[Federal Register Volume 61, Number 211 (Wednesday, October 30, 1996)]
[Notices]
[Pages 55957-55965]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27859]


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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