[Federal Register Volume 59, Number 116 (Friday, June 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-14850]
[[Page Unknown]]
[Federal Register: June 17, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-824]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Silicomanganese from
Brazil
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: June 17, 1994.
FOR FURTHER INFORMATION CONTACT: Lori Way or Stephen Alley, Office of
Antidumping Investigations, Import Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington, DC
20230; telephone (202) 482-0656 or 482-5288, respectively.
Preliminary Determination:
We preliminarily determine that silicomanganese from Brazil is
being, or is likely to be, sold in the United States at less than fair
value, as provided in section 733 of the Tariff Act of 1930, as amended
(the Act). The estimated margins are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the initiation of this investigation on December 2, 1993 (58
FR 64553, December 8, 1993), the following events have occurred.
On December 27, 1993, the U.S. International Trade Commission (ITC)
issued an affirmative preliminary determination in this case (see USITC
Publication 2714, December, 1993).
We issued the antidumping questionnaire on January 18, 1994, to
Companhia Paulista de Ferro-Ligas and Sibra-Eletrosiderurgica
Brasileira S/A (collectively, ``Paulista''). On January 24, 1994,
representatives of the Department of Commerce (the Department) met with
Paulista officials in Brazil to provide further explanation of the
antidumping questionnaire and to answer outstanding technical and
procedural questions.
Responses to the questionnaire were received on February 4, 1994,
and March 7, 1994. Petitioners in this investigation, Elkem Metals
Company and the Oil, Chemical & Atomic Workers, Local 3-639, submitted
comments regarding deficiencies in Paulista's questionnaire responses
on March 17 and 18, 1994. A supplemental questionnaire was issued on
March 28, 1994. Paulista submitted responses to this questionnaire in
April and May, 1994.
On February 2 and 8, 1994, Paulista asked the Department to amend
the product matching criteria included in Appendix V of its
questionnaire. Petitioners submitted comments on Paulista's request on
February 7 and 9, 1994. On February 10, 1994, we amended Appendix V
with respect to the silicon content and sieve size categories (see
letter from Gary Taverman to Dorsey & Whitney, dated February 10, 1994,
on file in Room B-099 of the main building of the Department of
Commerce).
At the request of petitioners, on March 30, 1994, the Department
postponed its preliminary determination until no later than June 10,
1994 (59 FR 16177, April 6, 1994).
On May 13, 1994, based on petitioners' March 14, 1994, allegation
of sales below cost of production (COP), the Department initiated a COP
investigation (see decision memorandum from Richard Moreland to Barbara
Stafford, dated May 13, 1994) and issued a COP questionnaire. However,
because of the deadline established for Paulista's COP questionnaire
response, this information could not be considered for the preliminary
determination. It will be considered for the final determination.
Postponement of Final Determination
Pursuant to section 735(a)(2)(A) of the Act, on April 26, 1994,
Paulista requested that, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination to 135 days after the date of publication of an
affirmative preliminary determination. Pursuant to 19 CFR 353.20(b), if
our preliminary determination is affirmative, and the Department
receives a request from producers or resellers who account for a
significant portion of the exports under investigation, we will, absent
compelling reasons for denial, grant the request. Because Paulista
represents a significant portion of the exports under investigation and
there are no compelling reasons to deny the request, we are postponing
the final determination until the 135th day after the date of
publication of this notice in the Federal Register.
Scope of Investigation
The merchandise covered by this investigation is silicomanganese.
Silicomanganese, which is sometimes called ferrosilicon manganese, is a
ferroalloy composed principally of manganese, silicon, and iron, and
normally containing much smaller proportions of minor elements, such as
carbon, phosphorous and sulfur. Silicomanganese generally contains by
weight not less than 4% iron, more than 30% manganese, more than 8%
silicon and not more than 3% phosphorous. All compositions, forms and
sizes of silicomanganese are included within the scope of this
investigation, including silicomanganese slag, fines and briquettes.
Silicomanganese is used primarily in steel production as a source of
both silicon and manganese. This investigation covers all
silicomanganese, regardless of its tariff classification. Most
silicomanganese is currently classifiable under subheading 7202.30.0000
of the Harmonized Tariff Schedule of the United States (HTS). Some
silicomanganese may also be classifiable under HTS subheading
7202.99.5040. Although the HTS subheading is provided for convenience
and customs purposes, our written description of the scope of this
proceeding is dispositive.
Period of Investigation
The period of investigation (POI) is June 1, 1993, through November
30, 1993.
Such or Similar Comparisons
We have determined that the class or kind of merchandise subject to
this investigation constitutes two such or similar categories:
silicomanganese lumps and silicomanganese fines. In making our fair
value comparisons, in accordance with the Department's standard
methodology, we first compared identical merchandise. Where there were
no sales of identical merchandise in the home market to compare to U.S.
sales, we made similar merchandise comparisons on the basis of the
criteria defined in Appendix V to the antidumping duty questionnaire.
In accordance with 19 CFR 353.58, the Department normally attempts to
compare U.S. sales to home market sales made at the same level of
trade, where possible. Because Paulista did not make sales at the same
level of trade in Brazil and the United States, we made comparisons
without regard to level of trade.
Fair Value Comparisons
To determine whether Paulista's sales of silicomanganese from
Brazil 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
In accordance with section 772(b) of the Act, we based USP for
Paulista on purchase price because all sales were made to unrelated
parties prior to importation into the United States.
We calculated purchase price sales based on prices to unrelated
customers in the United States. We made deductions, where appropriate,
for foreign brokerage, handling and foreign inland freight in order to
adjust these prices to an ex-factory basis. We did not add an amount
for interest revenue because Paulista failed to place adequate
information on the record to support this adjustment (see concurrence
memorandum, dated June 3, 1994). We will, however, examine
this issue further at verification, and consider it for the final
determination.
On October 7, 1993, the Court of International Trade (CIT), in
Federal-Mogul Corp. and The Torrington Co. v. United States, Slip Op.
93-194 (CIT, October 7, 1993), rejected the Department's methodology
for calculating an addition to USP under section 772(d)(1)(C) of the
Act to account for taxes that the exporting country would have assessed
on the merchandise had it been sold in the home market. The CIT held
that the addition to USP under section 772(d)(1)(C) of the Act should
be the result of applying the foreign market tax rate to the price of
the United States merchandise at the same point in the chain of
commerce that the foreign market tax was applied to foreign market
sales. Federal- Mogul, Slip Op. 93-194 at 12.
In accordance with the Federal-Mogul decision, we have added to USP
the product of the home market tax rate and the price of the United
States merchandise at the same point in the chain of commerce that the
home market tax was applied to foreign market sales. We have also
deducted from the USP and the FMV those portions of the home market tax
and the USP tax adjustments attributable to expenses included in the
home market and United States bases of the tax if those expenses are
later deducted to calculate FMV and USP. These adjustments to the home
market tax and the USP tax adjustment are necessary to prevent the
methodology for calculating the USP tax adjustment from creating
antidumping duty margins where no margins would exist if no taxes were
levied upon foreign market sales.
This margin creation effect is due to the fact that the basis for
calculating both the amount of tax included in the price of the foreign
market merchandise and the amount of the USP tax adjustment include
many expenses that are later deducted when calculating USP and FMV.
After these deductions are made, the tax included in FMV and the USP
tax adjustment still reflect the inclusion of these expenses in the
bases. Thus, a margin may be created that is not dependent upon a
difference between adjusted USP and FMV, but is the result of
differences between the expenses in the United States and the home
market that were deducted through adjustments.
This adjustment to avoid the margin creation effect is in
accordance with court decisions. The United States Court of Appeals has
held that the application of the USP tax adjustment under section
772(d)(1)(C) of the Act should not create an antidumping duty margin if
pre-tax FMV does not exceed USP. Zenith Electronics Corp. v. United
States, 988 F.2d 1573, 1581 (Fed. Cir. 1993). In addition, the CIT has
specifically held that an adjustment should be made to mitigate the
impact of expenses that are deducted from FMV and USP upon the USP tax
adjustment and the amount of tax included in FMV. Daewoo Electronics
Co., Ltd. v. United States, 760 F. Supp. 200, 208 (CIT, 1991). However,
the mechanics of the Department's adjustments to the USP tax adjustment
and the foreign market tax amount as described above are not identical
to those suggested in Daewoo.
In this investigation, we added to USP an amount for value added
tax that would have been paid had the U.S. sale not been exported. In
Brazil, there are four different taxes levied on sales of the subject
merchandise in the home market which are not levied on export sales:
(1) Imposto sobre a Circulacao de Mercadorias e Servicos (ICMS), a
regional tax with a rate that varies depending upon the state in which
the purchase originates;
(2) Imposto sobre Produtos Industrializados (IPI), the Federal
value-added tax which is levied at a rate of four percent;
(3) Programa de Integracao Social (PIS), a social integration
program tax which is levied at a rate of 0.65 percent; and
(4) Contribuicao do Fim Social (CONFINS), a social investment fund
tax which is levied at a rate of 2.0 percent.
Foreign Market Value
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating
FMV, we compared the volume of home market sales of subject merchandise
to the volume of third country sales of subject merchandise, in
accordance with section 773(a)(1)(B) of the Act. Since the total volume
of merchandise sold by Paulista in Brazil during the POI was greater
than five percent of the aggregate volume of third country sales for
each such or similar category, we determined that the home market was
viable. Therefore, we based FMV on home market sales for both
silicomanganese lumps and silicomanganese fines, in accordance with 19
CFR 353.48(a). We excluded from our analysis sales to a related
customer that were not claimed by Paulista to be at arm's length.
We calculated FMV based on prices to unrelated customers. In light
of the Court of Appeals for the Federal Circuit's (CAFC) decision in Ad
Hoc Committee of AZ-NM-TX-FL Producers of Gray Portland Cement v.
United States, Slip Op. 93-1239 (Fed. Cir., January 5, 1994), the
Department no longer deducts home market movement charges from FMV
pursuant to its inherent authority to fill in gaps in the antidumping
statute. We instead adjust for those expenses under the circumstance of
sale provision of 19 CFR 353.56 and the exporter's sales price offset
provision of 19 CFR 353.56(b) (1) and (2), as appropriate.
Accordingly, in the present case, we made circumstance of sale
adjustments for certain post-sale home market movement charges under 19
CFR 353.56. Also pursuant to 19 CFR 353.56(a)(2), we made circumstance
of sale adjustments, where appropriate, for differences in credit
expenses, warehousing, sampling-weighing-testing expenses, and bank
fees. In accordance with 19 CFR 353.56(b), we added commissions paid on
U.S. sales and deducted indirect selling expenses incurred on sales in
Brazil up to the amount of the U.S. commission.
Under our past practice, if the Department determines that a
country is hyperinflationary, we calculate FMVs on a monthly basis to
eliminate the distortive effects of inflation (see, Final Determination
of Sales at Less Than Fair Value and Amended Antidumping Duty Order,
Tubeless Steel Disc Wheels from Brazil, 53 FR 34566, September 7,
1988). An economy is deemed to be hyperinflationary if its monthly
inflation rate is greater than 5 percent or if its annual inflation
rate is greater than 60 percent. We determined that Brazil's economy
was hyper-inflationary during the POI. Brazil's inflation rate was over
60 percent during 1993.
We included in FMV the amount of the VAT collected in the home
market (i.e., the sum of the actual IPI, PIS and CONFINS tax rates plus
the weighted-average ICMS rate). However, we calculated the amount of
tax that was due solely to the inclusion of price deductions in the
original tax base (i.e., the sum of any adjustments, expenses, and
charges that were deducted from the tax base). See the ``United States
Price'' section of this notice, above. This amount was deducted from
the FMV after all other additions and deductions had been made.
Cost of Production
Based on petitioner's allegations, and in accordance with section
773(b) of the Act, the Department initiated an investigation to
determine whether Paulista made home market sales at prices below its
COP over an extended period of time, which would not permit the
recovery of costs within a reasonable period of time. However,
Paulista's COP questionnaire response is due on June 16, 1994, which is
after the deadline for the preliminary determination. The response
will, however, be considered for the final determination.
Currency Conversion
No certified rates of exchange, as furnished by the Federal Reserve
Bank of New York, were available for the POI. In place of the official
certified rates, we used the daily official exchange rates for
Brazilian currency published by the Central Bank of Brazil.
In hyperinflationary economies, the Department normally converts
movement charges for U.S. sales on the date that these charges become
payable, and we have done so in this investigation.
Verification
As provided in section 776(b) of the Act, we will verify the
accuracy of all information used in making our final determination.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of
silicomanganese from Brazil that are entered, or withdrawn from
warehouse, for consumption on or after the date of publication of this
notice in the Federal Register. The Customs Service shall require a
cash deposit or posting of a bond equal to the estimated preliminary
dumping margins as shown below. This suspension of liquidation will
remain in effect until further notice. The estimated preliminary
dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average
Manufacturer/producer/exporter margin
percentages
------------------------------------------------------------------------
Paulista................................................... 37.76
All others................................................. 37.76
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
the preliminary determination or 45 days after our final determination
whether imports of the subject merchandise are materially injuring, or
threaten material injury to, the U.S. industry.
Public Comment
Interested parties who wish to request a hearing must submit a
written request to the Assistant Secretary for Import Administration,
U.S. Department of Commerce, Room B-099, within ten days of the
publication of this notice. Requests should contain: (1) The party's
name, address, and telephone number; (2) the number of participants;
and (3) a list of the issues to be discussed.
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least ten copies must be submitted to the Assistant
Secretary for Import Administration no later than September 23, 1994,
and rebuttal briefs no later than September 28, 1994. A public hearing,
if requested, will be held on September 30, 1994, at 10 a.m. at the
U.S. Department of Commerce, Room 4830, 14th Street and Constitution
Avenue NW., Washington, DC 20230. Parties should confirm by telephone
the time, date, and place of the hearing 48 hours before the scheduled
time. In accordance with 19 CFR 353.38(b), oral presentations will be
limited to issues raised in the briefs.
We will make our final determination not later than 135 days after
publication of this determination in the Federal Register.
This determination is published pursuant to section 733(f) of the
Act, and 19 CFR 353.15(a)(4).
Dated: June 10, 1994.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 94-14850 Filed 6-16-94; 8:45 am]
BILLING CODE 3510-DS-P
