[Federal Register Volume 63, Number 151 (Thursday, August 6, 1998)]
[Notices]
[Pages 42001-42008]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-21061]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-806]
Silicon Metal From Brazil: Preliminary Results of Antidumping
Duty Administrative Review
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of Preliminary Results of the Antidumping Duty
Administrative Review.
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SUMMARY: In response to requests by American Silicon Technologies,
Elkem Metals Company, Globe Metallurgical, Inc. and SKW Metals &
Alloys, Inc. (petitioners) and Companhia Brasileira Carbureto De Calcio
(CBCC), Eletrosilex Belo Horizonte (Eletrosilex), Ligas de Aluminio
S.A. (LIASA), Companhia Ferroligas Minas Gerais-Minasligas (Minasligas)
and RIMA Industrial S/A (RIMA) (respondents), the Department of
Commerce (the Department) is conducting an administrative review of the
antidumping duty order on silicon metal from Brazil. The period of
review (POR) is July 1, 1996 through June 30, 1997.
We preliminarily determine that only Eletrosilex sold subject
merchandise at less than normal value (NV) during the POR. If the
preliminary results are adopted in the final results of administrative
review, we will instruct the U.S. Customs Service to assess antidumping
duties based on the difference between the export price (EP) and the
NV.
We invite interested parties to comment on the preliminary results.
Parties who submit comments in this proceeding should also submit with
the argument: (1) A statement of the issue(s); and (2) a brief summary
of the argument (not to exceed five pages).
EFFECTIVE DATE: August 6, 1998.
FOR FURTHER INFORMATION CONTACT: Robert Bolling, Abdelali Elouaradia,
Letitia Kress, Lisette Lach or Sinem Sonmez, Office of Antidumping/
Countervailing Enforcement, Group III, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone
482-3793.
SUPPLEMENTARY INFORMATION:
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations refer to 19
CFR part 351 (62 FR 27296 (May 19, 1997)).
Background
On July 31, 1991, the Department published in the Federal Register
the antidumping duty order on silicon metal from Brazil (56 FR 36135).
On July 21, 1997, the Department published in the Federal Register a
notice of opportunity to request an administrative review of the
antidumping duty order on silicon metal from Brazil for the period July
1, 1996 through June 30, 1997 (62 FR 38973). On July 29, 1997, in
accordance with 19 CFR 351.213(b)(1), CBCC, Minasligas, Eletrosilex,
and RIMA requested that the Department conduct an administrative review
of their respective sales. On July 31, 1997, LIASA requested that the
Department conduct an administrative review of its sales. On July 31,
1997, petitioners also requested that the Department conduct an
administrative review on sales made by CBCC, Eletrosilex, Minasligas
and RIMA. On September 22, 1997, the Department issued the antidumping
administrative review questionnaire to all respondents. On September
25, 1997, in accordance with 19 CFR 351.221(b)(1) of the Department's
regulations, the Department published in the Federal Register a notice
of initiation of this antidumping duty administrative review (62 FR
50292). The Department is conducting this review in accordance with
section 751 of the Act.
On March 24, April 24, and July 2, 1998, we issued supplemental
questionnaires to CBCC. We received responses from CBCC on April 15,
April 30, and July 14, 1998, respectively. On March 20, April 30, April
22, and July 13, 1998, we issued supplemental questionnaires to LIASA.
We received responses from LIASA, on April 3, April 27, April 30, and
July 20, 1998, respectively. On March 30, and July 2, 1998, we issued
supplemental questionnaires to Minasligas. We received responses from
Minasligas, on April 14, and July 9, 1998, respectively. On March 31,
June 29, and July 2, 1998, we issued supplemental questionnaires to
RIMA. We received responses from RIMA, on April 17, July 9, and July
13, 1998, respectively. On March 24, June 29, and July 6, 1998, we
issued supplemental questionnaires to Eletrosilex. We received a
response from Eletrosilex on April 10, 1998. However, Eletrosilex did
not respond to the
[[Page 42002]]
Department's final two supplemental questionnaires. See Use of Facts
Available section below.
On March 27, 1998, in accordance with section 751(a)(3)(A) of the
Act, the Department published in the Federal Register its notice
extending the deadline in the preliminary results until July 30, 1998
(63 FR 14900).
Scope of Review
The merchandise covered by this administrative review is silicon
metal from Brazil containing at least 96.00 percent but less than 99.99
percent silicon by weight. Also covered by this administrative review
is silicon metal from Brazil containing between 89.00 and 96.00 percent
silicon by weight but which contains more aluminum than the silicon
metal containing at least 96.00 percent but less than 99.99 percent
silicon by weight. Silicon metal is currently provided for under
subheadings 2804.69.10 and 2804.69.50 of the Harmonized Tariff Schedule
(HTS) as a chemical product, but is commonly referred to as a metal.
Semiconductor grade silicon (silicon metal containing by weight not
less than 99.99 percent silicon and provided for in subheading
2804.61.00 of the HTS) is not subject to the order. Although the HTS
item numbers are provided for convenience and for U.S. Customs
purposes, the written description remains dispositive.
Period of Review
The POR is July 1, 1996 through June 30, 1997.
Verification
As provided in section 782(i) of the Act, we verified LIASA's sales
and cost information from May 4, 1998 through May 9, 1998, and CBCC's
sales and cost information from May 11, 1998 through May 16, 1998. At
each verification, we used standard verification procedures, including
on-site inspection of the manufacturers' facilities, the examination of
relevant sales and financial records, and the selection of original
source documentation containing relevant information. Our verification
results are outlined in the public version of the respective
verification reports, available to the public in Room B-099 of the U.S.
Department of Commerce.
Product Comparisons
In accordance with section 771(16) of the Act, we considered all
products produced by the respondents, covered by the description in the
``Scope of the Review'' section, above, and sold in the home market
during the POR, to be foreign like products for purposes of determining
appropriate product comparisons to U.S. sales. Where there were no
sales of identical or similar merchandise in the home market to compare
to U.S. sales, we compared U.S. sales to the constructed value (CV) of
the product sold in the U.S. market during the comparison period.
On January 8, 1998, the U.S. Court of Appeals for the Federal
Circuit issued a decision in Cemex S.A. v. United States, 133 F. 3d 897
(Fed. Cir. 1998). In that case, based on the pre-URAA version of the
Act, the Court discussed the appropriateness of using CV as the basis
for foreign market value when the Department finds foreign market sales
to be outside ``the ordinary course of trade.'' This issue was not
raised by any party in this proceeding. However, the URAA amended the
definition of sales outside the ``ordinary course of trade'' to include
sales below cost. See section 771(15) of the Act. Consequently, the
Department has reconsidered its practice in accordance with this court
decision and has determined that it would be inappropriate to resort
directly to CV, in lieu of foreign market sales, as the basis for NV if
the Department finds foreign market sales of merchandise identical or
most similar to that sold in the United States to be outside the
``ordinary course of trade.'' Instead, the Department will use sales of
similar merchandise, if such sales exist. The Department will use CV as
the basis for NV only when there are no above-cost sales that are
otherwise suitable for comparison. Therefore, in this proceeding, when
making comparisons in accordance with section 771(16) of the Act, we
considered all products sold in the home market as described in the
``Scope of the Review'' section of this notice, above, that were in the
ordinary course of trade for purposes of determining appropriate
product comparisons to U.S. sales. Where there were no sales of
identical merchandise in the home market made in the ordinary course of
trade to compare to U.S. sales, we compared U.S. sales to sales of the
most similar foreign like product made in the ordinary course of trade,
based on the information provided by each respondent in response to our
antidumping questionnaire. We have implemented the Court's decision in
this case to the extent that the data on the record permitted.
Fair Value Comparisons
To determine whether sales of silicon metal by the Brazilian
respondents to the United States were made at less than fair value, we
compared EP to the NV, as described in the ``Export Price'' and
``Normal Value'' sections of this notice. In accordance with section
777A(d)(2), we calculated monthly weighted-average prices for NV and
compared these to individual U.S. transactions.
Export Price
For CBCC, Eletrosilex, LIASA, Minasligas and RIMA, we used the
Department's export price (EP) methodology, in accordance with section
772(a) of the Act, because the subject merchandise was sold by the
producer outside the United States directly to the first unaffiliated
purchaser in the United States prior to importation.
We made company-specific adjustments to EP as follows:
CBCC
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated purchasers
in the United States or to unaffiliated trading companies who sell the
subject merchandise in the United States. We made deductions from the
starting price (gross unit price), where appropriate, for foreign
inland freight, brokerage and handling, international freight.
Eletrosilex
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated customer in
the United States or to unaffiliated trading companies who sell the
subject merchandise in the United States. We made deductions from the
starting price (gross unit price), where appropriate, for foreign
inland freight, brokerage and handling, and international freight, and
added duty drawback.
LIASA
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated customer in
the United States or to unaffiliated trading companies who sell the
subject merchandise in the United States. We made deductions from the
starting price (gross unit price), where appropriate, for foreign
movement expenses. Upon our findings at verification, we modified the
value for inland freight and packing, as appropriate. See LIASA's
Verification Report dated July 30, 1998 and Memorandum dated July 30,
1998.
On May 1, 1998, petitioners requested in their pre-verification
comments that the Department closely examine a particular sale in the
LIASA U.S. sales database during its verification of
[[Page 42003]]
LIASA data. Petitioners stated that it appeared that this particular
sale was not representative of a normal commercial transaction due to
its aberrant sale price, quantity, and unusual mode of transportation.
Thus, petitioners requested that the Department use its authority to
exclude from the margin calculation this U.S. sale as it is distortive,
atypical and unrepresentative of an arm's-length transaction.
At verification, the Department examined the sale in question. See
LIASA Verification Report dated July 29, 1998. The evidence on the
record indicates that this sale is a testing/trial run sale. See
LIASA's Verification Exhibit 4 and verification report at pages 6-9.
Because consideration was paid for the merchandise, we preliminarily
determine in accordance with the Department's practice regarding
samples to include this sale in our calculations. See Antifriction
Other than Tapered Roller Bearings from France; Final Results of
Antidumping Duty Administrative Review, 62 FR 2081, 2122 (January 15,
1997). Further, we preliminarily do not find that it is distortive or
unrepresentative and should therefore be excluded.
Minasligas
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated customer in
the United States or to unaffiliated trading companies who sell the
subject merchandise in the United States. We made adjustments from the
starting price (FOB unit price), where appropriate, for foreign
movement expense (comprising weighing, sampling and analysis, and port
clerical expenses), inland freight, brokerage and handling, and duty
drawback. We used the FOB unit price (a gross unit price in dollars)
since Minasligas negotiated its U.S. sales in U.S. dollars. We also
made modifications to the payment date. We used the date of payment by
the U.S. customer to Minasligas for each sale rather than the date of
payment by the bank to Minasligas. The date of payment information was
provided to the Department in Minasligas's April 13, 1998 submission.
In addition, we recalculated the interest rate to be used in
Minasligas's U.S. credit expense calculation. For our calculation of
the interest rate for U.S. sales, we relied on the Advance Exchange
Contract (``ACC'') information presented in the company's April 13,
1998 submission.
Because Minasligas does not know the entry dates of its U.S. sales,
it reported all shipments made during the POR, which included two
shipments that were reported in the fifth administrative review. We
have excluded the two U.S. sales that were reported in the fifth
administrative review from our calculation as we have calculated a
margin on these sales in the last review.
RIMA
In accordance with section 772(c) of the Act, we calculated EP
based on packed, delivered prices to the first unaffiliated customer in
the United States or to unaffiliated trading companies who sell the
subject merchandise in the United States. We made deductions from the
starting price (gross unit price), where appropriate, for domestic
inland freight, brokerage and handling, and ocean freight.
Normal Value
A. Viability
In order to determine whether there was a sufficient volume of
sales in the home market to serve as a viable basis for calculating NV
(i.e., the aggregate volume of home market sales of the foreign like
product is greater than five percent of the aggregate volume of U.S.
sales), we compared each respondent's volume of home market sales of
the foreign like product to the volume of its U.S. sales of subject
merchandise, in accordance with section 773(a)(1) of the Act. Since
each respondent's aggregate volume of home market sales of the foreign
like product was greater than five percent of its respective aggregate
volume of U.S. sales for the subject merchandise, we determined that
the home market provides a viable basis for calculating NV for each
respondent. Therefore, pursuant to section 773(a)(1)(B) of the Act, we
based NV on home market sales.
B. Home Market Sales
We based NV on the price at which the foreign like product was
first sold for consumption in Brazil, in the usual commercial
quantities, in the ordinary course of trade in accordance with section
773(a)(1)(B)(i) of the Act. To the extent practicable, we based NV on
sales at the same level of trade as the EP sales. For level of trade,
please see the level of trade section below.
We made company-specific adjustments to the NV prices as follows:
CBCC
We based home market prices on the packed, delivered prices to
affiliated and unaffiliated purchasers in the home market. Where
appropriate, we used CV as the basis of NV. We made adjustments, where
applicable, in accordance with section 773(a)(6) of the Act. Where
applicable, we made adjustments to home market price for inland
freight. To adjust for differences in circumstances of sale between the
home market and the United States, we adjusted home market prices by
deducting HM credit expenses and adding HM interest revenue and adding
U.S. credit expenses (offset by interest revenue), U.S. post-sale
warehousing, and U.S. direct selling expenses. In order to adjust for
differences in packing between the two markets, we adjusted home market
price by deducting HM packing costs and adding U.S. packing costs. Home
market prices were reported inclusive of value-added taxes (VAT) and,
therefore, a deduction for VAT was necessary.
Because CBCC paid commissions on home market sales, in calculating
NV for this respondent, we added the lesser of either: (1) the
weighted-average amount of commissions paid on the home market sales;
or (2) the amount of indirect selling expenses paid on the U.S. sale.
See 351.410(e) of the Department's regulations.
Eletrosilex
We based home market prices on the packed, delivered prices to
affiliated and unaffiliated purchasers in the home market. We made
adjustments, where applicable, in accordance with section 773(a)(6) of
the Act. Where applicable, we made adjustments to home market price for
inland freight. To adjust for differences in circumstances of sale
between the home market and the United States, we adjusted home market
prices by deducting HM credit expense and other HM direct selling
expenses and adding U.S. directs selling expenses, including U.S.
credit expenses. In order to adjust for differences in packing between
the two markets, we deducted HM packing costs and added U.S. packing
costs. Home market prices were reported exclusive of VAT and,
therefore, no deduction was necessary.
Although Eletrosilex provided the Department with credit expenses
based on Reais and U.S. dollar borrowings, the Department calculated
home market credit expense based on Reais denominated loans.
LIASA
We based home market prices on the packed, delivered prices to
affiliated and unaffiliated purchasers in the home market. Where
appropriate, we used CV as the basis of NV. We made adjustments, where
applicable, in accordance with section 773(a)(6) of the Act. Where
applicable, we made adjustments for movement expenses. To
[[Page 42004]]
adjust for differences in circumstances of sale between the home market
and the United States, we reduced home market prices by the amounts for
direct selling expenses including credit and commission expenses and
added U.S. credit expenses. In order to adjust for differences in
packing between the two markets, we deducted HM packing costs and added
U.S. packing costs. Home market prices were reported inclusive of VAT
and, therefore, a deduction for VAT was necessary.
Minasligas
We based home market prices on the packed, delivered prices to
affiliated and unaffiliated purchasers in the home market. We made
adjustments, where applicable, in accordance with section 773(a)(6) of
the Act. Where applicable, we made adjustments for movement expenses.
To adjust for differences in circumstances of sale between the home
market and the United States, we reduced home market prices by an
amount for home market credit expenses and added U.S. credit expenses.
In order to adjust for differences in packing between the two markets,
we adjusted home market price by deducting HM packing costs and adding
U.S. packing costs. Home market prices were reported inclusive of VAT
and, therefore, a deduction for VAT was necessary.
RIMA
We based home market prices on the packed, delivered prices to
affiliated or unaffiliated purchasers in the home market. Where
appropriate, we used CV as the basis of NV. We made adjustments, where
applicable, in accordance with section 773(a)(6) of the Act. Where
applicable, we made adjustments for inland freight. To adjust for
differences in circumstances of sale between the home market and the
United States, we adjusted home market prices by deducting HM credit
expenses and commissions and adding HM interest revenue and adding U.S.
credit expenses. In order to adjust for differences in packing between
the two markets, we adjusted home market price by deducting HM packing
costs and adding U.S. packing costs. Home market prices were reported
inclusive of VAT and, therefore, a deduction for VAT was necessary.
Because Rima paid commissions on home market sales, in calculating
NV for this respondent, we added the lesser of either: (1) the
weighted-average amount of commissions paid on the home market sales;
or (2) the amount of indirect selling expenses paid on the U.S. sale.
See 351.410(e) of the Department's regulations.
C. ICMS Tax
In general, most foreign governments that establish value-added
taxes (``VAT'') allow for a credit for VAT paid on inputs that can be
used to offset tax liability to the government arising from home market
sales (i.e., VAT collected from domestic customers). In addition, most
foreign governments allow for a rebate or remittance of the tax paid on
material inputs upon the exportation of the finished product, provided
companies submit documentation that such inputs are used in the
products for exportation.
Under Brazil's VAT system, however, there is no provision for
refunding the taxes based upon export sales. Rather, in Brazil's system
only a tax credit arises upon the purchase of inputs for use in the
finished product. That credit can be used to offset tax liability to
the government arising from sales in the domestic market (i.e., ICMS
taxes collected from home market customers) to the extent that a
company makes such sales in the home market.
In the past, the Department included ICMS taxes in the calculation
of CV because such taxes are considered a cost of production. However,
recent decisions by the Court of International Trade (CIT) on this
issue have accorded substantial weight to the ``economic reality'' of
the Brazilian tax system which in some circumstances allows for
recovery of the ICMS tax paid on material inputs used in the production
of export sales. See Aimcor v. United States, 19 CIT 966 (CIT 1995);
Camargo Correa Metais, S.A. v. United States, 17 CIT 897, 911 (CIT
1993). In light of these decisions, the Department is reconsidering its
current policy of including ICMS tax in CV.
We will now no longer assume that VAT taxes are a cost when
calculating CV. Instead, we will examine the actual experience of each
producer/exporter subject to an investigation or review. If any
exporter/producer is able to demonstrate that it was able to offset its
tax liability on domestic sales, no addition for such taxes should be
made in calculating CV for that producer/exporter. Similarly, if any
producer/exporter is able to use only a portion of the credits
generated by export sales we will treat as a cost in calculating CV
only that portion which was not used during the period. Only if a
producer/exporter is unable to use any of the tax credits, or if the
producer/exporter fails to provide satisfactory evidence of its tax
experience on this question, will we continue to treat the entire
amount of VAT taxes as a direct cost in calculating CV. The Department
invites comment from interested parties with respect to this issue.
Additionally, CBCC, LIASA, and Minasligas have noted that Brazil's
new ICMS tax law allows companies to use ICMS tax credits generated
during the POR for the reduction in payment of electricity costs. These
companies have requested that the Department reduce their ICMS tax paid
during the POR by the amount of tax credits used for electricity after
the POR, because such credits were generated during the POR. We
preliminarily determine that, since the companies used these tax
credits after the POR, that would be the appropriate time to account
for this reduction in these companies' ICMS tax credit balance.
Price to Price Comparisons
Where there were contemporaneous sales of the comparison product
that passed the COP test, we based NV on home market prices.
Price to CV Comparisons
When we based NV on CV, we calculated CV in the manner described
below. See ``Cost of Production (COP) Analysis'' section. Where we
compared export prices to CV, we deducted from CV the weighted-average
home market direct selling expenses and added the U.S. direct selling
expenses, where applicable, in accordance with sections 773(a)(8) and
773(a)(6)(C)(iii) of the Act.
Cost of Production (COP) Analysis
On February 11, 1998, the Department published in the Federal
Register the final results of the fifth administrative review on
silicon metal from Brazil. See Final Results of Antidumping Duty
Administrative Review: Silicon Metal From Brazil, 63 FR 6899. In that
review, in accordance with section 773(b)(1) of the Act, the Department
disregarded home market sales found to be below COP for CBCC,
Eletrosilex, Minasligas and RIMA. Therefore, in accordance with section
773(b)(2)(A)(ii) of the Act, the Department has reasonable grounds to
believe or suspect that sales of the foreign like product under
consideration for the determination of NV in this review may have been
made at prices below the COP as provided by section 773(b)(2)(A)(ii) of
the Act. Therefore, pursuant to section 773(b)(1) of the Act, we
initiated an investigation to determine whether these respondents made
home market sales during the POR at prices below their COP. In
addition, on March 16, 1998, we initiated a below-cost investigation
for LIASA pursuant to petitioners' allegation on
[[Page 42005]]
December 12, 1997. See 1996-1997 Administrative Review of the
Antidumping Duty Order on Silicon Metal from Brazil: Analysis of
Petitioners' Allegation of Sales Below the Cost of Production (``COP'')
for Ligas de Aluminio S.A.
A. Calculation of COP
In accordance with section 773(b)(3) of the Tariff Act, we
calculated COP based on the sum of each respondent's cost of materials
and fabrication employed in producing the foreign like product, plus
amounts for home market general and administrative expenses and packing
costs. We relied on the home market sales and COP information that each
respondent provided in its questionnaire responses. We adjusted each
respondent's reported COP as follows:
CBCC
As a result of verification findings, we recalculated depreciation
based on the Departmental methodology. See CBCC's 1996-1997
Verification Report dated July 30, 1998, and Analysis Memorandum on the
Sixth Administrative Review of Silicon Metal from Brazil from Lisette
Lach through James Doyle to the File dated July 30, 1998
(``Memorandum''), a public version of which is in the file in Central
Records, Room B-099 at the U.S. Department of Commerce.
We recalculated CBCC's G&A expenses using CBCC's and Solvay & Cie's
1996 G&A expenses and COGS as reported in Exhibit 3 of CBCC's November
21, 1997 submission, because it is Departmental practice to calculate
G&A expenses on an annual basis as a ratio of total G&A expenses
divided by cost of goods sold (COGS). See Certain Corrosion-Resistant
Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate
from Canada; Notice of Final Antidumping Duty Administrative Reviews,
62 FR 18448, 18456 (April 15, 1997). To obtain the amount of unit G&A
expense for the POR, we multiplied the G&A expense ratio for CBCC and
Solvay & Cie by the unit COM of the merchandise under investigation.
See CBCC's Memorandum and Attachment to that Memorandum.
Additionally, the Department recalculated CBCC's cost of
manufacture because CBCC did not provide its COP for self-produced
charcoal. Instead, CBCC only provided costs based on its purchases of
charcoal from an unaffiliated supplier(s). Therefore, we had to apply
facts available in accordance with section 776(a) of the Act for the
cost of self-produced charcoal. As facts available, we used as the cost
for CBCC's self-produced charcoal the prices that CBCC paid to
unaffiliated supplier(s) for purchased charcoal. Therefore, we have
recalculated the cost of CBCC's charcoal production by using the annual
average cost CBCC was charged by unaffiliated supplier(s). See CBCC's
Verification Report dated July 30, 1998 and Memorandum dated July 30,
1998.
The Department's established policy is to calculate interest
expenses (INTEX) incurred on behalf of the consolidated group of
companies (e.g., Solvay & Cie) to which the respondent belongs, based
on consolidated financial statements. This practice recognizes two
facts: (1) The fungible nature of invested capital resources such debt
and equity of the controlling entity within a consolidated group of
companies, and (2) the controlling entity within a consolidated group
has the power to determine the capital structure of each member country
within its group. See, e.g., Notice of Final Results of Antidumping
Duty Administrative Review Aramid Fiber Formed of Poly ParaPhneylene
Terephthalamide from the Netherlands, 62 FR 38058 (July 16, 1997).
Accordingly, we recalculated INTEX by multiplying the reported the
percentage of Solvay & Cie's financial expenses by cost of manufacture
(COM). See CBCC's Memorandum and Attachment to Memorandum.
Eletrosilex
As a result of our determination to recalculate interest expense
based on the facts available (see facts available section), we have
recalculated Eletrosilex's general and administrative expenses on the
same basis as interest expense in order to be consistent with the
interest expense calculation. See Analysis Memorandum on the Sixth
Administrative Review of Silicon Metal from Brazil from Letitia Kress
through James Doyle to the File dated July 30, 1998 (``Memorandum''), a
public version of which is in the file in Central Records, Room B-099
at the U.S. Department of Commerce.
LIASA
As a result of verification, the Department recalculated LIASA's
total cost of manufacture because at we found that certain sales of
slag were incorrectly classified as off-grade silicon metal. See
LIASA's Verification Report dated July 30, 1998 and LIASA's Analysis
Memorandum dated July 30, 1998.
Minasligas
We recalculated Minasligas's G&A expenses, using Minasligas's and
Delp Engenharia Mecanica S.A. (Delp) 1996 G&A expenses and COGS as
reported in Minasligas's November 21, 1997 submission. We recalculated
G&A because it is Departmental practice to include both the parent
(Delp) and subsidiary company (Minasligas) G&A expenses in its
calculation of total G&A. See Minasligas's Analysis Memorandum.
RIMA
The Department adjusted RIMA's G&A and interest expense
calculations. In our original questionnaire of September 22, 1997, and
supplemental questionnaire of March 31, 1998, we requested RIMA to
compute its G&A expenses on an annual basis as a ratio of its total G&A
expenses divided by its cost of goods sold. In both instances, RIMA did
not calculate its G&A expenses using the methodology requested by the
Department. Therefore, we have recalculated RIMA's G&A based on its
1996 and 1997 financial statements, and Departmental practice of
calculating G&A on total G&A expenses divided by cost of sales. See
Analysis Memorandum on the Sixth Administrative Review of Silicon Metal
from Brazil from Abdelali Elouaradia through James Doyle to the File
dated July 30, 1998 (``Memorandum''), a public version of which is in
the file in Central Records, Room B-099 at the U.S. Department of
Commerce.
Additionally, the Department has recalculated RIMA's interest
expense. In our supplemental questionnaire of June 29, 1998, we
requested RIMA to provide a breakout for 1996 and 1997 of their Income
of Financial Investment by the type of investment. In its July 8, 1998
supplemental response, RIMA stated that it did not have financial
investments during this period. However, in its April 17, 1998
supplemental response, RIMA applied certain accounts (i.e., Currency
Adjustment, Asset Discounts, and Asset Interest) to offset its
financial expenses in its calculation of interest expense. Although
requested, RIMA has not provided the Department with an explanation why
these accounts were included as offsets to its interest expense.
Therefore, the Department has recalculated RIMA's interest expense
based on RIMA's 1996 and 1997 financial statements without the offsets
claimed by RIMA. See Analysis Memorandum on the of the Sixth
Administrative Review of Silicon Metal from Brazil from Abdelali
Elouaradia through James Doyle to the File dated July 30, 1998
(``Memorandum''), a public version of which is in the file in
[[Page 42006]]
Central Records, Room B-099 at the U.S. Department of Commerce.
B. Test of Home Market Prices
After calculating COP, we tested whether home market sales of
silicon metal were made at prices below COP within an extended period
of time in substantial quantities and whether such prices permitted the
recovery of all costs within a reasonable period of time. We compared
model-specific COP to the reported home market prices less any
applicable movement charges and discounts, where appropriate.
Pursuant to section 773(b)(2)(C) of the Act, where less than 20
percent of each respondent's home market sales for a model were at
prices less than the COP, we did not disregard any below-cost sales of
that model because we determined that the below cost sales were not
made within an extended period of time in ``substantial quantities.''
Where 20 percent or more of each respondent's home market sales of a
given product during the POR were at prices less than the COP, we
determined that such sales were made within an extended period of time
in substantial quantities in accordance with section 773(b)(2) (C) of
the Tariff Act. To determine whether such sales were at prices which
would not permit the full recovery of all costs within a reasonable
period of time, in accordance with section 773(b)(2)(D) of the Tariff
Act, we compared home market prices to the weighted-average COP for the
POR. When we found that below-cost sales had been made in ``substantial
quantities'' and were not at prices which would permit recovery of all
costs within a reasonable period of time, we disregarded these below-
cost sales in the preliminary results in accordance with section
773(b)(1) of the Act.
In these preliminary results, our cost tests for CBCC, Minasligas,
and Rima indicated that less than twenty percent of the sales of
subject merchandise were at prices below COP. We therefore retained all
sales of subject merchandise in our analysis and used them in our
determination of NV, where applicable.
The results of our cost tests for Eletrosilex and LIASA indicated
that, within an extended period of time (one year, in accordance with
section 773(b)(2)(B) of the Act), more than twenty percent of the sales
of all products of each company were at prices below COP. Thus these
below-cost sales were in ``substantial quantities.'' In addition, these
sales were at prices which would not permit the full recovery of all
costs within a reasonable period of time. In accordance with section
773(b)(1) of the Act, we disregarded the below-cost sales of subject
merchandise for each of these two companies and used the remaining
above-cost sales as the basis for determining each company's NV, where
applicable.
For all respondents in accordance with section 773(a)(4) of the
Act, we used CV as the basis for NV when there were no usable sales of
the foreign like product in the comparison market. We calculated CV in
accordance with section 773(e) of the Act.
Constructed Value
In accordance with section 773(e) of the Act, for CBCC, LIASA, and
Rima, we calculated CV based on the sum of respondent's cost of
materials and fabrication employed in producing the subject
merchandise, selling, general and administrative expenses, and profit
incurred and realized in connection with production and sale of the
foreign like product, and U.S. packing costs. In accordance with
section 773(e)(2)(A), we based SG&A and profit on the amounts incurred
and realized by each respondent in connection with the production and
sale of the foreign like product in the ordinary course of trade, for
consumption in the foreign country. We used the costs of materials,
fabrication, and SG&A as reported in the CV portion of respondent's
questionnaire response.
For Rima, we adjusted its general and administrative and interest
expenses. See Analysis Memorandum on the Sixth Administrative Review of
Silicon Metal from Brazil from Abdelali Elouaradia through James Doyle
to the File dated July 30, 1998 (``Memorandum''), a public version of
which is in the file in Central Records, Room B-099 at the U.S.
Department of Commerce. Additionally, because Rima has recovered ICMS
tax on material inputs used in the production of silicon metal for
export, we have excluded such taxes in the calculation of constructed
value. We used the U.S. packing costs as reported in the U.S. sales
portion of respondent's questionnaire responses. We based selling
expenses and profit on the information reported in the home market
sales portion of respondent's questionnaire responses. See Certain
Pasta from Italy; Notice of Preliminary Determination of Sales at Less
Than Fair Value and Postponement of Final Determination, 61 FR 1344,
1349 (January 19, 1996). For selling expenses, we used the weighted-
average home market selling expenses.
For CBCC, we made adjustments to fixed overhead to reflect the
correct depreciation expense, G&A expenses and interest expense. These
adjustments reflect those made in CBCC's COP. See adjustments to CBCC's
COP in ``Calculation of COP'' section above. Because CBCC did not
recover ICMS tax on material inputs used in the production of silicon
metal for export to the United States, we have included CBCC's ICMS tax
in the calculation of constructed value. To the extent CBCC recovered
ICMS taxes for sales in the home market during the POR, we have
excluded such tax from the calculation of CV.
For LIASA, because LIASA did not recover ICMS tax on material
inputs used in the production of silicon metal for export to the United
States we have included LIASA's ICMS tax in the calculation of
constructed value. To the extent LIASA recovered ICMS taxes for sales
in the home market during the POR, we have excluded such tax from the
calculation of CV.
For Eletrosilex, we included the cost of materials and fabrication,
and G&A expenses in CV. We made adjustments to depreciation expenses,
amortization expenses, electricity cost, general and administrative
expenses, and financial expenses. These adjustments reflect those made
in Eletrosilex's COP. See adjustments to Eletrosilex's COP in
``Calculation of COP'' section above and Facts Available section below.
In these preliminary results, since we found that Eletrosilex made no
above-cost sales of the foreign like product in the comparison market,
we were therefore unable to derive profit for use in the constructed
value calculation using Eletrosilex's home market sales data. For this
reason, in accordance with section 773(e)(2)(B)(ii) of the Act, we used
the average of the actual amounts of selling expenses incurred, and
profit realized, by CBCC, LIASA, Minasligas and Rima in connection with
the production and sale of the foreign like product, in the ordinary
course of trade, for consumption in the home market. Additionally, we
have included Eletrosilex's ICMS tax balance in the calculation of
constructed value because Eletrosilex failed to provide the Department
complete information on its ICMS tax balance. See Facts Available
Section below and Analysis Memorandum. In accordance with section
773(2)(B)(i) of the Act, we based G&A expenses (including net interest
expenses) on the amounts incurred by the respondent in connection with
the production and sale, for consumption in the foreign country, of the
same general category of products.
[[Page 42007]]
Use of Facts Available
Eletrosilex
We preliminarily determine that the use of adverse facts available
is appropriate with respect to certain aspects of Eletrosilex's
submitted data in accordance with section 776(a)(2)(C) and section
776(b) of the Act because we find that Eletrosilex failed to cooperate
to the best of its ability in failing to comply with our requests for
complete information. In two supplemental questionnaires issued by the
Department, Eletrosilex failed to provide the requested information.
See Memorandum to Robert S. LaRussa from Joseph A. Spetrini, July 20,
1998 on file in the Central Records Unit, Room B-099 of the main
Commerce Building.
On June 29 and July 6, 1998, the Department issued supplemental
questionnaires to Eletrosilex requesting additional information on its
home market sales, U.S. sales, cost of production, constructed value,
and ICMS taxes. See Departmental letters to Eletrosilex on those dates.
Eletrosilex failed to respond to two supplemental questionnaires
requesting clarification of specific sales and cost questions and the
nature of Eletrosilex's ICMS taxes. We must therefore consider whether
Eletrosilex's submitted response is usable under section 782(e) of the
Act.
Section 782(e) provides that the Department shall not decline to
consider information that is submitted by an interested party and is
necessary to the determination but does not meet 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.
When examined in light of the requirements of section 782(e), the
facts of this review demonstrate that while Eletrosilex data is
incomplete for certain elements of the calculation, nevertheless the
Department has enough data on the record to reasonably calculate a
dumping margin. On this basis, we determine that it is appropriate to
resort to partial facts available, based on Departmental adjustments to
Eletrosilex's cost of production data.
The Department finds that Eletrosilex did not act to the best of
its ability to comply with requests for information. In the past,
Eletrosilex has demonstrated an understanding for requests of
additional information by the Department. In this review, Eletrosilex
responded on April 10, 1998, to the Department's March 24, 1998
supplemental questionnaire. However, its failure to provide responses
to our other supplemental questionnaires (i.e., dated June 29 and July
6, 1998) despite numerous opportunities to do so constitutes a failure
to cooperate to the best of its ability with respect to our request for
information. See Public Version of Memorandum to File from Robert
Bolling, dated July 20, 1998. It is therefore appropriate, under
section 776(b) of the Act, for the Department to use an adverse
inference in applying facts available.
Accordingly, based on facts available, we have determined to
recalculate Eletrosilex's depreciation expenses, amortization expenses,
electricity cost, and financial expenses. See Analysis Memorandum dated
July 30, 1998.
Level of Trade
In accordance with section 773(a)(7) of the Act, to the extent
practicable, we determine NV based on sales in the comparison market at
the same level of trade (LOT) as the EP or CEP transaction. The NV LOT
is that of the starting price sales in the comparison market or, when
NV is based on CV, that of the sales from which we derive selling,
general and administrative (SG&A) expenses and profit. For EP sales,
the U.S. LOT is also the level of the starting price sales, which is
usually from exporter to importer. For CEP sales, it is the level of
the constructed sale from the exporter to the importer.
To determine whether NV sales are at a different LOT than EP or CEP
sales, we examine the stages in the marketing process and selling
functions along the chain of distribution between the producer and the
unaffiliated customer. If the comparison-market sales are at a
different LOT, and the difference affects price comparability, as
manifested in a pattern of consistent price differences between the
sales on which NV is based and comparison-market sales at the LOT of
the export transaction, we make an LOT adjustment under section
773(a)(7)(A) of the Act. Finally, for CEP sales, the NV level is more
remote from the factory than the CEP level and there is no basis for
determining whether the difference in the levels between NV and CEP
affects price comparability, we adjusted NV under section 773(a)(7)(B)
of the Act (the CEP Offset provision). See Notice of Final
Determination of Sales at Less Than Fair Value: Certain Cut-to-Length
Carbon Steel Plate from South Africa, 62 FR 61731 (November 19, 1997).
To determine whether a LOT adjustment or CEP offset was warranted
for all Brazilian respondents, we compared the EP sales to the HM sales
in accordance with the principles discussed above. For purposes of our
analysis, we examined information regarding the distribution systems in
both the U.S. and Brazilian markets, including the selling functions,
classes of customer, and selling expenses for each respondent.
In the home market, all respondents sold the subject merchandise to
one or more of the following three categories of customers: end-users,
and trading companies. Regardless of the category of customer, all
respondents' home market sales were manufactured to order and the
merchandise was shipped directly from the factory to each type of
customer. Their packing processes were also identical for all sales,
and the selling expenses for the POR were comparable for all sales,
regardless of the category of customer. Evidence on the record also
demonstrates that respondents did not have formal policies for
providing special payment terms, such as discounts, to different types
of customers. Additionally, we found no differences in the selling
activities performed for each respondent's U.S. sales in comparison to
its home market sales. Thus, we have determine that the selling
activities each respondent performed for its home market sales were the
same for all home market sales, and that each respondent's home market
sales were all made at a single LOT.
All respondents reported only EP sales in the U.S. market. All U.S.
sales were made to either U.S. end-users or traders, where each sale
was manufactured to order, and the selling activities were comparable
for all sales, regardless of the category of customer. Therefore, we
have concluded that for each respondent a single LOT exists in the
United States which is the same as the HM LOT. Therefore, no LOT
adjustment is warranted in this review.
Currency Conversion
For purposes of the preliminary results, we made currency
conversions in accordance with section 773A of the Act based on the
official exchange rates in effect on the dates of the U.S. sales as
certified by the Federal Reserve Bank of New York.
Preliminary Results of Review
As a result of our review, we preliminarily determine that the
[[Page 42008]]
following weighted-average dumping margins exist for the period July 1,
1996 through June 30, 1997, to be as follows:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
CBCC....................................................... 0
Eletrosilex................................................ 33.11
LIASA...................................................... 0
Minasligas................................................. 0
RIMA....................................................... 0
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within five (5)
days of the date of publication of this notice. Any interested party
may request a hearing within ten (30) days of publication. Any hearing,
if requested, will be held 44 days after the date of publication of
this notice, or the first workday thereafter. Interested parties may
submit case briefs within 30 days of the date of publication of this
notice. Rebuttal briefs, which must be limited to issues raised in the
case briefs, may be filed not later than 37 days after the date of
publication. Parties who submit argument are requested to submit with
the argument: (1) A statement of the issues and (2) a brief summary of
the argument. The Department will publish a notice of final results of
this administrative review, which will include the results of its
analysis of issues raised in any such comments or at a hearing, within
120 days of publication of these preliminary results.
The Department shall determine, and the Customs Service shall
assess, antidumping duties on all appropriate entries. Upon completion
of this review, the Department will issue appraisement instructions
directly to the Customs Service. The Department calculated the
assessment of duties in accordance with section 351.212 of its
regulations.
Furthermore, the following deposit rates will be effective upon
publication of the final results of this administrative review for all
shipments of silicon metal from Brazil entered, or withdrawn from
warehouse, for consumption on or after the publication date, as
provided for by section 751(a)(1)(c) of the Act: (1) The cash deposit
rate for the reviewed companies will be the rate established in the
final results of this review (except that no deposit will be required
for firms with zero or de minims margins, i.e., margins less than 0.5
percent); (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
less than fair value (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) for all other
producers and/or exporters of this merchandise, the cash deposit rate
shall be 91.06 percent, the all others rate established in the LTFV
investigation, 56 FR 36135 (July 31, 1991).
These deposit rates, when imposed, shall remain in effect until
publication of the final results of the next administrative review.
This notice also serves as a preliminary reminder to importers of
their responsibility under 19 CFR 351.402(f)(2) 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 determination is issued and published in accordance with
sections 751(a)(1) and 777(i)(1) of the Act.
Dated: July 30, 1998.
Joseph A. Spetrini,
Acting Assistant Secretary for Import Administration.
[FR Doc. 98-21061 Filed 8-5-98; 8:45 am]
BILLING CODE 3510-DS-P
