[Federal Register Volume 62, Number 25 (Thursday, February 6, 1997)]
[Notices]
[Pages 5613-5619]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3005]
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DEPARTMENT OF COMMERCE
[A-357-804]
Notice of Final Results of the 1992/93 Antidumping Duty
Administrative Review: Silicon Metal From Argentina
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
SUMMARY: In response to timely requests from the respondents,
Electrometalurgica Andina S.A.I.C. (Andina) and Silarsa S.A. (Silarsa),
and the petitioners,1 the Department of Commerce has conducted an
administrative review of the antidumping duty order on silicon metal
from Argentina. The review covers merchandise exported to the United
States by these two respondents during the review period of September
1, 1992 through August 31, 1993.
\1\ American Alloys Inc., American Silicon Technologies, ELKEM
Metals Company, Globe Metallurgical Inc., and SKW Metals & Alloys
Inc.
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EFFECTIVE DATE: February 6, 1997.
FOR FURTHER INFORMATION CONTACT: Michelle Frederick, Magd Zalok, or
Howard Smith, Office of AD/CVD Enforcement II, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Ave., NW., Washington, DC 20230; telephone:
(202) 482-0186, (202) 482-4162, or (202) 482-3530, respectively.
SUPPLEMENTARY INFORMATION:
Case History
On July 25, 1996, the Department of Commerce (the Department)
published in the Federal Register the preliminary results of this
administrative review. See Notice of Preliminary Results of the 1992/93
Antidumping Duty Administrative Review: Silicon Metal from Argentina,
61 FR 38711 (July 25, 1996) (Preliminary Results). On August 26, 1996,
the Department received briefs from Andina and the petitioners. On
September 3, 1996, the Department received rebuttal briefs from Andina,
the petitioners, and Hunter Douglas, an importer of the subject
merchandise. On September 10, 1996, the petitioners withdrew their
request for a hearing. The Department held ex-parte meetings with the
petitioners' counsel and counsel for Hunter Douglas on September 11 and
13, 1996, respectively (see Ex-Parte Memoranda From the Team to the
File dated September 11 and 13, 1996). The Department has now completed
this administrative review in accordance with section 751 of the Tariff
Act of 1930, as amended (the Act).
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are references to the provisions as they
existed on December 31, 1994.
Scope of Review
The product covered by this review is silicon metal. During the
less-than-fair-value (LTFV) investigation, silicon metal was described
as containing at least 96.00 percent, but less than 99.99 percent,
silicon by weight. In response to a request by the petitioners for
clarification of the scope of the antidumping duty order on silicon
metal from the People's Republic of China (PRC), the Department
determined that material with a higher aluminum content containing
between 89 and 96 percent silicon by weight is the same class or kind
of merchandise as silicon metal described in the LTFV investigation
(see Final Scope Rulings--Antidumping Duty Orders on Silicon Metal From
the People's Republic of China, Brazil, and Argentina (February 3,
1993)). Therefore, such material is within the scope of the orders on
silicon metal from the PRC, Brazil, and Argentina. Silicon metal is
currently provided for under subheadings 2804.69.10 and 2804.69.50 of
the Harmonized Tariff Schedule (HTS) and is commonly referred to as a
metal. Semiconductor-grade silicon (silicon metal containing by weight
not less than 99.99 percent of silicon and provided for in subheading
2804.61.00 of the HTS) is not subject to this review. The HTS
subheadings are provided for convenience and U.S. Customs purposes
only. Our written description of the scope of the proceeding is
dispositive.
Best Information Available
As explained in the preliminary results, Silarsa failed to respond
to the Department's questionnaire in this review. Therefore, we have
determined that the use of best information available (BIA) is
appropriate for Silarsa in accordance with section 776(c) of the Act.
For discussion of the Department's rationale for assigning a non-
cooperative respondent a dumping margin based on BIA, see Preliminary
Results. In this review, we have assigned Silarsa, as BIA, a margin of
24.62 percent, the rate assigned to Silarsa in the Amendment to Final
Results of Antidumping Administrative Review (1991/92): Silicon Metal
from Argentina, 59 FR 1617 (April 6, 1994), which is the highest rate
for any company from any prior segment of the proceeding.
[[Page 5614]]
Fair Value Comparisons
To determine whether Andina's sales of silicon metal from Argentina
to the United States were made at less than fair value, we compared the
United States price (USP) to the foreign market value (FMV), as
specified in the ``United States Price'' and ``Foreign Market Value''
sections of this notice.
United States Price
We calculated the USP based on the same methodology described in
our preliminary results.
Foreign Market Value
Except as noted below, the methodology and calculations we used to
arrive at the FMV for the final results are the same as those used in
the preliminary results of this review. Because all home market sales
were made at prices below their cost of production, we continued to use
Andina's constructed value (CV) as the basis for the FMV as defined in
section 773(e) of the Act. For a discussion of the Department's sales
below cost test, and calculation of the cost of production (COP) and
CV, see Preliminary Results.
For purposes of the final results of this review, we revised the
COP and CV calculated for Andina in the preliminary results as follows:
1. For COP and CV, we included the depreciation expense related to
idle furnaces. See Comment 1 in the ``Interested Party Comments''
section below.
2. We used the cost incurred by Andina's subsidiary to produce
woodchips for purposes of COP. See Comment 6 in the ``Interested Party
Comments'' section below.
3. For home market credit expense, we used the highest short-term
interest rate for peso-denominated short-term loans reported by Andina
in its May 24, 1994 submission. See Comment 11 in the ``Interested
Party Comments'' section below.
Interested Party Comments
We gave interested parties an opportunity to comment on the
preliminary results. We received comments from the petitioners, Andina,
and Hunter Douglas.
Comment 1: Depreciation of Idle Equipment
The petitioners argue that the Department should reject Andina's
reported depreciation expense for idle furnace IV because the expense
was allocated over the wrong product base, i.e., all products.
Specifically, the petitioners contend that the depreciation expense for
this furnace should have been attributed in total to silicon metal
production because that is how the expense was treated in the first
administrative review of this order. They further contend that not only
does Andina's normal accounting methodology treat the depreciation
expense of the idle furnace as a cost of producing silicon metal (and,
therefore, conclude it should be likewise for the POR), but that the
furnace has never been used to produce any other product. According to
the petitioners, the Department will not depart from a respondent's
normal accounting practice unless it is distortive. See, Final
Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit
From Thailand, 60 FR 29503, 29559 (June 5, 1995) (Pineapple from
Thailand) and Final Determination of Sales At Less Than Fair Value:
Certain Iron Construction Castings From Brazil, 51 FR 9477, 9481 (March
19, 1994) (Iron Castings from Brazil). To further support their
argument, the petitioners point to ferroalloy industry directories
which identify Andina's furnace IV as a silicon metal furnace.
Alternatively, the petitioners assert that, if the depreciation
expense is not allocated in total to silicon metal production, then it
should be allocated only to silicon metal and ferrosilicon, the two
products capable of being produced in furnace IV, as reported in the
Department's verification report of the first administrative review.
Finally, the petitioners argue that if the Department does allocate
this expense to all products Andina is capable of producing, then it
should do so only for the period of time when the furnace was
disassembled and incapable of producing any product.
Andina disagrees with the petitioners views, as does Hunter
Douglas. Andina argues that the furnace was disassembled and had not
yet been re-tooled to produce a particular product. According to
Andina, depreciation expense incurred while the furnace was
disassembled should be allocated over all products; it should be
allocated to a specific product only when the furnace is reactivated,
and producing a specific product. It acknowledges that it had
previously allocated the full expense of this furnace to silicon metal,
but asserts that was because the furnace was producing silicon metal at
that time. Andina maintains that the Department should not charge all
of the depreciation expense on idle furnace IV to the subject
merchandise because Andina was uncertain as to how the furnace would be
used in the future.
Hunter Douglas further argues that the petitioners have misapplied
the facts of Iron Castings from Brazil. First, it contends that it is
irrelevant how depreciation expense was treated in the first
administrative review--the only relevant issue is the status of the
furnace during this POR. Hunter Douglas asserts that the depreciation
expense for idle furnace IV should be treated as a general cost to
Andina because, during the period covered by this review, it was
disassembled and incapable of producing any product. Hunter Douglas
cites to the Final Determination of Sales at Less Than Fair Value: Shop
Towels from Bangladesh, 57 FR 3996, 3999 (February 3, 1992) (Shop
Towels from Bangladesh). Finally, it states that there is nothing on
the record to indicate that Andina allocated depreciation of furnace IV
entirely to silicon metal during the POR.
With respect to idle furnace III, Andina argues that the Department
should not have allocated the depreciation expense to all products, but
instead to calcium silicon, a product furnace III was being modified to
produce.
DOC Position
For purposes of this final determination, we have allocated the
depreciation expense for furnance IV to the production of silicon
metal. Although Andina asserts that furnace IV was disassembled and
incapable of producing any product during the entire POR (August 1992-
September 1993) and, therefore, should be allocated across all
products, an on-site verification conducted by the Department in July
1993 found that furnace IV was in fact being used to produce silicon
metal. (See, public File Memorandum from Maureen McPhillips, et al,
August 3, 1993, documenting the July 1993 verification of the 1991-92
administrative review period.) Accordingly, we have determined that the
depreciation related to furnance IV should be allocated to the
production of silicon metal. The comments raised by the petitioners,
with respect to Andina's normal accounting methodology for allocating
depreciation expenses related to furnace IV, and Hunter Douglas, with
respect to the analogy of idle furnace allocation in Shop Towels from
Bangladesh with Andina's allocation methodology in this review, are
moot because of the Department's verification findings.
Finally, we agree with Andina regarding furnace III. The record
indicates that furnace III was being modified to produce calcium
silicon while it was idle during 1993 and it began producing calcium
silicon in June 1993. Thus, we have determined that
[[Page 5615]]
the depreciation expense for furnace III should be charged to the
production of calcium silicon. We have amended our calculations for the
final results by not attributing any portion of depreciation expense
associated with furnace III to the cost of producing silicon metal.
Comment 2: Treatment of VAT on Inputs for CV
The petitioners argue that VAT paid on inputs used to produce
silicon metal should be included in CV in the Department's final
results. The petitioners assert that a home market tax directly
applicable to materials used in the manufacture of merchandise exported
to the United States is a cost of producing the exported merchandise
unless the tax is remitted or refunded upon exportation. They contend
that it is incumbent upon Andina to provide evidence that VAT paid on
inputs used in the production of silicon metal for exportation was
refunded, citing Timken Co. v. United States, 673 F. Supp. 495, 513
(CIT 1987). According to the petitioners, although the record shows
Andina requested reimbursement for VAT paid on inputs used to produce
exported silicon metal, a significant amount of the reimbursement
Andina requested was not received.
Andina claims that it can receive refunds for VAT paid on inputs in
three ways: (1) through an offset to the tax generated on domestic
sales; (2) through a credit used to pay other taxes; or (3) through a
cash refund upon exportation of the merchandise. Andina contends that
it did receive VAT refunds from the Argentine Government on its exports
as seen by the decrease from 1992 to 1993 in the balance of the
``government receivables on exportations'' account on its balance
sheet.
Hunter Douglas agrees with Andina and claims that Andina's method
of reporting VAT in its questionnaire response is consistent with the
way the company records the tax in its audited financial statements,
(i.e.,VAT is recorded as a receivable, not as an expense). Hunter
Douglas notes that in the preliminary results the Department confirmed
Andina's statements regarding the Argentine VAT system through
independent third-party sources.
DOC Position
We disagree with the petitioners that VAT paid on inputs used to
produce silicon metal should be included in CV. First, we corroborated
Andina's statements regarding the operation of the Argentine VAT system
through an independent source. Doing Business in Argentina (Price
Waterhouse, 1993 at 119-121). Exporters are entitled to a tax credit
for the full amount of VAT paid on inputs, if the final product is
exported. The credit may either be offset against other taxes (e.g.,
VAT on domestic sales), transferred to third parties, or reimbursed by
the Direccion General Impostiva (i.e., the Argentine tax authority).
Second, we confirmed Andina's statement that during the POR it
requested reimbursement of VAT paid on inputs used to produce exported
merchandise by examining its audited financial statements. Andina
recorded VAT payments on inputs for exported merchandise as a
receivable, not an expense. Third, we noted the decrease in Andina's
``government receivables on exportations'' account balance between 1992
and 1993 and agree that this supports Andina's claim that it receives
VAT refunds on exported merchandise. Based on the foregoing, we have
concluded that Andina is receiving credits for VAT associated with the
purchase of inputs used in the production of the subject merchandise.
Consequently, we excluded VAT from CV in the final results.
Comment 3: Import Duties on Electrodes
The petitioners claim that there is no evidence to support Andina's
claim that it included import duties on electrodes in the reported COP
and CV. Originally, Andina had reported that the cost of electrodes
consumed in the production of silicon metal by furnace V included
import duties. However, in its supplemental response, Andina reduced
the cost of the electrodes by the amount of the import duties and
reported the duties as an indirect material cost of furnace V. The
petitioners contend that the indirect material cost for furnace V
reported in the supplemental response is less than the indirect
material cost for furnace V reported in the original Section D
response. They argue that if Andina had changed its reporting
methodology as stated in its narrative, the indirect material costs
should have been greater in the supplemental response, not less.
Therefore, the petitioners contend that Andina failed to include duties
on electrodes in the indirect material cost of furnace V.
Additionally, the petitioners note that if duties on electrodes
were reported as an indirect material cost, then duties on electrodes
consumed during 1993, which were drawn from the 1993 beginning
inventory, have not been included in the reported costs. The
petitioners argue that the duties on those electrodes would have been
reported as an indirect material cost in 1992, when the electrodes were
purchased. The petitioners argue that the Department should either
determine whether Andina's reported costs include duties on imported
electrodes or include a proper amount for such duties in Andina's
reported costs.
Andina argues that import duties on electrodes are included as an
indirect material cost of furnace V. It states that it had first
included import duties on electrodes used to manufacture silicon metal
in the cost of electrodes because it had used this methodology in the
original investigation and the first review. However, it reported
import duties on electrodes in indirect materials costs of furnace V in
its supplemental responses so that the reported cost could be
reconciled with its audited financial statements. Andina contends that
the Department should not penalize it for changing its accounting
methodology when it explained how it reported the duties on electrodes.
Regarding the methodology it used to account for import duties on
electrodes drawn from beginning inventory, Andina agrees that it
inadvertently failed to report import duties on electrodes drawn from
beginning inventory and requests the Department to make the adjustment
requested by the petitioners.
DOC Position
We agree with Andina and the petitioners that import duties on
electrodes in beginning inventory were not included in the reported
costs and have corrected these final results for that omission.
The petitioners' conclusion that import duties were not included in
the indirect material costs for furnace V is wrong because they did not
compare correct costs and failed to include all indirect material costs
reported in Andina's supplemental response in their comparison.
Specifically, the petitioners incorrectly compared the operating
supplies expense and other costs for furnace V reported in Andina's
Section D response to the indirect materials expense for furnace V
reported in Andina's supplemental response. In addition, the indirect
materials expense from the supplemental should have included an amount
for the indirect materials and other costs from other cost centers
which were allocated to furnace V.
We found that the reported electrode cost (exclusive of import
duties) and the indirect materials cost for furnace V reconciled to
Andina's accounting records as submitted. Thus, we have accepted
Andina's statement that the import duties on electrodes is included
[[Page 5616]]
in indirect material costs for these final results.
Comment 4: Allocation of Laboratory Costs
The petitioners contend that the Department should not accept the
methodology Andina used to allocate laboratory costs because it is not
based on Andina's normal accounting system. They assert that Andina
failed to show that its reported methodology is more reasonable than
its normal methodology. Therefore, they argue, the Department should
either require Andina to report information that would allow the
Department to allocate laboratory costs using Andina's normal
accounting methodology, or allocate, as best information available
(BIA), laboratory costs over the direct labor hours of Andina's cost
centers.
Andina asserts that its reported methodology is fair and logical.
It disagrees with the methodology proposed by the petitioners, arguing
that using labor hours as an allocation basis results in significant
distortions.
Hunter Douglas also asserts that the petitioners fail to
acknowledge the distortions created by using an allocation methodology
based on Andina's accounting system; it over-allocates laboratory costs
to intermediate products used to produce both subject and non-subject
merchandise. Instead, it contends, Andina's revised methodology more
reasonably reflects its actual costs. In addition, Hunter Douglas
asserts that the petitioners offer no evidence that the ``labor hours''
methodology yields a more reasonable allocation.
DOC Position
We agree with Andina and Hunter Douglas. Andina appears to have
mischaracterized its normal allocation of laboratory costs by stating
that in its accounting system it assigns laboratory costs to the
product that is being analyzed. However, based on the records submitted
by Andina, we concluded that its normal accounting methodology is to
allocate costs on the basis of furnace capacity.
For purposes of this review, Andina submitted an alternative
allocation methodology based on allocating laboratory costs to its raw
materials, intermediate products, and final products according to the
volume of materials and products entering and leaving intermediate and
final product cost centers, i.e., an ``input/output'' basis.
Even though Andina's response is confusing regarding its normal
accounting methodology, we disagree with the petitioners that Andina
failed to provide adequate information about its normal accounting
methodology. We were able to conclude that Andina's normal methodology
is based on furnace capacity, (See Exhibit D-1 of March 15, 1996,
supplemental response) and to reconcile the inventory values in these
worksheets with Andina's 1993 audited financial statements, thus
validating Andina's normal allocation basis. However, we determined
that this allocation methodology does not reasonably allocate
laboratory costs because furnace capacity is not the determinant of the
amount of testing performed. Therefore, we have accepted Andina's
alternative allocation methodology because it is based on a reasonable
premise that the amount of laboratory testing will vary directly with
the actual quantity of material processed.
Comment 5: Deduction of Income From Sales of Woodchips
The petitioners argue that the Department should not reduce
Andina's reported COP and CV by the income from El Tambolar (a wholly-
owned subsidiary) because not all of El Tambolar's income was derived
from the sale of woodchips. They assert that El Tambolar's income
includes an extraordinary gain from the recovery of a tax credit
previously written-off and rental income, both of which bear no
relation to the sale of woodchips or the production of silicon metal.
Andina argues that this income should be deducted from COP and CV
because it is directly related to the production of silicon (i.e., it
uses woodchips to produce silicon metal).
DOC Position
We agree with the petitioners regarding El Tambolar's miscellaneous
income. It is the Department's practice to reduce production costs only
by revenue considered to be a recovery of costs (e.g., revenue from
sales of scrap) rather than revenue generated from sales in the normal
course of business. (See Final Determination of Sales at Less Than Fair
Value: Oil Country Tubular Goods from Argentina, 60 FR 33539, 33550
(June 28, 1995) (OCTG from Argentina).) The income El Tambolar earned
from its sales of woodchips is revenue earned from sales in the normal
course of business.
In addition, we have not offset production costs by El Tambolar's
extraordinary gain or rental income because this income is not related
to silicon metal production costs incurred during the POR.
Comment 6: Use of Subsidiary's Costs for Woodchips
Andina argues that the cost of woodchips included in COP for
silicon metal should be based on El Tambolar's actual costs to produce
the woodchips, rather than the price El Tambolar charges Andina (i.e.,
the transfer price).
The petitioners agree with Andina that El Tambolar's actual cost
should be used to value the woodchips purchased from the related party.
However, the petitioners urge the Department to base the cost of
woodchips on the costs reported in El Tambolar's fiscal 1993 (i.e.,
July 1, 1992-June 30, 1993) financial statements rather than the costs
reported in El Tambolar's 1993 calendar year financial statement which
was prepared for this review. The petitioners contend that the cost of
woodchips reported in the calendar 1993 statement is inconsistent with
other cost information on the record, namely the fiscal 1993 financial
statement. The petitioners argue that Andina failed to reconcile the
reported woodchip production costs contained in the calendar year 1993
financial statement with El Tambolar's fiscal 1993 financial statement.
Moreover, the petitioners claim that they were unable to reconcile the
costs figures reported in each statement. Thus, because the calendar
year woodchip costs could not be substantiated, the Department should
rely on the fiscal woodchip costs.
Additionally, the petitioners claim that costs on the fiscal
financial statement should be increased to include amortization of the
eucalyptus plantations from which wood is drawn to produce woodchips
because this amortization appears to be missing from that statement.
(See Final Determination of Sales at Less Than Fair Value; Ferrosilicon
from Brazil, 59 FR 732 737-738 (January 6, 1994).)
DOC Position
We agree with both parties that, for our COP analysis, the related
party purchases should be valued based on El Tambolar's actual cost of
woodchips rather than the transfer price. We based the cost of
woodchips on costs incurred by El Tambolar in calendar year 1993. (And,
thus, no adjustment was necessary for amortization of eucalyptus
plantations.)
With respect to petitioner's argument that Andina did not reconcile
the calendar year statement with the fiscal year statement, we were
able to reconcile the reported woodchip costs to El Tambolar's portion
of the consolidated Andina income statement for 1993. (See Calculation
[[Page 5617]]
Memorandum, January 10, 1997.) Therefore, we believe the reported
woodchip costs reasonably reflect their cost of production.
We note, however, that for CV we have followed our normal practice
and used the transfer price which was greater than cost. The Department
compared the transfer price to the prices from third-party sources in
Argentina (submitted by the petitioners in their sales below cost
allegation). We found the transfer prices to be consistent with the
petitioners'' evidence of market prices and concluded that the transfer
prices reflect arm's length prices. Therefore, we have used the higher
transfer price to value woodchips in our calculation of CV.
Comment 7: Interest Expense
Andina argues that the Department should not calculate interest
expenses based on the financial expense reported in its consolidated
financial statement. Andina asserts that its auditors erred in
preparing its consolidated income statement because they posted an
adjusting journal entry, eliminating Andina's share of El Tambolar's
net income, to the ``Financial Cost'' account instead of posting the
entry to the ``Other Income and Expenses'' account. According to
Andina, it is clear that this adjusting entry, which increased Andina's
financial expenses, should have been posted to the ``Other Income and
Expenses'' account. It argues that information exists on the record
showing that this entry meant to eliminate income recorded in the
``Other Income and Expenses'' account.
The petitioners contend that the Department's established practice
is to determine the interest expenses included in COP and CV based on a
respondent's audited consolidated financial statements. (See, e.g.,
Final Determination of Sales at Less Than Fair Value: New Minivans from
Japan, 50 FR 21065, 21069 (May 26, 1992), and Final Determination of
Sales at Less Than Fair Value: Certain Carbon Steel Butt-Weld Pipe
Fittings from Thailand, 57 FR 21065, 21069 (May 18, 1992).) According
to the petitioners, Andina failed to adequately support its claim
because the information on the record that Andina cites to support its
position is unaudited and prepared solely for this antidumping
proceeding. Thus, the petitioners argue that Andina failed to
demonstrate that the Department should not rely on the financial
expenses reported on Andina's audited consolidated financial statement
(see Timken Co., 673 F. Supp. at 513).
DOC Position
We agree with the petitioners. Andina has not provided sufficient
evidence to support its claim that its audited consolidated 1993
financial statements are inaccurate. It is the Department's
longstanding practice to base interest expense on the audited
consolidated financial statements. (See e.g., Notice of Final
Determination of Sales at LTFV: Small Diameter Circular Seamless Carbon
and Alloy Steel, Standard, Line, and Pressure Pipe from Italy, 60 FR
31981,31990 (June 19, 1995).) We have used the financial expenses
reported in Andina's audited, consolidated financial statements for the
final results.
Comment 8: Reducing COP and CV by Reimbursed Taxes
Andina argues that the Department should not include reembolso
taxes (taxes reimbursed under the reembolso program) in CV when making
comparisons to USP for the final results because reembolso taxes were
rebated upon exportation of the subject merchandise. Andina argues that
the bills of lading for export sales prove conclusively that tax
rebates were received on exports to the United States and, thus, the
Department must reduce CV by the amount of these indirect taxes proven
to be rebated on U.S. exports. Otherwise, claims Andina, the addition
of these taxes to CV creates an unfair comparison because it compares a
tax-inclusive CV to a tax-exclusive USP. (See OCTG from Argentina.)
The petitioners disagree with Andina. They contend that indirect
taxes must be included in CV based on section 773(e)(1)(A) of the Act,
which provides that the constructed value of imported merchandise shall
``be the sum of * * * the cost of materials (exclusive of any internal
tax applicable in the country of exportation directly to such materials
or their disposition, but remitted or refunded upon the exportation of
the article in the production of which such materials are used) * *
*.'' The fact that (a) indirect tax refunds under the reembolso program
are based on a percentage of sales value and that percentage is not
directly related to the indirect tax payments; (b) Andina paid a series
of indirect taxes that were not directly related to materials; and (c)
Andina calculated the amount of the requested percentage reduction to
CV based on the reported reembolso amounts received on export sales of
silicon metal to all countries, contend the petitioners, is further
evidence that Andina cannot establish a link.
The petitioners assert that Andina failed to answer the
Department's supplemental question requiring Andina to demonstrate that
reembolso taxes were tied directly to the exported merchandise. The
petitioners cite Timken Co. v. United States, 673 F. Supp. 496, 513
(CIT 1987) arguing that the burden of establishing the right for an
adjustment lies with Andina and assert that Andina failed to
sufficiently support its claim.
Finally, the petitioners contend that OCTG from Argentina does not
support Andina's position because that case did not address the proper
treatment of reembolso in the context of calculating CV, but involved a
circumstance-of-sale adjustment to account for differences in reembolso
received on U.S. sales and third-country sales used for FMV.
DOC Position
We agree with the petitioners that Andina failed to substantiate
its claimed adjustment. Although we have in past reviews granted this
adjustment for Andina, in accordance with OCTG from Argentina, in this
review we specifically requested Andina to link the reembolso tax to
material inputs that are physically incorporated into the subject
merchandise. See sections 773(e)(1)(A) and 772(d)(1)(C) of the Act.
Because Andina failed to provide the information specifically requested
by the Department with respect to this issue, we disallowed the claimed
tax adjustments.
Comment 9: Short-term Interest Offset From Interest Expense
Andina claims that it should be allowed to reduce the interest
expense included in COP and CV by interest income earned on certain
bond investments because they are short-term investments. It supports
this claim by noting that the bond investments are classified as
current assets in the company's audited financial statement.
The petitioners disagree with Andina arguing that it provided
documentation from the Argentine Central Bank identifying the term of
the bonds as four years. The petitioners note that it is the
Department's practice to reduce interest expense by interest income
earned on investments with a maturity of one year or less, citing the
Final Determination of Sales at Less Than Fair Value: Fresh Cut Roses
from Colombia, 60 FR 6980, 7011 (February 6, 1996). Therefore, the
petitioners contend, the interest income from these bonds should not be
used to reduce interest expense because the investments do not qualify
as short-term.
[[Page 5618]]
DOC Position
We agree with the petitioners. It is the Department's practice to
allow a respondent to reduce its interest expense by interest income
earned from short-term investments of working capital. The Department
generally considers an investment with a maturity of one year or less
to be a short-term investment. See e.g., Pasta from Italy, 61 FR 30326,
30359 (June 14, 1996). Andina reported the term of the bonds at issue
as four years. Thus, because these bonds are properly classified as
long-term investments, the interest income earned from these bonds was
not used to offset interest expense for the final results.
Comment 10: Allocation of Plant General Services
Andina claims that allocating plant general services (PGS) costs to
cost centers based on labor hours incurred in each center is not a
reasonable measure of PGS provided to each cost center. Instead, Andina
contends, it would be more appropriate to allocate these costs on bases
which are related to the costs being allocated, such as (i) tonnage of
inputs; (ii) tonnage of outputs; and (iii) salaries of each productive
cost center.
The petitioners disagree with Andina and state that the Department
properly rejected Andina's allocation methodology in the preliminary
results because Andina failed to use its normal allocation methodology
or demonstrate that its normal methodology, based on direct labor
hours, is distortive (see e.g., Pineapple from Thailand). Furthermore,
the petitioners contend that Andina's proposed methodology allocates
relatively large amounts of PGS costs to simple operations and smaller
amounts to more significant operations. The petitioners argue that this
result is contrary to the Department's practice to allocate general
facilities expenses and other indirect costs according to the level of
activity within direct cost centers. See Elemental Sulphur, p. 8245.
DOC Position
We disagree with Andina. We have determined that Andina's arbitrary
allocation of PGS costs into three portions did not reasonably reflect
the cost of producing the merchandise under investigation. Andina did
not demonstrate that the three different allocation bases it used are
each related to a portion of total PGS costs. Moreover, Andina's normal
allocation methodology for PGS costs, which is based on furnace
capacity, is unreasonable because the record does not indicate that PGS
costs are related to furnace capacity. Therefore, as in the preliminary
results, we have allocated PGS costs to Andina's cost centers based on
direct labor hours worked in each cost center because the nature of PGS
costs indicates that labor hours is a reasonable measure of the degree
to which a cost center benefits from plant general services.
Comment 11: BIA for Interest Rate
The petitioners argue that the Department improperly used as BIA an
11.8 percent interest rate from the International Monetary Fund, rather
than using the higher short-term, peso-denominated borrowing rate
reported on the bank statement submitted by Andina in its questionnaire
response. According to the petitioners, the short-term rate noted on
Andina's bank statement is the only evidence on the record regarding
Andina's short-term borrowing at a peso-denominated rate.
Andina argues that using the highest short-term interest rate
reported for one of its short-term loans is unjust since the interest
rate on that loan applies to an overdraft accounting for a small
portion of its borrowings.
DOC Position
We agree with the petitioners that, because Andina failed to
provide a complete list of its short-term borrowings for the POR, we
should use BIA. Andina was given ample time and opportunity to provide
a complete response to this request. However, it chose to provide the
Department with information related to only a portion of its short-term
borrowings. As BIA, we are using the higher (i.e., more adverse) short-
term, peso-denominated interest rate on the record to calculate the
home market imputed credit expense for purposes of calculating CV for
the final results.
Comment 12: Currency Conversion
The petitioners state that the Department improperly multiplied the
peso-denominated CV and direct selling expenses by the peso per U.S.
dollar exchange rates. The petitioner argues that the Department should
have multiplied the peso-denominated amounts by one divided by the
exchange rates used.
Andina argues that the Argentine Convertibility Law (law 23928)
makes currency conversion irrelevant since it is designed to equate the
U.S. dollar with the Argentine peso.
DOC Position
We agree with the petitioners that we improperly converted CV and
direct selling expenses in the preliminary results. The manner in which
the FMV was converted to U.S. dollars in the preliminary results
reflects a clerical error in that the FMV (CV less direct selling
expenses) was multiplied directly by the exchange rate rather than the
U.S. dollar amount based on the exchange rate (i.e., US$1.00 divided by
the exchange rate). This clerical error was corrected in the margin
calculation of these final results.
In addition, contrary to Andina's claim, currency conversion is
relevant to the Department's antidumping duty analysis. We have
followed the currency conversion requirements as set out in the
Department's regulations for these final results. See 19 CFR 353.60(a).
Currency Conversion
We made currency conversions for expenses denominated in Argentine
pesos based on the official monthly exchange rates in effect on the
dates of the U.S. sales as published by the International Monetary
Fund, in accordance with 19 CFR 353.60(a), because certified exchange
rates for Argentina were unavailable from the Federal Reserve.
Final Results of Review
As a result of our review, we determine that the following margin
exists for the period September 1, 1992 through August 31, 1993:
------------------------------------------------------------------------
Margin
Manufacturer/exporter Review period (percent)
------------------------------------------------------------------------
Andina.................................. 9/01/92-8/31/93 13.80
Silarsa................................. 9/01/92-8/31/93 24.62
------------------------------------------------------------------------
The Department shall determine, and the U.S. Customs Service shall
assess, antidumping duties on all appropriate entries. Individual
differences between USP and FMV may vary from the percentages stated
above. The Department will issue appraisement instructions directly to
the U.S. Customs Service.
Furthermore, the following deposit requirements will be effective
for all shipments of silicon metal from Argentina entered, or withdrawn
from warehouse, for consumption on or after the publication date of the
final results of this administrative review, as provided by section
751(a)(1) of the Act: (1) the cash deposit rates for Silarsa and Andina
will be the rates indicated above; (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
[[Page 5619]]
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) the cash deposit rate for all other
manufacturers or exporters will be 17.87 percent, the ``all other''
rate established in the final Results of Redetermination Pursuant to
Court Remand, American Alloys, Inc. v. United States, Ct. No. 91-10-
00782, p. 4 (April 7, 1995).
These cash deposit requirements, when imposed, shall remain in
effect until publication of the final results of the next
administrative review.
This notice 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 of
double antidumping duties.
This notice also serves as the only reminder to parties subject to
administrative protective order (APO) of their responsibility
concerning the disposition of proprietary information disclosed under
APO in accordance with 19 CFR 353.34(d). Timely written notification of
return/destruction of APO materials or conversion to judicial
protective order is hereby requested. Failure to comply with the
regulations and terms of the APO is a sanctionable violation.
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 353.22.
Dated: January 30, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration
[FR Doc. 97-3005 Filed 2-5-97; 8:45 am]
BILLING CODE 3510-DS-P
