[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: 94-14852]
[[Page Unknown]]
[Federal Register: June 17, 1994]
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DEPARTMENT OF COMMERCE
[A-307-811]
Notice of Preliminary Determination of Sales at Less Than Fair
Value and Postponement of Final Determination: Silicomanganese From
Venezuela
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: June 17, 1994.
FOR FURTHER INFORMATION CONTACT: Donna Berg or Stephen Alley, Office of
Antidumping Investigations, Import Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue NW., Washington, D.C.
20230; telephone (202) 482-0114 or 482-5288, respectively.
Preliminary Determination
We preliminarily determine that silicomanganese from Venezuela 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).
On January 14, 1994, we issued the antidumping questionnaire to
Hornos Electricos de Venezuela, S.A. (Hevensa), which accounted for at
least sixty percent of the exports of the subject merchandise to the
United States. On January 20, 1994, representatives of the Department
of Commerce (the Department) met with Hevensa officials in Venezuela to
provide further explanation of the antidumping questionnaire and to
answer outstanding technical and procedural questions.
Responses to the questionnaire were received on February 14, 1994,
and March 1, 1994. On March 10, 1994, petitioners in this
investigation, Elkem Metals Company and the Oil, Chemical & Atomic
Workers, Local 3-639, submitted comments regarding deficiencies in
Hevensa's questionnaire responses. A supplemental questionnaire was
issued to Hevensa on March 25, 1994. Hevensa submitted responses to
this questionnaire on April 19, 1994, and May 25, 1994.
On March 15, 1994, petitioner submitted an allegation that Hevensa
had sales below the cost of production (COP) in the home market.
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 9, 1994, based on petitioner's March 15, 1994 allegation,
the Department initiated an investigation of sales below COP in
accordance with section 773(b) of the Act (see decision memorandum from
Richard Moreland to Barbara Stafford, dated May 9, 1994). We issued a
COP questionnaire on May 9, 1994. However, because Hevensa's COP
response is not due until June 22, 1994, this information could not be
considered for the preliminary determination. It will be considered for
the final determination.
Petitioners and Hevensa submitted comments regarding certain issues
throughout May and June, 1994.
Postponement of Final Determination
Pursuant to section 735(a)(2)(A) of the Act, on May 27, 1994,
Hevensa requested that, in the event of an affirmative preliminary
determination in this investigation, the Department postpone its final
determination until 135 days after the date of publication of an
affirmative preliminary determination. Pursuant to 19 CFR 353.20(b),
because our preliminary determination is affirmative, and no compelling
reasons for denial exist, 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 (HTSUS). 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 (third country
market with respect to silicomagnese fines) to compare to U.S. sales,
we made similar merchandise comparisons on the basis of the criteria
defined in Appendix V to the antidumping questionnaire, on file in Room
B-099 of the main building of the Department of Commerce. In accordance
with 19 CFR 353.58, we made comparisons at the same level of trade,
where possible.
Fair Value Comparisons
To determine whether Hevensa's sales of silicomanganese from
Venezuela 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 based USP for Hevensa on purchase price (PP), in accordance with
section 772(b) of the Act, because all sales were made to unrelated
parties prior to importation into the United States.
We calculated PP based on FOB Venezuelan port prices to unrelated
customers in the United States. We made deductions, where appropriate,
for freight, loading expenses and rebates. We added an amount, where
appropriate, for duty drawback, in accordance with section 772(d)(1)(B)
of the Act.
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 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 CIT decision in Federal-Mogul, we have
multiplied the foreign market tax rate by 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, and have added
the product to the USP. We have also deducted from the USP and the FMV
those portions of the respective home market tax and the USP tax
adjustments attributable to expenses included in the foreign market and
United States bases of the tax if those expenses are later deducted to
calculate FMV and USP. These adjustments to the foreign 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.
The adjustment to avoid the margin creation effect is in accordance
with the United States Court of Appeals' holding 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, Venezuela began collecting a value added tax
(IVA) during the POI, on October 1, 1993. Consequently, for those U.S.
sales invoiced on or after October 1, 1993, we added an amount for this
tax, calculated as described above, that would have been collected had
the U.S. sale not been exported. For the U.S. sales invoiced prior to
October 1, 1993, we also added an amount for value-added tax when no
home market comparison sales were made prior to October 1, 1993 (see
below).
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 Hevensa's volume
of home market sales of silicomanganese lump was greater than five
percent of the aggregate volume of third country sales, we determined
that the home market was viable and, therefore, based FMV for
silicomanganese lump on home market sales, in accordance with 19 CFR
353.48(a). We found that the home market was not viable for
silicomanganese fines. We selected Peru as our third country market for
sales of silicomanganese fines, pursuant to 19 CFR 353.49.
In accordance with 19 CFR 353.46, we calculated FMV for
silicomanganese lump based on delivered or FOB plant prices to
unrelated customers. In light of the Court of Appeals of 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 power 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 post-sale home market movement charges under 19 CFR
353.56. This adjustment included home market inland freight and loading
charges. Pursuant to 19 CFR 353.56(a)(2), we also made circumstance-of-
sale adjustments, where appropriate, for differences in credit expenses
and royalties.
As discussed above, the IVA was only levied on sales in the home
market invoiced on or after October 1, 1993. Therefore, we divided the
reported home market sales into two categories, one covering home
market sales invoiced during the period June-September, 1993, and one
covering sales invoiced on or after October, 1993. We accounted for the
application of the IVA tax only on sales invoiced on or after October
1, 1993.
As the basis for FMV, we selected the home market group depending
on when the U.S. sale was invoiced. For U.S. sales invoiced prior to
October 1, 1993, we used the former group, and for those sales invoiced
after September 30, 1993, we used the latter group.
We also calculated the amount of the tax that was due solely to the
inclusion of price deductions in the original tax base (i.e., the sum
of any amounts 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.
In accordance with 19 CFR 353.49, we calculated FMV for
silicomanganese fines on FOB plant prices, inclusive of packing, to
unrelated customers in Peru. Pursuant to 19 CFR 353.56(a)(2), we made
circumstance-of-sale adjustments, where appropriate, for differences in
credit expenses and royalties. We deducted third country packing and
added U.S. packing costs, in accordance with section 773(a)(1) of the
Act.
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 Hevensa made home market sales at prices below its
COP, and over an extended period of time. Although Hevensa's COP
questionnaire response will be received too late for consideration for
the preliminary determination, it will be considered for the final
determination.
Currency Conversion
Because certified exchange rates from the Federal Reserve were
unavailable, we made currency conversions based on the official monthly
exchange rates in effect on the dates of the U.S. sales as certified by
the International Monetary Fund.
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 Venezuela 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
------------------------------------------------------------------------
Hevensa.................................................... 8.31
All others................................................. 8.31
------------------------------------------------------------------------
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 21, 1994,
and rebuttal briefs no later than September 26, 1994. A public hearing,
if requested, will be held on September 28, 1994, at 2 p.m. at the U.S.
Department of Commerce, Room 3708, 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. 94-14852 Filed 6-16-94; 8:45 am]
BILLING CODE 3510-DS-P
