[Federal Register Volume 61, Number 187 (Wednesday, September 25, 1996)]
[Notices]
[Pages 50273-50276]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-24605]
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DEPARTMENT OF COMMERCE
[C-535-001]
Cotton Shop Towels from Pakistan; Preliminary Results of
Countervailing Duty Administrative Reviews
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of countervailing duty
administrative reviews.
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SUMMARY: The Department of Commerce (the Department) is conducting
administrative reviews of the countervailing duty order on cotton shop
towels from Pakistan. For administrative convenience, the Department is
combining the reviews covering the periods January 1, 1992 through
December 31, 1992 (1992) and January 1, 1993 through December 31, 1993
(1993). We preliminarily determine the net subsidy to be 7.81 percent
ad valorem for all companies for 1992. For 1993, we preliminarily
determine the net subsidy to be 11.50 percent ad valorem for Eastern
Textiles (Eastern), 11.54 percent ad valorem for Creation (Pvt.), Ltd.
(Creation), and 5.02 percent ad valorem for all other companies. If the
final results remain the same as these preliminary results of
administrative reviews, we will instruct the U.S. Customs Service to
assess countervailing duties as indicated above. Interested parties are
invited to comment on these preliminary results.
EFFECTIVE DATE: September 25, 1996.
FOR FURTHER INFORMATION CONTACT: Anne D'Alauro or Lorenza Olivas,
Import Administration, International Trade Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue, N.W.,
Washington, D.C. 20230; telephone: (202) 482-2786.
SUPPLEMENTARY INFORMATION:
Background
On March 9, 1984, the Department published in the Federal Register
(49 FR 8974) the countervailing duty order on cotton shop towels from
Pakistan. On March 12, 1993, the Department published a notice of
``Opportunity to Request Administrative Review'' (58 FR 13583) of this
countervailing duty order for 1992. We received a timely request for
review from Milliken & Company (Milliken), a U.S. producer of the
subject merchandise and the petitioner in the original investigation.
For 1993, the notice of ``Opportunity to Request Administrative
Review'' was published on March 4, 1994 (59 FR 10368). Milliken, as
well as the Government of Pakistan, the Towel Manufacturers Association
of Pakistan and exporters of shop towels from Pakistan requested a
review for this period. We initiated the 1992 and 1993 reviews on May
6, 1993 (58 FR 26960) and April 15, 1994 (59 FR 18099), respectively.
The 1992 review covers 17 manufacturers/exporters of the subject
merchandise. The 1993 review covers 20 manufacturers/exporters. The
reviewed exporters account for virtually all exports of the subject
merchandise. Both reviews cover five programs.
Applicable Statute and Regulations
The Department is conducting these administrative reviews in
accordance with section 751(a) of the Tariff Act of 1930, as amended
(the Act). Unless otherwise indicated, all citations to the statute and
to the Department's regulations are in reference to the provisions as
they existed on December 31, 1994. However, references to the
Department's Countervailing Duties; Notice of Proposed Rulemaking and
Request for Public Comments (54 FR 23366; May 31, 1989) (Proposed
Regulations), are provided solely for further explanation of the
Department's countervailing duty practice. Although the Department has
withdrawn the particular rulemaking proceeding pursuant to which the
Proposed Regulations were issued, the subject matter of these
regulations is being considered in connection with an ongoing
rulemaking proceeding which, among other things, is intended to conform
the Department's regulations to the Uruguay Round Agreements Act. See
60 FR 80 (Jan. 3, 1995).
Scope of the Review
The subject merchandise is cotton shop towels from Pakistan. During
the review periods, this merchandise was classifiable under item number
[[Page 50274]]
6307.10.20 of the Harmonized Tariff Schedule (HTS). The HTS item number
is provided for convenience and Customs purposes. The written
description remains dispositive.
Best Information Available (BIA) for Creation
Section 776(c) of the Act requires the Department to use BIA
``whenever a party or any other person refuses or is unable to produce
information requested in a timely manner and in the form required, or
otherwise significantly impedes an investigation.'' See also 19 CFR
section 355.37.
In determining what rate to use as BIA, the Department follows a
two-tiered methodology. The Department assigns lower BIA rates to those
respondents who cooperated in an administrative review (tier two) and
rates based on more adverse assumptions to respondents who did not
cooperate, or significantly impeded the proceeding (tier one). See
Allied Signal Aerospace Co. v. United States, 996 F. 2d 1185 (Fed. Cir.
1993), aff'd, 28 F. 3d 1188, cert. denied, 1995 U.S. Lexis 100 (1995).
Creation, an exporter during 1993, did not respond to the Department's
initial or two supplemental questionnaires. However, the Government of
Pakistan provided information regarding Creation's volume and value of
exports during the 1993 administrative review period and regarding
Creation's non-use of certain programs during that review period. For
these preliminary results, we have utilized the information provided by
the Government of Pakistan to the extent that it permitted us to
calculate a program-specific rate for Creation. See Certain Steel
Products from Italy; Final Affirmative Countervailing Duty
Determinations (58 FR 37327, 37329; July 9, 1993). In the case of two
programs, this information was inadequate and, in accordance with
section 776 of the Act, we assigned to Creation a tier-one BIA rate for
those programs for 1993. This tier one BIA rate is the highest
individual rate found, either in the investigation or in a subsequent
administrative review, for these programs.
Most companies did not provide information regarding the benefits
earned under the Income Tax Reduction Program. For these companies, we
used tier one BIA for this program in both reviews. Eight others
attempted to cooperate but provided inadequate information as to the
benefit earned under this program during 1993. For these companies, we
used tier two BIA.
Calculation Methodology for Assessment and Cash Deposit Purposes
In accordance with Ceramica Regiomontana, S.A. v. United States,
853 F. Supp. 431 (CIT 1994), we calculated the net subsidy on a
country-wide basis by first calculating the total subsidy rate for each
company subject to the administrative review. We then weighted the rate
received by each company using as the weight its share of total
Pakistani exports to the United States of subject merchandise,
including all companies, even those with de minimis and zero rates. We
then summed the individual companies' weighted rates to determine the
country-wide, weighted-average subsidy rate from all programs
benefitting exports of subject merchandise to the United States.
Since the country-wide rate calculated using this methodology was
above de minimis, as defined by 19 CFR 355.7 (1994), for each review
period, we examined the net subsidy rate calculated for each company to
determine whether individual company rates differed significantly from
the weighted-average country-wide rate, pursuant to 19 CFR
355.22(d)(3). None of the companies had net subsidy rates which were
significantly different during the 1992 review period pursuant to 19
CFR 355.22(d)(3). Therefore, all companies are assigned the country-
wide rate in 1992. In 1993, Eastern had a significantly different rate.
Based on BIA, Creation also had a significantly different rate. These
companies are treated separately for assessment and cash deposit
purposes. All other companies are assigned the country-wide rate.
Analysis of Programs
I. Programs Previously Determined to Confer Bounties or Grants
A. Export Financing
The Export Finance Scheme (EFS), which is administered by the State
Bank of Pakistan, grants short-term loans at below-market interest
rates to exporters. The EFS has two parts. Under Part I, exporters may
obtain financing on irrevocable letters of credit or firm export
orders. Under Part II, exporters may obtain financing in the form of a
credit line based upon the value of the previous year's eligible
exports. The Department found this program countervailable in the
investigation (see Cotton Shop Towels from Pakistan: Final Affirmative
Countervailing Duty Determination (49 FR 1408; January 11, 1984))
(investigation) and in all subsequent reviews in accordance with
section 771(5) of the Act because receipt of this benefit was based
solely on export performance and the interest rates were preferential.
There has been no new information or evidence of changed circumstances
in these reviews to warrant reconsideration of this program's
countervailability.
During the review periods, shop towel exporters made interest
payments on loans obtained under Part I of the EFS. The interest rates
ranged between 7 percent and 11 percent. Loan terms require payment
within a maximum of 150 days. As our benchmark, we used the national
average commercial rates for short-term credit which was reported by
the Government of Pakistan. These rates were 14.5 percent applicable in
1991, 14 percent in 1992, and 15.5 percent in 1993.
To calculate the benefit, we took the difference between the actual
interest paid and the interest that would have been paid if the loans
had been obtained at commercial rates. See Final Affirmative
Countervailing Duty Determination: Certain Carbon Steel Butt-Welded
Pipe Fittings From India (60 FR 10564; February 27, 1995). For loans
obtained under Part I of the EFS, the financing reported was specific
to shipments made to the United States. We received no information
indicating that loans were received under Part II. For this reason,
where we could not determine if loans were obtained under Part I or
Part II, we assumed that they were obtained under Part I and were
specifically benefitting subject merchandise exports to the United
States. Therefore, we divided the benefit derived from Part I loans by
total exports of subject merchandise to the United States. On this
basis, we preliminarily determine the net subsidy from this program for
1992 to be 0.72 percent ad valorem for all manufacturers and exporters
in Pakistan of shop towels. For 1993, we preliminarily determine the
net subsidy from this program to be 0.49 percent ad valorem for all
manufacturers and exporters in Pakistan of shop towels, except for
Eastern, who has a significantly different subsidy rate. The rate for
Eastern is 6.31 percent ad valorem. As BIA, we assigned to Creation the
rate determined for Eastern in the 1993 review, because it is the
highest rate calculated for any company that used this program in any
administrative review.
B. Excise Tax, Sales Tax and Customs Duty Rebate Programs
The Central Bureau of Revenue administers the rebate of excise
taxes, sales taxes and customs duties on both
[[Page 50275]]
domestic and imported inputs used in exported products. The excise tax
rebate applicable to cotton shop towels during the review periods was
6.0 percent from January 1, 1992 through September 27, 1992, 4.72
percent from September 28, 1992 through July 13, 1993, and 1.79 percent
from July 14, 1993 through December 31, 1993. This rebate is calculated
on the basis of the f.o.b. value of exports. There was no rebate of
sales taxes or customs duties in either review period.
In the investigation and subsequent reviews, we found the program
countervailable because the Government of Pakistan failed to establish
the requisite linkage and comparison between taxes paid and rebates
provided. In this review, the Government of Pakistan did not provide
new information to establish the required linkage. Therefore, we
preliminarily determine that the Government of Pakistan pays these
rebates without regard to specific taxes incurred in the production of
shop towels and that the full amount of the rebate is countervailable
because the rebate is contingent upon export performance. See
Preliminary Results of Countervailing Duty Administrative Review:
Cotton Shop Towels from Pakistan (58 FR 32104; June 8, 1993) and Final
Results of Countervailing Duty Administrative Review: Cotton Shop
Towels from Pakistan (58 FR 48038; September 14, 1993).
These cash rebates are earned on a sale-by-sale basis, and a firm
can precisely calculate the amount of rebate it will receive for each
export sale at the moment the sale is made. Because the amount of these
rebates is known at the time of export, we calculate the benefit from
this rebate program on an ``as-earned'' basis for all exporters,
including Creation. To calculate the benefit, we separately weight-
averaged the rates applicable to cotton shop towel exports during the
1992 and 1993 review periods. On this basis, we preliminarily determine
the net subsidy from these programs to be 5.67 percent ad valorem for
all manufacturers and exporters in Pakistan of shop towels during 1992.
For 1993, we preliminarily determine the net subsidy from these
programs to be 3.35 percent ad valorem for all manufacturers and
exporters in Pakistan of shop towels, including Creation.
C. Income Tax Reductions
Before July 1992, the Government of Pakistan provided firms with a
maximum 50-percent reduction of their income taxes on income generated
from exports. The percentage of the reduction depended on the size of
the company and the form of business ownership. In case of a loss
(i.e., where there was no tax liability), the export income tax credit
could be carried forward to the following year as an offset against
income. In accordance with section 771(5) of the Act, the Department
found this program countervailable in the investigation and all
subsequent reviews because receipt of this benefit was contingent upon
export performance. There has been no information provided in this
review to warrant reconsideration of this program's countervailability.
This program was modified in 1992. Effective July 1, 1992, the
Finance Act 1992, under section 80cc of the Income Tax Ordinance,
required the commercial banks to withhold the income tax at source from
all foreign exchange proceeds. The amount withheld becomes the
company's final tax liability irrespective of whether or not the
company is profitable. Eligible exporters continued to receive a tax
reduction rate on export earnings. For shop towel exporters, the
reduction was 0.50 percent of total export earnings.
To calculate the benefit to each company, we subtracted the total
amount of income tax the company actually paid during the review period
from the amount of tax the company would have paid during the review
period had it not claimed any reductions under the Income Tax Reduction
Program. We then divided this difference by the value of the company's
total exports. See Preliminary Results of Countervailing Duty
Administrative Review; Certain Iron Metal Castings From India (61 FR
25623; May 22, 1996). For those companies which did not provide
information regarding the benefits earned from these claimed reductions
in one or both reviews, we assumed that they received benefits from
this program, and assigned, as BIA, a rate of 1.88 percent, the highest
rate found, either in the investigation or in a subsequent
administrative review, for this program. We are using the highest rate
found under this program because respondents failed to provide needed
information even after the Department's repeated requests for the
information from the shop towel exporters. In those instances where an
exporter cooperated by attempting to provide data, but failed to
provide adequate information on which to calculate accurately the
benefit during 1993, we relied on company-specific information provided
in the 1992 review for tier two BIA.
On this basis, we preliminarily determine the net subsidy from this
program to be 1.42 percent ad valorem for all manufacturers and
exporters in shop towels from Pakistan during 1992. For 1993, we
preliminarily determine the net subsidy from this program to be 1.19
percent ad valorem for all manufacturers and exporters in Pakistan of
shop towels, except for Eastern Textiles and Creation, who had
significantly different overall subsidy rates. For Eastern, we
calculated the benefit to be 1.84 ad valorem. For Creation, we assigned
a tier one BIA rate of 1.88 percent ad valorem because it is the
highest rate calculated for any company that used this program in any
administrative review.
II. Other Programs
We examined the following programs and preliminarily determine that
exporters of cotton shop towels did not apply for or receive benefits
under them during the review periods:
Import Duty Rebates
Export Credit Insurance
Preliminary Results of Reviews
For 1992, we preliminarily determine the net subsidy to be 7.81
percent ad valorem for all companies. For 1993, we preliminarily
determine the net subsidy to be 11.50 percent ad valorem for Eastern,
11.54 percent ad valorem for Creation and 5.02 percent ad valorem for
all other companies.
If the final results of these reviews remain the same as these
preliminary results, the Department intends to instruct the U.S.
Customs Service to assess countervailing duties of 7.81 percent ad
valorem for all shipments of the subject merchandise exported from
Pakistan on or after January 1, 1992 and on or before December 31,
1992. For all shipments of the subject merchandise exported from
Pakistan on or after January 1, 1993 and on or before December 31,
1993, the Department intends to instruct the U.S. Customs Service to
assess countervailing duties of 11.50 percent ad valorem for all
shipments of the subject merchandise from Eastern, 11.54 percent ad
valorem for all shipments of the subject merchandise from Creation and
5.02 percent ad valorem from all others.
The Department also intends to instruct the U.S. Customs Service to
collect a cash deposit of estimated countervailing duties of 11.50
percent of the f.o.b. invoice price on all shipments of this
merchandise from Eastern, 11.54 percent of the f.o.b. invoice price on
all shipments of this merchandise from Creation, and 5.02 percent of
the f.o.b. invoice price from all others on all shipments of this
merchandise entered, or withdrawn from warehouse, for
[[Page 50276]]
consumption on or after the date of publication of the final results of
these reviews.
Parties to the proceeding may request disclosure of the calculation
methodology and interested parties may request a hearing not later than
10 days after the date of publication of this notice. Interested
parties may submit written arguments in case briefs on these
preliminary results within 30 days of the date of publication. Rebuttal
briefs, limited to arguments raised in case briefs, may be submitted
seven days after the time limit for filing the case brief. Parties who
submit written arguments in this proceeding are requested to submit
with the argument (1) a statement of the issue and (2) a brief summary
of the argument. Any hearing, if requested, will be held seven days
after the scheduled date for submission of rebuttal briefs. Copies of
case briefs and rebuttal briefs must be served on interested parties in
accordance with 19 CFR 355.38(e).
Representatives of parties to the proceedings may request
disclosure of proprietary information under administrative protective
order no later than 10 days after the representative's client or
employer becomes a party to the proceedings, but in no event later than
the date the case briefs are due. The Department will publish the final
results of these administrative reviews, including the results of its
analysis of issues raised in any case or rebuttal brief or at a
hearing.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 CFR 355.22.
Dated: September 16, 1996.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 96-24605 Filed 9-24-96; 8:45 am]
BILLING CODE 3510-DS-P