expenses to reflect the production quantity
of subject merchandise in the CV worksheet. Based on information on the
record, for the final results we have adjusted Sonar's expenses
accordingly.
The Department has determined in accordance with section 782(e) of
the Act that it is appropriate to consider all of Sonar's other cost
data submitted for the record. Section 782(e) of the Act directs the
Department to consider all information submitted by an interested
party, even if it does not meet all of the applicable requirements
established by the Department if: (1) The information is submitted by
the deadline established for its submission; (2) the information can be
verified; (3) the information is not so incomplete that it cannot serve
as a reliable basis for reaching the applicable determination; (4) the
interested party has demonstrated that it acted to the best of its
ability in providing the information and meeting the requirements
established by the Department with respect to the information; and (5)
the information can be used without undue difficulties. Therefore,
except with regard to Sonar's reported materials costs and the
production quantity of subject merchandise, we have accepted Sonar's CV
information for these final results.
With respect to Milliken's concern over Sonar's reported earnings
pertaining to other export contract jobs, there is no evidence on the
record to demonstrate that the earnings reported are specifically
related to the sale of subject merchandise. In its questionnaire
response, Sonar refers to a certain export company, in addition to
another exporter, as an example of other export contract jobs that
Sonar maintains with companies. However, there is no indication on the
record to support a finding that Sonar earned revenue from its
contracts with these specific exporters. In addition, in its
supplemental questionnaire response, Sonar indicated that it has not
generated revenue from its contract with the specified exporter.
Therefore, because there is no evidence on the record to indicate that
the revenue reported in Sonar's financial statements from export
contract jobs relates to the sales of subject merchandise and because
Sonar has stated that it incurred expenses associated with, rather than
revenue from, the export contract job with the specified exporter, we
have not made an adjustment in the final margin calculation with
respect to any revenue that may have been generated from Sonar's
contract with that exporter.
Comment 14: Milliken contends that the Department, after assigning
facts available to Sonar, should assign that rate to a certain exporter
not currently involved in this review. Milliken states that the record
developed in this administrative review demonstrates that, in the
production of shop towels, Sonar used materials supplied by this
exporter and that Sonar produced subject merchandise for that same
exporter. Milliken also asserts that it suspects that the specified
exporter has shipped subject merchandise to the United States during
the POR. Milliken states that the Department should, in accordance with
its policy on establishing rates for new shippers, assign to the
specified exporter Sonar's antidumping duty rate.
Department's Position: We disagree with Milliken. Sonar stated in
its supplemental questionnaire response that it did not sell any
merchandise to the specified company. Sonar also indicated that it only
manufactures final products with the use of inputs supplied by this
specified company and charges the company for its cost of manufacture.
There is nothing on the record to indicate that Sonar sells subject
merchandise to or for the specified company.
Comment 15: Milliken asserts that, in its supplemental
questionnaire response, Shabnam apparently revised its reported exports
of shop towels during the POR by deleting two export sales within the
POR. Milliken states that it is not clear from the record whether these
sales should be counted as period sales. Milliken contends that the
Department must determine in which period these sales were made.
Milliken states that if the Department cannot discern in which period
these sales occurred then it should reject Shabnam's revision and treat
the two deleted export sales as period sales.
Department's Position: In its supplemental questionnaire response,
Shabnam indicated that, in its original sales listing (Statement of
Shipment), it reported sales that were not made during the POR and,
therefore, revised its sales listing by excluding the sales that were
not made during the POR. For the final results, we analyzed one of the
sales that Shabnam excluded in its revised sales listing. Of the two
sales it excluded from its supplemental questionnaire response, we
found that one of the two sales was shipped before the POR. We found
that the second sale was shipped during the POR. Since the sales
reported are export price sales, we use the shipment date to determine
whether the sales reported should be included in our analysis.
Therefore, we have included in our final margin calculation the sale
that was shipped during the POR and have excluded from the final margin
calculation the sale that was shipped outside the POR.
[[Page 55965]]
Comment 16: Milliken indicates that, in its supplemental
questionnaire response, Shabnam reported an amount for interest expense
on its balancing, modernization, replacement, and evaluation (BMRE)
loan, and that Shabnam stated that the loan amount was lower than the
amount originally reported in its questionnaire response. Milliken
argues that the Department should continue to use the higher interest
rate calculated for the BMRE loan in its final margin calculation
because it claims that the lower rate listed in Shabnam's supplemental
questionnaire response is not consistent with the amount of interest
expense it reported.
Department's Position: As explained in the preliminary results, we
were not able to incorporate information provided in respondents'
supplemental questionnaire responses for the preliminary results.
Therefore, we used an interest rate based on the facts available to
calculate Shabnam's interest expense. In our preliminary results, we
stated that we would incorporate the information reported in
respondents' supplemental questionnaire responses into our final margin
calculations. Shabnam indicated in its supplemental questionnaire
response the interest rate applicable to the amount borrowed from the
BMRE loan. Since Milliken has not provided an adequate explanation as
to why we should reject the use of Shabnam's reported interest rate on
its BMRE loan, absent verification there is no reason to question the
interest rate reported in Shabnam's supplemental questionnaire
response. For the final results, we have, therefore, modified the
interest expense calculation to take into account the interest rate
reported in Shabnam's supplemental questionnaire response.
Comment 17: Milliken states that, in its supplemental questionnaire
response, Shabnam indicated that it incurred an expense to build a
factory shed in order to upgrade its shop towel production facility.
Milliken argues that, while Shabnam indicates that the construction of
the factory shed is ``currently halted,'' it does not indicate whether
the shed sat idle during the POR. Milliken contends that, given the
type of manufacturing methods employed by Shabnam, it is unlikely that
the factory shed is not being used in the production of subject
merchandise. Milliken argues that the Department should therefore treat
the shed as part of the company's plant and equipment used in the
manufacture of subject merchandise and include an amount for
depreciation expenses in Shabnam's cost of production.
Department's Position: In its supplemental questionnaire response,
Shabnam stated that construction of the factory shed is still in
progress and therefore is incomplete. Further, even though the
construction of the shed is currently halted, there is no evidence on
the record to indicate that this partly finished factory shed is usable
for production purposes. In addition, there is no evidence on the
record to indicate that Shabnam did not already include an amount for
depreciation expense for the partly finished factory shed. Given the
lack of evidence to support Milliken's claim, there is nothing on the
record to warrant an adjustment to Shabnam's depreciation expense in
the calculation of COP to account for the partly finished factory shed.
Final Results of Review
We determine the following percentage weighted-average margins
exist for the period March 1, 1994, through February 28, 1995:
------------------------------------------------------------------------
Margin
Manufacturer/Exporter (Percent)
------------------------------------------------------------------------
Eagle Star Mills Ltd....................................... 42.31
Greyfab (Bangladesh) Ltd................................... 0.70
Hashem International....................................... 0.00
Khaled Textile Mills Ltd................................... 0.00
Shabnam Textiles........................................... 0.00
Sonar Cotton Mills (Bangladesh) Ltd........................ 27.31
------------------------------------------------------------------------
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between the export price and normal value may vary from the
percentages stated above. The Department will issue appraisement
instructions on each exporter directly to the Customs Service.
Furthermore, the following deposit requirements will be effective
for all shipments of the subject merchandise entered, or withdrawn from
warehouse, for consumption on or after the publication date of these
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed
companies will be those rates established above (unless the rate for a
firm is de minimis, i.e., less than 0.5 percent, in which case a cash
deposit of zero will be required for that firm); (2) for previously
reviewed or investigated companies not listed above, the cash deposit
rate will continue to be the company-specific rate published for the
most recent period; (3) if the exporter is not a firm covered in this
review, a prior review, or the original LTFV investigation, but the
manufacturer is, the cash deposit rate will be the rate established for
the most recent period for the manufacturer of the merchandise; and (4)
if neither the exporter nor the manufacturer is a firm covered in this
or any previous review or the original investigation, the cash deposit
rate will be 4.60 percent, the ``All Others'' rate established in the
LTFV Final Determination (57 FR 3996).
These deposit requirements shall remain in effect until publication
of the final results of the next administrative review.
This notice also serves as a final reminder to importers of their
responsibility under 19 CFR 353.26 to file a certificate regarding the
reimbursement of antidumping duties prior to liquidation of the
relevant entries during this review period. 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 notice also serves as a reminder to parties subject to
administrative protective orders (APOs) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d)(1). Timely written notification
of the return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and the terms of an APO is a sanctionable violation.
This administrative review and notice are in accordance with
section 751(a)(1) of the Tariff Act (19 U.S.C. 1675(a)(1)) and 19 CFR
353.22.
Dated: October 23, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-27859 Filed 10-29-96; 8:45 am]
BILLING CODE 3510-DS-P