Shop Towels From Bangladesh; Final Results of Antidumping Duty Administrative Review

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