[Federal Register Volume 62, Number 153 (Friday, August 8, 1997)]
[Notices]
[Pages 42759-42763]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-20935]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-351-806]
Silicon Metal From Brazil; Preliminary Results of Antidumping
Duty Administrative Review and Intent Not To Revoke in Part
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
ACTION: Notice of preliminary results of the antidumping duty
administrative review and intent not to revoke in part.
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SUMMARY: The Department of Commerce (the Department) is conducting an
administrative review of the antidumping duty order on silicon metal
from Brazil in response to requests by respondents Eletrosilex Belo
Horizonte (Eletrosilex), Companhia Ferroligas Minas Gerais--Minasligas
(Minasligas), Companhia Brasileira Carbureto de Calcio (CBCC), RIMA
Industrial S/A (RIMA), and Wabash Alloys, a division of Connell Limited
Partnership, an interested party which imported silicon metal during
the period of review. This review covers the period July 1, 1995,
through June 30, 1996.
We preliminarily determine not to revoke the order with respect to
CBCC or Minasligas. These companies submitted timely requests for
revocation in this review, however, in the final results of the
preceding administrative review of this order the Department determined
that both companies had dumping margins greater than de minimis.
Accordingly, these companies have not met the requirements of 19 CFR
353.25 (i.e., three consecutive years with zero or de minimis dumping
margins) and therefore do not qualify for revocation under the
Department's regulations.
We preliminarily determine that sales have been made at less than
normal value (NV) during the POR by Eletrosilex and Rima. If these
preliminary results are adopted in our final results of administrative
review, we will instruct the U.S. Customs Service to assess ad-valorem
antidumping duties equal to the difference between export price (EP)
and NV. Interested parties are invited to comment on these preliminary
results. Parties who submit comments are requested to submit with the
argument: (1) A statement of the issue; and (2) a brief summary of the
argument.
EFFECTIVE DATE: August 8, 1997.
FOR FURTHER INFORMATION CONTACT: Alexander Braier, Yury Beyzarov,
Sharon Harris, Sinem Sonmez, or James C. Doyle, 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 Tariff Act of
1930, as amended (the Act) are to the provisions effective January 1,
1995, the effective date of the amendments made to the Tariff Act by
the Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department's regulations are to the
regulations, as codified at 19 CFR part 353 (1996).
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 8, 1996, the Department published a ``Notice of Opportunity to
Request Administrative Review'' on silicon metal from Brazil in the
Federal Register for the period July 1, 1995, through June 30, 1996 (61
FR 35712).
In accordance with 19 CFR 353.22(a)(1), Eletrosilex, Minasligas,
CBCC, and RIMA requested that the Department conduct an administrative
review of their respective sales. Pursuant to 19 CFR 353.25, Minasligas
and CBCC also requested revocation of the antidumping duty order in
part. On August 15, 1995, the Department published in the Federal
Register a notice of initiation of this antidumping duty administrative
review (61 FR 42416). On March 7, 1997, the Department published in the
Federal Register its notice extending the deadline in these preliminary
results until May 14, 1997 (62 FR 10540). Due to the complicated issues
in this case, the Department again extended the deadline for these
preliminary results until July 31,1997 (62 FR 27235).
Verification
From March 17 through March 22, 1997, in accordance with section
782(i) of the Act, we verified information provided by Minasligas and
Rima using standard verification procedures including examination of
relevant sales and financial records, and selection of original source
documentation containing relevant information. Our verification results
are outlined in the respective verification reports, the public
versions of which are available in the Central Records Unit of the
Department of Commerce, room B-099.
Scope of Review
The merchandise covered by this 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 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. HTS item numbers are provided for convenience and for U.S.
Customs purposes. The written description remains dispositive as to the
scope of product coverage.
[[Page 42760]]
Level of Trade
To the extent practicable, we determine NV for sales at the same
level of trade as the U.S. sales (either export price (EP) or
constructed export price (CEP)). When there are no sales at the same
level of trade, we compare U.S. sales to home market (or, if
appropriate, third-country) sales at a different level-of-trade. The NV
level of trade is that of the starting-price sales in the home market.
When NV is based on CV, the level of trade is that of the sales from
which we derive selling, general, and administrative expenses (SG&A)
and profit.
For both EP and CEP, the relevant transaction for the level of
trade analysis is the sale (or constructed sale) from the exporter to
the importer. While the starting price for CEP is that of a subsequent
resale to an unaffiliated buyer, the construction of the CEP results in
a price that would have been charged if the importer had not been
affiliated. We calculate the CEP by removing from the first resale to
an independent U.S. customer the expenses under section 772(d) of the
Act and the profit associated with these expenses. These expenses
represent activities undertaken by the affiliated importer. Because the
expenses deducted under section 772(d) represent selling activities in
the United States, the deduction of these expenses normally yields a
different level of trade for the CEP than for the later resale (which
we use for the starting price). Movement charges, duties and taxes
deducted under section 772(c) do not represent activities of the
affiliated importer, and we do not remove them to obtain the CEP level
of trade.
To determine whether home market sales are at a different level of
trade than U.S. sales, we examine whether the home market sales are at
different stages in the marketing process than the U.S. sales. The
marketing process in both markets begins with goods being sold by the
producer and extends to the sale to the final user, regardless of
whether the final user is an individual consumer or an industrial user.
The chain of distribution between the producer and the final user may
have many or few links, and each respondent's sales occur somewhere
along this chain. In the United States, the respondent's sales are
generally to an importer, whether independent or affiliated. We review
and compare the distribution systems in the home market and U.S. export
markets, including selling functions, class of customer, and the extent
and level of selling expenses for each claimed level of trade. Customer
categories such as distributor, original equipment manufacturer (OEM),
or wholesaler are commonly used by respondents to describe levels of
trade, but, without substantiation, they are insufficient to establish
that a claimed level of trade is valid. An analysis of the chain of
distribution and of the selling functions substantiates or invalidates
the claimed levels of trade. Different levels of trade necessarily
involve differences in selling functions, but differences in selling
functions, even substantial ones, are not alone sufficient to establish
a difference in the levels of trade. Different levels of trade are
characterized by purchasers at different stages in the chain of
distribution and sellers performing qualitatively or quantitatively
different functions in selling to them.
When we compare U.S. sales to home market sales at a different
level of trade, we make a level-of-trade adjustment if the difference
in levels of trade affects price comparability. We determine any effect
on price comparability by examining sales at different levels of trade
in a single market, the home market. Any price effect must be
manifested in a pattern of consistent price differences between home
market sales used for comparison and sales at the equivalent level of
trade of the export transaction. To quantify the price differences, we
calculate the difference in the average of the net prices of the same
models sold at different levels of trade. We use the average difference
in net prices to adjust NV when NV is based on a level of trade
different from that of the export sale. If there is a pattern of no
consistent price differences, the difference in levels of trade does
not have a price effect and, therefore, no adjustment is necessary.
The statute also provides for an adjustment to NV when NV is based
on a level of trade different from that of the CEP if the NV level is
more remote from the factory than the CEP and if we are unable to
determine whether the difference in levels of trade between CEP level
and NV level affects the comparability of their prices. This latter
situation can occur where there is no home market level of trade
equivalent to the U.S. sales level or where there is an equivalent home
market level but the data are insufficient to support a conclusion on
price effect. This adjustment, the CEP offset, is identified in section
773(7)(B) of the Act and is the lower of the following:
The indirect selling expenses on the home market sale, or
The indirect selling expenses deducted from the starting
price used to calculate CEP.
The CEP offset is not automatic each time we use CEP. The CEP offset is
made only when the level of trade of the home market sale is more
advanced than the level of trade of the U.S. (CEP) sale and there is
not an appropriate basis for determining whether there is an effect on
price comparability.
In the present review, none of the respondents requested a level of
trade (LOT) adjustment. To ensure that no such adjustment was
necessary, in accordance with the principles discussed above, we
examined information regarding the distribution systems in both the
United States and Brazilian markets, including the selling functions,
classes of customer, and selling expenses for each respondent.
In the home market, all companies sold merchandise to one or more
of the following three categories of customers: end-users, traders, and
commissioned agents. Regardless of the category of customer, all the
companies' home market (HM) sales were manufactured to order and the
merchandise was shipped directly from the factory to each type of
customer. The companies' 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 the companies did not have formal policies for
providing special payment terms, such as discounts, to different types
of customers. Based upon this evidence, we 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 HM sales
were all made at a single LOT.
All four companies' sales in the United States were EP sales. All
of the companies' U.S. customers were end-users or traders, each sale
was manufactured to order, and the selling expenses were comparable for
all sales, regardless of the category of customer. Furthermore, the
packing processes were almost identical to that of the HM sales, and we
found no differences in the selling activities performed for each
respondent's U.S. sales in comparison to their HM sales. Based on this,
for each respondent, we conclude that a single level of trade exists in
the United States which is the same as the HM LOT. As a result, a LOT
adjustment is not warranted in this review.
Product Comparisons
To determine whether sales of silicon metal by CBCC, Eletrosilex,
Minasligas, and Rima to the U.S. were made at less than normal value,
we compared the ``Export Price'' to the ``Normal Value'',
[[Page 42761]]
as described in the ``Export Price'' and ``Normal Value'' sections of
this notice. In accordance with section 777A(d)(2) of the Act, we
compared the EP of individual transactions to the monthly weighted-
average NV of contemporaneous sales of the foreign like product.
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,
we compared each respondent's volume of home market sales of the
foreign like product to the volume of U.S. sales of the subject
merchandise, in accordance with section 773(a)(1)(C) of the Act.
Because each respondent's aggregate volume of home market sales of the
foreign like product was greater than five percent of its 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.
B. Home Market Sales
We compared the EP of individual transactions to the monthly
weighted-average NV of sales of the foreign like product, pursuant to
section 777A(d)(2) of the Act. In such cases we based NV on packed, ex-
factory or delivered prices to unaffiliated purchasers in the home
market. Where applicable, we made adjustments to home market price for
inland freight, inland freight insurance, and interest revenue. We
reduced home market prices by an amount for home market credit and
packing expenses, and we increased it by U.S. credit expenses and U.S.
packing costs, in accordance with sections 773(a)(6)(A) and (B) of the
Act. We also increased NV, where appropriate, for bank charges, U.S.
advertising, and warehousing expenses incurred on U.S. sales, in
accordance with sections 773(a)(6)(A) and (B) of the Act. We decreased
NV, where appropriate, by the amount of commissions paid in the home
market, but limited this amount to the amount of indirect selling
expenses incurred on U.S. sales, in accordance with 19 CFR
353.56(b)(1).
As respondents did not provide sufficient information regarding the
interest rates used in the calculation of home market credit, we used
the simple average of monthly Government of Brazil Taxa Referencial
(TR) rates for the POR. The TR rate is the published Government of
Brazil prime lending rate. We disallowed Minasligas' claimed imputed
U.S. credit revenue because the Department's practice is to allow
imputed credit revenue only in situations where advance payment is made
by the customer before the merchandise is shipped. See, e.g., Fresh Cut
Flowers from Mexico, Final Results of Antidumping Duty Administrative
Review (61 FR 40604). However, the customer does not pay until after it
receives the merchandise. Therefore, applying the Department's standard
imputed credit calculation would result in imputed U.S. credit expense,
not revenue. However, consistent with the Department's practice,
because all companies used Advance Exchange Contract's (ACC's) to
finance export sales, and ACC's are dollar-denominated short-term
loans, we used ACC rates to determine the interest rate used in the
U.S. imputed credit calculation. To calculate each company's U.S.
imputed credit interest rate, we used the simple average of their ACC
interest rates.
United States Price (USP)
A. Export Price
In calculating USP we used export price (EP) for each respondent,
as defined in section 772(a) of the Act, because the subject
merchandise was first sold to unrelated purchasers prior to the date of
importation into the United States and the use of constructed export
price was not indicated by the facts on the record.
We based EP on the packed, delivered price to the first
unaffiliated purchasers in the United States, or to unaffiliated
trading companies who sell the subject merchandise in the United
States. In accordance with Section 772(c)(2) of the Act, we reduced
this price, where appropriate, for foreign inland freight,
international freight, marine insurance, weighing and sampling charges,
port clerical expenses, and brokerage and handling. We made an addition
to USP, where appropriate, for duty drawback in accordance with section
772(c) of the Act. No other adjustments to company provided information
were made except in the following instances:
1. For the imputed U.S. credit calculation for CBCC, Eletrosilex,
and Minasligas, we used an interest rate which was the simple average
of the ACC rates used during the POR, as reported by each respondent.
2. Rima failed to provide the ACC interest rates it was charged
during the POR, despite three Departmental requests for these rates.
Therefore, pursuant to 776(b) of the Act, for Rima's imputed U.S.
credit calculation, we used as adverse facts available for Rima's
interest rate, the interest rate which was the highest of the ACC
interest rates used during the POR by the other respondents in this
review.
3. For all companies, we used as the payment date the date the bank
received payment from the U.S. customer.
4. For Eletrosilex, we used the date of shipment from the factory
as the date of shipment.
5. For Eletrosilex, we reallocated indirect selling expenses using
the methodology we used in the previous reviews of this case (see the
Department's calculation memo of January 24, 1997).
6. For Minasligas, we used as the date of shipment the date of
invoice, because that is the date of the first shipment from the
factory pursuant to a sale.
Cost of Production Analysis
In prior segments of this proceeding, we disregarded home market
sales found to be below the cost of production (COP) for CBCC,
Eletrosilex, 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 below the COP may have occurred during
the review period for these companies and has conducted a COP
investigation for these respondents. In addition, on January 28, 1997,
we initiated a below-cost investigation for Minasligas pursuant to an
allegation from petitioners on December 11, 1996.
A. Calculation of COP
In accordance with 773(b)(3) of the 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 home market selling,
general, and administrative expenses (SG&A) and the cost of all
expenses incidental to placing the foreign like product in condition
packed and ready for shipment. We relied on the home market sales data
and COP information provided by each respondent, except in the
following specific instances where the reported costs were determined
to be improperly valued:
1. For Minasligas, we made an offset to the total cost of
production (totcop) to account for the revenue received from the sale
of by-products.
2. For Minasligas, we set interest expense equal to zero because
financial income exceeded financial expenses for Minasligas and its
parent company, Delp Engenharia Mechanica, S.A.
3. For Minasligas, we computed G&A by multiplying the tax-exclusive
Cost of Manufacturing (COM) by the ratio of the combined G&A expenses
for Minasligas and its parent company to the two
[[Page 42762]]
companies' combined cost of goods sold.
4. For Eletrosilex, we recalculated total cost of manufacturing
(totcom) to account for the revenue received from the sale of by-
products.
5. For Rima, in the calculation of interest expense, we reallocated
financial revenues to the ``net interest expense'' reported on Rima's
1995 financial statements. We also added the increase in deferred
financial expenses shown on the 1995 financial statements, and the
amortization of the 1994 remaining balance of deferred financial
expenses, to the ``net interest expense''.
6. For Rima, in order to be consistent with the interest expense
calculation, we based G&A expenses on Rima's 1995 financial statements,
rather than its 1996 financial statements.
7. For Rima, we allocated an amount to G&A based on the difference
between the depreciated asset values from the depreciation calculation
worksheets for 1995, and the total asset values for 1995 as indicated
on Rima's financial statements. We also added to G&A the amortization
of the 1994 remaining balance of deferred assets.
B. Test of Home Market Prices
After calculating COP for each respondent, we tested whether home
market sales of subject merchandise were made at prices below COP
within an extended period of time and 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
post-sale price adjustments, where appropriate.
Pursuant to section 773(b)(2)(C) of the Act, where less than twenty
percent of a respondent's home market sales of a given model are at
prices less than COP, we do not disregard any below-cost sales of that
product because we determine that the below-cost sales were not made
within an extended period of time ``in substantial quantities.'' Where
twenty percent or more of a respondent's home market sales of a given
product are at prices less than the COP, we disregard the below-cost
sales because we determine that the below-cost sales were made within
an extended period of time in ``substantial quantities,'' in accordance
with section 773(b)(2)(C) of the Act. To determine whether such sales
are 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 Act, we compare home market prices to the weighted-
average model-specific COPs for the POR.
In these preliminary results, our cost tests for CBCC and
Minasligas 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 Rima 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 Eletrosilex and Rima, 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.
For Eletrosilex and Rima, we included the cost of materials and
fabrication, and G&A expenses in CV. In these preliminary results, we
found that Eletrosilex and Rima made no above-cost sales of the foreign
like product in the comparison market. Therefore, for these companies,
we were unable to derive profit for use in the constructed value
calculation using the companies' 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 and Minasligas in connection with the
production and sale of the foreign like product, in the ordinary course
of trade, for consumption in the home market. 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. Where appropriate,
we made adjustments to CV, in accordance with section 773(a)(8) of the
Act and section 353.56(a) of the Department's regulations, for
circumstances of sale (COS) differences. For comparisons to EP, we made
COS adjustments by deducting home market direct selling expenses and
adding U.S. direct selling expenses.
Price Comparisons
Where there were contemporaneous sales of the comparison product
that passed the COP test, we based NV on home market prices.
Where we compared export prices to CV, we deducted from CV the 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)(iii) of the Act.
Preliminary Results of Review
As a result of our comparison of EP and NV, we preliminarily
determine that the following weighted-average dumping margins exist for
the period July 1, 1995 through June 30, 1996:
------------------------------------------------------------------------
Margin
Manufacturer/exporter (percent)
------------------------------------------------------------------------
CBCC....................................................... 0.0
Minasligas................................................. 1.93
Eletrosilex................................................ 36.74
RIMA....................................................... 70.02
------------------------------------------------------------------------
Parties to the proceeding may request disclosure within 5 days of
the date of publication of this notice. Any interested party may
request a hearing within 10 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.
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
[[Page 42763]]
warehouse, for consumption on or after the publication date, as
provided for by section 751(a)(2)(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; (2) if the exporter is not a firm covered
in this 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 (3) 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 353.26 to file a certificate
regarding the reimbursement of antidumping duties prior to liquidation
of the relevant entries during this review period. Failure to comply
with this requirement could result in the Secretary's presumption that
reimbursement of antidumping duties occurred and the subsequent
assessment of double antidumping duties.
This administrative review and notice are in accordance with
section 751(a)(1) of the Act.
Dated: July 31, 1997.
Robert S. LaRussa,
Acting Assistant Secretary for Import Administration.
[FR Doc. 97-20935 Filed 8-7-97; 8:45 am]
BILLING CODE 3510-DS-P